Agenda packet — Monterey City Council, March 3, 2026

Council Chamber
580 Pacific St.

Monterey, California

CITY COUNCIL AGENDA
Council Regular Meeting and
Closed Session
Tuesday, March 3, 2026
4:00 PM
Mayor
Tyller Williamson
Councilmembers
Kim Barber, District 1
Ed Smith, District 2
Jean Rasch, District 3
Gino Garcia, District 4
Interim City Manager
Lew Bauman
City Attorney
M. Christine Davi
HOW TO PARTICIPATE IN THIS MEETING:
• In-Person: At the meeting location listed above.
• Remotely via ZoomGov webinar:
o On a computer or smartphone: https://monterey-org.zoomgov.com/j/1607729333 Zoom software must be up-to-date. For help, please use our Zoom Meeting Instructions. o By telephone dial 833-568-8864 (Toll Free), 669-254-5252 (CA) or 646-828-7666 (NY). If one number doesn’t work, please try another. Enter Webinar ID: 160 772 9333 # If asked for participant ID, press #. To raise your hand (or lower it), dial *9. Once called upon, dial *6 to unmute.
• This meeting will also stream live for viewing only on youtube.com/cityofmonterey (~10 second delay) and on Comcast Channel 25 (up to 90 second delay). • Written comment: Emailed comments to [email protected] sent no later than ½ hour before the start of the meeting (sooner preferred) are not read aloud but are made available to the Council and public at monterey.gov/submitted-comments.

PUBLIC COMMENT PROCEDURES AND TIME LIMITS:

The total amount of time allocated for public comment on a particular issue and for each individual speaker is generally as follows:

1. Up to three minutes per speaker.

2. For regular City Council meetings, there are two 15-minute public comment periods, one in the afternoon and one in the evening. Speakers may only comment during one session.

3. The total time allocated for public comment:
a. 30 minutes per item – Public Appearance and Public Hearing items b. 15 minutes per item – All other items (including, but not limited to, Consent, Closed Session, Presentations, and Requests to Agendize)
At the time an item is considered, the Mayor will ask those attending the meeting in person to line up at the podium or raise their hands, and for remote participants to use *9 on the telephone or the “raise hand” function in Zoom, if they wish to address the City Council. The maximum amount of time for each person to speak and the total amount of time allotted for each item will be determined based on the number of people indicating an interest in speaking and the amount of business to be conducted on the agenda. In exceptional circumstances and when necessary to ensure a full opportunity for public input, the Mayor may, with the legislative body’s consent, adjust the amount of time allowed for public input and/or the time allotted for each speaker.

CAMPAIGN CONTRIBUTION DISCLOSURE: Pursuant to the Levine Act (Govt. Code §84308), any party to a permit, license, contract, or other entitlement before the Council is required to disclose on the record any contribution, including aggregated contributions, of more than $500 made by the party or the party's agents within the preceding 12 months to any City official. Participants and agents are requested to make this disclosure as well. The disclosure must include the name of the party, participant, or agent, and any other person making the contribution; the name of the recipient, the amount of the contribution, and the date the contribution was made.

March 3, 2026 4:00 PM
2 Call to Order
AFTERNOON SESSION: 4:00 p.m.

Presentations (Afternoon)

1. Recognize City Employees for Milestone Anniversaries in 2026 (Not a Project Under CEQA per Article 20, Section 15378, and Under General Rule Article 5, Section 15061) General Public Comments
The public may speak to any item that is not on the agenda and that is in the City of Monterey’s subject matter jurisdiction.

Consent Agenda
All matters listed under Consent Agenda are routine and will be adopted by one motion unless a member of the City Council or the public requests discussion or a separate vote.

Consent: Resolutions
A resolution is an expression of opinion or evidence of a decision made by the City Council and often relates to administrative business of the City. Resolutions generally become effective immediately upon adoption.

2. Authorize an Amendment to the Professional Services Agreement with Mar Jang Design for the Fire Station 12 Renovations to Increase the Not-to-Exceed Amount from $73,760.00 to $131,484.80 ***NCIP*** (Exempt from CEQA, Article 19, Section 15301, Class 1, Existing Facilities)

3. Award a Contract for Bulk Gasoline, Diesel and Red Dye Diesel Fuel to Merrimac Petroleum, Inc. DBA Merrimac Energy Group, in an Amount Not to Exceed $500,000 per Year for the Term of the Contract (Not a project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061)
Consent: Other

4. Authorize the Mayor to Sign a Comment Letter to the United States Army Garrison Presidio (USAG Presidio) about the Lower Presidio Historic Park Draft Environmental Assessment and Draft Finding of No Significant Impact for Implementing Slope Stabilization and Erosion Control Measures (Not a project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061) End of Consent Agenda
Adjourn to Ocean View Community Services District Meeting Ocean View Community Services District Meeting: Consent Agenda This is a separate legal body of the City that oversees the operations of the Ocean View Community Services District desalinization plant. All matters listed under Consent Agenda are routine and will be adopted by one motion unless a member of the CSD or the public requests discussion or a separate vote.

5. Receive Ocean View Community Services District Quarterly Report (Not a Project under CEQA per Article 20, Section 15378 and General Rule Article 5, Section 15061) Adjourn to City Council Meeting
March 3, 2026 4:00 PM
3 Afternoon Session Items
Public Appearance (Afternoon)
Public Appearance items are on non-routine issues that might stimulate public interest and comments.

6. Suspend the City’s Special Event Support Program for Events Taking Place in Fiscal Years 2026-27 and 2027-28 and Direct Staff to Design a Fiscally Sustainable Special Event Approval and Funding Policy (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061)

7. Cancel the City’s December 1, 2025 Request for Waitlisted Cannabis Storefront Retail Business Permits Pursuant to City Code Section 7-7.09(f) and Approve a 180-Day Pause on Processing Additional Applications (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061) Adjourn to Closed Session
The City Council will take public comments on closed session items before convening to closed session.

Closed Session (Afternoon)
Part or all of a meeting may be closed to the public under special conditions. Council can consider only matters covered in the agenda descriptions.

8. Closed Session Conference with Real Property Negotiators Pursuant to Government Code Section 54956.8
Property: 798 Del Monte Avenue
Agency Negotiators: Kimberly Cole and Janna Aldrete
Negotiating Parties: Anthony Giammanco (El Estero Boating) Under Negotiation: Price and Terms of Payment for Lease Amendment (Not a Project under CEQA per Article 20, Section 15378 and under General Rule Article 5, Section 15061)

9. Conference with Legal Counsel, Existing Litigation Pursuant to Government Code section 54956.9(d)(1): City of Monterey v. Leslie J. Flores, Trustee (Monterey County Superior Court Case No. 24CV000750) (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061)

10. Conference with Legal Counsel: Anticipated Litigation, Significant Exposure to Litigation Pursuant to Government Code section 54956.9(d)(2), (e)(3): Café Fina and Domenico’s Re: Trash Porter Services (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061)

11. Closed Session Conference with Real Property Negotiators Pursuant to Government Code Section 54956.8
Property: 886 Cannery Row
Agency Negotiators: Kimberly Cole and Janna Aldrete
Negotiating Parties: Monterey Bay Aquarium Foundation
Under Negotiation: Review of Rent
(Not a Project Under CEQA Article 20, Section 15378 and Under General Rule Article 5, Section 15061)

12. Conference with Legal Counsel, Significant Exposure to Litigation Pursuant to Government Code section 54956.9(d)(2), (e)(1) (One Case) (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061) Recess
March 3, 2026 4:00 PM
4 Reconvene
EVENING SESSION AGENDA: Approximately 7:00 p.m.

No discussion of a new item will be started after 10:30 p.m. unless agreed upon by Council.

Pledge of Allegiance
General Public Comments, Continued
Any person who did not offer a general public comment in the afternoon session may speak to any item that is not on the agenda and that is in the City of Monterey’s subject matter jurisdiction.

Announcements from Closed Session
Evening Session Items
Public Appearance (Evening)
Public Appearance items are on non-routine issues that might stimulate public interest and comments.

13. Ask the Voters to Approve a Proposed Parking Lot Tax at the Rate of 8% at the June 2, 2026 Special Election (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)

14. Reauthorize Initiation of a Proceeding to Obtain Voter Approval for the City's Stormwater Fee at a Lower Rate to Mitigate Flood Risks and Reduce Pollutants in Stormwater Runoff into the Monterey Bay and Adopt Ballot Procedures for the Submission and Tabulation of Protests in Connection with Rate Hearings Conducted Pursuant to the California Constitution (Proposition 218) (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061) Council Comments
Councilmembers may ask a question for clarification, make a brief announcement, or make a brief report on their activities. In addition, Councilmember or the City Council may provide a referral to staff or other resources for factual information. (Government Code section 54954.2(a)(3).)
City Manager Reports
The City Manager may make a brief report on their activities or a brief announcement. They may also ask for clarification or direction regarding scheduling of Council meetings and study sessions.

Adjournment
Writings distributed for discussion or consideration on these matters within 72 hours prior to the meeting, pursuant to Government Code § 54957.5, are available at: monterey.gov/submitted-comments and in the City Manager’s Office at 580 Pacific St., Room 1, Monterey, CA 93940 during regular business hours. All comments and materials provided to the Council become part of the public record. Members of the public who comment in any fashion on an agenda item may be subject to the Levine Act which requires disclosure of campaign contributions of more than $500 to an officer of the City within the preceding 12 months.

INTERPRETATION: The Monterey City Council invites and encourages public participation at its meetings.

Requests for language interpretation may be made by contacting the City Clerk at [email protected] or 831-646-3935. The City Clerk will make every effort to accommodate requests for interpreter assistance.

Requests should be made as soon as possible in advance of any meeting of the City Council. The City is committed to addressing language interpretation requests swiftly in order to maximize public participation.

March 3, 2026 4:00 PM
5 ACCESSIBILITY: The City of Monterey is committed to including people with disabilities in all of its services, programs and activities. In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, including to coordinate the use of a hearing device, please contact [email protected] or (831) 646-3935. Notification 30+ hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting [28 CFR 35.102-

35.104 ADA Title II]. Later requests will be accommodated to the extent feasible. For communication-related assistance, dial 711 to use the California Relay Service (CRS) to speak to City offices. CRS offers free text-tospeech, speech-to-speech, and Spanish-language services 24 hours a day, 7 days a week.

CITY OF MONTEREY 24-HOUR SUGGESTION HOTLINES: (831) 646-3799 or [email protected] Upcoming city meetings are listed at monterey.gov/agendas For more information, call (831) 646-3935 Council
Agenda Report
№11/25
FROM: Lew Bauman, Interim City Manager
Prepared By: Hayley Goodwein, Administrative Assistant
SUBJECT: Recognize City Employees for Milestone Anniversaries in 2026 (Not a Project Under CEQA per Article 20, Section 15378, and Under General Rule Article 5, Section 15061)
RECOMMENDATION:

That the City Council recognize City employees for their milestone anniversaries for the first quarter of 2026.

VALUE DRIVERS:

Provide sufficient resources and support to develop,
retain, and recruit a high-quality city workforce.

POLICY IMPLICATIONS:

It is within the City Council’s scope and authority to
acknowledge and recognize employees of the City at
City Council meetings.

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE
ACT) APPLIES: No.

FISCAL IMPLICATIONS:

No fiscal implications.

ENVIRONMENTAL DETERMINATION:

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.

Agenda Report Highlights
• The recommendation to City
Council is to recognize the winners
of the City employees who have
milestone anniversaries in the first
quarter of 2026 to highlight and
acknowledge the hard work and
dedication of City employees.
• The recognition is part of the longstanding relationship between the City of Monterey its employees.
• There are no fiscal or environmental
implications associated with this
recognition.

Date: 3/3/2026
Item No.: 1.

Council Regular Meeting, 3/3/2026, Item No. 1., Item Page 1, Packet Page 6 №10/24
ALTERNATIVES CONSIDERED:

The City Council could choose not to recognize City employees; however, this is not recommended.

DISCUSSION:

The City of Monterey is fortunate to have many retirees and staff who are career employees and have served the community for decades. The Mayor and City Council will recognize City employees who have reached their work anniversary with 20, 25, 30, or 35 years of service.

Milestone Anniversaries in 2026 First Quarter
• Cherie Pipes, Public Works Department, Parking Division, Parking Services Representative – 20 years of service
• Christine Davi, City Attorney’s Office, City Attorney – 20 years of service • Cosimo Tilly, Fire Department, Fire Captain – 25 years of service • James Sheldon, Fire Department, Fire Captain – 25 years of service • Jesse Solis, City Manager’s Office, Monterey Conference Center, Facility Attendant – 25 years of service
• Jesus Garcia, Public Works Department, General Services Division, Lead Custodian – 25 years of services
• Kimberly Zook, Police Department, Police Officer – 20 years of service LB/hg
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.gov/Submitted-Comments
Council Regular Meeting, 3/3/2026, Item No. 1., Item Page 2, Packet Page 7 Council
Agenda Report
№11/25
FROM: Andrea Renny, Public Works Director
Prepared By: Megan Beckman, Administrative Analyst
SUBJECT: Authorize an Amendment to the Professional Services Agreement with Mar Jang Design for the Fire Station 12 Renovations to Increase the Not-to-Exceed Amount from $73,760.00 to $131,484.80 ***NCIP*** (Exempt from CEQA, Article 19, Section 15301, Class 1, Existing Facilities) RECOMMENDATION:

That the City Council adopt the attached resolution
authorizing the City Manager, or their designee, to
execute an amendment to the Professional Services
agreement with Mar Jang Design for Fire Station 12
Renovations to increase the not-to-exceed amount from
$73,760.00 to $131,484.80, an increase to the contract
of $57,724.80.

VALUE DRIVERS:

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.

Serve as stewards of the City’s financial resources
through sound economic vitality efforts, streamlining
operations, reasonable revenue enhancements,
visionary long-term planning, fiscal transparency, and
community partnerships.

Foster a local government that is transparent and
collaborative; and solicits, welcomes and appreciates
input from all.

POLICY IMPLICATIONS:

This action is consistent with Chapter 28-Purchasing of the City Code, which requires amendments to
Professional Services contracts exceeding $74,999 to
be approved by City Council.

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: No.

Agenda Report Highlights
• The City Council is recommended to
approve an amendment to increase
the contract amount with Mar Jang
Design for Fire Station 12
renovations from $73,760.00 to
$131,484.80.
• The amendment covers additional
services for ADA compliance, Title
24 energy consulting, and extended
construction administration.
• Approval of the amendment is
necessary to avoid project delays
and ensure successful completion of
the Fire Station 12 Renovation
Project.
• Sufficient funding for the
amendment is available in the Fire
Stations 12 & 13 Rehabilitation
project account, which has a
balance of $2,732,782.94.
• The amendment aligns with the City
Code requiring Council approval for
professional services contracts
exceeding $74,999.

Date: 3/3/2026
Item No.: 2.

Council Regular Meeting, 3/3/2026, Item No. 2., Item Page 1, Packet Page 8 №11/25
FISCAL IMPLICATIONS:

The amendment increases the total contract amount by $57,724.80 from $73,760.00 to $131,484.80. Sufficient funding is available in the Fire Stations 12 & 13 Rehabilitation project account (NCP2506). As of February 4, 2026, the account balance is $2,732,782.94.

ENVIRONMENTAL DETERMINATION:

The City of Monterey Planning Office determined that the following action is exempt from CEQA Guidelines (Article 19, Section 15301, Class 1, Existing Facilities) because the proposed because the project involves improvements to an existing facility. 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.

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 improvements will not create a cumulative impact because they involve improvements to existing features.

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. There are no unusual circumstances with the project or the site.

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 Environmental Impact Report (EIR). The improvements will not be visible from a state scenic highway.

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. The park is not located on a hazardous waste site 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 project is limited in scope and would not affect any historical resources. Therefore, impacts to historical resources would not occur.

ALTERNATIVES CONSIDERED:

The City Council could choose not to approve the amendment; however, this is not recommended. The additional services are necessary to complete the Fire Station 12 Renovation Project and to address permitting, ADA compliance, and construction administration requirements identified as the Project progressed. If the amendment is not approved, the Council Regular Meeting, 3/3/2026, Item No. 2., Item Page 2, Packet Page 9 №11/25
Project would likely experience delays while the City procures these services through a separate solicitation process, which could also result in duplication of effort and increased costs.

DISCUSSION:

On September 23, 2025, the City entered into an informal professional services agreement with Mar Jang Design (“Mar Jang”) to provide architectural design and construction administration services for the Fire Station 12 Renovation Project in an amount not to exceed $73,760.00. Mar Jang was selected through an informal solicitation process administered by the City’s construction management consultant, Ausonio, Inc. (“Ausonio”).

As the Project progressed, additional services were identified beyond the original scope of work, including supplemental ADA compliance coordination and documentation, Title 24 energy consulting services to support permit submission, and an additional month of construction administration for project close-out activities. Mar Jang submitted a proposal for these services in the amount of $57,724.80.

Because the original agreement was executed under the City’s informal contracting authority, the total cost of the additional services exceeds the informal contract limit and requires Council approval of an amendment to the agreement. Approval of this amendment will ensure timely completion of permit-ready construction documents, address ADA and energy code compliance requirements, and provide continued construction administration support necessary to maintain project momentum, minimize delays, and support successful delivery of the Fire Station 12 Renovation Project.

AR/mb
Attachments: 1. Resolution
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.gov/Submitted-Comments
Council Regular Meeting, 3/3/2026, Item No. 2., Item Page 3, Packet Page 10 RESOLUTION NO. __-___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№011/24

AUTHORIZING AN AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT WITH MAR JANG DESIGN FOR THE FIRE STATION 12 RENOVATIONS TO INCREASE THE NOTTO-EXCEED AMOUNT FROM $73,760 TO $131,484.80 ***NCIP*** WHEREAS, on December 3, 2024, the City Council awarded a Professional Services agreement to Ausonio, Inc. (“Ausonio”) for On-Call Project Management/Construction Management (Building Facilities). Ausonio serves as the City’s construction management consultant for both the Fire Station 12 Renovation and the Hilltop Center Renovation projects; WHEREAS, on June 10, 2025, Ausonio solicited an informal request for proposals (“RFP”) on behalf of the City for architectural services for the Fire Station 12 Renovation project (“Project”);
WHEREAS, Mar Jang Design and HGHB submitted qualified proposals and on September 23, 2025, the City awarded an informal professional services agreement to Mar Jang Design in an amount not to exceed $73,760;
WHEREAS, as the project progressed, additional services were identified beyond the original scope of work, including supplemental ADA compliance coordination and documentation, Title 24 energy consulting services to support permit submission, and an additional month of construction administration for project close-out activities; WHEREAS, Mar Jang submitted a proposal for these services in the amount of $57,724.80;
WHEREAS, because the original agreement was executed under the City’s informal contracting authority, the total cost of the additional services exceeds the informal contract limit and requires Council approval of an amendment to the agreement and, WHEREAS, the City of Monterey Planning Office determined that the following action is exempt from CEQA Guidelines (Article 19, Section 15301, Class 1, Existing Facilities) because the proposed because the project involves improvements to an existing facility. Furthermore, the project does not qualify for any of the exceptions to the categorical exemptions found at CEQA Guidelines Section 15300.2.

Council Regular Meeting, 3/3/2026, Item No. 2., Item Page 4, Packet Page 11 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. There are no unusual circumstances with the project or the site.

NOW, THEREFORE, BE IT 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.

NOW, THEREFORE, BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that it hereby authorizes the City Manager, or their designee, to execute an amendment to the Professional Services agreement with Mar Jang Design for Fire Station 12 Renovations to increase the not-to-exceed amount from $73,760.00 to $131,484.80, an increase to the contract of $57,724.80.

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, 3/3/2026, Item No. 2., Item Page 5, Packet Page 12 Council
Agenda Report
№12/25
FROM: Andrea Renny, Public Works Director
Prepared By: Rex Van Slyke, Fleet Manager
SUBJECT: Award a Contract for Bulk Gasoline, Diesel and Red Dye Diesel Fuel to Merrimac Petroleum, Inc. DBA Merrimac Energy Group, in an Amount Not to Exceed $500,000 per Year for the Term of the Contract (Not a project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061) RECOMMENDATION:

That the City Council adopt the attached resolution:

1. Approving the Call for Bids for the Bulk Gasoline,
Diesel and Red Dye Diesel Fuel bid;

2. Rejecting all non-responsive bids;

3. Accepting all responsive, responsible bids;

4. Awarding a contract to Merrimac Petroleum, Inc.

DBA Merrimac Energy Group, for fuel purchase
and delivery for a term of three years with the
option to extend for an additional two one-year
terms; and,

5. Authorizing the City Manager, or their designee,
to execute the contract upon receipt of the
information required by the Call for Bids.

VALUE DRIVERS:

POLICY IMPLICATIONS:

This action is consistent with City Council policy to
approve contracts for the purchase of goods and
services over $75,000.

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE
ACT) APPLIES: No.

Agenda Report Highlights
• The City Council is recommended to
award a three-year fuel supply
contract to Merrimac Petroleum Inc.,
with an option for two one-year
extensions, for an amount not
exceeding $500,000 annually.
• Merrimac Petroleum was the lowest
responsive and responsible bidder,
while Pinnacle Petroleum's bid was
deemed non-responsive due to
missing a notarized bid bond.
• Bulk fuel procurement ensures cost
savings compared to retail pricing
and supports uninterrupted
operations for City vehicles and
emergency infrastructure.
• The contract aligns with City policy
for purchases over $75,000 and
supports long-term financial
planning and operational stability.
• The City continues efforts to reduce
fuel consumption by transitioning
fleet vehicles to electric options
when feasible.

Date: 3/3/2026
Item No.: 3.

Council Regular Meeting, 3/3/2026, Item No. 3., Item Page 1, Packet Page 13 №11/25
FISCAL IMPLICATIONS:

On February 10, 2026, the following bids were received:

Name of Bidder Base Bid
Merrimac Petroleum, Inc. DBA Merrimac Energy Group $48,750.00 Pinnacle Petroleum Non-responsive
In the wholesale fuel market, total cost for fuel includes the wholesale rate of fuel for the market on the day of delivery, which is a determined price by region, and the supplier’s standard delivery charges and markup costs. The basis of award for this bid is for the supplier’s standard delivery charges and markup for 125,000 gallons of fuel.

Funds for the purchase of fuel are appropriated in the Fleet & Mechanical Division operating budget. Due to continual fluctuations of fuel prices, it is difficult to determine the precise value of the contract. In the FY26 budget, Council approved $580,000 for the purchase and delivery of fuel. Funding is available in account number 708-310-3154-0000-4206. The value of the contract will not exceed Council approved annual fuel expenditure budgets.

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.

ALTERNATIVES CONSIDERED:

City Council could choose not to award this contract, however that is not recommended. The Call for Bids is consistent with City policy for purchasing and achieves the desired result of providing a stable fuel supply for all City vehicles and equipment.

DISCUSSION:

Since 2016, the Public Works and Finance Departments have procured bulk fuel through a formal bid process, in which suppliers provide a standard delivery and profit margin to be added to each gallon of gasoline. This procurement method provides operational stability and supports accurate budgeting and financial planning.

Fuel acquired under this agreement is used to ensure uninterrupted fueling of the City’s entire vehicle fleet, including all departmental vehicles and most critically, emergency vehicles for Police and Fire. In addition, this fuel supports the operation of essential emergency infrastructure, including the El Estero Pump Station, the tunnel generator, all City generator locations, and IGSA generators, for which fuel costs are reimbursable. Collectively, these items are vital to maintaining Citywide emergency preparedness and storm readiness.

Council Regular Meeting, 3/3/2026, Item No. 3., Item Page 2, Packet Page 14 №11/25
A significant advantage of this procurement approach is cost savings. Purchasing fuel in bulk directly from the refinery results in substantial savings to the City when compared to third-party retail fuel station pricing. The City continues to implement strategies to reduce fuel consumption, including the conversion of existing fleet vehicles to electric vehicles when feasible.

The City issued a Call for Bids for the purchase of bulk gasoline, diesel and red dye diesel fuel, and on February 10, 2026, two bids were received. The lowest, responsive, responsible bidder, Merrimac Petroleum, Inc. DBA Merrimac Energy Group, is an established supplier. The other bid from Pinnacle Petroleum was deemed non-responsive due to failure to submit a notarized bid bond.

