Morgan Hill City Council
October 4, 2023

Special/Regular Meeting Agenda
City Council
Mark Turner - Mayor
Rene Spring - Mayor Pro Tem
Gino Borgioli - Council Member
Marilyn Librers - Council Member
Yvonne Martínez Beltrán - Council Member
Wednesday, October 4, 2023 5:00 PM
Council Chamber Building
17555 Peak Avenue, Morgan Hill, CA 95037
Morgan Hill City Council meetings are held in person with the option for the public to attend in-person or by teleconference/video conference. Information on how the public may observe and participate in the meeting is located below.

MEETING PARTICIPATION AND PUBLIC COMMENT
City Council meetings will be live-streamed on Channel 17, the City’s website, and the City’s Facebook page.

Those members of the community that would like to participate in the meetings remotely may do so by joining virtually at: https://bit.ly/MHCityCouncilMeeting or by calling (669) 900-9128, then enter the webinar id: 873 3200 8380#. Public comment may be provided in the following ways:
• Provide public comment in-person
• Join the City Council meeting virtually via the link above. When public comment is opened, raise your virtual hand and be called upon to speak for up to 3 minutes (YOU MUST BE RUNNING THE MOST CURRENT VERSION OF

ZOOM TO BE UNMUTED)
• Join virtually by calling the number above, dial *9 to raise your hand, and be called upon to speak for up to 3 minutes
• Public comment in writing may be submitted via email to [email protected] or by mail to the City Clerk at 17575 Peak Avenue, Morgan Hill, CA 95037. Please email your comments to the City Clerk no later than 3:00 p.m. on Tuesday (the day before the City Council meeting) for your comments to be submitted to the members of the City Council with sufficient

October 4, 2023
2 time to review the comments. You may continue to provide written comments up to noon on Wednesday (the day of the meeting) although Council Members may not have sufficient time to review them before the meeting. Public comments submitted to the City Clerk after 12:00 p.m. the day of the meeting will be provided to the City Council as time allows.

Written comments WILL NOT be read aloud during the City Council Meeting. Please note that written comments are posted on the City’s website, so do not include any personal information you do not want to be posted on the web.

SPECIAL/REGULAR MEETING
A special meeting of the City Council is called at 5:00 p.m. for the purpose of conducting a closed session.

SPECIAL MEETING
5:00 p.m. Closed Session

CALL TO ORDER

ROLL CALL ATTENDANCE

DECLARATION OF POSTING AGENDA

CLOSED SESSION

CONFERENCE WITH LABOR NEGOTIATORS
Authority: Pursuant Government Code Section 54957.6
City Negotiators: Christina Turner, City Manager; Donald Larkin, City Attorney; Michael Horta, Human Resources Director; Dat Nguyen, Finance Director; Edith Ramirez, Assistant City Manager, Development Services
Employee Organization: Morgan Hill Police Officers Association; AFSCME Local 101 Morgan Hill; Community Service Officers Association; Employees Covered under Management Resolution #21-050

OPPORTUNITY FOR PUBLIC COMMENT

ADJOURN TO CLOSED SESSION

October 4, 2023
3 REGULAR MEETING
6:00 p.m.

SILENT INVOCATION

PLEDGE OF ALLEGIANCE

RECOGNITIONS
Recognizing South Valley Symphony's 50th anniversary

PROCLAMATIONS
Proclamation Recognizing the Festival of Deepavali
Proclaiming September 17-23, 2023 as Constitution Week
Proclaiming October 1, 2023 as Latino Physician Day
Proclaiming October 4, 2023 as Clean Air Day
Proclaiming the month of October 2023 as Dementia and Brain Health Awareness Month

PRESENTATIONS
SVCE Presentation

CITY COUNCIL REPORTS
Council Member Borgioli

CITY MANAGER'S REPORT

CITY ATTORNEY'S REPORT

OTHER REPORTS

PUBLIC COMMENT
This opportunity for public comment is for items that are not on the agenda. If you would like to make comments on an item that is on the agenda, please wait until we get to that item to offer your comments. Members of the public are entitled to address

October 4, 2023
4 the City Council concerning any item within the Morgan Hill City Council’s subject matter jurisdiction. Public comments are limited to no more than three minutes. Except for certain specific exceptions, the City Council is prohibited from discussing or taking action on any item not appearing on the posted agenda. Public comment is intended for comments. Questions posed during public comment are not generally answered. If you have questions, please send them to the City Clerk at [email protected] to receive a response. (See additional noticing at the end of this agenda)

ADOPTION OF AGENDA

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.

1. ADOPT RESOLUTION DECLARING THE SECOND MONDAY IN OCTOBER

EACH YEAR AS INDIGENOUS PEOPLES' DAY
Recommendation:

Adopt resolution declaring the second Monday in October of each year as Indigenous Peoples' Day.

2. APPROVE AND ADOPT A RESOLUTION DECLARING THE SUMMARY

VACATION OF A PORTION OF DEPOT STREET RIGHT-OF-WAY,

ESTABLISHING NEW DEPOT STREET RIGHT-OF-WAY, AND ADDING A

PUBLIC UTILITY EASEMENT AT THE MORGAN HILL COMMUNITY AND

CULTURAL CENTER (CCC)
Recommendation:

1. Adopt a Resolution declaring the Summary Vacation of a portion of Depot Street right-of-way, from approximately 340 feet south of East 5th Street to East Dunne Avenue;

2. Approve the establishment of a Public Street Right-of-Way over the realigned portion of Depot Street;

3. Approve a Grant of Public Utility Easement along the southern portion of the Community and Cultural Center (CCC) that is parallel and adjacent to the area of Depot Street proposed to be vacated;

4. Approve the inclusion of the above Depot Street Public Street Right-ofWay and Grant of Public Utility Easement actions in the Summary Vacation Resolution;

5. Direct the City Clerk to file a certified copy of the Resolution in the Office of the Recorder of Santa Clara County; and

6. Authorize the City Manager to sign a Quitclaim Deed of the vacated portion of Depot Street and a separate Grant of Public Utility Easement

October 4, 2023
5 on behalf of the City and direct the City Clerk to file in the Office of the Recorder of Santa Clara County.

3. APPROVE A THREE-YEAR MAINTENANCE SERVICE AGREEMENT WITH HB RESTORATION, INC. FOR WELL SITE AND BOOSTER STATION

PAINTING
Recommendation:

1. Award a Maintenance Service Agreement to HB Restoration, Inc. in the not-to-exceed amount of $180,000 for annual painting of the City’s well sites and booster stations; and

2. Authorize the City Manager to execute and administer a three-year agreement with HB Restoration, Inc.

4. APPROVE HEATING, VENTILATION, AND AIR CONDITIONING (HVAC)

MAINTENANCE SERVICE AGREEMENT
Recommendation:

1. Award a Maintenance Service Agreement to Environmental Systems, Inc. in the total amount of $662,944 for preventative HVAC maintenance ($62,944) and repair services (not-to-exceed $600,000) for a two-year period; and

2. Authorize the City Manager to execute and administer that certain Maintenance Service Agreement with Environmental Systems, Inc.

5. APPROVE THE SEPTEMBER 6, 2023 CITY COUNCIL MEETING MINUTES Recommendation:

Approve the September 6, 2023 City Council Meeting Minutes.

6. ADOPT RESOLUTION OF INTENTION TO RENEW THE MORGAN HILL

TOURISM BUSINESS IMPROVEMENT DISTRICT
Recommendation:

Adopt Resolution of Intention to Renew the Morgan Hill Tourism Business Improvement District (TBID).

7. AWARD COMMUNITY PARK PICKLEBALL COURTS PROJECT TO EF&S CONCRETE, INC.

Recommendation:

1. Approve Community Park Pickleball Courts plans and specifications;

2. Award contract to EF&S Concrete, Inc. in the amount of $307,120;

October 4, 2023
6 3. Authorize expenditure of construction contingency funds not-to-exceed $61,424; and

4. Authorize the City Manager to execute and administer the construction contract with EF&S Concrete, Inc.

8. APPROVE SUBORDINATION AGREEMENT FOR CITY OPEN SPACE

EASEMENT WITH THE SANTA CLARA VALLEY HABITAT AGENCY
Recommendation:

Authorize the City Manager to execute a subordination agreement for a City Open Space Easement with the Santa Clara Valley Habitat Agency.

9. CARRYING A CONCEALED WEAPON LICENSE UPDATE
Recommendation:

Accept report.

10. SECOND AMENDMENT TO PROFESSIONAL SERVICE AGREEMENT WITH HARRIS & ASSOCIATES, INC. FOR ON-CALL ENGINEERING PLAN

REVIEW AND TECHNICAL SUPPORT SERVICES FOR LAND

DEVELOPMENT ENGINEERING
Recommendation:

1. Approve the Second Amendment to the professional service agreement with Harris & Associates, Inc. for on-call engineering plan review and technical support services for Land Development Engineering to add $180,000 to contract amount for a total not-to-exceed amount of $631,000 with the term of the agreement unchanged; and

2. Authorize the City Manager to execute the Second Amendment.

OTHER BUSINESS

11. ACCEPT MORGAN HILL TOURISM BUSINESS IMPROVEMENT DISTRICT (MHTBID) OWNERS ASSOCIATION ANNUAL REPORT (DBA VISIT

MORGAN HILL)
Recommendation:

Accept and file the Visit Morgan Hill Annual Report.

12. APPROVE OR DENY COMMUNITY FUNDING REQUESTS FOR DIA DE LOS

MUERTOS AND HOLIDAY POSADA EVENTS
Recommendation:

The City Council may approve or deny the requests.

October 4, 2023
7 FUTURE COUNCIL INITIATED AGENDA ITEMS
Note: in accordance with Government Code Section 54954.2(a), there shall be no discussion, debate and/or action taken on any request other than providing direction to staff to place the matter of business on a future agenda.

ADJOURNMENT

October 4, 2023
8 NOTICE
Any documents produced by the City and distributed to the majority of the City Council less than 72 hours prior to an open meeting, will be made available for public inspection at the City Clerk’s Counter at City Hall located at 17575 Peak Avenue, Morgan Hill, CA, 95037 and at the Morgan Hill Public Library located at 660 West Main Avenue, Morgan Hill, California, 95037 during normal business hours. (Pursuant to Government Code 54957.5)

PUBLIC COMMENT
Members of the Public are entitled to directly address the City Council concerning any item that is described in the notice of this meeting, before or during consideration of that item. If you wish to address the Council on any issue that is on this agenda, please complete a speaker request card located in the foyer of the Council Chambers and deliver it to the Minutes Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council, but it is very helpful. When you are called, proceed to the podium and the Mayor will recognize you. If you wish to address the City Council on any other item of interest to the public, you may do so during the public comment portion of the meeting following the same procedure described above. Please limit your comments to three (3) minutes or less.

Please submit written correspondence to the Minutes Clerk, who will distribute correspondence to the City Council.

Persons interested in proposing an item for the City Council agenda should contact a member of the City Council who may plan an item on the agenda for a future City Council meeting. Should your comments require Council action, your request may be placed on the next appropriate agenda. Council discussion or action may not be taken until your item appears on an agenda. This procedure is in compliance with the California Public Meeting Law (Brown Act) Government Code §54950.

City Council Policies and Procedures (CP 03-01) outlines the procedure for the conduct of public hearings.

Notice is given, pursuant to Government Code Section 65009, that any challenge of Public Hearing Agenda items in court, may be limited to raising only those issues raised by you or on your behalf at the Public Hearing described in this notice, or in written correspondence delivered to the City Council at, or prior to the Public Hearing on these matters.

The time within which judicial review must be sought of the action by the City Council, which acted upon any matter appearing on this agenda is governed by the provisions of Section 1094.6 of the California Code of Civil Procedure.

For a copy of City Council Policies and Procedures CP 97-01, please contact the City Clerk’s office (408) 779-7259, (408) 779-3117 (fax) or by email [email protected].

AMERICANS WITH DISABILITIES ACT (ADA)
In compliance with the Americans with Disabilities Act, if you are a disabled person and you need a disability-related modification or accommodation to participate in this meeting, please contact the City Clerk's Office at (408)779-7259, (408)779-3117 (fax) or by email [email protected]. Requests must be made as early as possible and at least two-full business days before the start of the meeting.

October 4, 2023
9

1 CITY COUNCIL STAFF REPORT
MEETING DATE: October 4, 2023
PREPARED BY:

Michelle Bigelow, City Clerk
APPROVED BY: City Manager

ADOPT RESOLUTION DECLARING THE SECOND MONDAY IN

OCTOBER EACH YEAR AS INDIGENOUS PEOPLES' DAY

RECOMMENDATION(S)
Adopt resolution declaring the second Monday in October of each year as Indigenous Peoples' Day.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Supporting our Youth, Seniors, and Entire Community
Fostering a Positive Organizational Culture
Preserving our Community History
Enhancing Diversity and Inclusiveness
REPORT NARRATIVE:

Indigenous Peoples' Day was first proposed in 1977 by a delegation of Native Nations to the United Nations-sponsored International Conference on Discrimination Against Indigenous Populations in the Americas, and as of the date of this resolution, over 200 cities, counties, states, and universities across the United States have officially adopted Indigenous Peoples' Day.

Staff proposes recognizing the second Monday in October as Indigenous Peoples Day, celebrating enduring traditions, values, and strength of Indigenous Peoples and bringing hope for a brighter future of respect, partnership, and unity.

COMMUNITY ENGAGEMENT:

This report serves to inform the community of the proposed City Council action to adopt a resolution declaring the second Monday in October each year as Indigenous Peoples' Day.

ALTERNATIVE ACTIONS:

City Council may choose to recognize Indigenous Peoples Day differently or not approve the resolution.

1 PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

None.

FISCAL AND RESOURCE IMPACT:

There is no fiscal impact associated with seeking direction from the Council on this item.

CEQA (California Environmental Quality Act):

Not a Project.

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

RESOLUTION NO. 23-

A RESOLUTION OF THE CITY COUNCIL OF THE CITY

OF MORGAN HILL DECLARING THE SECOND

MONDAY IN OCTOBER OF EACH YEAR AS
INDIGENOUS PEOPLES’ DAY IN MORGAN HILL
WHEREAS, the City Council of the City of Morgan Hill recognizes that the lands now known as the Americas have been inhabited by Indigenous peoples for thousands of years, and that the City of Morgan Hill is built upon the ancestral homelands of Indigenous people, who were longtime caretakers of these lands we now cherish; and WHEREAS, October 12, 1492, is one of the most significant historical dates for all Indigenous people of the Americas, as it marks the beginning of European and American colonization; and
WHEREAS, government entities and public institutions today have a responsibility to enact policies to oppose systemic racism towards Indigenous people in the United States, as discrimination perpetuates high rates of poverty and disproportionate health, education, and social crises; and
WHEREAS, Indigenous Peoples' Day was first proposed in 1977 by a delegation of Native Nations to the United Nations-sponsored International Conference on Discrimination Against Indigenous Populations in the Americas, and as of the date of this resolution, over 200 cities, counties, states, and universities across the United States have officially adopted Indigenous Peoples Day; and
WHEREAS, Indigenous Peoples' Day on the second Monday of October celebrates enduring traditions, values, and strength of Indigenous peoples, and brings hope for a brighter future of respect, partnership, and unity;

NOW, THEREFORE, THE MORGAN HILL CITY COUNCIL DOES RESOLVE AS FOLLOWS:

That the City of Morgan Hill shall henceforth also recognize the second Monday in October of each year as Indigenous Peoples' Day.

City of Morgan Hill
Resolution No. 23-

PASSED AND ADOPTED THIS 4TH DAY OF OCTOBER 2023, AT A REGULAR MEETING OF THE CITY COUNCIL BY THE FOLLOWING VOTE:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

APPROVED: ATTEST:
___________________________________ _______________________________ MARK TURNER, Mayor 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. 23-___ adopted by the City Council at the meeting held on the 4th day of October 2023.

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

DATE: _____________________ ___________________________________ MICHELLE BIGELOW, City Clerk

2 CITY COUNCIL STAFF REPORT
MEETING DATE: October 4, 2023
PREPARED BY:

Maria Angeles, Senior Civil Engineer
APPROVED BY: City Manager

APPROVE AND ADOPT A RESOLUTION DECLARING THE SUMMARY

VACATION OF A PORTION OF DEPOT STREET RIGHT-OF-WAY,

ESTABLISHING NEW DEPOT STREET RIGHT-OF-WAY, AND ADDING

A PUBLIC UTILITY EASEMENT AT THE MORGAN HILL COMMUNITY

AND CULTURAL CENTER (CCC)

RECOMMENDATION(S)

1. Adopt a Resolution declaring the Summary Vacation of a portion of Depot Street right-of-way, from approximately 340 feet south of East 5th Street to East Dunne Avenue;

2. Approve the establishment of a Public Street Right-of-Way over the realigned portion of Depot Street;

3. Approve a Grant of Public Utility Easement along the southern portion of the Community and Cultural Center (CCC) that is parallel and adjacent to the area of Depot Street proposed to be vacated;

4. Approve the inclusion of the above Depot Street Public Street Right-of-Way and Grant of Public Utility Easement actions in the Summary Vacation Resolution;

5. Direct the City Clerk to file a certified copy of the Resolution in the Office of the Recorder of Santa Clara County; and

6. Authorize the City Manager to sign a Quitclaim Deed of the vacated portion of Depot Street and a separate Grant of Public Utility Easement on behalf of the City and direct the City Clerk to file in the Office of the Recorder of Santa Clara County.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Enhancing Public Safety
2022-2023 Strategic Priorities
Transportation
Guiding Documents
Morgan Hill 2035 General Plan
Vision Zero

2 REPORT NARRATIVE:

On December 1, 2021, the City Council approved the Final Map and related Subdivision Improvements Agreement for The Lumber Yard - Tract No. 10541 located on the former Hale Lumber site on the east side of Depot Street between East 5th Street and East Dunne Avenue shown on the attached Site Map (Attachment 1).

The developer of the Lumber Yard Project, MH Lumberyard 49, LLC (Developer), was required pursuant to a Disposition and Development Agreement (DDA) and related amendments executed with the City to i) realign Depot Street to connect with Church Street; ii) perform surface parking lot enhancements on the City’s Community and Cultural Center (CCC) located at the northeast corner of Monterey Road and East Dunne Avenue; and iii) construct a mixed-use housing development with a ground floor office that will be a future City office space for public purposes.

The realigned/new segment of Depot Street is described in Attachments 2 and 3. Since the realigned/new segment of Depot Street is now complete and open to the public, staff is recommending the establishment of a Public Street Right-of-Way along this new segment of Depot Street.

Moreover, pursuant to the DDA, the City will convey to the Developer an approximate

0.29-acre portion of the current Depot Street alignment after the construction and realignment of Depot Street, and after City Council approval of a Summary Vacation of the right-of-way area. The 0.29-acre Depot Street right-of-way area that is proposed to be vacated is described in Attachments 4 and 5.

The Developer has submitted for City review the second Final Map for The Lumber Yard Project that incorporates the 0.29-acre area proposed to be vacated. Approval of the proposed Summary Vacation is required to occur first before the approval of the second Final Map. Staff’s recommendation for City Council approval of this second Final Map is proposed for a November 2023 City Council meeting date.

The recommended Summary Vacation of a portion of the Depot Street right-of-way conforms to the California Streets and Highways Code Section 8330 as said portion of Depot Street has been superseded by relocation.

All concerned utility companies have been contacted in writing and one utility company requested the City to grant a Public Utility Easement in the CCC parking lot where a portion of the company’s public utilities have been relocated. Some of the other public utilities have been relocated to the realigned segment of Depot Street. The proposed Public Utility Easement is described in Attachments 6 and 7.

Staff is recommending that Council approve the Summary Vacation of a portion of Depot Street right-of-way, the establishment of a Public Street Right-of-Way along the realigned segment of Depot Street, and the granting of a Public Utility Easement at the CCC parking lot by adoption of the attached resolution (Attachments 8 and 9).

2 COMMUNITY ENGAGEMENT:

Inform
No public engagement was performed specific to the actions associated with this report.

The approvals of the changes in the CCC Parking Lot and the development were previously made in past actions by the City Council. Staff at the Community and Cultural Center have engaged users to prepare and manage the related construction.

ALTERNATIVE ACTIONS:

There are no feasible alternative actions, as the realignment of Depot Street has been completed and the 0.29-acre Depot Street right-of-way area can be vacated. In addition, a Public Utility Easement is required over the public utilities that are within the CCC parking lot which will serve The Lumber Yard Project and the future City office space to be constructed by the project.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

October 3, 2018 – City Council adopted Resolution 18-075 approving the Disposition and Development Agreement with the developer for the project.

September 10, 2019 – Planning Commission approved the Tentative Map for The Lumber Yard Project and recommended approval of the Design Review Permit to City Council.

October 2, 2019 – City Council reviewed and approved the Design Review Permit for The Lumber Yard Project.

September 1, 2021 – City Council adopted Resolution 21-041 amending the Disposition and Development Agreement (DDA) with the Developer; and Council also adopted Resolution 21-042 amending Fiscal Year 2021-22 Budget appropriations related to The Lumber Yard Project.

December 1, 2021 – City Council approved the Phase 1 Final Map and Subdivision Improvements Agreement for The Lumber Yard Project.

FISCAL AND RESOURCE IMPACT:

Development review costs for this project are paid for by development processing fees.

CEQA (California Environmental Quality Act):

Project
The Final Master Environmental Impact Report (FMEIR) for the Morgan Hill Downtown Specific Plan was certified in November 2009 in conformance with California Environmental Quality Act (CEQA) Guidelines Section 15175(a), which identified the impacts of the Downtown Specific Plan in order to streamline the later environmental

2 review of projects and approvals required to implement the Specific Plan. The intent was for the Downtown Specific Plan MFEIR to be a program-level document from which subsequent development consistent with the Specific Plan could tier from in conformance with CEQA Guidelines Section 15176(d)).

In addition, an Environmental Impact Report (EIR) for the Morgan Hill 2035 Project, was prepared in accordance with CEQA and certified by the Morgan Hill City Council on July 27, 2016. (SCH #2015022074). CEQA Guidelines Section 15164 states that the lead agency or a responsible agency shall prepare an Addendum to a previously certified EIR if some changes or additions are necessary, but none of the conditions described in Section 15162 calling for preparation of a subsequent EIR have occurred.

An Addendum was completed and provided CEQA analysis for the project as part of the adopted 2009 Downtown Specific Plan MFEIR. As part of the Addendum, a Transportation Impact Analysis concluded consistency with both the General Plan and Downtown Specific Plan. The Addendum found no impacts that were not previously disclosed in the General Plan FEIR or the Downtown Specific Plan Master FEIR, nor would it result in a substantial increase in the magnitude of any significant environmental impacts previously identified.

ATTACHMENT 8
RESOLUTION NO. 23-0__

A RESOLUTION OF THE CITY COUNCIL OF THE CITY

OF MORGAN HILL DECLARING ITS SUMMARY
VACATION OF A PORTION OF DEPOT STREET RIGHTOF-WAY, LOCATED BETWEEN EAST 5TH STREET AND EAST DUNNE AVENUE; ESTABLISHING A PUBLIC

STREET RIGHT-OF-WAY ALONG THE REALIGNED
DEPOT STREET SEGMENT; AND ADDING A PUBLIC

UTILITY EASEMENT AT THE MORGAN HILL

COMMUNITY & CULTURAL CENTER (CCC) PARKING
LOT LOCATED AT 17000 MONTEREY ROAD IN THE

CITY OF MORGAN HILL
WHEREAS, the Downtown Specific Plan and the Morgan Hill 2035 General Plan envision the realignment of Depot Street to connect to Church Street, improving transportation circulation and movement in the Downtown area; and
WHEREAS, the City of Morgan Hill (“City”) is the owner of (i) Depot Street, a City street that runs north-south between East Main Avenue and East Dunne Avenue, and (ii) the Community and Cultural Center (the “CCC”) located on an approximate eight (8) acre parcel located at the northeast corner of Monterey Road and East Dunne Avenue in Morgan Hill, California, designated by Assessor Parcel Number 726-13-052; and WHEREAS, the developer of the adjacent residential project, MH Lumberyard 49, LLC (“Developer”), was required pursuant to the Disposition and Development Agreement (“DDA”) with the City to realign Depot Street and construct the new segment of Depot Street, which has been completed and is open to the public; and
WHEREAS, pursuant to the DDA, the City will convey to the Developer an approximate 0.29-acre portion of the current Depot Street alignment after the construction and realignment of Depot Street such that Developer is provided additional developable area; and WHEREAS, pursuant to the provisions of the California Streets and Highways Code, Section 8330 et seq., the City Council may summarily vacate street or highway that has been superseded by relocation; and
WHEREAS, the City Engineer of the City of Morgan Hill has recommended that the hereinafter described property presently held for public purposes is unnecessary for present or prospective municipal purposes, as Depot Street has been relocated; and WHEREAS, the City intends to establish a Public Street Right-of-Way along the realigned segment of Depot Street and intends to grant a Public Utility Easement at the CCC parking lot over the public utilities that will be relocated outside of the existing Depot Street alignment due to the proposed summary vacation of Depot Street; and

City of Morgan Hill
Resolution No. 23-00_

NOW, THEREFORE, THE MORGAN HILL CITY COUNCIL DOES RESOLVE AS FOLLOWS:

SECTION 1: The City Council of the City of Morgan Hill hereby finds from all evidence submitted that the street right-of-way of a portion of Depot Street (a public street) from approximately 340 feet south of East 5th Street to East Dunne Avenue, as fully described in Exhibits “A” and “B”, is unnecessary for present or prospective public street as said portion of Depot Street has been superseded by relocation, and is hereby vacated.

SECTION 2: The relocated or realigned segment of Depot Street right-of-way is fully described in Exhibits “C” and “D”.

SECTION 3: A Public Street Right-of-Way is hereby established over the realigned segment of Depot Street described in Exhibits “C” and “D”.

SECTION 4: All concerned utility companies have been notified in writing of the proposed summary vacation and one utility company requested the granting by the City of a Public Utility Easement for their respective public facilities that have been relocated in the CCC parking lot.

