Morgan Hill City Council
February 3, 2024

City Council
Annual Goal Setting Workshop
Mark Turner - Mayor
Marilyn Librers - Mayor Pro Tem
Gino Borgioli - Council Member
Rene Spring - Council Member
Yvonne Martínez Beltrán - Council Member
Friday, February 2, 2024 9:00 AM
Saturday, February 3, 2024 9:00 AM
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 view by live stream on the City's website or Channel 17. Information on how the public may observe and participate in the meeting is located below.

PUBLIC COMMENT
Public comment may only be provided in the following ways:
• In-person at the City Council Meeting;
• In writing
o Via email to [email protected]; or
o Hard copy hand delivered 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 1:00 p.m. on Thursday (the day before the City Council workshop) for your comments to be submitted to the members of the City Council with sufficient time to review the comments. You may continue to provide written comments throughout the workshop, although Council Members may not have sufficient time to review them.

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

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.

February 2 & 3, 2024
2 CALL TO ORDER

ROLL CALL ATTENDANCE

DECLARATION OF POSTING AGENDA

SILENT INVOCATION

PLEDGE OF ALLEGIANCE

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 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
GOAL SETTING WORKSHOP - FRIDAY, FEBRUARY 2, 2024 9:00 A.M.

CITY COUNCIL GOAL SETTING WORKSHOP

1. Review and discuss:
a. 2023 Accomplishments
b. Sustainable Morgan Hill
c. 2022-2023 Strategic Priorities Work Plan
d. Future Council Initiated Agenda Items
e. Remote Public Comments and Public Videos
f. Financial Update
g. Development Services Fund and Housing Laws
h. Youth Sports and Recreation Tourism
i. Economic Development

ADJOURNMENT TO SATURDAY, FEBRUARY 3, 2024 9:00 A.M.

GOAL SETTING WORKSHOP - SATURDAY, FEBRUARY 3, 2024 9:00 A.M.

CONTINUATION OF THE FEBRUARY 2, 2024, CITY COUNCIL GOAL SETTING

WORKSHOP

PUBLIC COMMENT

ADJOURNMENT
February 2 & 3, 2024
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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 request an item on the agenda for a future City Council meeting. 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].

February 2 & 3, 2024
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February 2 & 3, 2024
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City Council Goal Setting Workshop – Day 1
FRIDAY, FEBRUARY 2, 2024

ATTACHED
MATERIALS:
1) 2023 Accomplishments
2) 2022-2023 Sustainable Morgan Hill
3) 2022-2023 Strategic Priorities Workplan
4) Future Council Initiated Agenda Items
5) Remote Public Comments and Public Video
6) Financial and Investment Reports – December 31, 2023 7) Youth Sports and Recreation Tourism Background Documents 8) Economic Development Briefing
9) PowerPoint Presentation
Time Topic Presenter
9:00 AM-9:30 AM 1. Welcome Mayor Turner

1.1 Welcome Mayor & Christina
Turner

1.2 Council and Leadership Team Introductions City Council/Leadership Team

1.3 Icebreaker Christina Turner

1.4 Purpose of Goal Setting Workshop, Preview
Agenda, and Format
Christina Turner

1.5 Review of 2023 Accomplishments Christina Turner

1.6 Public Comment Mayor Turner
9:30 AM-11:45 AM 2. Sustainable Morgan Hill Christina Turner

2.1 Review of 2022-2023 Sustainable Morgan Hill Christina Turner

2.2 Review of 2022-2023 Strategic Priorities
Workplan
Christina Turner

2.3 Review Future Council Initiated Agenda Items Christina Turner

2.4 Discuss 2024-2025 Sustainable Morgan Hill Mayor & Christina Turner

2.5 Public Comment Mayor Turner
11:45 AM-12:00 PM 3. Remote Public Comments and Public Video Christina Turner

3.1 Review and Discuss Don Larkin/Michelle
Bigelow

3.2 Public Comment Mayor Turner
12:00 PM-1:00 PM Lunch Break
1:00 PM-2:00 PM 4. Financial Update Christina Turner

4.1 Financial and Investment Reports Dat Nguyen

4.2 Budget Process and Outlook Dat Nguyen

4.3 Public Comment Mayor Turner
2:00 PM-4:00 PM 5. Development Services and Housing Laws Christina Turner

5.1 Development Services Fund Jennifer Carman

5.2 Housing Laws Update Jennifer Carman

5.3 Public Comment Mayor Turner

City Council Goal Setting Workshop – Day 2
SATURDAY, FEBRUARY 3, 2024
Time Topic Presenter
9:00 AM-9:30 AM 1. City Council Goal Setting Day 1 Christina Turner

1.1 Recap of 2024-2025 Sustainable Morgan Hill Christina Turner

1.2 Public Comment Mayor Turner
9:30 AM-10:15 AM 2. Youth Sports and Recreation Tourism Christina Turner

2.1 Youth Sports and Recreation Tourism Discussion Chris Ghione

2.2 Public Comment Mayor Turner
10:15 AM-12:00 PM 3. Economic Development Christina Turner

3.1 Economic Blueprint Discussion Matt Mahood

3.2 Public Comment Mayor Turner

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
1 | P a g e

ADMINISTRATIVE SERVICES
Council Services and Records Management
• Supported Communications and Engagement efforts and activities. • Completed large records project pursuant to the Records Retention Schedule. • Successfully implemented a Laserfiche public facing link included on our website. • Successfully transitioned from virtual only City Council and Planning Commission meetings to hybrid inperson/virtual.

Finance/Budget/Utility Billing
• Successfully implemented Phase I of the Enterprise Resource Planning (ERP) system, Tyler Munis – Financials. • Updated certain user fees including Business License Renewal Fee and Credit Card Service Fee to ensure 100% cost recovery and the City’s long-term fiscal sustainability. • On behalf of the City utilities customers, applied and received $7,000 (an additional $57,000 applied with payment pending) from the State Water Resources Control Board and the California Department of Community Services and Development to help with utilities costs. This is on top of approximately $250,000 received in the prior years.
• Completed negotiations with all three bargaining groups with contracts that expired on December 31, 2023.