AR/rvs
Attachments: 1. Resolution
e: Merrimac Petroleum, Inc. DBA Merrimac Energy Group
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.gov/Submitted-Comments
Council Regular Meeting, 3/3/2026, Item No. 3., Item Page 3, Packet Page 15 RESOLUTION NO. __-___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№011/24

AWARDING A CONTRACT FOR BULK GASOLINE, DIESEL AND RED DYE DIESEL FUEL TO MERRIMAC PETROLEUM, INC. DBA MERRIMAC ENERGY GROUP, IN AN AMOUNT NOT TO EXCEED $500,000 PER YEAR FOR THE TERM OF THE CONTRACT WHEREAS, a Call for Bids was issued on January 26, 2026, and on February 10, 2026, two bids were received;
WHEREAS, the bid from Pinnacle Petroleum was deemed non-responsive due to failure to submit a notarized bid bond;
WHEREAS, the lowest responsive, responsible bidder was submitted by Merrimac Petroleum, Inc. DBA Merrimac Energy Group;
WHEREAS, due to continual fluctuations of fuel prices, it is difficult to determine the actual value of the contract. The value of the contract will not exceed Council approved annual fuel expenditure budgets;
WHEREAS, the bidding documents were constructed to provide standard delivery and bidder’s profit markup for delivery of fuel;
WHEREAS, the City Council as part of its normal operating budget process, approves funding for the purchase of fuel; and,
WHEREAS, 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.

NOW, THEREFORE, BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that it hereby:

1. Approves the call for bids for the Bulk Gasoline, Diesel and Red Dye Diesel Fuel bid;

2. Rejects all non-responsive bids;
Council Regular Meeting, 3/3/2026, Item No. 3., Item Page 4, Packet Page 16

3. Accepts all responsive, responsible bids;

4. Awards a contract to Merrimac Petroleum, Inc. DBA Merrimac Energy Group for fuel purchase and delivery for a term of three years with the option to extend for an additional two one-year terms; and,

5. Authorizes the City Manager, or their designee, to execute the contract upon receipt of the information required by the Call for Bids.

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, 3/3/2026, Item No. 3., Item Page 5, Packet Page 17 Council
Agenda Report
№11/25
FROM: Brian Edwards, Library Director
Kimberly Cole, AICP, Community Development Director
SUBJECT: Authorize the Mayor to Sign a Comment Letter to the United States Army Garrison Presidio (USAG Presidio) about the Lower Presidio Historic Park Draft Environmental Assessment and Draft Finding of No Significant Impact for Implementing Slope Stabilization and Erosion Control Measures (Not a project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061)
RECOMMENDATION:

That the City Council authorize the mayor to sign a
comment letter to the United States Army Garrison
Presidio (USAG Presidio) about the Lower Presidio
Historic Park Draft Environmental Assessment and
Draft Finding of No Significant Impact for implementing the slope stabilization and erosion control measures.

VALUE DRIVERS:

POLICY IMPLICATIONS:

The proposed project addresses an ongoing erosion
issue that is important to solve for public safety and
access.

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE
ACT) APPLIES: No.

FISCAL IMPLICATIONS:

The proposed letter has no fiscal impact. Project
funding is not contemplated in the environmental
document.

Agenda Report Highlights
• The City Council recommends the
Mayor sign a comment letter
supporting Alternative 1 – Small
Retaining Wall for slope stabilization
and erosion control at Lower
Presidio Historic Park.
• Alternative 1 aligns with the City of
Monterey’s previous work and
minimizes disruption to traffic and
pedestrian access.
• Temporary sidewalk and partial road
closures are expected during
construction, requiring coordination
with the city to avoid peak commute
hours.
• The No Action Alternative poses
safety risks and fails to meet
statutory requirements for cultural
preservation.
• Public comments on the draft
environmental assessment are due
by March 9, 2026.

Date: 3/3/2026
Item No.: 4.

Council Regular Meeting, 3/3/2026, Item No. 4., Item Page 1, Packet Page 18 ENVIRONMENTAL DETERMINATION:

The City of Monterey determined that the proposed action (comment letter) 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.

ALTERNATIVES CONSIDERED:

That the City Council chose to amend the letter or not send the letter.

DISCUSSION:

The United States Army Garrison Presidio of Monterey (USAG Presidio) sent a notice to the City of Monterey inviting public comment on the draft environmental assessment. Comments are due prior to March 9, 2026.

Background
The USAG Presidio’s draft Environmental Assessment evaluates three potential erosion control projects near Lighthouse Curve (Refer to Figure 1). The Environmental Assessment can be accessed via this link: https://home.army.mil/monterey/my-fort/all-services/environmental/publicnotice-environmental-assessment-and-impact.

Figure 1: Location Map
Council Regular Meeting, 3/3/2026, Item No. 4., Item Page 2, Packet Page 19 Source: https://home.army.mil/monterey/my-fort/all-services/environmental/public-noticeenvironmental-assessment-and-impact A summary of the erosion control measures evaluated in the EA include:

1. Alternative 1 – Small Retaining Wall: This project concept involves a small retaining wall along the Lighthouse Avenue sidewalk, between 3 and 4 feet tall, using a bestengineered technique. The best-engineered technique could include, but is not limited to, a cantilever wall, gravity wall, counter-fort wall, or anchored wall. Construction of an approximately 250-linear-foot retaining wall may involve slight clearing and grading of the slope. Additionally, implementation of selected slope stabilization and erosion control measures would occur along with the wall installation. The retaining wall would be constructed along the slope and over the sidewalk. Depending on the type of retaining wall selected for the slope, portions of the sidewalk may have to be removed and replaced. During construction, the entire sidewalk length along USAG Presidio’s portion of the LPHP slope would likely be temporarily closed. The right lane of Lighthouse Avenue adjacent to the LPHP could also potentially be closed at times during retaining wall installation. To minimize traffic impacts, only one of two lanes would potentially be closed, and construction would be limited to non-peak (i.e., non-commuting) hours, to the extent practicable. USAG Presidio would coordinate with the City of Monterey regarding sidewalk and roadway management prior to any construction.

Figure 2: Proposed Small Retaining Wall Concept
Source: https://home.army.mil/monterey/my-fort/all-services/environmental/public-noticeenvironmental-assessment-and-impact Council Regular Meeting, 3/3/2026, Item No. 4., Item Page 3, Packet Page 20

2. Alternative 2 – Tall Retaining Wall: This project concept involves installation of a taller, up to 8-foot retaining wall along the Lighthouse Avenue sidewalk using the bestengineered technique. The best-engineered technique could include a cantilever wall, gravity wall, counter-fort wall, or anchored wall. In addition to the approximately 250 linear feet where a retaining wall would be constructed under Alternative 2 south of the City’s temporary wall, a longer retaining wall may also be constructed north of the City’s temporary wooden wall in front of the remnant stone retaining wall. Although the proposed retaining wall would not be continuous due to dissection of the sidewalk/slope by the City’s property, up to approximately 500 linear feet of new retaining wall could be constructed. Portions of the existing retaining wall may be restored or covered by the new wall but not removed.

Similar to Alternative 1, depending on the type of retaining wall selected for the slope, portions of the sidewalk may have to be removed and replaced. During construction, the entire sidewalk length along USAG Presidio’s portion of the LPHP slope would likely be temporarily closed. The right lane of Lighthouse Avenue adjacent to the LPHP could also potentially be closed at times during retaining wall installation. To minimize traffic impacts, only one of two lanes would potentially be closed, and construction would be limited to non-peak (i.e., non-commuting) hours, to the extent practicable. USAG Presidio would coordinate with the City of Monterey regarding sidewalk and roadway management prior to any construction.

3. Alternative 3 – Slope Stabilization Only: This alternative would only implement slope stabilization and erosion control measures, including potential use of alternative low-cost engineering solutions. No retaining wall would be installed under this alternative. Similar to Alternative 1, the sidewalk along USAG Presidio’s portion of the LPHP slope would likely be closed during construction activities. USAG Presidio would coordinate with the City of Monterey regarding sidewalk and roadway management prior to any construction.

4. No Action Alternative: Under the No Action Alternative, USAG Presidio would not seek to implement slope stabilization and erosion control measures for the LPHP along Lighthouse Avenue. Excessive erosion and associated material accumulation on the Lighthouse Avenue sidewalk would continue to pose potential safety risks to pedestrians and roadway traffic and expose cultural resources that require protection. The No Action Alternative would not meet the minimum screening criteria as described in the EA, and USAG Presidio would not meet its statutory requirements in accordance with various cultural preservation regulations.

Analysis
The USAG Presidio efforts to address erosion issues along Lighthouse Curve is an important project for the military and city. Specifically, the City supports Alternative 1 – Small Retaining Wall. In 2023, the City of Monterey installed a low retaining wall on City-owned property along the Lighthouse Avenue curve. The USAG Alternative 1 – Small Retaining Wall – is consistent with the work that the City of Monterey has completed and is the preferred option.

All the project alternatives may result in temporary sidewalk and partial road closures. As mentioned in the EA, any temporary closure will need to be closely coordinated with the city during off-peak hours. The city recommends coordinating construction hours that minimize lane closures during commute hours and to provide continued access from the New Monterey to Pacific Street interchange along Lighthouse Avenue. As this is a major thoroughfare for Council Regular Meeting, 3/3/2026, Item No. 4., Item Page 4, Packet Page 21 residential, commuter, and commercial activity, the full closure of Lighthouse Avenue for the project would not be acceptable.

In summary, staff recommends the Mayor sign the attached comment letter for the project.

Attachments: 1. Draft Letter
e: All business associations
All neighborhood associations
Lauren Sullivan, Directorate of Public Works, Environmental Div., USAG Presidio, [email protected]
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.gov/Submitted-Comments
Council Regular Meeting, 3/3/2026, Item No. 4., Item Page 5, Packet Page 22 ATTACHMENT 1
March 3, 2026
Department of the Army, U.S. Army Garrison Presidio of Monterey Lauren Sullivan, DPW Environmental Division
398 Patton Ave., Bldg. 267, Rm. 122
Monterey, CA 93944
Via email: [email protected]
Re: Public Notice of Environmental Assessment and Impact: Addressing Slope Stabilization for the Lower Presidio Historic Park.

Council on Environmental Quality Unique ID: EAXX-007-21-001-1759319428 Thank you for the opportunity to comment on the proposed project at the Lower Presidio Historic Park.

One of the City of Monterey’s value drivers is to “protect and preserve our natural environment by addressing climate change through ecologically responsible and pragmatic solutions.” Since 1847, the United States Army has owned the land commonly known as the Lower Presidio. The rich history of this area contains historic sites dating back over 10,000 years from the Rumsen and Esselen Ohlone First Peoples, through the 1602 and 1770 Spanish arrivals, and later Mexican and early American development. The site can be recognized as the founding site of Monterey and Alta California and the historic importance and access to public space is recognized by our community.

The City of Monterey has a long history of collaboration with the United States Army Garrison Presidio of Monterey, which includes the City’s lease of the Lower Presidio Historic Park (LPHP) from the Army.

The City of Monterey has leased 25.15 acres of the Presidio from the U.S. Army with the understanding that it would be developed as a historic park. The City has provided more than $1 million from various sources, including grants and city funds, to support restoration projects, such as museum improvements, historic interpretation, monument restoration, and park enhancements including trail access.

The city is interested in the United States Army Garrison funding the project, Slope Stabilization for the Lower Presidio Historic Park, utilizing federal funding and completing this work at the Lighthouse curve to mitigate erosion with Alternative 1 – Small Retaining Wall.

Council Regular Meeting, 3/3/2026, Item No. 4., Item Page 6, Packet Page 23 ATTACHMENT 1

2.3.1 Alternative 1 – Small Retaining Wall
“Under Alternative 1, USAG Presidio would install a small retaining wall along the Lighthouse Avenue sidewalk, between 3 and 4 feet tall, using a best-engineered technique (see Figure 2-3). The bestengineered technique could include, but is not limited to, a cantilever wall, gravity wall, counter-fort wall, or anchored wall. Construction of an approximately 250-linear-foot retaining wall may involve slight clearing and grading of the slope. Additionally, implementation of selected slope stabilization and erosion control measures as described in Section 2.1 would occur along with the wall installation. The retaining wall would be constructed along the slope and over the sidewalk. Depending on the type of retaining wall selected for the slope, portions of the sidewalk may have to be removed and replaced.

During construction, the entire sidewalk length along USAG Presidio’s portion of the LPHP slope would likely be temporarily closed. The right lane of Lighthouse Avenue adjacent to the LPHP could also potentially be closed at times during retaining wall installation. To minimize traffic impacts, only one of two lanes would potentially be closed, and construction would be limited to non-peak (i.e., noncommuting) hours, to the extent practicable. USAG Presidio would coordinate with the City of Monterey regarding sidewalk and roadway management prior to any construction.” (page Response: In 2023 the City of Monterey installed a low retaining wall on City-owned property along the Lighthouse Avenue curve. The USAG Alternative 1 – Small Retaining Wall – is consistent with the work that the City of Monterey has completed, and is the preferred option.

3.1.4 Environmental Consequences

3.1.4.1 ALTERNATIVE 1
“Short-term, minor, adverse impacts on land use and the coastal zone would be expected to occur due to increased erosion and sedimentation potential during construction. The Proposed Action would adhere to development goals as described in the Draft Presidio District ADP. Spillover impacts from increased erosion and sedimentation associated with construction are unlikely but could occur due to the proximity of the project area to the coastal zone. Construction would be small in scale, affecting up to 3 acres of USAG Presidio property along Lighthouse Avenue, approximately 175 feet from the nearest coastline.

Additionally, implementation of BMPs would reduce potential impacts during construction. As noted in Section 1.6.5, the request for a Coastal Consistency Negative Determination for the Proposed Action is included in Appendix B. Long-term, minor to moderate, beneficial impacts would occur after construction completion. Additionally, improvements would be in line with future goals outlined in the Presidio District ADP and beneficial to both USAG Presidio and the City of Monterey. The land use designation for the project area would not change with implementation of the Proposed Action and would remain protected space. The retaining wall would be constructed to blend into the slope to the extent practicable to minimize impacts on aesthetics in the area. The wall would only be visible from Lighthouse Avenue and not from the rest of the LPHP. Existing impacts on the coastal zone from excessive erosion and sedimentation would be reduced with the construction of the retaining wall and slope stabilization and erosion control measures.” (page 25) Response: The City of Monterey prefers a proposal that is minimally ecologically invasive to the natural environment of the Lower Presidio Historic Park (LPHP). When installing the pathways along the historic Council Regular Meeting, 3/3/2026, Item No. 4., Item Page 7, Packet Page 24 ATTACHMENT 1
interpretation areas of the LPHP, infill was added to prevent the need for excavation. Installation of the low retaining wall and as limited excavation would be consistent with past activities at the LPHP.

3.7.4 Cultural Resources Environmental Consequences

3.7.4.1 ALTERNATIVE 1
“Alternative 1 would be expected to have long-term impacts on cultural resources from the installation of a retaining wall. The implementation of slope stabilization and erosion control measures, including potential use of alternative low-cost engineering solutions, would be expected to have short- and longterm impacts on cultural resources that are not likely to be adverse. The construction of a retaining wall has the potential to impact adjacent archaeological materials associated with site CA-MNT-101/H during construction because these materials are near the surface of and are actively eroding out of the current slope. These impacts assume up to 2 acres of fill would be required on top of the slope and some minimal excavation could occur for retaining wall installation within the project area. Some retaining wall and slope stabilization and erosion control measure designs may avoid or minimize these impacts.

Furthermore, these direct, immediate impacts may be mitigated by the retaining wall, providing greater long-term protection for more cultural resources in the project area. If during compliance with NHPA Section 106, USAG Presidio determines the undertaking would result in adverse effects, USAG Presidio would consult with the SHPO and tribes to avoid, minimize, or mitigate those adverse effects. Through avoidance, minimization, or mitigation of adverse effects during the Section 106 process, these impacts would be reduced below the threshold of a significant impact under NEPA. USAG Presidio would comply with NAGPRA through consultation with tribes and development of a plan of action to direct the disposition, repatriation, or relocation of archaeological materials. SOP Number 3 in the USAG Presidio ICRMP entails the use of a qualified archaeological monitor during certain ground-disturbing activities (USAG Presidio 2021).” (page 62)
Response: The City of Monterey has worked closely with the USAG to follow all Section 106 compliance in working at the LPHP. The City agrees that the low retaining wall provides greater long-term protection for cultural resources in the immediate area and it is a pragmatic solution.

3.10.4 Human Health and Safety Environmental Consequences

3.10.4.1 ALTERNATIVE 1
“Short-term, minor, adverse impacts on human health and safety would be expected under Alternative 1 due to safety risks to personnel and the public during construction activities. Construction of the retaining wall would involve closing the sidewalk temporarily along the project area, making it inaccessible to the public until construction completion. Additionally, the adjacent lane of Lighthouse Avenue may be closed during construction to allow space for construction equipment and activities and minimize safety risks to contractors from nearby traffic. During construction, contractors, personnel, and the public would be exposed to minor safety and health risks from construction activities and the presence of construction equipment, which would be minimized through the implementation of BMPs, the use of appropriate personal protective equipment, and adherence to relevant OSHA and Garrison Safety Plan regulations. Signs, barriers, and a pedestrian detour would be temporarily established to clearly define the construction area to the public during both on- and off-hours. The potential lane closure for Lighthouse Avenue would be coordinated with the City to ensure proper traffic safety Council Regular Meeting, 3/3/2026, Item No. 4., Item Page 8, Packet Page 25 ATTACHMENT 1
measures are implemented. Long-term, beneficial impacts on human health and safety would be expected after the completion of the retaining wall and implementation of slope stabilization and erosion control measures. The risk of erosion would be substantially reduced, minimizing the potential for material accumulation on the Lighthouse Avenue sidewalk and subsequent narrowing of the accessible sidewalk, thereby making the sidewalk safer for public use.” (page 71) Response: The City of Monterey is interested in continuing to provide the public access to the Lower Presidio Historic Park and to provide minimal impacts to traffic along Lighthouse Avenue and Pacific Street during construction. The City recommends coordinating construction hours that minimize lane closures during commute hours and to provide continued access from the New Monterey to Pacific Street interchange along Lighthouse Avenue. As this is a major thoroughfare for residential, commuter, and commercial activity, the full closure of Lighthouse Avenue for the project would not be acceptable.

Thank you for the opportunity to comment on this project. If you have any questions, please contact the City Manager’s Office at (831) 646-3760 or email [email protected].

Sincerely,
Mayor Tyller Williamson
Council Regular Meeting, 3/3/2026, Item No. 4., Item Page 9, Packet Page 26 Community Services District
Agenda Report
FROM: Christine Davi, City Attorney
SUBJECT: Receive Ocean View Community Services District Quarterly Report (Not a Project under CEQA per Article 20, Section 15378 and General Rule Article 5, Section 15061)
RECOMMENDATION:

That the Community Services District Board of Directors receive a report on the Ocean View Community Services District.

VALUE DRIVERS:

Champion regional and local efforts to secure adequate, affordable, and sustainable water sources for the city, now and into the future.

POLICY IMPLICATIONS:

This Community Services District was formed pursuant to Community Services District Law (Government Code section 61000 et seq.,) to own and operate a desalination plant to provide residential and commercial water to the Ocean View Plaza Project (“Project”) located at 457, 465, 470, 484, 565, and 570 Cannery Row.

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: No.

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 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.

DISCUSSION:

The City of Monterey approved the Ocean View Plaza Project (“Project”) located at 457, 465, 470, 484, 565, and 570 Cannery Row in June 2004. Subsequently, the City of Monterey requested that the Local Agency Formation Commission (LAFCO) review the establishment of a Date: 3/3/2026
Item No.: 5.

Council Regular Meeting, 3/3/2026, Item No. 5., Item Page 1, Packet Page 27 Community Services District (CSD) for the project site that would own, operate, and maintain the proposed desalination plant once constructed.

LAFCO adopted Resolution No. 05-27 on December 27, 2005, approving the formation of this CSD. The Monterey City Council was subsequently appointed as the District Board and must meet quarterly according to requirements of Government Code section 61044.

In November 2019, the California Coastal Commission denied requests for coastal development permit extensions (Permit No. 3-08-013). The Coastal Commission voted that there were changed circumstances from its original coastal development permit issued in 2008 related to water supply and coastal hazards/sea level rise.

In January 2020, Ruby Falls Fund, LLC, sued the Coastal Commission over its denial of the permit extension request as described in Monterey County Superior Court Case No. 20CV000165. The Court issued a ruling on July 11, 2024 granting Ruby Falls Fund, LLC’s petition for writ of administrative mandate. The petition was granted on the basis that the Coastal Commission failed to provide notice of the hearing and staff report of the November 19, 2019 hearing, the Commission failed to exercise its discretion in deciding whether to grant Ruby Falls Fund, LLC’s request for a continuance, and the November 19, 2019 decision based on “changed circumstances” was not reached through a fair hearing conducted as required by law.

An amended judgment was entered, and on March 7, 2025, the court issued a preemptory writ of mandate ordering the California Coastal Commission to set aside its November 2019 decision and hold a new hearing within 150 days. The California Coastal Commission hearing has been postponed until after the appeal, described below, is resolved.

Ruby Falls Fund, LLC appealed the ruling and the appellate case was fully briefed as of January 23, 2026. (Sixth Appellate District Case No. H053262) Ruby Falls Fund, LLC requests that the appellate court transfer and issue the Coastal Development Permit and set aside the permit extension denial. The California Coastal Commission asserts that there are substantial and fundamental changed circumstances regarding adequate water supply for the project and whether the project design adequately addresses sea level rise.

The City originally approved the vesting tentative map for the project on June 1, 2004. The City recognized an extension by operation of law to June 1, 2025. On April 10, 2025, Ruby Falls Fund, LLP requested a one-year extension. Under Government Code section 66452.6(e), the April 10, 2025 request for a one-year extension of the Map extends the life of the Map “for 60 days or until the application for extension is approved, conditionally approved, or denied, whichever occurs first.” Under Government Code section 66452.6(e) approval or denial of the requested one-year extension is discretionary, meaning that the City Council has no legal obligation to approve or deny the request. The City Council considered the map extension request at a public hearing on June 17, 2025, and granted the extension until June 17, 2026 (Resolution 25-066).
cc: Save Our Waterfront, 781 Terry Street, Monterey, CA 93940 Cannery Row Association
LAFCO of Monterey County – Local Agency Formation Committee, POB 1369, Salinas, CA 93902 New Monterey Neighborhood Association
David Balch, Esq.

Anne Mudge, Esq.

Neill Bower, Esq.

Stephanie Lai, Esq.

Aaron Gruber, Esq.

Bob Faulis
William Coffee, Esq.

David Bowie, Esq.

Council Regular Meeting, 3/3/2026, Item No. 5., Item Page 2, Packet Page 28 Council
Agenda Report
FROM: Nicole Banks, Parks and Recreation Director
Prepared By: Mark Ackermann, Management Analyst
SUBJECT: Suspend the City’s Special Event Support Program for Events Taking Place in Fiscal Years 2026-27 and 2027-28 and Direct Staff to Design a Fiscally Sustainable Special Event Approval and Funding Policy (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061)
RECOMMENDATION:

That the City Council suspend the Special Event Support Program (SESP) for events taking place in fiscal years
2026-2027 and 2027-2028 due to budget constraints and
reduced staff capacity. In addition, direct staff to design a fiscally sustainable special event approval and funding policy.

VALUE DRIVERS:

Serve as stewards of the City’s financial resources
through sound economic vitality efforts, streamlining
operations, reasonable revenue enhancements, visionary
long-term planning, fiscal transparency, and community
partnerships.

POLICY IMPLICATIONS:

The recommended action is in line with the program’s
guidelines which state, in part, “There is no guarantee that the City will be able to provide all, part, or any of the financial support requested by each applicant. Thus,
applicants should not make commitments based on the
expectation of receiving City support.” The policy also states in the first line of the overview, “Funding is subject to budget constraints.”

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE
ACT) APPLIES: No.

FISCAL IMPLICATIONS:

For the current FY 2025-26 budget, $50,000 in funding
was allocated for the Special Event Support Program
(SESP), providing funding for events that would take
Agenda Report Highlights
• The City Council is recommended to
suspend the Special Event Support
Program (SESP) for fiscal years
2026-2027 and 2027-2028 due to
budget constraints and limited staff
capacity. In addition, Council is
recommended to direct staff to
design a fiscally sustainable special
event approval and funding policy.
• The City Council is recommended to
suspend the Special Event Support
Program (SESP) for fiscal years
2026-2027 and 2027-2028 due to
budget constraints and limited staff
capacity.
• Suspending the program would
save $100,000 in expenditures
amidst a $10 million fiscal budget
deficit.
• The program has been paused
before due to financial challenges,
including during the pandemic.
• The Management Analyst position
responsible for administering the
program is vacant and frozen,
further limiting staff capacity.