SECTION 5: Public convenience and necessity require the granting of a Public Utility Easement, as fully described in Exhibits “E” and “F”, over a portion of the CCC parking lot, to construct, maintain, operate, replace, remove, renew, and enlarge lines of pipe, conduits, cables, wires, poles, and other convenient structures, equipment, and fixtures for any and all existing and future public facilities.

SECTION 6: The order of vacation of Depot Street right-of-way, from approximately 340 feet south of East 5th Street to East Dunne Avenue, conforms to the California Streets and Highways Code Section 8330 as said portion of Depot Street has been superseded by relocation.

SECTION 7: From and after the date this Resolution is recorded, the portion of street right-of-way described here as vacated will no longer constitute a public street.

SECTION 8: The vacation hereby releases all public right-of-way rights for streets and highway purposes to the property owner (who is also the Developer) of the two adjacent parcels (with Assessor Parcel Numbers 726-13-063, and 726-13-064 and), MH Lumberyard 49, LLC.

SECTION 9: The City Manager is hereby authorized to sign on behalf of the City a Quitclaim Deed granting property as described in Exhibits “A” and “B” to MH Lumberyard 49, LLC and a separate Grant of Public Utility Easement, which easement is described in Exhibits “E” and “F”, granting easement rights to public utilities, including PG&E.

SECTION 10: The City Clerk is hereby directed to cause said Quitclaim Deed and Grant of Public Utility Easement to be notarized and recorded in the Office of the Recorder of Santa Clara County. No fees shall be charged for recordation.

City of Morgan Hill
Resolution No. 23-00_

SECTION 11: The City Clerk is hereby directed to cause a certified copy of this Resolution, attested by said Clerk under seal, to be recorded without acknowledgment, certificate of acknowledgment or further proof in the Office of the Recorder of Santa Clara County. No fees shall be charged for recordation.

PASSED AND ADOPTED by the City Council of Morgan Hill at a Regular Meeting held on the __th day of ________ 2023 by the following vote:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

APPROVED: ATTEST:
____________________________ ________________________________ MARK TURNER, Mayor 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. 23-00_ adopted by the City Council at the meeting held on ____________, 2023.

WITNESS MY HAND AND THE SEAL OF THE CITY OF MORGAN HILL DATE: _____________________ ___________________________________ MICHELLE BIGELOW, City Clerk

3 CITY COUNCIL STAFF REPORT
MEETING DATE: October 4, 2023
PREPARED BY:

Inga Alonzo, Management Analyst
APPROVED BY: City Manager

APPROVE A THREE-YEAR MAINTENANCE SERVICE AGREEMENT
WITH HB RESTORATION, INC. FOR WELL SITE AND BOOSTER

STATION PAINTING

RECOMMENDATION(S)

1. Award a Maintenance Service Agreement to HB Restoration, Inc. in the not-toexceed amount of $180,000 for annual painting of the City’s well sites and booster stations; and

2. Authorize the City Manager to execute and administer a three-year agreement with HB Restoration, Inc.

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

The City’s 10 water booster stations and 16 water well sites require ongoing maintenance and upkeep, including painting. The scope of work consists of industrial maintenance painting of all exposed piping, valves, and metal appurtenances, including the necessary surface preparation work for iron and steel surfaces and the painting of buildings and floors when needed. The selected contractor will be responsible for furnishing all labor, paint and painting supplies, travel time, expenses, and equipment necessary to do the work. The scheduled facilities for this agreement are listed below but are subject to change based on necessity:

FY2024-2026 Painting Schedule
FY 24 FY 25 FY26

3 Booster TBD TBD TBD
Well Butterfield San Pedro Jackson
Well Diana #4 Boys Ranch #1 Dunne #2
A detailed Request for Proposal (RFP) was issued to select a qualified Contractor for the annual maintenance painting of well sites and booster stations on a time and materials basis. The RFP was advertised in the Morgan Hill Times. Additionally, the RFP was posted to both the City’s website and the Public Purchase website. The City received six proposals, but one was determined to be non-responsive. Current State of California Department of Industrial Relations (DIR) registration was confirmed before the proposals were reviewed. The remaining five submittals were reviewed by a team of evaluators to score per the scope for Experience, Capability, and References. A score of 30 or higher out of 40 was required to move on to the price scoring. Two contractors had scores that met that qualification. The final bid tabulation is included as Attachment

1. Staff recommends the award of the three-year annual painting maintenance services contract to HB Restoration, Inc.

COMMUNITY ENGAGEMENT:

Not applicable since maintenance of the City’s water infrastructure is a regular operational function of the City.

ALTERNATIVE ACTIONS:

City Council could choose to reject the proposals and reissue an RFP. This is not recommended as the formal process was followed per the purchasing policy and a rebid is not likely to result in a contract with added value. City Council could decide not to approve the agreement and direct staff to postpone maintenance painting of these facilities. This is not recommended because not keeping up on the annual maintenance of the water infrastructure can lead to system failure.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

On January 23, 2019, Council approved an agreement with Jeffco Painting & Coating, Inc. for annual painting services in the amount of $120,000.

FISCAL AND RESOURCE IMPACT:

Funds for this maintenance services agreement were budgeted at $60,000 annually in the current biennial budget, within the Water Operations Division (650.5710.42510).

Subsequent years (Fiscal Years 2025-26) are subject to budget appropriations by the City Council.

CEQA (California Environmental Quality Act):

Categorical Exemption

3 The planned maintenance and management of existing City infrastructure falls within the CEQA categorical exemption of Class 1, Existing Facilities.

Total Average Score Results
Painting of Wells and Boosters
HB Restoraton Unified Field Services

1.  Experience and Qualifications - Contractor and personell's previous experience painting  per the scope of the RFP for like size jurisdictions. Described the Safety program in detail.

POINTS 20 18.00 17.33

2.  Capability to perform necessary tasks, resolve problems, provide good customer service and provide timely repairs.

POINTS 15 12.50 14.00

3.  References Provided references for three like size jurisdictions and POINTS 5 4.33 4.33
QUALIFICATION, EXPERIENCE, REFERENCE OVERALL SCORE 34.83 35.66 *BID SCHEDULE OVERALL SCORE - POINTS 60 55.1 31.9
TOTAL AVERAGE SCORE 89.9 67.6
*BID SCHEDULE SCORING - Points are allocated by Line Item. The average cost of the line item over the three year period is calculated per line item. The lowest bidder for each line, receives the full points for that line item. The remaining Contractors receive points for that same line item based on a comparison of their proposed price to the lowest bidder's price. The lowest bidder’s average line-item price is divided by each Contractor’s average line-item price and multiplied by the number of points available for that line item.

MAINTENANCE SERVICE AGREEMENT
H.B. RESTORATION, INC,
THIS AGREEMENT is entered into and becomes effective on (Effective Date), by and between the CITY OF MORGAN HILL, a municipal corporation, ("CITY"), and H.B.

Restoration, 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:

I • This Agreement is entered into pursuant to the action of the Morgan Hill City Council taken on 20

2. Term of Aqreement. This Agreement shall cover services rendered from the Effective Date of this Agreement until Dec 30, 2026 at which time SERVICE PROVIDER'S services shall be completed.

The City Manager is authorized to extend the term of this Agreementfor a maximum period of one year.

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 annual painting of well sites and booster stations as further described in Exhibit A.

4. 4.1.

Compensation. SERVICE PROVIDER shall be compensated as follows:

Amount. $180,000.00. Total compensation to SERVICE PROVIDER under this

4.2. Agreement during its initial term set forth in Section 2 above shall not exceed One Hundred Eighty Thousand 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.

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.
1 Updated: July 2022

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 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 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 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. SERVICE PROVIDER is liable for any property damage caused by SERVICE PROVIDER or its Subcontractors during performance of the services and shall notify the CITY of damage within 24 hours of the occurrence. SERVICE PROVIDER must promptly repair or replace any real or personal property damage and must promptly restore the property to its original or intended condition. CITY may repair or replace the real or personal property damage if SERVICE PROVIDER fails to do so, and the cost of the repairs or replacement may be deducted or offset from any compensation due to SERVICE PROVIDER.

6.1. 6.2.

Schedule. SERVICE PROVIDER shall perform all work and services under this Agreement in conformance with the time schedule set forth on Exhibit C, "Schedule of Performance," attached hereto and incorporated herein by this reference. The 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.

Storage of Service Provider's Equipment. 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 the 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. 2 Updated: July 2022

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 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 CITY.

8.1. Insurance Types and Amounts.

8.1.1. 8.1.2.

8.1.3. 8.1.4.

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 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.

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/Nonowned 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 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.

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 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.

Pollution (Environmental) Liability. If the performance of SERVICE PROVIDER'S work or service under this Agreement involves hazardous materials, contaminated soil disposal, and/or a risk of accidental release of fuel oil, chemicals or other toxic gases or hazardous materials, SERVICE PROVIDER shall procure and maintain Pollution Liability covering the SERVICE PROVIDER'S liability for bodily injury, property damage and environmental damage resulting from pollution and related cleanup costs arising out of the work or services to be performed under this Agreement. Coverage shall be provided for both work performed on site, as well as during the transport of hazardous materials. Such coverage shall be in the minimum amount of: (i) one million 3 Updated: July 2022

8.1.5. 8.1.6.
dollars ($1 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.

Professional Liability.

8.1.5.1. 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 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 CITY for at least five (5) years after the completion of work performed under this Agreement.

8.1.5.2. 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 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.

Sexual Abuse/Molestation Liability (SML): If the performance of SERVICE PROVIDER'S work or service under this Agreement involves contact with minors, SERVICE PROVIDER shall procure and maintain Sexual Abuse and Molestation insurance in the minimum amount of: (i) two hundred thousand dollars ($200,000.00) 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.

8.2. 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 and pollution liability (when pollution liability applies).

8.2.1.1. "Additionally Insured" - The City of Morgan Hill, its elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers are named as additional insureds on a form at least as broad as ISO Form CG 20 10 for ongoing operations.
4 Updated: July 2022

8.2.2. 8.2.1.2. "Waiver of Rights of Subrogation" - The insurer waives the right of subrogation against the City of Morgan Hill and CITY'S elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers; and

8.2.1.3. "Primary and Non-Contributing" - Insurance shall be endorsed to be primary and non-contributory and will not seek contribution from the City's insurance or self-insurance and shall be at least as broad as ISO Form CG 20

01. 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. 8.4.

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.

Certificates. SERVICE PROVIDER shall furnish CITY 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 SERVICE PROVIDER'S agreement with CITY shall be canceled or materially changed except after thirty (30) days' notice by the insurer to CITY. A "material change" is a change that results in noncompliance 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 CITY. No official or employee of CITY shall be personally liable for any default or liability under this Agreement.

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. 5 Updated: July 2022

10.2. 10.3.

10.4. Without limiting the provisions of Section 10.1 above, each worker performing work under this Agreement shall be paid at a rate not less than the prevailing wage as defined in Sections 1771 and 1774 of the Labor Code. The prevailing wage rates are available SERVICE PROVIDER shall post a copy online at http://www.dir.ca.gov/dlsr. of the applicable prevailing rates at the Worksite. Pursuant to Labor Code Section 1775, SERVICE PROVIDER and any Subcontractor shall forfeit to CITY as a penalty up to two hundred dollars ($200.00) for each calendar day, or portion thereof, for each worker paid less than the applicable prevailing wage rate. SERVICE PROVIDER shall also pay each worker the difference between the applicable prevailing wage rate and the amount actually paid to that worker.

DIR Registration. CITY will not accept a Bid Proposal from or enter into a contract with a SERVICE PROVIDER, without first receiving proof to the satisfaction of CITY that SERVICE PROVIDER and its subcontractors are registered with the California Department of Industrial Relations to perform public work under Labor Code Section 1725.5, subject to limited legal exceptions. Under Labor Code section 1771.4, this Agreement is subject to compliance monitoring and enforcement by the California Department of Industrial Relations.

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 6 Updated: July 2022

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 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.

Independent Contractor. SERVICE PROVIDER is an independent contractor and not 11. 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.

Conflict of Interest 13. and Reportinq. 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:

H.B. Restoration Inc.
5907 26th Street
Rio Linda, CA 95673
7 Updated: July 2022

Address of CITY is as follows:

Utilities Division
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.

If applicable, 16. Service Provider's Proposal. 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. 17.2.

17.3. 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 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.

Access to and Audit of Records. CITY shall have the right to examine, monitor and audit all records, documents, conditions, and activities of 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 CITY or as part of any audit of 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.

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 PROVIDERS risk, until written instructions are received from CITY.

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

No Assiqnment. Neither this Agreement nor any 20. portion shall be assigned by SERVICE PROVIDER, without prior written consent of CITY. Any attempted assignment not first approved by 8 Updated: July 2022

CITY shall be void and, at CITY'S option, shall terminate this Agreement effective as of the date of such attempted assignment.

21. 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.

22. Defense and Indemnification.

22.1. 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, 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").

22.2. 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 CITY.

22.3. 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.

22.4. 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 (22) 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.

22.5. 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 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. Entire Aqreement: Modification: Conflictinq 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.

24. Governinq 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. 9 Updated: July 2022

25. 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 S 1654, the provisions of which are hereby waived. This Agreement shall be construed and interpreted in a neutral manner.

26. Preservation of Aqreement. 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.

27. Bindinq Aqreement. 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.

Electronic Siqnatures. Unless otherwise prohibited by law or CITY policy, the Parties agree 28. that an electronic copy of a signed contract, or an electronically signed contract, has the same force and legal effect as a contract executed with an original ink signature. The term "electronic copy of a signed contract" refers to a transmission by facsimile, electronic mail, or other electronic means of a copy of an original signed contract in a portable document format. The term "electronically signed contract" means a contract that is executed by applying an electronic signature using technology approved by the CITY.
[Signatures on Next Page]
10 Updated: July 2022

29. 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 S 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 ASSISTANTTREASURER.

ATTEST:

City Clerk/Deputy City Clerk
Michelle Bigelow
Print Name
Date:

APPROVED AS TO FORM:

City Attorney
Donald A. Larkin
Print Name
Date:
1034975
Contractor's License Number(s) (if applicable)
Expiration Date(s) 1/31/2024

CITY OF MORGAN HILL
City Manager
Christina J. Turner
Print Name
Date:

H.B. Restoratio , Inc.
p. gazc04s C ED
Print Name and Title of Signer.

If Corporate: Chairman, President or Vice
President
Date: q/._18/zcn3
By:

Print Name and Title of Signer.

If Corporate: Secretary, Assistant
Secretary, Chief Financial Officer or
Assistant Treasurer
1000055112
Contractor's DIR Registration Number(s) (ifapplicable)
Expiration Date(s) 06/30/2024
11 Updated: July 2022

EXHIBITA

SCOPE OF SERVICES
The scope of the work for this project includes the painting of water well sites and water booster stations operating by the City of Morgan Hill Utilities Division. There is a total of 27 facilities at this time: 17 water well sites and 10 water booster stations. Over the three-year term of the agreement, a
total of nine facilities will require paint maintenance (three each year).

The City will select one booster station and two water well sites each year for painting maintenance. The City reserves the right to make substitutions of like facilities to be painted in any given year. The Cotu reserves the right to add possible painting work at any of its Lift Station sites during any given year as part of the agreement.

1.00 Contractor's Responsibility
For each facility the work will consist of painting maintenance of the buildings and all exposed piping, valves, and metal appurtenances, including the necessary surface preparation work for iron and steel surfaces. The selected contractor will be responsible for furnishing any and all labor, paint and painting supplies, travel time, expenses, and equipment necessary to do the work required.

2.00 Schedule for Painting of Well Sites and Booster Stations The well sites and booster stations are to be painted during the months of October through May in order to minimize any detrimental operational impact during the City's peak water pumping activities during the warm weather periods.

3.00 City-wide Listing of City-wide Water Well Sites and Water Booster Stations Following is a city-wide listing of the water well sites and water booster stations currently in operation in the City of Morgan Hill:

Water Well Sites and Booster Stations
Booster Stations
E. Dunne Booster
Easy St. Booster
El Toro Booster
Encino Booster
Glen Ayre Booster
Hydro-Pneumatic Booster
Jackson Booster
Llagas Booster
Peak & Main Booster
Woodland Booster
Dunne Well #2
Main Well #1
Nordstrom Well
Tennant Well
Water Well Sites
Boys Ranch #1 Well
Boys Ranch #2 Well
Boys Ranch #3 Well
Butterfield Well
Condit Well
Diana #1 Well
Diana #2 Well
Diana #3 Well
Diana #4 Well
Dunne Well #1
Jackson Well
Main Well #2
San Pedro Well

4.00 Grouping of Water Well Sites and Water Booster Stations into "Types" 12 Updated: July 2022

The water booster stations and the water well sites vary in structure, layout, equipment, and accessories. These booster stations and well sites can be categorized generally as described below:
• Booster Stations: These consist of two different general types • Water Well Sites: These consist of one general type
The table below shows the nine facilities (by facility type) that are to be painted over the threeyear term of the agreement. Indicated are the equipment and accessories that are part of each facility. It shows the grouping of facilities into "Types" based on general similarities. The total facilities to be painted during this three-year period will be six wells and three booster stations.

Each year, the City will identify the facilities to be painted in the upcoming fiscal year. A tentative three year schedule is below but this schedule is subject to change:

FY2026-2026 Tentative Painting Schedule
Booster
Well
Well
Painting Specifications
General

1.01 Scope
FY 2024
TBD
Butterfield
Diana #4
FY 2025
TDB
San Pedro
FY 2026
TBD
Jackson
Boys Ranch #1 Dunne #2
This section includes everything necessary for, or incidental to, the painting and coating of:
all metal, above ground station piping, well pump motor and discharge head, concrete slabs, concrete masonry units, walls, ceilings, or other surfaces requiring painting.

All necessary ventilation, lighting equipment, and scaffolding shall be furnished and installed by the Contractor. Such scaffolding shall conform to regulations of the State Industrial Accident Commission and local ordinances.

1.02 Submittals
The Contractor shall submit the following items to the Utility Supervisor for review and color selection:

A. Color cards
Submit Color cards for all coatings proposed for use showing full range of standard colors.

B. Product Data
Submit product data including generic description, complete technical data, surface preparation and application instructions.

C. Coating System Data Sheets
Submit Coating System Data Sheets. A sample was included in the RFP specifications.

D. Manufacturer's Certification
Submit the manufacturer's certification that coatings comply with specified requirements and are suitable for intended application.

E. Warranty
13 Updated: July 2022

Submit the manufacturer's standard warranty.

1.03 Surfaces Requiring Painting
The following items shall be painted on-site. All exposed pump components including the motor; discharge head and base plate; piping, including valves and fittings; electrical conduits; building walls; floors and ceilings, and associated interior and exterior appurtenances.

1.04 Work Not Included
Factory coated equipment such as the motor control center, telemetry, pneumatic components, roofing, and chlorination equipment is not included in this Section.

1.05 Quality Assurance
A. Single Source
All materials of a paint system, including primer and finish coats, shall be produced by the same paint manufacturer unless otherwise approved by the Project Manager. Thinners, cleaners, driers, and other additives shall be as recommended by the paint manufacturer of the particular coating.

B. Surface Preparation
Preparation of surfaces and application of coatings shall be in conformance with the applicable AWWA, SSPC, and ASTM specifications, this Specification, and the printed recommendations of the paint manufacturer.

C. Weather
Prepare surfaces and apply and cure coatings within air and surface temperature range in accordance with the manufacturer's instructions. The surface temperature shall be a minimum of 40-degrees F and 5-degrees above the dew point. Do not prepare surfaces or apply coatings in dust, smoke, rain, fog, or damp or humid weather or if the wind velocity is above the manufacturer's limit. Schedule coating work to avoid excessive dust and airborne contaminants.

D. Ventilation
Provide ventilation during coating evaporation stage in confined or enclosed areas.

E. Inspection
The Contractor shall give advance notice of the start of any surface preparation work or coating application work.

Inspection by the Utility Supervisor, or the waiver of inspection of any particular portion of the work, shall not be construed to relieve the Contractor of any responsibility to perform the work in accordance with these Specifications.

For all coatings subject to immersion, full cure must be obtained for the completed system prior to submersion. Consult the coatings manufacturers written instructions for these requirements. The coating shall not be immersed for any purpose until completion of the curing cycle.

Materials

2.01 General
14 Updated: July 2022

All materials used, except as otherwise specified in carrying out the provisions of this contract, shall be manufactured by the following companies, or approved equals:
• Sherwin Williams
•
ICl Devoe
• TNEMEC
• Rain Guard

2.02 Paint Materials
The following surface preparations and paint and coating materials shall apply to this project.

A. System Number 1 — Exterior Steel Tanks, Station Piping, Valves, Conduits, Fittings, Pump Discharge Heads, Pump Motors, and Pump Base Plates.

All exposed steel surfaces including station piping, valves, pump discharge heads, conduits and fittings
that are exposed to weather or are located above grade inside a pump station building shall be coated as follows:

1. Surface Preparation: Clean and Dry

2. Paint Material: Aliphatic Acrylic Polyurethane
i. TNEMEC Endura-Shield II Series 1075 @
3 to 5 mils DFT or
ii. Devoe Devthane 379 H
@
2 to 3 mils DFT
B. System Number 2 — Factory Primed Steel Doors and Frames All exterior and interior steel doors, frames, and miscellaneous equipment that are exposed to weather or are located inside the pump station building shall be coated as follows:

1. Surface Preparation: Clean and Dry

2. Paint Material: High Solids Epoxy @
4 to 5 mils DFT
. TNEMEC Epoxoline.HS Series V69F or
ii. Devoe Bar-Rust 235 H

3. Paint Material-Exterior Applications: Aliphatic Acrylic Polyurethane TNEMEC Endura-Shield II Series 1075 @
3 to 5 mils DFT or
ii. Devoe Devthane 379H @
2 to 3 mils DFT
C. System Number 3 — Exterior Ductile and Cast Iron Pipe, Valves, and Fittings Ductile iron and cast iron piping, valves, and fittings exposed to weather and ultraviolet light deterioration or underground conditions shall be coated as follows:

1. 2.
ii.

Surface Preparation: In accordance with manufacturer's instructions.

Paint Material - Exterior Applications: Aliphatic Acrylic Polyurethane TNEMEC Endura-Shield II Series 1075 @
3 to 5 mils DFT or
Devoe Devthane 379H @
2 to 3 mils DFT
15 Updated.•
July 2022

D. System Number 4 — Interior Ductile and Cast Iron Pipe Valves and Fittings Ductile iron and cast iron piping, valves, and fittings located in the booster pump station building or exposed to other interior humid conditions shall be coated as follows:

1. Surface Preparation: In accordance with manufacturer's instructions

2. Paint Material: High Solids Epoxy @
4 to 5 mils DFT
i. TNEMEC Epoxoline HS Series V69F or
ii. Devoe Bar-Rust 235 H
E. System Number 5 — Exterior Concrete Masonry Units and Concrete Walls (Clear Water Repellent Coating)
The exterior of concrete masonry unit block walls, split face block walls, or concrete walls that are to receive a clear water repellent that are exposed to weather, driving rain and mildew, but are not subject to graffiti shall be coated where called for on the Plans, as follows:

1. Surface Preparation: Level protrusions and mortar splatter.

2. Paint Material: Water Repellent Siloxane/SiIane Blend or Polysilane i. TNEMEC Prime-A-Pell H20 Series 633 or
ii. Rain Guard (Do not apply a second coat)
F. System Number 6 — Exterior Concrete Masonry Units and Concrete Walls (Clear Water Repellent and Anti-Graffiti Coating)
The exterior of concrete masonry unit block walls, split face block walls, or concrete walls that are in public areas that may be exposed to graffiti and that are exposed to weather, driving rain and mildew, shall be coated with a clear water repellent anti-graffiti coating where called for on the Plans, as follows:

1. Surface Preparation: Level protrusions and mortar splatter.

2. Paint Material: Co-polymer Graffiti Protectant
i. TNEMEC (None required) or
ii. Rain Guard VandI-Guard
G. System Number 7 — Exterior Concrete Masonry Units and Concrete Walls (Water Repellent and Colored Coating)
The exterior of concrete masonry unit block walls or concrete walls that are to receive a colored coating and are exposed to weather, driving rain and mildew, but are not subject to graffiti shall be coated where called for on the Plans as follows:

1. Surface Preparation: Level protrusions and mortar splatter.

2. Paint Material: Aliphatic Acrylic Urethane or Waterborne Acrylic Polyurethane @ 2 to 3
mils DFT
i. TNEMEC Endura-Shield W.B. Series 1080 or
ii. Devoe Devthane 379 H
16 Updated: July 2022

H. System Number 8 - Interior Concrete Masonry Units and Concrete Walls Concrete masonry unit walls and concrete walls in the interior of the pump station building or elsewhere shall be coated as follows:

1. Surface Preparation: Level protrusions and mortar splatter. Voids and openings in concrete block surfaces shall be pointed.

2. Paint Material: High Solids Epoxy @4 to 6 mils DFT
i. TNEMEC Epoxoline HS Series V69F or
ii. Devoe Bar-Rust 235 H
l. System Number 9 - Sheet Rock
The sheet rocked walls and ceilings in the interior of the station building shall be coated as follows:

1. Surface Preparation: All surfaces shall be clean, dry, and free of oil, grease and other contaminants.

2. Paint Material: High Solids Epoxy @4 to 6 mils DFT
i. TNEMEC Epoxoline HS Series V69F or
ii. Devoe Bar-Rust 235 H
J. System Number IO- Chemical Room Protective Coatings (High Chemical Concentrations) The concrete masonry unit walls and sheet rocked walls, and moldings of the chemical treatment rooms that are exposed to high concentrations of chlorine, fluoride, or other chemicals that are to be painted grey in color shall be coated as follows. Chemical rooms with low concentrations of chemicals shall be coated per the applicable System 9 - Interior Concrete Masonry Units and Concrete Walls or System 10 — Sheet Rock.