Human Resources
• Completed recruitments for 28 regular, benefitted positions, and onboarded 22 new teammates. • Completed negotiations with all three bargaining groups with contracts that expired on December 31, 2023. • Provided Harassment Prevention Training to City teammates. • Prepared and completed Open Enrollment 2024.
• Conducted a citywide health fair event with various vendors. • Continued to regularly follow and update COVID policies to follow CDC and County guidelines, rules, and regulations.
• Organized and hosted Teammate Service Awards.
• Hosted and participated in the Santa Clara County Leadership Academy.

CITY MANAGER
• Served as the City of Morgan Hill’s Director of Emergency Services throughout local activations. • Participated in regular meetings with Santa Clara County City Managers Association (SCCCMA), County of Santa Clara, Morgan Hill Unified School District (MHUSD), Santa Clara Valley Transportation Agency (VTA),

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
2 | P a g e
Chamber of Commerce, Emergency Operational Area Council, Gilroy, South County Youth Task Force (SCYTF), and South County Regional Wastewater Authority (SCRWA). • Attended and/or presented at the League of California Cities New Mayor’s and Council Members Academy, City Managers Conference, and Annual Conference.
• Presented “City Revenues and Financial Responsibilities” sessions at a League Conference. • Worked with NextGen of Silicon Valley and International City/County Management Association (ICMA) to develop the Emerging Leaders Talent Development Program. • Supported the City’s Diversity, Equity, and Inclusion (DEI) Taskforce efforts. • Assisted with the Mayor’s State of the City Address to the community, highlighting accomplishments, challenges, and opportunities for the coming year.
• Served on the Santa Clara Countywide Fire Service Review Technical Advisory Committee Communications and Engagement
• Successfully led the coordination of Together at National Night Out 2023 with 28 community booths, 9 City booths, and over 1,500 community members in attendance. • Successfully increased the City’s number of followers on social media. o Facebook grew by 10% to 6,006 followers
o Instagram grew by 33% to 3,002 followers
o X (Twitter) grew by 11% to 1,894 followers
• Launched ongoing Internal Communicator's Monthly Meetings designed to connect teammates across varying departments and keep them informed on citywide events, campaigns, and initiatives. • Hired new Communications Intern:
o documenting social media campaigns
o researching and drafting a Language Access Plan
o updating Digital Media Guide
• Completed website refresh and update:
o taking team and teammate photos for website (ties in with Morgan Hill Together and Communications, Outreach, and Engagement Workplan)
o reorganizing the website to be user-centric and easier to navigate • Supported multiple departments with their communications, outreach, and marketing campaigns:
o Economic Development
▪ Spring and Fall Sidewalk Saturdays
▪ 4
th Saturday Downtown Street Series
o Citywide Events
▪ State of the City Address
▪ Pridefest

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
3 | P a g e
▪ National Night Out
• Provided translation and interpretation services and support:
o interpretation for Housing Support services
o translation of MoGo marketing materials, Housing documents and forms, various environmental services programs, Transportation Master Plan documents, and other engagement and marketing materials
• Implemented monthly Spanish email newsletter.
• Staffed a monthly booth at Sidewalk Saturdays increasing community engagement and building relationships. • Onboarded and trained a Multimedia Coordinator backup to provide support and depth to the Multimedia Coordinator position such as photography and videography for City meetings. • Implementing the Meet Morgan Hill campaign, highlighting teammates throughout the organization with videos and interviews.
• Provided services to the Transportation Master Plan (TMP) by hosting a meeting about the TMP to our Spanish speakers.
• Provided video and photo services to several departments.

PUBLIC SERVICES
Environmental Services
• Received an award for a $2 million grant by the Department of Water Resources (DWR) for retrofit of the Butterfield Basin into a Multi-Benefit Basin that will help the City meet trash capture requirements and also increase groundwater infiltration.
• Utilized funds from the Silicon Valley Clean Energy (SVCE) grant to hire a new part-time teammate that has supported implementation of significant portions of the City’s Climate Action Plan (CAP) including hosting the City’s first Clean Air Week and partnering with the Library to run the Induction Cooktop Loaner Program. • Complied with new State-mandated water conservation requirements by submitting our first annual Urban Water Use Objectives Report.
• Implemented the private sewer lateral inspection program which resulted in inspection and/or repairs of 222 laterals, reducing infiltration into the City’s Wastewater System.

Engineering
• Received an award for a $4 million grant by the Department of Water Resources (DWR) for construction of a new water reservoir on East Dunne Avenue.
• Completed First Phase of Hale Avenue Extension Project opening a new roadway and multi-use trail between Spring Avenue and West Dunne Avenue.
• Completed 2020 Inflow and Infiltration Sewer Project repairing or replacing 6,000 feet of sewer line across the City.

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
4 | P a g e
• Completed Fisher Basin Expansion Project, supporting future flood protection to residents in the northern part of the City.
• Completed Galvan Park Restroom Removal and Replacement Project, installing a new self-cleaning restroom facility that improves service to the Community and reduces maintenance staffing needs. • Completed Water Main Replacement at portion of Oak View Circle and Hilltop Court replacing aging water lines at high risk of failing.
• Completed Rectangular Rapid Flashing Beacon (RRFB) and High-Intensity Activated crossWalK (HAWK) installation at La Crosse Dr., Watsonville Road, and West Middle Ave. allowing the opening of the West Little Llagas Creek Trail south of Watsonville Road to Silviera Lake. • Completed significant landslide repairs caused by 2023 rain events at three major locations. • Successfully completed the 2023 Pavement Rehabilitation Project rehabilitating significant roadways in the LaCrosse area, Main Avenue between Monterey and Butterfield and significant other areas. • Continue to support the ongoing construction of Valley Water’s Upper Llagas Creek Flood Protection Project, supporting the completion of Phase 2A, which will ultimately result in flood protection for thousands of Morgan Hill residents.
• Permitted and oversaw work for 319 encroachment permits within the City. • Successfully designed, bid, and broke ground on the new Butterfield Fire Station.