Date: 3/3/2026
Item No.: 6.

Council Regular Meeting, 3/3/2026, Item No. 6., Item Page 1, Packet Page 29 №10/24
place in FY 2026-27. Since that decision was made, a fiscal emergency has been declared, the Management Analyst who previously administered the program has left the City, and the position was subsequently not filled due to budget constraints. The fully burdened cost of the Management Analyst for a full year is approximately $195,323.

Suspending the program for the current fiscal year and subsequent fiscal year would result in a combined $100,000 in reduced expenditures amidst a $10 million fiscal budget deficit. Deciding on a two-year pause in funding would also help the City plan to pause the SESP program in FY 2026-27.

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.

ALTERNATIVES CONSIDERED:

Should Council wish to continue the program for events taking place in FY 2026-27, staff could return in approximately eight (8) weeks to provide a plan to implement the Program in a more streamlined approach utilizing existing staff. However, that is not recommended, since the City is in a fiscal emergency and continuing this program would reduce staff’s ability to work on other priorities.

DISCUSSION:

Background
The Special Event Support Program (SESP) has provided funding to organizations hosting special events in the City of Monterey in eight (8) previous annual cycles. The program was paused due to budget restraints during the COVID-19 pandemic before returning in fiscal year (FY) 2023-24. The position that administers the program, Management Analyst in the Parks and Recreation Department, has been vacated and the position has been subsequently frozen.

There are inadequate staff time to administer the program.

A total of $50,000 was approved for the program in the current budget (FY 2025-26) to fund events that take place in FY 2026-27. Staff is also recommending not to budget for the program in FY 2026-27.

Organizations approved for funding in the previous round included:
• Big Sur International Marathon Foundation
• Captain + Stoker
• Cooper-Molera Adobe, The National Trust for Historic Preservation • Festa Italia Foundation
• First Night Monterey
Council Regular Meeting, 3/3/2026, Item No. 6., Item Page 2, Packet Page 30 №10/24
• Fisherman’s Wharf Association
• Jade Events Unlimited
• Monterey Bay Parent
• Monterey Bay Pony Baseball and Softball
• Monterey Firefighters Community Foundation
• Monterey History & Arts Association
• Monterey Museum of Art
• New Monterey Business Association
• The Japanese American Citizens League of the Monterey Peninsula • Whalefest Monterey
While these organizations provide great value and benefit to the community, the City of Monterey is not in a financial position to provide funding to outside organizations. Staff recommend pausing this program so that City funds can be focused on core services including police, fire, and other services, while it seeks solutions to reduce expenditures and increase revenue in the months and years ahead.

Funding to Organizations Not Guaranteed
The Program Guidelines approved by the City Council for the Special Event Support Program states, “There is no guarantee that the City will be able to provide all, part, or any of the financial support requested by each applicant. Thus, applicants should not make commitments based on the expectation of receiving City support. Recurring events do not automatically receive funding each year; event organizers of recurring events must apply each year to be considered.” Considerations
Cost
The direct cost of $50,000 for this program does not include indirect costs including staff time.

These indirect costs are estimated at $17,000.

Staff Capacity
The management analyst position in the Parks and Recreation Department typically administers this program with input from three (3) other staff members to process the applications. The grant process normally would commence at this time but has been delayed by limited staff capacity.

The process is generally conducted as follows:
• Posting and advertising the grant nomination period and fielding numerous calls and emails from applicants.
• Review of applicants by a subcommittee consisting of three (3) additional staff members. • Applicant hearings at the Monterey Conference Center and recommended funding by subcommittee.
• Preparation for City Council approval.
• Processing agreements with each successful organization prior to June 30 and submitting invoices for Accounts Payable (AP) prior to June 30 (this consisted of 17 agreements in the previous cycle).

Council Regular Meeting, 3/3/2026, Item No. 6., Item Page 3, Packet Page 31 №10/24
The total hours dedicated to this by the Management Analyst position is estimated at 100 hours or more when factoring in all the steps required. That position is currently vacant and frozen.

The Management Analyst from the City Manager’s Office is currently assigned in part to the Parks and Recreation Department to support work previously performed by the now vacant Management Analyst. Choosing to continue this program will reduce staff capacity for the Management Analyst to support other critical City projects and programs including Parks and Recreation budget development for FY 2026-27, the Tree Ordinance, updates to the Laguna Grande Regional Park agreements, and other priority efforts.

Next Steps: Design a Fiscally Sustainable Special Event Approval and Funding Policy In addition to the Special Event Support Program (SESP), the City of Monterey provides direct and in-kind support to select events in the community each year. These include First Night Monterey, July 4th Parade, and Tree Lighting Ceremony at Colton Hall. In recent years, other organizations have requested support from the City for co-sponsorship, in-kind support, and direct financial support for events throughout the City. Rather than consider events on an individual basis, it is recommended that the City Council direct staff to design a fiscally sustainable Special Event Approval and Funding Policy. This policy would review approval and funding considerations, including financials, staff availability, community impact, economic impact as a result of overnight stays, public safety, and other factors.

Developing a policy and potentially making changes to the City Code would be advantageous to ensure fairness, consistency, and clarity on event approvals and funding. The policy would be developed and presented to the City Council by late 2026 for implementation in early 2027.

NB/ma
Attachments: 1. Resolution

2. Current SESP Program Guidelines
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.gov/Submitted-Comments
Council Regular Meeting, 3/3/2026, Item No. 6., Item Page 4, Packet Page 32 RESOLUTION NO. __-___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№011/24

SUSPENDING THE SPECIAL EVENT SUPPORT PROGRAM (SESP) FOR EVENTS TAKING PLACE IN FISCAL YEARS 2026-2027 AND 2027-2028; AND

DIRECTING STAFF TO DESIGN A FISCALLY RESPONSIBLE SPECIAL EVENT

AND APPROVAL FUNDING POLICY
WHEREAS, the City is currently experiencing an extraordinary budget deficit and declared a fiscal emergency on February 17, 2026;
WHEREAS, the Special Event Support Program (SESP) incurs significant direct and indirect costs to the City’s general fund, totaling $50,000 in allocations for FY 2025-26 and potentially additional allocations for FY 2026-27;
WHEREAS, the staff position responsible for administration of this program, Management Analyst in the Parks and Recreation Department, is currently vacant and unfunded; and
WHEREAS, the City of Monterey provides in-kind support and direct financial support to special events throughout the City and desires to develop a policy that would review future approval and funding considerations, including financials, staff availability, community impact, economic impact as a result of overnight stays, public safety, and other factors; and WHEREAS, 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; Council Regular Meeting, 3/3/2026, Item No. 6., Item Page 5, Packet Page 33

NOW, THEREFORE, BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that it hereby cancels the Special Event Support Program for events scheduled to take place in Fiscal Year 2026-2027 and directs staff to suspend the program for events scheduled in Fiscal Year 2027-28; and directs staff to design a fiscally sustainable special event approval and funding policy.

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, 3/3/2026, Item No. 6., Item Page 6, Packet Page 34

SPECIAL EVENTS SUPPORT PROGRAM GUIDELINES
The City of Monterey recognizes the social and economic benefits that may result from special events. They can provide cultural enrichment, promote economic vitality, and enhance community identity. Special events may also provide funding opportunities for service organizations. Cooperation between the City, event organizers and sponsors, and the community is vital to successful events.

Purpose:

A Special Event Support Program (SESP), funded annually through the City’s budget process, with clearly defined goals, criteria, and metrics, will result in a granting process that provides equal opportunity for all interested event organizers, and a reporting process that demonstrates transparency and accountability for public funds.

Overview:

Funding is subject to budget constraints. Based on the limited amount of funding available, applications will be reviewed in consideration of all application submissions, and the submission of a complete application does not guarantee funding. The City reserves the right to accept or reject any or all applications received. Successful applicants will receive grant funds at a set amount based on an evaluation of the event budget, the estimate of City fees, and the estimated economic benefit the event will bring to the City. Most successful applicants will receive an amount of grant funding that correlates to the amount of City fees the applicant is expected to pay. The City’s SESP provides financial support to two categories of special events held in the City:
• Charitable: Events held by non-profit organizations qualified under 501(c)(3) or (c)(6) of the Internal Revenue Code, including but not limited to a qualified educational institutions, that serve the City of Monterey community. • Community: Applicant does not need to maintain non-profit status for consideration of grant funding for this category of events that are free, open to the public, call attention to, promote and/or provide recreational, cultural, and/or social benefits to Monterey residents.

Docusign Envelope ID: DCCCB594-C036-470D-BB75-C69F702B79E6

ATTACHMENT
Council Regular Meeting, 3/3/2026, Item No. 6., Item Page 7, Packet Page 35 I. ELIGIBILITY CRITERIA:

To be eligible to receive City of Monterey support, applicants must:

A. Submit a completed application by the deadline stated and in the format required.. Applications that are late, incomplete, or do not fully comply with the instructions will be disqualified and will not be considered.

B. Applicants that received grant funding in any prior funding cycles must have complied with all reporting requirements to be considered for future grants.

C. Include a copy of the complete event budget with an explanation of projected income and expenses.

D. Include proposed promotion/marketing plan and performance measures.

E. Include non-profit tax ID number if the event is organized by a non-profit.

F. Demonstrate that the special event will take place in the City of Monterey.

G. Demonstrate that the event is scheduled to take place between the Fiscal Year granting period (July 1 through June 30) and the date(s), time(s) and location within the City have been determined.

H. Demonstrate that the event will take place without consideration of SESP funding and that the event is not financially dependent upon receiving City of Monterey financial support.

I. State that the applicant has no outstanding debt due to the City of Monterey at the time of the application.

J. Agree that the event will be compliant with the Americans with Disability Act and be accessible to the community/public but need not be free of charge.

K. Acknowledge that participation in the organization and event requesting funding not be predicated on a person’s race, color, religion, ethnicity, national origin, age, sex, sexual orientation, marital status, political affiliation, disability or medical condition.

L. Agree to sign a funding agreement, within 14 days of receipt, if funding is awarded. The funding agreement requires event organizers to submit a post-event report within 60 days of their event and outlines measurable objectives and performance measures for evaluating the event’s marketing and economic impact, and the City’s right to audit records that evidence such performance measures. Additionally, the funding agreement requires the organization to post a sign at their event with the City logo, indicating: “This event is funded in part by a grant from the City of Monterey.”
M. Obtain a Business License for the event if required by the Finance Department and provide a new Vendor Record Form
N. Qualified applicants or their designee are required to attend an interview with the SESP panel. The interview consists of a verbal presentation from the applicant and responses to panelist questions. Applicants will be notified of the date and time for the presentations.

Docusign Envelope ID: DCCCB594-C036-470D-BB75-C69F702B79E6

ATTACHMENT
Council Regular Meeting, 3/3/2026, Item No. 6., Item Page 8, Packet Page 36 II. INELIGIBILITY:

The City of Monterey will not provide support to:

A. Individuals.

B. Organizations or programs whose primary purpose is to act on behalf of, in support of, or in opposition to any political candidate, ballot measure, or political position.

C. Events that serve a religious purpose. Note: religious or sectarian organizations are not excluded from consideration; however, the event must: (1) serve a clearly secular public purpose; and (2) the event must have a primary effect that neither advances nor inhibits religion.

D. Event organizers and organizations that have not fulfilled previous City sponsorship or special event obligations or have an outstanding debt to the City of Monterey at the time of the application period.

E. Invitation-only events that are not open to the general public.

F. Applicants involved in active litigation with the City and/or have active code enforcement violations.

III. EVALUATION CRITERIA:

Eligible applications will be reviewed and evaluated based on the following criteria:

A. The event directly or indirectly benefits the City of Monterey community by supporting its schools, cause-related or non-profit organizations; offering educational, cultural or arts experiences; or providing recreational or social activities.

B. The event benefits a City of Monterey or Monterey county-based nonprofit organization or City of Monterey community or neighborhood association/organization.

C. The event serves, involves, calls attention to and promotes the City of Monterey, its residents, youth, non-profits, schools and/or organizations.

D. The event enhances the quality of life within the City of Monterey with cultural, social, recreational or educational activities of interest to the community.

E. The event attracts visitors to the City of Monterey.

F. The quality of the promotion/marketing plan, budget and performance measures.

G. The event calls attention to and promotes the City of Monterey as a highly desirable place to live, visit, work, play and do business.

IV. OTHER REQUIREMENTS:

Successful applicants will be expected to follow the City’s separate Special Event Permit process and submit all necessary forms, insurance and fees as required.

Docusign Envelope ID: DCCCB594-C036-470D-BB75-C69F702B79E6

ATTACHMENT
Council Regular Meeting, 3/3/2026, Item No. 6., Item Page 9, Packet Page 37 Applications that do not meet the requirements and are not submitted within the specified deadlines risk forfeiting their City Special Event support.

Should the event not be held, all grant money received from the SESP must be returned immediately.

V. FUNDING:

The City expects to receive more applications and/or requests for grant support amounts in excess of what it can provide. There is no guarantee that the City will be able to provide all, part, or any of the financial support requested by each applicant. Thus, applicants should not make commitments based on the expectation of receiving City support.

Recurring events do not automatically receive funding each year; event organizers of recurring events must apply each year to be considered.

NO LATE APPLICATIONS WILL BE ACCEPTED
Docusign Envelope ID: DCCCB594-C036-470D-BB75-C69F702B79E6

ATTACHMENT
Council Regular Meeting, 3/3/2026, Item No. 6., Item Page 10, Packet Page 38 Council
Agenda Report
FROM: Nat Rojanasathira, Assistant City Manager
Prepared By: Mark Ackermann, Management Analyst
SUBJECT: Cancel the City’s December 1, 2025 Request for Waitlisted Cannabis Storefront Retail Business Permits Pursuant to City Code Section 7-7.09(f) and Approve a 180-Day Pause on Processing Additional Applications (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061)
RECOMMENDATION:

Cancel the City’s December 1, 2025 Request for
Waitlisted Cannabis Storefront Retail Business Permits
pursuant to City Code Section 7-7.09(f), thereby
withdrawing invitations to Infinity Assets Monterey LLC and Monterey Organic LLC to apply for cannabis retail
sales permits, and approve a 180-day pause on
processing additional applications.

VALUE DRIVERS:

Serve as stewards of the City’s financial resources
through sound economic vitality efforts, streamlining
operations, reasonable revenue enhancements, visionary
long-term planning, fiscal transparency, and community
partnerships.

POLICY IMPLICATIONS:

The City’s authority to regulate cannabis stems from the California Constitution’s grant of police powers and the City’s charter, and provisions of the Medicinal and Adult Use Cannabis Regulation and Safety Act (“MAUCRSA”).

On December 21, 2021, the City Council directed staff to develop regulations allowing no more than three (3)
cannabis retail permits, one (1) each in Downtown,
Lighthouse, and Cannery Row. On November 8, 2022,
Measure J, the City’s Cannabis Business License Tax,
passed with more than 65% of the voters voting in the
election approving the measure. On November 21, 2023,
the City Council adopted an amendment to the City Zoning Ordinance to allow for four (4) storefront retail cannabis businesses. Two (2) of the four (4) approved retailers have since opened their doors for business.

Agenda Report Highlights
• It is being recommended to cancel
invitations to two waitlisted cannabis
businesses and implementing a
180-day pause on processing new
applications.
• The pause will allow the City to
evaluate market saturation, external
competition, zoning concerns, and
safety impacts.
• The cannabis retail market in
Monterey is primarily supported by
local customers, with limited growth
potential due to market saturation
and nearby competition.
• The permitting process is resourceintensive, and the cost recovery for additional businesses is uncertain.
• The City aims to reassess its
cannabis strategy to optimize
revenue and address community
concerns.

Date: 3/3/2026
Item No.: 7.

Council Regular Meeting, 3/3/2026, Item No. 7., Item Page 1, Packet Page 39 №10/24
CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: Yes.

FISCAL IMPLICATIONS:

Based on the voter-approved Cannabis Business License Tax, currently set at 4% of gross receipts from retail businesses, 1% of gross receipts from testing laboratories, and 2% of gross receipts from cannabis distribution and other uses, the City of Monterey’s annual revenue estimate range is between $322,323 and $705,583.

The City’s first storefront retail cannabis business just passed one year of operation, and the second authorized business opened its doors in December 2025. Staff will have a clearer picture of the City’s actual cannabis-related revenue in the coming months. For the fiscal year ended June 30, 2025, the City received $80,500 in projected cannabis-related business license revenue compared to a projected revenue of $125,000. However, for the current fiscal year, the City is on target with a full fiscal year’s revenue of $200,000.

It is unknown if canceling the waitlisted cannabis storefront permits and instituting a 180-day pause on processing additional applications would reduce potential future income from cannabis. Due to oversaturation of cannabis retail demand on the Monterey Peninsula, it is uncertain if there would be additional revenue to the City as a result of approving waitlisted cannabis storefront permits now. It is possible that a 180-day pause on processing additional applications would allow the City to reassess its cannabis and revenue-generating strategy to yield higher cannabis-related revenues for the City in the long run.

ENVIRONMENTAL DETERMINATION:

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 recovering the City’s cost to regulate cannabis commerce and taxing that commerce to fund general city services 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, such as appropriating the revenues realized, will be assessed for CEQA applicability.

ALTERNATIVES CONSIDERED:

Council could choose to direct staff to amend the City Code to decrease the number of cannabis storefront retail business permits to two (2).

Council may proceed with consideration of the two (2) invited waitlisted applicants for potential approval at a future meeting. In accordance with City Code, the remainder of the waitlist expired on January 1, 2026; therefore, if Council does not approve either invited waitlisted applicant, the City would be required to initiate a new solicitation to award any remaining permits.

Council Regular Meeting, 3/3/2026, Item No. 7., Item Page 2, Packet Page 40 №10/24
DISCUSSION:

Background
On January 4, 2024, the City requested proposals for four (4) cannabis storefront retail business permits. Of the four (4) that were awarded the opportunity to exercise their permits on May 21, 2024, only two (2) were successful at opening, one in the Downtown District and the other in the Lighthouse Avenue and Foam Street Area.

On December 1, 2025, the City Manager invited the top two waitlisted applicants to apply for the vacant permits pursuant to City Code section 7-7.12(d) and the businesses have confirmed their desire to proceed but have not been considered or approved by the City Council. The waitlist expired on January 1, 2026.

Considerations:
• Two higher ranking cannabis businesses were unable to open in the vacant zones even with six-month extensions, and the top-ranked applicant immediately expressed market saturation concerns in the North Fremont Street area.
• The current market heavily leans on locals instead of tourism (70% locals) based on first year sales information from one of the businesses. With another business recently added, it would be wise to see if the market truly has room for expansion. • The City of Pacific Grove approved a retail cannabis business to open, impacting the customer base that may have seen Monterey as the most convenient location previously. If approved, the likely location for a dispensary would be in the Forest Hill Business District, located two blocks from Pacific Grove’s border with the New Monterey neighborhood in Monterey.
• The permitting process has proven to be extremely time-consuming, involving the efforts of at least four (4) departments. It would be time intensive for staff to process applications for additional businesses at this time, and the cost recovery is not guaranteed.

Recommendation
It is recommended that the City Council cancel the invitations to Infinity Assets Monterey LLC and Monterey Organic LLC to apply for cannabis retail sales permits and approve a 180-day pause on processing additional applications. This strategic pause would serve as a Market and Safety Evaluation Phase.

The 180-day pause will specifically allow staff to produce a report focused on the following:

1. Revenue saturation – has the cannabis market been saturated and current maximum revenue achieved?

2. External competition – how has the addition of Pacific Grove’s business and the closures and volatility of cannabis businesses in Seaside and Del Rey Oaks impacted the market?
Council Regular Meeting, 3/3/2026, Item No. 7., Item Page 3, Packet Page 41 №10/24

3. Re-evaluating zoning – considering concerns from local businesses and significant competition with limited available parcels to choose from on North Fremont Street, should the locations be modified?

4. Safety impacts – how have DUIs, service calls, and other issues changed at, near, or due to the current businesses?
NR/ma
Attachments: None.

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, 3/3/2026, Item No. 7., Item Page 4, Packet Page 42 Council
Agenda Report
FROM: Christine Davi, City Attorney
SUBJECT: Conference with Legal Counsel: Anticipated Litigation, Significant Exposure to Litigation Pursuant to Government Code section 54956.9(d)(2), (e)(3): Café Fina and Domenico’s Re” Trash Porter Services (Not a Project under CEQA Article 20, Section 15378 and under General Rule Article 5, Section 15061)
Attachments: Letters dated February 3, 2026
Date: 3/3/2026
Item No.: 10.

Council Regular Meeting, 3/3/2026, Item No. 10., Item Page 1, Packet Page 43 NOLAND

HAMERLY

ETIENNE
HOSS
Attorneys at Law
Stephen W. Pearson
Anne K. Secker
Randy Meyenberg
Christine G. Kemp
Timothy J. Baldwin
* Charles Des Roches
* Robert D. Simpson
Ana C. Toledo
* Leslie E. Finnegan
Lindsey Berg-James
Heidi A. Quinn
Daniel J. Little
Sharilyn R. Payne
Anne Frassetto Olsen
* Yvonne A. Ascher
William H. Falor If]
Geraldine A, Villa
Charles Mullaney
Chiara Veronesi
Sierra A. Rhodes
Jake J. Fathy
Michael Masuda
(Of Counsel)
Harry L. Noland
(1904-1991)
Paul M. Hamerly
(1920-2000)
Myron E. Etienne, Jr.
(1924-2016)
Peter T. Hoss
(1934-2018)
* CERTIFIED SPECIALIST IN

PROBATE, ESTATE PLANNING,

AND TRUST LAW BY

THE CALIFORNIA BOARD OF

LEGAL SPECIALIZATION

STATE BAR OF CALIFORNIA
WWW.NHEH.COM
E-MAIL [email protected]
831-424-1414 ExT. 248

A PROFESSIONAL CORPORATION
February 3, 2026

VIA U.S. MAIL and EMAIL
City of Monterey — Leasing & Property Management
ATTN: Janna Aldrete
aldrete@monterey ory
580 Pacific Street
Monterey, CA 93940
Re: Porter Service — Domenico’s Restaurant
Dear Ms. Aldrete:

Thank you for your letter dated January 22, 2026 regarding the Trash Porter Service. While your letter provides some ancillary history regarding the trash compactor relocation, it does not address the fundamental issue raised by my letter dated October 7, 2025, which is that Ground Lease dated September 21, 1998 (“Ground Lease”) obligates the City to make waste disposal services available for Domenico’s use adjacent to the site and that the Lease does not allow the City to condition the use of those services on the payment of a fee.

Your letter does not acknowledge that my client’s payment of porter fees for the months identified in your letter was under protest. As such, the payment of any porter fees by my client did not constitute a waiver of the City’s performance under the Ground Lease. This City has been made aware of objections to the payment of the porter fees for several years. In addition to my client’s previous objections, | understand that similar objections were made on behalf of the tenants on Fisherman’s Wharf by the Wharf Association at least as far back as September of 2023.

Your letter threatens to bar my client’s use of the trash compactor beginning February 6, 2026 unless my client agrees to pay the porter service fees. This is a breach of the Ground Lease and will cause my client substantial losses. The City will be responsible for this additional damages including loss of income, together with attorneys’ fees. Demand is made that you immediately withdraw this ultimatum in writing. If the parties cannot resolve this dispute, my client reserves the right to seek a judicial determination that the Ground Lease does not allow the City to condition the use of the waste disposal services on the payment of a porter fee.

My client renews its offer to settle this matter as described in my letter dated October 7, 2025. If the City is willing to settle this dispute short of litigation, or if you would like to discuss further, please get back to me at your earliest convenience. My client reserves all rights and remedies under the Ground Lease and reserves the right to pay any charges under protest.

PHONE 831-424-1414 FROM MONTEREY 831-372-7525 FAX 831-424-1975 333 SALINAS STREET POST OFFICE BOX 2510 SALINAS, CA 93902-2510 OUR FILE NO. 14625.022
ATTACHMENT 1
Council Regular Meeting, 3/3/2026, Item No. 10., Item Page 2, Packet Page 44

Page 2 ends

February 3, 2026
This letter constitutes an offer to compromise the ongoing dispute and constitutes a settlement communication protected under California Evidence Code section 1152.