1. Surface Preparation: Level protrusions and mortar splatter by sanding or other approved method.

2. Paint Material: Novolac Epoxy @
Manufacturer's Recommended DFT
i. TNEMEC Tneme-GIaze Series 282 or
ii. Devoe Devran 124 or Devmat 111
K. System Number 11 - Interior Concrete Floors
All concrete floors in the pump station building including the chemical room(s) shall have a non-skid protective coating suitable for moderate chemical exposure and heavy traffic and impact exposure. The Contractor shall be responsible for any preparatory work required by the coating manufacturer.

1. Surface Preparation: Verify dryness, followed by Shot Blast or Mechanically Abrade.

2. Paint Material: Novolac Epoxy
i. TNEMEC-Remove excess silica when dry to foot traffic and then coat with Tneme-Glaze Series 282 @
6 to 8 mils DFT or
17 Updated: July 2022

ii. Devoe-Remove excess silica when dry to foot traffic and then coat with Devran 124 @ 20 to 25 mils DFT.

L. System Number 12 — Exterior Aluminum (Gutters and Downspouts), Non-Ferrous Metals (Copper, Brass, or Bronze), and Galvanized Metal.

Exterior aluminum materials such as gutters and downspouts, non-ferrous metals such as copper, brass or bronze, and galvanized metal that is to be painted rather than repaired with zinc coating and that are exposed to weather shall be coated as follows:

1. Surface Preparation: Remove water-soluble dirt and chemicals with water and detergent and solvent-soluble contaminates with Solvent Clean (SPI). Allow to dry and then Hand Tool (SP2) or Power Tool (SP3) to remove oxides. Scarify to provide a minimum I-mil profile to aid adhesion.

2. Paint Material: Aliphatic Acrylic Urethane or Waterborne Acrylic Polyurethane @ 2 to 3
mils DFT
i. TNEMEC Endura-Shield W.B. Series 1080 or
ii. Devoe Devthane 379 H
M. System Number 13 — Interior Aluminum, Non-Ferrous Metals (Copper, Brass, or Bronze), and Galvanized Metal.

Interior aluminum materials such as ducting, non-ferrous metals such as copper, brass or bronze, and galvanized metals such as conduits, pipe hangers, and pipe supports that are to be painted rather than repaired with zinc coating and that are exposed to highly humid atmospheres shall be coated as follows:

1. Surface Preparation: Remove water-soluble dirt and chemicals with water and detergent and solvent-soluble contaminates with Solvent Clean (SPI). Allow to dry and then Hand Tool (SP2) or Power Tool (SP3) to remove oxides. Scarify to provide a minimum I-mil profile to aid adhesion.

2. Paint Material: High Solids Epoxy @
6 to 8 mils DFT
i. TNEMEC Epoxoline HS Series V69F or
ii. Devoe Bar-Rust 235 H
N. System Number 14 - Galvanized Metal (Repair)
Defects in factory applied galvanized items such as galvanized fencing, ladders rain gutters, down
spouts, metal doors, door hangers and pipe hangers, shall be coated with a Zinc-Rich coating with a minimum of 14-pounds of metallic zinc content per gallon. The coatings for potable and non-potable applications shall be as follows:

1. Surface Preparation: Solvent Clean (SPI), followed by Hand Tool (SP2), Power Tool (SP3) or Brush-off Blast (SP7). Provide a minimum I-mil profile to aid adhesion.

2. Paint Material: Potable Water: NSF Zinc-Rich Urethane @

2.5 to 3.5 mils DFT
i. TNEMEC Hydro-Zinc 91-H20
ii. Devoe Catha-Coat 316
18 Updated: July 2022

3. All Other Applications: Inorganic Zinc-Rich Urethane i. TNEMECTneme-Zinc Series 90-97 @

2.5 to 3.5 mils DFT or
ii. Devoe Catha-Coat 302H @
2 to 4 mils DFT
O. System Number 15 — Exterior Wood
Exterior wood such as tails, trim, soffits and all other wood that is exposed to weather or highly humid atmospheres shall be coated as follows:

1. Surface Preparation: Sand rough areas. Seal knots and pitch pockets and fill cracks and nail holes after primer has cured.

2. Paint Material: Acrylic Emulsion
i. TNEMEC Tneme-Crete 180 @
4 to 10 mils DFT
ii. Devoe 2200 Dulux Professional 100% Acrylic Flat Finish@ 300 to 400 sq ft/gal P. System Number 16 — Interior Wood
Interior wood such as trim, cabinets and all other wood shall be coated as follows:

1. Surface Preparation: Sand rough areas. Seal knots and pitch pockets and fill cracks and nail holes after primer has cured.

2. Paint Material: Acrylic Polymer or Waterborne Epoxy Polyamide i. TNEMEC Series 28 @

1.5 to 2.0 mils DFT
ii. Devoe Tru-Glaze 4406 WB Epoxy @
2 to 4 mils DFT
Execution

3.01 General
No paint shall be reduced or applied in any way except as herein specifically called for, or as recommended by the manufacturer. Should conflict occur between specifications and manufacturer's recommendations and/or standard practice, the City shall be notified prior to bid submittal for clarification.

It is the responsibility of the Contractor to inspect and provide substrata surfaces that are prepared in accordance with these Specifications and the printed directions and recommendations of the paint manufacturer whose product is to be applied.

All doors, windows, trim, moldings, base boards, electrical boxes, light fixture boxes, penetrations through the ceilings, walls or floors, shall be caulked prior to coating.

3.02 Material Delivery and Storage
All materials shall be new and shall be delivered to the worksite in unopened containers that plainly show, at the time of use, the designated name, date of manufacturer, and name of manufacturer. Materials shall be stored in a suitable protected area that is heated or cooled as required to maintain temperatures within the range recommended by the manufacturer.

3.03 Air Quality
19 Updated: July 2022

All coatings shall conform to the pertinent Volatile Organic Compound (VOC) requirements and any other air quality regulations applicable at the location of use. Coating materials, which cannot be guaranteed by the manufacturer to conform, whether or not specified by product designation, shall not be used.

3.04 Coating Compatibility
The Contractor shall be responsible for ensuring the compatibility of field coatings with each other or with the coatings on shop coated or previously coated surfaces. Coatings used in the first field coat over shop coated or previously coated surfaces shall cause no wrinkling, lifting, or other damage to underlying coats. Coatings used in successive field coats shall be produced by the same manufacturer.

3.05 Protection of Materials Not to be Painted
Remove, mask, or otherwise protect hardware, lighting fixtures, switch plates, aluminum surfaces, machined surfaces, couplings, shafts, bearings, nameplates on machinery and other surfaces not intended to be painted. Provide drop cloths to prevent paint materials from falling on or marring any adjacent surfaces. Protect working parts of all mechanical and electrical equipment from damage during surface preparation and painting process. All openings in motors shall be masked to prevent paint and all other materials from entering the motors.

3.06 Paint Mixing
Multiple-component coatings shall be prepared using all of the contents of the container for each component as packaged by the paint manufacturer. No partial batches will be permitted. Multiple-component coatings that have been mixed shall not be used beyond their pot life.

3.07 Scaffolding
All necessary scaffolding shall be furnished and installed by the Contractor. Such scaffolding shall conform to regulations of the State Industrial Accident Commission and local ordinances.

3.08 Safety
Painting shall be performed in strict accordance with the safety recommendations of the paint manufacturer; with the safety recommendations of the National Association of Corrosion Engineers contained in the publication, Manual for Painter Safety; Federal, state, and local agencies having jurisdiction.

All necessary precautions shall be taken to prevent fire. Rags and waste soiled with paint shall be removed from the premises at the end of each day's work or stored in metal containers with metal covers.

3.09 Surface Preparation
A. Metal Surface Preparation
All sharp edges and corners shall be ground smooth and all weld spatter, slag burrs, and other objectionable surface conditions must be removed prior to the surface preparation for coating.

No surface preparation blasting will be permitted prior to submission of samples. All workmanship for metal surface preparation as specified shall be in strict conformance with the current Steel Structures Painting Council (SSPC) Specifications as follows:
20 Updated: July 2022

Solvent Cleaning
Hand Tool Cleaning
Power Tool Cleaning
White Metal Blast Cleaning
Commercial Blast Cleaning
Brush-Off Blast Cleaning
Pickling
Near-White Blast Cleaning
SPI
SP2
SP3
SP6
SP8
SP 10
Coat abrasive blast-cleaned surfaces with primer before visible rust forms on surface.

Do not leave blast-cleaned surface uncoated for more than 8-hours.

Where OSHA or EPA regulations preclude standard abrasive blast cleaning, wet or vacu-blast methods may be required. Coating manufacturers recommendations for wet blast additives and first coat application shall apply.

B. Other Surfaces
All other surfaces shall be prepared in accordance with these specifications and the manufacture's recommendations.

3.10 Application of Paint
A. General
Manufacturer's written instructions for applying each type of paint or protective coating shall be furnished to the Project Manager prior to
application. Cleaned surfaces and all coats shall be inspected prior to the succeeding coat. Schedule such inspection with the Project Manager in advance. Apply all coatings in strict accordance with the paint manufacturer's recommendations, as approved by the Project Manager. Succeeding coats shall be painted in a different color to facilitate inspection. Final color shall be as selected by the Owner. Sufficient time shall be allowed between coats to assure thorough drying of previously applied paint. Coating shall be applied in a neat manner that will produce an even film of uniform and proper thickness, with finished surfaces free of runs, sags, ridges, laps, and brush marks. Units to be bolted together shall be painted prior to assembly or installation, unless otherwise specified.

B. Shop Primed Surfaces
All shop primed items shall be inspected at the jobsite for compliance with these Specifications. Schedule such inspection with the Project Manager in advance. Areas of chipped, peeled, or abraded primer shall be hand or power sanded feathering the edges. The areas shall then be spot primed with the specified primer.

C. Manufacturer Applied Paint Systems
Abraded areas on factory finished items shall be repaired in strict accordance with the manufacturer's directions. Repaired areas shall be carefully blended into the original finish.

D. Film Thickness
Coverage is listed as either total dry film thickness in mils (DFT) or the spreading rate in square feet per gallon (SFPG). The number of coats is the minimum required irrespective of the coating thickness. Additional coats may be required to obtain the minimum required paint thickness, depending on method of application, differences in manufacturers' products, and 21 Updated: July 2022

atmospheric conditions. Maximum film build per coat shall not exceed the coating manufacturer's recommendations.

E. Damaged Coatings
Damaged coatings, pinholes and holidays shall have the edges feathered and repaired in accordance with the recommendations of the paint manufacturer, as approved by the Project Manager. Recoat entire surface where touch-up result is visibly different, either in sheen, texture, or color.

F. Unsatisfactory Application
Work shall be free of runs, bridges, shiners, laps, delamination, peeled, blistered, cracked, chipped, abraded or other imperfections. Evidence of these conditions shall be cause for rejection. All visible areas of imperfections shall be hand or power sanded feathering the edges. The areas shall then be primed and finish coated in accordance with the Specifications. Depending on the extent of repair and its appearance, a finish sanding and topcoat may be required by the Project Manager.

If the item has insufficient film thickness, the surface shall be cleaned, and then prepared as required by the manufacturer taking into account the recoat window, and top coated with the specified paint material to obtain the specified appearance and coverage.

Specific surface preparation requirements shall be determined by the coating manufacturer, as approved by the Project Manager.

All areas of overspray including floors, windows, and equipment shall be cleaned or repainted if unable to be cleaned, to the satisfaction of the Project Manager.

Leave all staging up until areas are inspected and approval is given by the Project Manager, for each surface or coating. Staging removed prior to inspection shall be replaced.

Any defects in the coating system shall be repaired by the Contractor per written recommendations of the coating manufacturer, at no additional cost to the Owner.

3.11 Shipping
In all cases where pre-coated items are to be shipped to the jobsite, all efforts shall be made to protect the coating from damage. Coated items shall be battened to prevent abrasion.

Contractor shall use nonmetallic or padded slings and straps in handling. Items will be rejected for excessive damage.

3.12 Anniversary Inspection for Tanks
A. Failure
Any location where coating has delaminated, peeled, blistered, or cracked; and any location where rusting is evident will be considered a failure of the coating system.

B. Remedial Work
Repair all failures by removing the deteriorated coating, cleaning the surface, and recoating with the same system in accordance with this Section and the coating manufacturer.

With the approval of the City, surface preparation of small failures (areas less than 1 sq./fi.) may be made by cleaning to bare metal in accordance with appropriate SSPC-SP standards.

C. Schedule of Remedial Work
22 Updated.•
July 2022

23 Updated: July 2022
The City shall establish a starting date and reasonable time of completion for the remedial work. The starting date shall be no more than thirty (30) calendar days after the submittal of the inspection report to the Contractor. Should the Contractor fail to start the remedial work within ten (10) calendar days after the starting date established by the City, the City may at its option perform the remedial work, and the Contractor shall pay to the City the actual cost of such work, plus 20 percent to cover added engineering and administrative cost.

D. Cost
Warranty inspections of the remedial work shall be at the expense of the Contractor.

Coordinating Work

1. The Contractor shall provide a work schedule approved by the Utility Supervisor prior to start of work.

2. The Contractor shall schedule his work, in advance, with the Utility Supervisor.

3. The Contractor shall coordinate his schedule with any other work that might interfere or be impacted.

Other On-call Work
During the term of the agreement, there may be other various painting maintenance or touch up projects throughout the City that surface on an as needed basis. If this occurs, a separate scope for the work will be developed and presented to the contractor for a quote. The City retains the right to accept or reject any quotes.

Term of Service
The term of the contract will be from October 15, 2023 through December 30, 2026. The contract may be canceled or any portion thereof at any time during the term of service and such cancellations shall be effective upon giving thirty (30) days written notice. The City, at its option, may renew this contract for up to one additional year beginning on January 1, 2027.

This option will be exercised only if the contractor has demonstrated superior performance in provision of painting maintenance services to the City.

Pricing entries in Bid Schedule of Proposal Package applies to the period of October 15, 2023 through December 30, 2026. For services beginning on January 1, 2027, the Contractor may request a percentage adjustment to the pricing for all services equal to the Consumer Price Index (CPI) for the San Francisco Bay Area Counties. This request must be in writing ninety (90) days prior to the end of December 30, 2026.

Work Hours
The work hours for any, and all painting will be scheduled with City Maintenance Staff during regular business hours (7:00 a.m. to 3:00 p.m. Monday through Thursday).

Deviation from the above will not be permitted except by written permission of the City Maintenance Manager or designated representative from the facility. From time to time, the City may take on improvement projects or other construction. The Contractor shall cooperate with the City or its agents while said work is underway.

10.00 Workmanship and Quality level

All work shall be performed by staff directly employed and supervised by the Contractor.

The Contractor shall provide management and technical supervision through competent supervisors as required to provide the painting. The Contractor shall be responsible for the skills, methods and actions of all employees, subcontractors and for all work done.

The Contractor shall cooperate with the representative authorized by the City to enable them to determine the Contractor's conformity with these specifications and the adequacy of the work being performed. The Contractor shall give personal supervision to the work and will meet with the Utility Supervisor or designated City representative as needed.

Safety
The Contractor and staff shall follow all established safety procedures and shall take special care not to endanger the public in any way.
24 Updated: July 2022

EXHIBIT B

SCHEDULEOF COMPENSATION RATES
Tasldltem
Systems Described in Scope

1. 2.

3. 4.

5. 6.

Exterior Walls
Exterior Trim
Interior Wall and Ceiling
Interior Trimm
Interior Floors
Interior Piping & Appurtenances
Cost per Sq. Ft.

Year 1
$7.00
$8.00
$7.00
$9.00
$30.00
$6.25
Year 2
$7.75
$9.00
$7.75
$10.00
$35.00
$7.00
Year 3
$8.50
$10.00
$8.50
$11.00
$45.00
$7.75
The above rates include any and all labor, paint, painting supplies, travel time, expenses and equipment necessary to do the work required.

For any other on-call work and work not listed above- The City shall request a quote from the contractor before work is done. A notice to proceed shall be issued to the contractor if the City agrees on the pricing. The city reserves the right to contract with other contractors for other oncall work or work not listed above if the Clty feels it would be in the City's best interest. 25 Updated: July 2022

EXHIBIT C

SCHEDULEOF PERFORMANCE
This is a three year anuual on-call agreement. The well sites and booster stations are to be painted during the months of October through May in order to minimize any detrimental operational impact during the City's peak water pumping activities during the warm weather periods. Each year, the City will identify the facilities to be painted in the upcoming fiscal year.

A tentative three year schedule is below but this schedule is subject to change:
2023-2026 Tentative Painting Schedule
FY 2024
Booster TBD
Well
Well
Butterfield
Diana #4
FY 2025
TDB
San Pedro
Boys Ranch #1
FY 2026
TBD
Jackson
Dunne #2
26 Updated: July 2022

4 CITY COUNCIL STAFF REPORT
MEETING DATE: October 4, 2023
PREPARED BY:

Cynthia Iwanaga, Management Analyst
APPROVED BY: City Manager

APPROVE HEATING, VENTILATION, AND AIR CONDITIONING (HVAC)

MAINTENANCE SERVICE AGREEMENT

RECOMMENDATION(S)

1. Award a Maintenance Service Agreement to Environmental Systems, Inc. in the total amount of $662,944 for preventative HVAC maintenance ($62,944) and repair services (not-to-exceed $600,000) for a two-year period; and

2. Authorize the City Manager to execute and administer that certain Maintenance Service Agreement with Environmental Systems, Inc.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Enhancing Public Safety
2022-2023 Strategic Priorities
Fiscal Sustainability
REPORT NARRATIVE:

The purpose of this item is to provide the City Council with an opportunity to consider awarding a two-year maintenance service agreement for HVAC preventative maintenance and repair services to Environmental Systems, Inc. (Attachment 1). The City has contracted for professional Heating, Ventilation, and Air Conditioning (HVAC) preventative maintenance and repair services for many years, most recently with A&B Mechanical, Inc. The City’s current maintenance service agreement expires on October 31, 2023.

Proposals for the new HVAC maintenance and repair services contract were solicited in July 2023. In soliciting proposals, the City advertised in the Morgan Hill Times on July 14, 2023. The Request for Proposals (RFP) was released on July 14, 2023 on the City website, Public Purchase, and the Builders Exchange of Santa Clara County. Staff also contacted all registered C-20 (HVAC) licensed contractors on the City’s Informal Bidder’s List.

The proposals were opened on August 14, 2023 and seven proposals were received.

4 Three of the proposals did not score the minimum 30 out of 40 points on the narrative proposal as stated in the RFP. The narratives were scored for previous experience, work quality and references, qualifications of staff, and organized communication systems. The following four contractors scored 30 or more points on their narrative proposals: ACCO Engineered Systems, Air and Plumbing Systems, Mesa Energy Systems dba EMCOR Services, and Environmental Systems, Inc.

These four proposals were evaluated based on weighted average scoring for the contractors’ pricing of the following items: three quarterly maintenance visits and annual maintenance visit. Based on a combination of weighted average scoring for the contractors’ pricing and scoring of each contractor’s narrative, two contractors were selected to be interviewed. Interviews were conducted with Mesa Energy Systems dba EMCOR Services and Environmental Systems, Inc. Attached is the scoring summary (Attachment 2).

Staff recommends the award of this maintenance service agreement for HVAC maintenance and repair services to Environmental Systems, Inc. for a total not-toexceed amount of $662,944 for two years, which is $31,472 per year for preventative maintenance, subject to future budget appropriations by the City Council. In addition to the $31,472 per year ($62,944 for the two-year agreement term) for preventative maintenance, the contract would allow for additional repair costs (labor and materials) to be performed on an as-needed basis upon pre-approval by City maintenance staff in a not-to-exceed amount of $300,000 annually (not-to-exceed $600,000 for the two-year agreement term). The City’s actual repair costs will be contingent upon the circumstances and frequency of repair needs. With the City's aging building infrastructure, predicting all repair needs is not possible. However, quick responsive repairs are critical for the City's ongoing operations. The new agreement will have a two-year term with authorization for the City Manager to execute three consecutive oneyear extensions with the annual price increases not to exceed 5% of the prior year’s annual pricing, subject to future budget appropriations by the City Council. If approved, the initial two-year term will be from November 1, 2023 to October 31, 2025.

COMMUNITY ENGAGEMENT:

As HVAC preventative maintenance and repair services are a regular and expected City service to ensure basic City operations, no efforts were made to inform the community about this proposed agreement.

ALTERNATIVE ACTIONS:

An alternative action is to not approve this agreement, direct staff to extend the current contract with A&B Mechanical, Inc for a short term, and conduct another Request for Proposals (RFP) process. This alternative is not recommended as it is not expected to result in a better value to the City and would involve additional staff time.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

The City Council awarded the prior HVAC maintenance services agreement to A&B Mechanical, Inc on September 16, 2020.

4 FISCAL AND RESOURCE IMPACT:

The $31,472 in annual HVAC preventative maintenance costs and annual $300,000 allocation for potential additional repair costs, if needed, would be paid proportionally from the building maintenance budgets in the General Fund (010) and Building Maintenance Fund (740) for the following facilities: Aquatics Center, Centennial Recreation Center, Community and Cultural Center, Playhouse and CCC Building B, City Hall, The Villas, Council Chamber Building, Friendly Inn, Police Department Building including Information Services, and Corporation Yard.

CEQA (California Environmental Quality Act):

The activities described in this Staff Report are categorically exempt under CEQA, specifically pursuant to Section 15301 of the CEQA Guidelines (Existing Facilities), as the subject work involves the repair, maintenance or minor alterations of existing City facilities involving negligible or no expansion of use of those facilities. Categorical Exemption

City of Morgan Hill
2023 HVAC Maintenance Narrative and Cost Proposal Scores 8/31/2023

NARRATIVE SCORING NARRATIVE SCORING
Points
Available
A & B
Mechanical
ACCO
Engineered
Systems
Air and
Plumbing
Systems
Bay Area
HVAC
EMCOR
Services
Environmental
Systems
One Day
Installation &
Repair
Previous Experience 15.0 11.7 12.7 11.3 8.7 12.7 14.3 10.8 Work Quality 10.0 6.7 7.0 7.0 4.7 8.3 9.3 6.0
Qualifications of Staff 5.0 3.2 3.0 4.2 3.3 3.5 4.7 3.2 Organized Communication
Systems 10.0 6.0 8.0 7.5 5.0 8.3 9.2 6.5
SUBTOTAL- NARRATIVE POINTS 40.0 27.5 30.7 30.0 21.6 32.8 37.5 26.5

COST PROPOSAL COST PROPOSAL SCORING
Item
Price from
Lowest Bidder
Points
Available
BASE BID:
3 Quarterly Inspections and 1
Annual Inspection
A & B
Mechanical
ACCO
Engineered
Systems
Air and
Plumbing
Systems Bay Area HVAC
EMCOR
Services
Environmental
Systems
One Day
Installation &
Repair ### 60.0
A & B
Mechanical
ACCO
Engineered
Systems
Air and
Plumbing
Systems
Bay Area
HVAC
EMCOR
Services
Environmental
Systems
One Day
Installation &
Repair
SUBTOTAL-PRICING POINTS 31,472.00 76,040.00 78,250.00 80,317.00 31,472.00 60.0 24.8 24.1 23.5 60.0 GRAND TOTAL 100.0 55.5 54.1 56.3 97.5
3 4 2 1
Point Score is lowest bidder's price divided by each Contractor's price times the number of points available. For example, ACCO's Base Bid Points = 31,472/76,040 X 60 points = 24.8 points out of 60 points

EXHIBIT A- SCOPE OF WORK

ATTACHMENTC

FILTER LIST
Filters must be replaced with MERV13 filters at all facilities.

CITY OF MORGAN HILL HVAC EQUIPMENT FILTER LIST

FACILITY TYPE CHANGES/YEAR
Aquatics Center - 16200 Condit Road
Disposable Quarterly
Pleated
Centennial Recreation Center-171 West Edmundson Avenue
Disposable Quarterly
Pleated
City Hall -17575 Peak Avenue
Disposable Quarterly
Pleated
Community and Cultural Center and Playhouse-17000 Monterey Road Disposable Quarterly
Pleated
Council Chambers -17555 Peak Avenue
Disposable Quarterly
Pleated
CCC Building B-17060 Monterey Road
Disposable Quarterly
Pleated
Friendly Inn -17666 Crest Avenue
Disposable Quarterly
Pleated
Public Works Corporation Yard -100 Edes Court
Disposable Quarterly
Pleated
Police Department and Information Services-16200 Vineyard Blvd.

Disposable Quarterly
Pleated
The Villas -535 Alkire Avenue
Disposable Quarterly
Pleated
Note: Filter quantities/sizes to be determined during the field review by prospective bidders.

City Council
Meeting Minutes
Mark Turner - Mayor
Rene Spring - Mayor Pro Tem
Gino Borgioli - Council Member
Marilyn Librers - Council Member
Yvonne Martinez Beltran - Council Member
Wednesday, September 6, 2023 5:00 PM
Council Chamber Building
17555 Peak Avenue, Morgan Hill, CA 95037

SPECIAL/REGULAR MEETING
A special meeting of the City Council was called at 5:00 pm for the purpose of conducting a closed session.

SPECIAL MEETING
5:00 pm Closed Session

September 6, 2023
2 CALL TO ORDER
The special meeting was called to order at 5:01 pm.

ROLL CALL ATTENDANCE
City Clerk Michelle Bigelow called the roll.

City Clerk Michelle Bigelow called the roll.

PRESENT Rene Spring, Gino Borgioli, Yvonne Martinez Beltran, Mark Turner, Marilyn Librers
ABSENT None
Council Member Yvonne Martinez Beltan arrived at 6:29 pm and participated via posted teleconference on Zoom.

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

CLOSED SESSION

CONFERENCE WITH LABOR NEGOTIATORS
Authority: Pursuant Government Code Section 54957.6
City Negotiators: Christina Turner, City Manager; Donald Larkin, City Attorney; Michael Horta, Human Resources Director; Dat Nguyen, Finance Director; Edith Ramirez, Assistant City Manager, Development Services
Employee Organization: Morgan Hill Police Officers Association; AFSCME Local 101 Morgan Hill; Community Service Officers Association; Employees Covered under Management Resolution #21-050

CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED LITIGATION
Significant exposure to litigation pursuant to § 54956.9(b): (one case) Claim of DeNova Homes re" Builder's Remedy

OPPORTUNITY FOR PUBLIC COMMENT
Public comment opened at 5:02 pm. There being no requests to speak, public comment closed.