Maintenance
• Transitioned all of hard-wired irrigation controllers to smart irrigation controllers, which will support reduced water use while more efficiently managing irrigation systems citywide. • Transitioned the Heating, Ventilation, and Air Conditioning (HVAC) control systems at the Community Playhouse and Aquatics Center to a Building Management System to reduce energy costs and energy waste. • Provided 24-hour emergency response during one of the most significant storm seasons Morgan Hill has experienced.
• Successfully went from contracted janitorial service Downtown to utilizing part-time Recreation teammates. • Implemented a new location based 311 system for the community, SeeClickFix, that allows the public and staff to easily report maintenance and graffiti issues across the City. • Fully took over graffiti abatement from the Police Department and abated 305 locations of graffiti in 6 months of operating the program.

Recreation and Community Services
• Centennial Recreation Center (CRC) Memberships: Continued to build back to a peak of 4,050 membership units in the summer, 81% of pre-COVID levels. This is an increase of 450 memberships from summer 2022’s peak of 3,600 memberships.

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
5 | P a g e
• Provided financial assistance for program participation and membership and recreation programming, serving over 1,700 residents in need.
• Continued to offer online ticketing for Aquatics Center (AC) Day Use passes and the popular Summer Access Pass for CRC and AC seasonal membership, allowing for efficient customer service and improved cost recovery.
• Provided entry level and seasonal jobs to hundreds of youth and young adults at City Recreation facilities. • Worked with new City volunteers to create a Pickleball Club with approximately 100 active members. • Launched new adaptive programs for youth, adults, and teens, which includes multiple programs that are supported by volunteers, providing additional programming to students with disabilities. • Hosted Far Westerns and Adult Masters swim meet at the AC, both regional events bringing tens of thousands of visitors into Morgan Hill, supporting economic development through Sports Tourism. • Collaborated with Pony Baseball to rent field space at Community Park to help expand youth baseball programs and make improvements to the fields for the general community. • Partnered with the Morgan Hill Outdoor Sports Center (MHOSC) to operate the Outdoor Sports Center (OSC) at no direct cost to the City, balancing cost recovery and community access, by providing approximately 5,000 hours of local community sports field rentals, while also supporting economic development by hosting 20 major events.
• Collaborated with the MHOSC to enhance field sustainability by contributing over $160,000 to the facility’s replacement fund and supported the installation of field lighting on one new field at no direct cost to the City.
• Partnered with the YMCA of Silicon Valley to support the Senior Nutrition program which continued to serve close to 100 meals a day.
• Coordinated transportation for hundreds of older adults at the Senior Center, supporting rides through MoGo, Sourcewise, VTA Paratransit, and the City’s Volunteer Driver Program. • Continued to partner and host VOICES school at the Community and Cultural Center (CCC) for a second full school year.

Utilities
• Ensured water service was safely provided to residents, installing, or repairing 182 backflow devices and repairing 122 water mains and service lines.
• Completed point repairs at Del Monte and Central and at Lift station K to improve sewer flow and prevent blockage.
• Graded easement roads in the Jackson Oaks area for better access to hard-to-reach areas. • Secured four on-call consultants for Utility Planning and Engineering Services, two on-call Water and Sewer contractors, and two Hydro-Geo consultants for the City.

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
6 | P a g e
• Completed the transition to a new utility locating software system for improved utility locating services provided by the City.
• Completed the annual Consumer Confidence Report for the City’s Water System. • Completed an update to the City’s Sanitary Sewer Management Plan. • Successfully maintained and flushed the City wastewater main lines to ensure system reliability and reduce the risk of sanitary sewer overflows.
• Provided 24-hour emergency response to significant storms.

Geographic Information Systems (GIS)
• Locations of vulnerable populations including schools, pre-schools/daycare, senior-only housing, and more have been mapped for future Emergency Operations Center (EOC) use. • The BOSS811 app that assists with locating utilities was integrated with GIS so that teammates can see City utilities mapped in relation to proposed dig locations. • The utilities data catchup project to map missing utilities and improve existing mapping is nearly complete.

Public water, wastewater, stormwater, and electric light facilities were mapped for 26 developments/CIP projects. 500 mapping corrections (redlines) were reviewed and completed for water facilities. Work on wastewater redlines has begun.

Public Services General
• Supported MoGo, the City’s on-demand rideshare service operated in partnership with RideCo. Through December 2023, MoGo has provided 18,300+ passenger rides to 948 unique users since its September 2022 launch. As of the fourth quarter of 2023, MoGo is averaging 450+ passengers per week, 38% of rides are shared, and the service has an average rating of 4.8 out of 5. • Hired and onboarded 135 new part-time teammates to operate the AC, CRC, and CCC, perform parks maintenance, and support grant programs.

DEVELOPMENT SERVICES
Building
• Issued 2,009 building permits.
• Performed 10,841 inspections.
• Issued 139 new residential permits.
• Coordinated with GIS team for update of the TrakIT permit system including GIS informational services. • Developed application completion checklists for seven different permit types in accordance with AB2234. • Received a $40,000 grant to implement an automated Solar Permitting system.

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
7 | P a g e
Code Compliance
• Opened 666 code compliance cases in 2023.
• Closed 657 cases in 2023.
• Hired an additional Code Compliance Officer.

