Morgan Hill City Council
May 4, 2022

3. Workers' Compensation and Employers Liability: Workers' Compensation limits as required by the Labor Code of the State of California and Employers Liability limits of $100,000 per accident. '

4. Property Insurance: Full replacement cost with no co-insurance penalty provision.

C. Other Insurance Provisions.

The policies are to contain, or be endorsed to contain, the following .provisions:

1. Commercial General Liability and Automobile Liability Coverage(s) a. The City of Morgan Hill, its officers, employees, agents and contractors are to be covered as additional insured_(s) as respects: Liability arising out of activities performed by or on behalf of, COMPANY; products and completed operations of COMPANY; premises owned, leased or used by COMPANY; and automobiles owned, leased, hired or borrowed by COMPANY. The coverage shall contain no special limitations on the scope of protection afforded to CITY, its officers, employees, agents and contractors.
b. COMPANY'S insurance coverage shall be primary insurance as respects CITY, its officers, employees, agents and contractors. Any insurance or self-insurance maintained by CITY, its officers, employees, agents or contractors shall be excess of COMPANY'S insurance and shall not contribute with it.
c. Any failure to comply with reporting provisions of the policies by COMPANY shall not affect coverage provided CITY, its officerst employees, agents, or contractors.
d. Coverage shall state that COMPANY'S insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability.

2. All Coverage( s)
Each insurance policy required by this AGREEMENT shall not be cancelled or materially changed except after thirty (30) days' prior written notice has been given to CITY.

D. Acceptability of Insurers.

Insurance is to be placed with insurers with an AM Best rating of A-VII or greater. 27

E. Verification of Coverage.

COMPANY shall furnish CITY with copies of broad form additional insured endorsement upon execution of this lease and upon each policy -renewal thereafter.

The certificates and endorsements for each insurance policy are to be signed by a person authorized by that° insurer to bind coverage on its behalf. CITY has right to review and approve any replacement insurance policy and would not reasonably withhold such approval.

Proof of insurance shall be mailed to the following address or any subsequent address as may be directed in writing by the Risk Manager:

F. Subcontractors.

CITY OF MORGAN HILL
Risk Manager
17555 Peak Avenue
Morgan Hill, California 95112-5509
COMPANY shall require all subcontractors to obtain coverage as specified above.
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5 CITY COUNCIL STAFF REPORT
MEETING DATE: May 4, 2022
PREPARED BY:

Dat Nguyen, Finance Director
APPROVED BY: City Manager

APPROVE CONTRACT AGREEMENT WITH INFOSEND FOR UTILITY

BILLING PRINTING, MAILING, ELECTRONIC BILL PRESENTMENT

AND PAYMENT SERVICES, AND PAYMENT PROCESSING SERVICES

RECOMMENDATION(S)
Authorize the City Manager to execute an agreement with Infosend for an amount notto-exceed $199,516 for a three-year term for utility bill printing, mailing, electronic bill presentment and payment services, and payment processing services.

Estimated Time:

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Protecting the Environment and Preserving Open Space and Agricultural Land 2022-2023 Strategic Priorities
Fiscal Sustainability
Community Outreach, Engagement, and Messaging
REPORT NARRATIVE:

The City of Morgan Hill currently bills utility (water and wastewater) customers on a monthly basis. The City has been using Infosend, Inc. for numerous years to process the monthly bill printing and mailing. In 2009, the City revamped its website to provide customers with an on-line option to receive and pay their bills. On March 18, 2009, staff recommended, and City Council authorized a contract with Infosend, Inc for combined billing services of printing, mailing, and electronic bill presentment and payment (EBPP).

Subsequently, staff recommended and City Council authorized a new contract with Infosend, Inc. for EBPP through a request for proposals (RFP) on June 21, 2017.

Infosend offered to enter into a new agreement with the option to extend up to two additional one-year terms with an added service of payment processing.

The proposed new agreement would keep the cost the same as the existing agreement except for added new eBusiness Services or payment processing services and enhanced communication and messaging, including Interactive Voice Response (IVR) and SMS Text-to-Pay, which allow customers to make payments via automated phone service and text reply to have the registered

5 payment method payment drafted, speeding up the time to payment. Staff believes this is a good offer as a new RFP would not likely result in any savings. In addition, staff has overall been very satisfied with the services Infosend has provided. Furthermore, a possible switch to a new vendor for EBPP would create confusion for customers.

COMMUNITY ENGAGEMENT:

Inform
This staff report serves to inform the community of the proposed contract agreement with Infosend, Inc. for EBPP and payment processing services.

ALTERNATIVE ACTIONS:

The City Council could decide not to authorize the City Manager to execute an agreement with Infosend and direct staff to go through an RFP process.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

On June 21, 2017, the City Council approved an agreement with Infosend for Utility Billing's EBPP services.

FISCAL AND RESOURCE IMPACT:

The costs for these services are budgeted in the current adopted budget.

CEQA (California Environmental Quality Act):

Not a Project
Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.

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SERVICE AGREEMENT
INFOSEND, INC.

THIS AGREEMENT is entered into and becomes effective on July 1, 2022 (Effective Date), by and between the CITY OF MORGAN HILL, a municipal corporation, ("CITY"), and InfoSend, Inc a California corporation ("SERVICE PROVIDER") hereinafter referred to collectively as “Parties.” In consideration of the promises and the mutual covenants contained in this Agreement, the Parties agree as follows:

1. City Authority. This Agreement is entered into pursuant to the action of the Morgan Hill City Council taken on __________, ____, 2022

2. Term of Agreement. This Agreement shall cover services rendered from the Effective Date of this Agreement until June 30, 2025, at which time SERVICE PROVIDER’S services shall be completed. The City Manager is authorized to extend the term of this Agreement for up to two, one-year periods. Any such extension shall be in writing and signed by both Parties to this Agreement.

3. Scope of Service. The services to be performed by SERVICE PROVIDER shall be Utility Billing Customer Services as further described in Exhibit A.

4. Compensation. SERVICE PROVIDER shall be compensated as follows:

4.1. Amount. $199,516.00. Total compensation to SERVICE PROVIDER under this Agreement during its initial term set forth in Section 2 above shall not exceed One Hundred Ninety-Nine Thousand, Five Hundred Sixteen and no/100 dollars and shall be billed based on the rate and basis set forth in Exhibit B. If the City Manager extends the term of this Agreement pursuant to the provisions of Section 2 above, the City Manager shall have the authority to increase the maximum compensation allowed to be paid to SERVICE PROVIDER during that extended term period, so long as City Council has appropriated sufficient funds therefor, the Parties mutually agree to such amount in a writing signed by both Parties to this Agreement and provided further that in no event shall such maximum compensation allowed for the extended term exceed 105% of the maximum compensation allowed to be paid to SERVICE PROVIDER for one year of service during the initial term of this Agreement.

4.2. Billing. SERVICE PROVIDER shall provide CITY with an invoice containing the dated, detailed, and itemized descriptions of all services performed and expenses incurred (if such expenses are reimbursable pursuant to Exhibit B) by SERVICE PROVIDER on a monthly basis unless otherwise specified in Exhibit B. All invoices shall be sent to the CITY addressed to the department head or project manager identified below in Section 14 Notices. Payment will be made to SERVICE PROVIDER within thirty (30) days of receipt of invoice by CITY. Any rate charged shall be prorated where services are interrupted or not provided for any rate period (for example, any monthly rate charge should be prorated when services were interrupted or provided for only part of the month).

For services billed on an hourly rate, the minimum unit of billed time shall not exceed one tenth of one hour. CITY shall pay for services and expenses (if so provided in Exhibit B) up to the limit of compensation set forth above, that in the CITY’s judgment were necessary and reasonable.

Services for work performed and expenses incurred in excess of the total compensation set forth in paragraph 4.1 above shall be at no cost to CITY.

5. Termination. CITY or SERVICE PROVIDER shall have the right to terminate this Agreement, without cause, by giving thirty (30) days' written notice or less under urgent circumstances. Upon such termination, SERVICE PROVIDER shall submit to CITY an itemized statement of services performed for which

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compensation has not been paid. CITY may require SERVICE PROVIDER to complete certain work product or documents and SERVICE PROVIDER shall deliver to CITY all documents in its possession without additional compensation to SERVICE PROVIDER. The City Manager of CITY is authorized to terminate this Agreement, in whole or in part, on behalf of CITY.

5.1. Non-Appropriations. Notwithstanding anything contained in this Agreement to the contrary, if insufficient funds are appropriated, or funds are otherwise unavailable in the budget for CITY for any reason whatsoever in any fiscal year, for payments due under this Agreement, CITY will immediately notify SERVICE PROVIDER of such occurrence, and this Agreement shall terminate after the last day during the fiscal year for which appropriations shall have been budgeted for CITY or are otherwise available for payments.

6. Performance of Work. SERVICE PROVIDER represents that it is qualified by virtue of experience, training, education, and expertise to accomplish these services. Services shall be performed by SERVICE PROVIDER in accordance with professional practices in a manner consistent with a level of care, competence and skill exercised by qualified members of the SERVICE PROVIDER’S profession. By delivery of completed work, SERVICE PROVIDER certifies that the work conforms to the requirements of this Agreement and all applicable federal, state and local laws. CITY's City Manager is authorized on behalf of CITY to modify the timeframes set forth on the Schedule of Performance within the term of this Agreement. If SERVICE PROVIDER desires to leave or store any of SERVICE PROVIDER's equipment at a CITY site while SERVICE PROVIDER is performing work or service pursuant to this Agreement, SERVICE PROVIDER will first obtain the consent of CITY's City Manager, or his/her delegate, to do so, and any such storage shall occur only in the manner and location allowed by such CITY official and entirely at SERVICE PROVIDER's sole risk.

7. Hazardous Materials. Without limiting any other requirement or obligation of SERVICE PROVIDER under this Agreement, if SERVICE PROVIDER needs to use any material or chemical considered to be a hazardous material under any federal, state or local law, regulation or policy, SERVICE PROVIDER agrees to fully and timely abide by and comply with all laws, regulations and policies pertaining to the use, transport, removal, handling, disposal or other activity related to any and all such materials or chemicals. Prior to commencement of work or services under this Agreement, SERVICE PROVIDER shall provide CITY with a complete list of the hazardous materials SERVICE PROVIDER reasonably anticipates it may need to use to provide the services of SERVICE PROVIDER under this Agreement, together with the reasonably anticipated quantities thereof, if requested by CITY.

8. Insurance Requirements. SERVICE PROVIDER shall procure and provide proof of the insurance coverage required by this section in the form of certificates and endorsements. The required insurance must cover the activities of SERVICE PROVIDER, including its subcontractors, employees and agents, relating to or arising from the performance of any work or service under this Agreement, and must remain in full force and effect at all times during the period covered by this Agreement. The coverages may be arranged under a single policy for the full limits required or by a combination of underlying policies with the balance provided by excess or “umbrella” policies, provided each such policy complies with the requirements set forth herein.

Any deductibles or self-insured retentions must be declared to and approved by City. SERVICE PROVIDER further understands that the CITY reserves the right to modify the insurance requirements set forth herein, with thirty (30) days’ notice provided to SERVICE PROVIDER, at any time as deemed necessary to protect the interests of the CITY.

8.1. Insurance Types and Amounts.

8.1.1. Commercial General Liability (CGL). SERVICE PROVIDER shall maintain CGL against claims and liabilities for personal injury, death, or property damage providing protection in the minimum amount of: (i) one million dollars ($1,000,000.00) combined single limit for

3 Negotiated March 2022
any one accident or occurrence, or (ii) the maximum amount of such insurance available to SERVICE PROVIDER under SERVICE PROVIDER’s combined insurance policies (including any excess or “umbrella” policies), whichever is greater.

8.1.2. Automobile Liability. SERVICE PROVIDER shall maintain Automobile Liability covering all owned, non-owned and hired automobiles (if SERVICE PROVIDER does not own automobiles, then SERVICE PROVIDER shall maintain Hired/Non-owned Automobile Liability) against claims and liabilities for personal injury, death, or property damage providing protection in the minimum amount of: (i) one million dollars ($1,000,000.00) combined single limit for any one accident or occurrence, or (ii) the maximum amount of such insurance available to SERVICE PROVIDER under SERVICE PROVIDER's combined insurance policies (including any excess or “umbrella” policies), whichever is greater.

8.1.3. Workers’ Compensation Insurance and Employer’s Liability. SERVICE PROVIDER shall maintain Workers Compensation coverage, as required by law, in the minimum amount of: (i) one million dollars ($1,000,000.00) for any one accident or occurrence, or (ii) the maximum amount of such insurance available to SERVICE PROVIDER under SERVICE PROVIDER's combined insurance policies (including any excess or “umbrella” policies), whichever is greater. If SERVICE PROVIDER is self-insured, SERVICE PROVIDER shall provide its Certificate of Permission to Self-Insure, duly authorized by the Department of Industrial Relations.

8.1.4. Professional Liability.

8.1.4.1. If the performance of SERVICE PROVIDER’s work or service under this Agreement involves professional and/or technical services (examples include, but are not limited to, architects, engineers, land surveyors, and appraisers), SERVICE PROVIDER shall procure and maintain either a claims made or occurrence Errors and Omission liability insurance in the minimum amount of: (i) one million dollars ($1,000,000.00) each claim, or (ii) the maximum amount of such insurance available to SERVICE PROVIDER under SERVICE PROVIDER's combined insurance policies (including any excess or “umbrella” policies), whichever is greater. Further, if SERVICE PROVIDER maintains a claims-made policy, SERVICE PROVIDER shall provide written evidence of such insurance to the CITY for at least five (5) years after the completion of work performed under this Agreement.

8.1.4.2. If the performance of SERVICE PROVIDER’s work or service under this Agreement relates to Information Technology or related services (examples include, but are not limited to computer programmers, software designers, hardware engineers, or other systems consultants), SERVICE PROVIDER shall procure and maintain a claims made Errors and Omission liability insurance, including Cyber Liability and Data Breach, in the minimum amount of: (i) one million dollars ($1,000,000.00) each claim, or (ii) the maximum amount of such insurance available to SERVICE PROVIDER under SERVICE PROVIDER's combined insurance policies (including any excess or “umbrella” policies), whichever is greater.

8.1.5. Crime/Fidelity Bond: If the performance of SERVICE PROVIDER’s work or service under this Agreement relates to or involves handling of city monies, SERVICE PROVIDER shall procure and maintain CRIME insurance, in the minimum amount of: (i) three hundred thousand dollars ($300,000.00) per occurrence, covering all Service Providers’ officers and employees, for loss of City monies caused by

4 Negotiated March 2022
dishonesty and/or theft.

8.2. Endorsements. SERVICE PROVIDER shall provide proof of the following endorsements, listed for each policy for which endorsements are required, as outlined below:

8.2.1. General Liability.

8.2.1.1. The City of Morgan Hill, its elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers are named as additional insureds;

8.2.1.2. The insurer waives the right of subrogation against the City of Morgan Hill and the CITY’s elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers; and,

8.2.1.3. Insurance shall be primary non-contributing.

8.2.2. Workers Compensation.

If the performance of SERVICE PROVIDER’S work or service under this Agreement involves access to or activity on any property or premises owned or occupied by the CITY, including, but not limited to, SERVICE PROVIDER’S presence during site visits and meetings, then insurer waives the right of subrogation against the City of Morgan Hill and the CITY’s elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers.

8.3 Qualification of Insurers. All insurance required pursuant to this Agreement must be issued by a company licensed and admitted, or otherwise legally authorized to carry out insurance business in the State of California, and each insurer must have a current A.M. Best's financial strength rating of “A” or better and a financial size rating of “VII” or better.

8.4 Certificates. SERVICE PROVIDER shall furnish CITY of Morgan Hill with copies of all certificates as outlined herein, whether new or modified, promptly upon receipt. In the event of a claim or legal action, SERVICE PROVIDER shall promptly furnish CITY of Morgan Hill with copies of all policies outlined herein. No policy subject to the SERVICE PROVIDER’s agreement with the CITY shall be canceled or materially changed except after thirty (30) days' notice by the SERVICE PROVIDER to CITY. A "material change" is a change that results in non-compliance with any insurance requirements in this section 8. Certificates, including renewal certificates, may be mailed electronically to [email protected] or delivered to the Certificate Holder address provided herein.

Certificate Holder address:

City of Morgan Hill
Attn: Risk Management
17575 Peak Avenue
Morgan Hill, CA 95037

9. Non-Liability of Officials and Employees of the CITY. No official or employee of CITY shall be personally liable for any default or liability under this Agreement.

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10. Compliance with Law.

10.1. SERVICE PROVIDER and its officers, employees, agents, and subcontractors shall comply with all applicable laws, ordinances, administrative regulations, and permitting requirements in carrying out their obligations under this Agreement. SERVICE PROVIDER and its officers, employees, agents, and subcontractors covenant there shall be no discrimination based upon race, color, creed, religion, gender, marital status, age, sexual orientation, national origin, mental disability, physical disability, medical condition, or ancestry, in any activity pursuant to this Agreement.

10.2. Compliance with Wage and Hour Laws: SERVICE PROVIDER, and any subcontractor it employs to complete work under this Agreement, shall comply with all applicable federal, state and local wage and hour laws. Applicable laws may include, but are not limited to, the Federal Fair Labor Standards Act and the California Labor Code.

Final Judgments, Decisions, and Orders: For purposes of this Section, a “final judgment, decision, or order” refers to one for which all appeals have been exhausted or the time to appeal has expired. Relevant investigatory government agencies include: the federal Department of Labor, the California Division of Labor Standards Enforcement, or any other governmental entity or division tasked with the investigation and enforcement of wage and hour laws.

Prior Judgments against SERVICE PROVIDER and/or its subcontractors: BY SIGNING THIS

AGREEMENT, SERVICE PROVIDER AFFIRMS THAT IT HAS DISCLOSED ANY FINAL

JUDGMENTS, DECISIONS OR ORDERS FROM A COURT OR INVESTIGATORY GOVERNMENT AGENCY FINDING – IN THE FIVE (5) YEARS PRIOR TO EXECUTING THIS AGREEMENT – THAT SERVICE PROVIDER OR ITS SUBCONTRACTOR(S) HAS VIOLATED ANY APPLICABLE WAGE AND HOUR LAWS. SERVICE PROVIDER FURTHER AFFIRMS THAT IT OR ITS SUBCONTRACTOR(S) HAS SATISFIED AND COMPLIED WITH – OR HAS

REACHED AGREEMENT WITH THE CITY REGARDING THE MANNER IN WHICH IT WILL SATISFY – ANY SUCH JUDGMENTS, DECISIONS OR ORDERS.

Judgments or Decisions During Term of Contract: If at any time during the term of this Agreement, a court or investigatory government agency issues a final judgment, decision or order finding that SERVICE PROVIDER or any subcontractor it employs to perform work under this Agreement has violated any applicable wage and hour law, or SERVICE PROVIDER learns of such a judgment, decision, or order that was not previously disclosed, SERVICE PROVIDER shall inform the City Attorney, no more than fifteen (15) days after the judgment, decision or order becomes final or of learning of the final judgment, decision or order. SERVICE PROVIDER and its subcontractors shall promptly satisfy and comply with any such judgment, decision, or order, and shall provide the City Attorney with documentary evidence of compliance with the final judgment, decision or order within five (5) days of satisfying the final judgment, decision or order. CITY reserves the right to require SERVICE PROVIDER to enter into an agreement with CITY regarding the manner in which any such final judgment, decision, or order will be satisfied.

City’s Right to Withhold Payment: Where SERVICE PROVIDER or any subcontractor it employs to perform work under this Agreement has been found in violation of any applicable wage and hour law by a final judgment, decision or order of a court or government agency, CITY reserves the right to withhold payment to SERVICE PROVIDER until such judgment, decision or order has been satisfied in full.

Material Breach: Failure to comply with any part of this Section constitutes a material breach of this Agreement. Such breach may serve as a basis for immediate termination of this Agreement

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and/or any other remedies available under this Agreement and/or law.

Notice to City Related to Wage Theft Prevention: Notice provided to the City Attorney as required under this Section shall be addressed to: City Attorney, City of Morgan Hill, 17575 Peak Avenue, Morgan Hill, CA 95037. The Notice provisions of this Section are separate from any other notice provisions in this Agreement and, accordingly, only notice provided to the above address satisfies the notice requirements in this Section.

11. Independent Contractor. SERVICE PROVIDER is an independent contractor and not an agent or employee of CITY.

12. Confidentiality. All data, documents, or other information received by SERVICE PROVIDER from CITY or prepared in connection with SERVICE PROVIDER’S services under this Agreement are deemed confidential and shall not be disclosed to any third party by SERVICE PROVIDER without prior written consent by CITY.

13. Conflict of Interest and Reporting. SERVICE PROVIDER shall at all times avoid conflict of interest or appearance of conflict of interest in performance of this Agreement.

14. Notices. All notices shall be personally delivered or mailed, via first class mail to the below listed address. These addresses shall be used for delivery of service of process. Notices shall be effective five (5) days after date of mailing, or upon date of personal delivery.

Address of SERVICE PROVIDER is as follows:

Infosend, Inc.
4240 E La Palma Ave
Anaheim, CA 92807-1816
Address of CITY is as follows:

Utility Billing
City of Morgan Hill
17575 Peak Avenue
Morgan Hill, CA 95037
with a copy to:

City Clerk
City of Morgan Hill
17575 Peak Avenue
Morgan Hill, CA 95037

15. Licenses, Permits and Fees. SERVICE PROVIDER shall obtain a City of Morgan Hill Business License, all permits and licenses to the extent required by ordinances, codes, and regulations of the federal, state and local government.

16. Service Provider's Proposal. If applicable, this Agreement shall include SERVICE PROVIDER'S proposal or bid which is incorporated herein. In the event of any inconsistency between the terms of the proposal and this Agreement, this Agreement shall govern.

17. Maintenance of Records.

17.1. Maintenance. SERVICE PROVIDER shall prepare, maintain, and preserve all reports and records that may be required by federal, state, and CITY rules and ordinances related to services provided under this Agreement. SERVICE PROVIDER shall maintain records for a

7 Negotiated March 2022
period of at least 3 years after receipt of final payment under this Agreement. If any litigation, claim, negotiation, audit exception, or other action relating to this Agreement is pending at the end of the 3-year period, then SERVICE PROVIDER shall retain said records until such action is resolved.

17.2. Access to and Audit of Records. The CITY shall have the right to examine, monitor and audit all records, documents, conditions, and activities of the SERVICE PROVIDER and its subcontractors related to services under this Agreement. Pursuant to Government Code Section 8546.7, if this Agreement involves the expenditure of public funds in excess of $10,000, the Parties to this Agreement may be subject, at the request of the CITY or as part of any audit of the CITY, to the examination and audit of the State Auditor pertaining to matters connected with the performance of this Agreement for a period of three years after final payment under the Agreement.

17.3. Ownership of Work Product. All documents or other information developed or received by SERVICE PROVIDER for work performed under this Agreement shall be the property of CITY.

SERVICE PROVIDER shall provide CITY with copies of these items upon demand or upon termination of this Agreement.

18. Familiarity with Work. By executing this Agreement, SERVICE PROVIDER represents that: (1) it has investigated the work to be performed; (2) it has investigated the site of the work and is aware of all conditions there; and (3) it understands the difficulties and restrictions of the work under this Agreement. Should SERVICE PROVIDER discover any conditions materially differing from those inherent in the work or as represented by CITY, it shall immediately inform CITY and shall not proceed, except at SERVICE PROVIDER'S risk, until written instructions are received from CITY.

19. Time of Essence. Time is of the essence in the performance of this Agreement.

20. Force Majeure. Neither party shall be liable, or deemed to be in default, to the other for any failure or delay in performing an obligation under this Agreement to the extent that its performance is delayed, impaired or rendered impossible by an event beyond its control (“Force Majeure Event”) such as natural disasters, war, terrorist acts, riots, labor strikes, civil disturbances, extra-ordinary losses of utilities (including telecommunications services), computer “hacker” attacks on internet infrastructure, regulatory restrictions, change in law or regulation or other acts of government authority, including civil and military authorities and courts, fuel or energy shortages, labor shortages, transportation stoppages or slowdowns, the inability to procure parts or raw materials, and/or acts or omissions of common carrier. These causes will not excuse CITY from paying previously accrued payables due to SERVICE PROVIDER through any available lawful means acceptable to InfoSend.

21. No Assignment. Neither this Agreement nor any portion shall be assigned by SERVICE PROVIDER, without prior written consent of CITY. Any attempted assignment not first approved by CITY shall be void and, at CITY's option, shall terminate this Agreement effective as of the date of such attempted assignment.

22. Attorney Fees. In any legal action, dispute or arbitration arising out of or relating to this Agreement, the prevailing party shall be entitled to an award of its reasonable attorney fees, costs and expenses incurred.

23. Defense and Indemnification.

23.1. Defense and Indemnification. SERVICE PROVIDER shall, to the fullest extent permitted by law, indemnify, defend and hold harmless CITY, its elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers (“INDEMNITEES”) from and against any and all claims,

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liabilities, expenses, liens, or damages of any nature, including liability for bodily injury, property damage or personal injury, and including reasonable attorneys' fees and expenses, that arise out of, pertain to, or relate to the performance of this Agreement or the failure to comply with any obligations contained in this Agreement by SERVICE PROVIDER, and/or its agents, officers, employees, subcontractors, or independent contractors (“CLAIM”).

23.2. Exceptions. SERVICE PROVIDER is not required to indemnify INDEMNITEES against liability for bodily injury, property damage or personal injury, or any other loss, damage or expense arising from the sole negligence or willful misconduct of the CITY.

23.3. Not limited by insurance. The indemnity, defense and hold harmless provisions of this Agreement apply to all CLAIMs alleged against an INDEMNITEE, regardless of whether any insurance policies are applicable. Policy limits do not act as a limitation upon the amount of indemnification or defense to be provided by SERVICE PROVIDER.

23.4. Right to Offset. CITY shall have the right to offset against any compensation due SERVICE PROVIDER under this Agreement any amount due CITY from SERVICE PROVIDER as a result of SERVICE PROVIDER's failure to pay CITY promptly any indemnification arising under this Section (23) and any amount due CITY from SERVICE PROVIDER arising from SERVICE PROVIDER's failure either to (i) pay taxes on amounts received pursuant to this Agreement or (ii) comply with applicable workers' compensation laws.

23.5. Interpretation. This Section shall constitute an agreement or contract of indemnity, incorporating the interpretations under California Civil Code Section 2778. It is expressly understood and agreed that the obligation of the SERVICE PROVIDER to indemnify the INDEMNITEE shall be as broad and inclusive as permitted by the laws of the State of California and shall survive termination of this Agreement.

23.6. Limitation of Liability. In no event shall either party be liable to the other for indirect, special or consequential damages even if such party has been advised of the possibility of such potential claim, loss or damage. The foregoing limitation of liability and exclusion of certain damages shall apply regardless of the success or effectiveness of other remedies.

24. Entire Agreement; Modification; Conflicting Provisions. This Agreement constitutes the entire Agreement between the Parties and supersedes any previous agreements, oral or written. This Agreement may be modified or provisions waived only by a subsequent mutual written agreement executed by CITY and SERVICE PROVIDER. If the provisions contained in the main body of this Agreement conflict with any provision contained in an exhibit to this Agreement, the provisions of the main body of this Agreement shall govern and control over any provision contained in an exhibit to this Agreement.

25. Governing Law and Venue. This Agreement shall be construed in accordance with the laws of the State of California. This Agreement was entered into and is to be performed in the County of Santa Clara. Any action or dispute arising out of this Agreement shall only be brought in Santa Clara County.

26. Interpretation. This Agreement is a negotiated document and shall be deemed to have been drafted jointly by the Parties, and no rule of construction or interpretation shall apply against any particular Party based on a contention that the Agreement was drafted by one of the Parties including, but not limited to, California Civil Code § 1654, the provisions of which are hereby waived. This Agreement shall be construed and interpreted in a neutral manner.

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27. Preservation of Agreement. If any term, provision, covenant, or condition of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the rest of the Agreement shall remain in full force and effect and shall in no way be affected or invalidated.

28. Binding Agreement. Notwithstanding the provisions of Section 20 above, this Agreement shall bind any and all successors in interest, legal representatives and/or other permitted assignees or transferees of SERVICE PROVIDER in the same manner as if those successors in interest, legal representatives or other permitted assignees or transferees had entered into this Agreement originally.

29. Piggyback Cooperative. SERVICE PROVIDER and CITY agree that SERVICE PROVIDER may offer the prices and the terms and conditions offered herein to other government agencies that wish to participate in a cooperative purchase program with the CITY. SERVICE PROVIDER will review these requests from other government agencies on a case-by-case basis to decide whether this Agreement can be extended to the new agency. At a minimum, the following requirements must be met for the prices in this Agreement be extended to the new agency:

29.1 The new agency must require similar types of service for similar document types (i.e. utility bills and notices).The monthly document volume that SERVICE PROVIDER will produce must be similar, or at a minimum, acceptable.