ADJOURN TO CLOSED SESSION
The meeting adjourned to closed session at 5:02 pm.

REGULAR MEETING

September 6, 2023
3 6:00 pm
The regular meeting convened at 6:04 pm.

SILENT INVOCATION

PLEDGE OF ALLEGIANCE

RECOGNITIONS
The City of Morgan Hill recognized Ryder Kirk and Rohan Wilmot for earning the honored Eagle Scout Award.

The City of Morgan Hill recognized the Friends of Morgan Hill Senior Center for their outstanding dedication to the Morgan Hill Senior Center.

PROCLAMATIONS
Proclaiming the month of September as National Emergency Preparedness Month Proclaiming the month of September as National Hispanic and Latinex Heritage Month Proclaiming the month of September as Suicide Prevention Awareness Month Proclaiming the month of September as Childhood Cancer Awareness Month

CITY COUNCIL REPORTS
Mayor Turner announced that Caltrain has approved a 4th train that will begin September 25, 2023, running service to Morgan Hill and Gilroy. For information on arrival times and schedules, check the Caltrain website. He announced that he is continuing conversations with the Bay Area Panthers' owners in hopes they will stay local and continue to be headquartered in Morgan Hill.

September 6, 2023
4 CITY MANAGER'S REPORT
City Manager Christina Turner gave a presentation to announce newly hired, promoted, and retired employees. She announced that Second Chance week is here in Morgan Hill, kicking it off on Saturday September 9, 2023 with the Citywide garage sale. She also shared that there is a call for volunteers for the Transportation Master Plan Stakeholders Group. We are looking for community members with an interest in or thoughts on public transit. Volunteers will be required to attend 6-8 meetings that will be held over the next year on Wednesday evenings. The first meeting is planned for Wednesday, September 20, 2023 and the second meeting will be held on Wednesday, December 13, 2023.

Presentation for Newly Hired, Promoted, and Retired Employee Recognitions

CITY ATTORNEY'S REPORT
City Attorney Larkin shared that there was no reportable action from the closed session items that were heard earlier in the meeting or from the closed session that took place on August 23, 2023.

OTHER REPORTS
Council Member Borgioli reported on an email that he received advising it is poor etiquette to wear a hat indoors. He explained his reasoning for wearing a hat indoors and asked that if anyone has questions they can reach out directly to him.

PUBLIC COMMENT
Public comment opened at 6:30 pm.

Sharon Luna was called to speak.

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

ADOPTION OF AGENDA
MOTION:

Adopting the agenda moving items 18 and 19 ahead of item 17.

RESULT: Passed
MOVER: Council Member Borgioli
SECONDER: Mayor Pro Tem Spring
AYES: Mayor Pro Tem Spring, Council Member Martinez Beltran, Council Member Borgioli, Mayor Turner, Council Member Librers
NAYS: None

September 6, 2023
5 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.

MOTION:

Approving consent calendar items 1 through 9, 12, and 13.

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

1. ACCEPT $30,000 DONATION FROM THE FRIENDS OF MORGAN HILL

SENIOR CENTER
Recommendation:

1. Accept a $30,000 donation from the Friends of the Morgan Hill Senior Center to support services at the Centennial Recreation Senior Center; and

2. Authorize the City Manager to execute any agreements necessary for donation acceptance.

2. ACCEPT THE GRANT FUNDING FROM CALIFORNIA HIGHWAY PATROL'S

CANNABIS TAX FUND GRANT PROGRAM FOR DUI SATURATION

PATROLS AND THE PURCHASING OF EQUIPMENT
Recommendation:

1. Accept the grant funding from the California Highway Patrol’s (CHP) Cannabis Tax Fund Grant Program (CTFGP) and adopt a resolution to amend the City’s Fiscal Year 2023-24 General Fund budget, accepting grant funding of $10,144, and appropriating $10,144, and;

2. Authorize the City Manager to execute the California Highway Patrol’s

September 6, 2023
6 (CHP) Cannabis Tax Fund Grant Program’s (CTFGP) agreement.

3. ACCEPT MORGAN HILL RECTANGULAR RAPID FLASHING BEACON (RRFB) AND HIGH INTENSITY ACTIVATED CROSSWALK BEACON (HAWK) PROJECT IN THE AMOUNT OF $729,046
Recommendation:

1. Accept as complete the Morgan Hill Rectangular Rapid Flashing Beacon (RRFB) and High Intensity Activated Crosswalk Beacon (HAWK) 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.

4. ADOPT ORDINANCE 2348, NEW SERIES, ESTABLISHING CHAPTER 18.29 (MONTEREY CORRIDOR FORM-BASED CODE) OF TITLE 18 (ZONING) OF

THE MUNICIPAL CODE OF THE CITY OF MORGAN HILL AND

ESTABLISHING THE MONTEREY CORRIDOR FORM-BASED CODE

REGULATING PLAN IMPLEMENTING A FORM-BASED CODE ALONG THE

MONTEREY ROAD CORRIDOR CREATING A VIBRANT MIXED-USE

CORRIDOR THAT ENCOURAGES WALKING AND BIKING AS ENVISIONED WITHIN THE CITY OF MORGAN HILL 2035 GENERAL PLAN
Recommendation:

Waive the reading, adopt Ordinance No. 2348, 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.

5. ADOPT RESOLUTION AMENDING FISCAL YEAR (FY) 2023-24

COUNTYWIDE SOLID WASTE BUDGET FOR ADMINISTRATIVE SERVICES Recommendation:

Adopt resolution appropriating an additional $95,680 to the City's FY 2023-24 budget in the Countywide Solid Waste Administration Fund (246) and the General Fund (010).

6. APPROVE CONSULTANT AGREEMENT WITH LUHDORFF AND

SCALMANINI FOR TWO TEST WELLS
Recommendation:

1. Approve Consultant Agreement for Design Professionals with Luhdorff and Scalmanini Consulting Engineers for a total not to exceed contract amount of $347,100; and

2. Authorize the City Manager to execute and administer the Consultant Agreement for Design Professionals with Luhdorff and Scalmanini

September 6, 2023
7 Consulting Engineers.

7. APPROVE SECOND AMENDMENT TO THE AGREEMENT WITH DUKE'S

ROOT CONTROL
Recommendation:

Approve and authorize the City Manager to execute a second amendment to the agreement with Duke’s Root Control for additional root control treatment for a total agreement not to exceed amount of $99,185.

8. APPROVE OBJECTIVE DEVELOPMENT STANDARD WAIVERS FOR THE EDES-ALCINI: AFFORDABLE HOUSING PROJECT AT EDES COURT AND

MONTEREY ROAD
Recommendation:

Adopt Resolution approving the request for waivers for the Edes-Alcini project.

9. APPROVE THE PURCHASE OF A FIRE APPARATUS FOR THE THIRD FIRE

STATION
Recommendation:

1. Approve the purchase of a fire apparatus for the third fire station with Burton's Fire Inc. in the amount of $949,080 plus a 5% contingency; and

2. Authorize the City Manager to executive and administer the purchase agreement; and

3. Approve a budget amendment to move the approved funding from FY 2024-25 to FY 2023-24; and

4. Authorize an interfund loan to Public Safety Facilities Impact Fund (315) of $1.0 million from Local Drainage Impact Fund (303).

12. AUTHORIZE THE CITY MANAGER TO ENTER INTO AN AGREEMENT WITH

GRANITE GOVERNMENT SOLUTIONS FOR CONSOLIDATED

TELECOMMUNICATION SERVICES
Recommendation:

1. Authorize the City Manager to enter into an agreement with Granite Government Solutions for consolidated telecommunication services; and

2. Authorize the City Manager to execute and administer the consultant agreement with Granite Government Solutions.

13. AWARD SMART IRRIGATION CONTROLLER SYSTEM CONTRACT TO MEDALLION LANDSCAPE MANAGEMENT, INC.

September 6, 2023
8 Recommendation:

1. Award contract to Medallion Landscape Management, Inc. in the amount of $435,398 for the supply, installation and programming of a Citywide Smart Irrigation Controller System with a 5% contingency not to exceed $21,770;

2. Authorize the City Manager to execute and administer that certain contract with Medallion Landscape Management, Inc; and

3. Adopt a resolution amending the FY 2023-24 Budget appropriating $457,168, including $228,584 from the Water Operations Fund (650) and $228,584 from the General Fund (010).

ITEM PULLED FOR DISCUSSION

11. APPROVE THE CONSULTANT AGREEMENT WITH CIVICPLUS, LLC FOR

CIVICREC ENTERPRISE RECREATION SOFTWARE
Recommendation:

1. Approve the consultant agreement with CivicPlus, LLC in the amount of $472,886 for CivicRec enterprise recreation software; and

2. Adopt a resolution amending the FY 2023-24 General Fund (Fund 010) Budget to appropriate an additional $108,942; and

3. Authorize the City Manager to execute and administer the consultant agreement with CivicPlus, LLC.

Public comment opened at 6:41 pm. There being no requests to speak, public comment closed.

MOTION:

Approving the recommended actions.

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

10. APPROVE THE AUGUST 23, 2023 CITY COUNCIL MEETING MINUTES

September 6, 2023
9 Recommendation:

Approve the August 23, 2023 City Council Meeting Minutes.

MOTION:

Approving the recommended action.

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

PUBLIC HEARINGS

14. ADOPT A CITYWIDE VEHICLE-MILES-TRAVELED (VMT) POLICY

INCLUSIVE OF ESTABLISHING VMT AS THE APPROPRIATE METRIC FOR

EVALUATING TRANSPORTATION-RELATED IMPACTS UNDER THE

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) AND

ESTABLISHING VMT SCREENING CRITERIA, VMT THRESHOLDS OF

SIGNIFICANCE, AND TRANSPORTATION DEMAND MANAGEMENT (TDM)

STRATEGIES
Recommendation:

1. Open/close public hearing; and

2. Adopt Resolution adopting Screening Criteria and Thresholds of Significance regarding the City's implementation of State Senate Bill 743 (SB 743) transition from Level-of-Service (LOS) to Vehicle-Miles-Traveled (VMT) as the metric for transportation analysis under the California Environmental Quality Act (CEQA) for development projects.

Principal Planner Adam Paszkowski and Development Services Director Jennifer Carman provided the report and presentation, along with Arthur Tram with TJKM Transportation Consultants.

The meeting recessed at 7:09 pm and reconvened at 7:19 pm.

The public hearing opened at 8:07 pm. The following people were called to speak:

Joe Baranowski (Zoom)
Armando Benavides (Zoom)
There being no further requests to speak, the public hearing closed.

September 6, 2023
10 SUBSTITUTE MOTION:

Approving the recommended action, including revisiting the VMT screening criteria. Motion failed for lack of a second.

RESULT: Failed
MOVER: Council Member Borgioli
SECONDER: None
AYES: None
NAYS: None
ABSTAIN: None
ABSENT: None
MOTION:

Denying the recommended actions and directing staff to come back in 3 to 6 months with a cost analysis and timing along with limited research for a trip reduction plan ordinance and revisit the VMT screening criteria.

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

15. ADOPT RESOLUTION AMENDING AND RESTATING THE CITY OF MORGAN HILL'S STATEWIDE COMMUNITY INFASTRUCTURE PROGRAM ("SCIP") Recommendation:

1. Open and Close Public Hearing; and

2. Adopt amended and restated resolution
Economic Development Director Matt Mahood provided the report.

The public hearing opened at 8:52 pm. There being no requests to speak, the public hearing closed.

September 6, 2023
11 MOTION:

Approving the recommended action.

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

OTHER BUSINESS

16. APPROVE CONDITIONAL FUNDING FOR THE MAGNOLIAS AFFORDABLE

HOUSING DEVELOPMENT BY FIRST COMMUNITY HOUSING AND EDEN

HOUSING (FCH-EDEN) FROM DESIGNATED HOUSING FUNDS
Recommendation:

Approve conditional funding for the FCH-Eden Housing Project, “The Magnolias,” in the amount of $600,000, contingent on FCH-Eden’s ability to obtain the remaining gap funds, and subject to an agreement negotiated by the City Attorney.

Housing Director Rebecca Garcia and Development Services Director Jennifer Carman provided a presentation and report. Louis Liss of Eden Housing answered questions.

Public comment opened at 9:28 pm. The following people were called to speak:

Victoria Lam (Zoom), on behalf of County Supervisor Sylvia Arenas Joe Baranowski (Zoom)
Bryan Espiritu (Zoom)
Kyle Zaylor (Zoom), on behalf of First Community Housing There being no further requests to speak, public comment closed.

MOTION:

Approving the recommended action.

RESULT: Passed
MOVER: Council Member Martinez Beltran
SECONDER: Council Member Borgioli
AYES: Mayor Pro Tem Spring, Council Member Martinez Beltran, Council Member Borgioli, Mayor Turner

September 6, 2023
12 NAYS: Council Member Librers
ABSTAIN: None
ABSENT: None

18. APPROVE CODE OF CONDUCT FOR PUBLIC MEETINGS IN THE COUNCIL

CHAMBER AND CONFERENCE ROOMS
Recommendation:

Approve City Council Policy, "Code of Conduct for Public Meetings in the Council Chamber and Conference Rooms"
City Attorney Donald Larkin presented the report.

Public comment opened at 9:54 pm. The following people were called to speak:

Doug Muirhead
Marby Lee
Joe Baranowski (Zoom)
Bryan Espiritu (Zoom)
There being no further requests to speak, public comment closed.

The Council provided feedback to staff. The policy will be reviewed, the feedback will be incorporated, and the policy will be brought back at the mid-year goal review workshop.

MOTION:

Continuing this item to the September 27, 2023 City Council meeting.

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

19. PROVIDE DIRECTION TO STAFF ON PROPOSED FUTURE COUNCIL

INITIATED AGENDA ITEMS
Recommendation:

Determine if the majority of the City Council want the following items agendized at a future meeting for discussion:

September 6, 2023
13 1. Consider prohibiting pedestrians on median islands; and

2. Consider restoring the use of natural gas in new construction.

Mayor Turner explained why he asked for the items to come forward.

Public comment opened at 10:09 pm. The following people were called to speak:

Margaret McCann (Zoom)
Steve Chappell
Marby Lee
Diya Kandhra (Zoom)
Dashiell Leeds (Zoom)
Ashley Sailor (Zoom), on behalf of Sofia Ruiz
Matthew Lundy (Zoom)
Bryan Espiritu (Zoom)
There being no further requests to speak, public comment closed.

MOTION:

Directing staff to bring both items back for discussion.

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

17. PROVIDE DIRECTION REGARDING CITY COUNCIL TERM LIMITS Recommendation:

Provide direction to staff regarding the drafting of an ordinance creating term limits that would be submitted to the voters in November 2024.

Public comment opened at 10:37 pm. The following people were called to speak:

Steve Chappell
Marby Lee
Bryan Espiritu (Zoom)
There being no further requests to speak, public comment closed.

MOTION:

Continuing this item to a future meeting undetermined.

September 6, 2023
14 RESULT: Passed
MOVER: Mayor Pro Tem Spring
SECONDER: Council Member Borgioli
AYES: Mayor Pro Tem Spring, Council Member Martinez Beltran, Council Member Borgioli, Mayor Turner, Council Member Librers
NAYS: None
ABSTAIN: None
ABSENT: None

FUTURE COUNCIL INITIATED AGENDA ITEMS
None.

ADJOURNMENT
There being no further business, Mayor Turner adjourned the meeting at 10:46 pm.

Minutes Prepared by:

Michelle Bigelow, City Clerk

6 CITY COUNCIL STAFF REPORT
MEETING DATE: October 4, 2023
PREPARED BY:

Matthew Mahood, Economic Development Director
APPROVED BY: City Manager

ADOPT RESOLUTION OF INTENTION TO RENEW THE MORGAN HILL

TOURISM BUSINESS IMPROVEMENT DISTRICT

RECOMMENDATION(S)
Adopt Resolution of Intention to Renew the Morgan Hill Tourism Business Improvement District (TBID).

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Maintaining and Enhancing Infrastructure
2022-2023 Strategic Priorities
Economic Development
Guiding Documents
Economic Blueprint
Morgan Hill 2035 General Plan
Bikeways Trails Parks and Recreation Masterplan
Downtown Specific Plan
REPORT NARRATIVE:

On January 23, 2019, the City Council adopted a resolution declaring the results of the majority protest proceedings and established the Morgan Hill Tourism Business Improvement District (MHTBID). The initial formation of the MHTBID was for a 5 year period. The MHTBID assessment, if not renewed, expires on February 28, 2024. The Adoption of this Resolution will result in a public meeting on November 1, 2023 and a public hearing on December 6, 2023 on the renewal of the Morgan Hill Tourism Business Improvement District (MHTBID) and the levy of assessments on lodging businesses. The renewed TBID is proposed to have a ten (10) year life, beginning March 1, 2024.

Background
The MHTBID is a benefit assessment district proposed to continue a revenue source to help fund marketing and sales and sports facility marketing and development programs for Morgan Hill lodging businesses. This approach has been used successfully in other destination areas throughout the state to improve tourism and drive demand for

6 additional room nights towards assessed lodging businesses. The renewed MHTBID includes all lodging businesses, existing and in the future, available for public occupancy located within the boundaries of the City of Morgan Hill.

Lodging business owners decided to pursue renewal of the MHTBID in order to continue a revenue source devoted to marketing Morgan Hill as a tourist, meeting and event destination. If renewed, the MHTBID would generate approximately $341,000 on an annual basis for promotion of travel and tourism specific to the City of Morgan Hill.

Tourism Business Improvement Districts
Tourism Business Improvement Districts (TBIDs) utilize the efficiencies of private sector operations in the market-based promotion of tourism. These special assessment districts allow lodging business owners to organize their efforts to increase tourism.

Lodging business owners within the TBID fund the TBID, and those funds are used to provide services that are desired by and benefit the lodging businesses within the TBID.

TBID benefits:
• Funds cannot be diverted for other government programs; • They are customized to fit the needs of each destination; • They allow for a wide range of services; including: destination marketing, tourism promotion, and sales lead generation;
• They are designed, created and governed by those who will pay the assessment; and
• They provide a stable funding source for tourism promotion.

In California, TBIDs are primarily formed pursuant to the Property and Business Improvement District Law of 1994 (94 Law). This law allows for the creation of special benefit assessment districts to raise funds within a specific geographic area. The key difference between TBIDs and other special benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the TBID.

MANAGEMENT DISTRICT PLAN
The Management District Plan (Attachment 1) includes the proposed boundary of the MHTBID, a service plan and budget and a proposed means of governance. The MHTBID will include all lodging businesses, existing and in the future, available for public occupancy located within the boundaries of the City of Morgan Hill.

The annual assessment rate is one and one half percent (1.5%) of gross short-term sleeping room rental revenue. During the MHTBID’s term, the assessment rate may be increased annually by the Owner’s Association upon approval from the Board of Directors by a maximum of one half of one percent (0.5%) of gross short-term sleeping room rental revenue per year. The maximum assessment rate may not exceed three percent (3%) of gross short-term sleeping room rental revenue. If the assessment rate

6 is increased, it may subsequently be decreased by a maximum of one half of one percent (0.5%) each year, but shall not be decreased below a minimum of one- and one-half percent (1.5%) of gross short-term sleeping room rental revenue. Any proposed assessment rate increase or decrease shall be included in the MHTBID annual report and shall not be effective until approved by the Morgan Hill City Council.

Based on the benefit received, assessments will not be collected on: stays of more than thirty (30) consecutive days or stays by any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty.

The renewed MHTBID will have a ten (10) year life, beginning March 1, 2024 or as soon as possible thereafter, and ending ten (10) years from its start date. The assessment will be implemented beginning March 1, 2024. Once per year, beginning on the anniversary of MHTBID renewal, there is a thirty (30) day period in which business owners paying fifty percent (50%) or more of the assessment may protest and begin proceedings to terminate the MHTBID.

The City will be responsible for collecting the assessment on a monthly basis (including any delinquencies, penalties and interest) from each lodging business located within the boundaries of the MHTBID. The City shall make all reasonable efforts to collect the assessments from each lodging business. The City shall forward the assessments to Visit Morgan Hill, which will have the responsibility of managing MHTBID programs as provided in this Management District Plan. The City shall be paid a fee equal to two percent (2%) of the amount of assessment collected to cover its costs of collection and administration.

MHTBID renewal PROCESS
October 4, 2023 RESOLUTION OF INTENTION HEARING
Upon the submission of a written petition, signed by the lodging business owners in the renewed MHTBID who will pay more than fifty percent (50%) of the assessments proposed to be levied, the City Council may initiate proceedings to renew the MHTBID by the adoption of a resolution expressing its intention to renew the MHTBID.

Petition Status: Petitions in favor of MHTBID renewal were submitted by 8 lodging businesses, which represent 78.66% of the total MHTBID assessment. This majority petition allows the Council to initiate proceedings for MHTBID renewal at the October 4, 2024 meeting.

By October 21, 2023 NOTICE
The 94 Law requires the City to mail a written notice to the owners of all lodging businesses proposed to be assessed within the MHTBID. Mailing the notice begins a mandatory forty-five (45) day period in which owners may protest MHTBID renewal.

November 1, 2023 PUBLIC MEETING AND INTRODUCTION/FIRST READING OF

6 ORDINANCE
Allow public testimony on the renewal of the MHTBID and levy of assessments.

At the public meeting, the City Council shall introduce and conduct the first reading of the ordinance renewing the MHTBID and continue levying the assessment.

December 6, 2023 FINAL PUBLIC HEARING AND SECOND READING/ADOPTION

OF THE ORDINANCE
If written protests are received from the owners of lodging businesses in the renewed MHTBID which will pay more than fifty percent (50%) of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such businesses shall be taken for a period of one (1) year from the date of the finding of a majority protest by the Council.

If the Council, following a public hearing, decides to establish the renewed MHTBID, the Council shall adopt a resolution of formation.

Following a successful public hearing, the City Council shall convene to hold a second reading of the ordinance renewing the MHTBID and continue levying the assessment. Upon successful passage of the ordinance, the MHTBID shall be renewed, and the ordinance shall go into effect thirty (30) days after successful passage of the ordinance.

COMMUNITY ENGAGEMENT:

Inform. This staff report serves to inform the community of the proposed recommendation to renew the MHTBID.

ALTERNATIVE ACTIONS:

The Council could choose not to adopt the Resolution of Intention. Staff does not recommend this option.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

On July 18, 2018, the City Council directed staff to proceed with the creation of a Morgan Hill Tourism Business Improvement District (MHTBID).

On November 7, 2018, the City Council approved the original District Management Plan (Plan) that identified the proposed MHTBID’s boundary, budget, services, and governance and directed staff to circulate the MHTBID Petition form.

On November 28, 2018, the Council approved the Resolution of Intention which allows

6 the Council to initiate proceedings for District formation.

On January 23, 2019, the Council adopted a resolution declaring the results of the majority protest proceedings and established the Morgan Hill Tourism Business Improvement District (MHTBID)
FISCAL AND RESOURCE IMPACT:

The City will receive a fee of two percent (2%) of the amount collected to cover its costs of administration. Because the MHTBID programs are intended to increase visitation to the City, there may be an increase in transient occupancy tax and sales tax collections.

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.

2024-2034
Prepared pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq. September 15, 2023

MORGAN HILL TOURISM BUSINESS

IMPROVEMENT DISTRICT

MANAGEMENT DISTRICT PLAN

Contents
I. OVERVIEW..........................................................................................................................................3 II. BACKGROUND .................................................................................................................................5 III. BOUNDARY ........................................................................................................................................6 IV. ASSESSMENT BUDGET AND SERVICES.................................................................................7 A. Annual Service Plan ............................................................................................................7 B. Annual Budget .....................................................................................................................9 C. California Constitutional Compliance ...............................................................................10 D. Assessment ........................................................................................................................12 E. Penalties and Interest .........................................................................................................13 F. Audits.................................................................................................................................13 G. Time and Manner for Collecting Assessments..................................................................13 V. GOVERNANCE................................................................................................................................14 A. Owners’ Association..........................................................................................................14 B. Brown Act and California Public Records Act Compliance .............................................14 C. Annual Report....................................................................................................................14 APPENDIX 1 – LAW.....................................................................................................................................16 APPENDIX 2 – ASSESSED BUSINESSES ..............................................................................................27 Prepared by
Civitas
(800)999-7781
www.civitasadvisors.com

MHTBID Management District Plan 3
September 15, 2023
I. OVERVIEW
Developed by the City of Morgan Hill (City) and Morgan Hill lodging businesses, the Morgan Hill Tourism Business Improvement District (MHTBID) is an assessment district proposed to continue to provide specific benefits to payors, by funding sales & marketing and sports facility marketing & development programs for assessed lodging businesses. This approach has been used successfully in other destination areas throughout the country to provide the benefit of increased demand for room night sales directly to payors. The MHTBID was initially created in 2019 for a five (5) year term. The City and Morgan Hill lodging businesses now wish to renew the MHTBID for a ten (10) year term.

Location: The Morgan Hill MHTBID includes all lodging businesses, existing and in the future, available for public occupancy located within the boundaries of the City of Morgan Hill, as shown on the map in Section IV.

Services: The MHTBID is designed to provide specific benefits directly to payors by increasing awareness and demand for room night sales. Sales & marketing and sports facility marketing & development programs will increase demand for overnight tourism and market payors as tourist, meeting and event destinations, thereby increasing demand for room night sales for assessed lodging businesses.

Budget: The total MHTBID annual assessment budget for the initial year of its ten (10) year operation is anticipated to be approximately $341,000. A similar budget is expected to apply to subsequent years, but this budget is expected to fluctuate as room sales do, as lodging businesses open and close, and if the assessment rate is increased or decreased pursuant to this Plan.