Economic Development
• Implemented 4th Saturday Downtown Street Series Activations in August, September, and October bringing thousands of visitors to Downtown Morgan Hill.
• Expanded Sidewalk Saturday Program to increase vendor participation and event footprint. • Conducted a Legislative Business Roundtable with key stakeholders and businesses. • Conducted the first Human Resources Roundtable Meeting with key employers. • Received Council approval of Fee Freeze Agreement and Fee Financing Agreement for Cutina Group (Holiday Inn Express – Cochrane).
• Supported and received Council approval for 10-year renewal of the Tourism Business Improvement District. • Received Council approval of Fee Freeze Agreement for multiple Mersho Investment industrial projects. • Supported Chick-Fil-A Internal Review Process and Conditional Use Permit (CUP) Application. • Received Council approval of a Vehicle Sales Overlay and Design Guidelines. • Supported the start-up of the Downtown Morgan Hill Improvement District (DMHID), the non-profit which is managing the Downtown Property Based Improvement District (PBID). Conducted board meetings and initiated the first action item of sidewalk power washing. • Supported Butterfield 5 leasing activity – secured first tenant: Pinnacle. • Supported recruitment of The Silos Cocktail Lounge with SBA loan connection/support. • Initiated the Morgan Hill Holiday Shopping Passport Program to promote Shop Local during the holiday season.
• Utilized SVBJ Advertising Campaign – Promoting Industrial Projects in key publications. • Secured positive SVBJ Article – “The City Checks All the Boxes,” October 2023. • Updated City of Morgan Hill marketing materials to use as sales collateral at International Council of Shopping Centers (ICSC) conferences, links on our website, and for City promotion purposes. • Holiday Inn Express (Cochrane) paid fees and submitted architectural plans. • Hotel MOHI is back under construction.
• Utilized Retail Concentration Strategy to support General Plan Amendments at Cochrane Commons II and The Gates.
• Support Rosewood Medical PD Amendment Process with bi-monthly meetings with applicant.

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
8 | P a g e
• Implemented the Outdoor Dining & Parklet Manual to improve the standards and to streamline the permitting process for restaurants who want to operate in the public right of way. • Updated the Significant Projects PowerPoint to provide more detail and consistency. • Updated California Statewide Communities Development Authority (CSCDA) Statewide Community Infrastructure Program (SCIP) and received Council approval. • Managed Management Talent Exchange Program (MTEP) Fellow who focused on updating the Entertainment and Noise Ordinances including community outreach, developed the Smart City Memo provided to Council, and supported Economic Mobility Grant.
• Supported ICMA Economic Mobility Grant Project developing deliverables for 2024 and beyond.

Housing/Homelessness
• In coordination with the Planning Team, received 6th Cycle Housing Element Certification. Conducted all community outreach and engagement.
• Facilitated Housing outreach and engagement and led 40 Affordable Housing Program communication efforts in English and Spanish through presentations and tabling at resource fairs. • Processed 211 referrals and connected with 184 households at risk of or currently experiencing homelessness by providing case management and supportive services through the City’s Unhoused Specialist. Housed 28 households, of which 12 were homeless and 16 households were at risk of becoming homeless.
• Ongoing collaboration with Saint Vincent DePaul to identify funding for local Housing Problem Solving. • Supported efforts to fundraise for local housing problem solving (County of Santa Clara Board of Supervisors committed $120,000 for Homeless Prevention in Morgan Hill). • Operated a 10-bed Inclement Cold Weather Shelter in partnership with Community Christian Church during inclement cold weather episodes, 42 nights.
• Continued to partner with the Morgan Hill Bible Church Safe Car Parking Program that operates year-round for 8 families (30 people max each night) where they are provided meals, showers, restrooms, washer and dryer, and case management by the South County Compassion Center. Permanently housed 22 program participants.
• The Destination Home capacity building grant has supported the Unhoused Specialist since December 2021.

The second annual report was completed and accepted by Destination Home, and the City received the 2nd grant installment of $150,000 to continue advancing local implementation of the Community Plan to End Homelessness.
• Continued to partner with HouseKeys to provide ongoing implementation of the Inclusionary Housing Ordinance Below Market Rate (BMR) Program, 93 ownership and 79 rental BMRs approved and in the development pipeline, plus an additional 177 ownership and 77 rentals and an additional 54 undecided (ownership or rental) units processing but not yet approved. 1,183 attendees at BMR workshops (orientations), 1,052 new potential applicants added to the database.

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
9 | P a g e
• In coordination with the Communications team, as part of the City’s Diversity, Equity, and Inclusion (DEI) efforts, launched “I BELONG, Morgan Hill," a community outreach effort to discuss how local and global events impact our Community. Issued a survey in English and Spanish.

Planning
• Completed work on the Vehicle-Miles-Traveled (VMT) policy metric for transportation analysis under the California Environmental Quality Act (CEQA) for development projects. • In coordination with Engineering, began work on the Transportation Master Plan. • Completed three sets of revisions to 2023-2031 Housing Element based on HCD comments. • Received Housing Element certification from HCD on November 29, 2023. • Received final reimbursements for both the Local Early Action Planning (LEAP) grant of $150,000 and Regional Early Action Planning (REAP) grant for approximately $27,000. • Completed and implemented a Form Based Code for Monterey Road. • Completed annual Zoning Code Update.
• Continued to implement permit processing for SB330 including utilizing updated objective criteria. • Created new guidance documents for AB2011 and SB6 (commercial land conversion to housing) application processing.
• Continued to create and improve resources for public information regarding development activity in the City. • Continued to monitor state housing legislation and provide informational items to the public and Council on new laws.

FIRE
• Welcomed the new Fire Chief, Baraka Carter.
• Welcomed the new Assistant Fire Chief, Venmer Deocariza. • Initiated construction on Butterfield Fire Station.
• Butterfield Fire Engine 59 approved and construction initiated. • Initiated workorder for Mobile Data Computers (MDC) for all Fire resources. This will enhance dispatch efforts and provide greater response time data.
• Hired, onboarded, and trained 8 teammates: 6 Engineer Paramedics, 1 Engineer, and 1 Staff Services Analyst. • Partnered with Red Cross to install smoke detectors in under resourced residences during the Sound the Alarm event.
• Participated in Santa Clara County Strike Team and Mutual Aid Deployment Exercise.