Sincerely,

NOLAND, HAMERLY, ETIENNE & HOSS
A Professional Corporation
lav jl lee deg
Randy Ad. T
ce: Client
4933-4773-8253, v. 1
ATTACHMENT 1
Council Regular Meeting, 3/3/2026, Item No. 10., Item Page 3, Packet Page 45 ATTACHMENT 2
Council Regular Meeting, 3/3/2026, Item No. 10., Item Page 4, Packet Page 46 ATTACHMENT 2
Council Regular Meeting, 3/3/2026, Item No. 10., Item Page 5, Packet Page 47 Council
Agenda Report
№11/25
FROM: Rafaela T. King, CPA, Finance Director
SUBJECT: Ask the Voters to Approve a Proposed Parking Lot Tax at the Rate of 8% at the June 2, 2026 Special Election (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)
RECOMMENDATION:

That the City Council adopt a resolution to ask the voters to approve the proposed parking lot tax at a rate of 8% at the special election to be held on June 2, 2026.

VALUE DRIVERS:

Serve as stewards of the City’s financial resources
through sound economic vitality efforts, streamlining
operations, reasonable revenue enhancements, visionary
long-term planning, fiscal transparency, and community
partnerships.

POLICY IMPLICATIONS:

Timely election and maintaining long-term financial
stability for the City supports Council’s Value Driver of “Working to improve the quality of life of our residents.

The Council is committed to ensuring that Monterey
retains its special character, which derives from its
heritage, size and location. The Council also is
committed to ensuring that Monterey remains a safe and
welcoming place to live, work and visit.”

CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE
ACT) APPLIES: No.

FISCAL IMPLICATIONS:

The County of Monterey’s Elections Department
estimates the City’s election cost for the June 2, 2026 election to range between $96,768 to $161,280, which
will be budgeted for and paid for in FY 2026-27 along with the cost of the November 2026 election. However, should the voters of the City of Monterey approve the 8% parking lot tax, the estimated annual revenue ranges between
$372,000 to $745,000.

Agenda Report Highlights
• The City Council proposes an 8%
parking lot tax on private parking
facilities to address a structural
deficit and maintain financial
stability.
• The tax excludes City-owned
parking lots, residential parking
permits, hotel parking fees, and
residential premises parking for
long-term occupants.
• Estimated annual revenue from the
parking lot tax ranges between
$372,000 and $745,000, with an
average cost to customers of
$0.72–$1.44.
• The City faces a projected $12
million deficit for FY 26/27, requiring
sustainable solutions like increased
revenue or reduced expenditures.
• A special election on June 2, 2026,
will include the parking lot tax and a
general sales tax measure to avoid
service cuts.

Date: 3/3/2026
Item No.: 13.

Council Regular Meeting, 3/3/2026, Item No. 13., Item Page 1, Packet Page 48 №11/25
ENVIRONMENTAL DETERMINATION:

The proposed ballot measure is not subject to review under the California Environmental Quality Act. (Pub. Resources Code, § 21000 et seq.) It concerns a government funding mechanism that does not commit to any specific project which may result in a potentially significant physical impact on the environment, and it can be seen with certainty that there is no possibility that adopting the tax at issue, in itself, may have a significant effect on the environment. (14 CCR §§ 15061(b)(3), 15378(b)(4).)
ALTERNATIVES CONSIDERED:

The Council could decide not to ask the voters to approve the parking tax measure, but that is not advised.

DISCUSSION:

The Proposed Measure
The proposed ballot measure would enact a parking tax of 8% on users for occupying a parking space in private parking facilities.

The proposed ballot measure does not apply to the City’s Residential Parking Permit (RPP) Program. The RPP program is a resident-driven parking management tool that allows neighborhoods experiencing parking pressures to establish time-limited parking with permit exemptions for residents. RPP permits are administered by the city and are not subject to the proposed parking tax.

The proposed tax does not apply to parking in City-owned lots and structures because public parking lots serve the City’s social and economic goals. For-profit parking is taxable as other businesses are. California courts have recognized that providing parking facilities constitutes a legitimate government function. Moreover, the City need not collect a parking tax on its users when it retains the authority to set parking fee increases if determined necessary to provide adequate funding for the service.

Additional exemptions to the proposed tax include instances where: (1) the parking fee is included in hotel room charges, or (2) any occupancy in a parking facility associated with a residential premises, where the occupant is a resident of those premises for at least 30 consecutive calendar days, and where the occupant’s right to occupancy is based on his or her status as such a resident.

The estimated annual revenue from the proposed parking lot tax ranges between $372,000 to $745,000. The average cost for individual customers is estimated between $0.72 - $1.44. 5-Year Forecast Operating Deficits
At the June 2, 2025 Council meeting, the City Council adopted the budget for the 2025-26 fiscal year (FY). The FY 25-26 budget faced a structural deficit of $10.5 million. The budget was balanced with several one-time solutions including reductions to services and supplies, unfunding positions, salary savings, decreases to reserve contributions and restructuring prior financing commitments. As part of the budget presentation, the City Council received a presentation on the City’s immediate financial challenges as well as a high-level review of the 5- Council Regular Meeting, 3/3/2026, Item No. 13., Item Page 2, Packet Page 49 №11/25
year forecast that projected continuing structural deficits highlighting the need for fiscal solutions.

Dating as far back as the 2013-14 Adopted Budget, each year the General Fund five-year forecast has projected a net operating deficit for at least three of the five years projected in the respective adopted budgets. The five-year forecasts projected operating deficits that have and continue to increase in magnitude over time. Specifically, the estimated budget deficits included in FY13/14 show a low of ($.3) million in that five-year period to a high of ($10.5) million for FY25/26 presented in the latest adopted budget, with an updated estimate of ($12) million for FY 26/27.

It is important to note that the five year forecast assumptions included only modest growth in revenue and operational expenses, but did not include budgeted contributions to 1) CIP (typically a minimum of $2.5 million per year), 2) Reserves (typically at $5 million per year), 3) deferred maintenance, and 4) salary adjustments for the years not under current contract (FY28 and beyond), all which could significantly increase the deficit amounts.

Challenges
Projected costs continue to outpace projected revenues. There are various cost drivers including rising costs for staffing (salaries, benefits and pension obligations), utilities, insurance, contract services, equipment and vehicles. In the absence of new revenue sources, cuts to City reserves and services will continue. It is recommended that a combination of cuts, efficiencies and new revenue sources are identified to align projected City revenues with expenses.

The city provides critical community services, including public safety (Police and Fire); maintenance of City parks, libraries and community centers; and recreation programs for youth and seniors. Importantly, these services must be funded to provide continued reliability with long-term financial stability. With the projected FY26/27 budget deficit of ($12) million, the City is faced with urgency to identify new revenues or alternatively make substantial service reductions.

Strategies for a Solution
This projected increasing structural budget deficits cannot be permanently solved with one-time solutions; and will continue to grow in future fiscal years. Any fiscal solution must be sustainable year-over-year. One time funding, such as the sale of properties and/or other assets or the utilization of the city’s Economic Reserve Fund simply delay the problem to the future. The recommended options include:
a) increase ongoing revenue, and/or
b) reduce ongoing expenditures and related services
From August through October, the Monterey City Council received staff presentations regarding the current budget situation and strategies to offset the structural deficit.

In November 2025, FM3 Research Firm conducted Part 1 of a Citywide survey/public polling for potential revenue generating ballot measures. In January 2026, Part 2 of public polling for potential revenue generating ballot measures was conducted. Also, in January 2026, the City Council Regular Meeting, 3/3/2026, Item No. 13., Item Page 3, Packet Page 50 №11/25
Council meet to review the updated polling questions and results where council agreed a tax measure was part of a viable long-term solution as there is the potential to generate $4.5 million in sales tax annually. In addition, the council has agreed to a proposed parking lot tax of 8% on private parking lots.

At the February 17, 2026 Council meeting, the City Council declared a “fiscal emergency,” which allowed the City to request the County of Monterey to hold a special election in June 2026 and place general tax measures on the ballot. This item is a continuation of that request to also include the parking lot tax on the June 2026 special election. The revenue is estimated at between $372,650 and $745,300. In addition to the sales tax measure, if approved, these funds would help mitigate the level of service cuts due to insufficient General Fund revenues.

Putting a general sales tax and parking lot tax on the June 2, 2026 ballot are part of a viable funding strategy that is responsive to providing residents’ options to maintain the long-term financial stability of the City.

Recommendation
Due to the negative impacts of service cuts to the city residents, businesses, and visitors, Staff recommend that the Council adopt a resolution calling an election to ask the voters to approve a private parking lot tax measure of 8% at the election to be held on June 2, 2026.

RTK
Attachments: 1. Resolution

2. Ordinance
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.gov/Submitted-Comments
Council Regular Meeting, 3/3/2026, Item No. 13., Item Page 4, Packet Page 51 1 RESOLUTION NO. ______

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY

ASKING THE VOTERS TO APPROVE A PROPOSED PARKING LOT TAX AT THE RATE OF 8% AT THE JUNE 2, 2026, SPECIAL MUNICIPAL ELECTION WHEREAS, the City Council wishes to submit the parking lot tax ordinance attached hereto as Exhibit A (the “Ordinance”) to the City’s voters for their approval; WHEREAS, the Ordinance imposes a general tax, the revenues from which may fund public safety, parks, street maintenance, or any other lawful purpose; WHEREAS, the City Council has declared a fiscal emergency by unanimously adopting Resolution No. 26-030;
WHEREAS, under Article II of the Monterey City Charter, the election contemplated by this Resolution is governed by the general laws of the State of California; WHEREAS, the City Council adopted Resolution No. 26-031 on February 17, 2026, calling a special election and requesting consolidation with the election to be held on June 2, 2026, and for the County of Monterey to conduct the election on the City’s behalf. The City Council is requesting the same services from the Monterey County Elections Department for the election on this Ordinance;
WHEREAS, because the Ordinance concerns a tax, this Resolution must be approved by two-thirds of the City Council (Rev. & Tax. Code, § 7285.9).

NOW, THEREFORE, BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY as follows:

SECTION 1. RECITALS. The foregoing recitals are true and correct and are hereby adopted by the City Council.

SECTION 2. ADDING BALLOT MEASURE TO SPECIAL ELECTION. Pursuant to the Monterey City Charter and the laws of the State of California, the City Council of the City of Monterey previously called and noticed a special municipal election to be held on Tuesday, June 2, 2026 (“Special Municipal Election”). The City Council hereby adds the following measure to the Special Municipal Election.

Private Parking Lots/Facilities Tax Measure. Shall the
measure to maintain essential services such as clean/safe streets, and other unrestricted general fund expenditures, by enacting a parking tax of 8% on users for occupying a parking space in private parking facilities, with no additional cost for parking in City-owned lots and structures because of a partial exemption, until ended by voters, with funds locally controlled, providing approximately $372,000 to $745,000 annually, be adopted?
Yes ___
No ___
Council Regular Meeting, 3/3/2026, Item No. 13., Item Page 5, Packet Page 52 2 The Ordinance imposing this measure is attached hereto as Exhibit A and is incorporated into this Resolution by this reference. The Ordinance requires the approval of a simple majority (50% plus one) of those voting in the Special Municipal Election.

SECTION 3. IMPLEMENTATION. The City Clerk is directed to file certified copies of this Resolution with the Monterey County Board of Supervisors, with a copy to the County of Monterey Elections Department, pursuant to Elections Code section 10402. The City Clerk is further authorized and directed to perform all other acts necessary or required by law to implement this Resolution and related to the Special Municipal Election.

The City Clerk is hereby authorized to cause notice of the Ordinance to be published once in the Monterey Herald in accordance with Elections Code section 12111 and Government Code section 6061. The City Clerk is authorized to request that the Monterey County Elections Department prepare and publish the required notice. The full text of the measure can be found online at https://monterey.gov/elections. If you desire a copy of the measure, please call the election official’s office at 831-646-3935 and a copy will be mailed at no cost to you.

SECTION 4. IMPARTIAL ANALYSIS. The City Clerk is directed to transmit a copy of the Ordinance to the City Attorney, who shall prepare an impartial analysis of the Ordinance in accordance with applicable law. The impartial analysis shall indicate the measure was placed on the ballot by the City Council.

SECTION 5. BALLOT ARGUMENTS. The City Clerk shall set the deadline for submission of arguments in favor of or against the Ordinance and provide notice of that deadline. The City Clerk may do this in coordination with the County of Monterey Elections Department, as necessary. In all respects, the process to choose these arguments shall accord with Elections Code sections 9280 et seq. and 9600 et seq.

The City Council hereby authorizes the Mayor to prepare and file the primary written argument on behalf of the City Council in support of the Ordinance. At the discretion of the Mayor, the argument may also be signed by other members of the City Council, bona fide associations of citizens, or by individual voters who are eligible to vote on the measure (Elec.

Code, § 9282(b).)
Further, the City Council hereby adopts the provisions of Elections Code section 9285(a) authorizing rebuttal arguments only as to arguments for the Special Municipal Election. This adoption is repealed, and the provisions of section 9285(a) shall not apply, thereafter.

SECTION 6. CEQA. The adoption of this Resolution is exempt from the California Environmental Quality Act (CEQA), Public Resources Code section 21000 et seq. and California Code of Regulations, title 14, section 15000 et seq. (CEQA Guidelines). The calling of a municipal election is not a project within the meaning of CEQA Guidelines section 15378.

Further, the general tax proposed by this Resolution is a government funding mechanism that does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment, and thus adopting this Resolution is not a project under CEQA Guidelines section 15378(b)(4).

SECTION 7. SEVERABILITY. If any section, subsection, sentence, clause, phrase or portion of this Resolution or its application to any person or circumstance 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 this Resolution or its application to other persons and circumstances. The City Council hereby declares that it would have adopted this Resolution and each section, subsection, sentence, clause, phrase or portion thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, Council Regular Meeting, 3/3/2026, Item No. 13., Item Page 6, Packet Page 53 3 phrases, or portions be declared invalid or unconstitutional and, to that end, the provisions hereof are hereby declared to be severable.

SECTION 8. EFFECTIVE DATE. The City Clerk shall certify the adoption of this Resolution, which shall be effective upon its adoption, and shall give notice of the measure to be voted on in the manner provided by law.

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this ___ day of ____________, 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
______________________________
Mayor
ATTEST:
______________________________
City Clerk
Council Regular Meeting, 3/3/2026, Item No. 13., Item Page 7, Packet Page 54 1 ORDINANCE NO._________

AN ORDINANCE OF THE CITY OF MONTEREY

IMPOSING A GENERAL TAX ON THE USE OF PARKING FACILITIES THE PEOPLE OF THE CITY OF MONTEREY DO HEREBY ORDAIN as follows:

SECTION 1: AMENDMENT TO CODE. Article 10 is hereby added to Chapter 35 of the Monterey Municipal Code to read in its entirety as follows.

ARTICLE 10.

PARKING TAX
35-112. Definitions. As used in this Article, the terms below mean as follows.

Finance Director. The Finance Director of the City of Monterey or their designee.

Occupant. Any person who, for consideration, exercises occupancy or is entitled to occupancy in a parking facility.

Occupancy. The use, possession, or the right to use or possess any space for the parking or storage of a motor vehicle, motorcycle, or similar means of conveyance in a parking facility.

Operator. The person who is the proprietor of the parking facility, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, manager, valet service, or any other capacity. Where the operator conducts operations through a managing agent that is not an employee, that managing agent shall also be deemed an operator for the purposes of this Article and shall have the same duties and liabilities as the principal. Compliance with this Article by either the principal or such an agent shall be considered compliance by both.

Parking Facility. Any privately owned structure or other area, or any portion thereof located in the City, which is used for the parking or storage of motor vehicles, motorcycles, or similar means of conveyance, and for which any parking fee is charged.

Parking Fee. The consideration charged to an occupant, whether or not received, for occupancy in a parking facility, valued in money, whether to be received in money, goods, labor, or otherwise, including all receipts, cash, credits, property, or services of any kind or nature, without any deduction therefrom.
35-113. Parking tax imposed. For the privilege of occupancy in any parking facility in the City, each occupant is subject to and shall pay a tax of 8% of the parking fee charged by an operator. This tax is a debt owed by the occupant to the City, which is extinguished only by payment to an operator or to the City. An occupant shall pay the tax to an operator each time a parking fee is paid. If a parking fee is paid in installments, a proportionate share of the tax shall be paid with each installment. If for any reason the tax due is not paid to an operator of a parking facility, the Finance Director may require an occupant to pay such tax directly to the City.
35-114. Exemptions. The tax imposed by this Article shall not apply to:

Council Regular Meeting, 3/3/2026, Item No. 13., Item Page 8, Packet Page 55 2 A. Any person as to whom, or any occupancy as to which, it is beyond the City’s legal authority to impose this tax.

B. Any occupancy if the occupant is a transient in a visitor accommodation facility and either (1) the parking fee is included in the rent subject to the tax imposed pursuant to Article 3 of this Chapter, or (2) there is no parking fee for the occupancy, provided operators of both the visitor accommodation facility and the parking facility (if different) maintain proper records to accurately reflect the absence of a parking fee. For purposes of this subdivision, the terms “rent,” “transient,” “visitor accommodation facility,” and “operator” of a “visitor accommodation facility” have the meanings applied in Article 3 of this Chapter.

C. Any occupancy in a parking facility owned and operated by the City for public parking.

This exemption does not apply to a City-owned parking facility that is leased to or operated by a private party.

D. Any occupancy where the parking fee is paid to the City or its agent, such as at a parking meter or in a City-operated lot.

E. Any occupancy in a parking facility associated with residential premises, where the occupant is a resident of those premises for at least 30 consecutive calendar days, counting portions of calendar days as full days, and where the occupant’s right to occupancy is based on his or her status as such a resident. 35-115. Collection by operator. Each operator shall collect the tax imposed by this Article from every occupant to the same extent and at the same time as a parking fee is collected. The tax shall be stated separately from the parking fee charged, and each occupant shall receive a receipt for payment from the operator. No operator of a parking facility shall advertise or state in any manner, whether directly or indirectly, that the tax or any part thereof will be assumed or absorbed by the operator, or that it will not be added to the parking fee, or that, if added, any part will be refunded, except as provided in this Article. 35-116. Reporting and remitting of collections.

A. Each operator of a parking facility shall, on or before the 15th day of each month, remit the full amount of taxes collected for the previous month with a completed return on a form designated by the Finance Director. Returns are timely if received on or before the 15th or if postmarked by the 15th. If a due date falls on Saturday, Sunday, or a holiday, the due date will become the first working day thereafter. Failure of the Finance Director to designate a return form does not excuse an operator from the obligation to timely remit tax pursuant to this Article.

B. The Finance Director may establish shorter reporting periods for any parking facility if deemed necessary to ensure collection of the tax and may require further information in a return than specified here. The Finance Director may also require that an operator who is delinquent in payment of tax be placed on a direct deposit system with taxes deposited directly into the City’s bank account.

C. All taxes collected by an operator pursuant to this Article are public monies and the sole and separate property of the City upon collection and shall be received and held in trust for the City until paid to the City.

D. Whenever an operator ceases to operate or otherwise sells or disposes of parking facility, any tax payable to the City shall become due and payable within 10 days of cessation of business, and the operator shall make a report and pay the tax due by that Council Regular Meeting, 3/3/2026, Item No. 13., Item Page 9, Packet Page 56 3 day. If an operator fails to pay the tax due within 10 days of cessation of business, and the parking facility was sold or transferred to a successor, the successor shall be liable to the City for the tax due and any penalty. Either the seller or the purchaser may satisfy this tax obligation within 10 days of cessation of business, but the successor operator is ultimately responsible for the tax.
35-117. Penalties and interest.

A. Original Delinquency. Any operator who fails to timely remit any tax imposed by this Article shall pay a penalty of 10 percent of the tax in addition to the tax or the estimated tax.

B. Continued Delinquency. Any operator who fails to remit any delinquent taxes on or before 30 days after the taxes first became delinquent shall pay a second delinquency penalty of 10 percent of the sum of the tax and the 10 percent penalty first imposed.

C. Fraud. If the Finance Director determines that nonpayment of any remittance due under this Article is due to fraud, a penalty of 25 percent of the tax shall be added thereto, in addition to the penalties stated in Subdivisions (A) and (B) of this section.

D. Compound Interest. In addition to the foregoing penalties, any operator who fails to remit any tax imposed by this Article shall pay interest at the rate of 1 percent per month or fraction thereof, compounded, on the amount of the tax, exclusive of penalties, from the date the remittance first became delinquent, until it is paid.

E. Penalties. Every penalty imposed and such interest that accrues under the provisions of this section shall become a part of the tax required to be paid.

F. Audit Deficiency. If, upon audit by the City, an operator is found to be deficient in its return, its remittance, or both, the Finance Director shall invoice the operator for the amount of the deficiency plus a penalty of 10 percent. If the operator fails or refuses to pay the deficiency and applicable penalties within 30 days of the date of the invoice, an additional 10 percent penalty shall be added. In addition to the penalties imposed, any operator who fails to remit payment of such deficiencies within 30 days of the date of the invoice shall pay interest at the rate of 1 percent per month or fraction thereof, compounded, on the amount of the tax, exclusive of penalties from that 30th day until the sums due are paid.
35-118. Failure to collect and report tax; determination of tax by Finance Director.

A. If any operator fails or refuses to collect the tax imposed by this Article, or to make when this Article requires, any report and remittance of such tax or any portion thereof, the Finance Director shall proceed as they may deem best to obtain facts and information on which to estimate the tax due. The Finance Director shall determine and assess against such operator the tax, interest, and penalties this Article imposes. The Finance Director shall give a notice of the amount so assessed by serving it personally, by email, or by depositing it in the United States mail, postage prepaid, addressed to the operator at the last address known to the Finance Director.

B. Within 10 days after service of such notice, an operator may submit a request, in writing, to the Finance Director for a hearing. If the operator does not request a hearing within that time, the tax, interest, and penalties determined by the Finance Director shall become final and immediately due and payable. Such a failure to appeal will be a failure to exhaust administrative remedies.

Council Regular Meeting, 3/3/2026, Item No. 13., Item Page 10, Packet Page 57 4 C. If a request for hearing is made, the Finance Director shall give the operator not less than five days’ written notice as prescribed in this section of the time and place of the hearing before the Finance Director, or their designee. At such hearing, the operator may appear and offer evidence why such specified tax, interest, and penalties should not be imposed. A rebuttable presumption shall exist at the hearing that the amount assessed is correct, and the burden to rebut this presumption shall be on the operator.

After such hearing, the Finance Director shall determine the proper tax, penalties and interest to be remitted and shall thereafter give written notice to the operator as prescribed in this section of such determination and the amount due. The amount determined to be due shall be payable after 15 days unless an appeal is taken as provided below.
35-119. Appeals.

A. Any operator aggrieved by a decision of the Finance Director under Section 35-117 (Penalties and interest) or Section 35-118 (Failure to collect and report tax; determination of tax by Finance Director) may appeal to the Appeals Hearing Board by filing a written notice of appeal with the City Attorney’s Office within 15 calendar days of the service of the decision. All other decisions of the Finance Director with respect to this Article are final. The Clerk of the Board shall fix a time and place for hearing such appeal, and the City shall give notice in writing by serving it personally, by email, or by depositing it in the United States mail, postage prepaid, addressed to such operator at the last address known to the Finance Director.

B. At the hearing, the operator and the Finance Director shall have an opportunity to explain their case and introduce evidence. Formal rules of evidence do not apply in proceedings under this section, and the Board may consider any evidence or information deemed relevant and reasonably reliable. The decision of the Appeals Hearing Board shall be final and conclusive and shall be served upon the appellant as prescribed above for service of notice of hearing.

C. If the Board upholds the appeal, or a portion thereof, then within 30 days of the Board’s decision the City shall refund the deposited amount of the tax, interest or penalty as specified in the decision. Ane operator may seek judicial review of that decision pursuant to Sections 1094.5 and 1094.6 of the California Code of Civil Procedure. 35-120. Records, audits, and confidentiality.

A. No reports or statements from an operator shall be conclusive as to the matters set forth therein, nor shall the filing of such reports or statements preclude the City from collecting by appropriate action such sum as is actually due and payable. Each report or statement, and each of the items therein, shall be subject to audit and verification by the City or its authorized agents, who are hereby authorized to examine, audit, and inspect such books and records as may be necessary in their judgment to verify or determine the tax due.

B. The Finance Director is hereby authorized to issue written administrative warrants to any person who bears duties under this Article commanding production of documents and other information reasonably necessary to the enforcement of this Article. Alternatively, the Finance Director may employ any other lawful means to access and inspect the records of an operator who refuses to make such records available for inspection.

C. Every operator shall keep and preserve for a period of not less than four years all records as may be necessary to determine the tax, and those records shall be made available upon the City’s demand at all reasonable times. The records to be kept Council Regular Meeting, 3/3/2026, Item No. 13., Item Page 11, Packet Page 58 5 include, but are not limited to, records of admission on a daily basis by number and price, internal reports, bank deposits, and general ledgers. All such records shall be kept within the City or shall be produced within 10 working days of written notice at the business location within the City.