29.2 The new agency must agree to use SERVICE PROVIDER’S standard envelopes.

29.3 If the above conditions are not met, then SERVICE PROVIDER will provide the new agency with revised pricing that it can elect to accept if it moves forward with the cooperative purchase program.

Other agencies will be responsible for entering into separate agreements with the contract and for all payments thereunder.
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[Signatures on Next Page]

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30. Authority to Execute. Those individuals who are signing this Agreement on behalf of entities represent and warrant that they are, respectively, duly authorized to sign on behalf of the entities and to bind the entities fully to each and all of the obligations set forth in this Agreement.

IN WITNESS THEREOF, these Parties have executed this Agreement on the day and year shown below.

AS SET FORTH IN CA. CORP. CODE § 313, TWO SIGNATURES ARE REQUIRED FOR CALIFORNIA CORPORATIONS:
(1) CHAIRPERSON OF THE BOARD, PRESIDENT, OR VICE PRESIDENT; AND (2) SECRETARY, ASSISTANT SECRETARY, CHIEF FINANCIAL OFFICER OR ASSISTANT TREASURER.

ATTEST: CITY OF MORGAN HILL
City Clerk/Deputy City Clerk City Manager
Michelle Bigelow Christina J. Turner
Print Name Print Name
Date: Date:

APPROVED AS TO FORM: InfoSend, Inc.

City Attorney By:

Donald A. Larkin
Print Name Print Name and Title of Signer.

If Corporate: Chairman, President or
Vice President
Date: Date:

By:

Print Name and Title of Signer.

If Corporate: Secretary, Assistant
Secretary, Chief Financial Officer or
Assistant Treasurer

Exhibit A Page 1

EXHIBIT A
Scope of InfoSend Services
This Exhibit provides the Services which InfoSend shall deliver to City to permit City’s customers (“Users”) to use the products and services to view and pay their bills. These services will include:
 Data Processing, Printing and Mailing Service (“DPPM Service”): During the term of this Agreement, InfoSend will provide data processing, printing, and mailing services. The Service consists of processing data, printing documents, mail preparation, applying postage (where applicable) and sending via the United States Postal Service. Document types include but are not limited to bills, postcards, and letters.  eBusiness Services (the “eBusiness Services”): During the term of this Agreement InfoSend will provide eBusiness Services. These services can include presenting bills online and/or accepting and reporting payment transaction information to facilitate ACH and/or credit card payments via web, Interactive-Voice-Response (IVR), SMS, or Bank Billpay (e-Lockbox).

Section 1. Data Processing, Printing and Mailing (DPPM) Service Description A. Data Transfer and Processing
 Client to transmit data to InfoSend in an agreed upon format. Should Client make changes to data file format after initial setup is complete, it agrees to pay for the professional services required to accommodate the new file format. See Professional Services in this Exhibit A for information on initial setup and ongoing programming changes.  Client will monitor transfer confirmation emails to ensure InfoSend is in receipt of the data. Client acknowledges that InfoSend will not be responsible or liable for any transferred data which does not result in a confirmation receipt to Client.
 A File Transfer Report will be emailed to the Client representatives who have opted-in to this email. A copy of this report is also available to download from the InfoSend website.  Client will have access to an online Job Tracking application that shows the progress of each file as it is processed and becomes a batch of documents to be printed and mailed. Client can see both the original input file name and the InfoSend-assigned “Job Code”.
 InfoSend will process the mailing addresses and perform the following functions:
o Apply CASS-certified address validation
o Comply with USPS requirements to obtain pre-sort automation rates for qualified client mail pieces o Stay current with all USPS regulations required to mail presorted first-class mail  InfoSend will optionally provide proofs of the final print-ready PDF files to Client to be reviewed and approved before printing begins (if requested).

B. Document Printing and Mailing
 Batches are printed by InfoSend using a high-speed production process onto the agreed upon forms.  Printed documents are put through a quality control process and then released to the mailing department to be inserted into outgoing envelope. A return envelope and any applicable inserts are included as defined by client workflow.  After a batch of mail is completed in InfoSend’s system it will be marked as such in the online Job Tracker and a Process Confirmation Report will be emailed to the Client representatives who have opted-in to this email. A copy of this report is also available to download from the InfoSend website.

Section 2. eBusiness Service Description
A. General System Description
 Mobile-Ready Customer Engagement: all products are mobile compatible out of the box, with no app store downloads

Exhibit A Page 2
required of customers. Powered by InfoSend’s CCM platform, customer specific messaging and payment reminders are delivered electronically.
 Multi-Channel Payment Collection: InfoSend’s payment platform will consolidate web, telephone, SMS, CSR, in-person EMV and bank payments into a single lockbox file.
 One-Time and Automatic Payments: allow customers to quickly make a one-time payment, as well as sign up to have their payment account auto debited with each billing cycle.
 Bill Notification and Presentment: notify customers via email when a new bill is available, and securely deliver exact replica of printed document to customers inbox or show online via the secure portal.  Interactive Voice Response (IVR): accept customer payments via automated phone service with InfoSend-hosted phone number, enabling client phone systems to redirect customers with ease.  SMS Text-to-Pay: enrolled customers may opt in to receive text notifications of new bills and reply to have the registered payment method drafted for the amount due, speeding up the time to payment.  Bank Payments (MasterCard RPPS): InfoSend can collect payments made via the customer bank and include them within the lockbox file.
 PCI-Compliant Cloud Based Solution: electronic billing and payment related products hosted in the cloud by InfoSend in a secure PCI-Level 1 compliant environment.

B. Data Transfer and Processing
 Client to transmit data to InfoSend in an agreed upon format, using the Data Transfer and Processing workflow described in Section 1.
 Client acknowledges that InfoSend will not be responsible or liable for any transferred data which does not result in a confirmation receipt to Client.
 If the Client is not using InfoSend’s DPPM Service, USPS address workflow will not be applied.  Data loaded into the eBusiness system is used to facilitate accurate payments via Web, IVR, SMS or Bank BillPay.

C. Customer Enrollment and Bill Notification
 Data loaded into the system will be used to facilitate customer enrollment, using two pieces of information specific to the customer bill.
 For enrolled customers, system will send a notification of the new bill available via email.  For enrolled customers who have opted in, system will send an SMS alert.  For customers using the IVR system, bill information will be dictated by text to voice.  For customers paying via Bank BillPay, the account number can be validated by the system prior to accepting payment.  The system may optionally be configured to display a PDF replica of the bill image.

D. Customer Payment and Reporting
 Customers can make payment via Web, SMS, IVR or Bank BillPay, depending on channels which Client has requested InfoSend setup.
 Payments can be configured to allow Users to pay by bank account and/or credit/debit card.  All payments will be reported in a standard daily “lockbox” file.

Professional Services
InfoSend’s Professional Services Fees which InfoSend shall bill to City in exchange for Professional Services.

Section 1. Price Escalations to InfoSend Professional Services Fees InfoSend Professional Services Fees can be adjusted once every twelve (12) months to account for increases to the cost of providing these services. InfoSend reserves the right to increase Professional Services Fees on an annual basis, starting with the first anniversary of the Agreement date, if needed. The City will be notified, in writing, at least thirty (30) days prior to such price increase. An amendment to the Agreement will not be required if the Professional Services Fees are changed unless the terms or conditions of the Agreement have changed.

Exhibit A Page 3
Section 2. Definition of Professional Services
InfoSend Professional Services are the technical services that are required to perform the initial setup of the InfoSend Primary Services defined in this Exhibit A and the technical services required to make changes to these Primary Services after the initial setup is complete. Once any Primary Service is live and operational Professional Services will not be required unless City requests a change or makes changes to its data file format or business rules which necessitates a change to InfoSend’s system configuration or programming. Examples of InfoSend Professional Services:
 Project requirements gathering and analysis hours
 Project management and/or consulting hours
 Software development and system configuration hours related to the processing of City’s data  Software development and system configuration hours related to document design, web portal setup, business rule configuration, or any other applicable technical services  Application testing and deployment hours
Section 3. Professional Services Fee and Process for Approval and Payment of Fee The current Professional Services Fee is $125.00 per hour. In the event that a project will incur billable Professional Services hours, City will be informed before work begins. InfoSend and City will execute a Statement of Work for the project that City wants InfoSend to undertake. The payment terms for the project depend on the size and scope of the project. The Statement of Work can include payment terms that are different than the terms listed in this Agreement for InfoSend Fees, otherwise these terms will apply, and the project fees will be invoiced upon project completion. Small projects that incur less than five (5) hours of Professional Services can be initiated without a Statement of Work if City accepts and executes a Programming Quote for this work.

Any project that will take more than five (5) hours of Professional Services work will require both parties to execute a formal Statement of Work. Depending on the nature of the work required, InfoSend will provide one of the following quotation methods:
 Fixed Quote – a fixed project cost will be set. InfoSend may elect to waive this cost in some circumstances. City understands and accepts that it must accept the terms and conditions of the Statement of Work for the project and that changes made to the project requirements, data file structure, etc., after the Statement of Work and any amendments to it have been finalized will require City to pay for these changes on a Time and Materials basis. City will be notified immediately if this scenario arises and will be given an option to keep the original project specifications to keep the fixed quote in place.  Time and Materials Quote – should it not be possible to provide a fixed quote due to the nature of a City’s requested project, then InfoSend will provide an estimated number of hours to complete the project and bill the hours on a Time and Materials basis. The Statement of Work will include the terms and conditions for these project types and City will be invoiced weekly for the hours spent on the project.

Section 4. Initial Setup Cost: InfoSend Primary Services The Initial Setup cost for the InfoSend Primary Services selected in this Exhibit A are listed in Exhibit B. These costs have been provided using a Fixed Quote process, explained in Section 3 above. City understands and agrees to these terms, and to the project-specific terms and conditions that will be provided in the Statement of Work that will be created to capture City’s specific requirements and data types.

EXHIBIT B
InfoSend Fees
This Exhibit 2 provides the Fees which InfoSend shall bill to City in exchange for Primary Services.

Section 1. Price Escalations to InfoSend Fees
InfoSend Fees may be adjusted once every twelve (12) months to account for increases in the cost of materials, labor, and other overhead costs. InfoSend reserves the right to increase InfoSend Fees on a yearly basis (starting with the first anniversary of the Agreement date). The Client will be notified, in writing, at least thirty (30) days prior to such price increase. An amendment to the Agreement will not be required if the Fees are changed unless the terms or conditions of the Agreement have otherwise changed. Postage fees may change at any time per USPS regulations and do not require an amendment to the Agreement.

In addition to this, if Client uses the Printing and Mailing Service, it accepts that InfoSend reserves the right to pass on any extraordinarily high increases to the cost of forms or envelopes at any time. The Client will be notified, in writing, at least thirty (30) days prior to such price increase.

InfoSend pricing is predicated on Client representations of Client and Client User transactional usage. Should Client’s actual continuous volume and/or recurring frequency deviate by more than thirty percent (30%) from what Client has represented to InfoSend in Section 2 below, then InfoSend reserves the right to invalidate the Fees listed in this Agreement. Should this rare situation arise then InfoSend will notify Client immediately and negotiate with Client in good faith to pass on any increased costs to Client, in line with actual Client and Client User transactional usage. Should InfoSend and Client fail to agree upon updated Fees, InfoSend reserves the right to terminate this Agreement with one hundred and eighty (180) days’ notice.

Section 2. City Representations
Client Volume Assumptions
Customers Contacted or Billed Monthly
-Printed – 13,500/mo
-Enrolled users – 1,020
-eBills Loaded – 14,134
-Average credit card payments per month – 4,531
-Average ACH payments per month – 3,465
-Total electronic payments per month - 7006
Section 3. DPPM Fees:

Data Processing
Data Processing Fee (per document) $0.01
Printing and Mailing Service
Statement Print Fee, per page, with up to 4/1 print $0.068 USPS Postage Pass-through
A postage deposit will be required prior to
starting service.

Print Color Options (colors per side) $0.073 for 4/4 printing Excess Pages Handwork Surcharge (per mail piece) $0.35
Address Updates $0.35 ACS
Materials
Standard Paper Stock (per sheet) $0.015
Standard Outgoing #10 Envelope $0.02
Standard Return #9 Envelope $0.017
Outgoing Flat Envelope – used for mail pieces with excess pages $0.17 Insert Services
InfoSend Produced Quoted based on specification
Envelope Messaging (Snipes) Quoted based on specification Electronic Inserts $0.01 per insert
Inserting Fee $0.01 per insert
Optional Document Services
Print Image Archiving (Per Document Image), with included USPS mail tracking
$0.00 – 24-month archive included
with EBPP
Professional Services Rate (per hour) $125.00
Returned Mail Handling $0.35 per reported returned mail piece Remit Tracking $100 monthly support fee
Section 3.1. Custom Forms/Envelopes
If Client has selected the Printing and Mailing Service and at any time requests that InfoSend Fees include the cost of custom Client-specific materials (either in this Agreement or since its execution), then Client understands and accepts that these materials will be purchased in bulk to achieve the lowest possible per-unit cost. Client agrees to purchase any remaining supplies of requested custom materials (normally forms or envelopes) if Client stops using InfoSend’s Service for any reason. Client agrees to purchase the remaining supply of custom forms/envelopes upon Client’s request to change the custom forms/envelopes before the supply has been depleted.

Section 3.2. USPS Postage Rates
Postage rates are determined by the United States Postal Service. All postage rate changes are determined directly by USPS and are independent of any InfoSend service or materials fees. In no event shall any change in the postage rates affect the InfoSend service or materials fees. The Client will be invoiced the amount of excess for overweight and foreign mail.

Section 3.3. Postage Deposit
This section is waived.

Section 4. eBusiness Service Fees:

Multi-Channel Payments
Bank Account (ACH) $0.34 per payment
Credit Card (CC)
Interchange: Pass-through
$0.34 per payment
Above fees cover payment initiation through all channels hosted by InfoSend. All Payment Processing fees will be assessed by Global Payments and included in a merchant statement.

Interchange rates are determined by the Card Organizations and is passed through to Client. All pricing is based on “Client Volume Assumptions” listed and excludes applicable sales tax.

Online BillPay Platform
Online BillPay Setup Fee, including SSO connection to Water Smart $0.00 – Waived ($4995 value) Monthly Maintenance $199.00
Per eBill Loaded $0.03
Per Enrolled Customer Fee $0.00 - Waived
IVR Platform (Optional)
IVR Setup Fee $0.00 – Waived ($2995 value)
Second Language Recording Setup Fee (Optional) $550.00
Monthly Maintenance $149.00
IVR Per Call Fee $0.23
SMS Platform (Optional)
SMS Setup Fee $0.00 - Waived
Monthly Maintenance $0.00 - Waived
SMS Per Text Fee $0.03
Misc. Payment Fees
Monthly Outbound Voice and SMS Messaging Two buckets offered:
$350.00 – 0 to 5,000 messages
$500.00 – 5,001-10,000 messages
$0.10 per message thereafter
ACH Return Fee $3.50
Chargeback Fee $20.00
In-Person Virtual Terminal Payments Included
(Must purchase device separately)
Online Banking Payment Consolidation (Optional)
Setup Fee $995.00
Per Bank Payment Fee $0.13

Per Reversal (Optional) $3.50
Outbound Notifications (Optional)
Setup Fee $0.00 – Waived ($995 value)
Monthly Minimum (for up to 3000 IVR Minutes and/or SMS
Messages)
$95.00
Per IVR Minute after Minimum $0.10
Per SMS after Minimum $0.10
Section 5. Client Go-Live and Fees
InfoSend will provide Client with a Demo instance of the System to approve configuration and simulation of Services. Upon Client approval of the Demo instance of the System and sample outputs from Services, InfoSend will create a copy of Demo System in Production for completion of final User Acceptance Testing (UAT). Client will be given the UAT Period to complete internal testing prior to initiating Go-Live. All Setup and recurring Monthly Fees will become due upon the sooner of (a) Client Go-Live with the application or (b) 60 days from InfoSend delivery of Production System for UAT.

Section 6. Implementation Project Cost Subsidization:

InfoSend’s internal costs to complete the project is higher than the Setup fees given. InfoSend has subsidized these fees by factoring in years of service given the term of the Agreement. Should Client cancel the project or terminate the Agreement at its convenience less than one (1) year from the Effective Date then it must pay according to the below:
 EBPP Setup Fee: 100% of Setup fees quoted or listed as “Waived” in the pricing exhibit.

EXHIBIT C
Additional Terms & Conditions
This Exhibit C contains terms and conditions which shall supplement the terms and conditions contained in the Service Agreement.

Definitions
The following terms and words shall have the meaning ascribed to them, unless the context clearly indicates otherwise. “User(s)” shall mean a customer or employee of Client accessing InfoSend hosted applications via the Internet. Users of the System will agree to accept all the terms and conditions herein, and may be issued a unique User ID and/or password by InfoSend or Client.
“Services” shall include the performance of the Services detailed in Exhibit A of this Agreement. “System” shall include all InfoSend hosted data and software applications.

License Grant and Restrictions
Grant of License
InfoSend agrees to provide to Users the right to use software and the provision of Services, but in all cases only in full and complete compliance with all of the terms and conditions of this Agreement. Subject to the terms of this Agreement, InfoSend hereby grants, and Client hereby accepts, for the Term (as defined herein) of this Agreement, a non-exclusive, non-transferable license to access and use and to permit its Users to access and use the System via the Internet (the “License”).

License Restrictions
Client hereby agrees not to: (i) reproduce, download, modify, create derivative works from, distribute, or attempt to reverse engineer, decompile, disassemble, or access the source or object code for, the System; (ii) use the System, or any component thereof, in any manner contrary to applicable laws or government regulations; or (iii) otherwise affect or attempt to enable the unauthorized use (with or without User ID and/or password) of the System.

Confidentiality & Intellectual Property
Confidentiality
All information and data relating to Client’s business, as well as all User information, submitted by Client to InfoSend under this Agreement shall be treated as confidential by InfoSend and shall not, except as required to perform the Services under this Agreement or otherwise required by law, be disclosed to any third party by InfoSend without Client’s written consent.

InfoSend shall promptly notify Client should InfoSend be served with a summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, requests for admission, or other discovery request or court order (a “Request to Disclose”) from any third party regarding this Agreement, the Services performed under this Agreement, and/or seeking such information or data. Client shall be responsible to timely make appropriate objections to any Request to Disclose.

Client will not disclose to any third party or use for any purpose inconsistent with this Agreement any confidential or proprietary non-public information it obtains during the term of this Agreement about InfoSend’s business (the “Confidential Information”), which Confidential Information shall include InfoSend’s operations, financial condition, technology, systems, suppliers, clients or prospective clients, marketing data, plans, pricing, and models, or personnel, unless required by applicable law. Client will ensure that its employees and agents similarly abide by the requirements hereof. Client will promptly notify InfoSend of its receipt of a Request to Disclose and Confidential Information, and InfoSend shall be responsible to timely make appropriate objections thereto.

Intellectual Property
InfoSend, and its licensors, where applicable, owns all rights, title and interest, including all related Intellectual Property Rights, in and to InfoSend technology, the content and the Services. The InfoSend name, the InfoSend logo, and the product names associated with the Service are trademarks of InfoSend or third parties, and no right or license is granted to use them.

Representations & Warranties
InfoSend Representations and Warranties
InfoSend represents and warrants that it has the legal power and authority to enter into this Agreement and that Services will be provided in a professional and workmanlike manner.

InfoSend warrants that the Services will materially perform the functions that the Client has selected under normal use and circumstances and that InfoSend shall use commercially reasonable measures to protect Client Data to the extent that it retains such data in the operation of the Services. Provided that Client gives InfoSend written notice of failure to meet the foregoing warranty within sixty (60) days following delivery of any Services, or as otherwise specified in a Statement of Work (“SOW”), InfoSend warrants that it will use commercially reasonable efforts to correct any Services that fail to comply with the foregoing warranty. If there is no notice by Client within sixty (60) days following delivery of any Services, or as otherwise specified in a Statement of Work (“SOW”), it shall be deemed Client has accepted the Services and waived any claims to the otherwise.

Client Representations and Warranties
Client represents and warrants that it has the legal power and authority to enter into this Agreement and provide to InfoSend all information and data necessary for InfoSend to perform the Services. Client further warrants that it will comply with all laws, regulations, and compliance requirements applicable to Client’s and User’s activities covered by this Agreement.

Warranty Disclaimer
Except as expressly set forth above, InfoSend disclaims all other representations or warranties, express or implied, made to Client or any other party, including without limitation, any warranties regarding quality, suitability, merchantability, fitness, for a particular purpose or otherwise of any services or any good provided incidental to the Services provided under this Agreement, to the extent permitted by applicable law.

InfoSend and its licensors and payment processors do not represent or warrant that (i) the use of the Services will be uninterrupted or error-free, or operate in combination with any other hardware, software, system or data; or (ii) the Services will not delay in processing or paying to the extent such delay is caused by things outside the control of InfoSend.

Services may be subject to the limitations, delays, and other problems inherent in the use of the Internet and electronic communications. InfoSend is not responsible for any delays, delivery failures, or other damage resulting from such problems.

In performing the Services, InfoSend is responsible for producing for print or online display the content that Client provides to InfoSend. InfoSend is not responsible for reviewing the content for spelling or typos, nor is InfoSend responsible for verifying the accuracy or legality of the content. It is Client’s sole responsibility to verify that the content that InfoSend’s applications will produce on Client’s behalf is appropriate for distribution.

Inbound Communication Services Disclaimer
InfoSend Inbound Communication services are intended to receive communications and data from clients to facilitate the performance of InfoSend Services. While the inbound services have been created with the best available tools and practices, they are dependent on infrastructure that is inherently not fail-proof, including but not limited to infrastructure such as United States Postal Service (“USPS”) delivery standards, software, computer hardware, network services, telephone and SMS services, and email. Examples of situations that could cause failure include but are not limited to:

USPS failure to deliver, down phone lines, all lines busy, equipment failure, email address changes, and Internet service

disruptions. Client acknowledges that it is aware of the potential hazards associated with using such infrastructure and will be responsible for ensuring InfoSend is in receipt of any communication or data destined for InfoSend. Client releases InfoSend from any and all liability that results from an unsuccessful communication or data transfer to InfoSend, one which does not produce a confirmation receipt from InfoSend.

Outbound Services Disclaimer
InfoSend Outbound Communication services are intended to create additional methods of communication for clients in support of existing processes. These services are not intended to replace all interaction with Client’s end users or employees. While the outbound services have been created with the best available tools and practices, they are dependent on infrastructure that is inherently not fail-proof, including but not limited to infrastructure such as United States Postal Service (“USPS”) delivery standards, software, computer hardware, network services, telephone and SMS services, and email. Examples of situations that could cause failure include but are not limited to: USPS failure to deliver, down phone lines, all lines busy, equipment failure, email address changes, and Internet service disruptions. For this reason, while outbound services are valuable in providing enhanced communication, they are specifically not designed to be used as the sole method to deliver critical messages. Client acknowledges that Client is aware of the potential hazards associated with relying on an automated outbound service feature when using InfoSend services. Client agrees that it is giving up in advance any right to make any claim against InfoSend, and that Client forever releases InfoSend from any and all liability caused by (a) any failed USPS delivery; (b) any failed email delivery; (c) any failed SMS or call attempts (including excess of calls over and above network or system capacity), incomplete calls, or any busy-outs; or (d) any failure to transmit, obtain or collect data from callers or for human and machine errors, faulty or erroneous input, inarticulate caller communication, caller delays or call lengths exceeding estimated call lengths or omissions, delays and losses in connection with the Services provided hereunder. Such release shall include instances where Client, Client’s employees, or Client’s end user suffer injury or damage due to the failure of outbound services to operate, even though InfoSend may know or suspect what or how extensive those injuries or damages might be, unless such losses were directly attributable to InfoSend’s gross negligence or willful misconduct.

6 CITY COUNCIL STAFF REPORT
MEETING DATE: May 4, 2022
PREPARED BY:

Yat Cho, Senior Project Manager
APPROVED BY: City Manager

APPROVE ARTIST AGREEMENT WITH EVELYN DAVIS FOR THE

WEST LITTLE LLAGAS CREEK TRAIL PROJECT

RECOMMENDATION(S)
Authorize the City Manager to execute and administer an artist agreement with Evelyn Davis for an amount not-to-exceed $17,500 for a Steelhead Trout Sculpture.

Estimated Time: not applicable

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Supporting our Youth, Seniors, and Entire Community
Preserving our Community History
Guiding Documents
Bikeways, Trails, and Recreation Master Plan
REPORT NARRATIVE:

Valley Water has been working on the Upper Llagas Creek Flood Protection Project for many years. When completed, this project will provide flood control for West Little Llagas Creek running through Morgan Hill, protecting both homes and businesses.

Phase 1 of this project will include the construction of flood control improvements with a maintenance road from Watsonville Road to Lake Silvera. In collaboration with Valley Water, a paved trail along West Little Llagas Creek from Watsonville Road to Lake Silvera (Attachment A) is also being constructed. In addition to the paved trail, there will be an observation area along with enhancements to the crosswalks at both Middle Avenue and Watsonville Road, interpretive signage, and other amenities to allow the community to access and enjoy the newly restored Lake Silvera.

As part of this project, the City has committed to the installation of a sculpture or artwork as part of this project (per grant funding requirements). On April 5, 2022, the Library, Cultural, and Arts Commission reviewed and recommended the installation of Evelyn Davis' Steelhead Trout Bronze Sculpture (Attachment B). Staff is recommending moving forward and working with Evelyn Davis as she is a local bronze artist that has

6 completed most of the previous wildlife-themed sculptures along the West Little Llagas Creek. Furthermore, Evelyn Davis' past work with the City has been outstanding, and has strong ties to the community. If approved, staff will work directly with Evelyn Davis to have the sculpture installed in 2022.

Staff recommends authorizing the City Manager to execute the artist agreement with Evelyn Davis in the amount of $17,500 to complete this work.

COMMUNITY ENGAGEMENT:

The proposed sculpture was presented to Library, Cutural and Arts Commission on April 5, 2022.

ALTERNATIVE ACTIONS:

City Council may elect to not approve this agreement and direct City Staff to review other possible designs. This is not recommended as there will be months in delay in getting the sculpture designed, fabricated, and installed.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

City Council approved the West Little Llagas Creek Trail as a project in the City's approved Capital Improvement Program. Furthermore, this is a project that has been supported by the City Council through the approval of the 2017 Master Bikeways, Trails, Parks, Facilities, and Recreation Master Plan.

September 27, 2017 - Grant Application to the State of California Habitat Conservation Fund (HCF) Program
October 4, 2017 - Grant Application to the Valley Water December 6, 2017 - Grant Application to the Santa Clara Valley Open Space Authority July 17, 2019 - Approve Design Agreement for West Little Llagas Creek Trail Project September 15, 2020 - (Parks and Recreation Commission) West Little Llagas Creek Trail and Valley Water Cost Share
April 5, 2022 - (Library, Cultural and Arts Commission) Review and recommend to the City Council that the Steelhead Trout Sculpture proposed by Evelyn Davis be approved.

FISCAL AND RESOURCE IMPACT:

Sufficient funds are available for this work under the West Little Llagas Creek Trail Project (117001).

CEQA (California Environmental Quality Act):

Categorical Exemption
Addition of the art to the West Little Lllagas Creek Trail Project is categorically exempt from CEQA under Section 15304, Minor Alterations to Land, which covers minor public or private alterations to the condition of land, water, and/or vegetation which do not

6 involve removal of healthy, mature, scenic trees for forestry or agricultural purposes, including the creation of bicycle lanes on existing right-of-way.

©2021 County of Santa Clara, all rights reserved
O
0 375 750 1,500 2,250 3,000
Feet

WEST LITTLE LLAGAS CREEK

WILDLIFE TRAIL
Engineering and Utilities Department
CIP Engineering Division
G:\R-14\Proj\GIS\John\Yat_WatsonvillePathoVERALL.mxd

WEST LITTLE LLAGAS CREEK

WILDLIFE TRAIL

PROPOSED

SCULPTURE LOCATION

EXISTING

WEST LITTLE LLAGAS CREEK

WILDLIFE TRAIL

CENTRAL COAST STEELHEAD TROUT

INSTALLATION
The drawing to the right is provided to show
what the completed artwork will look like.

At the time of the boulder installation, the
steelhead trout artwork will not be on site, but
the artist will be there to choose the orientation
of the rock.

The boulder will already be on site-delivered by
U-Save Rockery in Morgan Hill.

The boulder will be between 1000 and 1500
pounds and 45”-55” tall.

Contractors are needed to use their equipment
to excavate a hole deep enough to secure the
bottom of the boulder in the ground.

The contractors will make some kind of metal
framework to be placed in the hole in such a way
as to fix the boulder in position.

Contractors will use their equipment to lower the
rock into position.