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
10 | P a g e
• Solidified partnership with Santa Clara County Justice Training Center, providing Advanced Life Support (ALS) standby during combat trainings.
• Engine crews continued to engage in Community events including 4th Saturday Downtown Street Series, Farmers Markets, Magical Bridge Playground one-year anniversary, National Night Out, and multiple school tours and educational events.
• Reviewed and provided comments on the Santa Clara County LAFCO Countywide Fire Service Review POLICE
Administrative
• Transitioned to new report writing software, fleet monitoring system, and Axon Officer Safety Plan. • Participating in the 30X30 Initiative to increase representation of women in policing. • Police Chief holding Santa Clara County Police Chiefs’ Association President position for Fiscal Year 2023- 2024.
• Implemented Department’s first carrying a concealed weapon program. • Recruited, hired, and trained nine (9) teammates: 4 Police Officers, 2 Dispatchers, 2 Multi-Service Officers, and 1 Community Service Officer.
• Expanded Flock Safety License Plate Recognition system from 25 to 50 locations throughout the City. • Re-implemented Community Police Academy in English and held first Community Police Academy in Spanish. • First department in Santa Clara County to train officers in Active Bystandership for Law Enforcement (ABLE), a program in partnership with Georgetown University to prepare officers to successfully intervene to prevent harm and to create a law enforcement culture that supports peer intervention. • The Department received Morgan Hill Chamber of Commerce’s Special Merit Award for Community Service. • Project management of Police Department expansion into adjacent building space. • Supported Information Technology Team with citywide security, projects, and leadership. • Hosted National Night Out event in conjunction with larger City hosted community event with 1,500 to 2,000attendees.
• Presented First Annual Military Equipment Use Report. • Re-implemented Police Explorer Volunteer Program.

Patrol Division
• Maintained response time to Priority One Calls for Service under 8 minutes; the average response time was 3 minutes and 41 seconds.
• Patrol responded to 36,384 calls for service.

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
11 | P a g e
• The Department generated 2,897 police reports and 1,780 supplemental police reports. • Officers utilized Flock cameras as a crime reduction strategy from August 2021 to December 2023, which resulted in a decrease in property crimes and 246 arrests with 823 criminal offenses charged. • The Department received two traffic grants for a total of $70,000. • Enhanced traffic safety measures and increased the Traffic Team by adding a Police Corporal, making it a team of 3.
• Traffic and Patrol Officers were assigned Downtown as a pilot program to reduce collisions, speed, and quality of life issues.
• Officers made 248 Driving Under the Influence arrests. • Deployed the City’s Community Emergency Response Team (CERT) during the 4th of July weekend to high fire locations to monitor and deter the use of illegal fireworks. • Officers engaged in Community Policing activities to include, but not limited to, participating in events at Park Place, bicycle patrol Downtown, Outdoor Movie Series, Farmers’ Market, and other community events. • The Crime Prevention Unit participated in 34 community meetings on a variety of crime topics. • Collaborated with the Santa Clara County’s Mobile Crisis Response Team (MCRT) and addressed chronic persons who were in crisis or in need of resources.
• Utilized Homeland Security Grant for the purchase of 2 additional incursion barriers (now totaling 4). The barriers were used at special events such as Mushroom Mardi Gras and National Night Out. • Officers completed their mandated POST training, along with DEI training (specifically, LGBTQ+, Harassment Prevention Training, and Autism Awareness training).
• Officers have been trained in the administration of NARCAN and carry Automated External Defibrillators (AED) in each patrol vehicle which has resulted in no less than 7 lives saved. • Strengthened our partnership with County and faith-based organizations by applying best practices for our unhoused population.
• Attended a total of 7 Faith and Blue events for the annual National Faith and Blue event. • Conducted activities as part of Vision Zero Morgan Hill effort:
o Coordinated with MHUSD and American Medical Response (AMR) to offer driving under the influence programs at local high schools (e.g., Sober Graduation, Zero Tolerance) o Department had zero fatal collisions in 2023
o Injuries collisions down 16% from 2022
Special Operations Division
• In the summer of 2023, the City experienced over 10 fires including the Hale Lumber construction site. The Special Operations team was able to identify and arrest the primary suspect. The primary suspect later admitted to setting 14 fires throughout the South County region.

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
12 | P a g e
• The Special Operations team identified and arrested a second arsons suspect who was responsible for lighting four fires during the same evening and four additional fires in the South County region. • The Special Operations team conducted a several month surveillance operations resulting in the arrest of multiple suspects, closing out two unsolved homicides.
• Had a clearance rate of 74% for Crimes Against Persons (statewide average 41%). • Had a clearance rate of 24% for Crimes Against Property (statewide average 7%). • Provided community trainings related to fraud protection and cyber-crimes awareness. • Implemented a Psychiatric Emergency Response Team (PERT) in partnership with County Behavioral Health Services, with one detective and a licensed mental health clinician. • Conducted a multi-agency Active Shooter training based on the revised county-wide protocol. • Council approved a Community Service Officer (CSO) to manage the Youth Diversion Program. • Implemented Youth Restorative Justice Program diverting youth from the criminal justice system and continued our partnership with MHUSD on providing Restorative Justice Practices for our students. • School Resource Officer and the Community Tobacco Enforcement Officer partnered with MHUSD to provide training to students and staff on the dangers surrounding vaping, tobacco use, and distracted driving. • Conducted Run, Hide, Defend trainings at MHUSD schools, local private schools, and businesses. • Conducted a majority of Graffiti Abatement within 48 hours of notification. • Participated in the Regional Enforcement Allied Computer Team (REACT). • Participated in Regional Auto Theft Task Force (RATTF). • Actively used social media platforms to inform and educate the Community about police activity and public safety announcements.
• Actively participated in the South County Youth Task Force (SCYTF).