Cost: The annual assessment rate is one and one half percent (1.5%) of gross short-term sleeping room rental revenue. During the MHTBID’s term, the assessment rate may be increased annually by the Owner’s Association upon approval from the Board of Directors by a maximum of one half of one percent (0.5%) of gross short-term sleeping room rental revenue per year. The maximum assessment rate may not exceed three percent (3%) of gross short-term sleeping room rental revenue. If the assessment rate is increased, it may subsequently be decreased by a maximum of one half of one percent (0.5%) each year, but shall not be decreased below a minimum of one- and one-half percent (1.5%) of gross short-term sleeping room rental revenue. Any proposed assessment rate increase or decrease shall be included in the MHTBID annual report and shall not be effective until approved by the Morgan Hill City Council. Based on the benefit received, assessments will not be collected on: stays of more than thirty (30) consecutive days or stays by any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty. ………………………………………………………………...

Collection: The City will be responsible for collecting the assessment on a monthly basis (including any delinquencies, penalties and interest) from each lodging business located in the boundaries of the MHTBID. The City shall take all reasonable efforts to collect the assessments from each lodging business.

Duration: The MHTBID will have a ten (10) year life, beginning March 1, 2024 or as soon as possible thereafter, and ending ten (10) years from its start date. After ten (10) years,

MHTBID Management District Plan 4
September 15, 2023
the MHTBID may be renewed pursuant to Streets and Highways Code section 36660, if lodging business owners support continuing the MHTBID programs.

Management: Visit Morgan Hill (VMH) shall continue to serve as the MHTBID’s Owners’ Association. The Owners’ Association is charged with managing funds and implementing programs in accordance with this Plan, and must provide annual reports to the City Council within one-hundred and twenty (120) days of the MHTBID’s fiscal year (June 30).

MHTBID Management District Plan 5
September 15, 2023
II. BACKGROUND
TBIDs are an evolution of the traditional Business Improvement District. The first TBID was formed in West Hollywood, California in 1989. Since then, over 100 California destinations have followed suit. In recent years, other states have begun adopting the California model – Massachusetts, Montana, South Dakota, Washington, Colorado, Texas and Louisiana have adopted TBID laws. Several other states are in the process of adopting their own legislation. The cities of Wichita, Kansas and Newark, New Jersey used an existing business improvement district law to form a TBID . Additionally, some cities, like Portland, Oregon and Memphis, Tennessee have utilized their home rule powers to create TBIDs without a state law.

California’s TBIDs collectively
raise over $300 million
annually for local destination
marketing. With competitors
raising their budgets, and
increasing rivalry for visitor
dollars, it is important
that Morgan Hill lodging
businesses continue to invest
in stable, commerce-specific
marketing programs.

TBIDs utilize the efficiencies
of private sector operation in
the market-based promotion
of tourism districts. TBIDs allow tourism business owners to organize their efforts to increase commerce. Tourism business owners within the TBID pay an assessment and those funds are used to provide services that increase commerce.

In California, most TBIDs are formed pursuant to the Property and Business Improvement District Law of 1994. This law allows for the creation of a benefit assessment district to raise funds within a specific geographic area. The key difference between TBIDs and other benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the district.

There are many benefits to TBIDs:
• Funds must be spent on services and improvements that provide a specific benefit only to those who pay;
• Funds cannot be diverted to general government programs; • They are customized to fit the needs of payors in each destination; • They allow for a wide range of services;
• They are designed, created and governed by those who will pay the assessment; and • They provide a stable, long-term funding source for tourism promotion.

MHTBID Management District Plan 6
September 15, 2023
III. BOUNDARY
The MHTBID will include all lodging businesses, existing and in the future, available for public occupancy within the boundaries of the City of Morgan Hill, as shown in the map below.

Lodging business means: any structure, or any portion of any structure, which is occupied or intended or designed for occupancy by transient for dwelling, lodging, or sleeping purposes, and includes any hotel, inn, tourist home or house, dormitory, public or private club, recreational vehicle park, mobile home or house trailer at a fixed location located outside a mobile home park and not occupied by employees, operator or owner of said mobile home park, or other similar structure or portion thereof.

A complete listing of lodging businesses within the MHTBID can be found in Appendix 2.

MHTBID Management District Plan 7
September 15, 2023
IV. ASSESSMENT BUDGET AND SERVICES
A. Annual Service Plan
Assessment funds will be spent to provide specific benefits conferred or privileges granted directly to the payors that are not provided to those not charged, and which do not exceed the reasonable cost to the City of conferring the benefits or granting the privileges. The privileges and services provided with the MHTBID funds are sales & marketing and sports facility marketing & development programs available only to assessed lodging businesses.

A service plan assessment budget has been developed to deliver services that benefit the assessed businesses. A detailed annual assessment budget will be developed and approved by VMH. The table below illustrates the initial annual assessment budget allocations. These activities and allocations will also apply in subsequent years. The total initial assessment budget is estimated to be $341,000.

Although actual revenues will fluctuate due to market conditions, the proportional allocations of the budget shall remain the same. However, the City and the VMH board shall have the authority to adjust budget allocations between the categories by no more than fifteen percent (15%) of the total budget per year. A description of the proposed improvements and activities for the initial year of operation is below. The same activities are proposed for subsequent years. In the event of a legal challenge against the MHTBID, any and all assessment funds may be used for the costs of defending the MHTBID.

Each budget category includes all costs related to providing that service. For example, the sales & marketing budget includes the cost of staff time dedicated to overseeing and implementing the sales & marketing program. Staff time dedicated purely to administrative tasks is allocated to the administrative portion of the budget. The costs of an individual staff member may be allocated to multiple budget categories. The staffing levels necessary to provide the services below will be determined by VMH on an as-needed basis.

Sales & Marketing,
$238,700, 70%
Sports Facility Marketing
& Development, $37,510,
11%
Administration &
Operations,
$51,150, 15%
City Administration Fee,
$6,820, 2%
Contingency/Reserve,
$6,820, 2%
Initial Annual Assessment Budget
Allocations - $341,000

MHTBID Management District Plan 8
September 15, 2023
Sales and Marketing
A sales and marketing program will promote assessed lodging businesses as tourist, meeting, and event destinations. The sales and marketing program will have a central theme of promoting Morgan Hill as a desirable place for overnight visits. The program will have the goal of increasing demand for overnight visitation and room night sales at assessed lodging businesses, and may include the following activities:
• Internet marketing efforts to increase awareness and optimize internet presence to drive overnight visitation and room sales to assessed lodging businesses; • Print ads in magazines and newspapers, television ads, and radio ads targeted at potential visitors to drive overnight visitation and room sales to assessed lodging businesses; • Regional tourism promotion and marketing to benefit assessed lodging businesses; • Attendance of trade shows to promote assessed lodging businesses; • Sales blitzes for assessed lodging businesses;
• Familiarization tours of assessed lodging businesses; • Preparation and production of collateral promotional materials such as brochures, flyers and maps featuring assessed lodging businesses;
• Owners’ Association/Visit Morgan Hill staff attendance of professional industry conferences and affiliation events to promote assessed lodging businesses; • Lead generation activities designed to attract tourists and group events to assessed lodging businesses;
• Director of Sales and General Manager meetings to plan and coordinate tourism promotion efforts for assessed lodging businesses; and
• Development and maintenance of a website designed to promote assessed lodging businesses.

Sports Facility Marketing and Development
The sports facility marketing and development portion of the budget shall be utilized for the promotion and improvement of sports facilities, with a particular focus on supporting the sales and marketing efforts of lodging businesses in the MHTBID. The primary objective is to increase the desirability of the City of Morgan Hill as a place for overnight visits for sports opportunities, and may include the following activities:
• Sports marketing and promotions designed to increase demand for overnight visitation and room night sales at assessed lodging businesses;
• Financial incentives to maintain and attract new sporting events that have a significant impact on lodging business room night generation;
• Implementing improvements to existing sports facilities, specifically those utilized by overnight visitors, to create a visitor experience that will bring repeat visits to assessed lodging businesses.

Sports facility marketing and development funds shall not be used for ongoing maintenance and operations costs of existing and new sports facilities.

Administration and Operations
The administration and operations portion of the budget shall be utilized for administrative staffing costs, office costs, and other general administrative costs such as insurance, legal, and accounting fees.

City Administration Fee
The City of Morgan Hill shall be paid a fee equal to two percent (2%) of the amount of assessment collected to cover its costs of collection and administration.

MHTBID Management District Plan 9
September 15, 2023
Contingency/Reserve
The budget includes a contingency line item to account for uncollected assessments, if any. If there are contingency funds collected, they may be held in a reserve fund or utilized for other program, administration or renewal costs at the discretion of the VMH Board. Policies relating to contributions to the reserve fund, the target amount of the reserve fund, and expenditure of monies from the reserve fund shall be set by the VMH Board. Contingency/reserve funds may be spent on District programs or administrative and renewal costs in such proportions as determined by the VMH Board. The reserve fund may be used for the costs of renewing the MHTBID.

B. Annual Budget
The total ten (10) year assessment budget is projected at approximately $341,000 annually, or $6,138,000 through 2034 if the maximum assessment rate increases are adopted. A similar budget is expected to apply to subsequent years, but this budget is expected to fluctuate as room sales do, as lodging businesses open and close, and if the assessment rate is increased or decreased pursuant to this Plan.

The annual assessment rate is one and one half percent (1.5%) of gross short-term sleeping room rental revenue. During the MHTBID’s term, the assessment rate may be increased annually by the Owner’s Association upon approval from the Board of Directors by a maximum of one half of one percent (0.5%) of gross short-term sleeping room rental revenue per year. The maximum assessment rate may not exceed three percent (3%) of gross short-term sleeping room rental revenue. If the assessment rate is increased, it may subsequently be decreased by a maximum of one half of one percent (0.5%) each year, but shall not be decreased below a minimum of one- and one-half percent (1.5%) of gross short-term sleeping room rental revenue. Any proposed assessment rate increase or decrease shall be included in the MHTBID annual report and shall not be effective until approved by the Morgan Hill City Council.

The table below demonstrates the estimated annual budget with the assumption that the rates will not be increased during the MHTBID’s term.

Estimated Annual Budget if Maximum Assessment Rates Are Not Adopted* Year Sales &
Marketing
Sports Facility
Marketing &
Development
Administration
& Operations
City
Administrative
Fee
Contingency/
Reserve
Total
2024/2025 $238,700 $37,510 $51,150 $6,820 $6,820 $341,000 2025/2026 $238,700 $37,510 $51,150 $6,820 $6,820 $341,000 2026/2027 $238,700 $37,510 $51,150 $6,820 $6,820 $341,000 2027/2028 $238,700 $37,510 $51,150 $6,820 $6,820 $341,000 2028/2029 $238,700 $37,510 $51,150 $6,820 $6,820 $341,000 2029/2030 $238,700 $37,510 $51,150 $6,820 $6,820 $341,000 2030/2031 $238,700 $37,510 $51,150 $6,820 $6,820 $341,000 2031/2032 $238,700 $37,510 $51,150 $6,820 $6,820 $341,000 2032/2033 $238,700 $37,510 $51,150 $6,820 $6,820 $341,000 2033/2034 $238,700 $37,510 $51,150 $6,820 $6,820 $341,000 Total $2,387,000 $375,100 $511,500 $68,200 $68,200 $3,410,000

MHTBID Management District Plan 10
September 15, 2023
* A similar budget is expected to apply to subsequent years, but this budget is expected to fluctuate as room sales do, as lodging businesses open and close, and if the assessment rate is increased or decreased pursuant to this Plan.

The table below demonstrates the estimated annual budget with the assumption that the assessment rate will be increased at the earliest opportunity. This estimation is a required disclosure and is not the anticipated course of action. Alternate courses of action may be taken in regard to implementing the assessment rate increase other than what is demonstrated in the chart below, within the parameters of this Plan.

Estimated Annual Budget if Maximum Assessment Rates are Adopted* Year Sales &
Marketing
Sports Facility
Marketing &
Development
Administration
& Operations
City
Administrative
Fee
Contingency/
Reserve
Total
2024/2025 $238,700 $37,510 $51,150 $6,820 $6,820 $341,000 2025/2026 $318,267 $50,013 $68,200 $9,093 $9,093 $454,667 2026/2027 $397,833 $62,517 $85,250 $11,367 $11,367 $568,333 2027/2028 $477,400 $75,020 $102,300 $13,640 $13,640 $682,000 2028/2029 $477,400 $75,020 $102,300 $13,640 $13,640 $682,000 2029/2030 $477,400 $75,020 $102,300 $13,640 $13,640 $682,000 2030/2031 $477,400 $75,020 $102,300 $13,640 $13,640 $682,000 2031/2032 $477,400 $75,020 $102,300 $13,640 $13,640 $682,000 2032/2033 $477,400 $75,020 $102,300 $13,640 $13,640 $682,000 2033/2034 $477,400 $75,020 $102,300 $13,640 $13,640 $682,000 Total $4,296,600 $675,180 $920,700 $122,760 $122,760 $6,138,000 * A similar budget is expected to apply to subsequent years, but this budget is expected to fluctuate as room sales do, as lodging businesses open and close, and if the assessment rate is increased or decreased pursuant to this Plan.

C. California Constitutional Compliance
The MHTBID assessment is not a property-based assessment subject to the requirements of Proposition 218. Courts have found Proposition 218 limited the term ‘assessments’ to levies on real property.1 Rather, the MHTBID assessment is a business-based assessment, and is subject to Proposition 26. Pursuant to Proposition 26 all levies are a tax unless they fit one of seven exceptions.

Two of these exceptions apply to the MHTBID, a “specific benefit” and a “specific government service.” Both require that the costs of benefits or services do not exceed the reasonable costs to the City of conferring the benefits or providing the services.

1. Specific Benefit
Proposition 26 requires that assessment funds be expended on, “a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.”2 The services in this Plan are designed to provide targeted benefits directly to assessed businesses, and are intended only to provide benefits and services directly to those businesses paying 1 Jarvis v. the City of San Diego 72 Cal App. 4th 230
2 Cal. Const. art XIII C § 1(e)(1)

MHTBID Management District Plan 11
September 15, 2023
the assessment. These services are tailored not to serve the general public, businesses in general, or parcels of land, but rather to serve the specific businesses within the MHTBID. The activities described in this Plan are specifically targeted to increase demand for room night sales for assessed lodging businesses within the boundaries of the MHTBID, and are narrowly tailored. MHTBID funds will be used exclusively to provide the specific benefit of increased demand for room night sales directly to the assessees. Assessment funds shall not be used to feature non-assessed lodging businesses in MHTBID programs, or to directly generate sales for non-assessed businesses. The activities paid for from assessment revenues are business services constituting and providing specific benefits to the assessed businesses. Nothing in this Plan limits the ability of the Owners’ Association to enter into private contracts with non-assessed lodging businesses for the provision of services to those businesses.

The assessment imposed by this MHTBID is for a specific benefit conferred directly to the payors that is not provided to those not charged. The specific benefit conferred directly to the payors is an increase in demand for room night sales. The specific benefit of an increase in demand for room night sales for assessed lodging businesses will be provided only to lodging businesses paying the district assessment, with marketing & sales and sports facility marketing & development programs promoting lodging businesses paying the MHTBID assessment. The marketing & sales and sports facility marketing & development programs will be designed to increase demand for room night sales at each assessed lodging businesses. Because they are necessary to provide the marketing & sales and sports facility marketing & development programs that specifically benefit the assessed lodging businesses, the administration and contingency services also provide the specific benefit of increased demand for room night sales to the assessed lodging businesses.

Although the MHTBID, in providing specific benefits to payors, may produce incidental benefits to non-paying businesses, the incidental benefit does not preclude the services from being considered a specific benefit. The legislature has found that, “A specific benefit is not excluded from classification as a ‘specific benefit’ merely because an indirect benefit to a nonpayor occurs incidentally and without cost to the payor as a consequence of providing the specific benefit to the payor.”3

2. Specific Government Service
The assessment may also be utilized to provide, “a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.”4 The legislature has recognized that marketing and promotions services like those to be provided by the MHTBID are government services within the meaning of Proposition 265. Further, the legislature has determined that “a specific government service is not excluded from classification as a ‘specific government service’ merely because an indirect benefit to a nonpayor occurs incidentally and without cost to the payor as a consequence of providing the specific government service to the payor.”6

3. Reasonable Cost
MHTBID services will be implemented carefully to ensure they do not exceed the reasonable cost of such services. The full amount assessed will be used to provide the services described herein. Funds will be managed by VMH, and reports submitted on an annual basis to the City. Only assessed lodging businesses will be featured in marketing materials, receive sales leads generated from MHTBID3 Government Code § 53758(a)
4 Cal. Const. art XIII C § 1(e)(2)
5 Government Code § 53758(b)
6 Government Code § 53758(b)

MHTBID Management District Plan 12
September 15, 2023
funded activities, be featured in advertising campaigns, and benefit from other MHTBID-funded services. Non-assessed lodging businesses will not receive these, nor any other, MHTBID-funded services and benefits.

The MHTBID-funded programs are all targeted directly at and feature only assessed lodging businesses. It is, however, possible that there will be a spill over benefit to non-assessed businesses.

If non-assessed lodging businesses receive incremental room nights, that portion of the promotion or program generating those room nights shall be paid with non-MHTBID funds. MHTBID funds shall only be spent to benefit the assessed lodging businesses, and shall not be spent on that portion of any program which directly generates incidental room nights for non-assessed businesses.

D. Assessment
The annual assessment rate is one and one half percent (1.5%) of gross short-term sleeping room rental revenue. During the MHTBID’s term, the assessment rate may be increased by the Owners’ Association to a maximum rate of three percent (3%) of gross short-term sleeping room rental revenue for assessed lodging businesses. The maximum increase or decrease in any year shall be one half of one percent (0.5%). If the assessment rate is increased, it may subsequently be decreased by a maximum of one half of one percent (0.5%) each year, but shall not be decreased below a minimum of one and one half percent (1.5%) of gross short-term sleeping room rental revenue. Based on the benefit received, assessments will not be collected on: stays of more than thirty (30) consecutive days or stays by any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty.

The assessment was calculated based on the total cost of the activities to be provided for the benefit of the lodging businesses within the MHTBID with costs allocated based on the proportional benefit conferred to each lodging business. Activities funded by the MHTBID are specifically targeted to increase demand for room nights at assessed lodging businesses. All room night sales do not represent the same benefit to the payors. For example, a higher priced room night is of greater benefit than a lower priced room night because the assesse derives greater revenue. To account for this benefit differential and to make sure the benefits are proportional, an assessment formula based on a percentage of revenue has been selected. The proposed formula accurately reflects greater benefit to assessed lodging businesses with higher priced room nights.

The term “gross short-term sleeping room rental revenue” as used herein means: the consideration charged, whether or not received, for the occupancy of space in a lodging business valued in money, whether to be received in money, goods, labor, or otherwise, including all receipts, cash, credits and property, and services of any kind or nature, without any deduction therefrom whatsoever. Gross short-term sleeping room rental revenue shall not include any federal, state or local taxes collected, including but not limited to transient occupancy taxes.

The assessment is levied upon and a direct obligation of the assessed lodging business. However, the assessed lodging business may, at its discretion, pass the assessment on to transients. The amount of assessment, if passed on to each transient, shall be disclosed in advance and separately stated from the amount of rent charged and any other applicable taxes, and each transient shall receive a receipt for payment from the business. If the MHTBID assessment is identified separately it shall be disclosed as the “MHTBID Assessment.” As an alternative, the disclosure may include the amount of the MHTBID assessment and the amount of the assessment imposed pursuant to the California Tourism Marketing Act, Government Code §13995 et seq. and shall be disclosed as the “Tourism Assessment.” The assessment is imposed solely upon, and is the sole obligation of the assessed lodging business

MHTBID Management District Plan 13
September 15, 2023
even if it is passed on to transients. The assessment shall not be considered revenue for calculation of transient occupancy taxes.

Bonds shall not be issued.

E. Penalties and Interest
The MHTBID shall reimburse the City of Morgan Hill for any costs associated with collecting unpaid assessments. If sums in excess of the delinquent MHTBID assessment are sought to be recovered in the same collection action by the City, the MHTBID shall bear its pro rata share of such collection costs. Assessed lodging businesses which are delinquent in paying the assessment shall be responsible for paying:

1. Original Delinquency: Any lodging business that fails to remit any assessment imposed within the time required shall pay a penalty of ten percent (10%) of the amount of the assessment in addition to the amount of the assessment.

2. Continued Delinquency: Any lodging business that fails to remit any delinquent remittance on or before a period of thirty (30) days following the date on which the remittance first became delinquent shall pay a second delinquency penalty of ten percent (10%) of the amount of the assessment in addition to the amount of the assessment and the ten percent (10%) penalty first imposed.

3. Fraud: If the City determines that the nonpayment of any remittance due is due to fraud, a penalty of twenty-five percent (25%) of the amount of the assessment shall be added thereto in addition to the penalties stated in paragraphs in 1 and 2 of this subsection E.

4. Interest: In addition to the penalties imposed, any lodging business who fails to remit any assessment imposed shall pay interest at the rate of one-half of one percent (0.5%) or fraction thereof on the amount the assessment, exclusive of penalties, from the date on which the remittance first became delinquent until paid.

F. Audits
The City may audit those records kept by the lodging business at any time upon reasonable notice to the lodging business. If the audit reveals an underpayment of assessments in excess of ten percent (10%) of the total amount owed to the City for any consecutive three (3) month period during the audit period, the lodging business shall pay the City’s actual costs to perform the audit as well as the full amounts, plus penalties and interest of assessment, that the audit reveals should have been remitted to the City.

G. Time and Manner for Collecting Assessments
The MHTBID assessment will be implemented beginning March 1, 2023, or as soon as possible thereafter, and will continue for ten (10) years from the start date. The City will be responsible for collecting the assessment on a monthly basis (including any delinquencies, penalties and interest) from each lodging business. The City shall take all reasonable efforts to collect the assessments from each lodging business. The City shall forward the assessments collected to the Owners’ Association.

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V. GOVERNANCE
A. Owners’ Association
The City Council, through adoption of this Management District Plan, has the right, pursuant to Streets and Highways Code §36651, to identify the body that shall implement the proposed program, which shall be the Owners’ Association of the MHTBID as defined in Streets and Highways Code §36612. The City Council has determined that Visit Morgan Hill will continue to serve as the Owners’ Association for the MHTBID.

The VMH Board shall be comprised of seven (7) or nine (9) directors. Among the directors:
• Up to four (4) but not less than three (3) directors shall be owners or approved managers of lodging businesses paying the MHTBID assessment; and
• Two (2) directors shall be City of Morgan Hill staff members representing Community Services and Economic Development and shall be appointed by the Morgan Hill City Council; and
• Up to three (3) but not less than one (1) director(s) shall represent:
o A winery located in the Morgan Hill region, be in good standing with the Wineries Association of Santa Clara County; and/or
o An entity associated with sports recreation tourism involved in Morgan Hill; and/or o The community at large with an interest in tourism.

B. Brown Act and California Public Records Act Compliance An Owners’ Association is a private entity and may not be considered a public entity for any purpose, nor may its board members or staff be considered to be public officials for any purpose. The Owners’ Association is, however, subject to government regulations relating to transparency, namely the Ralph M. Brown Act and the California Public Records Act. These regulations are designed to promote public accountability. The Owners’ Association acts as a legislative body under the Ralph M. Brown Act (Government Code §54950 et seq.). Thus, meetings of the Board and certain committees must be held in compliance with the public notice and other requirements of the Brown Act. Accordingly, the Owners’ Association shall publicly report any action taken and the vote or abstention on that action of each member present for the action. The Owners’ Association is also subject to the record keeping and disclosure requirements of the California Public Records Act.

C. Annual Report
VMH shall present an annual report at the end of each year of operation to the City Council pursuant to Streets and Highways Code §36650 (see Appendix 1) within one hundred-twenty (120) days of the MHTBID’s fiscal year (June 30). The annual report shall include:
• Any proposed changes in the boundaries of the improvement district or in any benefit zones or classification of businesses within the district.
• The improvements and activities to be provided for that fiscal year. • An estimate of the cost of providing the improvements and the activities for that fiscal year. • The method and basis of levying the assessment, including any assessment rate increases or decreases and implementation date, in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for that fiscal year.
• The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year.

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• The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part.

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APPENDIX 1 – LAW
*** THIS DOCUMENT IS CURRENT THROUGH THE 2023 SUPPLEMENT *** (ALL 2022 LEGISLATION)

STREETS AND HIGHWAYS CODE
DIVISION 18. PARKING
PART 7. PROPERTY AND BUSINESS IMPROVEMENT DISTRICT LAW OF 1994 CHAPTER 1. General Provisions
ARTICLE 1. Declarations
36600. Citation of part
This part shall be known and may be cited as the “Property and Business Improvement District Law of 1994.” 36601. Legislative findings and declarations; Legislative guidance The Legislature finds and declares all of the following:
(a) Businesses located and operating within business districts in some of this state’s communities are economically disadvantaged, are underutilized, and are unable to attract customers due to inadequate facilities, services, and activities in the business districts. (b) It is in the public interest to promote the economic revitalization and physical maintenance of business districts in order to create jobs, attract new businesses, and prevent the erosion of the business districts. (c) It is of particular local benefit to allow business districts to fund business related improvements, maintenance, and activities through the levy of assessments upon the businesses or real property that receive benefits from those improvements.
(d) Assessments levied for the purpose of conferring special benefit upon the real property or a specific benefit upon the businesses in a business district are not taxes for the general benefit of a city, even if property, businesses, or persons not assessed receive incidental or collateral effects that benefit them. (e) Property and business improvement districts formed throughout this state have conferred special benefits upon properties and businesses within their districts and have made those properties and businesses more useful by providing the following benefits:
(1) Crime reduction. A study by the Rand Corporation has confirmed a 12-percent reduction in the incidence of robbery and an 8-percent reduction in the total incidence of violent crimes within the 30 districts studied.
(2) Job creation.
(3) Business attraction.
(4) Business retention.
(5) Economic growth.
(6) New investments.
(f) With the dissolution of redevelopment agencies throughout the state, property and business improvement districts have become even more important tools with which communities can combat blight, promote economic opportunities, and create a clean and safe environment. (g) Since the enactment of this act, the people of California have adopted Proposition 218, which added Article XIII D to the Constitution in order to place certain requirements and restrictions on the formation of, and activities, expenditures, and assessments by property-based districts. Article XIII D of the Constitution provides that property-based districts may only levy assessments for special benefits. (h) The act amending this section is intended to provide the Legislature’s guidance with regard to this act, its interaction with the provisions of Article XIII D of the Constitution, and the determination of special benefits in property-based districts.
(1) The lack of legislative guidance has resulted in uncertainty and inconsistent application of this act, which discourages the use of assessments to fund needed improvements, maintenance, and activities in property-based districts, contributing to blight and other underutilization of property. (2) Activities undertaken for the purpose of conferring special benefits upon property to be assessed inherently produce incidental or collateral effects that benefit property or persons not assessed.