The contractors will mix and pour the concrete
into the hole around the bottom of the rock.

When the concrete has dried, some of the
removed dirt will be replaced around the bottom
of the rock to cover the concrete.

If the contractors have a different method of
installing the rock that will make it more sturdy
and immovable, we would defer to their
experience.

Black line indicates approximate ground level.

Evelyn Davis 2/11/22

1 ARTIST AGREEMENT BY AND BETWEEN

THE CITY OF MORGAN HILL AND
EVELYN A. DAVIS FOR A DOWNTOWN PARKS ART
This ARTIST AGREEMENT ("Agreement") is made and entered into by and between the City of Morgan Hill, a municipal corporation of the State of California ("City") and Evelyn A. Davis, an individual ("Artist") as of this ______ day of _____________________, 2022 (the "Effective Date"). City and Artist may be collectively referred to as "Parties" and individually referred to as a "Party." Recitals
A. The City desires to enhance the park and trail facilities of the City of Morgan Hill (West Little Llagas Creek Trail) with artwork.

B. The Library, Culture and Arts Commission recommended for approval this art work.

C. The Artist submitted art proposal was approved by the City Council on May 4, 2022.

D. Artist is in need of financial assistance for costs and expenses to implement Artist's artwork.

NOW, THEREFORE, in consideration of the facts set forth above and below and for adequate consideration, the receipt and sufficiency of which are hereby acknowledged, City and Artist agree as follows:

Agreement

1. Grant. City hereby grants to Artist the amount of Seventeen Thousand Five Hundred Dollars ($17,500) (the "Grant Award"). Artist agrees to use the Grant Award only for those costs related to Artist's placemaking work described Exhibit "A" entitled "Project Description, Performance and Payment Schedule," attached hereto and incorporated herein by this reference (the "Work"). City shall make disbursements of the Grant Award to Artist in accordance with the schedule set forth in Exhibit "A" the Project Description, Performance and Payment Schedule.

2. Work. Artist will create the Work at Artist's cost and expense. On or before December 31, 2022, Artist will:
a. Deliver to the City (at a location determined by the City) the Work. b. Work shall include all necessary installation materials to for installation at the location approved by the City (the “Display Site).
c. Upon delivery, City and Artist agree that the Work shall be the property of City. Artist shall commit to coordinate the installation with a non-profit organization or subcontractor with experience installing such artwork. The non-profit organization or subcontractor shall apply for and receive an encroachment permit from the City before commencing the installation. Installation costs shall be the sole responsibility of the artist. d. City may remove the Work at any time; provided, however, that City and Artist understand that City intends the Work to be on display at the Display Site for at least 25 years.

3. Artist's Representations. Artist represents and warrants to the City the following:
a. The individuals signing below have full legal power and authority to sign for and bind the Artist to all obligations under this Agreement. There is no consent needed from any third party for Artist to enter into this Agreement.
b. Artist will timely obtain all necessary permits and perform all work pursuant to this Agreement in full compliance with all permits obtained, as well as all other applicable

2 laws. Artist warrants that it will continue to comply with all permits obtained and laws applicable to its activities pursuant to this Agreement during the term of this Agreement.

4. Waiver of Artist Rights.
a. Artist expressly acknowledges the provisions of and agrees to fully and completely waive any and all rights that Artist may have pursuant to Title 17 U.S.C. Section 101 at seq (commonly known as the "Visual Artists Rights Act of 1990 "), pursuant to Section 987 et seq of the California Civil Code (the "California Art Preservation Act "), or pursuant to any other law, statute, policy or regulation, to the extent any such right may exist, in connection with the Work.
b. Artist further agrees that City shall have the right to remove, relocate, modify, reproduce, store, dispose of, loan or provide to others, or take any other actions upon the Work as City may determine to be reasonable or appropriate.
c. Artist agrees that City, without charge to City, may make photographs or other reproductions of the Work without payment of royalty or other payment to Artist

5. Term of Agreement. This Agreement is effective as of the Effective Date first set forth above and shall December 31, 2022, subject to earlier termination by a Party as set forth in Section 11(d) below.

6. Notices. Notices and other communications shall be in writing and personally delivered to or mailed via first class United States mail to a Party as follows:

City: City of Morgan Hill
17575 Peak Avenue
Morgan Hill, CA 95037
Attention: Chris Ghione
Artist: Evelyn Davis
5770 Croy Road
Morgan Hill, CA 95037
Attention: Evelyn Davis
or to such other address as a Party may designate by providing notice as required by this section to the other Party.

7. Independent Contractor. Artist is an independent contractor and shall furnish all supervision, labor, materials, equipment, supplies and other incidentals in connection with the Work and shall be entitled to no benefits, insurance, compensation or other entitlement whatsoever as a City employee.

8. No Assignment. Artist understands that the grant provided by City for the work provided under this Agreement by Artist in connection with the Work is personal to Artist and may not be assigned, delegated or transferred.

9. Repairs and Maintenance. Artist shall install, repair and maintain the Work in good condition for a period of six months from the date of full completion of installation of the Work.

10. Indemnification and Release. Artist hereby releases CITY from, and waives all claims against CITY for, any and all liability in connection with the Work and all activities of Artist under this Agreement. Artist shall save, defend, and hold harmless City, its officers, employees and agents, from any and all causes of action, legal suits, claims, demands or liability of any nature arising out of or in connection with any act or omission of Artist or any agent of Artist arising out of this Agreement to the fullest extent allowed by law, excepting only those resulting solely from

3 the intentional and willful or grossly negligent acts of City. This provision shall survive expiration or termination of this Agreement.

11. General.
a. The Parties agree to comply with all applicable laws in the performance of their respective tasks and obligations under this Agreement.
b. Artist shall procure and maintain in full force and effect all required licenses, permits or other approvals necessary to perform Artist's work under this Agreement and shall comply with the terms and conditions thereof.
c. This Agreement shall be interpreted and construed in accordance with the laws of the State of California. The venue for any action arising out of this Agreement shall be the courts of Santa Clara County, California.
d. Either Party may terminate this Agreement by providing at least seven (7) days' advance notice to the other Party; provided, however, that Artist shall return all unexpended grant funds to City prior to the effective date of such termination and the obligation to return said grant funds to City shall survive any termination of this Agreement. e. This Agreement constitutes the entire agreement of the Parties as to the matters discussed herein. This Agreement may be modified by the Parties in a writing duly executed by both Parties.

WITNESS THE EXECUTION HEREOF on the day and year first herein above written.

CITY OF MORGAN HILL, a municipal
corporation:
_________________________________
Christina Turner
City Manager
Artist:
_________________________________
Evelyn Davis
Approved as to form
:
_________________________________
Donald Larkin,City Attorney

7 CITY COUNCIL STAFF REPORT
MEETING DATE: May 4, 2022
PREPARED BY:

Kim Mancera, Municipal Services Assistant
APPROVED BY: City Manager
APPROVE THE APRIL 6, 2022 AND THE APRIL 20, 2022 CITY

COUNCIL MEETING MINUTES

RECOMMENDATION(S)
Approve the April 6, 2022 and the April 20, 2022 City Council Meeting Minutes.

Estimated Time:

COUNCIL PRIORITIES, GOALS & STRATEGIES
REPORT NARRATIVE:

COMMUNITY ENGAGEMENT:

ALTERNATIVE ACTIONS:

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

FISCAL AND RESOURCE IMPACT:

CEQA (California Environmental Quality Act):

Meeting Minutes
City Council
Rich Constantine
Gino Borgioli
John McKay
Yvonne Martinez Beltran
Rene Spring
-
-
-
-
-
Mayor
Mayor Pro Tem
Council Member
Council Member
Council Member
Wednesday, April 6, 2022 6:00 PM
Virtual Meeting
Link to join the meeting can be found below

SPECIAL/REGULAR MEETING
A special meeting of the City Council was called at 6:00 p.m. for the purpose of conducting a closed session.

SPECIAL MEETING
6:00 p.m. Closed Session

CALL TO ORDER
Mayor Constantine called the City Council meeting to order at 6:00 p.m.

ROLL CALL ATTENDANCE
City Clerk Michelle Bigelow called the roll.

DECLARATION OF POSTING AGENDA
City Clerk Michelle Bigelow declared the posting of the agenda.

CLOSED SESSION
City Attorney Donald Larkin announced the closed session item.

Closed Session Supplements

OPPORTUNITY FOR PUBLIC COMMENT
Public comment for closed session items opened at 6:04 p.m. The following people were called to speak:

Armando Benavides
Kathy Napoli
Sally Casas
Patricia Darling
Joe Baranowski
Yolanda
There being no further requests to speak, public comment closed.

ADJOURN TO CLOSED SESSION
Conference with Legal Counsel – Anticipated Litigation
Significant exposure to litigation (Govt Code § 54956.9(b)): (One Case) Alleged violation of the California Voting Rights Act and the FAIR MAPS Act.

The meeting adjourned to closed session at 6:24 p.m.

REGULAR MEETING
7:00 p.m.

The meeting reconvened at 7:20 p.m.

April 26, 2022
PRESENT Rich Constantine, Rene Spring, Gino Borgioli, John McKay, Yvonne Martinez Beltran
ABSENT None

RECOGNITIONS
Proclaiming March 20, 2022 as Nowrūz - Persian New Year's Day

PROCLAMATIONS
Proclaiming the week of April 10-16, 2022 as National Telecommunicator's Week Proclaiming April 28, 2022 as a Day of Remembrance of the Victims of the Holocaust Proclaiming the Month of April 2022 as Sexual Assault Awareness Month

CITY COUNCIL REPORTS
Council Member Borgioli asked to forego his report as the agenda was quite lengthy.

CITY MANAGER'S REPORT
City Manager Christina Turner mentioned that with this nice weather people want to be outdoors. She announced that in our most recent Weekly 411 email we had a link to a great map about our local trails and bike lanes. If you did not see that in our 411 you can go to our website and put in bicycling or explore trails and you will find that map.

On April 7th, we will have Youth Action Council's Warriors Against Vaping and ECigarettes. It is a presentation on vaping's effects on the brain. We are trying with our youth leaders to get the word out on how bad vaping is and, in this case, specifically, how bad it is for developing brains. In addition, we are starting up Sidewalk Saturdays and having our team there. This weekend you can join us from 9 am - 12 noon. We will be talking about the Housing Element. We encourage you to engage with us. We will be close to Coffee Guys on Third Street. Lastly, it is very exciting to share that Art A La Carte is happening on April 3rd at the Community and Cultural Center Amphitheater from 11 am - 2 pm. Please join us for this free event.

CITY ATTORNEY'S REPORT
City Attorney Donald Larkin shared that he is the Council's representative on the PLAN Joint Powers Authority Board. PLAN Joint Powers Authority is the risk pool agency that provides our insurance and risk liability for damage claims. It looks like while we will see increases in our property damage insurance due to things like extreme weather events and fires, our liability will remain relatively flat, which has not happened at any point in the last 5 years. This is a great step forward that one area of our insurance will not be increasing as much as we had anticipated. He also reported that in last year's legislative cycle, the legislature completely reorganized and renumbered the California Public Records Act. They gave us 2 years to adjust to the new numbering system, so it will not go into effect until January of next year. Everything we knew about the Public April 6, 2022
3

Records Act is changing. Don has been appointed to chair the Cal Cities Committee that is going to be responsible for updating all the various guidebooks and other practice materials with the new California Public Records Act.

OTHER REPORTS
Mayor Constantine mentioned that currently, we are halfway through our flood control project through our Downtown. Our box culvert is nearing completion south of Watsonville Rd. We are now constructing Phase 2b which is now digging a tunnel under Nob Hill. When that is completed, our businesses and our residents who currently have to pay flood insurance will no longer have to do so once FEMA has approved the maps. This has been a project which some may know as PL 566 that has been in the works since 1954. This has been a long time coming and great news that we will soon not have to worry about our Downtown flooding.

PUBLIC COMMENT
Public comment for items not on the agenda opened at 7:30 p.m. The following people were called to speak:

Rocke Garcia
Marby Lee
Joe Baranowski
There being no further requests to speak, public comment closed.

City Attorney Donald Larkin announced that closed session was continued to the end of the meeting.

ADOPTION OF AGENDA
MOTION:

Adopting the agenda moving item 16 to follow item 12.

April 6, 2022
4 RESULT: Passed
MOVER: Council Member Spring
SECONDER: Council Member McKay
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None

CONSENT CALENDAR
Items appearing on the Consent Calendar are considered routine and may be approved by one motion. Pursuant to City Council Policies and Procedures (CP 97-01), any member of the Council or public may request to have an item removed from the Consent Calendar for comment and action.

Time Estimate for Consent Calendar: 1 - 10 Minutes
MOTION:

Approving consent calendar items 1 through 11.

1. CALL FOR A GENERAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, NOVEMBER 8, 2022
Recommendation:

1. Adopt resolution calling for a General Municipal Election to be held on Tuesday, November 8, 2022 to elect a Mayor, one Council Member from District B, and one Council Member from District D; and

2. Adopt resolution requesting the services of the Board of Supervisors of the County of Santa Clara and the Registrar of Voters Office - and the Consolidation of the Election.

2. ACCEPT CENTENNIAL RECREATION CENTER EXPANSION PROJECT Recommendation:

1. Accept as complete the Centennial Recreation Center Expansion Project;

2. Authorize the City Engineer to sign the Notice of Completion; and

3. Direct the City Clerk to file said Notice of Completion with the County Recorder's Office.

April 6, 2022
5 RESULT: Passed
MOVER: Mayor Pro Tem Borgioli
SECONDER: Council Member Spring
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None

3. ADOPT ORDINANCE NO. 2330, NEW SERIES AMENDING TITLE 18, DIVISION I, ZONING CODE SECTION 18.26.020 (LAND USE REGULATIONS) OF CHAPTER 18.26 (INDUSTRIAL ZONING DISTRICTS) TO MODIFY THE

LAND USES PERMITTED IN THE INDUSTRIAL ZONING DISTRICTS
Recommendation:

Waive the reading, adopt Ordinance No. 2330, New Series, and declare that said title, which appears on the agenda, shall be determined to have been read by title and further reading waived.

4. APPROVE PARCEL MAP FOR DAKOTA DUNNE SUBDIVISION (APN: 726- 09-024) AND RELATED SUBDIVISION IMPROVEMENTS AGREEMENT
Recommendation:

1. Approve the Parcel Map;

2. Authorize the City Manager to execute the Subdivision Improvements Agreement with Michael F. Dunne, Jr. and Jonna Dunne; and

3. Authorize the recordation of the Parcel Map and Subdivision Improvements Agreement.

5. APPROVE AGREEMENT WITH MARK THOMAS AND COMPANY FOR

CONSTRUCTION SUPPORT SERVICES ASSOCIATED WITH VALLEY

WATER'S FLOOD CONTROL PROJECT
Recommendation:

Authorize the City Manager to execute and administer a consultant agreement with Mark Thomas and Company for a not to exceed amount of $246,000 for construction support services for City improvements associated with Valley Water’s flood control project.

6. APPROVE AGREEMENT WITH SANTA CLARA COUNTY FOR WEED

ABATEMENT PROGRAM ADMINISTRATION
Recommendation:

Authorize the City Manager to execute the agreement with Santa Clara County for weed abatement program services.

7. APPROVE INNOVATIVE TRANSIT AGREEMENTS
Recommendation:

1. Authorize the City Manager to execute and administer a grant agreement for innovative transit funding with the Valley Transportation Authority; and

2. Authorize the City Manager to execute and administer a consultant services April 6, 2022
6

agreement with Rideco, Inc. for the provision of transit services within the City of Morgan Hill; and

3. Adopt a budget resolution appropriating $60,000 for Fiscal Year 2021-22 to fund the initiation of the program.

8. APPROVAL OF SECOND AMENDMENT TO AGREEMENT WITH WEST

COAST DOOR AND GATE
Recommendation:

1. Approve the Second Amendment to the On-Call Maintenance Service Agreement with West Coast Door and Gate for one additional year of service for $40,000 for a total contract amount of $100,000;

2. Determine that competitive bids upon notice would not likely result in a lower price to the City from a responsible bidder or would cause unnecessary expense or delay under the circumstances per Section

3.04.150 (1) of the Morgan Hill Municipal Code; and

3. Authorize the City Manager to execute and administer the amendment with West Coast Door and Gate.

9. APPROVE FIRST AMENDMENT TO AGREEMENT WITH TESCO CONTROLS, INC. FOR SCADA HARDWARE PURCHASE
Recommendation:

Authorize the City Manager to execute a first amendment to the agreement with Tesco Controls, Inc. for SCADA hardware for a total contract amount of $217,190.

10. APPROVE THE MARCH 16, 2022 CITY COUNCIL MEETING MINUTES Recommendation:

Approve the March 16, 2022 City Council Meeting Minutes.

11. AWARD 2022 PARKING LOT SEAL COAT PROJECT
Recommendation:

1. Award contract to Silicon Valley Paving, Inc. in the amount of $78,148;

2. Authorize the expenditure of contingency funds not to exceed $7,814; and

3. Authorize City Manager to execute and administer that certain construction contract with Silicon Valley Paving, Inc.

PUBLIC HEARINGS
April 6, 2022
7

12. RECONSIDER ACTION TO ADOPT CITY COUNCIL DISTRICT MAP 103 - FROM MARCH 2, 2022 CITY COUNCIL ACTION
Recommendation:

1. Review and discuss whether an alternative map should be adopted in light of a demand to cure a violation of the FAIR MAPS Act; and

2. Determine whether to: a) affirm the adoption of Map 103, or 2) approve an amended resolution identifying an alternative City Council District map.

Estimated Time: 45 Minutes
City Manager Christina Turner provided the report. City Attorney Donald Larkin, City Clerk Michelle Bigelow, and Doctors Douglas Johnson and Justin Levitt with National Demographics Corporation answered questions.

The public hearing opened at 8:18 p.m. The following people were called to speak:

Armando Benavides
Steve Tate
Kathy Napoli
Brian Sullivan
Sally Casas
Doug Muirhead
Chris Skinnell
Delia Gomez
Patricia Darling
Joe Baranowski
Roberto Aguirrez
Yolanda
Miguel Jimenez
There being no further requests to speak, the public hearing closed.

MOTION:

Take no action.

SUBSTITUTE MOTION:

Rescind the approval of map 103 and adopt the NDC Green Map.

April 6, 2022
8 RESULT: Substitute Motion Made
MOVER: Council Member Martinez Beltran
SECONDER: Council Member Spring
AYES: None
NAYS: None
ABSTAIN: None
ABSENT: None

MOTION:

Take no action on the map and authorize the City Attorney to file a validation action motion.

The meeting recessed at 9:50 p.m. and reconvened at 10:00 p.m.

MOTION:

Continuing items 14, 15, and 18 to the April 20, 2022 City Council meeting.

April 6, 2022
9 RESULT: Passed
MOVER: Council Member McKay
SECONDER: Council Member Spring
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
RESULT: Passed
MOVER: Mayor Constantine
SECONDER: Council Member Spring
AYES: Mayor Constantine, Council Member Spring, Council Member Martinez Beltran
NAYS: Mayor Pro Tem Borgioli, Council Member McKay
ABSTAIN: None
ABSENT: None
RESULT: Second Substitute Motion Made
MOVER: Council Member McKay
SECONDER: Mayor Pro Tem Borgioli
AYES: None
NAYS: None
ABSTAIN: None
ABSENT: None

OTHER BUSINESS

16. ACCEPT INITIATIVE PETITION IMPACT REPORT AND ADOPT RESOLUTION

PLACING THE CITIZENS' INITIATIVE AMENDING THE GENERAL PLAN TO

REQUIRE VOTER APPROVAL OF ANY FUTURE MONTEREY ROAD LANE REDUCTION ON THE NOVEMBER 2022 BALLOT
Recommendation:

1. Accept the Initiative Petition Impact Report; and

2. Adopt Resolution placing Initiative Petition Titled: The Citizens' Initiative Amending The General Plan To Require Voter Approval of Any Future Monterey Road Lane Reduction on the November 2022 ballot.

Estimated Time: 45 Minutes
Economic Development Director Matt Mahood provided the report and presentation. City Manager Christina Turner, Public Services Director Chris Ghione, and Assistant City Manager for Development Services Edith Ramirez answered questions.

Public comment opened at 10:31 p.m. The following people were called to speak:

Joe Baranowski
Armando Benavides
Nick Gaich
Roberto Aguirrez
Sally Casas
Bryan Espiritu
Patricia Darling
There being no further requests to speak, public comment closed.

MOTION: Extending the meeting to midnight.

April 6, 2022
10 RESULT: Passed
MOVER: Council Member Spring
SECONDER: Council Member Martinez Beltran
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None
ABSENT: None

SUBSTITUTE MOTION:

Directing staff to place the initiative on the November 2022 ballot and directing the city to halt the lane reduction implementation until the vote has taken place in November 2022.

MOTION:

Approving the recommended actions.

PUBLIC HEARING

13. INTRODUCE ORDINANCE APPROVING MILITARY EQUIPMENT POLICIES AS REQUIRED BY AB 481
Recommendation:

1. Waive the first and second reading of the ordinance; and

2. Introduce ordinance approving Morgan Hill Police Department Policies 708-- Armored Rescue Vehicle (ARV MedEvac) and 709--Military Equipment.

Estimated Time: 20 minutes
Police Captain Mario Ramirez provided the report and presentation.

The public hearing opened at 11:47 p.m.

April 6, 2022
11 RESULT: Passed
MOVER: Council Member McKay
SECONDER: Council Member Martinez Beltran
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None
RESULT: Failed
MOVER: Council Member Spring
SECONDER: Council Member Martinez Beltran
AYES: Council Member Spring, Council Member Martinez Beltran NAYS: Mayor Constantine, Mayor Pro Tem Borgioli, Council Member McKay
ABSTAIN: None
ABSENT: None

Roberto Aguirrez was called to speak.

There being no further requests to speak, the public hearing closed.

MOTION:

Waiving the first and second reading of the ordinance.

MOTION:

Introducing the ordinance.

MOTION:

Extending the meeting to 12:30 a.m.

April 6, 2022
12 RESULT: Passed
MOVER: Mayor Constantine
SECONDER: Council Member Martinez Beltran
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
RESULT: Passed
MOVER: Mayor Pro Tem Borgioli
SECONDER: Council Member Martinez Beltran
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None
RESULT: Passed
MOVER: Council Member Martinez Beltran
SECONDER: Council Member McKay
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None

14. INTRODUCE ORDINANCE UPDATING WATER WASTE ORDINANCE, ADOPT

WATER SHORTAGE RESOLUTION, AND ACCEPT REPORT ON WATER

OFFSET PROGRAM
Recommendation:

1. Waive the first and second reading of the ordinance; and

2. Introduce the ordinance updating the City's water waste provisions to reflect the actions and stages identified in the City's Urban Water Management Plan (UWMP);

3. Adopt resolution declaring a Level 4 Water Supply Shortage; and

4. Accept report on the development of a "water offset" program for new development.

Estimated Time: 30 Minutes
Item continued to the April 20, 2022 City Council meeting.

CONDUCT TAX AND EQUITY FISCAL RESPONSIBILITY ACT (TEFRA)

HEARING APPROVING ISSUANCE OF BONDS FOR VILLAGE AT MADRONE AFFORDABLE HOUSING APARTMENTS AT 18960 MONTEREY STREET

WITHIN THE CITY OF MORGAN HILL
Recommendation:

15. 1. Open/close public hearing consistent with the requirements of the Federal Tax and Equity Fiscal Responsibility Act ("TEFRA") and Section 147 (f) of the Internal Revenue Code of 1986, as amended (the “Code”); and

2. Adopt resolution approving the issuance of bonds by the California Municipal Finance Authority (CMFA), for the acquisition, construction, improvement and equipping of a multifamily rental housing project located at 18960 Monterey Street, Morgan Hill, California (the “Project”).

Estimated Time: 15 Minutes
Item continued to the April 20, 2022 City Council meeting.

OTHER BUSINESS

17. RECEIVE WATER RATE STUDY REPORT, ADOPT RESOLUTION

DECLARING INTENT TO IMPLEMENT NEW WATER RATES, COMMENCING PROPOSITION 218 NOTICES, AND SETTING JUNE 1, 2022 AS DATE FOR A

PUBLIC HEARING
Recommendation:

1. Receive Water Rate Study report;

2. Adopt resolution declaring intent to adjust water rates and authorizing the April 6, 2022
13 ABSTAIN: None
ABSENT: None

commencement of Proposition 218 noticing; and

3. Set June 1, 2022 as the date for Public Hearing and new water rates adoption.

Estimated Time: 30 Minutes
Finance Director Dat Nguyen provided the report and presentation.

The public comment opened at 12:22 a.m. There being no requests to speak, public comment closed.

MOTION:

Approving the recommended actions.

18. ADOPT THE COMMUNICATIONS, OUTREACH, AND ENGAGEMENT PLAN

AND APPROVE THE RECOMMENDED STAFFING CHANGES
Recommendation:

1. Adopt the Communications, Outreach, and Engagement Plan; and

2. Approve the classifications for City Clerk/Public Information Officer (PIO); Communications and Engagement Coordinator; and updated Multimedia Coordinator.

Estimated Time: 30 Minutes
Item continued to the April 20, 2022 City Council meeting.

FUTURE COUNCIL INITIATED AGENDA ITEMS
Council Member Martinez Beltran asked to see the Monterey Road Specific Plan come to Council to discuss funding before the budget approval.

Council Member Spring asked for more information about the dirt disposal that Rocke Garcia mentioned during public comment.

April 6, 2022
14 RESULT: Passed
MOVER: Mayor Pro Tem Borgioli
SECONDER: Council Member Spring
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None

The meeting adjourned to the closed session at 12:26 a.m.

ADJOURNMENT
The regular meeting reconvened at 12:53 a.m.

City Attorney Donald Larkin announced that there was no reportable action from the closed session.

There being no further business, the meeting adjourned at 12:54 a.m.

MINUTES PREPARED BY:

Michelle Bigelow, City Clerk
April 6, 2022
15

Meeting Minutes
City Council
Rich Constantine - Mayor
Gino Borgioli - Mayor Pro Tem
John McKay - Council Member
Yvonne Martinez Beltran - Council Member
Rene Spring - Council Member
Wednesday, April 20, 2022 5:30 PM
Virtual Meeting
Link to join the meeting can be found below

SPECIAL/REGULAR MEETING
A special meeting of the City Council was called at 5:30 p.m. for the purpose of conducting a workshop and a closed session.

SPECIAL MEETING
5:30 p.m. Citywide Transportation Planning Workshop
6:00 p.m. Closed Session

CALL TO ORDER
Mayor Constantine called the special meeting to order at 5:30 p.m.

ROLL CALL ATTENDANCE
City Clerk Michelle Bigelow called the roll.

PRESENT Rich Constantine, Rene Spring, Gino Borgioli, John McKay, Yvonne Martinez Beltran
ABSENT None
Mayor Pro Tem Borgioli joined the meeting at 5:35 p.m.

DECLARATION OF POSTING AGENDA
City Clerk Michelle Bigelow declared the posting of the agenda.

CITYWIDE TRANSPORTATION PLANNING WORKSHOP
City staff provided the City Council and Community with an update on the City’s programs related to traffic congestion, traffic safety, and transportation management.

The Council discussed future transportation needs and the development of a transportation master plan for the City.

City Manager Christina Turner introduced the workshop and Dina El-Tawansy and Nick Saleh of CalTrans, provided a presentation. Public Services Director Chris Ghione and City Engineer Scott Creer provided a presentation.

CLOSED SESSION
Closed Session Supplements

OPPORTUNITY FOR PUBLIC COMMENT
The public comment opened at 6:52 p.m. The following people were called to speak:

Armando Benavides
Joe Baranowski
Kathy Napoli
Sally Casas
Yolanda
Edith Duran
There being no further requests to speak, public comment closed.

April 20, 2022
2

ADJOURN TO CLOSED SESSION
Conference with Legal Counsel – Existing Litigation (Government Code § 54956.9 Tate et al., v. City of Morgan Hill, et al. Santa Clara County Superior Court, Case No. 22CV396857
The closed session item was continued to the end of the meeting.

REGULAR MEETING
7:00 p.m.

The regular meeting was called to order at 7:06 p.m.

RECOGNITIONS
Outgoing Commissioners - Ronald Locicero and Neil Berman Public Services Director Chris Ghione recognized and acknowledged Outgoing Commissioners Neil Berman and Ronald Locicero. Mayor Constantine thanked both Commissioners for their service on behalf of himself and the Council.

PROCLAMATIONS
Proclaiming April 22, 2022 as Earth Day
Proclaiming April, 29, 2022 as National Arbor Day

PRESENTATIONS
Youth Action Council (YAC - Asset #38 Self Esteem

CITY COUNCIL REPORTS
Mayor Pro Tem Borgioli provided an update on the Llagas Creek Flood Control Project.