Support Services Division
• Answered 98.54% of 911 calls under 10 seconds.
• Handled 36,384 incidents (calls for service and officer-initiated activity), including 388 priority one calls and 117 felony car stops.
• Revitalized social media strategy and increased engagement with 40% more visits to the page, median posts/likes/shares to 271, and grew to an expanded reach of over 240K people. • Property and evidence technician received 186 firearms as evidence or safekeeping. • Submitted over 1,500 cases to the Santa Clara County District Attorney’s Office for prosecution (47% increase from 2022; 68% increase from 2021).

Selected vendor for Next Generation 911 phone upgrade. This will provide emergency dispatchers with enhanced technology, including the ability to receive images and videos.

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
13 | P a g e
• Prepared to transition to Next Generation 911 once CalOES lifts statewide stop-clock. • Participated in and implemented the Criminal Justice Information Control (CJIC) decommission and replacement solution.
• Expanded electronic transmission of records to DMV, Parking Citation Management, and Santa Clara County Court System.
• Received certification from the Department of Justice for compliance with California Incident Based Reporting System (CIBRS).
• Researched and selected Axon software as our new records management system. The purchase of the Axon RMS completes the technology ecosystem that integrates Taser, in-camera car cameras, body worn cameras, weapon sensors, digital evidence storage, records management, and computer aided dispatch.

Office of Emergency Services
• Gained approval for the Emergency Management Performance Grant to purchase Emergency Operations Center (EOC) equipment to enhance emergency readiness.
• Oversaw Santa Clara County Leadership Academy’s Continuity of Operations Plan (COOP) project. • Enhanced Emergency Sheltering Capabilities with City Disaster Service Workers including training, functional needs including inclusiveness, and adding additional shelter sites in the Community. • Ran Community Emergency Response Team (CERT) training in person and virtually. Held the first private sector CERT training with Specialized Bicycle Components. • Completed Listos Emergency Preparedness training program, now available to all Community members on the City’s YouTube channel and available in person by request.

Information Technology (IT)
IT Security
• Expanded authentication offerings for Multi-Factor Authentication (MFA). • Upgraded access control system.
• Isolated Heating, Ventilation, and Air Conditioning (HVAC) traffic to separate network. • Created secure connection and monitored connections for vendor access. • Deployed a more robust antivirus solution.
• Deployed new remote assistance tools to facilitate IT support for teammates. • Deployed and secured new forensic workstation.
• Upgraded multiple systems to support levels, ensuring security and compliance. • Conducted internal audit of accounts and computers.
• Leveraged JPA resources for cybersecurity auditing and compliance.

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
14 | P a g e
• Deployed additional email security enhancements.
• Procured and deployed new Firewalls.
• Created diverse, redundant and failover systems.
• Implemented best practices for server configurations. • Deployed DMZ network to add an extra layer of protection from untrusted network traffic. • Completed audits and removed legacy connections and configurations. • Procured new network switches.
• Decommissioned legacy solutions.

IT Projects
• Completed procurement of equipment needed for datacenter refresh. • Completed procurement of new backup and recovery storage solution. • Deployed new wireless access points and switches to City Hall and Council Chamber Buildings. • Citywide printer refresh with improved deployment and management. • Upgraded Council Chamber West Conference room to provide hybrid meeting space. • Installed and configured new datacenter equipment in Council Chamber. • Stabilized Police Department uninterruptible power supplies (UPS), preventing system outages and disruption.
• Completed Cal Fire Automatic Vehicle Location (AVL) support:
o New managed Apple IDs for iPads
o Deployed custom app, Radio Mobile, using mobile device management (MDM) platform • Installed and configured new data center in the Police Department. • Installed new isolated and secure supervisory control and data acquisition (SCADA) system. • Assisted with the implementation of phase 1 of the Enterprise Resource Planning (ERP) software. • Completed AXON Cradlepoints and Fleet 3 installation in Police vehicles. • Completed audit of cell phones.
• Procured and deployed ID printers for access control system. • New rugged Mobile Data Terminal (MDT) deployment.
• Deployed new call logger.
• Migration to a single domain and decommissioned morgan-hill.ca.gov. • Granite Project – consolidation of Frontier and Verizon telecommunications.

ACCOMPLISHMENTS
JANUARY – DECEMBER 2023
15 | P a g e
IT Helpdesk
• Deployed computer imaging – efficiency for standardizing computer deployment. • Deployed new workstations in Dispatch, 12 new computers, 3 MDTs, 22 re-imaged computers, and 15 new monitors.

IT Leadership
• Partnered with GIS to implement best practices for modernizing and integrating with other applications. • Partnered with the Police Department to implement new cloud-based software. • Performed a citywide telecommunications analysis.