Therefore, for special benefits to exist as a separate and distinct category from general benefits, the

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incidental or collateral effects of those special benefits are inherently part of those special benefits.

The mere fact that special benefits produce incidental or collateral effects that benefit property or persons not assessed does not convert any portion of those special benefits or their incidental or collateral effects into general benefits.
(3) It is of the utmost importance that property-based districts created under this act have clarity regarding restrictions on assessments they may levy and the proper determination of special benefits.

Legislative clarity with regard to this act will provide districts with clear instructions and courts with legislative intent regarding restrictions on property-based assessments, and the manner in which special benefits should be determined.
36602. Purpose of part
The purpose of this part is to supplement previously enacted provisions of law that authorize cities to levy assessments within property and business improvement districts, to ensure that those assessments conform to all constitutional requirements and are determined and assessed in accordance with the guidance set forth in this act. This part does not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or the raising of revenue for these purposes.
36603. Preemption of authority or charter city to adopt ordinances levying assessments Nothing in this part is intended to preempt the authority of a charter city to adopt ordinances providing for a different method of levying assessments for similar or additional purposes from those set forth in this part. A property and business improvement district created pursuant to this part is expressly exempt from the provisions of the Special Assessment Investigation, Limitation and Majority Protest Act of 1931 (Division 4 (commencing with Section 2800)). 36603.5. Part prevails over conflicting provisions
Any provision of this part that conflicts with any other provision of law shall prevail over the other provision of law, as to districts created under this part.
36604. Severability
This part is intended to be construed liberally and, if any provision is held invalid, the remaining provisions shall remain in full force and effect. Assessments levied under this part are not special taxes.

ARTICLE 2. Definitions
36606. “Activities”
“Activities” means, but is not limited to, all of the following that benefit businesses or real property in the district:
(a) Promotion of public events.
(b) Furnishing of music in any public place.
(c) Promotion of tourism within the district.
(d) Marketing and economic development, including retail retention and recruitment. (e) Providing security, sanitation, graffiti removal, street and sidewalk cleaning, and other municipal services supplemental to those normally provided by the municipality. (f) Other services provided for the purpose of conferring special benefit upon assessed real property or specific benefits upon assessed businesses located in the district. 36606.5. “Assessment”
“Assessment” means a levy for the purpose of acquiring, constructing, installing, or maintaining improvements and providing activities that will provide certain benefits to properties or businesses located within a property and business improvement district.
36607. “Business”
“Business” means all types of businesses and includes financial institutions and professions.

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36608. “City”
“City” means a city, county, city and county, or an agency or entity created pursuant to Article 1 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code, the public member agencies of which includes only cities, counties, or a city and county, or the State of California. 36609. “City council”
“City council” means the city council of a city or the board of supervisors of a county, or the agency, commission, or board created pursuant to a joint powers agreement and which is a city within the meaning of this part. 36609.4. “Clerk”
“Clerk” means the clerk of the legislative body.
36609.5. “General benefit”
“General benefit” means, for purposes of a property-based district, any benefit that is not a “special benefit” as defined in Section 36615.5.
36610. “Improvement”
“Improvement” means the acquisition, construction, installation, or maintenance of any tangible property with an estimated useful life of five years or more including, but not limited to, the following:
(a) Parking facilities.
(b) Benches, booths, kiosks, display cases, pedestrian shelters and signs. (c) Trash receptacles and public restrooms.
(d) Lighting and heating facilities.
(e) Decorations.
(f) Parks.
(g) Fountains.
(h) Planting areas.
(i) Closing, opening, widening, or narrowing of existing streets. (j) Facilities or equipment, or both, to enhance security of persons and property within the district. (k) Ramps, sidewalks, plazas, and pedestrian malls.
(l) Rehabilitation or removal of existing structures.
36611. “Management district plan”; “Plan”
“Management district plan” or “plan” means a proposal as defined in Section 36622. 36612. “Owners’ association”
“Owners’ association” means a private nonprofit entity that is under contract with a city to administer or implement improvements, maintenance, and activities specified in the management district plan. An owners’ association may be an existing nonprofit entity or a newly formed nonprofit entity. An owners’ association is a private entity and may not be considered a public entity for any purpose, nor may its board members or staff be considered to be public officials for any purpose. Notwithstanding this section, an owners’ association shall comply with the Ralph M. Brown Act (Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code), at all times when matters within the subject matter of the district are heard, discussed, or deliberated, and with the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code), for all records relating to activities of the district.
36614. “Property”
“Property” means real property situated within a district.

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36614.5. “Property and business improvement district”; “District” “Property and business improvement district,” or “district,” means a property and business improvement district established pursuant to this part.
36614.6. “Property-based assessment”
“Property-based assessment” means any assessment made pursuant to this part upon real property. 36614.7. “Property-based district”
“Property-based district” means any district in which a city levies a property-based assessment. 36615. “Property owner”; “Business owner”; “Owner”
“Property owner” means any person shown as the owner of land on the last equalized assessment roll or otherwise known to be the owner of land by the city council. “Business owner” means any person recognized by the city as the owner of the business. “Owner” means either a business owner or a property owner. The city council has no obligation to obtain other information as to the ownership of land or businesses, and its determination of ownership shall be final and conclusive for the purposes of this part. Wherever this part requires the signature of the property owner, the signature of the authorized agent of the property owner shall be sufficient. Wherever this part requires the signature of the business owner, the signature of the authorized agent of the business owner shall be sufficient. 36615.5. “Special benefit”
(a) “Special benefit” means, for purposes of a property-based district, a particular and distinct benefit over and above general benefits conferred on real property located in a district or to the public at large. Special benefit includes incidental or collateral effects that arise from the improvements, maintenance, or activities of property-based districts even if those incidental or collateral effects benefit property or persons not assessed. Special benefit excludes general enhancement of property value.
(b) “Special benefit” also includes, for purposes of a property-based district, a particular and distinct benefit provided directly to each assessed parcel within the district. Merely because parcels throughout an assessment district share the same special benefits does not make the benefits general. 36616. “Tenant”
“Tenant” means an occupant pursuant to a lease of commercial space or a dwelling unit, other than an owner.

ARTICLE 3. Prior Law
36617. Alternate method of financing certain improvements and activities; Effect on other provisions This part provides an alternative method of financing certain improvements and activities. The provisions of this part shall not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or the raising of revenue for these purposes. Every improvement area established pursuant to the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500) of this division) is valid and effective and is unaffected by this part.

CHAPTER 2. Establishment
36620. Establishment of property and business improvement district A property and business improvement district may be established as provided in this chapter. 36620.5. Requirement of consent of city council

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A county may not form a district within the territorial jurisdiction of a city without the consent of the city council of that city. A city may not form a district within the unincorporated territory of a county without the consent of the board of supervisors of that county. A city may not form a district within the territorial jurisdiction of another city without the consent of the city council of the other city.
36621. Initiation of proceedings; Petition of property or business owners in proposed district (a) Upon the submission of a written petition, signed by the property or business owners in the proposed district who will pay more than 50 percent of the assessments proposed to be levied, the city council may initiate proceedings to form a district by the adoption of a resolution expressing its intention to form a district.

The amount of assessment attributable to property or a business owned by the same property or business owner that is in excess of 40 percent of the amount of all assessments proposed to be levied, shall not be included in determining whether the petition is signed by property or business owners who will pay more than 50 percent of the total amount of assessments proposed to be levied. (b) The petition of property or business owners required under subdivision (a) shall include a summary of the management district plan. That summary shall include all of the following:
(1) A map showing the boundaries of the district.
(2) Information specifying where the complete management district plan can be obtained. (3) Information specifying that the complete management district plan shall be furnished upon request.
(c) The resolution of intention described in subdivision (a) shall contain all of the following:
(1) A brief description of the proposed improvements, maintenance, and activities, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property or businesses within the district, a statement as to whether bonds will be issued, and a description of the exterior boundaries of the proposed district, which may be made by reference to any plan or map that is on file with the clerk. The descriptions and statements do not need to be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements, maintenance, and activities, and the location and extent of the proposed district. (2) A time and place for a public hearing on the establishment of the property and business improvement district and the levy of assessments, which shall be consistent with the requirements of Section 36623.
36622. Contents of management district plan
The management district plan shall include, but is not limited to, all of the following:
(a) If the assessment will be levied on property, a map of the district in sufficient detail to locate each parcel of property and, if businesses are to be assessed, each business within the district. If the assessment will be levied on businesses, a map that identifies the district boundaries in sufficient detail to allow a business owner to reasonably determine whether a business is located within the district boundaries. If the assessment will be levied on property and businesses, a map of the district in sufficient detail to locate each parcel of property and to allow a business owner to reasonably determine whether a business is located within the district boundaries.
(b) The name of the proposed district.
(c) A description of the boundaries of the district, including the boundaries of benefit zones, proposed for establishment or extension in a manner sufficient to identify the affected property and businesses included, which may be made by reference to any plan or map that is on file with the clerk. The boundaries of a proposed property assessment district shall not overlap with the boundaries of another existing property assessment district created pursuant to this part. This part does not prohibit the boundaries of a district created pursuant to this part to overlap with other assessment districts established pursuant to other provisions of law, including, but not limited to, the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500)). This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with another business assessment district created pursuant to this part. This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with a property assessment district created pursuant to this part. (d) The improvements, maintenance, and activities proposed for each year of operation of the district and the estimated cost thereof. If the improvements, maintenance, and activities proposed for each year of operation are the same, a description of the first year’s proposed improvements, maintenance, and activities and a

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statement that the same improvements, maintenance, and activities are proposed for subsequent years shall satisfy the requirements of this subdivision.
(e) The total annual amount proposed to be expended for improvements, maintenance, or activities, and debt service in each year of operation of the district. If the assessment is levied on businesses, this amount may be estimated based upon the assessment rate. If the total annual amount proposed to be expended in each year of operation of the district is not significantly different, the amount proposed to be expended in the initial year and a statement that a similar amount applies to subsequent years shall satisfy the requirements of this subdivision.
(f) The proposed source or sources of financing, including the proposed method and basis of levying the assessment in sufficient detail to allow each property or business owner to calculate the amount of the assessment to be levied against their property or business. The plan also shall state whether bonds will be issued to finance improvements.
(g) The time and manner of collecting the assessments.
(h) The specific number of years in which assessments will be levied. In a new district, the maximum number of years shall be five. Upon renewal, a district shall have a term not to exceed 10 years. Notwithstanding these limitations, a district created pursuant to this part to finance capital improvements with bonds may levy assessments until the maximum maturity of the bonds. The management district plan may set forth specific increases in assessments for each year of operation of the district. (i) The proposed time for implementation and completion of the management district plan. (j) Any proposed rules and regulations to be applicable to the district. (k)
(1) A list of the properties or businesses to be assessed, including the assessor’s parcel numbers for properties to be assessed, and a statement of the method or methods by which the expenses of a district will be imposed upon benefited real property or businesses, in proportion to the benefit received by the property or business, to defray the cost thereof. (2) In a property-based district, the proportionate special benefit derived by each identified parcel shall be determined exclusively in relationship to the entirety of the capital cost of a public improvement, the maintenance and operation expenses of a public improvement, or the cost of the activities. An assessment shall not be imposed on any parcel that exceeds the reasonable cost of the proportional special benefit conferred on that parcel. Only special benefits are assessable, and a property-based district shall separate the general benefits, if any, from the special benefits conferred on a parcel. Parcels within a property-based district that are owned or used by any city, public agency, the State of California, or the United States shall not be exempt from assessment unless the governmental entity can demonstrate by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit. The value of any incidental, secondary, or collateral effects that arise from the improvements, maintenance, or activities of a property-based district and that benefit property or persons not assessed shall not be deducted from the entirety of the cost of any special benefit or affect the proportionate special benefit derived by each identified parcel. (3) In a property-based district, properties throughout the district may share the same special benefits. In a district with boundaries that define which parcels are to receive improvements, maintenance, or activities over and above those services provided by the city, the improvements, maintenance, or activities themselves may constitute a special benefit. The city may impose assessments that are less than the proportional special benefit conferred, but shall not impose assessments that exceed the reasonable costs of the proportional special benefit conferred. Because one or more parcels pay less than the special benefit conferred does not necessarily mean that other parcels are assessed more than the reasonable cost of their special benefit. (l) In a property-based district, a detailed engineer’s report prepared by a registered professional engineer certified by the State of California supporting all assessments contemplated by the management district plan. (m) Any other item or matter required to be incorporated therein by the city council. 36623. Procedure to levy assessment
(a) If a city council proposes to levy a new or increased property assessment, the notice and protest and hearing procedure shall comply with Section 53753 of the Government Code. (b) If a city council proposes to levy a new or increased business assessment, the notice and protest and hearing procedure shall comply with Section 54954.6 of the Government Code, except that notice shall be mailed to the owners of the businesses proposed to be assessed. A protest may be made orally or in writing by any interested person. Every written protest shall be filed with the clerk at or before the time fixed for the

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public hearing. The city council may waive any irregularity in the form or content of any written protest. A written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Each written protest shall contain a description of the business in which the person subscribing the protest is interested sufficient to identify the business and, if a person subscribing is not shown on the official records of the city as the owner of the business, the protest shall contain or be accompanied by written evidence that the person subscribing is the owner of the business or the authorized representative. A written protest that does not comply with this section shall not be counted in determining a majority protest. If written protests are received from the owners or authorized representatives of businesses in the proposed district that will pay 50 percent or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than 50 percent, no further proceedings to levy the proposed assessment against such businesses, as contained in the resolution of intention, shall be taken for a period of one year from the date of the finding of a majority protest by the city council. (c) If a city council proposes to conduct a single proceeding to levy both a new or increased property assessment and a new or increased business assessment, the notice and protest and hearing procedure for the property assessment shall comply with subdivision (a), and the notice and protest and hearing procedure for the business assessment shall comply with subdivision (b). If a majority protest is received from either the property or business owners, that respective portion of the assessment shall not be levied. The remaining portion of the assessment may be levied unless the improvement or other special benefit was proposed to be funded by assessing both property and business owners.
36624. Changes to proposed assessments
At the conclusion of the public hearing to establish the district, the city council may adopt, revise, change, reduce, or modify the proposed assessment or the type or types of improvements, maintenance, and activities to be funded with the revenues from the assessments. Proposed assessments may only be revised by reducing any or all of them. At the public hearing, the city council may only make changes in, to, or from the boundaries of the proposed property and business improvement district that will exclude territory that will not benefit from the proposed improvements, maintenance, and activities. Any modifications, revisions, reductions, or changes to the proposed assessment district shall be reflected in the notice and map recorded pursuant to Section 36627. 36625. Resolution of formation
(a) If the city council, following the public hearing, decides to establish a proposed property and business improvement district, the city council shall adopt a resolution of formation that shall include, but is not limited to, all of the following:
(1) A brief description of the proposed improvements, maintenance, and activities, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property, businesses, or both within the district, a statement on whether bonds will be issued, and a description of the exterior boundaries of the proposed district, which may be made by reference to any plan or map that is on file with the clerk. The descriptions and statements need not be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements, maintenance, and activities and the location and extent of the proposed district. (2) The number, date of adoption, and title of the resolution of intention. (3) The time and place where the public hearing was held concerning the establishment of the district.
(4) A determination regarding any protests received. The city shall not establish the district or levy assessments if a majority protest was received.
(5) A statement that the properties, businesses, or properties and businesses in the district established by the resolution shall be subject to any amendments to this part. (6) A statement that the improvements, maintenance, and activities to be conferred on businesses and properties in the district will be funded by the levy of the assessments. The revenue from the levy of assessments within a district shall not be used to provide improvements, maintenance, or activities outside the district or for any purpose other than the purposes specified in the resolution of intention, as modified by the city council at the hearing concerning establishment of the district.

Notwithstanding the foregoing, improvements and activities that must be provided outside the district boundaries to create a special or specific benefit to the assessed parcels or businesses may be provided, but shall be limited to marketing or signage pointing to the district.

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(7) A finding that the property or businesses within the area of the property and business improvement district will be benefited by the improvements, maintenance, and activities funded by the proposed assessments, and, for a property-based district, that property within the district will receive a special benefit.
(8) In a property-based district, the total amount of all special benefits to be conferred on the properties within the property-based district.
(b) The adoption of the resolution of formation and, if required, recordation of the notice and map pursuant to Section 36627 shall constitute the levy of an assessment in each of the fiscal years referred to in the management district plan.
36627. Notice and assessment diagram
Following adoption of the resolution establishing district assessments on properties pursuant to Section 36625, the clerk shall record a notice and an assessment diagram pursuant to Section 3114. No other provision of Division 4.5 (commencing with Section 3100) applies to an assessment district created pursuant to this part. 36628. Establishment of separate benefit zones within district; Categories of businesses The city council may establish one or more separate benefit zones within the district based upon the degree of benefit derived from the improvements or activities to be provided within the benefit zone and may impose a different assessment within each benefit zone. If the assessment is to be levied on businesses, the city council may also define categories of businesses based upon the degree of benefit that each will derive from the improvements or activities to be provided within the district and may impose a different assessment or rate of assessment on each category of business, or on each category of business within each zone. 36628.5. Assessments on businesses or property owners
The city council may levy assessments on businesses or on property owners, or a combination of the two, pursuant to this part. The city council shall structure the assessments in whatever manner it determines corresponds with the distribution of benefits from the proposed improvements, maintenance, and activities, provided that any propertybased assessment conforms with the requirements set forth in paragraph (2) of subdivision (k) of Section 36622. 36629. Provisions and procedures applicable to benefit zones and business categories All provisions of this part applicable to the establishment, modification, or disestablishment of a property and business improvement district apply to the establishment, modification, or disestablishment of benefit zones or categories of business. The city council shall, to establish, modify, or disestablish a benefit zone or category of business, follow the procedure to establish, modify, or disestablish a property and business improvement district. 36630. Expiration of district; Creation of new district If a property and business improvement district expires due to the time limit set pursuant to subdivision (h) of Section 36622, a new management district plan may be created and the district may be renewed pursuant to this part.

CHAPTER 3. Assessments
36631. Time and manner of collection of assessments; Delinquent payments The collection of the assessments levied pursuant to this part shall be made at the time and in the manner set forth by the city council in the resolution levying the assessment. Assessments levied on real property may be collected at the same time and in the same manner as for the ad valorem property tax, and may provide for the same lien priority and penalties for delinquent payment. All delinquent payments for assessments levied pursuant to this part may be charged interest and penalties.
36632. Assessments to be based on estimated benefit; Classification of real property and businesses; Exclusion of residential and agricultural property

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(a) The assessments levied on real property pursuant to this part shall be levied on the basis of the estimated benefit to the real property within the property and business improvement district. The city council may classify properties for purposes of determining the benefit to property of the improvements and activities provided pursuant to this part.
(b) Assessments levied on businesses pursuant to this part shall be levied on the basis of the estimated benefit to the businesses within the property and business improvement district. The city council may classify businesses for purposes of determining the benefit to the businesses of the improvements and activities provided pursuant to this part.
(c) Properties zoned solely for residential use, or that are zoned for agricultural use, are conclusively presumed not to benefit from the improvements and service funded through these assessments, and shall not be subject to any assessment pursuant to this part.
36633. Time for contesting validity of assessment
The validity of an assessment levied under this part shall not be contested in an action or proceeding unless the action or proceeding is commenced within 30 days after the resolution levying the assessment is adopted pursuant to Section 36625. An appeal from a final judgment in an action or proceeding shall be perfected within 30 days after the entry of judgment.
36634. Service contracts authorized to establish levels of city services The city council may execute baseline service contracts that would establish levels of city services that would continue after a property and business improvement district has been formed. 36635. Request to modify management district plan
The owners’ association may, at any time, request that the city council modify the management district plan. Any modification of the management district plan shall be made pursuant to this chapter. 36636. Modification of plan by resolution after public hearing; Adoption of resolution of intention (a) Upon the written request of the owners’ association, the city council may modify the management district plan after conducting one public hearing on the proposed modifications. The city council may modify the improvements and activities to be funded with the revenue derived from the levy of the assessments by adopting a resolution determining to make the modifications after holding a public hearing on the proposed modifications. If the modification includes the levy of a new or increased assessment, the city council shall comply with Section 36623. Notice of all other public hearings pursuant to this section shall comply with both of the following:
(1) The resolution of intention shall be published in a newspaper of general circulation in the city once at least seven days before the public hearing.
(2) A complete copy of the resolution of intention shall be mailed by first class mail, at least 10 days before the public hearing, to each business owner or property owner affected by the proposed modification.
(b) The city council shall adopt a resolution of intention which states the proposed modification prior to the public hearing required by this section. The public hearing shall be held not more than 90 days after the adoption of the resolution of intention.
36637. Reflection of modification in notices recorded and maps Any subsequent modification of the resolution shall be reflected in subsequent notices and maps recorded pursuant to Division 4.5 (commencing with Section 3100), in a manner consistent with the provisions of Section 36627.

CHAPTER 3.5. Financing
36640. Bonds authorized; Procedure; Restriction on reduction or termination of assessments

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(a)The city council may, by resolution, determine and declare that bonds shall be issued to finance the estimated cost of some or all of the proposed improvements described in the resolution of formation adopted pursuant to Section 36625, if the resolution of formation adopted pursuant to that section provides for the issuance of bonds, under the Improvement Bond Act of 1915 (Division 10 (commencing with Section 8500)) or in conjunction with Marks-Roos Local Bond Pooling Act of 1985 (Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code). Either act, as the case may be, shall govern the proceedings relating to the issuance of bonds, although proceedings under the Bond Act of 1915 may be modified by the city council as necessary to accommodate assessments levied upon business pursuant to this part.
(b) The resolution adopted pursuant to subdivision (a) shall generally describe the proposed improvements specified in the resolution of formation adopted pursuant to Section 36625, set forth the estimated cost of those improvements, specify the number of annual installments and the fiscal years during which they are to be collected. The amount of debt service to retire the bonds shall not exceed the amount of revenue estimated to be raised from assessments over 30 years.
(c) Notwithstanding any other provision of this part, assessments levied to pay the principal and interest on any bond issued pursuant to this section shall not be reduced or terminated if doing so would interfere with the timely retirement of the debt.

CHAPTER 4. Governance
36650. Report by owners’ association; Approval or modification by city council (a) The owners’ association shall cause to be prepared a report for each fiscal year, except the first year, for which assessments are to be levied and collected to pay the costs of the improvements, maintenance, and activities described in the report. The owners’ association’s first report shall be due after the first year of operation of the district. The report may propose changes, including, but not limited to, the boundaries of the property and business improvement district or any benefit zones within the district, the basis and method of levying the assessments, and any changes in the classification of property, including any categories of business, if a classification is used.
(b) The report shall be filed with the clerk and shall refer to the property and business improvement district by name, specify the fiscal year to which the report applies, and, with respect to that fiscal year, shall contain all of the following information:
(1) Any proposed changes in the boundaries of the property and business improvement district or in any benefit zones or classification of property or businesses within the district. (2) The improvements, maintenance, and activities to be provided for that fiscal year. (3) An estimate of the cost of providing the improvements, maintenance, and activities for that fiscal year.
(4) The method and basis of levying the assessment in sufficient detail to allow each real property or business owner, as appropriate, to estimate the amount of the assessment to be levied against his or her property or business for that fiscal year.
(5) The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year.
(6) The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part.
(c) The city council may approve the report as filed by the owners’ association or may modify any particular contained in the report and approve it as modified. Any modification shall be made pursuant to Sections 36635 and 36636.

The city council shall not approve a change in the basis and method of levying assessments that would impair an authorized or executed contract to be paid from the revenues derived from the levy of assessments, including any commitment to pay principal and interest on any bonds issued on behalf of the district. 36651. Designation of owners’ association to provide improvements, maintenance, and activities The management district plan may, but is not required to, state that an owners’ association will provide the improvements, maintenance, and activities described in the management district plan. If the management district plan designates an owners’ association, the city shall contract with the designated nonprofit corporation to provide services.

CHAPTER 5. Renewal

MHTBID Management District Plan 26
September 15, 2023
36660. Renewal of district; Transfer or refund of remaining revenues; District term limit (a) Any district previously established whose term has expired, or will expire, may be renewed by following the procedures for establishment as provided in this chapter. (b) Upon renewal, any remaining revenues derived from the levy of assessments, or any revenues derived from the sale of assets acquired with the revenues, shall be transferred to the renewed district. If the renewed district includes additional parcels or businesses not included in the prior district, the remaining revenues shall be spent to benefit only the parcels or businesses in the prior district. If the renewed district does not include parcels or businesses included in the prior district, the remaining revenues attributable to these parcels shall be refunded to the owners of these parcels or businesses. (c) Upon renewal, a district shall have a term not to exceed 10 years, or, if the district is authorized to issue bonds, until the maximum maturity of those bonds. There is no requirement that the boundaries, assessments, improvements, or activities of a renewed district be the same as the original or prior district.