D. If records are not produced upon request, or such records cannot reasonably be audited, then tax, interest, and penalties will be levied based upon the average parking fee and occupancies for similar parking facilities within the City during the audit period. Further, and without limitation, any operator who does not produce records following written notice as set forth herein shall pay, as a civil penalty, in addition to any tax, penalty or interest, $100 per day for each business day the records are not produced for audit.

D. All tax returns, reports, audit findings, and any confidential or proprietary information furnished to or obtained by the City pursuant to this Article are and will remain confidential. Unauthorized disclosure or use of such information by any officer, agent, or employee of the City is a misdemeanor. Provided, this subdivision shall not apply to any disclosures made in connection with any hearing, appeal, or any civil or criminal action relating to the determination or recovery of the tax. Further, this section shall not prohibit disclosure of statistical or cumulative information that does not identify any particular taxpayer or operator, nor any disclosure compelled by order of any court or other tribunal with jurisdiction.
35-121. Refunds.

A. Whenever any tax, interest or penalty under this Article has been overpaid, paid more than once, or has been erroneously or illegally collected or received by the City, the overpayment may be refunded as provided in Subdivisions (B) and (C) of this section.

Provided, however, that a claim in writing must be filed in accordance with Section 1-

1.09 of this Code within a period of one year from the date of the claimed overpayment stating under penalty of perjury the specific grounds upon which the claim is founded and the amount claimed.

B. An operator may claim a refund, or take as credit against taxes collected and remitted, the amount overpaid, paid more than once, or erroneously or illegally collected or received, when it is established in a manner prescribed by the Finance Director that the person from whom the tax has been collected was not an occupant subject to tax.

Provided, however, that neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the payor or credited to parking fees subsequently payable by the payor to the operator.

C. A payor may obtain a refund of taxes overpaid, paid more than once, or erroneously or illegally collected or received by the City by filing a claim as provided in Subdivision (A) of this section, but only when the tax was paid by the payor directly to the City, or when the payor, having paid the tax to the operator, establishes to the satisfaction of the Finance Director that the payor has been unable to obtain a lawful refund from the operator who collected the tax.
35-122. Condition precedent for administrative, legal, or equitable claims. No person may commence or maintain any proceeding, or assert any administrative, legal or equitable claim of any kind, whether affirmatively or by defense, against the City challenging or disputing in any way the imposition, assessment, or collection of any tax, interest, or penalty imposed under this Article, unless the person first deposits with the City the full amount of any tax, interest or penalty imposed or assessed or otherwise challenged or claimed to be in dispute.

Only after payment of the full amount of any tax, including interest and any penalties assessed or imposed, claimed to be illegal or otherwise improper, may a person maintain an action to Council Regular Meeting, 3/3/2026, Item No. 13., Item Page 12, Packet Page 59 6 recover the tax and other amounts paid and in dispute, with interest, in such manner as provided by law and after exhausting the administrative remedies provided by this Article. 35-123. Collection by court action.

A. Any tax imposed under this Article shall be deemed a debt owed by the occupant to the City until paid.

B. Failure of an operator to collect tax shall not excuse the occupant or the operator from complying with this Article. Any tax collected by an operator that has not been paid to the City shall be deemed a debt the operator owes the City. Any tax required to be paid by any occupant that is not collected by the operator is deemed a debt owed by the operator to the City.

C. Any person owing money to the City under the provisions of this Article shall be liable to an action brought in the name of the City to recover such amount.

D. If any amount required to be paid to the City under this Article is not paid when due, the Finance Director may, within four years after the amount is due, file an action to collect any unpaid amount and seek a judgment to enforce collection of the debt. All lawful means of judgment collection shall be available to the Director of Finance, including but not limited to a lien on real property.

E. Although the City may enforce the tax, penalties and interest due under this chapter against some or all of an occupant or any operator, no sum shall be collected more than once.
35-124. Powers and Duties of Finance Director
The Finance Director shall have the power and duty, and is hereby directed, to enforce each and all of the provisions of this Article. The Finance Director shall have the power to adopt rules and regulations not inconsistent with the provisions of this Article for the purpose of carrying out and enforcing the provisions of this Article. A copy of any such rules and regulations shall be on file and available for public examination in the Finance Director’s office. 35-125 Violations. Any person violating any provision of this Article shall be subject to administrative citations as provided by Section 1-2.00, et seq. and to any other remedy specified in this Code or available at law or in equity. No election of remedies shall apply.

SECTION 2: GENERAL TAX. The tax imposed by this Ordinance is a general tax pursuant to Article XIII C, section 2 of the California Constitution. Its proceeds shall be placed into the City’s General Fund and may be used for any lawful government purposes.

SECTION 3: AMENDMENTS. The City Council of the City of Monterey may amend this Ordinance, without voter approval, in any manner that does not constitute a tax increase requiring voter approval pursuant to Article XIII C of the California Constitution.

SECTION 4: CEQA. This Ordinance is not subject to review under the California Environmental Quality Act. (Pub. Resources Code, § 21000 et seq.) It concerns a government funding mechanism that does not commit to any specific project which may result in a potentially significant physical impact on the environment, and it can be seen with certainty that there is no possibility that adopting the tax at issue, in itself, may have a significant effect on the environment. (14 CCR §§ 15061(b)(3), 15378(b)(4).)
Council Regular Meeting, 3/3/2026, Item No. 13., Item Page 13, Packet Page 60 7 SECTION 5: SEVERABILITY. If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid, the remainder of the Ordinance and the application of such provision to other persons or circumstances shall not be affected thereby and, to that end, the provisions of this Ordinance are hereby declared to be severable.

SECTION 6: EFFECTIVE DATE. This Ordinance relates to the levying and collecting of a tax and shall take effect immediately if it is approved by a simple majority of the City’s voters in the election to be held June 2, 2026.

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this ___ day of ____________, 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:
______________________________
Mayor
ATTEST:
______________________________
City Clerk
Council Regular Meeting, 3/3/2026, Item No. 13., Item Page 14, Packet Page 61 Council
Agenda Report
№12/25
FROM: Andrea Renny, PE, Public Works Director
Prepared By: Rebecca Baggott, Environmental Regulations Analyst SUBJECT: Reauthorize Initiation of a Proceeding to Obtain Voter Approval of the City’s Stormwater Fee at a Lower Rate to Mitigate Flood Risks and Reduce Pollutants in Stormwater Runoff Into the Monterey Bay and Adopt Procedures for the Submission and Tabulation of Protests in Connection with Rate Hearings Conducted Pursuant to the California Constitution (Proposition 218) (Not a Project Under CEQA per Article 20, Section 15378 and Under General Rule Article 5, Section 15061)
RECOMMENDATION:

That the City Council adopt a resolution to reauthorize the initiation of a proceeding to obtain voter approval of the city’s stormwater fee at a lower rate and adopt ballot procedures for the submission and tabulation of protests in connection with rate hearings conducted pursuant to
the California Constitution (Proposition 218) to help
develop and maintain structures to mitigate flood risks and reduce pollutants in stormwater runoff into the
Monterey Bay.

VALUE DRIVERS:

Serve as stewards of the City's financial resources
through sound economic vitality efforts, streamlining
operations, reasonable revenue enhancements,
visionary long-term planning, fiscal transparency, and
community partnerships.

Foster a local government that is transparent and
collaborative; and solicits, welcomes and appreciates
input from all.

POLICY IMPLICATIONS:

This action advances the City Council’s strategic
initiatives related to long-term infrastructure planning, regulatory compliance, and ensuring a sustainable
funding approach for essential public services.

Establishing a dedicated stormwater funding source
would help ensure mandatory regulatory obligations are
met while preserving General Fund capacity for other critical City services and priorities.

Agenda Report Highlights
• The City Council aims to reauthorize
a lower stormwater utility fee of
$4.81/month for medium singlefamily residences to address flood risks and reduce pollutants in
Monterey Bay.
• The proposed fee structure is
expected to generate $904,000
annually, covering two-thirds of
stormwater program costs and
reducing reliance on the General
Fund.
• A public survey revealed insufficient
support for the original $7.72/month
fee, prompting a reduced rate to
increase approval likelihood.
• The fee structure is based on
property impervious surface area,
ensuring equitable distribution of
costs across property types.
• A 45-day public protest period and
ballot proceeding will be conducted
to seek voter approval for the new
fee under Proposition 218.

Date: 3/3/2026
Item No.: 14.

Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 1, Packet Page 62 №11/25
CAMPAIGN DISCLOSURE REQUIREMENT (LEVINE ACT) APPLIES: No.

FISCAL IMPLICATIONS:

If Council approves this action, there is no additional direct cost to the City. The cost of preparing and mailing the ballot procedures is already budgeted and included in the Consultant’s professional service agreement scope of services for the Storm Drain Master Plan and Stormwater Utility Rate Study Agreement.

The City currently has no dedicated revenue source for its stormwater program. Stormwater regulatory compliance, operations, maintenance, and capital needs are funded through the General Fund, which is insufficient to meet ongoing program requirements. The Stormwater Fund balance is projected to be depleted in FY 2026/27. Without establishment of a stormwater utility fee, the General Fund will need to continue subsidizing stormwater operations and compliance at approximately $1.34 million annually.

The proposed revised stormwater utility fee is estimated to generate $904,000 annually, which would only provide two-thirds funding for stormwater operations and maintenance. While this revenue would significantly reduce reliance on the General Fund compared to current conditions, it would not fully cover projected operating costs and would require an estimated $452,000 in continued General Fund subsidies to support stormwater program activities and regulatory compliance.

The dedicated funding would support stormwater system operations, maintenance, and regulatory compliance, while reducing the burden on the General Fund.

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 to cause 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.

ALTERNATIVES CONSIDERED:

Council could choose to proceed with the original proposed rate to fully cover the costs of the stormwater operations and maintenance. However, this alternative was not recommended by the consultant because the public survey results showed there was not a majority support for the proposed fee ($7.72 for medium single-family residence baseline) from residents who participated.

Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 2, Packet Page 63 №11/25
DISCUSSION:

Stormwater Survey and Need for Funding
At the January 28, 2026, Special Meeting, City Council received a comprehensive presentation on the stormwater utility fee and directed staff to initiate the process for stormwater fee adoption. The presentation included detailed findings from the community survey conducted from November to December 2025. The survey is attached as Attachment 4 to this report, and the results received as Attachment 5. The survey received a 23.8% response rate (976 responses out of 4,110 surveys mailed) and tested support for a stormwater utility fee of $7.72 per month ($92.64 annually for a medium single-family residence baseline). Results showed

42.9% support (15.0% “Definitely Yes” and 27.9% “Probably Yes”) and 57.1% opposition (14.7% “Probably No” and 42.5% “Definitely No”), falling short of the 50% threshold needed for approval under Proposition 218. Since then, Staff has had several discussions with the Consultants who administered the survey and have been advised to reduce the rate based on the survey results.

The survey also identified community priorities for stormwater investments, with flood protection, environmental protection (trash and pollution prevention), climate adaptation, and drain maintenance ranking as top concerns.

The City of Monterey operates and maintains a comprehensive stormwater system that protects public and private property from flooding, reduces pollution entering Monterey Bay and local waterways, and ensures compliance with state and federal water quality regulations under the Municipal Separate Storm Sewer System (MS4) NPDES permit.

Unlike the sanitary sewer system, the stormwater system does not have a dedicated funding source and relies on the General Fund. These services must compete with other General Fund priorities, which constrains the City’s ability to address aging infrastructure, increasing regulatory requirements, and emerging challenges such as sea level rise and more frequent and intense storm events. As a result, staff have been evaluating long-term funding strategies to support the stormwater program and ensure its continued effectiveness.

Currently, the City's Stormwater Fund balance is projected to be depleted in FY 2026/27.

Without a dedicated funding source, stormwater operations and regulatory compliance costs, estimated to be $1.34 million annually, must be funded through the General Fund. This creates ongoing fiscal constraints and limits the City's ability to meet increasing state and federal water quality requirements and maintenance of stormwater infrastructure to address drainage and flooding issues.

Additionally, while Measure S funds can support some stormwater capital projects, they cannot be used for operations, maintenance, or permit compliance activities. Measure S is also set to sunset in March 2027 if not renewed by voters.

Proposed Stormwater Fee Structure
Based on a comprehensive Fee Study analysis conducted by SCI Consulting Group updating the cost-of-service analysis performed by Bartle Wells and Associates, the consultants are recommending a proposed revised stormwater utility fee of $4.81 per month ($57.72 annually) for a medium single-family residence. This fee level is designed to provide two-thirds partial operating cost recovery while balancing affordability considerations informed by the community Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 3, Packet Page 64 №11/25
survey results, which indicated that the higher $7.72 monthly rate for a medium single-family residence tested in the survey did not achieve sufficient community support.

The fee structure is based on the Single-Family Equivalent (SFE) methodology, which calculates fees proportionally based on a property's impervious surface area (such as rooftops and pavement). This approach ensures fee equity across different property types and land uses, as required by Proposition 218.

The fee structure establishes the $4.81 monthly rate for a medium single-family residence as the baseline, defined as one SFE. All other property categories are charged proportionally based on their impervious surface area relative to this benchmark.

Table 1. Stormwater Fee Schedule
This proportional approach ensures that each property pays its fair share based on the stormwater runoff it generates, which is directly related to the amount of impervious surface on the property.

Revenue Generation and Funding Gap
The revised proposed fee structure is designed to generate approximately $904,000 in annual revenue in the first year of implementation. While this represents a significant dedicated revenue source for the stormwater program, it only provides partial operating cost recovery and would not fully fund all projected operations, maintenance, and regulatory compliance activities.

Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 4, Packet Page 65 №11/25
Based on the FY 2026/27 budget projections, the City's stormwater operations and maintenance costs are estimated at $1.34 million annually. The proposed revised fee revenue, combined with existing miscellaneous stormwater revenues (approximately $54,000 annually from review fees and other sources), would considerably reduce, but not eliminate, the General Fund subsidy currently required to support the stormwater program. While ideally the fee would support the entirety of the operations and maintenance cost, the consultant stressed the fact that the community survey did not meet the support necessary for the fee to be approved. If this fee was not approved by property owners, the General Fund would then bear the full burden of operations and maintenance. The consultant is recommending a lower fee set to two thirds the program costs to increase support and the likelihood that the fee is successful.

With the proposed fee structure, the ongoing General Fund subsidy needed to support stormwater operations would be reduced from approximately $1.34 million annually to approximately $440,000 annually. This represents a substantial reduction in the burden on the General Fund while maintaining program services and regulatory compliance.

The fee structure includes an annual adjustment mechanism tied to the Consumer Price Index (CPI) for the San Francisco Bay Area. This escalator helps ensure that revenues keep pace with rising operational costs over time, though even with CPI adjustments, some level of General Fund support may continue to be needed in future years, depending on cost growth and program requirements.

Stormwater Utility Fee Report
A fee report is necessary to meet Proposition 218 requirements and must be based on the final stormwater fee rate proposed in the mailed ballot proceeding. The Stormwater Fee Report (Attachment 3) completed by SCI serves as the basis for the Proposition 218 Property Related Fee Balloting. The revenues required to fund the stormwater operations and maintenance are approximately $1.34 million.

Based on the overall stormwater needs and community priorities and support levels, it is recommended that a FY 26-27 revenue stream of $904,000 be used as a basis of the proposed rate structure with a $4.81/month fee for a medium single-family residence. The Stormwater Fee Report illustrates that although the revenue falls short of funding the operations and maintenance of the stormwater program in full, it can support over two thirds of the program’s operational needs, and when combined with a General Fund funding of approximately $440,000, the total would fully fund the program’s operations. This revenue requirement has the following advantages:

Rate Structure
The goal of implementing the stormwater rate is two-fold. First, to address the operating service level and regulatory needs as described in the Stormwater Fee Report; and second, to ensure that the fee charged continues to reflect how properties within the City interact with the stormwater infrastructure. The proposed rate structure uses surveys and GIS data analysis conducted on property types, sizes and characteristics to develop a basic unit of measure, the single-family equivalent or “SFE” unit. This basic unit of measure is then used to calculate the units of measure for all types of land uses.

The annual revenue requirement for the utility is divided by the total SFEs to calculate the peryear and per-month cost for each SFE. The per-month, per SFE cost is then multiplied by the Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 5, Packet Page 66 №11/25
SFEs per parcel or per acre, for each land use category, to determine the stormwater rate for that parcel. The proposed rates included in the Stormwater Fee Report are summarized below.

Rate Credits: Low Impact Development
The City’s Stormwater National Pollutant Discharge Elimination System permit requires that certain properties be designed to capture stormwater onsite, reducing runoff and pollutants from entering the stormwater system. This type of design, also known as low impact development (LID), reduces a parcel’s stormwater runoff, which in turn reduces the interaction of that parcel with the stormwater infrastructure. As part of the Stormwater Fee Report, parcels that meet the strict criteria for LID would receive a 25% credit towards their stormwater fee.

Ballot Procedures
Notwithstanding Government Code section 53750(k), which was amended in 2018 to include stormwater in the definition of sewer to make stormwater fees exempt from the voter approval process, the recommended procedural process to avoid a legal challenge is: 1) a 45-day public protest period culminating in a public hearing, and 2) a ballot proceeding whereby it must be approved by a 50% simple majority of property owners (or a two-thirds supermajority of registered voters) voting before new or increased fees could be authorized.

For property-related stormwater utility fees the electorate are property owners, not residents. A ballot is mailed to each property owner of record. The ballot period is closed 45 days from ballot mailing, and ballots are tabulated. The City may use a vendor to assist with the ballot tabulation, and if a vendor is used, the ballots will be unsealed and tabulated in public view at the conclusion of the hearing so that any interested persons can monitor the process. Following the ballot tabulation, Council will certify the results and if is approved by the voters Council will authorize the fees.

City Code section 1-4.00 establishes a clear and robust process for customers to raise questions, concerns, comments, and criticisms of a proposed rate structure. It outlines a clearly defined process that a ratepayer must follow to contest the fee.

AR/rb
Attachments: 1. Resolution Authorizing Obtaining Voter Approval of Stormwater Fee

2. Resolution Adopting Proposition 218 Protest Procedures

3. Stormwater Utility Fee Study Report

4. Stormwater Survey

5. Stormwater Survey Results

6. Stormwater Fee Schedule to Fully Cover the Costs
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.gov/Submitted-Comments
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 6, Packet Page 67 RESOLUTION NO. __-___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№011/24

REAUTHORIZING INITIATION OF A PROCEEDING TO OBTAIN VOTER APPROVAL FOR THE CITY’S PROPOSED STORMWATER FEE AT A LOWER RATE
WHEREAS, the City of Monterey operates and maintains a stormwater system that protects public and private property from flooding, reduces pollution entering Monterey Bay and local waterways, and ensures compliance with state and federal water quality regulations under the Municipal Separate Storm Sewer System (MS4) NPDES permit; WHEREAS, the City’s Stormwater Fund balance is projected to be depleted in FY 2026/27, and without a dedicated funding source, stormwater operations and regulatory compliance costs must be funded through the General Fund; WHEREAS, projected operating costs and regulatory compliance for the stormwater system are approximately $1,343,000 annually, not including capital improvements, trash capture projects, or pipeline renewal and replacement;
WHEREAS, funding stormwater operations through the General Fund creates ongoing fiscal constraints and limits the City’s ability to meet increasing state and federal water quality requirements, maintain aging infrastructure, and respond to climate-related challenges; WHEREAS, Proposition 218, codified in Article XIII D of the California Constitution, requires that fees cannot exceed the cost of service, must be fair and equitable, and are based on the actual cost of providing the entire service, with each customer charged their proportional cost of service attributable to the property;
WHEREAS, the California Constitution requires (1) written notice; (2) a public hearing; and (3) a protest process before establishing or increasing the rate of a property-related fee; WHEREAS, the City Council authorized staff to conduct a comprehensive Stormwater Utility Fee Study to develop proposed rates to recover costs, and the initial proposed rates are based on that fee study to fully fund all projected operations, maintenance, and regulatory compliance activities;
WHEREAS, the City conducted a community survey to test the community support of a stormwater utility fee that fully funds all projected operations, maintenance, and regulatory compliance activities and the results showed less than 50% of responders supported the proposed fee;
WHEREAS, based on the survey results, the Consultants who administered the survey have recommended a reduced rate set to two thirds of the total costs; WHEREAS, the revised stormwater utility fee revenue would fall short of funding the operations and maintenance of the stormwater program in full, it can support over two thirds of the program’s operational needs;
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 7, Packet Page 68 WHEREAS, the stormwater utility fees are not imposed unless the stormwater service is used by, or immediately available to, the owner of the property subject to the fee; and WHEREAS, the City of Monterey has 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.

NOW, THEREFORE, BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF MONTEREY that it hereby directs staff to initiate proceedings for the approval of a stormwater utility fee and approves the Stormwater Fee Report.

PASSED AND ADOPTED BY THE COUNCIL OF THE CITY OF MONTEREY this 3rd day of March, 2026, by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

APPROVED:

ATTEST:

Mayor of said City
City Clerk thereof
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 8, Packet Page 69 RESOLUTION NO. __-___ C.S.

A RESOLUTION OF THE COUNCIL OF THE CITY OF MONTEREY
№011/24
435257.1

ADOPTING PROCEDURES FOR THE SUBMISSION AND TABULATION OF PROTESTS IN

CONNECTION WITH RATE HEARINGS CONDUCTED PURSUANT TO ARTICLE XIIID, SECTION 6, SUBDIVISION (a) OF THE CALIFORNIA CONSTITUTION (PROPOSITION 218)
WHEREAS, Proposition 218 was approved by California voters on November 5, 1996, adding Articles XIIIC and XIIID to the California Constitution; WHEREAS, Articles XIIIC and XIIID of the California Constitution impose certain procedural and substantive requirements relating to assessments (as defined); WHEREAS, Article XIIID, section 6 of the California Constitution requires the City of Monterey (the “City”) to consider written protests prior to adopting or increasing certain propertyrelated fees; WHEREAS, this constitutional provision does not offer specific guidance as to who is allowed to submit protests, how written protests are to be submitted, or how the City is to tabulate the protests;
WHEREAS, the City Council has the authority to adopt procedures to be followed when notice of a public hearing regarding adoption or increase of property-related fees has been given by the City pursuant to Article XIIID, section 6, subdivision (a) of the California Constitution;
WHEREAS, the City Council believes it to be in the best interest of the City and its property owners to confirm and memorialize the City’s procedures regarding implementation of the provisions of Proposition 218 and pertinent statues; and WHEREAS, the City of Monterey has 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.

NOW, THEREFORE, THE COUNCIL OF THE CITY OF MONTEREY HEREBY RESOLVES AS FOLLOWS:

Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 9, Packet Page 70 435257.1
SECTION 1. The City Council hereby finds the above recitals true and correct and they are hereby incorporated and adopted as findings of the City Council as if fully set forth herein.

SECTION 2. Statement of Legislative Intent. In adopting this resolution, it is the City Council’s intent to adopt procedures that are consistent and in compliance with Articles XIIIC and XIIID of the California Constitution and with California Government Code sections 53750 through 53758 (the “Proposition 218 Omnibus Implementation Act”). It is not the intent of the Council to vary in any way from the requirements of either the California Constitution or the laws of the State of California. If there is any inconsistency between a provision of this resolution and state law, state law will govern.

Further, the procedures set forth in this resolution are in addition to, and do not displace, the requirements to exhaust administrative remedies in Section 1-4.00 of the City’s Code. The protest procedure at issue in this resolution concerns the approval of a property related fee subject to Article XIII D of the California Constitution, not a claim regarding that fee’s legality.

The exhaustion procedure in Section 1-4.00 concerns the claim that a given revenue measure is unlawful.

SECTION 3. Definitions. Unless the context plainly indicates another meaning was intended, the following definitions shall apply in construction of these guidelines.

A. “Parcel” means a County Assessor’s parcel the owner or occupant of which is subject to the proposed fee that is the subject of the hearing.

B. “Record owner” or “parcel owner” means the person or persons whose name or names appear on the County Assessor’s latest equalized assessment roll as either the owner or tenant of a parcel.

C. “City Clerk” means the City Clerk of the City of Monterey or the City Clerk’s designee as identified in the notice of the proposed charges.

SECTION 4. Notice.

A. The City shall comply with the procedures set forth in City Code section 1-4.00(d).

B. The City shall provide notice of the proposed charges and public hearing via U.S. mail to all record owners at least 45 days prior to the public hearing.