REVISED JANUARY 24, 2024
Strategic Priorities 2022-2023
City of Morgan Hill Strategic Priorities Workplan 2022-2023 # Activity Goals
Fiscal Sustainability Affordable Housing & HomelessnessCommunity Engagement & Messaging Economic Development Transportation Status % Complete for In Process Activities Estimated Completion By City Manager
1 Ensure Departments maintain focus on cost
containment and continue to actively pursue
County, State, and Federal funding
X Ongoing
2 Advocate with regional partners for the clearly
identified traffic and transportation issues,
including the High-Speed Rail, Hale Avenue
extension, expansion of Highway 101,
electrification of commuter rail, and funding for
priority projects in South Santa Clara County
X X Ongoing
3 Represent the City’s interests by regularly
meeting with County of Santa Clara, MHUSD,
Santa Clara Valley Transportation Agency (VTA),
Chamber of Commerce, Emergency Operational
Area Council, Gilroy, and South County Regional
Wastewater Authority (SCRWA), and Cal Cities
X X X X Ongoing
4 Work with the City departments to implement a
work plan for Diversity, Equity, and Inclusion
X X X X Ongoing
Communications and Engagement
5 Continue outreach and bilingual
communication
X X Ongoing
6 Implement the Communications, Outreach, and
Engagement Plan
X X Ongoing
7 Implement Morgan Hill Together celebrating our
diverse community through events and
educational campaigns
X In Process 50% Fall 2024
8 Perform Website refresh X Complete 100% Winter 2023
9 Develop and implement a customer service
training program for teammates
X In Process 20% Spring/Summer 2024
City Attorney
10 Communicate with Council and the community
regarding changes to the Housing
Accountability Act and advocate for measures
to mitigate potential impacts
X X Ongoing
Human Resources
11 Negotiate fiscally responsible labor agreements
with the City's three bargaining groups, for
contracts expiring in December 2023
X Complete 100% December 2023
Council Services and Records Management
12 Implement hybrid City Council and Planning
Commission meetings
X Complete 100% Winter 2022
Finance/Budget/Utility Billing
13 Explore new or expand existing tax revenue
sources to address City's unfunded needs
X X Ongoing
14 Implement new Enterprise Resource Planning
System to replace the outdated system
X In Process 40% December 2024
15 Review and adjust certain impact and user fees
to ensure the long-term sustainability of the
City's critical infrastructure and services
X Ongoing
Public Services
16 Support ongoing coordination with Visit Morgan
Hill, MHOSC, the operator of the Outdoor Sports
Center, and the team at the Aquatics Center to
host regional sports events, while minimizing
impact to the community
X X X Ongoing
17 Create and manage a volunteer program for the
Magical Bridge Playground in Community Park
X Ongoing

REVISED JANUARY 24, 2024
Strategic Priorities 2022-2023
City of Morgan Hill Strategic Priorities Workplan 2022-2023 # Activity Goals
Fiscal Sustainability Affordable Housing & HomelessnessCommunity Engagement & Messaging Economic Development Transportation Status % Complete for In Process Activities Estimated Completion By 18 Explore alternative options for management of
the City's open space
X In Process 50% Fall 2024
19 Continue to monitor and adjust water
restrictions to meet local and state water
conservation efforts
X Ongoing
20 Implement Climate Action Plan X Ongoing
21 Establish new solid waste management
franchise agreement for Gilroy and Morgan Hill
X Complete 100% Summer 2022
22 Continue to implement the new and significant
organic waste management regulations adopted
by the State under SB 1383
X Ongoing
23 Continue participation with Valley Water and the
City of Gilroy in working towards recycled water
opportunities for the City of Morgan Hill
X Ongoing
24 Develop the City’s first Transportation Master
Plan in coordination with the update to the
City’s General Plan Transportation Element
X In Process 35% Winter 2024
25 Complete the Hale Avenue Extension Project X In Process 90% Fall 2023 26 Initiate on-demand last mile transit service for
the Morgan Hill Community
X Complete 100% Fall 2022
27 Collaborate with City of Gilroy and elected
officials on advocacy for the South County
Transportation Corridor; VTA, Caltrain, Highway
101 expansion, and electrification of commuter
rail
X Ongoing
28 Update Street and Sidewalk Development Code X
Deferred due to staffing
resources and addressing State
mandated regulatory programs
TBD
Fire
29 Plan for the addition of a third fire station X X X In Process 25% Fall 2024 30 Negotiate Cooperative Agreement for Fire
Protection with CAL FIRE
X Complete 100% Summer 2023
Police and Information Technology
31 Strengthen partnerships with County and faithbased organizations to apply best practices for the unhoused population
X Ongoing
32 Address quality of life issues in partnership with
the City's Housing Department
X Ongoing
33 Present at least two Parent Project classes per
year in English and Spanish in partnership with
the Office of the District Attorney and/or Morgan
Hill Unified School District
X Ongoing
34 Host Community Police Academy in Spanish X Complete 100% Fall 2023 35 Enhance Listos Program including recruitment
of Listos Program Instructor, organize and
deliver Spanish language community training
X Complete 100% January 2024
36 Create criteria, train, and implement CERT
Neighborhood Teams
X Complete 100% July 2023
37 Continue to use social media to inform and
educate the community of police activity and
public safety announcements
X Ongoing
38 Re-implement the following Community
Programs that were suspended because of
COVID-19: Community Police Academy, Police
Explorer Program, Parent Project, Crime
Prevention meetings, Volunteers in Policing, and
Cadet Program
Complete 100% Summer 2023
39 Implement IT processes that enhance
productivity and increase efficiencies such as
helpdesk system, disaster recovery plan,
remote assistance tools, and mobile device
management system
X Ongoing

REVISED JANUARY 24, 2024
Strategic Priorities 2022-2023
City of Morgan Hill Strategic Priorities Workplan 2022-2023 # Activity Goals
Fiscal Sustainability Affordable Housing & HomelessnessCommunity Engagement & Messaging Economic Development Transportation Status % Complete for In Process Activities Estimated Completion By 40 Implement a highly available and manageable
network architecture to achieve sustainability,
reduced complexity, regulatory compliance,
security, and resiliency
X Complete 100% Winter 2023
41 Complete management and installation of
WAVE broadband connectivity to all City
buildings
X X Complete 100% Winter 2022
Development Services
42 Create and implement Citywide Outdoor Dining
Manual
X X X Complete 100% Winter 2022
43 Re-establish a PBID in Downtown X X Complete 100% Summer 2023 44 Manage Auto Dealer and Fee Freeze Programs
to attract new investment.