CHAPTER 6. Disestablishment
36670. Circumstances permitting disestablishment of district; Procedure (a) Any district established or extended pursuant to the provisions of this part, where there is no indebtedness, outstanding and unpaid, incurred to accomplish any of the purposes of the district, may be disestablished by resolution by the city council in either of the following circumstances:
(1) If the city council finds there has been misappropriation of funds, malfeasance, or a violation of law in connection with the management of the district, it shall notice a hearing on disestablishment. (2) During the operation of the district, there shall be a 30-day period each year in which assessees may request disestablishment of the district. The first such period shall begin one year after the date of establishment of the district and shall continue for 30 days. The next such 30-day period shall begin two years after the date of the establishment of the district. Each successive year of operation of the district shall have such a 30-day period. Upon the written petition of the owners or authorized representatives of real property or the owners or authorized representatives of businesses in the district who pay 50 percent or more of the assessments levied, the city council shall pass a resolution of intention to disestablish the district. The city council shall notice a hearing on disestablishment. (b) The city council shall adopt a resolution of intention to disestablish the district prior to the public hearing required by this section. The resolution shall state the reason for the disestablishment, shall state the time and place of the public hearing, and shall contain a proposal to dispose of any assets acquired with the revenues of the assessments levied within the property and business improvement district. The notice of the hearing on disestablishment required by this section shall be given by mail to the property owner of each parcel or to the owner of each business subject to assessment in the district, as appropriate. The city shall conduct the public hearing not less than 30 days after mailing the notice to the property or business owners. The public hearing shall be held not more than 60 days after the adoption of the resolution of intention. 36671. Refund of remaining revenues upon disestablishment or expiration without renewal of district; Calculation of refund; Use of outstanding revenue collected after disestablishment of district (a) Upon the disestablishment or expiration without renewal of a district, any remaining revenues, after all outstanding debts are paid, derived from the levy of assessments, or derived from the sale of assets acquired with the revenues, or from bond reserve or construction funds, shall be refunded to the owners of the property or businesses then located and operating within the district in which assessments were levied by applying the same method and basis that was used to calculate the assessments levied in the fiscal year in which the district is disestablished or expires. All outstanding assessment revenue collected after disestablishment shall be spent on improvements and activities specified in the management district plan. (b) If the disestablishment occurs before an assessment is levied for the fiscal year, the method and basis that was used to calculate the assessments levied in the immediate prior fiscal year shall be used to calculate the amount of any refund.

MHTBID Management District Plan 27
September 15, 2023
APPENDIX 2 – ASSESSED BUSINESSES
Business Name Business Address City, State, ZIP
Airbnb Corporate* 888 Brannan St. San Francisco, CA 94103 Budget Inn 19240 Monterey Rd. Morgan Hill, CA 95037
California Inn 16525 Condit Rd. Morgan Hill, CA 95037
Comfort Inn 16225 Condit Rd. Morgan Hill, CA 95037
Courtyard by Mariott 18610 Madrone Pkwy. Morgan Hill, CA 95037 Economy Inn 15080 Monterey Rd. Morgan Hill, CA 95037
Executive Inn 16505 Condit Rd. Morgan Hill, CA 95037
Extended Stay America 605 Jarvis Rd. Morgan Hill, CA 95037 Granada Hotel 17440 Monterey Rd. Morgan Hill, CA 95037
Hampton Inn Morgan Hill 16115 Condit Rd. Morgan Hill, CA 95037 Holiday Inn Express 17035 Condit Rd. Morgan Hill, CA 95037 Holiday Motel 16210 Monterey Rd. Morgan Hill, CA 95037
La Quinta Inn 17043 Condit Rd. Morgan Hill, CA 95037
Maple Leaf RV Park 15200 Monterey Rd. Morgan Hill, CA 95037 Microtel Inn and Suites 16245 Condit Rd. Morgan Hill, CA 95037 Morgan Hill Inn 16250 Monterey Rd. Morgan Hill, CA 95037 Paradise Motel 16310 Monterey Rd. Morgan Hill, CA 95037 Rancho Motel 19040 Monterey Rd. Morgan Hill, CA 95037
Residence Inn 18620 Madrone Pkwy. Morgan Hill, CA 95037 *Pursuant to an agreement executed between the City of Morgan Hill and Airbnb, Airbnb shall be responsible for collecting assessment remittances from short-term rentals within the MHTBID that are registered with Airbnb. Airbnb shall remit the collected assessment revenue to the City.

RESOLUTION NO. 2023 - ____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

MORGAN HILL DECLARING ITS INTENTION TO RENEW THE

MORGAN HILL TOURISM BUSINESS IMPROVEMENT

DISTRICT (MHTBID) AND FIXING THE TIME AND PLACE OF A

PUBLIC MEETING AND A PUBLIC HEARING THEREON AND

GIVING NOTICE THEREOF
WHEREAS, the City of Morgan Hill (City) created the MHTBID on January 23, 2019 by Resolution No. 19-004; and
WHEREAS, the MHTBID was created for a five (5) year term which ends on February 29, 2024, and
WHEREAS, the Property and Business Improvement Law of 1994, Streets and Highways Code §36600 et seq., authorizes the City to renew business improvement districts for the purposes of promoting tourism; and
WHEREAS, Visit Morgan Hill, lodging business owners, and representatives from the City have met to consider the renewal of the MHTBID; and
WHEREAS, Visit Morgan Hill has drafted a Management District Plan (Plan) which sets forth the proposed boundary of the MHTBID, a service plan and budget, and a proposed means of governance; and
WHEREAS, lodging businesses who will pay more than fifty percent (50%) of the assessment under the MHTBID have petitioned the City Council to renew the MHTBID.

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL THAT:

1. The recitals set forth herein are true and correct.

2. The City Council finds that lodging businesses that will pay more than fifty percent (50%) of the assessment proposed in the Plan have signed and submitted petitions in support of the renewal of the MHTBID. The City Council accepts the petitions and adopts this Resolution of Intention to renew the MHTBID and to levy an assessment on lodging businesses within the MHTBID boundaries in accordance with the Property and Business Improvement District Law of 1994.

3. The City Council finds that the Plan satisfies all requirements of Streets and Highways Code § 36622.

4. The City Council declares its intention to renew the MHTBID and to levy and collect assessments on lodging businesses within the MHTBID boundaries pursuant to the Property and Business Improvement District Law of 1994.

City of Morgan Hill
Resolution No. 23-

5. The MHTBID shall include all lodging businesses, existing and in the future, available for public occupancy located within the boundaries of the City of Morgan Hill, as shown in the map attached as Exhibit A.

6. The name of the district shall be Morgan Hill Tourism Business Improvement District (MHTBID).

7. The annual assessment rate is one and one half percent (1.5%) of gross short-term sleeping room rental revenue. During the MHTBID’s term, the assessment rate may be increased annually by the Owner’s Association upon approval from the Board of Directors by a maximum of one half of one percent (0.5%) of gross short-term sleeping room rental revenue per year. The maximum assessment rate may not exceed three percent (3%) of gross short-term sleeping room rental revenue. If the assessment rate is increased, it may subsequently be decreased by a maximum of one half of one percent (0.5%) each year, but shall not be decreased below a minimum of oneand one-half percent (1.5%) of gross short-term sleeping room rental revenue. Any proposed assessment rate increase or decrease shall be included in the MHTBID annual report and shall not be effective until approved by the Morgan Hill City Council. Based on the benefit received, assessments will not be collected on: stays of more than thirty (30) consecutive days or stays by any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty.

8. The assessments levied for the MHTBID shall be applied toward sales and marketing and sports facility marketing & development programs to market assessed lodging businesses in Morgan Hill as tourist, meeting, and event destinations, as described in the Plan. Funds remaining at the end of any year may be used in subsequent years in which MHTBID assessments are levied as long as they are used consistent with the requirements of this resolution and the Plan.

9. The renewed MHTBID will have a ten (10) year life, beginning March 1, 2024 or as soon as possible thereafter, and ending ten (10) years from its start date, unless renewed pursuant to Streets and Highways Code § 36660.

10. Bonds shall not be issued.

11. The time and place for the public meeting to hear testimony on establishing the MHTBID and levying assessments are set for November 1, 2023 at 6:00 PM, or as soon thereafter as the matter may be heard, at the City Council Chamber Building located at 17555 Peak Ave., Morgan Hill, CA 95037. Following the public meeting, the City Council shall move to introduce and conduct the first reading of the Ordinance to renew the MHTBID and continue the levy of assessments.

12. The time and place for the public hearing to establish the MHTBID and the levy of assessments are set for December 6, 2023, at 6:00 PM, or as soon thereafter as the matter may be heard, at the City Council Chamber Building located at 17555 Peak Ave., Morgan Hill, CA 95037. The City Clerk is directed to provide written notice to the lodging businesses subject to assessment

City of Morgan Hill
Resolution No. 23-

of the date and time of the meeting and hearing, and to provide that notice as required by Streets and Highways Code §36623, no later than October 21, 2023.

13. At the public meeting and hearing the testimony of all interested persons for or against the renewal of the MHTBID may be received. If at the conclusion of the public hearing, there are of record written protests by the owners of the lodging businesses within the renewed MHTBID that will pay more than fifty percent (50%) of the estimated total assessment of the entire MHTBID, no further proceedings to renew the MHTBID shall occur for a period of one (1) year.

14. Following a successful public hearing, at the same City Council meeting on December 6, 2023, held at the City Council Chamber Building located at 17555 Peak Ave., Morgan Hill, CA 95037, the City Council may conduct a second reading of the Ordinance to renew the MHTBID and to continue the levy of assessments. At the conclusion of the second reading of the Ordinance, the City Council may adopt the Ordinance, renewing the MHTBID and levying the assessments.

15. The complete Plan is on file with the City Clerk and may be reviewed upon request.

16. This resolution shall take effect immediately upon its adoption by the City Council.

PASSED AND ADOPTED THIS 4TH DAY OF OCTOBER 2023, AT A REGULAR MEETING OF THE CITY COUNCIL BY THE FOLLOWING VOTE:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSTAIN: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:

APPROVED: ATTEST:
___________________________________ _______________________________ MARK TURNER, Mayor MICHELLE BIGELOW, City Clerk

City of Morgan Hill
Resolution No. 23-

 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. 23-___ adopted by the City Council at the meeting held on the 4th day of October 2023.

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

DATE: _____________________ ___________________________________ MICHELLE BIGELOW, City Clerk

City of Morgan Hill
Resolution No. 23-

EXHIBIT A
District Boundaries

7 CITY COUNCIL STAFF REPORT
MEETING DATE: October 4, 2023
PREPARED BY:

Lynette Kong, Associate Engineer
APPROVED BY: City Manager

AWARD COMMUNITY PARK PICKLEBALL COURTS PROJECT TO
EF&S CONCRETE, INC.

RECOMMENDATION(S)

1. Approve Community Park Pickleball Courts plans and specifications;

2. Award contract to EF&S Concrete, Inc. in the amount of $307,120;

3. Authorize expenditure of construction contingency funds not-to-exceed $61,424; and

4. Authorize the City Manager to execute and administer the construction contract with EF&S Concrete, Inc.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Maintaining and Enhancing Infrastructure
Supporting our Youth, Seniors, and Entire Community
2022-2023 Strategic Priorities
Economic Development
Guiding Documents
Bikeways, Trails, and Recreation Master Plan
REPORT NARRATIVE:

The Community Park Pickleball Courts Project is located south of the Magical Bridge playground and west of the basketball court and consists of new, dedicated outdoor public pickleball court facilities at the park.

The project’s scope of work is described as follows, but not limited to: the installation of four regulation outdoor pickleball courts; application of court surfacing and striping treatments; installation of court posts, nets, windscreens, gates, and perimeter fencing; site clearing and grubbing; site earthwork and grading; asphalt concrete paving; installation of surface drainage facilities; installation of post-stormwater control biotreatment measures; and all other work related to the above items and as shown and detailed on the project plans and specifications.

7 The bid opening was held on September 19, 2023 and the seven (7) bids received are listed below:

Bidder: Base Bid Total:

EF&S Concrete, Inc. $307,120.00*
Guerra Construction Group $343,547.00*
Tri Valley Excavating Co., Inc. $349,886.00
Dryco Construction, Inc. $357,785.00
Silicon Valley Paving $381,500.00
101 Builders, Inc. $431,707.00*
Galeb Paving $451,540.00
* The construction base bid total was corrected due to calculation error.

EF&S Concrete, Inc.'s bid of $307,120 is approximately 5.5% lower than the engineer's estimate of $325,000. EF&S Concrete, Inc.is an experienced contractor and has the necessary qualifications to perform this project. Staff recommends the award of the contract to EF&S Concrete, Inc. in the amount of $307,120 with a 20% contingency for this project. The project is scheduled to begin in November 2023 and be completed by winter/spring 2024, pending construction delays due to weather.

The plans and specifications are available for review on the City's webpage.

COMMUNITY ENGAGEMENT:

Involve and Inform
This project was brought forward by community members interested in developing outdoor pickleball courts in Morgan Hill due to the sport's high demand by residents who provided input on interim and permanent court locations to the City's Parks and Recreation Commission.

Prior to and during construction, staff is committed to inform the community regarding the progress of this project using media, social media, and the City’s website. The Morgan Hill Pickleball Club has been involved with the court design and will share information with the community on construction of the new courts.

ALTERNATIVE ACTIONS:

City Council may elect not to award this construction contract and request the project be rebid. Staff does not recommend this alternative as this project was competitively bid with 7 bids being received by the City. Rebidding the project is not likely to result in significant savings and it will delay the project approximately three to four months.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

7 • On July 20, 2017, the City Council adopted the Bikeways, Trails, Parks and Recreation Master Plan.
• On June 15, 2022, the City Council adopted the FY2022-23 through 2027-28 Capital Improvement Program Budget.
• On March 15, 2022, the City Parks and Recreation Commission provided input on interim locations and long term development options. • On October 18, 2022, the City Parks and Recreation Commission recommended the priority location for future Pickleball Courts.

FISCAL AND RESOURCE IMPACT:

If approved, the total authorization of this project shall be $368,544 which includes a 20% contingency of $61,424. There are sufficient funds within the FY2023-24 Budget for this project (118020). Funding for new pickleball courts will be funded from the Quimby Fee Fund (375).

CEQA (California Environmental Quality Act):

Categorical Exemption
Categorically exempt from the requirements of the California Environmental Quality Act (CEQA) Guidelines pursuant to: 1) Section 15301 Class 1 “Existing Facilities” for the replacement or reconstruction of existing facilities and paths where the new facilities will be located on the same site as the area replaced and will have substantially the same purpose and capacity, 2) Section 15304 Class 4 “Minor Alterations to Land” for the construction of new pathways, bicycle paths, changes to existing landscaping, grading, and cut and fill of soils, and 3) Section 15311 Class 11 “Accessory Structures” for the construction of appurtenant structures in a publicly owned park. Furthermore, the project design complies with the City’s Engineering Standards and accepted landscape architectural practices.

O
0 375 750 1,125 1,500 187.5
Feet

MORGAN HILL COMMUNITY

PARK PICKLEBALL COURTS
PROJECT Engineering and Utilities Department
Capital Improvement Division
G:\R-14\Proj\GIS\Agustin\PickleballPLM.mxd

CENTENNIAL REC
CENTER

COMMUNITY PARK

PROJECT LOCATION

8 CITY COUNCIL STAFF REPORT
MEETING DATE: October 4, 2023
PREPARED BY:

Chris Ghione, Public Services Director
APPROVED BY: City Manager

APPROVE SUBORDINATION AGREEMENT FOR CITY OPEN SPACE

EASEMENT WITH THE SANTA CLARA VALLEY HABITAT AGENCY

RECOMMENDATION(S)
Authorize the City Manager to execute a subordination agreement for a City Open Space Easement with the Santa Clara Valley Habitat Agency.

COUNCIL PRIORITIES, GOALS & STRATEGIES
City Council Ongoing Priorities
Protecting the Environment and Preserving Open Space and Agricultural Land Advancing Regional Initiatives
REPORT NARRATIVE:

The City holds an open space easement that was obtained in 1996 in association with residential development located just east of Castle Lake Drive in the northeast area of the City. The easement specifically applies to a portion of the 45 acre parcel of land (APN 764-30-001). The purpose of the 1996 Open Space Easement is to maintain the property in perpetuity “in its natural, scenic, historical and unused condition for the enjoyment of the aesthetic pleasure which is experienced by Grantees in such condition of the land.”
The property has been purchased by the Santa Clara Valley Habitat Agency (SCVHA) with the intent of permanently conserving the entirety of this property and adjacent property through an easement with the Land Trust of Santa Clara Valley (LTSCV). The purpose of the conservation easement is to ensure that the existing and future natural values and associated wildlife and habitat values of the easement area will be forever protected by preventing any use of the property that would impair or interfere with the property’s wildlife, habitat values, and associated open space values.

In order for the Conservation Easement to be conveyed from the SCVHA to LTSCV the City must allow subordination of its 1996 Open Space Easement. In light of similar purposes of the easements and the City's long term goal of Protecting the Environment, City staff recommend approval of the subordination agreement, which will allow the land to be used for the wildlife habitat.

COMMUNITY ENGAGEMENT:

8 Not Applicable
The property is currently operated by SCVHA and the subordination of the open space easement will not change existing uses.

ALTERNATIVE ACTIONS:

The City Council could choose to not allow the subordination of the open space easement in association with a transfer of development rights.

PRIOR CITY COUNCIL AND COMMISSION ACTIONS:

There have been no recent actions taken in association with the open space easement.

The City received the easement in June 1996 in association with a transfer of development rights.

FISCAL AND RESOURCE IMPACT:

There is no significant fiscal impact associated with the subordination agreement.

Minimal resources in the City Attorney's Office and Public Services Department were spent reviewing and preparing the associated subordination agreement and staff report.

CEQA (California Environmental Quality Act):

Categorical Exemption
The subordination of the open space easement to the conservation easement is exempt from the requirements of the California Environmental Quality Act pursuant to Public Resources Code Section 21080.28(a)(1)(A), which exempts the transfer of interest in land by a public agency for the preservation of natural conditions existing at the time of acquisition, including plant and animal habitats.

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

When recorded, return original to:

Edmund Sullivan, Executive Officer
Santa Clara Valley Habitat Agency
535 Alkire Ave., Suite 100
Morgan Hill, CA 95037
Return one conformed copy to:

Land Trust of Santa Clara Valley
605 Tennant Avenue, Suite H
Morgan Hill, CA 95037
Return one conformed copy to:

City of Morgan Hill
17575 Peak Ave
Morgan Hill, CA 95037

EXEMPT FROM RECORDING FEES PER
GOVERNMENT CODE §§ 6103, 27383
APN 764-30-001 SPACE ABOVE FOR RECORDER’S USE

SUBORDINATION AGREEMENT
This Subordination Agreement ("Subordination Agreement") is by and between the CITY OF MORGAN HILL a California municipal corporation (the “City”), and the SANTA CLARA VALLEY HABITAT AGENCY, a California Joint Powers Authority (the “Habitat Agency”). The City and Habitat Agency are collectively referred to herein as the Parties, and individually as a Party.

RECITALS
A. The City holds a Deed of Open Space Easement that was recorded with the Santa Clara County Recorder on June 20, 1996 (Document No. 13338719) (“1996 Open Space Easement”), which applies to a portion of Parcel 764-30-001, currently owned by the Habitat Agency, depicted on Exhibit A.

The purpose of the 1996 Open Space Easement is to maintain the property in perpetuity “in its natural, scenic, historical and unused condition for the enjoyment of the aesthetic pleasure which is experienced by Grantees in such condition of the land.”
B. The Habitat Agency intends to enter into a Conservation Easement Agreement with the Land Trust of Santa Clara Valley (“LTSCV”) pursuant to which the Habitat Agency will convey a Conservation Easement over Parcel 764-30-001 to the LTSCV in furtherance of the Habitat Plan Reserve System established pursuant to the Santa Clara Valley Habitat Plan dated August 2012 (“Habitat Plan”) prepared pursuant to section 10 of the Endangered Species Act, of 1973, 16 U.S.C. Section 1531 et seq., and the California Natural Community Conservation Planning Act, California Fish and Game Code Section 2800 et seq. The purpose of the Conservation Easement Agreement is to ensure that the existing and future natural values and associated wildlife and habitat values of the easement area will be forever protected by preventing any use of the Easement Area that would impair or interfere with the property’s wildlife, habitat values, and associated open space values (Exhibit B).

C. The United States Fish and Wildlife Service (“USFWS”) and the California Department of Fish and Wildlife (“CDFW”), third-party beneficiaries to the Conservation Easement Agreement, requested that the 1996 Open Space Easement be subordinated to the Conservation Easement Agreement for the portion of Parcel 764-30-001 that is currently subject to the Open Space Easement.

D. In light of the parallel purposes of the Conservation Easement Agreement between the Habitat Agency and LTSCV and the 1996 Open Space Easement, the City agrees to subordinate the 1996 Open Space Easement to the Conservation Easement Agreement.

AGREEMENT

1. Subordination. The Conservation Easement Agreement between the Santa Clara Valley Habitat Agency and the Land Trust of Santa Clara Valley recorded with the Santa Clara County Recorder on ______________ (date), (Document No. ____________) (“Conservation Easement Agreement”), and any and all renewals, modifications permitted hereunder, extensions, or protective advances thereunder (including interest thereon), are and will remain at all times, a lien, claim, or charge on the Conservation Easement Property prior and superior to the 1996 Open Space Easement. The City acknowledges that it has had an opportunity to review the Conservation Easement Agreement, and that it intentionally subordinates the 1996 Open Space Easement.

2. Indemnification.

2.1 The Habitat Agency shall to the fullest extent permitted by law, indemnify, defend and hold harmless City and LTSCV, their elected or appointed officials, volunteers, boards, agencies, officers, agents, employees, and volunteers from and against and all claims, liabilities, expenses, liens or damages of any nature and including reasonable attorney’s fees and expenses, that arise out of, pertain to, or relate to any challenge filed by a third party about this Agreement or the failure to comply with any obligations contained in the 1996 Open Space Easement. The Habitat Agency is not required to indemnify City or LTSCV against liability for any loss, damage or expense arising from the sole negligence or willful misconduct of the City or LTSCV.

2.2 The Habitat Agency shall to the fullest extent permitted by law, indemnify , defend and hold harmless LTSCV, its elected or appointed officials, boards, agencies, officers, agents, employees, and volunteers from and against and all claims, liabilities, expenses, liens or damages of any nature and including reasonable attorney’s fees and expenses, that arise out of, pertain to, or relate to any challenge filed by a third party about this Agreement or the failure to comply with any obligations contained in the 1996 Open Space Easement. The Habitat Agency is not required to indemnify LTSCV against liability for any loss, damage or expense arising from the sole negligence or willful misconduct of the LTSCV.

3. Amendments Require Consent. The Habitat Agency agrees that it will not amend or modify the Conservation Easement Agreement in a manner that would adversely affect the 1996 Open Space Easement without the prior written consent of the City.

4. Integration; No Waiver. This Subordination Agreement is the whole and only agreement with regard to the subordination of the terms and conditions of the 1996 Open Space Easement to the Conservation Easement Agreement. This Subordination Agreement may not be modified or amended except by a written agreement signed by the Parties. No waiver shall be deemed to be made by any Party of any of its rights hereunder unless the waiver shall be in writing signed by such Party, and each such waiver, if any, shall be a waiver only with respect to the specific matter or matters to which the waiver relates and shall in no way impair the rights or obligations of any Party in any other respect or at any other time.

5. Successors and Assigns. This Subordination Agreement is binding on and inures to the benefit of the legal representatives, successors, and assigns of the Parties.

6. Governing Law. This Subordination Agreement shall be governed by, and construed in accordance with, the laws of the State of California without regard to California choice of law rules, except to the extent that any of such laws may now or hereafter be preempted by federal law. The Parties consent to the jurisdiction of any federal or state court having jurisdiction within the County of Santa Clara, California, submit to venue in such jurisdiction, and also consent to service of process by any means authorized by California law or federal law. Without limiting the generality of the foregoing, the Parties hereby waive and agree not to assert by way of motion, defense, or otherwise in such suit, action, or proceeding, any claim that (i) any such Party is not subject to the jurisdiction of the courts of the State of California or the United States

District Court for such jurisdiction, or (ii) such suit, action, or proceeding is brought in an inconvenient forum, or (iii) the venue of such suit, action, or proceeding is improper.

7. Notices. All notices given under this Subordination Agreement shall be in writing and be given by personal delivery, overnight receipted courier (such as Airborne, UPS, or Federal Express), or by registered or certified United States mail, postage prepaid, sent to the Party at its address appearing below.

Notices shall be effective upon the first of the following to occur: receipt; when proper delivery is refused; or the expiration of forty-eight (48) hours after deposit in registered or certified United States mail as described above. The following addresses may be changed by any Party by providing notice to the other Parties in accordance with this Section.

City of Morgan Hill
City Manager
17575 Peak Ave
Morgan Hill, CA 95037
Santa Clara Valley Habitat Agency
Edmund Sullivan, Executive Officer
Santa Clara Valley Habitat Agency
535 Alkire Ave., Suite 100
Morgan Hill, CA 95037
Land Trust of Santa Clara Valley
605 Tennant Avenue, Suite H
Morgan Hill, CA 95037
Attn: Executive Director

8. Counterparts. This Subordination Agreement may be executed in counterparts, all of which shall together constitute one and the same document.

IN WITNESS WHEREOF, the parties have executed this Subordination Agreement as of the date first above written.

CITY OF MORGAN HILL APPROVED AS TO FORM:

By: __________________________ By: _______________________________ Name: Name:

Title: Title:

SANTA CLARA VALLEY HABITAT AGENCY APPROVED AS TO FORM:

By: ______________________________ By: _______________________________ Edmund Sullivan Valerie J. Armento
Executive Officer General Counsel

ACKNOWLEDGMENT
State of California )
) ss
County of Santa Clara )
On , 2021, before me,___________________________________________, (Name of Notary)
notary public, personally appeared _________________________________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.
(Notary Signature)
A notary public or other officer completing this
certificate verifies only the identity of the
individual who signed the document to which this
certificate is attached, and not the truthfulness,
accuracy, or validity of that document.

ACKNOWLEDGMENT
State of California )
) ss
County of Santa Clara )
On , 2020, before me,___________________________________________, (Name of Notary)
notary public, personally appeared _________________________________________________ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.
(Notary Signature)
A notary public or other officer completing this
certificate verifies only the identity of the
individual who signed the document to which this
certificate is attached, and not the truthfulness,
accuracy, or validity of that document.