Phase 1 milestone is complete. All of the flood protection improvements are completed at Lake Silveira. He mentioned that Lake Silveira is a phenomenal lake that houses a lot of our wildlife preserves and they did this phase to really protect our wildlife also.

Phase 2, the tunnel, started in October 2021. He reported he has been there at least 4 times in the
April 20, 2022
3

last 3 weeks and they are really doing a good job of mitigation relative to the traffic and the delay from the construction. They are getting ready to put in the below-ground conduit for PG&E, Frontier, Verizon, and Comcast. They are progressing very well with almost no delays. Phase 2B which many residents will be happy about is going to be finished somewhere around 2025. This is the phase where FEMA gets involved with flood insurance, so our community has the opportunity not to get flood insurance in that particular area. Anderson Dam is progressing very well and still has a completion date of 2030-2031.

CITY MANAGER'S REPORT
City Manager Christina Turner invited the community to check out the Art a la Carte event on Saturday April 23. It is a Free Children's Arts & Crafts Event from 11 a.m. - 2 p.m. at the Community & Cultural Center Amphitheater. She announced the City's recruitment to fill two terms on the Parks and Recreation Commission with the four-year terms ending April 2026, and one term on the Library, Culture & Arts Commission with the four-year term ending April 2026. The application period ends this Friday, April 22 and at this point, we anticipate interviews to be on May 4. She wanted to notify the community of an event coming up related to Mental Health and Suicide Prevention.

This is an Awareness Presentation being held from 6:00 - 7:30 p.m. on Thursday, April

28. You can find more information about this on our website. This presentation is to talk about mental health and suicide, which is an issue and has only compounded since Covid. Understanding the issues around mental health, talking about suicide prevention, how to help others in a crisis, and change the conversation. She asked to please join us to learn valuable coping skills for managing stress, anxiety, and suicide prevention.

CITY ATTORNEY'S REPORT
City Attorney Donald Larkin reported that at the end of the last meeting on April 6, the City Council met in closed session on one item of anticipated litigation. There was no reportable action.

OTHER REPORTS
Council Member McKay had a request for our community and colleagues; he said that things have become very contentious over the redistricting issue over the last month or so and he fears for our community’s wholeness. He would like to see if our community can wait until we have an outcome. Then, when we have an outcome, let's come out the other side and have the grace that we need to have as a community. Whoever prevails, he hopes that they have the grace to not gloat and whoever loses, he hopes they have the grace to not be vindictive. He worries about our community and hopes to get past this as quickly as possible.

April 20, 2022
4

April 20, 2022
5 PUBLIC COMMENT
Public comment opened at 7:28 p.m. There being no requests to speak, public comment closed.

ADOPTION OF AGENDA
MOTION:

Adopting the agenda as posted.

RESULT: Passed
MOVER: Council Member Spring
SECONDER: Council Member McKay
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None
The meeting recessed at 7:31 p.m. and reconvened at 7:42 p.m.

CONSENT CALENDAR
Public comment opened at 7:43 p.m.

Joe Baranowski was called to speak.

There being no further requests to speak, public comment closed.

MOTION:

Approving consent calendar items 1 through 7 and 9 through 13.

RESULT: Passed
MOVER: Council Member Spring
SECONDER: Council Member McKay
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None

April 20, 2022
6 1. ADOPT RESOLUTION DETERMINING THAT CONDUCTION OF IN-PERSON

MEETINGS WOULD PRESENT A PUBLIC HEALTH RISK AND CONTINUING

TELECONFERENCE MEETINGS
Recommendation:

Adopt resolution to continue holding City Council and commission meetings by teleconference.

2. ADOPT RESOLUTION APPROVING FY2022-23 LIST OF STREET
REHABILITATION PROJECTS FUNDED BY SENATE BILL (SB) 1: THE ROAD

REPAIR AND ACCOUNTABILITY ACT
Recommendation:

Adopt resolution approving a list of street rehabilitation projects funded by SB 1, The Road Repair and Accountability Act of 2017.

3. ADOPT ORDINANCE 2331, NEW SERIES, AN UNCODIFIED ORDINANCE OF

THE CITY COUNCIL OF THE CITY OF MORGAN HILL APPROVING POLICE DEPARTMENT POLICIES 708 (ARMORED RESCUE VEHICLE) AND 709 (MILITARY EQUIPMENT)
Recommendation:

Waive the reading, adopt Ordinance No. 2331, New Series, and declare that said title, which appears on the agenda, shall be determined to have been read by title and further reading waived.

4. ADOPT RESOLUTION RESCINDING RESOLUTION 21-016: A RESOLUTION

OF THE CITY COUNCIL OF THE CITY OF MORGAN HILL, CALIFORNIA,

SUBMITTING TO THE VOTERS OF THE CITY AN INITIATIVE ORDINANCE

CHANGING ZONING REGULATIONS THROUGHOUT THE CITY OF MORGAN

HILL TO PROHIBIT CERTAIN NEW STORAGE AND DISTRIBUTION USES IN

ALL AREAS OF THE CITY AND AMENDING THE REVIEW PROCESS FOR

LARGE-SCALE DEVELOPMENT PROJECTS
Recommendation:

Adopt resolution rescinding Resolution 21-016: A resolution of the City Council of the City of Morgan Hill, California, submitting to the voters of the City an initiative ordinance changing zoning regulations throughout the City of Morgan Hill to prohibit certain new storage and distribution uses in all areas of the City and amending the review process for large-scale development projects.

April 20, 2022
7 5. ADOPT RESOLUTION AUTHORIZING AN APPLICATION FOR THE

CALIFORNIA CLIMATE INVESTMENTS-DEPARTMENT OF FORESTRY AND

FIRE PROTECTION'S (CAL FIRE) FIRE PREVENTION GRANT PROGRAM Recommendation:

Adopt resolution authorizing an application for the California Climate Investments-Department of Forestry and Fire Protection's (CAL FIRE) Fire Prevention Grant Program for the purchase of a radio controlled slope mower.

6. APPROVE AGREEMENT BETWEEN THE COUNTY OF SANTA CLARA AND THE CITY OF MORGAN HILL GRANTING PROGRAM FUNDS FOR THE 2021

STATE HOMELAND SECURITY GRANT PROGRAM
Recommendation:

Adopt a Resolution to:

1. Accept grant funds from the Santa Clara County Office of Emergency Management via the Department of Homeland Security up to the amount of $17,558 for the purchase of a Long-Range Acoustic Device (LRAD);

2. Amend the adopted Fiscal Year (FY) 2021-2022 budget to recognize the Santa Clara County Office of Emergency Services/ Department of Homeland Security funds as revenue, and appropriate $17,558 in the Police Department budget for the capital expenditures; and

3. Authorize the City Manager to execute the Agreement and approve the purchase up to the amount of $17,558 for an LRAD system from Genasys.

7. APPROVE MEMORANDUM OF UNDERSTANDING BETWEEN THE COUNTY OF SANTA CLARA AND THE CITY FOR THE 2021 EMERGENCY

MANAGEMENT PERFORMANCE GRANT
Recommendation:

1. Authorize the City Manager to execute the Memorandum of Understanding with the County of Santa Clara for the 2021 Emergency Management Performance Grant (EMPG); and

2. Recognize grant revenue in an amount not to exceed $19,000 for the purchase of Emergency Operations Center (EOC) Technology.

8. APPROVE FIRST AMENDMENT TO THE AGREEMENT FOR COUNTYWIDE

HOUSEHOLD HAZARDOUS WASTE COLLECTION PROGRAM
Recommendation:

Authorize the City Manager to execute the First Amendment to the Agreement for Countywide Household Hazardous Waste Collection Program.

April 20, 2022
8 10. APPROVE SECOND AMENDMENT TO GILROY STAFF SERVICES

AGREEMENT
Recommendation:

Authorize the City Manager to execute the Second Amendment to the Gilroy Staff Services Agreement for Stormwater Permitting Requirements and Environmental Management Services.

11. APPROVE FINAL MAP FOR APPLE TREE - TRACT NO. 10523 AND

RELATED SUBDIVISION IMPROVEMENTS AGREEMENT
Recommendation:

1. Approve the Final Map;

2. Authorize the City Manager to execute the Subdivision Improvements Agreement with 18755 OLD MONTEREY LLC, a California Limited Liability Company; and

3. Authorize the recordation of the Final Map and Subdivision Improvements Agreement.

12. APPROVE FOURTH AMENDMENT TO AGREEMENT WITH INNOVATIVE CLAIMS SOLUTIONS, INC.

Recommendation:

Authorize the City Manager to execute and administer a Fourth Amendment to Agreement with Innovative Claims Solutions, Inc. to provide third party claims administration for workers’ compensation extending the agreement for one additional year of service at annual amount of $34,380, for a new total contract amount of $240,980 over 7 years.

13. AWARD EAST DUNNE AVENUE REHABILITATION PROJECT AND
APPROVE CONSULTANT AGREEMENT WITH CSG CONSULTANTS, INC.

FOR FEDERAL-AID PROJECT SUPPORT AND CONSTRUCTION

INSPECTION SERVICES
Recommendation:

1. Approve the East Dunne Avenue Rehabilitation Project plans and specifications;

2. Award contract to A. Teichert & Son, Inc. DBA Teichert Construction for the East Dunne Avenue Rehabilitation Project in the amount of $2,153,195;

April 20, 2022
9 3. Authorize the expenditure of construction contingency funds not to exceed $430,639;

4. Authorize the City Manager to execute and administer the construction contract with A. Teichert & Son, Inc. DBA Teichert Construction; and

5. Approve and authorize the City Manager to execute and administer a consultant agreement with CSG Consultants, Inc. in the amount of $175,000 for Federal-Aid project support and construction inspections.

ITEMS PULLED FOR DISCUSSION

8. APPROVE FIRST AMENDMENT TO SOLID WASTE DISPOSAL CONTRACT Recommendation:

Authorize the City Manager to execute the First Amendment to the Solid Waste Disposal Contract.

Council Member Martinez Beltran had questions.

Program Administrator Anthony Eulo provided answers.

Public comment opened at 7:49 p.m. There being no further requests to speak, public comment closed.

MOTION:

Approving the recommended actions.

RESULT: Passed
MOVER: Council Member Martinez Beltran
SECONDER: Council Member Spring
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None

PUBLIC HEARINGS

14. CONDUCT TAX AND EQUITY FISCAL RESPONSIBILITY ACT (TEFRA)

HEARING APPROVING ISSUANCE OF BONDS FOR VILLAGE AT MADRONE AFFORDABLE HOUSING APARTMENTS AT 18960 MONTEREY STREET

WITHIN THE CITY OF MORGAN HILL
Recommendation:

April 20, 2022
10 1. Open/close public hearing consistent with the requirements of the Federal Tax and Equity Fiscal Responsibility Act ("TEFRA") and Section 147 (f) of the Internal Revenue Code of 1986, as amended (the “Code”); and

2. Adopt resolution approving the issuance of bonds by the California Municipal Finance Authority (CMFA), for the acquisition, construction, improvement and equipping of a multifamily rental housing project located at 18960 Monterey Street, Morgan Hill, California (the “Project”).

Estimated Time: 15 Minutes
Housing Director Rebecca Garcia provided a report and presentation.

The public hearing opened at 7:52 p.m. There being no requests to speak, public comment closed.

MOTION:

Approving the recommended actions.

RESULT: Passed
MOVER: Council Member Spring
SECONDER: Council Member Martinez Beltran
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None

OTHER BUSINESS

15. APPROVE DONATION OF MONUMENT SIGNS FROM LEADERSHIP

MORGAN HILL
Recommendation:

1. Review new City of Morgan Hill monument signs proposed by Leadership Morgan Hill;

2. Approve installation of monument signs at proposed locations;

3. Approve the design of the monument signs; and

4. Authorize the Public Services Director to execute agreements as needed with Leadership Morgan Hill and associated contractors to complete the installation.

Estimated Time: 30 Minutes
City Manager Christina Turner recused herself and turned off her camera as she is participating in the 2022 Leadership Morgan Hill class.

April 20, 2022
11 Public Services Director Chris Ghione provided the report and shared a rendering of the proposed monument sign.

Public comment opened at 8:13 p.m. The following people were called to speak:

Brian Sullivan
Joe Guerra
Joe Baranowski
Sally Casas
There being no further requests to speak, public comment closed.

MOTION:

Approving the recommended actions and asking the class to consider adding the message in Spanish.

RESULT: Passed
MOVER: Council Member McKay
SECONDER: Mayor Pro Tem Borgioli
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None

16. PROVIDE POLICY DIRECTION FOR FY 22-23 COMMUNITY FUNDING

REQUESTS
Recommendation:

Provide policy direction regarding requests for community funding.

Estimated Time: 30 minutes
Public Services Director Chris Ghione provided a presentation and report.

Public comment opened at 9:02 p.m.

Peter Mandel was called to speak.

There being no further requests to speak, public comment closed.

The Council provided direction to staff.

17. INTRODUCE AN ORDINANCE ESTABLISHING ENFORCEMENT EFFORTS

FOR SIDESHOW PARTICIPANTS AND SPECTATORS
Recommendation:

1. Waive first and second reading of the ordinance; and

2. Introduce an ordinance establishing a process to prohibit spectators from participating in illegal speed contests, exhibitions of speed or reckless driving exhibitions.

Estimated Time: 5 Minutes
Police Captain Ray Ramos provided a presentation and report.

Public comment opened at 9:35 p.m. The following people were called to speak:

Joe Baranowski
Sally Casas
There being no further requests to speak, public comment closed.

MOTION:

Waiving the first and second reading of the ordinance.

RESULT: Passed
MOVER: Council Member Martinez Beltran
SECONDER: Council Member Spring
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT:

MOTION:

Introducing the ordinance.

RESULT: Passed
MOVER: Council Member Spring
SECONDER: Council Member McKay
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None

18. RECEIVE MONTHLY BUDGET UPDATE; MARCH 2022 FINANCIAL AND INVESTMENT REPORTS; AND CITY MANAGER AUTHORITY REPORT
Recommendation:

Accept and file report.

Estimated Time: 10 minutes
Due to technical difficulties, item 18 was heard after item 20.

Finance Director Dat Nguyen provided a presentation and report.

April 20, 2022
12

April 20, 2022
13 Public comment opened at 10:30 p.m.

Joe Baranowski was called to speak.

There being no further requests to speak, public comment closed.

Report received.

19. ADOPT THE COMMUNICATIONS, OUTREACH, AND ENGAGEMENT PLAN

AND APPROVE THE RECOMMENDED STAFFING CHANGES
Recommendation:

1. Adopt the Communications, Outreach, and Engagement Plan; and

2. Approve the classifications for City Clerk/Public Information Officer (PIO); Communications and Engagement Coordinator; and updated Multimedia Coordinator.

Estimated Time: 30 Minutes
Item 19 was heard after item 20.

City Clerk/Interim Public Information Officer Michelle Bigelow provided a presentation and report.

Public comment opened at 10:55 p.m. The following people were called to speak:

Joe Baranowski
Sally Casas
There being no further requests to speak, public comment closed.

MOTION:

Extending the meeting to 11:30 p.m.

RESULT: Passed
MOVER: Council Member Martinez Beltran
SECONDER: Council Member Spring
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None
MOTION:

Approving the recommended actions.

RESULT: Passed
MOVER: Council Member Martinez Beltran

April 20, 2022
14 SECONDER: Council Member McKay
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None

PUBLIC HEARING

20. INTRODUCE ORDINANCE UPDATING WATER WASTE ORDINANCE, ADOPT

WATER SHORTAGE RESOLUTION, AND ACCEPT REPORT ON WATER

OFFSET PROGRAM
Recommendation:

1. Waive the first and second reading of the ordinance;

2. Introduce the ordinance updating the City's water waste provisions to reflect the actions and stages identified in the City's Urban Water Management Plan (UWMP);

3. Adopt resolution declaring a Level 4 Water Supply Shortage; and

4. Accept report on the development of a "water offset" program for new development.

Estimated Time: 30 Minutes
Item 20 was taken before items 18 and 19.

Program Administrator Anthony Eulo provided a presentation and report.

The public hearing opened at 10:11 p.m. There being no requests to speak, the public hearing closed.

MOTION:

Waiving the first and second reading of the ordinance.

RESULT: Passed
MOVER: Council Member Spring
SECONDER: Council Member McKay
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None

April 20, 2022
15 MOTION:

Introducing the ordinance.

MOTION:

Adopting resolution declaring a Level 4 Water Supply Shortage.

RESULT: Passed
MOVER: Council Member McKay
SECONDER: Council Member Spring
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None

21. ADOPT RESOLUTION OF INTENTION AND INTRODUCTION OF

ORDINANCE TO AMEND THE CONTRACT BETWEEN THE BOARD OF
ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES’

RETIREMENT SYSTEM (CALPERS) AND THE CITY OF MORGAN HILL TO

IMPLEMENT THE EMPLOYEE SHARE OF EMPLOYER CONTRIBUTION IN ACCORDANCE WITH SECTION 20516 OF THE CALIFORNIA GOVERNMENT CODE
Recommendation:

1. Adopt Resolution of Intention of the City Council of the City of Morgan Hill stating its intent to amend the contract between the California Public Employees’ Retirement System (CalPERS) and the City of Morgan Hill in order to implement the pension cost share provision in accordance with California Government Code section 20516;

2. Open/close the public hearing;
RESULT: Passed
MOVER: Council Member Spring
SECONDER: Council Member Martinez Beltran
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None

April 20, 2022
16 3. Waive the first and second reading of the ordinance amending the City’s contract with CalPERS; and

4. Introduce the ordinance.

Estimated Time: 5 Minutes
Finance Director Dat Nguyen provided the report.

The public hearing opened at 11:10 p.m. There being no requests to speak, the public hearing closed.

MOTION:

Adopting the resolution.

RESULT: Passed
MOVER: Council Member Spring
SECONDER: Council Member McKay
AYES: Mayor Constantine, Council Member Spring, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: Mayor Pro Tem Gino Borgioli
MOTION:

Waiving the first and second reading of the ordinance.

RESULT: Passed
MOVER: Council Member Spring
SECONDER: Council Member Martinez Beltran
AYES: Mayor Constantine, Council Member Spring, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: Mayor Pro Tem Gino Borgioli
MOTION:

Introducing the ordinance.

RESULT: Passed
MOVER: Council Member Spring

SECONDER: Council Member Martinez Beltran
AYES: Mayor Constantine, Council Member Spring, Mayor Pro Tem Borgioli, Council Member McKay, Council Member Martinez Beltran
NAYS: None
ABSTAIN: None
ABSENT: None

FUTURE COUNCIL INITIATED AGENDA ITEMS
Council Member Martinez Beltran requested the City look into providing Council Members with reimbursement for dependent care expenses for Council meetings.

Council Member McKay asked that staff share the City's social host accountability ordinance.

The meeting recessed at 11:14 p.m. and reconvened at 11:20 p.m.

CONTINUED CLOSED SESSION:

The meeting adjourned to closed session at 11:20 p.m.

The meeting reconvened at 11:53 p.m.

No reportable action.

ADJOURNMENT
There being no further business, Mayor Constantine adjourned the meeting at 11:53 p.m.

Minutes Prepared by:

Michelle Bigelow, City Clerk
April 20, 2022
17

8 CITY COUNCIL STAFF REPORT
MEETING DATE: May 4, 2022
PREPARED BY:

Brittney Sherman, Economic Development Coordinator
APPROVED BY: City Manager

APPROVE MORGAN HILL OUTDOOR DINING PROGRAM AND

PARKLET GRANT FUNDING PROGRAM

RECOMMENDATION(S)

1. Approve the Morgan Hill Outdoor Dining Program, Manual, and Implementation Timeline; and

2. Approve the Parklet Grant Funding Program.

Estimated Time: 60 Minutes

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Enhancing Public Safety
Supporting Youth, Seniors, and the Entire Community
2022-2023 Strategic Priorities
Fiscal Sustainability
Economic Development
Guiding Documents
Economic Blueprint
Morgan Hill 2035 General Plan
Vision Zero
Downtown Specific Plan
REPORT NARRATIVE:

POLICY CONSIDERATIONS:

Should the City continue to support outdoor dining on private and public property? Should the City require a rental fee and security deposit in addition to a higher quality, standardized build-out as part of the new Semi-Permanent Parklet Program? Should the Parklet Grant Program be available to both public and private parklets?

8 Background
On July 25, 2018, the City Council approved a Parklet Pilot Program allowing businesses to repurpose parking spaces and expand their operations to facilitate outdoor dining, public activation and encourage pedestrian-friendly environments. While the 2018 Pilot Program provided a streamlined process and offered a 3-year permit, the City did not receive any applications for the Pilot Parklet program due to the costs and requirements associated with the program.

The COVID-19 pandemic and resulting emergency health orders caused operational and financial challenges to an untold number of businesses, particularly those in the restaurant and hospitality industries. Due to indoor restrictions, businesses were forced to reimagine their businesses with outdoor operations. In June 2020, the City of Morgan Hill responded to these challenges by approving a 2-year extension of the existing Parklet Pilot Program (attachment A) and creating Morgan Hill Al Fresco (attachment B), both of which provided an avenue for restaurants and retailers to safely reopen by utilizing new or additional outdoor space for dining or retail merchandise displays, while meeting mandated physical social distancing requirements. In the Al Fresco Program, the City waived encroachment permit fees and provided water-filled barricades in order to meet the traffic safety barricade requirement. The City’s ability to expeditiously develop and deploy the Al Fresco Program has allowed many businesses to survive.

Both, the Parklet Pilot Program and Morgan Hill Al Fresco Program expanded business operating capacity, promoted business recovery, and activated City streets and sidewalks.

Today, there are currently 7 restaurant operators participating in the Al Fresco Dining Program and 4 restaurant operators participating in the Parklet Pilot Program. And just over two years since the start of the pandemic, the popularity of outdoor dining has grown and has become the preferred method of dining for many restaurant patrons. Per the State guidance and in order to continue supporting outdoor dining, the City needs to transition from the temporary emergency response-driven program to a long-term sustainable program rooted in standards for aesthetic design, safety, accessibility and constructability.

The Morgan Hill Al Fresco Program will expire on December 31, 2022, requiring any business operating under this program to transition to the Parklet Program or cease outdoor dining operations. This also means that businesses need to ‘build’ out their parklet and provide traffic safety devices as the water-filled barricades will be removed.

On January 19, 2022, the City Council directed staff to develop a Semi-Permanent Parklet Program and Parklet Grant Funding Program to aide in the transition of existing parklets and construction of new parklets to a new, longer-term parklet program.

The Morgan Hill Outdoor Dining Manual
The Morgan Hill Outdoor Dining Manual is a 42-page comprehensive overview of outdoor dining guidelines and standards for parklets located on private and public property. It simplifies and streamlines outdoor dining guidelines, processes and permitting, while also addressing outdoor dining standards for safety, accessibility, and

8 constructability. The Manual focuses on the two distinct types of Parklets: Public and Private.

Parklets
Public – Public Parklets are outdoor spaces created in formerly dedicated parking stalls in the public right-of-way, consisting of a semi- permanent extension of the existing curb into the parking lane to facilitate outdoor dining, public interaction, encourage pedestrian and bicycle transportation, and create a space for all.

Private – Private Parklets are outdoor spaces created in formerly dedicated private parking stalls, such as in a shopping center, consisting of a semi- permanent extension of the existing curb into the parking lane to facilitate outdoor dining, public interaction, and shopping center activation.

Sidewalk Café– The Outdoor Dining Manual also addresses sidewalk cafes that allow outdoor dining within the sidewalk/pedestrian areas. However, no changes are recommended to the regulations of these spaces.

Documents, Permits and Fees
The following applications, permits and fees are required for Public Parklets and Private Parklets:

Public Parklets
 Outdoor Dining Application, dimensional site plan, certificate of insurance (listing the City as an additional insured), and property owner letter of approval.
 City Encroachment Permit in the amount of $672, a one-time fee that spans the life of the 7-year parklet program.
 An annual Rental Fee of $1,000 for parklets in the public right-of-way. The fee will allow the parklet to connect to the City tree light electrical outlets to increase visibility and safety. (The annual Rental Fee is proposed to be waived in 2023 out of consideration for parklet construction costs and will be applied beginning January 1, 2024.)
 A refundable security deposit in the amount of $1,000 will be collected from each approved parklet applicant and held until completion of parklet deconstruction to ensure proper parklet deconstruction is completed at the end of the parklet permit.

Private Parklet
 Outdoor Dining Application, dimensional site plan, and property owner letter of approval.
 Apply and submit payment for a one-time Zoning Clearance in the amount of $250.

8  If review time of the Zoning Clearance and supporting documents exceeds 90 minutes due to the parklet design having significant structural or overhead construction, the Development Services Director will modify the requirement to an Administrative Use Permit in the amount of $1,500.
 The amount paid for the Zoning Clearance will be applied to the fee for the Administrative Use Permit.

Private Property Outdoor Dining Ordinance
Currently, the City’s Zoning Ordinance does not address outdoor dining on private property. As such, a Zoning Amendment is proposed that will add a new section to the Zoning Ordinance to specifically include operational standards and permitting requirements for Parklets on private property.

The proposed regulations are focused on ensuring vehicle and pedestrian circulation, and creating well-designed, attractive outdoor dining areas. A Zoning Clearance is proposed to be required for the review of parklets and/or permanent structures within private parking areas.

Planning Commission and City Council consideration of the proposed Private Property Outdoor Dining Ordinance (attachment C) will follow upon the Council’s review and approval of the proposed Outdoor Dining Manual.

Semi-Permanent Parklet Program
The Semi-Permanent Parklet Program is designed to replace the current Parklet Pilot Program, offering a long-term and standardized approach to parklet construction and operation. Approved semi-permanent parklets may be operated for up to 7 years before renewal. Parking space utilization is limited to each individual restaurant's storefront/footprint. Property owner approval is required.

Parklet Designs
Parklet applicants can select from the Industrial or Agricultural design in the AP&I Kit-ofParts or create their own unique design in compliance with all requirements outlined in the DIY standards of the Outdoor Dining Manual. All parklet designs are based on industry and professional standards, resulting in the creation of sturdy and safe parklets that maintain emergency access and accessibility.

A portion of the Outdoor Dining Manual is dedicated to providing standards and design options for DIY parklet applicants. These pages cover in detail the locational, accessible and safety standards required for parklet approval. Other design options may include overhead coverings, including umbrellas, canvas sail and pillar and roof styles, and their coinciding heater regulations.

Traffic Safety
Traffic impact safety devices have been divided into two categories based on the number of traffic lanes and speed on the parklet facing road.

8 A parklet located on Monterey Road, or on a 4-lane road, or a road with a speed greater than 25 miles-per-hour (MPH), will require traffic safety devices that can withstand 6,000 pounds of force. Cement k-rails are allowed for parklets located on a 4-lane or greater than 25 MPH. Alternatively, a parklet operator may submit a different safety device with the equivalent impact rating for staff review.

A parklet located on a side-street such as First Street or a 2-lane road with a speed that is 25 MPH or less, will require traffic safety devices that can withstand 500 pounds of force. Bollards, certain planters and decorative k-rail are allowed for these roads. All parklet operators that select the cement decorative k-rail option, are encouraged to beautify the devices via mural painting, wood/metal coverings or planter boxes.

All proposed beautification and signage of traffic safety devices must be described in the Outdoor Dining Application to be reviewed and approved by City staff.

Maintenance
Parklet operators are responsible for maintaining their parklet by way of trash, debris and graffiti removal, noise level compliance with adjacent use, ensuring a smoke-free and vape-free environment and providing access to City infrastructure. They must also maintain the quiet, safety, and cleanliness of the sidewalk and parking lane space adjacent to their parklet area. Parklet operators are responsible for removing the parklet in its entirety when the permit expires or when the operator no longer wishes to participate in the program. In the event that a parklet changes ownership, the new owner will submit a new parklet permit and take over maintenance and operation of the space.

Downtown Parking Impacts
Downtown includes both private lots and public parking lots with approximately 2,575 parking spaces. 53 new parking stalls have recently been added to Downtown with modifications to off-street parking, including restriping the Railroad Parking Lot on Depot Street, activating the Depot Street and First Street temporary lot and transitioning two existing spaces on 3rd street to disabled parking. To date, 25 Downtown parking spaces are being repurposed for the use of parklets, 12 of which are located on Monterey Road. Based on conversations with existing and future applicants of the SemiPermanent Parklet Program, City staff anticipates that the maximum number of parking spaces to be converted for parklets will be no more than 40 total.

Additionally, some spaces are planned to be converted to short-term (20-minute) parking spaces to allow for maximum use of these spaces to support the growing demand for delivery and takeout services as well as support passenger drop-off, which will make Downtown more accessible.

Application Process
After receiving a Semi-Permanent Parklet Program application, the City will post a public notice at the applicant’s location documenting the application for a parklet permit.

The public notice must be posted for ten (10) calendar days. The notice will alert the public of the parklet and provide the opportunity to express support or opposition to the

8 application. If objections are raised during the public notice period:

1. City Staff will meet and review the application with the objector to determine if there are feasible alternatives to make the parklet acceptable. Final objections will be submitted to the Development Services Director.