C. The notice shall contain the following information:
(i) The date, time, and place of the public hearing;
(ii) The reason for the rate increase;
(iii) The duration of the rate increase;
(iv) The amount to be charged to the record owner’s parcel or parcel category; (v) The basis upon which the amount of the rate was calculated; (vi) Clear and accurate instructions on how to submit a timely written protest; and (vii) A statement that the lack of a majority protest will result in the fee being imposed.

D. A record owner’s failure to receive a notice shall not invalidate the proceedings conducted under this section and Article XIIID, Section 6 of the California Constitution.

Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 10, Packet Page 71 435257.1
SECTION 5. Protest Submittal.

A. Any record owner who is subject to the fee that is the subject of the public hearing may submit a written protest by:
• Personal delivery to the secure drop box across from the accessible entrance to the Council Chamber, City Hall, 580 Pacific Street, Monterey, CA 93940, with the envelope clearly marked “Attention: Prop 218 Protest”; or • Mail to the Office of the City Clerk, Attention: Prop 218 Protest, 580 Pacific Street, Monterey, CA 93940; or
• Personally submitting the protest at the public hearing.

B. Protests must be received prior to the end of the public hearing, including those mailed to the City or personally delivered. No postmarks will be accepted; therefore, any protest not actually received by the close of the hearing, whether or not mailed prior to the hearing, shall not be counted.

C. Written protests in other forms such as email, fax, photocopy, social media, etc. shall not be counted.

D. Although oral protests at the public hearing shall not qualify as a formal protest unless accompanied by a written protest, the City welcomes input from the community during the public hearing on the proposed changes.

SECTION 6. Protest Requirements.

A. A written protest must include:
(i) A statement that it is a protest against the proposed charge that is the subject of the hearing;
(ii) Name of the record owner who is submitting the protest and the parcel number of the property;
(iii) Identity, by street address or parcel number (APN), of the parcel with respect to which the protest is made; and
(iv) Original signature and legibly printed name of the record owner who is submitting the protest. The City Clerk may exercise discretion to accept an alternative that reasonably establishes the record owner’s identity if an accommodation is necessary.

B. Protests shall not be counted if any of the required elements (i through iv) outlined in the preceding subsection A are omitted.

SECTION 7. Protest Withdrawal. Any record owner who submits a protest may withdraw it by submitting to the City Clerk a written request that the protest be withdrawn. The withdrawal of a protest shall be submitted before the close of the public hearing and contain sufficient information to identify the affected parcel and the name of the record owner who submitted both the protest and the request that it be withdrawn.

SECTION 8. Multiple Record Owners.

A. Each record owner of a parcel served by the City may submit a protest. This includes instances where:
(i) A parcel is owned by more than a single record owner or more than one name appears on the property tax roll; or
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 11, Packet Page 72 435257.1
(ii) Multiple parcels are served via a single utility account, as master-metered multiple family residential units.

B. Only one protest will be counted per parcel as provided by Government Code section 53755(b).

SECTION 9. Ownership Disputes. In the event of a dispute regarding the ownership of a parcel, the City will make such determination from the official County Assessor records and any evidence of ownership submitted to the City prior to the conclusion of the public hearing. The City will be under no obligation to obtain or consider any other evidence as to ownership of property and its determination of ownership shall be final and conclusive.

SECTION 10. Tabulation of Protests.

A. Any protest that was delivered or mailed in an envelope shall remain sealed until tabulation commences, provided that the envelope was received sealed and properly marked as required in Section 5, Protest Submittal. Once a protest is opened during tabulation, it becomes a disclosable public record, as required by state law.

B. At the public hearing, the City Clerk may report to the City Council the number of protests received prior to the hearing.

C. Following the conclusion of the public hearing, the City Clerk may report to the City Council the total count of protests received.

D. Following the conclusion of the public hearing, if the number of protests received is obviously substantially fewer than the number required to constitute a majority protest, the City Clerk may determine the absence of a majority protest without opening the envelopes in which protests are returned.

E. Following the conclusion of the public hearing, the City Clerk does not determine the absence of a majority protest based on the number of protests received, then at its discretion the City Council may order by majority vote that the tabulation either:
(i) take place immediately, or
(ii) be continued to a different time or different location, which shall be announced at the time of the majority vote. Such continuation shall be conducted in an accessible location where interested members of the public may observe the tabulation. Following tabulation, the City Clerk shall bring her/his final protest determination to the City Council for action at the next regular or special meeting.

F. The City Clerk shall oversee the tabulation of the protests and may be assisted by City staff members and/or technical staff from a third party. The City Clerk shall follow the rules and procedures of the laws of the State of California, this resolution, and any other rules and procedures of the Council or the City.

G. The City Clerk shall not accept as valid any protest if she or he determines that any of the following is true:
(iii) The protest does not state its opposition to the proposed charges. (iv) The protest does not name the record owner of the parcel identified in the protest as of the date of the public hearing.
(v) The protest does not identify a parcel served by the City that is subject to the proposed charge.
(vi) The protest does not bear an original signature of the named record owner with respect to the parcel identified on the protest. Whether a signature is valid shall Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 12, Packet Page 73 435257.1
be entrusted to the reasonable judgment of the City Clerk, who may consult signatures on file with the County Elections Official.
(vii) The protest was altered in a way that raises a fair question as to whether the protest actually expresses the intent of a record owner to protest the charges. (viii) The protest was not received by the City Clerk before the close of the public hearing on the proposed charges.
(ix) A request to withdraw the protest was received prior to the close of the public hearing on the proposed charges.

SECTION 11. City Clerk’s Decisions Final. The City Clerk’s decision, in consultation with the City’s legal counsel, that a protest is not valid shall constitute a final action of the City and shall not be subject to any internal appeal.

SECTION 12. Majority Protest.

A. A majority protest exists if written protests are timely submitted and not withdrawn by the record owners of a majority (50% plus one) of the parcels subject to the proposed charge.

B. The number of parcels at the time that notices were issued shall control in determining whether a majority protest exists.

C. If a majority protest is received, the City Council shall not impose the rate increase.

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, 3/3/2026, Item No. 14., Item Page 13, Packet Page 74 Fee Report
City of Monterey
Storm Water Utility Rate Study
February 2026
ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 14, Packet Page 75 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026
Page ii
City of Monterey - Acknowledgements
City Council
Tyller Williamson, Mayor
Kim Barber
Gino Garcia
Jean Rasch
Ed Smith
Senior Staff
Lew Bauman, Interim City Manager
Andrea Renny, Director of Public Works
Rafaela King, Finance Director
Andrew Easterling, Deputy Public Works Director, City Engineer Consultant Team (G7EI INC (G7), Akel Engineering Group, Inc. (Akel), Bartle Wells & Associates (BWA), SCI Consulting Group (SCI))
Chris Coulter, Senior Consultant (SCI), Project Manager John Bliss, President (SCI)
Paul Greenway, President (G7)
Tony Akel, President (Akel)
Erik Helgeson, Vice President (BWA)
ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 15, Packet Page 76 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026
Page iii
Table of Contents
Introduction and Executive Summary..........................................................................6 Background ................................................................................................................................6 Facilities and Services.................................................................................................................9 Report Organization...................................................................................................................9 Financial Needs and Revenue Requirement...............................................................10 Introduction to Revenues and Costs........................................................................................10 Annual Revenue Requirement.................................................................................................12 Evaluation of Funding Options..................................................................................13 Summary of Funding Options ..................................................................................................13 Balloted Property-Related Fee - Recommended Option.........................................................17 Legal Requirements of Property-Related Fees........................................................................18 Proposed Rate Structure Analysis and Determination ...............................................20 Single-Family Residential Parcels as Benchmark .....................................................................20 Non-Single-Family Residential Parcels.....................................................................................22 Rate Credits..............................................................................................................................25 Summary of SFEs and Revenues by Rate Category..................................................................26 Storm Water Fee Calculation ...................................................................................................27 Billing Methodologies ..............................................................................................................28 Annual Cost Indexing ...............................................................................................................28 Management and Use of Stormwater Funds...........................................................................29 Appendices...............................................................................................................30 Appendix A – Stormwater Rates in Other Cities......................................................................31 Appendix B – Rate Credit Basis................................................................................................33 Appendix C – Funding Options.................................................................................................37 List of Tables
Table 1 – Summary of Revenues ....................................................................................................11 Table 2 – Summary of Operations & Maintenance and CIP Costs.................................................11 Table 3 – Estimate of Annual Revenue Requirement.....................................................................12 ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 16, Packet Page 77 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026
Page iv
Table 4 - SFE Summary for Single-Family Residential Parcels........................................................22 Table 5 - SFE Summary for Non-Single-Family Residential Parcels................................................23 Table 6 – Summary of Parcels, Acreage, and SFEs by Rate Category.............................................26 Table 7 –Stormwater Fee Schedule................................................................................................27 Table 8 – Recent Stormwater Fee Ballot Measures & Outcomes..................................................31 Table 9 – Samples of Stormwater Rates Around the State ............................................................32 ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 17, Packet Page 78 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026
Page v
List of Figures
Figure 1 – Funding Types................................................................................................................14 Figure 2 – Balloted Funding Mechanisms.......................................................................................15 ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 18, Packet Page 79 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 6 ends

Introduction and Executive Summary
Background
City of Monterey’s Storm Drainage System
The City of Monterey was incorporated in 1889 and operates and maintains a municipal storm drainage system as authorized under California Government Code Sections 38900 and 38901.

Through its Public Works Department, the City undertakes essential activities to prevent flooding, protect water quality, and ensure compliance with state and federal regulatory requirements. The City’s storm drainage system is complex and geographically varied, consisting of approximately 44 miles of infrastructure that includes storm drain pipes, inlets, culverts, channels, pump stations, basins, and outfalls that discharge into Monterey Bay and its connected creeks and lakes.

In addition, the system includes structural and non-structural best management practices (BMPs) such as bioretention facilities, sediment traps, and full trash capture systems installed to comply with water quality mandates.

Monterey’s storm drainage system has evolved in response to its unique topography and coastal setting. The City’s 5,568-acre jurisdiction extends along 3.5 miles of Monterey Bay shoreline and encompasses several small coastal watersheds that drain directly to the bay, as well as portions of the Canyon Del Rey Creek watershed. For stormwater planning purposes, the City divides its drainage into distinct basins: Canyon Del Rey, Laguna Grande/Roberts Lake, Del Monte Lake, El Estero Lake, Ryan Ranch basin, and Monterey Highlands/Upper Residential basins, each with unique hydrologic characteristics and infrastructure needs. Because these watersheds discharge into the federally protected Monterey Bay National Marine Sanctuary, the City’s stormwater management responsibilities extend beyond flood prevention to include the protection of water quality and marine habitats.

The City’s stormwater program integrates operations and maintenance, capital planning, environmental compliance, and public education. These activities are necessary to maintain the City’s network of stormwater conveyance and treatment facilities, protect property from flooding, and preserve the ecological health of Monterey Bay. Throughout the City’s growth up to the early 1990s, the stormwater system was primarily viewed as a drainage network designed to collect rainwater and convey it away from developed areas. However, beginning in the early 1990s the City was required to comply with newly enacted environmental laws that evolved over the past three decades into a comprehensive set of regulations, embodied by the NPDES General Permit for Waste Discharge Requirements for Storm Water Discharges from Small MS4 Phase II Permit.

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 19, Packet Page 80 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 7 ends

In 2003, the Central Coast Regional Water Quality Control Board issued to the City of Monterey its first MS4 Permit under the federal Clean Water Act. This permit has been renewed and updated several times, most recently through the State Water Resources Control Board’s 2013 Phase II MS4 Permit, which remains the principal regulatory framework governing the City’s stormwater program. The permit regulates stormwater and non-stormwater discharges from the City’s storm drainage system and requires implementation of key program elements addressing water quality protection, trash control, and lowimpact development. Under these regulations, the City is required to reduce trash discharge, implement full capture systems, and maintain stormwater facilities in a manner consistent with the Clean Water Act’s objectives and the Central Coast Regional Water Quality Control Board’s standards. Over time, the range of required actions and level of effort have expanded in response to evolving state mandates and community expectations. To comply with the MS4 Permit and the State’s Trash Amendments, the City has adopted a Storm Water Ordinance, prepared a Storm Drainage Maintenance Plan, and implemented a Track 2 Trash Control Implementation Plan that define maintenance priorities, regulatory compliance pathways, and adaptive management strategies to meet the State’s Full Capture System Equivalency (“FCSE”) standards. These documents define the City’s compliance framework, outlining the actions, schedules, and performance measures necessary to maintain water quality and ensure that stormwater discharges to Monterey Bay meet state and federal requirements. The associated compliance workload is incorporated into the City’s ongoing operations and maintenance activities, and the resulting costs are included within the overall O&M budget presented in this report.

Over the past three decades, stormwater management has shifted from a system focused primarily on flood control to one that integrates water quality protection, habitat management, and regulatory compliance. This evolution, driven by environmental regulations such as the NPDES permits and the State’s Trash Amendments, has significantly expanded the scope and complexity of municipal stormwater programs. Collectively, these requirements have changed how the City and property owners approach land use decisions. This new paradigm has placed stormwater management at the forefront of land use practices, on par with other community priorities such as transportation, housing, and major utility services. As a result, many municipalities across the state and nation are now considering stormwater to be a major utility.

Stormwater Funding Background
The City, with a population of 29,015, is a full-service municipality providing police, fire, library services, public works, engineering, parks and recreation, and community development. As the scope of the City’s stormwater responsibilities has grown, so have the associated costs.

Historically, Monterey has funded its stormwater activities through a combination of General ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 20, Packet Page 81 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 8 ends

Fund revenues, grant funding, special project allocations, and a limited portion of revenues from the City’s one percent sales tax measures, Measure P and its successor, Measure S, which is set to sunset in 2027. For several years, the City also collected stormwater utility management fees under City Ordinance No. 3126 to help offset program expenses; however, collection of this fee concluded after Fiscal Year 2023-24. Unlike the City’s other utilities (Cal Water, Monterey One Water wastewater, and Monterey Disposal Service) the stormwater management program does not have a dedicated user-fee revenue source. Rising costs for operations, regulatory compliance, deferred maintenance, and infrastructure renewal have expanded funding gaps that increasingly strain the City’s budget and reduce its capacity to perform necessary O&M activities at the level required to sustain long-term system performance, and limiting the City’s ability to address aging system components. The absence of a dedicated revenue source increasingly forces stormwater funding to compete with other essential General Fund priorities such as public safety and community services.

These funding constraints coincide with increasing operational demands. The stormwater operations side of the Program carries out numerous activities to support clean water goals and to maintain the City’s aging infrastructure so it can protect neighborhoods and businesses from local flooding. On average, the industry-standard life expectancy of a storm drain system is approximately 60 years. Much of the City’s storm drain network is more than 50 years old, and several basins identified in the City’s maintenance plan contain culverts and channels nearing the end of their service life.

The City’s coastal location and aging infrastructure also make it vulnerable to more frequent and intense storm events associated with climate change. While ongoing maintenance and localized improvements are critical to maintaining system performance, they alone cannot address the broader hydrologic and environmental challenges facing the region. In response, this report evaluates revenue options to support system operations, maintenance, and regulatory obligations, to serve as the foundation for a Proposition 218-compliant Cost of Service Analysis.

Broader capital needs will be further defined through the forthcoming Storm Drain Master Plan.

As that work progresses, the City may consider additional approaches to funding major improvements, including how future fee revenues could support prioritized capital needs.

Project Background
In September 2024, the City issued a Request for Proposals (“RFP”) soliciting proposals from qualified firms to prepare a Storm Drain Master Plan and Stormwater Utility Rate Study ("Report"). The purpose of this Report was to explore different sources of funding to meet the increasing needs of the City's Program. The Report is intended to provide a multi-year plan with a recommendation for a Proposition 218-compliant Cost of Service Analysis with associated Stormwater Utility Fee rate structure. G7, with Akel Engineering Group, Bartle Wells & Associates, ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 21, Packet Page 82 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 9 ends

and SCI Consulting Group as sub-contractors was engaged by the City for this project, which began in February 2025.

Facilities and Services
The City operates and maintains an MS4 within its jurisdictional boundaries. The system is composed of a mix of constructed and natural drainage features, including curbs and gutters, storm drain pipes, inlets, culverts, channels, pump stations, and outfalls that discharge to Monterey Bay, as well as surface drainage facilities such as detention basins, lake outlets, and modified or naturalized channels. The system also includes structural and non-structural BMPs that support stormwater quality and conveyance functions. The system serves the entire City.

The primary storm drainage service provided by the City is the collection, conveyance, and overall management of stormwater and non-stormwater runoff from parcels. By definition, all parcels that shed stormwater into the City’s system, either directly through piped infrastructure or indirectly through streets, gutters, or surface channels, use and receive benefit from the City’s storm drainage system. The need and necessity for this service is derived from property improvements, which historically have increased the amount of stormwater runoff from parcels by constructing impervious surfaces such as rooftops, pavement areas, and certain types of landscaping that restrict or retard the percolation of water into the soil beyond the conditions found in the natural, or unimproved, state. As such, open space land (in a natural condition) and agricultural lands that demonstrate stormwater absorption equal to or greater than natural conditions are not charged a fee. Other vacant land containing landscaping or which is currently or was previously improved or has been prepared for future improvements does not qualify as open space or natural land and will typically be charged a fee.

A critical service provided by management of the City’s storm drainage system is compliance with all water quality requirements through the City’s MS4 permit. This service ensures that all parcels within the City are monitored and, in some cases, individually regulated to ensure such compliance. This applies to parcels that may drain directly to non-City receiving waters as well as all other parcels in the City. For this reason, all parcels (other than natural open space and qualifying agricultural) are included in the fee structure.

Report Organization
This Report is structured to serve as the primary administrative record in support of a new stormwater utility fee and underlying rate structure to be considered by the City Council and staff.

Any such fee and underlying rate structure would ultimately need to be approved by a 50% majority vote of affected property owners through a Proposition 218 balloting process before being implemented. To support that process, this Report provides the technical, financial, and ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 22, Packet Page 83 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 10 ends

administrative foundation needed to advance a Proposition 218-compliant stormwater fee. It establishes the revenue needs of the Program, identifies viable funding options, and determines the rate structure that forms the basis of a Proposition 218-compliant property-related fee ballot proceeding.

As such, this Report is divided up into three sections, which are summarized below. ▪ Financial Needs and Annual Revenue Requirement
▪ Evaluation of Funding Options and Recommended Option
▪ Proposed Rate Structure Analysis and determination
Financial Needs and Revenue Requirement
Introduction to Revenues and Costs
Utility rate setting is dependent on two primary elements: Financial needs (i.e., revenue requirements) and apportionment formula (distributing the costs fairly). This section focuses on the former.

The City’s stormwater-related revenues and costs were evaluated based upon an analysis of the City’s 2025-26 Budget Stormwater Fund 280, along with additional information provided by City staff and other supporting documents.

Program Revenues
Table 1 below summarizes current and projected stormwater program revenues. Operating revenues consist of ongoing sources such as review fees and miscellaneous program revenues including interest income and Public Works service fees. Non-operating revenues include the portion of Measure S sales tax funds allocated to stormwater activities; these revenues are expected to phase out as Measure S sunsets in March 2027. Note that one-time grant revenue is not included in this table because it is typically dedicated to specific projects and often acts as “pass-through” revenue.

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 23, Packet Page 84 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 11 ends

Table 1 – Summary of Revenues
Revenues 2025-26 2026-27 2027-28 2028-29 2029-30
Operating Revenues
Stormwater Review Fees $ 24,000 $ 24,000 $ 24,000 $ 24,000 $ 24,000 Misc Revenue 28,232 30,000 31,000 3,000 3,000
Total Operating Revenues $ 52,232 $ 54,000 $ 55,000 $ 27,000 $ 27,000 Non Operating Revenues
Measure S Funding 589,543 1,000,000 - - -
Total Non Operating Revenues $ 589,543 $1,000,000 $ - $ - $ - Total Revenues $ 641,775 $1,054,000 $ 55,000 $ 27,000 $ 27,000 The ongoing operating revenues shown above, totaling $54,000 in FY 2026-27 and declining to approximately $27,000 in FY 2028-29, consist primarily of permit review fees and miscellaneous revenues. These revenues are nominal relative to total program operating costs exceeding $1.3 million per year. In practice, these amounts are deposited to and managed within the City’s broader stormwater funding structure and are reflected as part of the General Fund support shown in Table 3. They do not represent a standalone funding source capable of materially offsetting the overall operating requirement.

Table 2 below summarizes current and projected stormwater program costs. Projects assume annual cost growth of 2.8% to 2.9% for total operating costs. Operating costs reflect the ongoing expenses required to operate and maintain the City’s storm drainage system, including routine maintenance, inspections, regulatory compliance activities, and program administration. Cost projections reflect expected ongoing operational needs and exclude one-time master planning professional services costs allocated in 2025-26. Capital costs represent storm drainage-related projects funded through Measure P and Measure S, which provide limited-term support for drainage improvements but are not ongoing program funding sources. These capital expenses are shown separately to distinguish them from the core operational needs of the stormwater program.

Table 2 – Summary of Operations & Maintenance and CIP Costs Costs 2025-26 2026-27 2027-28 2028-29 2029-30
Operations & Maintenance
Program
Total O&M Costs $1,955,424 $1,343,000 $1,380,000 $1,420,000 $1,461,000 Capital Improvement Program
Measure P-S Capital Projects 589,543 1,000,000 - - -
$2,544,967 $2,343,000 $1,380,000 $1,420,000 $1,461,000
ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 24, Packet Page 85 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 12 ends

Note that Capital project costs are shown only through FY 2026-27 because Measure S, the current source of stormwater-related capital funding, sunsets in 2027. Consistent with the purpose of this Report, additional long-term capital needs are not incorporated beyond that year, since this fee study focuses on establishing an ongoing funding source for system operations, maintenance, and regulatory obligations. Future capital priorities may be further refined as part of the City’s broader planning efforts.

Annual Revenue Requirement
Rate setting for stormwater fees is fundamentally different than for other utilities. Other utilities (e.g., water and sewer) are limited to a 5-year rate window, and conducting a rate reset every five years is routine and low risk. Stormwater rates are not limited to 5 years, but they must be approved by voters, a task that would need to be repeated every time a rate reset is undertaken.

As a result, stormwater rates are best designed to be durable for several decades and incorporate an escalation formula included in the voter approval process.

One of the most important aspects of this process is to determine the correct revenue requirement at the outset since that will set the trajectory for all future revenues. Table 3, below, summarizes the projected operating costs and identifies the funding sources required to meet those costs. The proposed Stormwater Utility Fee is structured to generate approximately $904,000 in FY 2026-27. The remaining balance is shown as General Fund Revenue and represents the difference between total operating costs and proposed fee revenue. This amount includes the $54,000 in operating revenues identified in Table 1, which are embedded within the City’s General Fund support for the program. Implementation of a voter-approved Flood Protection and Clean Stormwater Fee consistent with the rate structure described in this Report would substantially reduce reliance on the General Fund while, in combination with existing revenues, fully supporting projected operating needs.

Table 3 – Estimate of Annual Revenue Requirement
2025-26 2026-27 2027-28 2028-29 2029-30
Total Operating Costs(from
Table 2) $1,955,424 $1,343,000 $1,380,000 $1,420,000 $1,461,000 General Fund Revenue NA $ 439,150 $ 451,249 $ 464,329 $ 477,735 Proposed new Fee Revenue NA $ 903,850 $ 928,751 $ 955,671 $ 983,265 Net Operating Balance NA $ - $ - $ - $ -
Operating Costs and Funding
Sources
ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 25, Packet Page 86 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 13 ends

Ballot Support Considerations
As part of the overall effort to implement a stormwater fee designed to provide projects best suited to the community’s priorities and the operational needs of the stormwater program, the City directed SCI to conduct a public opinion survey to better understand community values and priorities, messaging effectiveness, and willingness to pay for various levels of service. The survey did not receive sufficient public support for full recovery of operating costs. The proposed new Fee is structured to generate approximately $900,000 in its first year. While this revenue level is not sufficient to fully fund the program’s operations and maintenance needs, it can support most of the required O&M costs, and when combined with existing stormwater funding sources, would fully fund the program.

Evaluation of Funding Options
Many municipalities operate utilities such as water, wastewater, and solid waste. Utilities are managed as enterprises which provide services to properties within their jurisdiction and are primarily supported financially through user fees. Stormwater management has not historically been treated as this type of municipal utility. However, across the nation there is a fast-growing trend 1to establish stormwater management as a utility. While this Report ultimately recommends establishing a property-related stormwater fee, the following discussion reviews alternative funding mechanisms to present a complete picture of the options available to the City.