Exhibit A
1996 Deed of Open Space Easement

Exhibit B
Conservation Easement

Davidson Parcels Conservation Easement
1 RECORDING REQUESTED BY

AND FOLLOWING RECORDING
MAIL TAX STATEMENTS TO:

Santa Clara Valley Habitat Agency
535 Alkire Avenue, Suite 100
Morgan Hill, CA 95037
Attention: Executive Officer
And a conformed copy to:

Land Trust of Santa Clara Valley
605 Tennant Avenue, Suite H
Morgan Hill, CA 95037
No fee for recording pursuant to
Government Code Section 27383
Space Above Line for Recorder's Use Only

CONSERVATION EASEMENT AGREEMENT
THIS CONSERVATION EASEMENT AGREEMENT (the “Agreement” or "Conservation Easement") for reference dated______________________, 2023, is by and between the Santa Clara Valley Habitat Agency, a California Joint Powers Authority (“Landowner” or “Habitat Agency” or “Implementing Entity”), and the Land Trust of Santa Clara Valley, a California 501(c)3 nonprofit corporation (“Easement Holder”). Landowner and Easement Holder are also referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS
A. Landowner is the fee owner of certain real property commonly known as the Davidson Parcels, 764-28-007 and 764-30-001 containing approximately 93 acres of land located in Santa Clara County, State of California, more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the “Property”) and depicted on the map attached hereto as Exhibit B and incorporated herein by this reference.

B. This Agreement is being executed and delivered to satisfy certain habitat conservation requirements set forth in the following documents (collectively, the “Habitat Plan

Davidson Parcels Conservation Easement
2 Instruments”):
(i) The Santa Clara Valley Habitat Plan (“Habitat Plan”), dated August 2012, prepared by County of Santa Clara (“County”), City of San Jose (“San Jose”), City of Gilroy (“Gilroy”), City of Morgan Hill (“Morgan Hill”), Santa Clara Valley Water District (“Valley Water”), and Santa Clara Valley Transportation Authority (“VTA”), and approved by the United States Fish and Wildlife Service (“USFWS”) under Section 10 of the federal Endangered Species Act of 1973 (16 U.S.C. Section 1531 et seq., as it may be amended from time to time) (“ESA”), and by California Department of Fish and Wildlife (“CDFW”) under the California Natural Community Conservation Planning Act (California Fish and Game Code Section 2800 et seq., as it may be amended from time to time) (“NCCPA”); and (ii) The Implementing Agreement for the Habitat Plan (the “Implementing Agreement”), dated August 14, 2012, by and among USFWS and CDFW (collectively, the “Wildlife Agencies”), Santa Clara Valley Habitat Plan Implementing Agency, a Joint Powers Authority (“JPA” or “Implementing Entity”), County, San Jose, Gilroy, Morgan Hill, Water District, and VTA (collectively, JPA, County, San Jose, Gilroy, Morgan Hill, Water District, VTA, are referred to herein as “Permittees”); and
(iii) The federal incidental take permit issued by USFWS to Permittees for the Habitat Plan pursuant to Section 10 of ESA; and
(iv) The state incidental take permit issued by CDFW to Permittees for the Habitat Plan pursuant to the NCCPA.

C. CDFW has jurisdiction, pursuant to Fish and Game Code Section 1802, over the conservation, protection, and management of fish, wildlife, native plants and the habitat necessary for biologically sustainable populations of those species, and CDFW is authorized to hold easements for these purposes pursuant to Civil Code Section 815.3, Fish and Game Code Section 1348, and other provisions of California law.

D. USFWS is an agency of the United States Department of the Interior and is authorized by Federal law to be a third-party beneficiary of the Conservation Easement and to administer the Federal Endangered Species Act, 16 U.S.C. § 1531 et seq. (“ESA”), the Fish and Wildlife Coordination Act, 16 U.S.C. §§ 661-666c, and the Fish and Wildlife Act of 1956, 16 U.S.C. § 742(f) et seq.

E. The Easement Holder is authorized to hold conservation easements pursuant to, among other provisions of law, California Civil Code Section 815.3.

F. Habitat Agency serves as the “Implementing Entity” of the Habitat Plan, and as such, is responsible for overseeing implementation of the Habitat Plan Instruments, including carrying out planning and design, habitat restoration, monitoring, adaptive management programs, and periodic coordination with the USFWS and CDFW.

Davidson Parcels Conservation Easement
3 G. The Property possesses wildlife, habitat values, and associated open space values that are of great importance to Habitat Agency, Easement Holder, the people of Santa Clara County and the people of the State of California and of the United States (the “Conservation Values”). The Initial Conservation Values, described in Exhibit C attached hereto and incorporated herein by reference, are those Conservation Values that are identified in the Habitat Plan and present on the Property at the time of the execution of the Agreement.

H. Following recordation of this Agreement, the Property will be incorporated into the Reserve System (as such term is defined in the Habitat Plan) (“Reserve System”) and will count toward the land acquisition requirements set forth in the Habitat Plan.

I. The Habitat Agency will develop a management plan, known as the “Davidson Management and Monitoring Plan” or the “Management Plan,” as referenced interchangeably. The Management Plan will serve as the management plan for the Property for Habitat Plan purposes. The Management Plan will be developed in accordance with the applicable requirements of the Habitat Plan Instruments, and may be combined as a joint management plan with the Baird Management Plan.

J. The Management Plan, upon completion, will be incorporated herein by reference.

Landowner and Easement Holder recognize that changes (e.g., in weather cycles, natural resource management technologies, conservation practices) may dictate an adaptation in the management of the Property, consistent with the purposes of this Conservation Easement and the Habitat Plan Instruments. It may be revised from time to time with the written approval of the Landowner, Easement Holder, and the Wildlife Agencies, so long as the revisions are consistent with the requirements of the Habitat Plan Instruments. A full and complete copy of the Management Plan, including any such revisions, shall be kept on file at the offices of the Implementing Entity. The Property will be managed in accordance with the applicable requirements of the Habitat Plan until the Management Plan is developed.

K. The State of California recognizes the public importance and validity of conservation easements by enactment of California Civil Code Section 815 et seq.

AGREEMENTS
NOW, THEREFORE, in consideration of the above and mutual covenants, terms, conditions and restrictions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and pursuant to the laws of the State of California, including California Civil Code Section 815 et seq., Landowner hereby voluntarily grants and conveys to Easement Holder, its successors and assigns, a conservation easement in perpetuity on, over and across the Property described in Exhibit A and depicted on Exhibit B (the “Conservation Easement”), subject to the terms and conditions set forth herein, restricting forever the uses which may be made of the Property, and the Parties agree as follows:

Davidson Parcels Conservation Easement
4 1. Purpose. The purpose of this Conservation Easement is to ensure that existing and future natural values and associated wildlife and habitat values of the Property will be forever protected by preventing any use of the Property that would impair or interfere with the Conservation Values. Landowner intends that this Conservation Easement will confine the use of the Property to such activities that are consistent with the purposes set forth herein, including, without limitation, those involving the preservation, restoration, and enhancement of the Property's Covered Species, as defined in the Habitat Plan, and their habitats.

2. Baseline Documentation Report. The Parties acknowledge that a Baseline Documentation Report (the “Report”) has been prepared for the Property and approved in writing by Landowner and Easement Holder. A copy of the Report is on file with Landowner and Easement Holder at their respective addresses for notices set forth below. The parties agree that the Report contains an accurate representation of the biological and physical condition of the Property at the time this Agreement is recorded in the Official Records of Santa Clara County (“Official Records”), including an inventory of all of the Property’s Covered Species and natural communities found thereon. Notwithstanding the foregoing, if a controversy arises with respect to the nature and extent of the physical or biological condition of the Property or the Allowed Uses of the Property, the Parties shall not be foreclosed from utilizing any and all other relevant documents, surveys or other evidence or information to assist in the resolution of the controversy.

3. Rights of Easement Holder. To accomplish the purposes of this Conservation Easement, Landowner hereby grants and conveys the following rights to Easement Holder:
(a) To preserve, protect, sustain, restore, and enhance the Conservation Values for the Property described in Exhibit C or which develop on the Property in accordance with the Management Plan and the terms and conditions of this Conservation Easement;

(b) To enter upon the Property to monitor Landowner’s compliance with, and to otherwise enforce the terms of, this Conservation Easement, and for scientific research necessary to support monitoring and in order to support adaptive management of the Conservation Values; provided, that Easement Holder shall not unreasonably interfere with Landowner's allowed uses and quiet enjoyment of the Property; (c) To enter upon the Property to carry out, those management and monitoring requirements applicable to the Property that are set forth in the Management Plan and in Habitat Plan Chapters 5 and 7, provided, that Easement Holder shall use reasonable good faith efforts to conduct such management and monitoring activities in a manner that does not unreasonably interfere with Landowner's allowed uses and quiet enjoyment of the Property; (d) To prevent any activity on or use of the Property that is inconsistent with the purposes of this Conservation Easement and to require the restoration of such areas or features of the Property that may be damaged by any act, failure to act, or any use that is inconsistent with the purposes of this Conservation Easement;

Davidson Parcels Conservation Easement
5 (e) To require that all mineral, air and water rights held by Landowner that Easement Holder deems necessary to preserve, protect and sustain the biological resources and Conservation Values of the Property, shall remain a part of and be put to beneficial use upon the Property, consistent with the purposes of this Conservation Easement; (f) To erect and maintain signs or other appropriate markers in one or more prominent locations on the Property acceptable to Landowner, bearing information indicating that the Property is protected by the Easement Holder. The wording of the information shall be determined by the Easement Holder. The Easement Holder shall be responsible for the costs of erecting and maintaining such signs or markers; (g) All present and future development rights and wind power rights allocated, implied, reserved or inherent in the Property are hereby terminated and extinguished, and may not be used on or transferred to any portion of the Property. Landowner and Easement Holder both understand and agree that nothing in this Conservation Easement relieves Landowner of any obligation or restriction in relation to the development or use of the Property imposed by law, including but not limited to local land use restrictions; and (h) Except where there is an imminent threat to the Property or its Conservation Values, Easement Holder and its employees, contractors or agents will only enter the Property at reasonable times and with at least forty-eight (48) hours advance notice to Landowner. The Landowner may waive these requirements in whole or in part by written notice to Easement Holder.

4. Rights of Wildlife Agencies. The USFWS and CDFW are each a third-party beneficiary of this Agreement (collectively, “Third-Party Beneficiaries”) for the sole purpose of enforcing the terms of this Agreement.

5. Prohibited Uses. Any activity on or use of the Property that adversely affects the purposes of this Conservation Easement is prohibited. Without limiting the generality of the foregoing, Landowner, Landowner’s personal representatives, heirs, successors, assigns, employees, agents, lessees, licensees and invitees are expressly prohibited from doing or allowing any of the following uses and activities on the Property, unless, and then only to the extent that, a generally prohibited activity set forth below is: (i) an allowed use or practice (e.g., agricultural, rangeland or site visit uses) set forth in Exhibit D attached hereto and incorporated herein by reference; (ii) a management practice set forth in the Management Plan; (iii) necessary in connection with the performance of any of the conservation actions described in Habitat Plan Chapter 5; or (iv) otherwise necessary to maintain or enhance the Conservation Values:

Davidson Parcels Conservation Easement
6 (a) Unseasonal watering;
(b) Use of fertilizers, pesticides, biocides, herbicides or other chemicals, except for non-native invasive plant species management and infrastructure and facilities management as specifically provided for in the Management Plan or Allowed Uses; (c) Use of off-road vehicles and use of any other motorized vehicles except on existing roadways, excepting off-road vehicle use required to conduct any allowed management practice set forth in the Management Plan or as provided in the Allowed Uses; (d) Except as set forth in 3(f) above, any construction, reconstruction, relocation or placement of any road, building, billboard, fencing, or sign, or any other structure or improvement of any kind, or altering the surface or general topography of the Property without written approval by the Easement Holder and Wildlife Agencies unless otherwise allowed in the Management Plan or Allowed Uses;
(e) Agricultural uses, including, without limitation, vineyards, nurseries, or intensive livestock use (e.g., dairy, feedlot) except as may be provided for in the Management Plan (e.g., prescribed grazing) or Allowed Uses;
(f) Any legal or de facto division, subdivision or partitioning of the Property or any fee transfer of less than the entire Property;
(g) Depositing or accumulation of soil, trash, ashes, refuse, waste, bio-solids or any other materials;
(h) Planting, introduction, or dispersal of nonnative plant or animal species, except as approved by the California Department of Food and Agriculture’s Biological Control Program for control of invasive species as specifically provided in the Management Plan or with the approval of the Wildlife Agencies;
(i) Filling, dumping, excavating, draining, dredging, mining, drilling, removing, or exploring for or extraction of minerals, loam, soil, sands, gravel, rocks, or other material on or below the surface of the Property, and granting or authorizing any surface entry for any of these purposes except as identified in the Management Plan or for Allowed Uses; (j) Removing, destroying, or cutting of trees, shrubs, or other vegetation except as allowed by Exhibit D or required by law for (i) fire breaks and/or fuels treatment, (ii) maintenance of existing roads, (iii) maintenance and installation of grazing infrastructure necessary to implement the Management Plan; or (iv) prevention or treatment of disease as specifically provided in the Management Plan;
(k) Manipulating, impounding, or altering any water course, body of water, or water circulation on the Property, and activities or uses detrimental to water quality,

Davidson Parcels Conservation Easement
7 including but not limited to degradation or pollution of any surface or subsurface waters and future creation or habitat enhancement of the Property for sensitive, threatened, or endangered species as specifically provided for in the Management Plan or Allowed Uses; (l) Recreational activities, including, but not limited to, horseback riding, biking (including e-bikes), fishing, dog walking, with the exception of any site visits specifically allowed in Exhibit D;
(m) Commercial, industrial, residential, or institutional uses, with the exception of the Allowed Uses;
(n) Altering the surface or general topography of the Property, including but not limited to any alterations to habitat, building roads or trails, paving or otherwise covering the Property with concrete, asphalt or any other impervious material except for those habitat management activities specified in the Management Plan or as permitted by the Allowed Uses; and
(o) Without the prior written consent of Easement Holder, which Easement Holder may reasonably withhold, transferring, encumbering, selling, leasing or otherwise separating the mineral, air or water rights for the Property owned by Landowner; changing the place or purpose of use of the water rights owned by Landowner; abandoning or allowing the abandonment of, by action or inaction, any water or water rights, ditch or ditch rights, spring rights, reservoir or storage rights, wells, ground water rights or other rights in and to the use of water historically used on or otherwise appurtenant to the Property that are owned by Landowner, including but not limited to: (i) riparian water rights; (ii) appropriative water rights; (iii) rights to waters which are secured under contract with any irrigation or water district, to the extent such waters are customarily applied to the Property; and (iv) any water from wells that are in existence or may be constructed in the future on the Property.

6. Unlawful Entry. Landowner shall undertake all reasonable actions to prevent the unlawful entry and trespass on the Property by persons whose uses or activities may degrade or harm the Conservation Values or are otherwise inconsistent with the purposes of this Conservation Easement.

7. Landowner’s Reserved Rights and Responsibilities; Allowed Uses. (a) Landowner reserves to itself, and to its representatives, agents, heirs, successors, and assigns, all rights accruing from its ownership of the Property, including without limitation, the following (collectively, the “Allowed Uses”): (i) those specific uses and activities identified in the Management Plan or detailed in Exhibit D attached hereto, and (ii) all other uses of the Property that are not expressly prohibited or limited by this Agreement and are consistent with the purposes of this Conservation Easement as set forth in Section 1. Landowner shall have the right to exercise any of the Allowed Uses directly or to allow or invite others to engage in any of the Allowed Uses. Landowner is obligated under

Davidson Parcels Conservation Easement
8 this Agreement to perform the management and monitoring actions set forth in the Management Plan. Landowner’s exercise of the Allowed Uses shall be conducted in a manner that is consistent with the Habitat Plan, Management Plan and Conservation Values. (b) To accomplish the purposes of this Conservation Easement, Landowner, as Implementing Entity, retains the following rights, and accepts the following responsibilities, including financial responsibilities:
(i) To preserve, protect, sustain, restore, and enhance the Conservation Values for the Property described in Exhibit C or which develop on the Property in accordance with the Management Plan and the terms and conditions of this Conservation Easement;
(ii) To allow scientific research necessary to support monitoring and adaptive management of the Conservation Values;
(iii) To enter upon the Property and be responsible for the management requirements applicable to the Property that are set forth in the Management Plan and in the Habitat Plan, Chapters 5 and 7;
(iv) To manage all grazing-related matters, including the design and execution of any improvements related to grazing, and all grazing contracts, including the retention of revenue, according to the management plan and consistent with maintaining the conservation values of this Conservation Easement; and (v) To manage all invasive species control, both plant and animal (including pig management).

8. Easement Holder & Third-Party Beneficiary’s Remedies. If Easement Holder or any Third-Party Beneficiary determines there is a violation of the terms of this Agreement or that such violation is threatened, written notice of such violation and a demand for corrective action sufficient to cure the violation shall be given to Landowner, with a copy provided to Easement Holder and each other Third-Party Beneficiary. The notice of violation shall specify the measures the Landowner must take to cure the violation.
(a) Opportunity to Cure. If Landowner fails to cure the violation within thirty (30) days after receipt of written notice and demand from Easement Holder or any Third-Party Beneficiary, as applicable; or if the cure reasonably requires more than thirty (30) days to complete and Landowner fails to begin the cure within such thirty (30) day period; or Landowner fails to continue diligently to complete the cure, Easement Holder or any ThirdParty Beneficiary may bring an action at law or in equity in a court of competent jurisdiction to enforce the terms of this Agreement, to recover any damages to which Easement Holder and the Third-Party Beneficiaries may be entitled for violation of the terms of this Agreement or for any injury to the Conservation Values, to enjoin the violation, ex parte as necessary, by temporary or permanent injunction without the necessity of proving either actual damages or the inadequacy of otherwise available legal remedies, or for other equitable relief, including, but not limited to, the restoration of the Property to the condition in which it existed prior to any such violation or injury. Without limiting Landowner's liability therefor, any damages

Davidson Parcels Conservation Easement
9 recovered may be applied to the cost of undertaking any corrective action on the Property at the election of the party receiving such damages.
(b) Emergencies. If Easement Holder or any Third-Party Beneficiary, each in its sole discretion, determines that circumstances require immediate action to prevent or mitigate damage to the Conservation Values, Easement Holder and/or any Third-Party Beneficiary may pursue its remedies under this section without prior notice to Landowner or without waiting for the period provided for cure to expire. The rights of Easement Holder and the Third-Party Beneficiaries under this section apply equally to actual or threatened violations of the terms of this Agreement. Landowner agrees that Easement Holder’s and Third-Party Beneficiaries’ remedies at law for any violation of the terms of this Agreement are inadequate and that Easement Holder and/or any Third-Party Beneficiary shall be entitled to the injunctive relief described in this section, both prohibitive and mandatory, in addition to such other relief to which Easement Holder and the Third-Party Beneficiaries may be entitled, including specific performance of the terms of this Agreement, without the necessity of proving either actual damages or the inadequacy of otherwise available legal remedies.

Remedies described in this section shall be cumulative and shall be in addition to all remedies now or hereafter existing at law or in equity; including but not limited to, the remedies set forth in California Civil Code Section 815, et seq. The failure of Easement Holder or any Third-Party Beneficiary to discover a violation or to take immediate legal action in response to such action shall not bar such party from taking legal action at a later time.
(c) Costs of Enforcement. Any reasonable costs incurred by the Easement Holder or any Third-Party Beneficiary, where it is the prevailing party, in enforcing the terms of this Conservation Easement against the Landowner, including, but not limited to, costs of suit and attorneys' and experts' fees, and any costs of restoration necessitated by Landowner's negligence or breach of this Agreement shall be borne by Landowner. In any action where an agency of the United States is a party, the right to recover fees and costs shall be governed by federal law.
(d) Enforcement Discretion. Enforcement of the terms of this Agreement against Landowner shall be at the respective discretion of Easement Holder and each of the Third-Party Beneficiaries, and any forbearance by any such party to exercise its rights under this Agreement in the event of any breach of any term of this Agreement shall not be deemed or construed to be a waiver by such party of such term or of any subsequent breach of the same or any other term of this Agreement or of any of such party’s rights under this Agreement. No delay or omission by Easement Holder or any Third-Party Beneficiary in the exercise of any right or remedy upon any breach shall impair such right or remedy or be construed as a waiver.
(e) Acts Beyond Landowner's Control. Nothing contained in this Agreement shall be construed to, or shall entitle, Easement Holder or any Third-Party Beneficiary to bring any action against Landowner for any injury to or change in the Property resulting from

Davidson Parcels Conservation Easement
10 (i) any natural cause beyond Landowner's control, including, but not limited to, climate change, fire not caused by Landowner, flood, storm, and earth movement, or any prudent action taken by Landowner under emergency conditions to prevent, abate, or mitigate significant injury to the Property resulting from such causes; (ii) acts by Easement Holder or any Third-Party Beneficiary or any of their employees, contractors or agents; or (iii) acts by persons that entered the Property lawfully or unlawfully whose activities degrade or harm the Conservation Values of the Property or whose activities are otherwise inconsistent with this Conservation Easement where Landowner has undertaken all reasonable actions to discourage or prevent such activities.
(f) Third Party Beneficiary Rights. The parties intend for each Implementing Entity (during any such period, if any, that Implementing Entity does not also constitute Easement Holder), USFWS and CDFW (collectively, “Third-Party Beneficiaries”) to be a third-party beneficiary of this Agreement. All rights and remedies conveyed to Easement Holder under this Agreement shall extend to and are enforceable by each of the Third-Party Beneficiaries in accordance with the terms hereof. Landowner and Easement Holder acknowledge that, as third-party beneficiaries of this Conservation Easement, the Third-Party Beneficiaries shall have the same rights of access to the Property granted to Easement Holder in Section 3 above, and with rights to enforce all of the provisions of this Agreement. If at any time in the future Landowner uses, allows the use, or threatens to use or allow use of, the Property for any purpose that is inconsistent with or in violation of this Agreement then, despite the provisions of California Civil Code Section 815.7, the California Attorney General and each Third-Party Beneficiary has standing as an interested party in any proceeding affecting the Conservation Easement. These rights are in addition to, and do not limit, the rights of enforcement under the Habitat Plan Instruments. In addition, if CDFW reasonably determines that the Property is not being held, monitored, or stewarded for conservation purposes in the manner specified in this Agreement, the Habitat Plan Instruments, or the Management Plan, the Conservation Easement shall revert to the State of California or another entity as described in California Government Code Section 65967, subdivisions (b) and (c), and subject to approval by CDFW. Such reversion may only be effective after Third-Party Beneficiaries provide Easement Holder with a minimum of thirty (30) days written notice and an opportunity to cure any defects.

9. Public Access. Nothing contained in this Agreement gives or grants to the public an independent right to enter upon or use the Property or any portion thereof. Nor shall this Agreement extinguish any public right to enter upon or use the Property.

10. Costs and Liabilities. Except for those specific rights granted to Easement Holder under Section 3 above, Landowner shall retain all responsibilities and shall bear all costs and liabilities of any kind related to Landowner’s ownership, operation, management and maintenance activities on and relating to the Property. Landowner agrees that neither the Easement Holder nor Third Party Beneficiaries shall have any duty or responsibility for the operation or maintenance of the Property, the monitoring of hazardous conditions thereon, or the protection of Landowner, the public or any third parties from risks relating to conditions on the Property. The Landowner and

Davidson Parcels Conservation Easement
11 Easement Holder shall remain responsible for obtaining any applicable governmental permits and approvals for any of their activity or allowed use on the Property under this Agreement, and each shall undertake all allowed activities and uses of the Property in accordance with all applicable federal, state, local and administrative agency statutes, ordinances, rules, regulations, orders and requirements. Landowner shall pay before delinquency all taxes, assessments, fees, and charges of whatever description levied on or assessed against the Property by competent authority (collectively "taxes"), including any taxes imposed upon, or incurred as a result of, this Agreement, and shall furnish Easement Holder with satisfactory evidence of payment, or exemption from payment, upon request. Landowner and Easement Holder shall keep the Property free from any liens, including those arising out of any obligations incurred by such Party for any labor or materials furnished or alleged to have been furnished to or for such Party or for use on the Property.

11. Indemnification.
(a) Indemnification by Landowner. Landowner shall hold harmless, protect and indemnify Easement Holder and the Third-Party Beneficiaries, and their respective members, directors, officers, employees, agents, contractors, and representatives and the heirs, personal representatives, successors and assigns of each of them (each an “Easement Holder Indemnified Party” and, collectively, the “Easement Holder Indemnified Parties”) from and against any and all liabilities, penalties, costs, losses, damages, expenses (including, without limitation, reasonable attorneys' and experts’ fees and costs), causes of action, claims, demands, orders, liens or judgments (each a “Claim” and, collectively, “Claims”), arising from or in any way connected with: (i) the activities of Landowner on the Property; (ii) the inaccuracy of any representation or warranty made by Landowner in this Agreement; (iii) the breach by Landowner of any provision of this Agreement; (iv) any injury to or the death of any person, or physical damage to any Property resulting from any act, omission, condition, or other matter related to or occurring on or about the Property, unless such injury or death or physical damage to any Property relates to an activity on, or use of, the Property by Easement Holder, including without limitation, those activities performed under the Management Plan, or negligent or willful misconduct of the Easement Holder Indemnified Party; or (v) any violation of, or failure to comply with, any state, federal or local law, regulation or requirement, by Landowner, or by any entity, other than one of the Easement Holder Indemnified Parties, acting at the time upon permission from Landowner, in any way affecting, involving or relating to the Property. If any action or proceeding is brought against Easement Holder or any of the Easement Holder Indemnified Parties because of any such Claim, Landowner shall, at the election of and upon written notice from Easement Holder and the Third-Party Beneficiaries, defend such action or proceeding by counsel acceptable to the Easement Holder or any of the Easement Holder Indemnified Parties. (b) Indemnification by Easement Holder. Easement Holder shall hold harmless, protect, and indemnify Landowner and the Third-Party Beneficiaries, and their respective members, directors, officers, employees, agents, contractors, and representatives and the heirs, personal representatives, successors and assigns of each of them (each, a