2. The City may require redesign of the parklet to attempt to alleviate any objections.

3. If objections to the project are still outstanding, the Development Services Director will make a final determination on the permit based on the proposal, expressed concerns, and overall benefit.

4. If the Development Services Director rejects the application, the applicant may appeal the decision to the Planning Commission or the applicant may reapply.

Parklet Grant Funding Program
Constructing a parklet requires significant financial investment, ranging from $20,000 - $90,000 with the estimated return on investment anywhere from three to five years. To assist parklet operators, the City Council approved $50,000 to be used for a Parklet Fee Financing Program. City staff is recommending a Parklet Grant Program to reimburse dining establishments for traffic safety, landscaping, and/or construction/architecture document-related expenses. Grant reimbursements will be capped at $5,000 per parklet operator and will be issued on a first come first serve basis, upon approval of the applicant’s parklet. If approved by the Council, the Parklet Grant Program will begin accepting applications on July 1, 2022, and close on June 1, 2023.

Code Enforcement
Currently, there are seven businesses operating under the Al Fresco program on public property. Additionally, over half a dozen businesses have expanded outdoor dining operations on private property. To support business recovery, the City has allowed these operations to take place with limited permitting, under the Al Fresco Program. The Al Fresco Program is scheduled to end on December 31, 2022. Upon approval of the Outdoor Dining Program, which includes the Semi-Permanent Parklet Program for public right-of-way and the Zoning Amendment for parklets in private property, staff will work with the business community to help them transition out of the temporary Al Fresco program. Businesses that choose not to apply for the necessary parklet permits, will be asked to terminate their Al Fresco activations by January 31, 2023, offering a one-month grace period.

Staff will begin notifying the business community about the new regulation in early Summer and require permit applications by the Fall. Code enforcement, including citations, will take place after January 31, 2023. Below is a detailed program timetable.

Program Timeline
June 1, 2022 Launch the Outdoor Dining Manual, Semi-Permanent Parklet Program and Parklet Grant Program
July 1, 2022 Begin accepting applications for the Parklet Grant Program.

October 1, 2022 Deadline for existing parklet operators to submit a SemiPermanent Parklet Application.

8 December 31, 2022 Expiration of the Al Fresco Outdoor Dining Program.

January 1, 2023 Enforcement of all signage, fees, permitting, and standard dining operations resumes.

January 31, 2023 Deconstruction of non-compliant parklets. Businesses are subject to fines for code violations.

COMMUNITY ENGAGEMENT:

Inform
April 14, 2022 - Chamber of Commerce Economic Development Meeting April 21, 2022 - Morgan Hill Downtown Association Meeting April 28, 2022 - Draft version of the Outdoor Dining Manual included in the Economic Development eNewsletter
April 29, 2022 - Draft version of the Outdoor Dining Manual included in the City’s 411 May 2 & 3, 2022 - Draft version of the Outdoor Dining Manual shared & reviewed with Citywide restaurant operators
ALTERNATIVE ACTIONS:

The City Council may provide alternate directions for staff to return with adjustments to the Outdoor Dining Program and Parklet Grant Program.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

On January 19, 2022, City Council directed staff to create a Semi-Permanent Parklet Program to replace the Al Fresco Program scheduled to expire on December 31, 2022.

During that same meeting, Council also approved $50,000 for the creation of a Parklet Grant Program to help citywide restaurants recover expenses for existing parklet conversions and new parklet construction under the new Semi-Permanent Program.

Council directed staff to create a Parklet Grant Program and Semi-Permanent Parklet Program and return to Council in Spring 2022.

On June 3, 2020, City Council reviewed and approved the Economic Development Recovery Plan. This action included approving the Morgan Hill Al Fresco Outdoor Dining Program and easing requirements outlined in the existing Parklet Pilot Program.

The City provided orange safety barricades to participating restaurants at no cost, waived all encroachment permit fees and relaxed the enforcement of signage and live entertainment.

On May 20, 2020, City Council provided direction to the City Manager to take immediate action and implement an economic recovery plan that takes immediate action to respond to the needs of Morgan Hill’s business community and continues to execute strategies that support fiscal sustainability. Within the Economic Recovery Plan, City staff developed a “Morgan Hill Dine al Fresco” guide (Attachment B) for restaurants with information about how to obtain a temporary encroachment permit for Cityowned/regulated sidewalks and streets from the City and amend necessary permits

8 from the County Health Department and Alcohol Beverage Control (ABC). This allowed restaurants to meet physical distancing requirements by expanding their footprint outdoors onto private outdoor spaces or City’s public Right-of-Way, like sidewalks or on street parking spaces. As an added support for restaurants, the Economic Recovery Plan also extended the Parklet Pilot Program another 3 years from its original sunset date in 2020.

On July 25, 2018, the City Council approved a two-year Parklet Pilot Program and Manual. However, there were no restaurant participants in the program until it was extended by Council in 2020 as part of the Economic Development Recovery Plan and in support of restaurant survivability during the COVID-19 pandemic.

FISCAL AND RESOURCE IMPACT:

If approved, review costs for existing parklet conversions and new parklet construction will be paid by encroachment and building permit fees. A refundable security deposit in the amount of $1,000 will be collected from each approved parklet applicant in the public right-of-way and held until parklet deconstruction is completed. An annual Rental Fee of $1,000 will be charged to each parklet operator in the public right-of-way to cover the City’s electrical cost of mandating that parklets provide lighting through City tree light electrical outlet, for mandatory lighting to increase visibility and safety. The annual Rental Fee will be waived in 2023 out of consideration for parklet construction costs but will be applied beginning January 1, 2024.

The Outdoor Dining Program will allow the City to support business recovery and generate additional sales tax.

CEQA (California Environmental Quality Act):

Categorical Exemption
This project is categorically exempt from environmental review under CEQA pursuant to California Code of Regulations, Title 21, Section 15304(b) (Minor Alterations to Land which do not involve removal of healthy, mature, scenic trees).

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Fa
Parklet featured: Noriega Street Parklet, San Francisco, CA Parklet Pilot Program
Manual
Updated
October 2020

Page | 2
Contents
Parklet featured: Bellingham, WA
Parklet Pilot
Program
The City of Morgan Hill is
embarking on a two-year
parklet pilot program which will
allow businesses and
community organizations
situated in the downtown core
an opportunity to extend their
operations onto the street in
the form of a parklet.

What is a parklet? A parklet is
an extension of the sidewalk
that repurposes on street
parking spaces for the creation
of public space. The idea is to
transform public space, such a
parking spot, into an area that
can be utilized by pedestrians
with seating, shade, and
dinning.

Page | 3
Morgan Hill Parklet Pilot Program Pg. 4
About Parklets
Program Goals
Parklet Standards and Responsibilities Pg. 5
Location Criteria
Parklet Eligibility
Parklet Cost
Basic Requirements
Parklet Standards
Parklet Application Process Pg. 11
Preliminary Application
Encroachment Permit
Contacts
Application

Page | 4
About Parklets
A parklet activates the street by replacing one or more on-street parking spaces with pedestrian oriented amenities such as seating, planting, and/or elements of play.

Program Goals
Support downtown
Businesses by adding
unique opportunities in
the public sphere. 1 2 Slow down traffic.

Make downtown
interesting and vibrant. 3 4 Promote walkability.

Support the downtown
strategies outlined in
the Economic
Blueprint, Station Area
Master Plan, Downtown
Specific Plan,
Placemaking
Investment Strategy, &
2035 General Plan.
5

Page | 5
Location Criteria
The Parklet Pilot Program will be available only in the downtown core. The priority area for parklets are on Monterey Road between Main and Dunne Avenue as illustrated.

However, installation of a parklet in the downtown core, as outlined in red in the map, will be considered on a case by case basis.

Parklet Eligibility
Eligible applicants include:

1. Downtown businesses

2. Community-based organizations
Priority Area
Downtown Core
Map Key

Page | 6
Parklet Cost
Before installing a parklet there are costs that should be taken into consideration:

1. Parklet Cost. Parklets can range in cost. The typical parklet with a platform (materials and installation), planters, tables, and chairs is approximately $16,000.

2. City Fees. The City will require an Encroachment Permit which costs $615. A refundable deposit of $2,000 is required when playing for the encroachment permit. This deposit will be returned when the parklet owner has completed their term with the parklet program and restores the parking stall to its original condition.

3. General Liability Insurance. General liability insurance of up to $1,000,000 in coverage is required to receive an Encroachment Permit. General Liability insurance can range from $300 to $1,000 a year.

4. Maintenance and upkeep. This will vary project by project but should be taken into consideration as the parklet will need to be kept in good repair year-round.

Parklet featured: San Francisco, CA

Page | 7
Basic Requirements

MOVEABLE

FURNITURE
• Secure furniture overnight or when not in use.
• Store unsecured furniture and equipment after business hours.

BUILT

FACILITIES
• Must meet development standards (Page 9)
• Develop plans with a Licensed B or C-5 Contractor
• Built to approved plan by general contractor.
• Structural engineer certification
UPKEEP
• Keep all plants healthy and replace dead plants.
• Keep parklet free of debris, grime, and graffiti.
• Keep the parklet free of pests.
• Sweep out debris from under parklet on an as-needed basis to allow proper drainage.
• Adequately maintain all surfaces of the parklet so they are clean and safe for community use.
• Keep any furniture- such as tables and chairs, and benchesclean. • Repair and/or replace tables, chairs, and other elements of the parklet as needed.

PARKING
ZONES
• Parklets are not permitted in an existing tow away,
commercial loading, disabled parking, red, or white zones. • Parklets must have adequate clearance for automobiles to turn in and out of nearby driveways.

PUBLIC

UTILITIES
• Parklets must not cover any utility or manhole covers. • The design must provide access to public utilities, access panels, valves, building standpipes, and other features. • The parklet design must provide for proper street drainage. • Space underneath and surrounding parklets shall be kept clean and shall be maintained free of debris and
obstructions to allow for property drainage.

Page | 8
Parklet Standards
✓ Materials
If not proposing a decked parklet (See Page 9), the
parklet can utilize the existing road as the ground for the parklet. Painting the road, poured concrete, or
loose particles such as sand or stone are not
permitted.
✓ Location
Parklets shall be located at least one parking space
away from an intersection or street corner unless
adjacent to a curb-extension or bulb-out. Parklets
near an entrance only driveway must be at least twofeet from the driveway apron. ✓ Access
The width of the entrance(s) to the parklet should be
at least 48-inches wide.
✓ Drainage

1. Parklets cannot impede the flow of curbside
drainage.

2. The parklet design shall include a 6-inch
clearance from sidewalk curb along the entire
length of the parklet.

3. For parklets that include a platform, refer to
Parklet Platform standards below.
✓ Defined Barrier
The parklet must be a defined space separating the
space for pedestrians from bicyclists and vehicular
traffic. These requirements include:

1. Perimeter wall or rail must be 3 feet minimum
and 42 inches maximum height and must not
obstruct views of traffic.

2. Platform ends and corners must be capable of
withstanding 500 pounds of horizontal force.

Confirmation of these requirements must be
provided by a certified structural engineer.

Access Width
48” min.
2’ min.

Parklet Standard
stall 20’
Barrier
Parklet
6” clear
6” clear
Barrier
Wheel Stop

Page | 9
✓ Defined Barrier (Con’t)

3. Additional street side platform
reinforcement capable of withstanding 500
pounds of horizontal force must be placed
a minimum of every 15 feet

4. Parking stops and reflective delineators
must be placed at the traffic flow side of the
parklet. Parking stop may not be required if
parklet is directly adjacent to sidewalk
“bulb-out”.

5. Parklet barrier must be 3 feet clear from the
adjacent vehicular travel lane

6. A wheel stop shall be installed a minimum
of 4 feet away from the end of the parklet
where the parklet is adjacent to a parallel
parking stall.
✓ Platform Materials
✓ Platform surface materials should be
textured or treated with a non-skid coating to
ensure a safe walking surface.
✓ Paneled decking is preferred. Allows for
easy access under the deck if needed. Easy to
replace damaged pieces.
✓ Parklet floor load-bearing weight minimum is
100 pounds per square foot.
✓ Platform Extension
✓ The deck of a parklet platform shall be flush
with the sidewalk without a horizontal or vertical
separation greater than ½ inch.
✓ Vertical separation between ¼ inch and ½
inch high shall be beveled with a slope not
steeper than 1:4 (25%).
✓ Securing Structure
Bolting into the street or penetrating the surface
of the road in anyway is prohibited.
(Not including wheel stop)
Parklet
1/2” max gap
Curb
Curb
Aligned flush
to ¼”
Span gap Bevel
Yes
6”
Keep
Clear
Parklet
Curb
No
Additional Standards for Platform Parklets
6”
6”

Page | 10
✓ Drainage

1. Parklets cannot impede the flow of curbside
drainage.

2. All parklets must provide access through the
parklet platform to the gutter adjacent to the
curb.

3. A six-inch by six-inch minimum clear gutter
space must be provided along the entire
length of the parklet adjacent to the curb.

Barrier adjacent to vehicle lane should
incorporate two six-inch clearance paths
(see drainage image on page 8)
Additional Standards for Platform Parklets

Page | 11
Parklet Application Process
The process to build a parklet consists of a two-step process:

1. Preliminary Application – The preliminary application is intended to be exploratory where the applicant can share their ideas for a parklet with the City.

2. Encroachment Permit – The encroachment permit submittal requires the plan and application to be completed with payment of fees. At the time of Encroachment Permit Application, a certification by a structural engineer on the barriers will be needed.

The following pages will walk through the items needed for both the preliminary application and the encroachment permit submittal requirements.

Submit Parklet Proposal
with Preliminary Application
City Initial Review Approval
Submit Application & Fees
for encroachment permit
Public Notice
Obtain Encroachment
Permit Agreement

Page | 12
Preliminary Application
Applicants should submit Parklet Preliminary Application with the following information:

2. Project Description
The proposal needs a brief description of the parklet concept, this should include:
- General parklet concept
- How the parklet will be activated
- Any potential programming envisioned
Left Side Right Side Across

1. Photos of Site
The proposal should include at least three photos showing the proposed parking space(s) to be converted into a parklet. The three photos must show the parking space from across the street and one photo from each end of the proposed parklet.

You may bring in photos or a hand drawling to initially discuss your plan. Prior to encroachment permit submittal, a detailed plan showing compliance with the parklet standards will be required. Plans should be completed by a general contractor.

Page | 13

3. Initial Site Plan
Provide detailed and measured drawing showing:

A. Parklet dimensions
B. Identify parklet materials to be used (can bring photos, pamphlets, or pieces of material for examples)
C. Compliance with parklet standards
D. Width of adjacent sidewalk
E. Location of fronting business and neighboring businesses on both sides.

F. Location of any above ground fixtures (trees, fire hydrants, poles, bike racks, street lights, etc.)
G. At-grade roadway markings (color curbs, parking stall markings, etc.) H. At-grade utilities (panels, storm drains, manhole covers, etc.)

4. When the proposal is ready for submittal please submit the application in person at City Hall to Economic Development Staff or by email to:
[email protected]
Development Services Address:
17575 Peak Ave.

Morgan Hill, CA 95037

Page | 14
Encroachment Permit Phase
Contacts
If you have any questions regarding the parklet process feel free to email Morgan Hill’s Economic Development Staff at [email protected] or call 408.310.4633.

1. Design Review
Design Review is an integral part of the permitting process which ensures the site, architectural design and landscape design meet City code and ensure that project will fit within the downtown as proposed.
• All parklets require Design Review. Design Review will take place at both the preliminary permit and encroachment permit phase.
• This review typically does not add any time to the project lead time. • Provide all materials with any suggested corrections from the preliminary application.

3. Encroachment Permit
An Encroachment Permit is written permission to encroach within the City’s public rightof-way. • All parklets will require an Encroachment Permit before a parklet can be installed. • At the time of Encroachment Permit Application, a certification by a structural engineer on the barriers will be needed.
• The Encroachment Permit fee for parklets is $615, plus the $2,000 deposit that will be reimbursed when the parklet is cleared and returned to its original condition.
• Insurance for the parklet is required and part of the Encroachment Permit process
• This permit typically takes between two and three weeks to process. • Under the Parklet Pilot Program, the initial Encroachment Permit will be valid for two-years with a one-year extension from date of approval.

2. Notification
Upon approval of the proposal, the City will create a notification sign to inform the community of the intent to install a parklet. You must post the sign in front of the proposed parklet’s location for 10 days. The notification must be visible to the public. If you are the adjacent business, then the sign can go in the window of that business.

When ready to apply for permits, please visit City Hall.

Development Services Address:
17575 Peak Ave.

Morgan Hill, CA 95037

Page | 15

CITY OF MORGAN HILL
Preliminary PARKLET APPLICATION
Please complete the following parklet proposal form and submit in person at City Hall to Economic Development Staff or by email to: [email protected]
Applicant Information Date:______________________
Name:_________________________ Business/Organization: _____________________________ Business/Organization Address________________________________________________________ Email: _______________________________ Phone: ________________________________ Proposed Parklet Location
Nearest Street Address:
______________________________________
Neighboring Businesses:
______________________________________
Date Public Notification Sign Up:
______________________________________
I acknowledge this is the preliminary application
and will apply for the encroachment permit if this
preliminary application is approved. No work on
the parklet shall begin until an encroachment
permit is issued.
______________________________________
Applicant Signature
Staff Use ONLY Additional Parklet Information
Please attach ALL of the following materials
Photos of Site
Include 3 photos showing the proposed parking
space(s) to be converted into a parklet. The three must show the parking space from across the street and one
photo from each end of the proposed parklet.

Project Description
Submit a project description of your proposed
parklet. The description should include the general
parklet concept, how the applicant envisions activating the parklet and any potential programming that is
envisioned.

Initial Site Plan
Provide a detailed and measured drawing of the
parklet, sidewalks, etc. See page 10 of the Parklet Pilot Manual for details of what must be included in the Initial Site Plan.

Staff Use Only
Application Complete: Yes No Date Received: ______________ Approved: Yes No Reviewer: ______________________________________Date Approved: _________________________ Comments:__________________________________________________ Fees Collected: ____________

www.morganhill.ca.gov
MORGAN HILL al FRESCO
Guide for Temporary Outdoor Dining & Retail Activation

Revised November 4, 2020

“Morgan Hill al Fresco”

TEMPORARY OUTDOOR DINING & RETAIL ACTIVATION
The Morgan Hill al Fresco program is an opportunity for restaurants and retailers to safely reopen during the COVID-19 pandemic by utilizing new or additional outdoor space for dining or displaying retail merchandise, while meeting physical social distancing requirements. Morgan Hill al Fresco is a great way to expand square footage, add liveliness to city streets, and promote business recovery!
Businesses wishing to use on-street parking spaces, sidewalks, or other public spaces, can apply for a temporary encroachment permit from the City of Morgan Hill. It is fast, easy, and FREE! City of Morgan Hill Temporary Encroachment Permit Application Required with Application:
o Supplemental Diagram
o Liability Insurance (coverage reduced for on-street spaces!) To qualify for streamlined response:
o No structure (decking) required—no Building Permit needed! o If new space is in sidewalk area, space must allow for pedestrian access o All spaces must be compliant with Fire Code and ADA requirements o If the new space is in the street, space must be safely closed off to traffic with a protection device certified by a structural engineer
Submission and Review:
o Submit application, insurance, photos, and diagram to [email protected]
o 1-3 day review period, depending on the need to review traffic safety measures Additionally, all businesses need to obtain and conform with all governmental rules and regulations:

Santa Clara County Public Health Social Distancing Guidelines Temporary Catering Permit from the Department of Alcoholic Beverage Control (if selling alcohol)
For questions, please contact the Morgan Hill al Fresco Liaison, [email protected] or (408) 310-4656

“Morgan Hill al Fresco”
Temporary Encroachment Permit Application

Name of Business:

Physical Address of Business:

Name of Applicant: Phone:

Email:

Name of On-Site Manager: Phone:

Email:

Business Website: Business Hours:

Are you expanding your outdoor space? Yes No

Are you adding temporary structures (tents, canopies) to your outdoor space? Yes No

How many temporary structures (tent, canopies) are you adding and how big are they?

Explain how will the temporary structure be anchored? (weights, ropes, braces, etc.)

Are you adding heating devices? Yes No

Temporary Structures (tents and canopies)
• Temporary structures must be weighted, anchored, or secured to the ground, but cannot screw, cut or drill into the public right of way (i.e. on streets or sidewalks) • Temporary structures less than 100 square feet require a minimum of 40 lbs. of anchor weight per leg
• Temporary structures larger than 100 square feet must be installed by a licensed tent vendor or structural calculations provided to the City
• Temporary structures covering an aggregate of over 700 square feet without walls or 400 square feet with a single wall, will require the Fire Marshal to permit and inspect • If heating devices will be used under the structure, structure shall have a fire-resistant certification or flame certification showing material is fire-rated or noncombustible • Temporary outdoor structures must have at least 50% of the sides open to allow airflow • Layout of temporary outdoor structures must be shown on encroachment application diagram

Heating Devices under tents and canopies
• Heating equipment must be shown on encroachment permit application diagram • Propane heaters are not allowed inside/under tents or canopies • Propane heaters must always be outside tents or canopies and kept 3 feet from combustible materials
• Heating devices must be listed for the application and used in accordance with applicable Code and Standards
• Fire Marshal will inspect heating devices in tents and canopies of all sizes • Extension cords must be protected by a Ground Fault Circuit Interrupter and covered in compliance with American with Disabilities Act (ADA)
Access & Safety Requirement Checklist (check each box to certify that you adhere to the following requirements):
 Dining, retail activity, and merchandise display area must be limited to the width of the business  For use of the public sidewalk, a minimum, unobstructed width of five (5) feet must be permanently maintained for public pedestrian passage. Furnishings and merchandise shall not be placed in a manner that obstructs access to this pedestrian passage.  No items shall block visibility for required street signs, crosswalks, and intersections  Heating equipment and other related components used under tents or canopies shall be installed in accordance with the California Mechanical Code and shall be approved by the fire code official  Heating equipment shall be unplugged or disconnected for overnight storage, and employees shall be trained in proper installation of fuel tanks and in detecting leaks  Enclosed areas with heating devices must have clearly marked entrances and exits  Businesses must have sufficient fire extinguishers to cover indoor and outdoor spaces  Restaurants will need inclement weather plans in writing and trained staff to prevent any injuries in storms or other unsafe situations
 The area shall be maintained in a sanitary condition free from litter, infestation from pests and the storm drain must be kept clear
 Access to building fire protection equipment and sidewalk fire hydrants must be kept clear  No stacking of furnishings in outdoor areas
Description of Encroachment: Briefly describe the type of the encroachment requested.

For example: if you wish to add café tables in parking spaces or on the sidewalk, list the number and description of tables and chairs. In addition, if the site is in the street and impedes vehicular and/or pedestrian traffic, appropriate barriers and traffic plans need to be certified by a structural engineer.

Site Plan:

Attach a simple diagram with dimensions showing the layout of the outdoor space, including, but not limited to:
 where furnishings will be placed with a minimum of 6 feet between tables  location and size of temporary structures
 location and type of anchor system for temporary structures  location, type, and power source for heaters
Certificate of Liability Insurance & Endorsement:

Attach (1) a certificate of Liability Insurance and (2) an endorsement form which names the “City of Morgan Hill, its’ elected officials, officers, employees, agents, volunteers and representatives” as “Additionally Insured”. The general liability coverage of the policy must be for at last One Million Dollars ($1,000,000.00).

Property Owner Permission: The property owner has given applicant permission for improvements described in application.

Initials___
I have a current and valid Morgan Hill Business License Initials_____

Additional Requirements:

I certify that my business is adhering to all governmental rules, regulations and requirements in operation of my business, including but not limited to those rules established by the County Department of Environmental Health, County Department of Public Health, and the State Department of Alcoholic Beverage Control for both ongoing operations and those issued specifically for the COVID-19 shelter in place orders.

I agree Initials ___
I understand that the City’s acceptance of this encroachment permit application does not constitute approval be the City. Furthermore, I understand that any person who does or causes to be done any improvement or encroachment work of any kind within the City’s right-of-way without first having obtained a permit therefore, is in violation of Municipal Code Section 12.08.040 and therefore deemed guilty of a misdemeanor and upon conviction thereof shall be subject to a fine of not more than $1,000.00 or by imprisonment in the county jail for not more than six months, or by both fine and imprisonment, per Municipal Code Section 12.08.150.

I agree Initials ___
Applicant agrees to provide the City required documentation for tent structure calculations, fire resistance certifications, vendor permission to use heaters, acknowledges that temporary tent structure(s) and heating device(s) will meet local and state codes, and will obtain necessary insurance and hold the City of Morgan Hill harmless in the event of a structure failure.

I agree Initials ___
Applicant Signature Print Name Date

SAMPLE SITE PLAN
Attach a simple diagram with dimensions showing the layout of the outdoor space, including, where furnishings, tents, and heaters will be placed. This can be a hand drawing on a 8.5” x 11” sheet of paper.

Please e-mail completed application, site drawing, and insurance to [email protected] Revised November 4, 2020

EXAMPLES OF ALLOWED
Outdoor Dining Configurations
4 SIDES
NO TOP
2 SIDES

WITH TOP
1 SIDE

WITH TOP

NO SIDES

WITH TOP
These are examples only.

Please see the FAQ page for the exact definition of an outdoor facility:
www.sccgov.org/cv19business

EXAMPLES OF PROHIBITED
Outdoor Dining Configurations
4 SIDES
PLUS

WINDOWS
2 SIDES
PLUS

BUILDING SIDE
2 SIDES

PLUS WALL OR

BARRIER TALLER
THAN 4 FEET
OVER
4 ft
These are examples only.

Please see the FAQ page for the exact definition of an outdoor facility:
www.sccgov.org/cv19business

18.92.115___ Outdoor Dining on Private Property
A. Purpose: In order to accommodate vehicle and pedestrian circulation and to create well-designed and attractive outdoor dining areas, this section establishes standards for restaurants to utilize an adjacent sidewalk/patio (Sidewalk Café), or parking area (Parklet), outside of the public right of way, for the purposes of outdoor dining.

B. A Zoning Clearance in accordance with Section 18.108.110 is required for a Parklet which includes permanent structures or is proposed to be located within an on-site parking lot for the purpose of ensuring consistency of the standards outlined within the Morgan Hill Outdoor Dining Manual.

C. Exceptions to Standards. The Development Services Director may allow accessory outdoor dining that deviates from the standards in Subsection D below with approval of an Administrative Use Permit in accordance with Section 18.108.020.

D. Outdoor Dining Standards.

1. Hours: Outdoor dining shall only be allowed during the operating hours of the restaurant use and shall not operate between the hours of 12:00 a.m. (midnight) and 6:00 a.m.

2. The restaurant owner or manager shall obtain authorization from the property owner for the creation or expansion of any outdoor dining area.

3. Parking: Outdoor dining that complies with this Section is not subject to the on-site parking requirements contained in Section 18.72.010 (Parking and Loading).

4. The use of on-site parking stalls for outdoor dining shall be limited to the stalls located directly adjacent to the exterior of the restaurant building or tenant space.

5. Substantial safety barriers such as temporary walls, concrete, or water-filled K-rails, or landscape planters shall be installed to protect outdoor seating areas from vehicles, consistent with the Morgan Hill Outdoor Dining Manual.

6. Outdoor storage or preparation of food or beverages is not permitted.

7. Screening. Barriers, such as fences, gates, or ropes shall be a minimum of 3-feet and not exceed 4-feet in height. Chain link fencing is not permitted.

8. Tables, racks, shelving, and chairs must be freestanding and capable of immediate removal. Booths and built-in installations are prohibited.

9. Outdoor dining areas may not be arranged or operated in a manner that would:
a. Cause a safety hazard.
b. Obstruct the entrance to a building.
c. Reduce the accessible path of travel.
d. Interfere with access or parking required to be maintained under the Americans with Disabilities Act (ADA).
e. Encroach upon driveways or drainages, or otherwise create hazards for pedestrian or vehicle traffic.
f. Creates a private or public nuisance.

DRAFT
Outdoor Dining Manual
17575 Peak Avenue
(408) 310-4623
www.morganhill.ca.gov

Choose Morgan Hill
Table of
Contents
01 1.1 Program Overview

1.2 Program Goals

1.3 Timeline
04 4.1 Operational
Requirements

4.2 Permit Process

4.3 Code Enforcement
02 2.1 Types of Dining

2.2 Permits
05 5.1 Grant Program
03 3.1 Kit of Parts

3.2 Design Requirements

3.3 DIY Design Menu

3.4 Mobile Vendors
DRAFT

01 Choose Morgan Hill
DRAFT 1

Program launch June 1, 2022
7-years
Length of Parklet Program
Completed Semi-Permanent Parklet
Applications are due October 1, 2022
Deconstruction of non-compliant
parklets must occur before January
31, 2023
Parklet Deadlines
Provide guidelines, standards and
processes for outdoor dining on private
property and in the public right-of-way
Manual Outline
AP&I Kit of Parts
Standard Design Requirements
DIY Menu
Parklet Design
Program Overview

1.1 Choose Morgan Hill
The Morgan Hill Outdoor Dining Manual was developed to
provide citywide guidance and standards for outdoor dining in both private and public spaces. This program is meant to condense all existing outdoor dining policies, procedures and guidelines into one user-friendly manual.