Currently, the City does not have a separate Stormwater revenue fund supported by a user fee system. The legal requirements for establishing and increasing municipal utility fees are governed by Proposition 218. Fees for water, sewer, refuse collection (or solid waste), and stormwater services are defined as property-related fees. Notably, while voter approval is not required for the first three types of fees, it is required for stormwater fees. This voter approval requirement poses a significant barrier for municipalities trying to establish stormwater fees. Consequently, municipalities often seek alternative, non-balloted funding options to support stormwater activities. Several such options are reviewed below.

Summary of Funding Options
The options for funding a stormwater program can be divided into these categories: ongoing funding, one-time funding, or debt financing (one-time funds repaid over time). It is crucial to 1 Western Kentucky University tracks stormwater utilities ("SWUs") across the United States and Canada.

Each year they publish a survey of such SWUs, that latest of which can be found here:
https://digitalcommons.wku.edu/seas_faculty_pubs/6/
ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 26, Packet Page 87 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 14 ends

distinguish between balloted and non-balloted funding sources, since those requiring a ballot measure inherently present more challenges and risks. The matrix below categorizes these funding options along two axes and provides examples of each.

Figure 1 – Funding Types
Legal Landscape
New sources of revenues for municipalities typically come in the form of taxes, fees, assessments and other charges, which are governed by two voter-approved initiatives: Propositions 218 and

26. Proposition 218 defines the requirements for property-related fees, including proportionality, use restrictions, and procedural requirements such as the 45-day protest period and subsequent ballot proceeding. Fees for water, sewer, and refuse collection are exempt from the ballot requirement, but stormwater fees are not. Proposition 26 addresses regulatory fees and allows for recovery of reasonable regulatory costs such as plan checks, inspections, and enforcement activities.

Balloted Mechanisms
Balloted funding mechanisms are typically the most comprehensive funding options but are also the most challenging due to voter approval requirements, outreach needs, and the risk of rejection.
▪ Property-Related Fees for stormwater services are similar to fees imposed for water, sewer, and solid waste services. The distinct difference is that stormwater fees require approval through a ballot measure in accordance with Proposition 218, requiring a simple 50% majority for passage (with one parcel equating to one vote). Otherwise, they are identical to the other utility fees: they require a fair-share apportionment of costs to ratepayers as detailed in a rate study or other cost of service analysis; they cannot charge more than the proportionate cost of service (e.g., discounts or exemptions cannot be subsidized by other ratepayers); and all revenues must exclusively be spent on the stormwater services. Property-related fees are the most common sustainable revenue mechanism employed by municipalities for stormwater management services.

Property-related fees are subject to the requirements of Articles XIIIC and D of the State Constitution, which were approved by voters in 1996 as Proposition 218. They are also Sustainable / Ongoing One-Time Long-Term Debt
Balloted Taxes, Fees
& Assessments
GO Bonds *
Non-Balloted
Regulatory Fees
Re-Alignment
Developer Fees
Grants
COPs **
Revolving Fund
* General Obligation Bonds; ** Certificates of Participation ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 27, Packet Page 88 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 15 ends

subject to the Proposition 218 Omnibus Implementation Act (Government Code Sections 53750 through 53758).
▪ Special Taxes are decided by registered voters and require a two-thirds majority for approval. Special taxes are well known to Californians and are utilized for all manner of services, projects, and programs. They are usually legally stout and flexible and can support debt issuance of debt including most loans or bonds. Among the various types of special taxes, parcel taxes are the most commonly used type for stormwater services.

Other special taxes include sales, business licenses, vehicle licenses, utility users, and transient occupancy taxes. These taxes can also be implemented as a general (not special) tax, which require only a simple 50% majority for passage. However, to qualify as a general tax, the revenue must be allocated to the agency's general fund without specific restrictions. In this case, stormwater services must compete for funding with other general funded services such as police, fire, and parks. Although a general tax requires only a simple majority, voters tend to tend to favor special taxes that explicitly identify their purpose.
▪ General Obligation (GO) bonds are well known to the voting public and require a twothirds majority for approval. These bonds are issued to raise funds upfront and are repaid through a tax levied against property on the annual property tax bill. A primary restriction on GO bonds is that they can only be used for capital projects, including land acquisition, planning, design, and construction. However, costs for maintenance and operations cannot be paid from bond proceeds.

Challenges with balloted approaches extend beyond the requirement for voter approval; they include a lack of familiarity among stormwater professionals, the need for extensive community engagement and education, and a certain amount of political strategizing. Over the past 15 years, fewer than three dozen community-wide measures for stormwater have been attempted throughout California, with the success rate of just over 50%.

Figure 2 – Balloted Funding Mechanisms
ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 28, Packet Page 89 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 16 ends

Property-Related Fee Special Tax
Who Pays Property Owners Property Owners
Who Votes Property Owners Registered Voters
Vote Threshold 50% 66.70%
Votes When Any Time Established Voting Dates
Fairness of Rates Strict Fairness Requirements No Fairness Requirements Other Features
* Tenants excluded from vote
* No exemptions or discounts for
low-income or seniors
* Government and non-profit
must pay
* Each parcel gets a vote,
unweighted
* Out-of-town owners excluded
from vote
* Exemptions or discounts allowed
for low-income or seniors
* Tax-exempt properties do not
pay
* Exemptions cut into revenues
Non-Balloted Mechanisms
Non-Balloted funding mechanisms include regulatory fees, developer impact fees, and other opportunistic approaches. Of these mechanisms, regulatory fees and realignment are the most applicable to the City for compliance with the MS4, which is primarily a set of operational tasks rather than capital improvement projects.
▪ Regulatory Fees under Proposition 26 may fund plan reviews, inspections, and related administrative and enforcement activities, and must be limited to cost recovery. The City’s master fee schedule already includes fees for construction inspections, MS4 compliance inspections, and stormwater plan reviews. These fees are useful but cannot support core operations, maintenance, or capital needs. ▪ Realignment refers to allocating certain stormwater-related activities to utilities that do not require voter approval for rate changes. Examples include trash load reduction activities that benefit solid waste services and could be funded through solid waste fees.

Street sweeping is already funded this way. This approach can provide targeted support but is limited to specific trash-related functions and cannot fund the broader stormwater program.
▪ Grants and Partnerships: Grants are typically one-time funds used for capital projects and cannot support ongoing operations. Partnerships, such as multi-agency projects, transportation improvements, or public-private collaborations, can offer cost efficiencies and leverage resources but do not provide dedicated revenue. These sources should be considered supplemental.

Other Mechanisms (Not Recommended)
ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 29, Packet Page 90 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 17 ends

Special financing districts (BIDs, CFDs, EIFDs), development impact fees, and development in-lieu fees may provide project-specific resources but are generally limited in application, require voter or property-owner approval, or do not fund O&M activities.

Senate Bill 231 could theoretically eliminate the ballot requirement for stormwater fees, but this method remains legally untested and carries with it a likely risk of litigation. Based on this, SCI has been advising municipalities to not use the SB 231 path, but rather to move forward with a ballot measure. A Proposition 218 ballot measure is the recommendation for the City of Monterey as well.

For other funding resources, the reader is referred to the Funding Resources web page2 on the website of the California Stormwater Quality Association (“CASQA”). The reader is also directed to a handy CASQA stormwater funding matrix in Appendix C.

Balloted Property-Related Fee - Recommended Option
The purpose of this Report is to develop a Proposition 218-compliant Stormwater Fee Study that identifies the City’s operations and maintenance funding needs, evaluates revenue options, and provides the technical and financial foundation for establishing a new property-related stormwater fee. In addition to being the most common, this type of user fee is recognized as legitimate by rate payers, is the most flexible because it can fund all enterprise-related costs, is legally stout, and is highly sustainable to meet future operational and regulatory needs.

The City’s near-term stormwater funding needs are centered on operations, maintenance, and regulatory compliance, while substantial capital funding needs are expected to emerge as existing Measure P and Measure S revenues phase out. This fee study focuses on addressing the operational and regulatory component of those needs. While several potential funding mechanisms exist, most non-balloted approaches are limited in scope and cannot generate sufficient, reliable revenue to meet ongoing MS4 obligations. For these reasons, a balloted property-related fee remains the most practical and durable primary funding option, supplemented where appropriate by regulatory fees, realignment opportunities, and opportunistic grants and partnerships.

For these reasons, SCI recommends the balloted property-related fee as the primary option to consider moving forward. However, other options should not be discarded. To the extent supplemental revenues are established, the overall burden on ratepayers will be reduced. For 2 https://www.casqa.org/resources/funding-resources
ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 30, Packet Page 91 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 18 ends

that reason, a portfolio approach is typically recommended with multiple sources of revenue to the extent practical.

Legal Requirements of Property-Related Fees
Property-related fees are subject to the requirements of Articles XIIIC and D of the State Constitution, which were approved by voters in 1996 as Proposition 218. They are also subject to the Proposition 218 Omnibus Implementation Act (Government Code Sections 53750 through 53758).

Any property-related fee must comply with the requirements of Article XIIID, Section 6. These include the following:
▪ Revenues derived from the fee shall not exceed the funds required to provide the property-related service.
▪ Revenues derived from the fee shall not be used for any purpose other than that for which the fee was imposed.
▪ The amount of a fee upon any parcel or person as an incident of property ownership shall not exceed the proportional costs of the service attributable to the parcel. ▪ No fee may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question. Fees based on potential or future use of service are not permitted. Standby charges, whether characterized as charges or assessments, shall be classified as assessments and shall not be imposed without compliance with the assessment section of the code.
▪ No fee may be imposed for general governmental services including, but not limited to, police, fire, ambulance or library services where the service is available to the public at large in substantially the same manner as it is to the property owners.

The procedural requirements of Proposition 218 require that new or increased property-related fees submit to the following two-step process: 1) a 45-day public protest period culminating in a public hearing, and 2) a ballot proceeding whereby it must be approved by a 50% simple majority of property owners (or a two-thirds supermajority of registered voters) voting before new or increased fees could be authorized. However, fees for water, sewer and refuse collection are exempt from the second step.

In the years following the passage of Proposition 218, there was uncertainty whether stormwater fees qualified as a type of sewer fee and therefore were not subject to the ballot proceeding requirement. The California Sixth Appellate District Court clarified the question in a 2002 ruling3 3 Howard Jarvis Taxpayers Association v. City of Salinas, No. H022665.Sixth Dist. June 3, 2002.

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 31, Packet Page 92 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 19 ends

that found stormwater fees did not qualify as a type of sewer fee, and new or increased fees must be approved through a ballot proceeding.

This voter approval requirement creates a significant barrier for municipalities to set stormwater fees. As a result, municipalities typically look for other, non-balloted funding options to assist in the funding for stormwater activities.

Despite these barriers, a property-related fee is the most common type of dedicated, sustainable funding source used by stormwater utilities throughout the State (indeed, throughout the country). Other balloted mechanisms typically require a higher approval threshold (i.e., two-thirds majority). Non-balloted funding mechanisms are worth pursuing but are typically considered as supplement funding sources since they can rarely generate the level of revenue required to support the enterprise.

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 32, Packet Page 93 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 20 ends

Proposed Rate Structure Analysis and Determination
Proposition 218 states that the amount of a fee upon any parcel shall not exceed the proportional costs of the service attributable to that parcel. It also states that no fee may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property. In compliance with Proposition 218, the proposed Stormwater Fee, if approved by property owners, will only be imposed on properties that shed water, directly or indirectly, into the City’s system or are otherwise served by the system. Additionally, the amount of use attributed to each parcel is proportionate to the amount of stormwater runoff contributed by the parcel, which is, in turn, proportionate to the amount of impervious surface area on a parcel (such as building roofs and pavement).

The impervious surface area (IA) method of apportioning the cost of stormwater management has become the industry standard over recent decades. It is accepted across the nation as the best and most equitable method. However, there is variability in how impervious surface area is utilized, depending on the types of data and technology available for measuring or estimating this variable.

Single-Family Residential Parcels as Benchmark
The most widely used method of establishing storm drainage rates is to use the average or median single-family residential parcel (SFR) as the basic unit of measure, or benchmark, which is called the single-family equivalent, or “SFE.” Since the metric for this fee structure is impervious surface area, a benchmark amount of impervious area (“IA”) must be established.

The City has a wide range of sizes of SFR parcels, which have varying percentages of impervious area (“%IA”). Generally, smaller, denser parcels tend to have a higher proportion of impervious area than larger, less dense parcels, which tend to have a lower percentage of impervious area. This can be best visualized by the fact that larger residential properties tend to have a larger proportion of pervious landscaping, and therefore a smaller proportion of impervious area.

Imperviousness data were developed using a combination of building footprint data, aerial imagery, and GIS analysis to produce a representation of impervious conditions across all parcels in the City. The most recently available National Land Cover Dataset (NLCD) 2024 imperviousness values were reviewed as a reference but were adjusted where necessary, particularly in residential areas where NLCD data can overestimate or underestimate actual impervious coverage. Building footprints were expanded to account for driveways, paved areas, and other SFR
Single-family
residential
SFE
Single-family
equivalent
IA
Impervious
area
%IA
Percentage of
impervious
area
Acronyms
ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 33, Packet Page 94 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 21 ends

common hardscape features, and aerial imagery from 2024 and 2025 was used to verify adjustments. This combined approach was supplemented with individual measurements from a wholly representative sample of parcels to serve as the foundation for this study and provides a reliable basis for estimating parcel-level imperviousness. An extensive sample of 5,754 singlefamily residential parcels across various lot sizes was analyzed, with impervious areas measured using this methodology and validated through additional parcel research and aerial photograph measurements. This dataset provides the basis for determining the average IA, which will serve as the basis for determining the SFE.

The range of SFR parcels was grouped into three size categories based on trends that emerged in the IA data (small, medium, and large). For each size group, the total IA on the sampled parcels were divided by the number of parcels sampled to arrive at the average amount of IA for each size group. For the medium SFR category, 4,240 parcels were sampled with a total of 14,827,023 square feet of IA, resulting in a mean IA of 3,497 SF. The medium SFR category represents the most common residential parcel type in the City, and the most prevalent parcel type city-wide and is therefore used as the benchmark (1 SFE) for all other size categories and other nonresidential land uses.

Condominiums
Condominium units are particularly difficult to categorize as they are often on very small individual parcels yet share larger common areas that are made up of landscaped (pervious) areas, parking lots and shared roofs, and other recreational uses (either pervious or impervious). The data for these variables is not readily available, so some assumptions are made about their characteristics.

Condominiums can be grouped into two categories: Medium-density where there is only one level of residential units (e.g., townhomes) and high-density where there are multiple levels of residential units (similar to apartment buildings).

In numerous prior studies including the City of Alameda Water Quality and Flood Protection Fee Report, City of Cupertino Clean Water and Storm Protection Fee Report, and City of Davis Stormwater Fee Report, a strong trend emerged for these two types of condominiums in which the medium-density IA was approximately two-thirds that of a medium SFR, and the high-density IA was approximately one-third that of a medium SFR. Since the medium SFR is benchmarked as one SFE, the SFE values for these types of condominiums are set at 0.6667 SFE and 0.3333 SFE, respectively.

Additionally, most condominium sites include common parcels for parking areas, greenbelts, and other common facilities. Since these represent aspects that are also common to SFR parcels (driveway/garage for parking, front/back yards), these common parcels are considered included ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 34, Packet Page 95 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 22 ends

in the rate for each residential unit. In some cases where a condominium site includes extraordinary improvements on common parcels such as sport courts, swimming pools, or recreation centers, they may be charged separately.

Table 4 shows a summary of the SFEs for single-family residential parcels.

Table 4 - SFE Summary for Single-Family Residential Parcels # of
Parcels
A Acres
A
Average IA
(sf)
SFE per
Parcel
Small under 0.10 under 4,356 872 67.65 2,274 0.6504
Medium 0.10 to 0.30 4,356 to 13,068 4,245 715.18 3,497 1.0000 Large over 0.30 over 13,068 616 311.11 4,665 1.3340
2+Houses over 0.30 over 13,068 28 17.60 6,049 1.7297
Condo - 1 Level na 448 12.92 2,331 0.6667
Condo - 2+ Levels na 1,099 86.69 1,166 0.3333
TOTAL 7,308 1,211
A
Lot Type Parcel Size Range
Acres Square Footage
Numbers of Parcels and Acres do not factor into the basis of the SFE calculation; they are shown for informational purposes only.

Non-Single-Family Residential Parcels
Unlike single-family residential parcels, non-single-family parcels can vary widely in size as well as impervious characteristics. For this reason, these parcels have been grouped into land use categories according to their %IA characteristics. The SFE for each land use category is based on a per-acre basis, so size can be a variable in the calculation of the fee. The SFE-per-acre can be computed for each category using the following formula:
(43,560 sf / acre) x % I A
3,497 sf / SFE
= SFE per Acre
where 3,497 square feet is the amount of IA in one SFE. A summary of the SFEs for each nonsingle-family residential land use category is contained in Table 5.

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 35, Packet Page 96 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 23 ends

Table 5 - SFE Summary for Non-Single-Family Residential Parcels # of
Parcels
A AcresA
% Imperv
Area
SFE per
Acre
Apartments 281 141.10 57.7% 7.187
Commercial /Industrial 788 425.32 68.0% 8.466
Office /Institutional 581 229.77 45.3% 5.647
Institutional w/Field 25 593.02 42.1% 5.248
Park 37 140.39 17.9% 2.230
Recreational 6 1.93 50.5% 6.290
Vacant (developed)
B 243 114.92 5.0% 0.623
Open Space / Agricultural 103 620.25
TOTAL 2,064 2,266.70
A
B Vacant parcels were estimated to have a 5% impervious area based on prior fee studies referenced previously.

Land Use Category
not charged
Aggregate numbers of Parcels and Acres do not factor into the basis of the SFE calculation; they are shown for informational purposes only.

Each individual parcel’s SFE is then calculated by multiplying the parcel size (in acres) times the SFE per acre for that land use category, as shown in the following formula:

Parcel Size (acres) x SFE per Acre = SFE
Non-Residential Condominiums
Non-residential condominium parcels such as commercial or office condominiums cannot be charged on the acreage of the individual unit because that would omit the acreage of the common areas, which are often parking lots with high %IA. In turn, the common area acreage data is sometimes duplicative of the acreages assigned to the individual units. For these reasons, the full site acreage for each complex of condominiums has been apportioned to the individual units, prorated on the basis of the individual unit’s floor space (when available). From that, their SFEs are calculated using the method described above.

Graded Vacant Parcels
Graded vacant parcels may be devoid of obvious structures or impervious improvements but are distinguished from natural open space by one of several characteristics. Typically, a graded vacant parcel has been graded to be ready for building construction (possibly as part of the original subdivision or adjacent street grading). In some cases, the parcel previously contained a structure or improvement that has been removed, but its fundamental alteration from a natural state remains. Although graded vacant parcels may have significant vegetative cover, the underlying soil conditions resulting from grading work or previous improvements usually cause some rainfall to runoff into the storm drainage system. The %IA for developed vacant parcels is reasonably assumed to be 5%, which is also used as a minimum value of imperviousness for any land use type ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 36, Packet Page 97 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 24 ends

(excluding open space and agricultural land – see next section). Vacant parcels that have significant impervious paving remaining from prior improvements may be classified as Commercial or some other classification best representing the %IA of the parcel. Parcels primarily consisting of railroad tracks are classified as Graded Vacant Parcels.

Open Space and Agricultural Parcels are Not Charged
The City’s storm drain system was developed in response to land development over many decades. Tracts of land that have not yet been developed, or have been used primarily for agricultural purposes, have not created an impact on the storm drainage system beyond the natural condition, and are therefore considered to receive no service from the system. In practical terms, these parcels generate no additional storm runoff beyond the natural condition. For these reasons, open space and agricultural parcels are not charged a Fee.

Hybrid Parcels
Some parcels may have a mixture of improvements and open space areas. For such parcels that contain a residence, the open space acreage does not increase the fee because residential parcels are not charged on a per-acre basis. Rather, they are charged based on the median IA for that size category.

For such parcels that contain non-residential improvements (which are charged on a per-acre basis), the chargeable acreage should be adjusted downward to reflect the improved area only, leaving the open space area “invisible” to the fee calculation. Where parcels have been found in this category, that acreage adjustment has been made.

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 37, Packet Page 98 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 25 ends

Other Parcels
Parcels that do not fall within the land use descriptions listed above may be placed into the category having the closest %IA characteristics.

Other Non-Charged Parcels
Parcels such as streets, detention basins, or rights of way for drainage appurtenances are considered part of the drainage system and thus are not charged a storm water fee.

Other parcels that may not be charged include sliver parcels that function as part of another parcel or railroad rights of way that contain established internal drainage retention features (ballast).

Rate Credits
Rate Credit for Low Impact Development Projects
The City's NPDES Permit requires certain properties to install structural BMPs4intended to treat stormwater runoff and attenuate stormwater flows. These facilities are typically designed to capture a portion of the storm flows, retain them, and enable them to filter through a landscape, be used as an alternative water supply, or infiltrate into the ground. While this is intended to help filter pollutants from the water, it also can reduce the parcel’s stormwater runoff quantity to some extent, which in turn can reduce a parcel’s impact on the system. In addition to Permit-required measures, other parcel owners may elect to follow these guidelines voluntarily.

The section of the NPDES Permit that requires structural BMPs is Provision E.12 (Post Construction Storm Water Management Program).

The BMPs outlined include provisions for Low Impact Development (“LID”) design standards to reduce the rate and volume of stormwater runoff. Compliance with E.12 is a well-established and convenient metric on which to base customer activities that further Program goals and affect Program costs. LID compliance can reduce impacts on many of the Program elements. Based on a detailed study5 done for a similar city in the Bay Area, it has been determined that compliance with Provision E.12 equates to a reduction of Program impacts of approximately 25% based on the overall Program costs. Based on that analysis, E.12-compliant 4 BMP is an acronym for "best management practices." In this context, BMPs refer to permanent facilities built on-site that mitigate Stormwater impacts of certain regulated development projects. 5 A study was conducted for the City of Cupertino in Santa Clara County. Excerpts from that study are included in Appendix B.

BMP
A permanent
structure that
meets clean
water goals
(best
management
practice)
PDP
Priority
development
project
Acronyms
ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 38, Packet Page 99 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 26 ends

parcels implementing BMPs that satisfy the full water quality treatment or runoff retention requirements under the City’s Post Construction Requirements (“PCR”) PCR 2 or PCR 3 shall receive a credit of 25% of their otherwise-calculated fee.

Because not all PCR pathways require the same level or extent of BMP implementation, a tiered credit structure is used to reflect differing levels of runoff reduction. Parcels implementing BMPs that satisfy water quality treatment requirements under PCR 2 through biofiltration or partial LID measures, typically representing a moderate level of stormwater management, shall receive a

12.5 percent credit. Parcels implementing only the basic site design measures under PCR 1, which provide limited hydrologic benefit relative to full treatment or retention, shall receive a 6.3 percent credit. Projects governed by PCR 4 (peak management) or PCR 5 (special circumstances) do not automatically qualify for higher credits, but may receive one of the credit levels above if the BMPs implemented on the site meet the applicable PCR performance standard associated with that tier.

Summary of SFEs and Revenues by Rate Category
SFEs are calculated for each parcel according to the methodology described above. A summary of parcels, SFEs, and acreage is shown by Rate Category in Table 6. It is worth noting that the allocation of revenues is identical to the allocation of SFEs.

Table 6 – Summary of Parcels, Acreage, and SFEs by Rate Category Category Parcels % Acres % SFEs %
Small 872 9.4% 68 2.4% 567.12 3.6%
Medium 4,245 45.8% 715 25.0% 4,245.00 26.9%
Large 616 6.6% 311 10.9% 821.77 5.2%
2+Houses 28 0.3% 18 0.6% 48.43 0.3%
Condo 1 448 4.8% 13 0.5% 298.67 1.9%
Condo 2+ 1,099 11.9% 87 3.0% 366.33 2.3%
Residential Totals 7,308 78.8% 1,211 42.4% 6,347.32 40.3% Apartments 281 3.0% 141 4.9% 1,014.09 6.4%
Commercial /Industrial 788 8.5% 425 14.9% 3,600.76 22.8% Office /Institutional 581 6.3% 230 8.0% 1,297.51 8.2%
Institutional w/ Field 25 0.3% 593 20.8% 3,112.17 19.7% Park 37 0.4% 140 4.9% 313.07 2.0%
Recreational 6 0.1% 2 0.1% 12.14 0.1%
Graded Vacant 243 2.6% 115 4.0% 71.60 0.5%
LID Credit Adjustment (109.95) -0.7%
Non-Residential Totals 1,961 21.2% 1,646 57.6% 9,311.38 59.7% TOTAL 9,269 2,858 15,658.70
ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 39, Packet Page 100 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 27 ends

Stormwater Fee Calculation
The primary metric in this analysis is the SFE as noted above. To arrive at the fee amount for the various land use categories, the total City-wide SFEs must be divided into the total revenue requirement to arrive at the rate per SFE. For this calculation, the $903,850 revenue requirement is reflected in the formula shown below. Using the analysis above, the calculation is represented as follows:

This SFE rate is then multiplied by the SFEs per parcel or per acre for the various rate categories to arrive at the Stormwater Fee Rate Schedule shown in Table 7.