The design and operating regulations outlined in the Manual address dining safety, accessibility, emergency access, maintenance and operations.

Outdoor dining applicants, architects and contractors should read this Manual in its entirety prior to submitting an application and refer to it regularly throughout the process. Applications accepted July 1, 2022 Application deadline June 1, 2023
Grant Funding
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2

Program Goals

1.2 Choose Morgan Hill
DRAFPublisTh Citywide Standards for Outdoor
Dining and Safety
Simplify and Streamline Outdoor Dining
Permits
Grow Sales Tax and Support Sustainability
Support Citywide Businesses
Foster Community Interaction
Create Public Access and Spaces for All
Promote Biking and Walkability
Provide Unique Opportunities in the Public
Increase Vibrancy in the Downtown
Sphere
3

Timeline

1.3 May 4, 2022
June 1, 2022
July 1, 2022
Semi-Permanent Parklet and Grant Funding
Program Presented to City Council.

Outdoor Dining Manual Published.

City Website Page Launched.

Existing Parklet Permit Holder Outreach.

Grant Program Goes LIVE.

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December 31, 2022
Semi-Permanent Parklet Application Deadline.

January 31, 2023
Non-Compliant Parklet Deconstruction Deadline.

June 1, 2023
Semi-Permanent Parklet Conversion Completion Deadline.

Grant Program Deadline.

October 1, 2022
Al Fresco
D
Outdoor Din
R
ing Program Expires.

AFT January 1, 2023
Signage, Fees, Permitting and Dining Enforcement Resumes. 4

02 DRA
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FT
5 Palmerino's Italian Deli

Types of Outdoor Dining

2.1 Public
Sidewalk Cafe
Public Sidewalk Cafes are
outdoor dining spaces located
within the sidewalk area of the
public right-of-way, that are
associated with adjacent
eating and drinking
establishments.

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DRAFT Private
Sidewalk Cafe
Private Sidewalk Cafes are
outdoor dining spaces located
within the sidewalk area or
adjacent landscaping area,
located on private property
such as a shopping center, that
are associated with adjacent
eating and drinking
establishments.
6

Types of Outdoor Dining

2.1 Public
Parklet
Parklets are outdoor spaces created
in formerly dedicated parking stalls,
consisting of a semi-permanent
extension of the existing curb into
the parking lane to facilitate outdoor
dining, public interaction, encourage
pedestrian and bicycle
transportation, and create a space
for all.

Private
Parklet
Private Parklets are outdoor spaces
created in formerly dedicated
private parking stalls, such as in a
shopping center, consisting of a
semi-permanent extension of the
existing curb into the parking lane
to facilitate outdoor dining, public
interaction and shopping center
activation.

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7

Public Sidewalk Cafe
Private Sidewalk Cafe
Sidewalk Cafe
Examples
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Rosy's at the Beach
D
Yolked Extreme Breakfast
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8

Public Parklet
Examples
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Maurizio's Italian Ristorante
D
Ladera Grill
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9

Private Parklet
Examples
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Margarita's Bar & Grill
Betto's Bistro
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10

Outdoor Dining Permits
Sidewalk Cafe

2.2 Public
Sidewalk Cafe
Encroachment Permit
Letter of approval from
property owner
Proof of Insurance
APPROXIMATE COST:

Permit- $672/every 3 years
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Private
Sidewalk Cafe
Must comply with standards
outlined in the Private
Property Outdoor Dining
Ordinance
APPROXIMATE COST:

Permit- none required
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11

Outdoor Dining Permits
Parklet

2.2 Public
Parklet Dining
Encroachment Permit
Letter of approval from
property owner
Proof of Insurance
APPROXIMATE COST:

Permit- $672/every 7 years
Security Deposit- $1,000
Annual Rental Fee- $1,000*
*waived in 2023*
Private
Parklet Dining
Outdoor Dining Clearance Permit
Letter of approval from property
owner
Must comply with standards outlined
in the Private Property Outdoor Dining
Ordinance
APPROXIMATE COST:

Zoning Clearance- $250
Administrative Use Permit- $1,500
*Clearance Permit fee is applied to
Administrative Use Permit Fee.

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*additional fees for building review and fire permit based upon design* DRAFT
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03 DRA
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13 Maurizio's

Parklet Design

3.1 A parklet is an extension of the sidewalk that repurposes parking spaces for the creation of public space. A parklet activates the street or parking lot by replacing one or more parking spaces with pedestrian oriented amenities such as seating, dining, and/or elements of play. Parklets must be stable, sturdy, and safe for users and pedestrians, maintain emergency access, and be accessible for people with disabilities.

Architecture Firm AP&I was contracted by the City in 2021 to create a Kit of Parts to include two parklet design alternatives. Parklet applicants can select from one of the AP&I Kit of Parts designs or create a unique design in compliance with all outlined DIY requirements. All parklet designs are based on industry and professional standards for safety and constructability. The number of parking spaces utilized is limited to each individual restaurant's storefront/footprint and property owner approval is required for both private and public right-of-way parklets.

These guidelines shall not be construed as authorizing or approving any improvements or uses of the public right-of-way that are inconsistent with applicable Federal, State, and Local statues and regulations.

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14

Agricultural Design
Choose Morgan Hill
DRAFT Option 1
15

Agricultural Design
Choose Morgan Hill
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16

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17

Industrial Design
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DRAFT Option 2
18

Industrial Design
Choose Morgan Hill
DRAFT
19

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20

Design
Elements

3.2 Choose Morgan Hill
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21

Design
Requirements

3.2 Shall not obstruct any utility or manhole covers.

Must provide access to public utilities, access panels, valves, building standpipes, and other features.

Must provide for proper street drainage.

Space underneath and surrounding parklets shall be kept clean and shall be maintained free of debris and obstructions to allow for proper drainage.

Complies with standards outlined in the California Building Code.

Plans developed by a Professional Engineer or Licensed Architect.

Built to approved plan by a licensed contractor.

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Not permitted in an existing tow away, commercial loading, disabled parking, red, or white zones.

Must have adequate clearance for automobiles to turn in and out of nearby driveways.

Extend no more than 7-feet from curb into parking lane.

Shall not extend over the curb or onto the sidewalk.

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22

Design
Requirements

3.2 Shall not obstruct access of emergency responders to fire exits or fire hydrants.

Minimum 5-foot clearance around fire hydrants.

Minimum 3-foot wide emergency access gap, with vertical and horizontal clearance, accessible by a removeable barrier, is required for every 20-feet of structure length.

Must have a minimum 44-inch barrier opening.

Must maintain clear sightline visibility above 42-inches.

Cannot obstruct pedestrian view of crosswalks, bike lane and/or traffic signals.

A minimum 3-foot maximum 42-inch high barrier or railing consisting of approved safety mechanisms must be present on all (3) roadway facing sides. A clear, transparent, shatterproof vertical extension of the barrier can be added so long as the total barrier height does not exceed 5-feet.

Barriers must not be solid but rather separated with slates and alternating openings.

Traffic safety bollards are required to be placed every 15-feet around the perimeter of the parklet barrier, including at each parklet end and/or corner.

A soft-hit post and yellow high intensity retro-reflective tape or reflectors are required at both ends of the parklet.

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23

Design
Requirements

3.2 Propane cylinders (empty or full) cannot be stored indoors or within 5-feet of any building openings (e.g. doors, windows or vents).

When not in use, propane cylinders (empty or full) should be stored in cylinder safety cages and away from high traffic areas.

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A "no smoking" sign must be placed in a conspicious location.

One minimum 2-A:10-B:C fire extinguisher shall be provided within 75-feet of travel distance and include a State Fire Marshall's Tag of annual service.

Portable fire extinguishers shall not be obstructed or obscured from view and the extinguisher top shall be mounted between 3-feet to 5-feet above the floor.

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24

Design
Requirements

3.2 Provide 5% or no less than one accessible table and one 30-inch X 48-inch clear space for wheelchair users. Where tables, counters and drink tables are provided, at least one of each feature shall be wheelchair accessible.

Provide an accessible entrance a minimum of 48-inches wide and a wheelchair turning space of 60-inches in diameter.

Minimum 4-feet maneuvering clearance is required from the front edge of wheelchair seating area to the table.

An accessible path of travel shall connect the sidewalk to the entry, deck surface, wheelchair turning space and wheelchair resting space.

Parklet platform deck must be flush with the sidewalk, with a 1/2 inch separation or less, and a maximum vertical height difference of 1/4 inch.

A Maximum 2% cross slope on parklet surface in any direction.

Parklet surface must be stable, firm, textured and slip-resistant.

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Minimum 5-foot wide unobstructed route for pedestrian
travel on the sidewalk.

Minimum of 4-feet of setback from adjacent parking spaces.

Minimum of 2-feet of setback between parklet and adjacent on-street travel lanes.

Must be 10-feet away from the nearest intersection/street corner.

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25

Secure furniture overnight or when not in use.

Store unsecured furniture and equipment
after business hours.

Design
Requirements

3.2 Choose Morgan Hill
Keep all foliage healthy and replace deceased plants.

Keep parklet free of debris, grime, and graffiti.

Keep the parklet free of pests.

Sweep out debris from under parklet on an as-needed basis to allow proper drainage.

Adequately maintain all surfaces of the parklet so they are clean and safe for use.

Keep any furniture clean- such as tables and chairs, and benches.

Repair and/or replace tables, chairs, and other elements of the parklet as needed.

Enhanced lighting elements are a required component
of parklet designs and must be energy efficient.

All cables, cords, or wires used for lighting shall be run a minimum of 10-feet overhead.

Lighting shall comply with the California Electrical Code.

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26

DIY Menu
Overhead Options

3.3 Open Air
No overhead cover. String
lighting does not qualify as
an overhead cover.

Umbrella
A device consisting of a
circular or rectangular
canopy of cloth on a folding
metal frame supported by a
central rod, used as
protection against rain or sun.

Canvas Sail
A shade sail is a type of fabric
awning that covers patios and
outdoor dining areas. Canvas
shades are prohibited from
being attached directly to a
building face. Materials must
meet the flame propagation
performance of
Test Method 2 of NFPA 701 with
an affixed label bearing the
identification of size and fabric
or material type.

Pillar and Roof
An overhead covering
consisting of parallel posts
and a roof that is either
closed solid or opened
through cross beams and
rafters. Pillar and Roof
designs can be made from
wood, metal or a
combination of each.

A minimum clearance of 7-feet and maximum clearance of 10-feet is required DRAFT27

DIY Menu
Heater Options

3.3 Open Air
Heaters are approved in this
setting as long as they are
located a minimum of 5-feet
from an exit and flammable
materials.

Umbrella
Propane heaters are permitted if
they are located a minimum of
5-feet away from an umbrella
awning and electric heaters are
permitted if they are located a
minimum of 3-feet away from
an umbrella awning.

Canvas Sail
Any heaters with open flame,
open flame elements, or
exposed heating elements are
prohibited from being used
underneath a canvas roof.

Electric heaters are permitted
so long as they are located a
minimum of 3-feet away from
canvas and flammable
materials.

Pillar and Roof
Any heaters with open
flame, open flame
elements, or exposed
heating elements are
prohibited from being used
underneath a wooden pillar
and roof.

Electric heaters are
permitted so long as they
are located a minimum of
3-feet away from canvas
and flammable materials.

Propane and electric
heaters are both allowed
under a 100% metal
composed pillar and roof.

A site plan with the desired location of each heater is required and must comply fully with California Fire Code Standa
D
rds.

RAFT
28

Required traffic safety measure for a parklet located on a 4-lane road or a road with a speed limit greater than 25 mph.

DIY Menu
4-Lane Road
Required Safety Measure

3.3 Cement K-Rail
or Equivalent
(6,000 pound impact rating)
DRAFT
Choose Morgan Hill
29

DIY Menu
K-Rail Beautification

3.3 Choose Morgan Hill
Beautification of k-rail traffic
safety devices is encouraged.

A rendering of your proposed
artwork must be submitted with
your parklet application and is
subject to approval by the
Development Services Director.

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30

DIY Menu
2-Lane Road
Required Safety Measure Options

3.3 Required traffic safety measure on a parklet located on a 2-lane road and with a speed 25 mph or less.

Choose Morgan Hill
Bollard
(500 pound impact rating)
Decorative K-Rail Planter Box Encasing
Bollard or Decorative K-Rail
DRAFT
31

Mobile Vendors

3.4 Choose Morgan Hill
Operate between the hours of 7AM10PM
Located at least 15-feet from a driveway
and/or fire hydrant
Located at least 100-feet from a bus
stop, intersection or primary school
If operating within 100-feet of a park,
must vend on the same side of the street
as the park
Not allowed on the sidewalk or within
25-feet of a fire lane or "no parking" zone
Not allowed within 300-feet of another
mobile vendor, except where separated
by public street
Sidewalk Cafe or Parklet Permit required
by "host business" if encroaching onto
the sidewalk or adjacent parking spaces
DRAFT
32

04 Choose Morgan Hill
DRAFT
33 Willard Hicks

Noise levels comply with the permitted sound
levels of the adjacent use.

Maintain that the outdoor area is safe and free
of trash, debris, graffiti at all times.

All outdoor dining areas should promote a smoke-free
and vape-free environment in accordance with state
and local laws.

Operational
Requirements

4.1 Choose Morgan Hill
Rinse out and clean debris from
the area under their structure at
least once a week.

Maintain the quiet, safety, and
cleanliness of the sidewalk and
parking lane space adjacent to
parklet area.

Ensure that the space occupied and the services
offered under the permit comply with health
guidelines, adhere to all accessibility laws and do not interfere with emergency responders' access.

Responsible for removing any structures
when the Outdoor Dining Permit expires, or
when participation in the program is no
longer active.

Failure to properly and sufficiently maintain the
cleanliness, safety, and accessibility of a parklet may be subject to violations and fines. If maintenance issues
are not resolved, parklet operators may be required to
remove the parklet at their own expense.

Provide and maintain access to the City infrastructure.

If a parklet changes ownership, the permit
holder will remove the parklet or transfer it to
the new owner. A transfer requires the new
operator to submit a new permit.

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34

Encroachment Permit
Clearance Permit
Insurance
Permit
Checklist

4.2 Choose Morgan Hill
Public
Parklet
Private
Parklet
Public
Sidewalk
Fire Permit
*only if heaters included
Property Owner Approval
When all locational, design and
operational requirements are met,
the application is reviewed by the
applicable City department.
14-Day Posting
Annual Rental Fee
Administrative Use Permit
*if required by design
D
Security Deposit
RAFT Private
Sidewalk
Comply with Private
Outdoor Dining Ordinance
35

Encroachment Permit
Clearance Permit
Insurance
Permit
Cost

4.2 Choose Morgan Hill
Public
Parklet
Private
Parklet
Public
Sidewalk
Fire Permit
*only if heaters included
Property Owner Approval
When all locational, design and
operational requirements are met,
the application is reviewed by the
applicable City department.
10-Day Posting
Annual Rental Fee
(waived until 2024)
Administrative Use Permit
*if required by design
Security Deposit
DRA
(refundable)
FT
Private
Sidewalk
Comply with Private Outdoor
Dining Ordinance
$672/
3 years
$672/
7 years
$1000/
yearly
$250/
one-time
$1000/
one-time
$1500/
one-time
36

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Public Sidewalk Café
Permit Process

4.2 STEP 1
Outdoor Dining Application
Preliminary Application
Dimensional Site Plan
Proof of Insurance
Property Owner approval
STEP 3
Fees
Encroachment Permit
Encroachment Fee
STEP 2
Food & Beverage
Obtain Health Department Permit
Obtain ABC Permit
Submit
Upload and Submit
[email protected]
DRAFT
37 APPROVAL
Respond to requests for additional
information
Receive City approval notice
Submit
Upload and Submit
[email protected]

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Public Parklet
Permit Process

4.2 STEP 1
Outdoor Dining Application
Preliminary Application
Dimensional Site Plan
Proof of Insurance
Property Owner approval
STEP 3
Fees
Encroachment Permit
Encroachment Fee
Security Deposit
STEP 2
Food & Beverage
Obtain Health Department
Permit
Obtain ABC Permit
Submit
Upload and Submit
[email protected]
DRAFT
38 APPROVAL
Respond to requests for
additional information
Receive City approval notice
Submit
Upload and Submit
[email protected]
Noticing
10-day notice to the public
posted in business window

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Private Parklet
Permit Process

4.2 STEP 1
Outdoor Dining Application
Preliminary Application
Dimensional Site Plan
Proof of Insurance
Property Owner approval
STEP 3
Fees
Zoning Clearance or
Administrative Use Permit
STEP 2
Food & Beverage
Obtain Health Department
Permit
Obtain ABC Permit
Submit
Upload and Submit
[email protected]
DRAFT
39 APPROVAL
Respond to requests for
additional information
Receive City approval notice
Submit
Upload and Submit
[email protected]

Issued by the Morgan Hill Police Department
Active for one-year
Enforcement begins May 1, 2022
Live Entertainment Permit
Code Enforcement

4.3 DRAF
Sidewalk Dining $672 every 3 years
Parklet Dining $672 every 7 years
Enforcement begins January 1, 2023
Encroachment Permit Fees
Temporary signage is 3 days, 30 days or 3 months
depending on sign type and material
Pole, roof, portable and a-frame signs are not allowed
Enforcement begins January 1, 2023
Signage Ordinance
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Must have a Morgan Hill Business
License
Obtain a California Seller's Permit
Obtain a Santa Clara County Health
Permit
Occupy a location approved in the
Mobile Vendor, Peddler and Solicitor
Trifold
Enforcement begins January 1, 2023
Food Trucks
Code enforcement resumes
Al Fresco expires December 31, 2022
Enforcement with fines begins January
31, 2023
Building Code
40

DRAFT
05 Choose Morgan Hill 41
MOHI Social

Applications accepted beginning July
1, 2022.

Application deadline is June 1, 2023.

Grant Timeline
Parklet Grant

5.1 Choose Morgan Hill
Whether you are an existing parklet operator coming into compliance or a future parklet operator submitting your first application, the cost can range from $10,000-$90,000. A Parklet Grant Program was created to help businesses recover
expenses for existing parklet conversions and new parklet construction.

The Parklet Grant Program will reimburse parklet applicants for traffic safety, beautification landscaping, and/or
construction/architecture document related expenses. Grant reimbursements will be capped at $5,000 per parklet operator and will be issued on a first come first serve basis once parklet construction is completed.

Businesses operating an existing
parklet or building a new parklet, in the
public right-of-way.

Businesses operating an existing
parklet or building a new parklet on
Private Property.

Eligibility
Grant dollars are approved to reimburse traffic
safety components, beautification landscaping,
and/or construction/architecture document
fees.

Use of Funds
In January 2022, City Council allocated $50,000
to support parklet development.

Grants awarded at a maximum of $5,000 per
eligible parklet.

Funding Amount
DRAFT
42

Please direct all outdoor dining questions, applications and documentation to Economic Development Staff:

Development Services
ATTN: Economic Development Team
17575 Peak Ave.

Morgan Hill, CA 95037
(408) 310-4623
[email protected]
www.choosemorganhill.com

START YOUR OUTDOOR DINING APPLICATION HERE
Have Questions?

9 CITY COUNCIL STAFF REPORT
MEETING DATE: May 4, 2022
PREPARED BY:

Christina Turner, City Manager
APPROVED BY: City Manager
INTRODUCE THE RECOMMENDED FISCAL YEAR (FY) 2022-23 AND
FY 2023-24 BIENNIAL OPERATING AND FY 2022-23 THROUGH FY 2027-28 CAPITAL IMPROVEMENT PROGRAM BUDGETS

RECOMMENDATION(S)
Receive the Introduction to the Recommended Budget Presentation

Estimated Time: 45 Minutes

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Enhancing Public Safety
Protecting the Environment and Preserving Open Space and Agricultural Land Maintaining and Enhancing Infrastructure
Supporting our Youth, Seniors, and Entire Community
Fostering a Positive Organizational Culture
Preserving and Cultivating Public Trust
Preserving our Community History
Enhancing Diversity and Inclusiveness
Advancing Regional Initiatives
2022-2023 Strategic Priorities
Fiscal Sustainability
Affordable Housing and Homelessness
Community Outreach, Engagement, and Messaging
Economic Development
Transportation
Guiding Documents
Bikeways, Trails, and Recreation Master Plan
Economic Blueprint
Fire Services Standards of Coverage
Morgan Hill 2035 General Plan
Public Safety Master Plan
Storm Drain Master Plan
Vision Zero

9 Water System Master Plan
Wastewater System Master Plan
REPORT NARRATIVE:

On Friday, April 29, the Recommended FY 2022-23 and FY 2023-24 Operating and FY 2022-23 through FY 2027-28 Capital Improvement Program (CIP) Budgets were distributed to the City Council and made available for public review.

Guided by our goals and priorities, the recommended budget reflects the City’s current financial condition, which improved markedly from the very dire outlook forecasted in the last budget cycle. As a result of the fast economic recovery from the impact of the COVID-19 pandemic, most notably from the one-time influx of lost revenue from the Federal Government, as well as stronger than the projected growth of the City’s existing tax base, the recommended budget not only maintains existing service levels but is able to enhance some City services that are considered priorities by the Council and the Community.

As most of the City’s major tax revenue categories continue to improve, Transient Occupancy Tax (TOT) and Recreation Services, two of the City’s General Fund major revenue sources, do not assume full recovery until FY 24-25. This, coupled with the projected higher cost to provide service as a result of the high inflation factor and the loss of revenue from the City’s Residential Development Control System (RDCS), due to Senate Bill 330 (SB 330), which went into effect January 1, 2020, has limited the City’s ability to fully address the General Fund’s unfunded needs. The City will continue to work with the community to look for ways to address the remaining General Fund’s unfunded needs.

The total Recommended Budget is $204.2 million in FY 22-23 and $167.7 million in FY 23-24. The FY 22-23 budget includes $52.5 million for General Fund expenditures, $58.5 million for CIP, and $93.2 million for non-General Fund expenditures. For FY 23- 24, the Recommended Budget includes $54.1 million for General Fund expenditures, $39.8 million for CIP, and $73.8 million for non-General Fund expenditures.

These recommended budgets are the team’s commitment to improving the City's longterm fiscal health by carrying out a financial plan which aligns resources with service level delivery recommendations that are consistent with the City Council’s goals and priorities while adhering to the sustainable budget principles.

Recommended FY 2022-23 and 2023-24 Operating and FY 2022-23 through 2027-28 Capital Improvement Program Budgets
COMMUNITY ENGAGEMENT:

Involve
March 24, 2022 - Budget Community Townhall Meeting.

9 In addition to introducing the recommended budget on May 4, staff will be hosting an inperson community budget meeting on May 18, and the community is invited to participate in the City Council budget workshop which is scheduled for May 18.

ALTERNATIVE ACTIONS:

Not Applicable
PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

The City Council received the last recommended biennial operating and CIP budgets in April 2020 which was subsequently adopted in June of 2020.

FISCAL AND RESOURCE IMPACT:

The budget documents are the product of many employees working in a collaborative manner to strive to attain the Council’s and Community’s priorities in a cost-effective manner while maintaining the City’s goal of fiscal sustainability.

The fiscal and resource impacts are included in the current year’s budget and workplan for all departments.

CEQA (California Environmental Quality Act):

Not a Project
Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.

10 CITY COUNCIL STAFF REPORT
MEETING DATE: May 4, 2022
PREPARED BY:

Dat Nguyen, Finance Director
APPROVED BY: City Manager

ADOPT RESOLUTION AUTHORIZING THE EXECUTION AND

DELIVERY OF A BOND ISSUANCE AGREEMENT TO REFINANCE AT
LOWER INTEREST RATES CERTAIN OUTSTANDING 2014 WATER

REVENUE BONDS AND AUTHORIZING CERTAIN OTHER MATTERS

RELATING THERETO

RECOMMENDATION(S)
Adopt a resolution approving the execution and delivery of a Bond Issuance Agreement and authorizing certain other matters relating thereto.

Estimated Time: 10 Minutes

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Maintaining and Enhancing Infrastructure
2022-2023 Strategic Priorities
Fiscal Sustainability
Guiding Documents
Water System Master Plan
REPORT NARRATIVE:

In 2014, the City of Morgan Hill issued $21,975,000 in Water Revenue Bonds (“2014 Bonds”). The 2014 Bonds have a final maturity of June 1, 2034, and carry an interest rate of 3.75% per year. The 2014 Bonds were sold directly to Capital One. The 2014 Bonds have a first optional redemption date on June 1, 2022, with no redemption penalty, for all bonds maturing after that date.

While interest rates have been rising, there is an opportunity to refinance the 2014 Bonds at a lower interest rate. Capital One has provided a fixed interest rate of 2.71% for a new financing for the remaining 12-year term (assuming the refinancing can be completed no later than June 1, 2022). In addition to fixing the rate for the 12-year term, Capital One has locked the interest rate through closing of the refunding bond. This removes the risk to the City that interest rates rise and reduce the savings on the

10 refunding of the 2014 Bonds.

The 2022 Water Revenue Refunding Bonds (“2022 Bonds”) will have a June 1, 2034, final maturity (same as the 2014 Bonds) and will have a very similar structure to the 2014 Bonds. In the graph below, the blue bars represent the debt service on the 2022 Bonds and the orange line represents the debt service on the 2014 Bonds. The amount by which the blue bars are lower than the orange line in any given year represents the savings the Water Fund will achieve through refunding the 2014 Bonds (average of $84,000 per year).

Financial Impact
The Water Fund can achieve an average of $84,000 in debt service savings each year, or just over $1,000,000 over the next 12 years. These savings are presented net of costs associated with issuing the 2022 Bonds. In present value terms, the Water Fund will see a benefit of $862,000. This represents a net present value benefit equal to

5.63% of refunded par. As a frame of reference, the industry-standard minimum net present value savings threshold is 3.00% of refunded par.

Summary of Legal Documents
There are three legal documents related to the 2022 Bonds that will need to be approved: the Authorizing Resolution, the Bond Issuance Agreement, and the Placement Agent Agreement.

Authorizing Resolution – the Authorizing Resolution authorizes City staff to execute the legal documents for the 2022 Bonds. It also authorizes City staff to finalize the Bond

10 Issuance Agreement provided it is within not-to-exceed parameters of $15,415,000 principal, 2.71% true interest cost, and final maturity in 2034. These not-to-exceed parameters match the terms of the 2022 Bonds since those terms are locked and not expected to change.

Bond Issuance Agreement – the Bond Issuance Agreement describes the terms of the 2022 Bonds and establishes the relationship between the City and Capital One for the 2022 Bonds. This agreement also identifies the security for the 2022 Bonds as a pledge of net revenues of the Water Fund and that the Water Fund is required to maintain net revenues equivalent to 120% of total debt service on the 2022 Bonds and any future debt payable from net revenues on parity with the 2022 Bonds. The 2014 Bonds have this same provision. The Bond Issuance Agreement also identifies the payment schedule, prepayment terms, and other covenants the City is making with Capital One for the 2022 Bonds.

Placement Agent Agreement – the Placement Agent Agreement between the City and Oppenheimer & Co. Inc (“Oppenheimer”), which is acting as placement agent for the 2022 Bonds. This agreement defines Oppenheimer’s role in placing the 2022 Bonds with Capital One and identifies the amount to be paid to Oppenheimer for services provided in that role. This fee is contingent upon a successful closing of the 2022 Bonds.

Timetable
Pending City Council approval of the 2022 Bonds and legal documents, the 2022 Bonds will close on June 1, 2022 (the first optional redemption date for the 2014 Bonds). The City will be making one final payment on the 2014 Bonds on the morning of June 1, 2022. On the same day, the 2022 Bonds will refund the amount of the 2014 Bonds remaining after the June 1, 2022, payment.

COMMUNITY ENGAGEMENT:

Inform
This staff report serves to inform the community of the proposed sale and issuance of the 2022 Bonds for refunding the outstanding 2014 Bonds.

ALTERNATIVE ACTIONS:

Not Applicable
PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

On April 2, 2014, City Council approved the issuance of 2014 Water Revenue Bonds to refund the 1999 and 2004 bonds and to fund new capital improvement water related projects.

FISCAL AND RESOURCE IMPACT:

The 2022 Bonds would have an average of $84,000 annual debt service savings

10 relative to the 2014 Bonds. These savings would be realized on an annual basis in the Water Fund (not General Fund). Total cashflows savings through 2034 is just over $1,000,000, or $862,000 in net present value terms. All savings figures presented here are net of costs of issuing the 2022 Bonds.

CEQA (California Environmental Quality Act):

Not a Project
Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.

105888917.3
RESOLUTION NO. ____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MORGAN

HILL APPROVING THE EXECUTION AND DELIVERY OF A BOND

ISSUANCE AGREEMENT AND AUTHORIZING CERTAIN OTHER

MATTERS RELATING THERETO
WHEREAS, the City operates a Water System (as defined herein) to serve the City; and WHEREAS, for the purpose of providing funds to the City to finance and refinance certain Water System projects and related obligations, the City Morgan Hill Financing Authority (the “Authority”) has previously issued its Morgan Hill Financing Authority Revenue Bond (Water System Refunding and Capital Improvement Project), Series 2014 (the “2014 Bond”) pursuant to a Bond Purchase Agreement, dated as of June 1, 2014, by and among the Authority, Capital One Public Funding, LLC, and the City; and
WHEREAS, in order to provide security for the payment of the 2014 Bond, the City and the Authority entered into an Installment Sale Agreement, dated as of May 1, 2014 (the “2014 Installment Sale Agreement”), pursuant to which the City agreed to purchase certain facilities from the Authority and make certain installment payments payable from Net Revenues (as defined therein) of the City’s Water System, calculated to be sufficient to enable the Authority to pay the principal of, premium, if any, and interest on the 2014 Bond when due and payable; and WHEREAS, for the purpose securing the payment thereof, the Authority assigned to the owner of the 2014 Bond certain of its rights under the 2014 Installment Sale Agreement, including its rights to receive payments of the City under the 2014 Installment Sale Agreement; and WHEREAS, under Article 11 (commencing with Section 53580), Chapter 2, Part 1, Division 2 of Title 5 of the California Government Code (the “Refunding Act”), the City is authorized to issue refunding bonds for the purpose of refunding evidences of indebtedness of the City payable from funds other than the proceeds of ad valorem taxes or the proceeds of assessments levied without limitation as to rate or amount by the local agency upon property in the local agency; and
WHEREAS, for the purpose of refunding its obligations evidenced by the 2014 Installment Payment Agreement and thereby refund the 2014 Bond, the City desires to authorize the issuance of its City of Morgan Hill Revenue Bond (Water System Refunding), Series 2022 (the “Bond”); and
WHEREAS, in furtherance of the issuance and sale of the Bond by the City, there has been submitted to the City Council of the City (the “Council”), for its consideration and approval, a form of Bond Issuance Agreement, made by the City, and a form of Placement Agent Agreement, between the City and Oppenheimer & Co. Inc.;
WHEREAS, Senate Bill 450 (Chapter 625 of the 2017-2018 Session of the California Legislature) (“SB 450”) requires that the governing body of a public body obtain prior to authorizing the issuance of bonds with a term of greater than 13 months, good faith estimates of the following information in a meeting open to the public: (a) the true interest cost of the bonds,

City of Morgan Hill
Resolution No. _____

105888917.3
(b) the sum of all fees and charges paid to third parties with respect to the bonds, (c) the amount of proceeds of the bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the bonds, and (d) the sum total of all debt service payments on the bonds calculated to the final maturity of the bonds plus the fees and charges paid to third parties not paid with the proceeds of the bonds; and

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MORGAN HILL DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:

Section 1. Findings. The above recitals are true and correct.

Section 2. Bond Issuance Agreement. The Bond Issuance Agreement, in substantially the form on file with the City Clerk, is hereby approved. The Mayor (or in his absence, the Mayor Pro Tem), the City Manager or the Finance Director and any of their respective designees (each, an “Authorized Officer”), acting singly, is authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Bond Issuance Agreement, with such changes therein, whether material or otherwise, as the Authorized Officer executing the same may approve (such approval to be conclusively evidenced by such Authorized Officer’s execution and delivery thereof); provided, that the Bond shall be issued in a principal amount not-to-exceed $15,415,000, the true interest cost with respect to the Bond shall not exceed 2.71% per annum and the final maturity of the Bond shall not exceed 2034.

Section 3. Private Placement. The City hereby approves private placement of the Bond, subject to the authorization and limitations set forth herein and final delivery of the documents authorized hereby.

Section 4. Placement Agent Agreement. The Placement Agent Agreement, in substantially the form on file with the City Clerk, is hereby approved. Each Authorized Officer, acting singly, is authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Placement Agent Agreement, with such changes therein, whether material or otherwise, as the Authorized Officer executing the same may approve (such approval to be conclusively evidenced by such Authorized Officer’s execution and delivery thereof).

Section 5. Professional Services. In connection with the private placement, the City Council hereby approves the appointment of Norton Rose Fulbright US LLP to perform bond counsel services, NHA Advisors, Inc., to perform Municipal Advisor services. Any Authorized Officer is hereby authorized and directed to enter into professional services agreements with each of the foregoing.

Section 6. Good Faith Estimates. In accordance with SB 450, good faith estimates of the following are set forth on Exhibit A attached hereto: (a) the true interest cost of the Bond, (b) the sum of all fees and charges paid to third parties with respect to the Bond, (c) the amount of proceeds of the Bond expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Bond, and (d) the sum total

City of Morgan Hill
Resolution No. _____

105888917.3
of all debt service payments on the Bond calculated to the final maturity of the Bond plus the fees and charges paid to third parties not paid with the proceeds of the Bond.

Section 7. General Authorization. Any Authorized Officer is authorized and directed to execute and deliver any and all documents, certificates and other instruments (including without limitation a tax certificate and escrow agreement) and to do and cause to be done any and all acts necessary or proper for carrying out the issuance and sale of the Bond, the transactions contemplated by this Resolution, and the documents herein approved; and the investment of the proceeds of the Bond as permitted by the Bond Issuance Agreement.

Section 8. Ratification. All actions heretofore taken by the officers and employees of the City, with respect to the issuance and sale of the Bond, or in connection with or related to any of the agreements or documents referenced herein, are approved, confirmed and ratified.

Section 9. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption.
* * * * *

City of Morgan Hill
Resolution No. _____

105888917.3
PASSED AND ADOPTED by the City Council of Morgan Hill at a Regular Meeting held on the 4th day of May, 2022 by the following vote.

AYES: Council Members:

NOES: Council Members:

ABSTAIN: Council Members:

ABSENT: Council Members:

DATE: ______________ ________________________________
Rich Constantine, MAYOR
Attest:

DATE: ______________ ________________________________
Michelle Bigelow, CITY CLERK

CERTIFICATION
I, MICHELLE BIGELOW, City Clerk of the City of Morgan Hill, California, do hereby certify that the foregoing is a true and correct copy of Resolution No. _____, adopted by the City Council at a Regular Meeting held on May 4, 2022.

WITNESS MY HAND AND THE SEAL OF THE CITY OF MORGAN HILL.

DATE:

Michelle Bigelow, CITY CLERK

105888917.3

EXHIBIT A

GOOD FAITH ESTIMATES
The following information was obtained from the Municipal Advisor with respect to the Bond approved in the Resolution, and is provided in compliance with Senate Bill 450 (Chapter 625 of the 2017-2018 Session of the California Legislature) with respect to the Bond:

1. True Interest Cost of the Bond. Assuming an aggregate principal amount of $15,415,000 of the Bond is sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the true interest cost of the Bond, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bond, is 2.71%.

2. Finance Charge of the Bond. Assuming an aggregate principal amount of $15,415,000 of the Bond is sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the finance charge of the Bond, which means the sum of all fees and charges paid to third parties (or costs associated with the Bond), is approximately $90,000.

3. Amount of Proceeds to be Received. Assuming an aggregate principal amount of $15,415,000 of the Bond is sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the amount of proceeds expected to be received by the City for sale of the Bond less the finance charge of the Bond described in 2 above and any reserves or capitalized interest paid or funded with proceeds of the Bond, is $15,325,000.

4. Total Payment Amount. Assuming an aggregate principal amount of $15,415,000of the Bond is sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the total payment amount, which means the sum total of all payments the City will make to pay debt service on the Bond plus the finance charge of the Bond described in paragraph 2 above not paid with the proceeds of the Bond, calculated to the final maturity of the Bond, is $18,172,642.

Attention is directed to the fact that the foregoing information constitutes good faith estimates only. The actual interest cost, finance charges, amount of proceeds and total payment amount may vary from the estimates above due to variations from these estimates in the timing of Bond sale, the amount of the Bond sold, the amortization of the Bond sold and market interest rates at the time of each sale. Market interest rates are affected by economic and other factors beyond the City’s control. The City has approved the issuance of the Bond with a maximum true interest cost of 2.71%.

Norton Rose Fulbright US LLP draft 4/14/22
109657297.4

BOND ISSUANCE AGREEMENT
made by the

CITY OF MORGAN HILL
Dated as of June 1, 2022
Relating to
City of Morgan Hill
Revenue Bond
(Water System Refunding)
Series 2022

109657297.4

TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND EXHIBITS ..............................................................................2 SECTION 1.01. Definitions ...............................................................................................2 SECTION 1.02. Construction; Interpretation.....................................................................6 ARTICLE II ISSUANCE OF BONDS...........................................................................................7 SECTION 2.01. Issuance of Bond; Bond Terms................................................................7 SECTION 2.02. Disposition of Bond Proceeds..................................................................9 SECTION 2.03. Costs of Issuance .....................................................................................9 SECTION 2.04. Rate on Overdue Payments....................................................................10 ARTICLE III PLEDGE OF NET REVENUES; WATER REVENUE FUND; PROJECT ACCOUNTS.....................................................................................................................10 SECTION 3.01. Pledge of Net Revenues.........................................................................10 SECTION 3.02. Water Revenue Fund .............................................................................11 SECTION 3.03. [Reserved]..............................................................................................11 SECTION 3.04. Series 2022 Costs of Issuance Account .................................................11 ARTICLE IV ADDITIONAL PARITY OBLIGATIONS...........................................................12 SECTION 4.01. Conditions for Incurrence of Additional Parity Obligations .................12 SECTION 4.02. Superior and Subordinate Obligations...................................................12 ARTICLE V OTHER COVENANTS OF CITY; REPRESENTATIONS AND
WARRANTIES OF THE CITY.......................................................................................13 SECTION 5.01. Compliance with Agreement .................................................................13 SECTION 5.02. Distribution of Net Revenues for Debt Service.....................................13 SECTION 5.03. Rates and Charges..................................................................................13 SECTION 5.04. Maintenance and Operation of the Water System .................................14 SECTION 5.05. Tax Covenants .......................................................................................14 SECTION 5.06. Insurance................................................................................................15 SECTION 5.07. Payment of Taxes and Compliance with Governmental Regulations ...........................................................................................................15 SECTION 5.08. Sale or Other Disposition of Property....................................................15 SECTION 5.09. Compliance with Contracts; Liens.........................................................15 SECTION 5.10. Accounting Records; Financial Statements and Other Reports.............15 SECTION 5.11. Representations, Warranties and Agreements of the City .....................16 SECTION 5.12. City Acknowledgements Relating to Original Owner...........................17 SECTION 5.13. Financial Obligations Disclosure...........................................................18 ARTICLE VI DEFAULTS AND REMEDIES ............................................................................18 SECTION 6.01. Events of Default; Remedies .................................................................18 SECTION 6.02. Expenses on Default ..............................................................................19 SECTION 6.03. Notice of Default ...................................................................................19

109657297.4 ii
ARTICLE VII DISCHARGE OF OBLIGATIONS.....................................................................20 SECTION 7.01. Escrow Deposit......................................................................................20 SECTION 7.02. Effect of Prepayment .............................................................................20 ARTICLE VIII MISCELLANEOUS ...........................................................................................20 SECTION 8.01. Notices; Business Days..........................................................................20 SECTION 8.02. Content of Statements and Opinions .....................................................21 SECTION 8.03. Governing Law ......................................................................................21 SECTION 8.04. Severability of Invalid Provisions..........................................................21 SECTION 8.05. Binding Effect........................................................................................22 SECTION 8.06. Further Assurances ................................................................................22 SECTION 8.07. Amendments ..........................................................................................22 SECTION 8.08. Waiver of Personal Liability..................................................................22 SECTION 8.09. Execution of Counterparts .....................................................................22 SECTION 8.10. Benefits Limited to Parties ....................................................................22 EXHIBIT A — DESCRIPTION OF FACILITIES A-1
EXHIBIT B — DESCRIPTION OF 1999 PROJECTS, 2004 PROJECTS AND 2014 PROJECTS B-1
EXHIBIT C — FORM OF BOND C-1
EXHIBIT D — FORM OF LETTER OF REPRESENTATIONS D-1

109657297.4

BOND ISSUANCE AGREEMENT
THIS BOND ISSUANCE AGREEMENT, dated as of June 1, 2022 (this “Bond Issuance Agreement”), made by the CITY OF MORGAN HILL, a municipal corporation duly organized and existing under the laws of the State of California (the “City”), for the benefit of the Owners (as defined herein) from time to time of the bond issued hereunder (initially, Capital One Public Funding , LLC (the “Original Owner”)),
WITNESSETH:

WHEREAS, the City operates a Water System (as defined herein) to serve the City; and
WHEREAS, for the purpose of providing funds to the City, the Morgan Hill Wastewater Facilities Financing Corporation (the “Corporation”) previously issued its Refunding Certificates of Participation (Water System Improvement Project) Series 1999 (the “Series 1999 COPs”) pursuant to a Trust Agreement, dated as of May 1, 1999, by and between the Corporation and U.S. Bank National Association, as successor trustee; and WHEREAS, in furtherance of the issuance of the Series 1999 COPs, the City and the Corporation entered into an Installment Sale Agreement, dated as of May 1, 1999, by and between the City and the Corporation, pursuant to which the City agreed to purchase the Facilities (as defined therein) from the Corporation and make certain installment payments were calculated to be sufficient to enable the Corporation to pay principal of and interest and premium (if any) on the Series 1999 COPs when due and payable; and
WHEREAS, the City previously entered into a loan agreement by and between the City and the Morgan Hill Financing Authority, pursuant to which the Morgan Hill Financing Authority made a loan to the City (the “2003 Loan”), which 2003 Loan refinanced a 1993 loan made to the City by the California Statewide Communities Development Authority (“CSCDA”), which 1993 loan refinanced the cost of a 1980 loan made to the City by the State of California (the “State”) pursuant to the California Safe Drinking Water Bond Law of 1976; which it intends to defease simultaneously with the issuance of the Bond (hereinafter referred to); and WHEREAS, in connection with the issuance of the Authority’s Water Revenue Bonds, Series 2004 (the “Series 2004 Bonds”), the City and the Authority previously entered into an Installment Sale Agreement, dated as of October 1, 2004 (the “2004 Installment Sale Agreement”), pursuant to which the City has agreed to purchase the Facilities (as defined therein) from the Authority and make certain installment payments which have been calculated to be sufficient to enable the Authority to pay the principal of, premium, if any, and interest on the Series 2004 Bonds when due and payable; and
WHEREAS, for the purpose of providing funds to the City to finance the 2014 Projects (defined below), to refinance the 1999 Projects (defined below) and refund the Series 1999 COPs, to refinance the 2004 Projects (defined below) and refund the Series 2004 Bonds, and to pay for certain costs of issuance, the Authority has previously issued its Morgan Hill Financing Authority Revenue Bond (Water System Refunding and Capital Improvement

109657297.4 2
Project), Series 2014 (the “2014 Bond”) pursuant to a Bond Purchase Agreement, dated as of June 1, 2014, by and among the Authority, Capital One Public Funding, LLC, and the City; and WHEREAS, in order to provide security for the payment of the 2014 Bond, the City and the Authority entered into an Installment Sale Agreement, dated as of May 1, 2014 (the “2014 Installment Sale Agreement”), pursuant to which the City agreed to purchase the Facilities (as defined therein) from the Authority and make certain installment payments payable from Net Revenues (as defined therein) of the City’s water system, calculated to be sufficient to enable the Authority to pay the principal of, premium, if any, and interest on the 2014 Bond when due and payable; and
WHEREAS, for the purpose securing the payment thereof, the Authority assigned to the owner of the 2014 Bond certain of its rights under the 2014 Installment Sale Agreement, including its rights to receive payments of the City under the 2014 Installment Sale Agreement; and
WHEREAS, under Article 11 (commencing with Section 53580), Chapter 2, Part 1, Division 2 of Title 5 of the California Government Code (the “Refunding Act”), the City is authorized to issue refunding bonds for the purpose of refunding evidences of indebtedness of the City payable from funds other than the proceeds of ad valorem taxes or the proceeds of assessments levied without limitation as to rate or amount by the local agency upon property in the local agency; and
WHEREAS, for the purpose of refunding its obligations evidenced by the 2014 Installment Payment Agreement, the City has authorized the issuance of its City of Morgan Hill Revenue Bond (Water System Refunding), Series 2022 (the “Bond”); and WHEREAS, the City enters into this Bond Issuance Agreement in order to provide for the execution and delivery of the Bond, to establish and declare the terms and conditions upon which the Bond shall be issued and secured, and to secure the payment of the principal thereof and interest thereon.; and
NOW, THEREFORE, in order to secure the payment of the Bond and the performance and observance by the City of all the covenants, agreements and conditions herein and in the Bond contained, and in exchange for good and valuable consideration (including the payment of the purchase price of the Bond by the Original Owner), the receipt of which is hereby acknowledged, the City hereby agrees and covenants with and for the benefit of the Owners from time to time of the Bond, as follows:

ARTICLE I

DEFINITIONS AND EXHIBITS
SECTION 1.01. Definitions. The following terms shall, for all purposes of this Bond Issuance Agreement, have the respective meanings ascribed to them in this Section 1.01. “Accountant” means any independent certified public accountant or firm of such accountants selected by the City.

109657297.4 3
“Authority” means the Morgan Hill Financing Authority.
“Bond Issuance Agreement” means this Bond Issuance Sale Agreement, together with any duly authorized and executed amendments hereto. “Closing Time” means the time the City delivers the Bond to the Original Owner in consideration and upon receipt of the purchase price for the Bond. “Code” means the Internal Revenue Code of 1986 as in effect on the date of original issuance of the Bond or (except as otherwise referenced herein or in this Bond Issuance Agreement) as it may be amended to apply to obligations issued on the date of original issuance of the Bond, together with regulations promulgated, and official public guidance published, under the Code.
“Costs of Issuance” means any costs or expenses paid or incurred in connection with the preparation, execution and delivery of the Bond, including but not limited to printing costs, word processing costs, special counsel and other legal fees and expenses, rating agency fees, financial advisor fees, verification agent fees, accounting fees, legal fees, fees of the Placement Agent, fees payable to any other consultants or experts retained by the City in connection with such preparation, execution and delivery, and any other cost, charge or fee in connection with the original issuance of the Bond which constitutes a “cost of issuance” within the meaning of the Code. Costs of Issuance shall not include any costs or expenses of the Original Owner. “Counsel” means attorneys, selected by the City and acceptable to the Owner, who are nationally recognized in the issuance of tax-exempt municipal obligations. “Defeasance Securities” means either of the following:
(a) cash (insured at all times by the Federal Deposit Insurance Corporation); or (b) obligations of, or obligations guaranteed as to principal and interest by, the United States of America or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the United States of America including:
(i) U.S. Treasury obligations;
(ii) All direct or fully guaranteed obligations
(iii) Farmers Home Administration;
(iv) General Services Administration;
(v) Guaranteed Title XI financing;
(vi) Government National Mortgage Association (GNMA); and (vii) U.S. Treasury - State and Local Government Series

109657297.4 4
provided, that such securities must provide for the timely payment of principal and interest and cannot be callable or prepayable prior to maturity or redemption. “Event of Default” means any of the events described in Section 6.01. “Facilities” mean the facilities and improvements described in Exhibit A attached hereto and by this reference incorporated herein.
“Fiscal Consultant” means any consultant or firm of such consultants appointed by the City and who, or each of whom: (a) is judged by the City to have experience in matters relating to the financing of water system enterprises; (b) is in fact independent and not under domination of the City; (c) does not have any substantial interest, direct or indirect, with the City other than as purchaser of the Bond or any Parity Obligations; and (d) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make reports to the City.
“Gross Revenues” mean all income, rents, rates, fees, charges and other moneys derived from the ownership or operation of the Water System (including, without limiting the generality of the foregoing, (i) all income, rents, rates, fees, charges, business interruption insurance proceeds or other moneys derived by the City from the sale, furnishing and supplying of the water or other services, facilities, and commodities sold, furnished or supplied through the facilities of or in the conduct or operation of the business of the Water System, (ii) the earnings on and income derived from the investment of such income, rents, rates, fees, charges, or other moneys, including City reserves (whether held in trust for any Parity Obligations or otherwise), (iii) the proceeds of any stand-by or water availability charges collected by the City, and (iv) the proceeds of any facilities fees or connection fees collected by the City), but excluding in all cases (A) customers’ deposits or any other deposits or advances subject to refund until such deposits or advances have become the property of the City, (B) any proceeds of taxes restricted by law to be used by the City to pay bonds hereafter issued, and (C) revenues from any surcharge that have been designated by the City for use for specific purposes, including with limitation, the perchlorate-related surcharge imposed pursuant to Resolution No. 5766, adopted by the City Council on February 4, 2004.
“Independent Accountant” means any certified public accountant or firm of certified public accountants appointed and paid by the City, and who, or each of whom: (a) is in fact independent and not under domination of the City; (b) does not have any substantial interest, direct or indirect, in the City; and (c) is not connected with the City as an officer or employee of the City but who may be regularly retained to make annual or other audits of the books of or reports to the City.
“Maximum Annual Debt Service” means, with respect to the Bond and any Parity Obligations, as of the date of such calculation, the maximum sum obtained for the current or any future Bond Year during the Term of this Bond issuance Agreement by totaling the following amounts for each such Bond Year:

109657297.4 5
(a) the aggregate amount of the principal and interest coming due and payable on the Bond in such Bond Year pursuant hereto, except to the extent payable from any escrow deposit pursuant to Section 7.01;
(b) the principal amount of all outstanding Parity Obligations, if any, coming due and payable by their terms in such Bond Year; and
(c) the amount of interest which would be due during such Bond Year on the aggregate principal amount of all outstanding Parity Obligations, if any, which would be outstanding in such Bond Year if such Parity Obligations are retired as scheduled. If any Parity Obligations bear interest at a variable rate, the City may assume that the interest rate on such Parity Obligations for any future period shall be the Bond Buyer Revenue Bond Index plus 20 basis points.
“Net Proceeds” mean, with respect to any condemnation award or with respect to any insurance proceeds, the amount of such condemnation award or such insurance proceeds remaining after payment of all expenses (including attorneys’ fees) incurred in the collection of such award or proceeds.
“Net Revenues” mean, for any period, an amount equal to all of the Gross Revenues received during such period minus the amount required to pay all Operation and Maintenance Costs.
“1999 Projects” means the 1999 Projects described in Exhibit B attached hereto and by this reference incorporated herein.
“Operation and Maintenance Costs” mean the reasonable and necessary costs paid or incurred by the City for maintaining and operating the Water System, determined in accordance with generally accepted accounting principles, including all reasonable expenses of management and repair and all other expenses necessary to maintain and preserve the Water System in good repair and working order, and including all administrative costs of the City that are charged directly or apportioned to the operation of the Water System, such as salaries and wages of employees, overhead, taxes (if any), the cost of permits and licenses to operate the Water System and insurance premiums, and including all other reasonable and necessary costs of the City or charges required to be paid by it to comply with the terms hereof; but excluding in all cases (i) depreciation, replacement and obsolescence charges or reserves therefor and amortization of intangibles, and (ii) any costs covered by revenues from surcharges described in clause (C) of the definition of “Gross Revenues.”
“Original Owner” means Capital One Public Funding, LLC, its successors and assigns.
“Owner” means the person in whose name the Bond is registered. “Parity Obligations” mean any leases, loan agreements, installment sale agreements, bonds, notes or other obligations of the City payable from and secured by a pledge of and lien upon any of the Net Revenues on parity with the Bond, entered into or issued pursuant to and in accordance with Section 4.01.

109657297.4 6
“Payment Date” means each June 1 and December 1 during the Term of this Bond Issuance Agreement, commencing December 1, 2022.
“Placement Agent” means Oppenheimer & Co., and its successors and assigns. “Projects” means the 1999 Projects, the 2004 Projects and the 2014 Projects. “Series 2022 Costs of Issuance Account” means a special account created and designated by the provisions of Section 3.04 of the Installment Sale Agreement. “Tax Certificate” means the Tax Certificate, dated the date hereof, pertaining to the use and investment of proceeds of the Bond, executed and delivered by a duly authorized officer of the City at the Closing Time, including any and all exhibits and attachments thereto. “Term” means, with respect to this Bond Issuance Agreement, the period commencing on the Closing Date and ending on the date the City shall have paid or prepaid all of its obligations hereunder in accordance with Article II or VII. “2014 Installment Sale Agreement” means the Installment Sale Agreement, dated as of May 1, 2014, between the City and the Authority, together with any duly authorized and executed amendments hereto.
“2014 Projects” mean the 2014 Projects described in Exhibit B attached hereto and by this reference incorporated herein.
“2004 Projects” mean the 2004 Projects described in Exhibit B attached hereto and by this reference incorporated herein.
“2002 Master Plan” means the City of Morgan Hill Water System Master Plan, dated January 9, 2002, prepared by Carollo Engineers, Walnut Creek, California and on file with the City, and as the same may be hereafter updated and revised. “Water Revenue Fund” means the “City of Morgan Hill Water Revenue Fund” heretofore established and held by the City with respect to the Water System, as further described in Section 3.02.
“Water System” means the whole and each and every part of the water system of the City, including the portion thereof existing on the date hereof, and including all additions, betterments, extensions and improvements to such water system or any part thereof hereafter acquired or constructed; provided, that to the extent the City is not the sole owner of an asset or property or to the extent that an asset or property is used in part for the above described water system purposes, only the City’s ownership interest in such asset or property or only the part of the asset or property so used for water system purposes shall be considered to be part of the Water System.

SECTION 1.02. Construction; Interpretation. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this

109657297.4 7
Bond Issuance Agreement. All references herein to “Articles,” “Sections” and other subsections are to the corresponding Articles, Sections or subsections of this Bond Issuance Agreement; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Bond Issuance Agreement as a whole and not to any particular Article, Section or subsection hereof; and words of the masculine gender shall mean and include words of the feminine and neuter genders. Words in the singular shall include the plural and words in the plural shall include the singular where the context so requires.

ARTICLE II

ISSUANCE OF BONDS
SECTION 2.01. Issuance of Bond; Bond Terms.
(a) The City has authorized the issuance of the Bond in the aggregate principal amount of [______] Dollars ($[______]), for the purpose of providing funds to refinance certain capital costs relating to the 2014 Projects and to refinance certain capital costs relating to the 1999 Projects and the 2004 Projects by prepaying the installment payments payable by the City under the 2014 Installment Sale Agreement and to pay Costs of Issuance of the Bond. The City shall pay or cause to be paid a portion of the proceeds of sale of the Bond on the Closing Date for prepayment of all of the unpaid installment payments payable by the City under the 2014 Installment Sale Agreement and to pay the Costs of Issuance. (b) The City shall issue the Bond substantially in the form attached as Exhibit D hereto, with such appropriate variations, omissions and insertions as are permitted or required by this Bond Issuance Agreement. The Bond may have endorsed thereon such legends or text as may be necessary or appropriate to conform to any applicable rules and regulations of any governmental authority or any usage or requirement of law with respect thereto or as may be authorized by the City. The Bond shall be in the aggregate principal amount of $________, shall be designated “City of Morgan Hill Revenue Bond (Water System Refunding) Series 2022”, shall be dated the date of delivery of and payment therefor, shall bear interest from its date until payment, such interest to the maturity thereof being payable each June 1 and December 1, commencing December 1, 20__, and shall be stated to mature in annual installments on each June 1, commencing June 1, 20__, and ending June 1, 20__, subject to the right of prepayment, all as set forth in the Bond. The Bond shall bear interest at a rate equal to ____% per annum, accruing from the date of issuance. Interest shall be computed on the basis of a year consisting of twelve 30-day months.

All payments with respect to the Bond will be paid to the Owner and shall satisfy all obligations of the City with respect to such payments. Such payments shall be made by wire or other form of electronic payment in accordance with written instructions provided by the Owner or, with the Owner’s consent, by another commercially reasonable method of payment. Upon final payment of the Bond, the Bond shall be surrendered to the City for cancellation.