Table 7 –Stormwater Fee Schedule
SFE Rate
Single-Family Residential
A
Small Under 0.10 ac 0.6504 $ 3.13 per parcel
Medium 0.10 to 0.30 ac 1.0000 $ 4.81 per parcel
Large 0.30 and over ac 1.3340 $ 6.42 per parcel
2+Houses 0.30 and over ac 1.7297 $ 8.32 per parcel
Condo - Medium Density 0.6667 $ 3.21 per unit
Condo -High Density 0.3333 $ 1.60 per unit
Non-Single-Family Residential
B
Apartment 7.1869 $ 34.57 per acre
Commercial /Industrial 8.4660 $ 40.72 per acre
Office /Institutional
C 5.6465 $ 27.16 per acre
Institutional w/ Field 5.2482 $ 25.24 per acre
Park/Cemetery/Golf Course 2.2300 $ 10.73 per acre
Recreational 6.2896 $ 30.25 per acre
Vacant (developed) 0.6228 $ 3.00 per acre
Open Space/Agricultural
A
B
C
Land Use Category Proposed Monthly Fee
not charged
Residential category also includes duplex, triplex, four-plex and condominium.

Commercial, industrial, and office condominium units are charged on their proportionate share of site acreage.

Non-Residential parcel size is calculated to the hundredth of an acre.

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 40, Packet Page 101 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 28 ends

Appendix A provides information about stormwater rate initiatives implemented by other municipalities and rates adopted by other municipalities.

Billing Methodologies
The proposed rate structure is recommended to be billed once a year through the property tax bill system. There are many upsides to this system.
▪ The recommended structure is not dependent on monthly water consumption. It is reliant on property imperviousness that is derived from land use and statistical analyses (already done for this Report). These factors rarely change from year to year, and when they do change (new construction or development being the primary cause), those changes are easy to incorporate on an annual basis from other existing data sets (e.g., City building permits, county tax assessor use code changes).
▪ As an annual billing, there is less administrative action needed prior to the July/August deadline for tax bill charges.
▪ Delinquencies are virtually not a factor since property owners typically pay their tax bills promptly and routinely. While property tax bill delinquencies do occur, the County's Teeter Plan ensures that direct charges are paid to the local agencies despite the delinquency.6
▪ Third-party agencies are relieved of the burden of billing on behalf of the City. ▪ There is no additional work needed to conform to a tax bill format. The data for this Report has been developed at the parcel level because the Proposition 218 balloting procedures require that each affected parcel receive a ballot. Therefore, the data is already in the correct format for the annual property-tax billing method.

On the downside, the County charges local agencies for the convenience of collecting such charges on the property tax bill, in the amount of 0.25% of the total amount collected. For the City, that would amount to approximately $2,250 for the first year of the fee.

Annual Cost Indexing
The potential 2026 Stormwater Fee is subject to an annual adjustment tied to the Consumer Price Index-U for the San Francisco Bay Area7 as of December of each succeeding year (the “CPI”), with a maximum annual adjustment not to exceed 3%. Any change in the CPI in excess of 3% shall be 6 The County has a sophisticated procedure in place for delinquencies, that may include foreclosure on a property.
7 The San Francisco Bay Area index is used because it is the nearest available CPI-U index to Monterey.

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 41, Packet Page 102 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 29 ends

cumulatively reserved as the “Unused CPI” and shall be used to increase the maximum authorized rate in years in which the CPI is less than 3%. The maximum authorized rate is equal to the maximum rate in the first fiscal year the Fee was approved adjusted annually by the lower of either 3% or the change in the CPI plus any Unused CPI as described above. However, the actual rate charged in any year will be based on the anticipated costs of the Program, and will be less than or equal to the maximum authorized rate.

Management and Use of Stormwater Funds
The City shall deposit into a separate account(s) all Stormwater Fee revenues collected and shall appropriate and expend such funds only for the purposes outlined by this Report. The specific assumptions utilized in this Report, the specific programs and projects listed, and the division of revenues and expenses between the two primary categories (O&M and CIP) are used as a reasonable model of future revenue needs and are not intended to be binding on future use of funds.

Dated: February 12, 2026
Engineer of Work
John W. Bliss, License No. C52091
ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 42, Packet Page 103 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 30 ends

Appendices
The following appendices are provided:

Appendix A – Stormwater Rates in Other Cities
Appendix B – Rate Credit Basis
Appendix C – CASQA stormwater Funding Options Matrix
ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 43, Packet Page 104 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 31 ends

Appendix A – Stormwater Rates in Other Cities
Table 8 – Recent Stormwater Fee Ballot Measures & Outcomes Agency Year Type
Support
Level
City of San Mateo 2024 $ 96 Fee 52%
City of Manhattan Beach 2024 $ 129 Fee 53%
City of Sacramento 2022 $ 207 Fee 52%
V alle jo F lood & S torm 2022 $ 54 F e e 32%
City of Davis 2021 $ 157 Fee 61%
City of S an Bruno 2021 $ 154 F e e 36%
City of Alameda 2019 $ 129 Fee 57%
City of Cupertino 2019 $ 56 Fee 51%
City of Los Altos 2019 $ 88 F e e 44%
City of Berkeley 2018 $ 96 Fee 61%
Los Angeles County 2018 $ 83 Tax 69%
Town of M oraga 2018 $ 120 F e e 48%
City of Palo Alto 2017 $ 164 Fee 64%
City of Culver City 2016 $ 99 Tax 74%
City of Santa Cruz 2008 $ 28 Tax 76%
NO TE: Brown font indicates a failed ballot m easure
Annual Amount
ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 44, Packet Page 105 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 32 ends

Table 9 – Samples of Stormwater Rates Around the State
Municipality
Annual
Rate Type of Fee
Alameda $ 134 Property-Related Fee
Bakersfield $ 200 Property-Related Fee
Culver City $ 99 Special Tax
Davis $ 85 Property-Related Fee
Elk Grove $ 70 Property-Related Fee
Hayward $ 29 Property-Related Fee
Los Angeles $ 27 Special tax
Los Angeles County $ 83 Special tax
Manhattan Beach $ 129 Property-Related Fee
Palo Alto $ 164 Property-Related Fee
Redding $ 16 Property-Related Fee
Sacramento (City) $ 136 Property-Related Fee
Sacramento (County) $ 70 Property-Related Fee
San Bruno $ 46 Property-Related Fee
San Clemente $ 60 Property-Related Fee
San Jose $ 92 Property-Related Fee
San Mateo $ 96 Property-Related Fee
Santa Cruz $ 28 Special Tax
Stockton * $ 221 Property-Related Fee
Vallejo Sanitation and Flood Control
District
$ 24 Property-Related Fee
West Sacramento $ 144 Property-Related Fee
Woodland $ 6 Property-Related Fee
* This is the calculated ave rage rate for the City of S tock ton, which has 15 rate zone s with rate s ranging from $3.54 to $651.68 pe r year.

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 45, Packet Page 106 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 33 ends

Appendix B – Rate Credit Basis
On the following pages is an analysis done for the City of Cupertino in February 2019 that evaluated how structural Best Management Practices, commonly referred to as low impact development (LID), reduce impacts on a municipal storm drainage system. Cupertino operates under the San Francisco Bay Area Municipal Regional Permit (MRP) issued by the Regional Water Quality Control Board, Region 2, while the City of Monterey is regulated under the State Water Resources Control Board’s Phase II Small MS4 General Permit and overseen by the Central Coast Regional Water Quality Control Board.

Although the two permit frameworks differ procedurally, both require implementation of postconstruction BMPs intended to reduce runoff volume, peak flows, and pollutant loading. The applicability of the Cupertino analysis to Monterey was evaluated in the context of the Phase II Permit, including Provision E.12 (Post-Construction Stormwater Management), the City’s Post Construction Requirements (PCRs), and Central Coast regional conditions. Based on this review, the role of structural BMPs in reducing demands on the storm drainage system is considered sufficiently comparable to support use of the Cupertino analysis as a reference for estimating relative program impact reductions associated with E.12-compliant BMPs in Monterey.

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 46, Packet Page 107 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 34 ends

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 47, Packet Page 108 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 35 ends

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 48, Packet Page 109 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 36 ends

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 49, Packet Page 110 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 37 ends

Appendix C – Funding Options
On the following pages A funding options matrix derived from this CASQA website is provided:
https://www.casqa.org/wp-content/uploads/2023/01/funding_matrix.pdf ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 50, Packet Page 111 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 38 ends

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 51, Packet Page 112 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 39 ends

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 52, Packet Page 113 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 40 ends

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 53, Packet Page 114 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 41 ends

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 54, Packet Page 115 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 42 ends

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 55, Packet Page 116 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 43 ends

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 56, Packet Page 117 City of Monterey
Storm Water Utility Rate Study
Final Report, February 2026

Page 44 ends

ATTACHMENT 3
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 57, Packet Page 118 Trash Capture Matters!
Prevents plastics and debris from
reaching our beaches and wildlife.

Operations & Infrastructure
Matter!
Clean catch basins & inlets to
prevent blockage
Maintain and repair pipes,
outfalls, and pump stations
Install trash-capture devices
and green infrastructure
Stormwater Capture Matters!
Supports Stormwater Projects
that divert stormwater to sewer
for treatment and recycling
Opportunity to reuse seasonal
flows to support supply
Helps meet water-quality
mandates by reducing discharge.

Reduces stormwater runoff into
the Monterey Bay
WHY STORMWATER MATTERS!
Drains to the Bay
Flood Control Matters!
Clear drains move
stormwater off streets
quickly, reducing ponding and
flood risk near homes, schools,
and businesses.

When we all pitch in, we prevent flooding and protect the Monterey Bay! For more resources and information, please visit
monterey.gov/stormwaterpollution and
monterey.gov/stormwaterprogram
ATTACHMENT 4
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 58, Packet Page 119 ¡La Captura de Agua Pluvial
Importa!
Apoya los proyectos de agua pluvial que
desvían el agua pluvial al alcantarillado
para su tratamiento y reciclaje.

Ofrece la oportunidad de reutilizar los
flujos estacionales para apoyar el
suministro
Ayuda a cumplir con los mandatos de
calidad del agua al reducir las descargas
Reduce la escorrentía de aguas pluviales
hacia la Bahía de Monterey
¡Las Operaciones e Infraestructura
Importan!
Limpiar sumideros y entradas para
prevenir obstrucciones
Mantener y reparar tuberías,
desagües y estaciones de bombeo
Instalar dispositivos de captura de
basura e infraestructura verde
¡POR QUÉ IMPORTA EL AGUA PLUVIAL!
Desagües a la Bahía
¡El Control de Inundaciones
Importa!
Los desagües despejados drenan las
aguas pluviales de las calles
rápidamente, lo que reduce el riesgo
de encharcamientos e inundaciones
cerca de casas, escuelas y negocios.
¡La Captura de Basura Importa!
Evita que los plásticos y los
desechos lleguen a nuestras
playas y vida silvestre.
¡Cuando todos colaboramos, evitamos inundaciones y protegemos la Bahía de Monterey! Para obtener más recursos e información, visite
monterey.gov/stormwaterpollution y
monterey.gov/stormwaterprogram
ATTACHMENT 4
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 59, Packet Page 120 Why Am I Receiving This
Survey?
Understanding Stormwater
in Monterey
What Could This Fee
Provide?
How Much Would it Cost?
The City of Monterey is seeking input
from property owners about priorities
for stormwater management and clean
water initiatives. Please return this
survey as soon as possible, your
feedback is essential to our planning.

Your input will directly shape our
stormwater priorities.

Stormwater flows over rooftops,
streets and landscaped areas,
collecting debris, sediment and
pollutants before entering the storm
drain system. Unlike wastewater,
stormwater is not treated before
entering Monterey Bay.

The revenues generated by a
dedicated fee could be used to
comply with unfunded State and
Federal mandates, further protect
from local street and property
flooding, and proactively clean and
maintain storm drain infrastructure.

This fee could better equip the City to
remove trash and pollution before it
enters Monterey Bay. Not only could
this fee help maintain existing
infrastructure, it could help fund highpriority capital projects and watershed restoration projects designed to
protect against flooding and improve
water quality.

Your input will help determine the level
of service provided by the fee and help
shape a fee study. A final fee study will
be available for review in the future.

Currently, the City estimates that the
cost for a medium-sized single-family
residential property is approximately
$7.72 per month, with varied rates for
other property types. Without a
reasonable dedicated fee, the City
would need to cut other services to
meet the meet the minimum regulatory
storm water compliance.

To respond online, visit www.survey and enter code found on front of survey. Para espanol, vea el reverso For more information please visit
monterey.gov/stormwaterprogram and
monterey.gov/stormwaterpollution
City of Monterey Stormwater Official Survey
Flooding on Del Monte Avenue in 1998
ATTACHMENT 4
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 60, Packet Page 121 Inundación de la avenida Del Monte en 1998.

Aguas Pluviales de la Ciudad de Monterey: Encuesta Oficial ¿Por qué Recibo esta
Encuesta?
¿Qué Podría Proveer esta
Cuota? ¿Cuánto Costaría?
Comprender las Aguas
Pluviales de Monterey
La Ciudad de Monterey solicita las opiniones de los propietarios sobre las prioridades en materia de gestión de aguas pluviales e iniciativas de agua limpia. Por
favor, devuelva esta encuesta lo antes
posible, ya que sus comentarios son esenciales para nuestra planificación. Su opinión influirá directamente en nuestras prioridades en materia de aguas pluviales.

Los ingresos generados por una cuota
específica se podrían utilizarse para
cumplir con los mandatos estatales y
federales no financiados, proteger aún
más las calles y propiedades locales
contra las inundaciones, y limpiar
y mantener de forma proactiva la
infraestructura de los desagües pluviales.

Esta cuota permitiría a la ciudad estar
mejor equipada para eliminar la basura
y la contaminación antes de que lleguen
a la Bahía de Monterey. Esta cuota no
solo contribuiría al mantenimiento de
las infraestructuras existentes, sino que
también ayudaría a financiar proyectos
de inversión de alta prioridad y proyectos
de restauración de Cuenca destinados
a proteger contra las inundaciones y
mejorar la calidad del agua.

Su opinión ayudará a determinar el
nivel de servicio que se presta con la
cuota y contribuirá a configurar un
estudio sobre las cuotas. Los resultados
del estudio final estarán disponibles
en el futuro. Actualmente, la ciudad
estima que el costo de una propiedad
residencial unifamiliar de tamaño
mediano es de aproximadamente $7.72
dólares al mes, con tarifas variables
para otros tipos de propiedades. Sin una
cuota específica razonable, la Ciudad
de Monterey tendría que recortar otros
servicios para cumplir los requisitos
normativos mínimos de aguas pluviales.

Las aguas pluviales fluyen sobre los
techos, las calles y las zonas ajardinadas,
recogiendo residuos, sedimentos y
contaminantes antes de entrar en el
sistema de alcantarillado pluvial. A
diferencia de las aguas residuales, las
aguas pluviales no se tratan antes de
llegar a la Bahía de Monterey.

Para obtener más información, visite:

Monterey.gov/stormwaterprogram
Monterey.gov/stormwaterpollution
ATTACHMENT 4
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 61, Packet Page 122 This survey has been mailed to a random sample of residents and business owners in the City of Monterey to gather information and input. This information will help the City make decisions about funding for future stormwater management activities. Please complete and return this survey as soon as possible. You may take the survey online or mail the completed survey below in the postage-prepaid return envelope provided. Please provide your response by December 19, 2025.

Detach Here Fill in Lower Portion, Detach at this Line, and Mail Back in Return Envelope Detach Here Definitely YES Probably YES Probably NO Definitely NO
Residents and business owners within Monterey may be asked to vote on a monthly fee.

Please indicate your level of support.

STORMWATER

OFFICIAL SURVEY
As you review the following questions, please think about how a stormwater fee could be reinvested in our community: Very Important Survey Instructions:
1) Read each question listed below.
2) Fill in the circle for your response. Please use a
pen and completely fill in the circle.
3) Detach the bottom portion of this sheet
containing your answers.
4) Place the bottom portion of this sheet in the
return envelope and mail (no postage needed).

In order to protect properties from flood damage, reduce flooding of streets, and prevent pollution of Monterey Bay and our local creeks and channels, would you support a monthly fee in the amount of _____ ?*

2. Capturing stormwater runoff and protecting the City of Monterey from local street and property flooding?..........................................................................................................................................................

3. Proactively cleaning drains & performing other preventative maintenance before a storm starts?....

4. Having the infrastructure and the operations team to remove trash and pollution before it enters Monterey Bay? ...............................................................................................................................................

5. Continuing to address drainage and water quality challenges in ways that are environmentally sustainable? ....................................................................................................................................................

6. Strengthening infrastructure in response to extreme weather events, sea level rise, and more frequent and intense storms?.......................................................................................................................

7. Utilizing stormwater runoff as a potential additional water resource? ....................................................

8. Ensuring dedicated funding for stormwater services, that cannot be used for any other reason?.....

To complete this survey online please do one of the following:
• visit www.inputlocal.com, enter: SURVEY NAME “MONTEREYSW”, SURVEY CODE ________, or • scan the QR CODE on the right with your phone and follow the instructions.

1. This survey is being conducted by an independent third party on behalf of the City. All information obtained through this process will remain confidential and only shared with the City in aggregate form.

Please use the space below to write any reasons why you support or oppose this proposed fee. Also, please describe which issues are most important to you:
*If you own multiple properties in the City, amount shown is the total combined amount of your properties.

Important
Moderately
Important
Slightly
Important
Not
Important
HOW IMPORTANT IS...

ATTACHMENT 4
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 62, Packet Page 123 Esta encuesta se ha enviado por correo a una muestra aleatoria de los residentes y dueños de negocios de la Ciudad de Monterey para recopilar información y opiniones. Esta información ayudará a la ciudad a tomar decisiones sobre la financiación de las futuras actividades de gestión de las aguas pluviales. Complete y envíe esta encuesta lo antes posible. Puede realizarla en línea o devuélvala en el sobre con porte prepagado que recibió.Por favor, envíe esta encuesta antes del 19 de diciembre de 2025.

Es posible que se solicite a los residentes y dueños de negocios de Monterey que voten sobre una cuota mensual. Por favor, indique su nivel de apoyo.

ENCUESTA OFICIAL DE

LAS AGUAS PLUVIALES
Mientras revisa las siguientes preguntas, piense en cómo se podría reinvertir una cuota por aguas pluviales en nuestra comunidad: Muy Importante ¿Con el fin de proteger las propiedades contra los daños causados por las inundaciones, reducir las calles inundadas, prevenir la contaminación de la Bahía de Monterey, los arroyos, y canales locales, apoyaría una cuota mensual de _____?*

2. ¿Capturando la escorrentía de aguas pluviales y protegiendo a la Ciudad de Monterey de inundaciones locales en calles y propiedades?.................................................................................................

3. ¿Limpiar de manera proactiva los desagües y realizar otras tareas de mantenimiento preventivo antes de las tormentas?........................................................................................................................................

4. ¿Contar con la infraestructura y el equipo operativo necesarios para eliminar la basura y la contaminación antes de que lleguen a la bahía de Monterey?...................................................................

5. ¿Seguir abordando los retos relacionados con el drenaje y la calidad del agua de forma sostenible para el medio ambiente?

6. ¿Fortalecer la infraestructura en respuesta a los fenómenos meteorológicos extremos, aumento del nivel del mar y las tormentas más frecuentes e intensas?........................................................................

7. ¿Aprovechando la escorrentía de aguas pluviales como un posible recurso hídrico adicional?................

8. ¿Cómo garantizar una financiación específica para los servicios de aguas pluviales, que no pueda utilizarse para ningún otro fin?................................................................................................................................................

1. Esta encuesta la realiza un tercero independiente. Toda la información obtenida a través de este proceso será confidencial y solo se compartirá con la ciudad de forma agregada.

Utilice el espacio a continuación para escribir las razones por las que apoya o se opone a esta propuesta. Además, describa los temas que considera más importantes para usted:

Importante
Moderadamente
Importante
Ligeramente
Importante
No es
Importante
QUÉ TAN IMPORTANTE ES...

Instrucciones para la encuesta:
1) Lea cada una de las preguntas a continuación.
2) Rellene el círculo con su respuesta. Utilice un
bolígrafo y rellene completamente el círculo.
3) Separe la parte inferior de esta hoja que contiene
sus repuestas.
4) Coloque la parte inferior de esta hoja en el sobre
de devolución y envíela por correo (no necesita
franqueo).

Corte aqui Complete la parte de abajo, corte en esta linea y enviela por correo en el sobre Corte aqui Elija una de las siguientes opciones para completar esta encuesta en línea:
• visita www.inputlocal.com, e introduzca el SURVEY NAME “MONTEREYSS”, CÓDIGO DE LA ENCUESTA_________; o bien • escanee el código QR a la derecha con su teléfono y siga las instrucciones.

Definitivamente SÍ Probablemente SÍ Probablemente NO Definitivamente NO *Si usted es propietario de varias propiedades en la ciudad, el monto indicado es el total combinado de todas sus propiedades.

ATTACHMENT 4
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 63, Packet Page 124 Survey Results – Monterey Stormwater Fee (50% needed to pass)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%
18 to 29 30 to 39 40 to 49 50 to 64 65 to 99
% Support
Age
Support by Age

7.72 0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

D DD MX OR R RR
% Support
Political Party
Support by Political Party

7.72 0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%
00 to 04 05 to 09 10 to 14 15 to 19 20 to 25 25 to 99
% Support
Years in Residence
Support by Years in Residence

7.72 ATTACHMENT 5
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 64, Packet Page 125 ATTACHMENT 5
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 65, Packet Page 126

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% Strengthening infrastructure in response to extreme weather events, sea level rise, and more frequent and intense storms?
Utilizing stormwater runoff as a potential additional water resource? Ensuring dedicated funding for stormwater services, that cannot be used for any other reason?
Continuing to address drainage and water quality challenges in ways that are environmentally sustainable?
Capturing stormwater runoff and protecting the City of Monterey from local street and property flooding?
Having the infrastructure and the operations team to remove trash and pollution before it enters Monterey Bay?
Proactively cleaning drains & performing other preventative maintenance before a storm starts?
% Support
Detailed Support by Projects and Issues for Potential Swing Voters 'Probably YES' Respondents 'Probably NO' Respondents
ATTACHMENT 5
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 66, Packet Page 127 Property Owners in Favor of the Assessment
44 Overall Support for the Proposed Assessment
87 Support with Environmental Concerns
10 Other Methods to address problems
23 Comments on Increasing Costs
8 Concerns of Waste
25 Misc. / Need more info
197 Total
44 Overall Support for the Proposed Assessment
87 Support with Environmental Concerns
38 Duty to support climate change
40 Protect the bay
9 Homes flooding
10 Other Methods to address problems
5 Provide preventative methods to address runoff
2 Keeping streets clean
3 Collab with others to maintain drainage
23 Comments on Increasing Costs
19 I support this tax but I do not want it to increase over time 4 This is neccesary
8 Concerns of Waste
6 Is city not already doing this?
2 Concerns of city debt
25 Misc. / Need more info
6 Accountability needed
4 Transparency/More info needed
4 Allow usage of rainwater without permits
11 Pull from other sources
Property Owners Against the Assessment
94 Taxes & Assessments are already too High
78 Mistrust or Lack of confidence in the District/Government 29 Fixed Income
16 Need more Information
6 Parcel does not receive benefit from assessments
23 Cost
245 Total
94 Taxes & Assessments are already too High
78 Mistrust or Lack of confidence in the District/Government 29 Fixed Income
16 Need more Information
23 Cost
6 Parcel does not receive benefit from assessments
Summary of written comments included with survey responses ATTACHMENT 5
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 67, Packet Page 128 Stormwater Fee Schedule to Fully Cover the Costs
ATTACHMENT 6
Council Regular Meeting, 3/3/2026, Item No. 14., Item Page 68, Packet Page 129

Monterey City CouncilMarch 3, 2026

Monterey City Council
March 3, 2026