The initial Bond shall be numbered “R-l.”
(c) The Bond is a limited obligation of the City, and is not a debt, a liability or an obligation of the County of Santa Clara (the “County”), the State, or any other public

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agency or instrumentality of the State (other than the City), and none of the County, the State, nor any other public agency or instrumentality of the State (other than the City) shall be liable thereon, nor in any event shall the Bond be payable out of any funds or properties of the City other than the Net Revenues. None of the County, the State, or any other public agency or instrumentality of the State, or the City shall be obligated to pay the Bond or the interest thereon except as provided in the Bond, and neither the faith and credit nor the taxing power of the State, the County, the City or any public agency or instrumentality of the State is pledged to the payment of the principal of or the interest on the Bond. (d) Delivery of the Bond shall be conditioned on receipt by the City of a Letter of Representations addressed to the City and the Placement Agent in the form in Exhibit D and executed by the Original Owner.
(e) The Bond shall be signed by, or bear the facsimile signature of, the City Manager of the City, and shall be signed by, or bear a facsimile signature of, the Clerk of the City, but at least one such signature shall be manual, and shall have impressed thereon the official seal of the City. In case any officer whose signature or a facsimile of whose signature shall appear on the Bond shall cease to be such officer before the delivery of the Bond, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes, the same as if he had remained in office until delivery, and also the Bond may bear the facsimile signature of or may be signed by such persons as at the actual time of the execution of such Bond shall be the proper officers to sign such Bond although at the date of such Bond such persons may not have been such officers. (f) The City shall keep books for the registration of and for the registration of transfer of the Bond as provided in this Bond Issuance Agreement. The transfer of the Bond may be registered only upon the books kept for the registration of and registration of transfers of the Bond upon surrender thereof to the City together with an assignment duly executed by the registered owner or his attorney or legal representative in such form as shall be satisfactory to the City. Upon any such registration of transfer the City shall execute and deliver in exchange for such Bond a new Bond registered in the name of the transferee, in an aggregate principal amount equal to the principal amount of such Bond of the same maturity and bearing interest at the same rate. Any transfer of the Bond is subject to the satisfaction of the conditions set forth in subsection (h) of this Section.

In all cases in which the transfer of the Bond shall be registered hereunder, the City shall execute and deliver at the earliest practicable time a Bond in accordance with the provisions of this Bond Issuance Agreement. Any Bond surrendered in any such registration of transfer shall forthwith be cancelled by the City. The City may make a reasonable fee or service charge for every such registration of transfer of the Bond sufficient to reimburse it for any lax or other governmental charge required to be paid with respect to such registration of transfer. The City shall not be required to make any such registration of transfer during the fifteen (15) days immediately preceding the date of first giving of notice of any prepayment of the Bond. (g) The Bond shall be issued in a form payable to the Owner, and the Owner shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of and premium, if any, and interest on the Bond shall be made to the Owner whether or not any transfer thereof shall be made, until the City shall have received written

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notice of such transfer, including the name and address of the transferee and the conditions of subsection (f) of this Section have been satisfied. Within ten days after any disposition of the Bond, the Owner shall give written notice of such disposition to the City. (h) The Owner may at any time to sell or transfer the Bond (in whole but not in part), but agrees that any such sale or transfer by the Owner shall be to:
(i) an affiliate of the Owner; or
(ii) a bank, insurance company or other financial institution; provided, however, that, as a condition of transfer, any purchaser or assignee of the Bond shall execute an assignment and assumption of the rights and obligations of the prior Owner under this Bond Issuance Agreement in form acceptable to the City.

Nothing herein limits the right of the Owner to sell or assign participation interests in the Bond to one or more institutions listed in (i) or (ii), provided that City has no obligation or liability to such participants and such participants shall look solely to the Owner to enforce any such obligations under the Bond or this Bond issuance Agreement against the City. (i) The Bond shall not be subject to prepayment except, as provided therein.

The Bond shall be prepayable in whole, on any date on or after June 1, 20__, at a price of par plus accrued interest to the date of prepayment. The City shall give the Owner at least 30 days prior written notice of such prepayment.

Such notice shall be mailed, postage prepaid, to the Owner at the address appearing on the bond register described in Section 2.01(f) setting forth the date fixed for prepayment. On the date so designated for prepayment, notice having been mailed in the manner and under the conditions hereinabove provided, the Bond shall become and be due and payable on such date, and, if sufficient moneys for payment of the prepayment price and the accrued interest are made available to the Owner for the payment thereof, interest on the Bond so prepaid shall cease to accrue, the Bond or portion of the Bond shall cease to be entitled to any benefit or security hereunder, and the Owner shall have no rights in respect thereof except to receive payment of the prepayment price thereof and the accrued interest.

SECTION 2.02. Disposition of Bond Proceeds. At or about the Closing Time the proceeds received from the sale of the Bond ([together with $_____ of the City’s legally available funds]) shall be applied as follows:
(a) shall be applied to prepayment of all of the 2014 Installment Payments and thereby redeem and discharge the 2014 Bond; and
(b) $_______ shall be transferred to the City and deposited in the Series 2022 Costs of Issuance Account.

SECTION 2.03. Costs of Issuance. The City agrees to pay (i) all Costs of Issuance; (ii) all taxes, if any, upon any documents or transactions pursuant to this Bond Issuance Agreement; (iii) all expenses incidental to all filings or recordings pursuant to this Bond Issuance Agreement; and (iv) all costs of collection (including reasonable counsel fees) in the event of

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default in the payment of the principal of or interest on the Bond or other charges payable under this Bond Issuance Agreement.

SECTION 2.04. Rate on Overdue Payments. In the event the City should fail to make any of the payments required in this Article II, the payment in default shall continue as an obligation of the City until the amount in default shall have been fully paid, and the City agrees to pay the same with interest thereon, from the date of default to the date of payment, at the same rate of interest otherwise payable on the Bond.

ARTICLE III
PLEDGE OF NET REVENUES; WATER REVENUE FUND
SECTION 3.01. Pledge of Net Revenues. All of the Net Revenues are irrevocably pledged, charged and assigned to the punctual payment of the debt service on the Bond and, except as otherwise provided herein, the Net Revenues and such other funds shall not be used for any other purpose so long as the Bond remains unpaid. Such pledge, charge and assignment shall constitute a first lien on the Net Revenues and moneys for the payment of amounts due with respect to the Bonds and Parity Obligations in accordance with the terms hereof and thereof.

The obligations of the City to pay debt service on the Bonds from the Net Revenues and to perform and observe the other agreements contained herein shall be absolute and unconditional. Until such time as all debt service payments and other payments coming due and payable hereunder shall have been fully paid or prepaid, the City (a) will not suspend or discontinue payment of any debt service payments and other such payments, (b) will perform and observe all other agreements contained in this Bond Issuance Agreement, and (c) will not terminate this Bond Issuance Agreement for any cause, including, without limiting the generality of the foregoing, the occurrence of any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, destruction of or damage to the Water System, sale of any portion of the Water System, the taking by eminent domain of title to or temporary use of any component thereof, commercial frustration of purpose, or any change in the tax law or other laws of the United States of America or the State or any political subdivision of either thereof.

The City’s obligation to pay the debt service on the Bond and the other payments payable hereunder shall be a special obligation of the City limited solely to the Net Revenues. Under no circumstances shall the City be required to advance moneys derived from any source of income other than the Net Revenues and other sources specifically identified in this Bond Issuance Agreement for the payment of the debt service on the Bond and the other payments payable hereunder, nor shall any other funds or property of the City be liable for the payment of the debt service on the Bond and any other amounts coming due and payable hereunder. The Owner shall have no right, directly or indirectly, to require or compel the exercise of the ad valorem taxing power of the City or the forfeiture of any property of the City, including the Water System, for the making of any payments hereunder.

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SECTION 3.02. Water Revenue Fund.
(a) The City has heretofore established a fund designated as the “City of Morgan Hill Water Revenue Fund” (the “Water Revenue Fund”) and has held and shall continue to hold such fund segregated from all other funds of the City. All Gross Revenues shall be deposited by the City immediately upon receipt in the Water Revenue Fund and shall be applied, first, to pay Operation and Maintenance Costs as they become due and payable (including amounts reasonably required to be set aside in contingency reserves for Operation and Maintenance Costs, the payment of which is not then immediately required). The City may at any time establish such sub-level funds and accounts as it deems necessary or desirable within the Water Revenue Fund.

The City covenants and agrees that all Net Revenues shall be held by the City in the Water Revenue Fund in trust for the benefit of the Owner and for the benefit of the owners of any Parity Obligations on a pari passu basis.
(b) On each Payment Date, the City shall withdraw from the Water Revenue Fund and transfer to the Owner an amount which (other than amounts resulting from the prepayment of the Bond pursuant to Article IX) is equal to the aggregate amount of the principal of and interest on the Bond coming due and payable on such Payment Date. (c) In addition to Operation and Maintenance Costs and amounts to be transferred to the Owner under (b) above, the City shall withdraw from the Water Revenue Fund such amounts at such times as shall be required: (i) to pay the principal of and interest on any Parity Obligations and otherwise comply with the provisions of the instruments authorizing the issuance of any Parity Obligations; and (ii) all other amounts when and as due and payable hereunder, all on a pari passu basis with the payment of the Bond. (d) The City shall manage, conserve and apply the Net Revenues on deposit in the Water Revenue Fund in such a manner that all payments required to be made pursuant to the preceding subsections (b) and (c) will be made at the times and in the amounts so required. Subject to the foregoing sentence, so long as no Event of Default shall have occurred and be continuing hereunder, the City may use and apply moneys in the Water Revenue Fund for (i) the payment of any subordinate obligations or any unsecured obligations, (ii) the costs for additional improvements, extensions, replacements and betterments to the Water System, (iii) the prepayment of any obligations of the City relating to the Water System, or (iv) any other lawful purposes of the City.
(e) Any moneys held in the Water Revenue Fund shall be invested in lawful investments which will, as nearly as practicable, mature on or before the dates when such moneys are anticipated to be needed for disbursement hereunder. All investment earnings from moneys or deposits in the Water Revenue Fund shall be credited in such fund and applied only to the purposes permitted for such fund. The City may commingle any of the moneys in the Water Revenue Fund with the moneys held in other funds and accounts (except for moneys held in any rebate fund which shall be held separately) for investment purposes; provided, however, that all moneys in the Water Revenue Fund shall be accounted for separately notwithstanding such commingling.

SECTION 3.03. [Reserved]. Series 2022 Costs of Issuance Account. The City shall establish, maintain and hold a separate account designated as the “City of Morgan Hill

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Series 2022 Costs of Issuance Account.” The moneys in the Costs of Issuance Account shall be used and withdrawn by the City to pay the Costs of Issuance. On the 120th day after the Closing Date, or upon the earlier date as the City directs, the City may transfer all amounts remaining in the Series 2022 Costs of Issuance Account to ________.

ARTICLE IV

ADDITIONAL PARITY OBLIGATIONS
SECTION 4.01. Conditions for Incurrence of Additional Parity Obligations. (a) Subject to the conditions set forth in this Section 4.01, the City from time to time may issue or incur additional Parity Obligations. Any incurrence by the City of Parity Obligations is subject to the following conditions:
(i) The City shall be in compliance with all covenants in this Bond Issuance Agreement;
(ii) No Event of Default hereunder and no event of default with respect to any Parity Obligations shall have occurred and be continuing; and (iii) Either the Net Revenues received by the City (A) in the most recent Fiscal Year for which audited financial statements are available, or (B) alternatively in any consecutive 12 month period during the most recent 18 months prior to issuance, shall be at least equal to 120 percent of the sum of the Maximum Annual Debt Service with respect to the Bond and any Parity Obligations which will be outstanding immediately following the incurrence of such Parity Obligations, as evidenced by a certificate of the Finance Director of the City (in the case of A) or a Fiscal Consultant or Independent Accountant (in the case of B).
(iv) If required by the terms of such Parity Obligation, a separate reserve has been or will be established therefor and that provisions have been made to fund such reserve.
(b) The foregoing conditions of Section 4.01(a) shall not apply to, or in any way limit, the City’s ability to incur Parity Obligations at any time to refund any outstanding Parity Obligations, if (1) such refunding will result in a net present value savings to the City (inclusive of all costs of such refunding), or (2) will not result in debt service being increased in any fiscal year during which the obligations under this Bond Issuance Agreement or any Parity Obligations remain outstanding.

SECTION 4.02. Superior and Subordinate Obligations.
(a) So long as the Bond remains Outstanding, the City shall not issue or incur any additional bonds or other obligations, which will rank senior in the priority of lien over the Bond with respect to the Net Revenues.

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(b) Nothing in this Bond Issuance Agreement shall be construed to limit or affect the ability of the City to issue or incur obligations which are either unsecured or which rank junior to the Bond in their lien with respect to the Net Revenues.

ARTICLE V
OTHER COVENANTS OF CITY;

REPRESENTATIONS AND WARRANTIES OF THE CITY
SECTION 5.01. Compliance with Agreement. The City shall punctually pay the principal of and interest on the Bond in strict conformity with the terms hereof, and shall faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by it. The City shall not fail to make any payments of principal or interest required by this Bond Issuance Agreement for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruction of or damage to all or a portion of the Water System, commercial frustration of purpose, or any change in the tax or other laws of the United States of America or of the State or any political subdivision of either or any force majeure, including acts of God, tempest, storm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo, strikes, industrial disputes, lockouts, lack of transportation facilities, fire, explosion, or acts or regulations of governmental authorities.

SECTION 5.02. Distribution of Net Revenues for Debt Service. The City covenants that the City will distribute Net Revenues available for debt service on the bond and all outstanding Parity Obligations on a pro rata basis without regard to whether each such Parity Obligation has a funded debt service reserve or a surety bond or other similar funding instrument.

SECTION 5.03. Rates and Charges.
(a) The City shall fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Water System during each Fiscal Year, which are at least sufficient, after making allowances for contingencies and error in the estimates, to yield Gross Revenues which are sufficient to pay the following amounts in the following order of priority:
(i) All Operation and Maintenance Costs estimated by the City to become due and payable in such Fiscal Year;
(ii) The principal of and interest on the Bond and then Outstanding Parity Obligations as they become due and payable during such Fiscal Year, without preference or priority (except to the extent such principal and interest on the Bond and the Parity Obligations are payable from the proceeds of the Bond or Parity Obligations, or from any other source of legally available funds of the City which have been held for such purpose prior to the commencement of such Fiscal Year);
(iii) All Additional Payments and other payments required to meet any other obligations of the City which are charges, liens, encumbrances upon, or which are otherwise payable, from Gross Revenues during such Fiscal Year.

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(b) In addition, the City shall fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Water System during each Fiscal Year, so that Gross Revenues less Operation and Maintenance Costs will be at least equal to 120 percent of the sum of the amounts described in the preceding clause (a)(ii) of this Section. (c) The City will have in effect at all times rules and regulations requiring each consumer or customer located on any premises connected with the Water System to pay the rates and charges applicable to the Water System provided to such premises and providing for the billing thereof and for a due date and a delinquency date for each bill.

SECTION 5.04. Maintenance and Operation of the Water System. The City will maintain and preserve the Water System in good repair and working order at all times and will operate the Water System in an efficient and economical manner and will pay all Operation and Maintenance Costs as they become due and payable. Tax Covenants. (a) General. The City hereby covenants, for the benefit of the Owner of the Bond that, notwithstanding any other provisions of this Agreement, it shall not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the exclusion from gross income of interest on the Bond under Section 103 of the Code. The City shall not, directly or indirectly, use or permit the use of proceeds of the Bond or any of the property financed or refinanced with proceeds of the Bond, or any portion thereof, by any person other than a governmental unit (as such term is used in Section 141 of the Code and applicable Treasury Regulations) in such manner or to such extent as would result in the loss of exclusion from gross income for federal income tax purposes of interest on the Bond. (b) Use of Proceeds. The City shall not take any action, or fail to take any action, if any such action or failure to take action would cause the Bond to be a “private activity bond” within the meaning of Section 141 of the Code and applicable Treasury Regulations, and in furtherance thereof, shall not make any use of the proceeds of the Bond or any of the property financed or refinanced with proceeds of the Bond, or any portion thereof, or any other funds of the City, that would cause the Bond to be a “private activity bond” within the meaning of Section 141 of the Code. To that end, so long as the Bond is Outstanding, the City, with respect to such proceeds and property and such other funds, will comply with applicable requirements of the Code and applicable Treasury Regulations, to the extent such requirements are, at the time, applicable and in effect. The City shall establish reasonable procedures necessary to ensure continued compliance with Section 141 of the Code and the continued qualification of the Bond as “governmental bond.”
(c) Arbitrage. The City shall not, directly or indirectly, use or permit the use of any proceeds of the Bond, or of any property financed or refinanced thereby, or other funds of the City, or take or omit to take any action, that would cause the Bond to be an “arbitrage bond” within the meaning of Section 148 of the Code and applicable Treasury Regulations, and shall not otherwise take any action, or fail to take action, if such action or failure to take action would cause the Bond to be an “arbitrage bond” with the meaning of Section 148 of the Code and applicable Treasury Regulations. To that end, the City shall comply with all requirements of Section 148 of the Code and applicable Treasury Regulations to the extent such requirements are, at the time, in effect and applicable to the Bond.

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(d) Federal Guarantee. The City shall not make any use of the proceeds of the Bond or any other funds of the City, or take or omit to take any other action, that would cause the Bond to be “federally guaranteed” within the meaning of Section 149(b) of the Code, and shall not otherwise take any action, or fail to take action, when such action or failure to take action would cause the Bond to be “federally guaranteed” within the meaning of Section 149(b) of the Code. (e) Compliance with Tax Certificate. In furtherance of the foregoing tax covenants of this Section, the City covenants that it will comply with the provisions of the Tax Certificate, which is incorporated herein as if fully set forth herein. These covenants shall survive payment in full or defeasance of the Bond.

SECTION 5.06. Insurance. The City shall procure and maintain such insurance relating to the Water System (including the Facilities) which it shall deem advisable or necessary to protect its interests, which insurance shall afford protection in such amounts and against such risks as are usually covered in connection with public water systems similar to the Water System; provided, that any such insurance may be maintained under a self-insurance program so long as such self-insurance is maintained in the amounts and manner as is, in the opinion of an accredited actuary, actuarially sound. If all or any part of the Water System shall be taken by eminent domain proceedings, or if the City receives any insurance proceeds resulting from a casualty loss to the Water System, the Net Proceeds may be used, at the option of the City, to (a) repair, rebuild or replace such damaged, destroyed or taken portion of the Water System, or (b) prepay the Bond or any Parity Obligations to the extent permitted by the terms thereof.

SECTION 5.07. Payment of Taxes and Compliance with Governmental Regulations. The City will pay and discharge all taxes, assessments and other governmental charges which may hereafter be lawfully imposed upon the Water System or any part thereof when the same shall become due. The City will duly observe and conform with all valid regulations and requirements of any governmental authority relative to the operation of the Water System or any part thereof, but the City shall not be required to comply with any regulations or requirements so long as the validity or application thereof shall be contested in good faith and contesting such validity or application will not materially impair the operations or financial condition of the Water System to the extent permitted by the terms thereof. Sale or Other Disposition of Property. The City will not sell, transfer or otherwise dispose of any of the works, plant, properties, facilities or other part or rights of the Water System or any real or personal property comprising a part of the Water System if such sale, transfer or disposition would cause the City to be unable to satisfy the requirements of Section 5.03 hereof.

SECTION 5.09. Compliance with Contracts; Liens. The City shall not commit any breach or default under any agreement affecting or involving the Water System (to the extent that the City is a party thereto), or permit any lien to be attached to any portion of the Water, if such breach, default, or lien which would materially adversely affect its ability to comply with its covenants set forth in Section 5.03 hereof.

SECTION 5.10. Accounting Records; Financial Statements and Other Reports. The City will keep appropriate accounting records in which complete and correct entries shall be made of all transactions relating to the Water System. The City will prepare and file with the Owner annually within one hundred eighty (180) days after the close of each Fiscal Year

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(commencing with the Fiscal Year ending June 30, 2014), the following: (a) audited financial statements of the Water System for such Fiscal Year prepared in accordance with generally accepted accounting principles, together with a report thereon by and Independent Accountant, (b) a report as to all insurance policies maintained and self-insured programs maintained by the City with respect to the Water System, as of the close of such Fiscal Year, including the names of the insurers which have issued the policies and the amounts thereof and the property or risks covered thereby, (c) a summary report showing in reasonable detail, the amounts of Gross Revenues, Net Revenues and the Operation and Maintenance Costs for such Fiscal Year, and containing a general description of the Water System. The Owner shall not be responsible for reviewing the such statements and reports. Representations, Warranties and Agreements of the City. The City hereby represents and warrants to, and agrees with, the Owner as follows:
(a) The City confirms its representations, warranties and agreements and its covenants set forth in this Bond Issuance Agreement. The City is authorized under the Refunding Act to borrow money and issue the Bond therefore for the purpose of refunding its obligations under the 2014 Installment Sale Agreement. The City has duly authorized the issuance and sale of the Bond.
(b) A fully executed Bond, fully executed counterpart of this Bond Issuance Agreement and a certified copy of the resolution of the City Council of the City authorizing the City’s undertakings contemplated hereby and thereby has been or shall at the Closing Time be delivered by the City, and they shall be in the forms theretofore submitted to the Original Owner and approved by the Original Owner, with only such changes or modifications thereof as the Original Owner and the City shall agree upon.
(c) The City will keep or cause to be kept proper books of record and accounts in which complete and correct entries shall be made of all transactions made by the City relating to the receipts, disbursements, allocation and application of the principal and interest payments on the Bond and the proceeds of the Bond, and such books shall be available for inspection by the Owner, at reasonable hours and under reasonable conditions. (d) There is no action, suit, proceeding or investigation at law or in equity or before or by any court, public board or body pending or, to the knowledge of the City, threatened against or affecting the City, nor to the knowledge of the City is there any basis therefor, wherein an unfavorable decision, ruling or finding would adversely affect the transactions contemplated by this Bond Issuance Agreement, or which, in any way, would adversely affect the validity of the Bonds, this Bond Issuance Agreement, or any other agreement or instrument to which the City is a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby.
(e) The execution, delivery and due performance by the City of the Bonds, this Bond Issuance Agreement and the other agreements contemplated hereby and compliance with the provisions hereof and thereof will not conflict with, or constitute on the part of the City a breach of, or a default under, any existing law, administrative regulation, decree or court order or any provision of any legislative act, constitutional or other proceeding applicable to or establishing or relating to the establishment of the City or its affairs or resolutions, or any agreement, indenture, mortgage, lease or other instrument to which the City is subject or by which it is or may be bound.

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(f) The City does hereby agree to make such payments as are required by the terms of the Bond including principal of, premium, if any, and interest on the Bond when due. The obligation of the City to make payment of the principal of an interest on the Bond is a limited obligation of the City, payable solely from Revenue. The City covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in the Bond, and in all proceedings of the City pertaining thereto and will faithfully observe and perform at all times any and all covenants, undertaking, stipulations and provisions of this Bond Issuance Agreement on its part to be observed or performed. The City covenants that it is duly authorized under the Constitution and laws of the State, including particularly and without limitation the Refunding Act, to issue the Bond and to enter into this Bond Issuance Agreement; that action on its part for the issuance of the Bond and the execution and delivery of this Bond Issuance Agreement has been duly and effectively taken; and that the Bond in the hands of the owner thereof is and will be the valid and enforceable limited obligation of the City according to the tenor and import thereof.

SECTION 5.12. City Acknowledgements Relating to Original Owner. The City acknowledges that:
(a) the Original Owner is acting solely for its own loan account and not as a fiduciary for the City or in the capacity of broker, dealer, placement agent, municipal securities underwriter, municipal advisor or fiduciary;
(b) the Original Owner has not provided, and will not provide, financial, legal (including securities law), tax, accounting or other advice to or on behalf of the City (including to any financial advisor or any placement agent engaged by the City) with respect to the structuring, issuance, sale or delivery of the Bond; and
(c) the Original Owner has no fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934 to the City with respect to the transactions relating to the structuring, issuance, sale or delivery Bond and the discussions, undertakings and procedures leading thereto,
(d) each of the City, its financial advisor, and its placement agent will obtain such financial, legal (including securities law), tax, accounting and other advice (including as it relates to structure, timing, terms and similar matters and compliance with legal requirements applicable to such parties) with respect to the Bond from its own financial, legal, tax and other advisors (and not from the undersigned or its affiliates) to the extent that the City, its financial advisor, or its placement agent requires such advice,
(e) the Original Owner has expressed no view regarding the legal sufficiency of its representations for purposes of compliance with any legal requirements applicable to any other party, including but not limited to the City’s financial advisor or its placement agent (if any, or the correctness of any legal interpretation made by counsel to any other party, including but not limited to counsel to the City’s financial advisor or placement agent (if any), with respect to any such matters; and,

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(f) the transactions between the City and the Original Owner are arm’s-length, commercial transactions in which the Original Owner is acting and has acted solely as a principal and for its own interest, and the Original Owner has not made recommendations to the City with respect to the transactions relating to the Bond.

SECTION 5.13. Financial Obligations Disclosure. In connection with the City’s compliance with any continuing disclosure undertakings (each, a “Continuing Disclosure Agreement”) entered into by the City pursuant to SEC Rule 15c2-12 promulgated pursuant to the Securities and Exchange Act of 1934, as amended (the “Rule”), the City may be required to file with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system or its successor (“EMMA”) notice of its incurrence of its obligations with respect to the Bonds and related documents and notice of any accommodation, waiver, amendment, modification of terms or other similar events reflecting financial difficulties in connection with the Bonds and related documents, in each case including a full copy thereof or a description of the material terms thereof (each such posting, an “EMMA Posting”). Unless required by the Rule, the City agrees that it shall not file or submit or permit the filing or submission of any EMMA Posting that includes information relating to Capital One Public Funding, LLC (“COPF”), including the following:
unredacted sensitive or confidential information about COPF or its affiliates in any portion of an EMMA Posting, address and account information of COPF or any affiliates, e-mail addresses, telephone numbers, fax numbers, names and signatures of officers, employees and signatories of COPF or its affiliates. The City acknowledges and agrees that COPF and its affiliates are not responsible for the City’s or any other entity’s (including, but not limited to, any broker-dealer’s) compliance or noncompliance (or any claims, losses or liabilities arising therefrom) with the Rule, any Continuing Disclosure Agreement or any applicable securities or other laws, including but not limited to those relating to the Rule.

ARTICLE VI

DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default; Remedies.

If one or more of the following events (each, an “Event of Default”) shall occur:
(a) If the City shall fail to pay in full any installment of the principal of or interest on the Bond pursuant to Section 2.01 hereof at the time and in the manner specified herein; (b) If the City shall fail to observe or perform any covenant, condition, agreement or provision in this Bond Issuance Agreement on its part to be observed or performed, other than as referred to in subsection (a) of this Section 6.01, or shall breach any warranty by the City herein contained, for a period of thirty (30) days after written notice, specifying such failure or breach and requesting that it be remedied, has been given to the City by the Owner; except that if such failure or breach can be remedied but not within such thirty (30) day period and if the City has taken all action reasonably possible to remedy such failure or breach within such thirty (30) day period, such failure or breach shall not become an Event of Default for so long as the City shall diligently proceed to remedy same in accordance with and subject to any directions or limitations of time established by the Owner, as the case may be;

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(c) If the City files a petition in voluntary bankruptcy, for the composition of its affairs or for its corporate reorganization under any state or federal bankruptcy or insolvency law, or makes an assignment for the benefit of creditors, or admits in writing to its insolvency or inability to pay debts as they mature, or consents in writing to the appointment of a trustee or receiver for itself or for the whole or any substantial part of the Water System; (d) If a court of competent jurisdiction shall enter an order, judgment or decree declaring the City an insolvent, or adjudging it bankrupt, or appointing a trustee or receiver of the City or of the whole or any substantial part of the Water System, or approving a petition filed against the City seeking reorganization of the City under any applicable law or statute of the United States of America or any state thereof, and such order, judgment or decree shall not be vacated or set aside or stayed within thirty (30) days from the date of the entry thereof; or (e) If, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the City, and such custody or control shall not be terminated within thirty (30) days from the date of assumption of such custody or control;
then and in each and every such case during the continuance of such Event of Default, the Owner may take any or all of the following actions:
(i) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the City or any officer or employee thereof, and to compel the City or any such officer or employee to perform and carry out its or his or her duties under the law and the agreements and covenants required to be performed by it or him or her contained in this Bond Issuance Agreement;
(ii) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Owner; or
(iii) by suit in equity upon the happening of an Event of Default to require the City and its officers and employees to account as the trustee of an express trust.

The Owner shall have no right to accelerate the payment of the Bond.

No delay in exercising or omitting to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every such right and power may be exercised from time to time and as often as may be deemed expedient.

SECTION 6.02. Expenses on Default. In the event the City should default under any of the provisions of this Bond Issuance Agreement and the Owner should employ attorneys or incur other expenses for the collection of the payments due hereunder, the City agrees that it will on demand therefor pay to the Owner the fee of such attorneys and such other expenses so incurred by the Owner.

SECTION 6.03. Notice of Default. The City agrees that, as soon as is practicable, and in any event within ten (10) days of the City’s actual gaining knowledge thereof, the City will