X X Ongoing
45 Create Hotel Development Incentive strategy
and policy
X X X Complete 100% Fall 2022
46 Implement Economic Development Outreach
Campaign to attract new advanced
manufacturing, office, innovation, and medical
users
X X Ongoing
47 Create Retail Concentration Strategy X X Complete 100% Fall 2023 48 Update Housing Element for 2023-2031 and
respond to RHNA Goals
X X Complete 100% Fall 2023
49 Update Circulation, Infrastructure and Safety
Element
X X Commencing Soon Fall 2025
50 Prepare Environmental Justice Element X Commencing Soon Fall 2024 51 Prepare LOS-VMT Model and policy guide X In Process 90% Spring 2024 52 Continue various housing and homelessness
initiatives: implementation of the Housing
Element, Safe Park Program, Inclement Weather
Shelter Program, and Case Management
X Ongoing

Future Council Initiated Agenda Items
Meeting
Date
Council
Member Request Teammate Estimated Completion
11/15/2023 Borgioli Fines for property owners for vacant buildings Mahood February 2024 Goal Setting
11/1/2023 Martinez
Beltran
Zoom public comment and displaying the
names of Zoom participants Bigelow February 2024 Goal Setting 10/4/2023 Turner Youth sports and recreation tourism Ghione February 2024 Goal Setting 10/4/2023 Martinez
Beltran Economic Blueprint and focus on tourism Mahood February 2024 Goal Setting 10/4/2023 Turner Funding mechanism for public art Ramirez April 17, 2024 6/21/2023 Martinez
Beltran Ag policy to conserve land Ramirez May 15, 2024 6/7/2023 Turner Fundraising or panhandling around medians Larkin/Palsgrove March 6, 2024 5/3/2023 Spring Term limits for Council and Commissioners Larkin/Bigelow January 17, 2024 and February 21, 2024
4/5/2023 Borgioli Ordinance prohibiting smoking in multi-unit properties Larkin February 21, 2024
2/16/22 Borgioli Noise ordinance for Downtown Larkin/Ramirez November 15, 2023 and Spring 2024
10/2/19 Spring CCC Parking Enforcement (will coordinate with Lumber Yard Development Project) Ghione Staff Memo upon completion of project revised 1.25.24

Memorandum
City Clerk's Office
Date: January 25, 2024
To: Christina Turner
From: Michelle Bigelow
Subject: Remote Public Comments and Public Video
At the October 4, 2023, City Council meeting, hateful and hostile comments were made by people participating on Zoom for public comment. This occurred in Morgan Hill and throughout the nation. In response, public comment on Zoom was no longer allowed. Several factors contributed to this decision:
• Promoting a safe and inclusive space: the City works to create an environment where everyone feels safe and respected during public meetings. Hate speech can create a hostile atmosphere that hinders meaningful public participation and disrupts the purpose of the meetings.
• Protection of vulnerable communities: hate speech often targets specific communities based on their characteristics, such as race, religion, gender, or sexual orientation. Taking steps to prevent hate speech protects these communities from harm and harassment.

Further, as an employer, the City must take reasonable steps to prevent exposure to verbal conduct based on protected classifications (including race, religion, gender, and/or sexual orientation) that are objectively and subjectively offensive. • Ensuring efficient meetings: the City's goal is to conduct productive and efficient meetings that allow for the exchange of diverse opinions and ideas. Hate speech can disrupt these meetings, making maintaining a respectful and constructive environment challenging.

Through this change, the City of Morgan Hill aimed to strike a balance between promoting free speech and protecting the safety and dignity of all participants in its public meetings.

The State's Brown Act, which governs public access to government meetings, only requires cities to offer the public a chance to comment at public sessions in person. Since the pandemic, many cities have allowed the public to comment by Zoom or phone. However, a growing number of cities in the Bay Area, including Morgan Hill, have moved to prohibit remote comments because of the increasing incidents of antisemitic callers.

A staff report was presented at the City Council meeting on December 6, 2023. The City Council directed staff to explore options to allow for public comment on Zoom requiring registration/authentication.

Staff is seeking direction from the City Council on:
• Does the Council wish to allow remote public comments? o If yes:

1. Does the Council wish to put a registration and/or verification in place?

2. Does the Council wish to show a list of names for all remote participants?

3. Does the Council wish to allow or require meeting attendees to show their video?
Registration/Verification Options for Remote Public Comment Should the City Council decide that it wants to allow remote public comment and to put measures in place to help protect employees and the Community from hostile verbal conduct, there are a few options to consider:
• Option 1: Require both registration and authentication on Zoom o Uses an existing available tool requiring no additional expenditures or staff management of another program during City Council meetings o Requires minimal additional staff time to verify/manage speakers o Authentication allows the host (the City) to restrict webinar attendees to sign-in users only, confirming that they have a legitimate email account o Registration allows the host to view and manage the registrants, be aware of how many will potentially join, and it ensures that attendees do not share their attendance link with others, ensuring that each person joining has to register with a unique email address
o Scheduling a webinar with registration requires registrants to complete a brief form before receiving the link to join the webinar. This allows the agency to collect the names, email addresses, and other information from the registrants o It can be set not to allow attendees to change their name • Option 2: Require registration through an online form o Requires speakers to sign up via an online form on the City website o Requires a cutoff time to allow staff review
o Requires more staff time to manage speakers/requests
o No added cost, as the form would be created through the City's website o Registration allows the host to view and manage the registrants, and be aware of how many will potentially join
• Option 3: CivicBell Virtual Speaker Card
o This product is still in the beta testing phase and has no current agencies using it o Ensures the speaker is a real person and not a "bot"
o Prevents participant from changing name
o Cost $2,000 annually
o Requires an additional tool and additional staff time * Important note: We cannot prohibit speakers from using assumed or false names. None of the options listed above stop workarounds, and we may still experience hate speech and use of vulgar names.

Meeting Attendee Video
Staff recommend against allowing remote meeting participants to show their video. We are seeking a balance between inclusion and protection. For in-person meetings, we leverage uniformed Police presence for physical protection. We protect online meetings by leveraging software restrictions such as not allowing video and requiring running the latest software version.

It was just four months ago when we experienced extremely disturbing hate speech in a meeting, amplifying the urgency of our security measures. Before that incident, we had inappropriate graphic images displayed on two separate occasions at City meetings. "Zoom bombing" is so serious it is now considered a federal crime. The reality is that security is in direct conflict with convenience. However, convenience is no longer an acceptable reason to reject necessary security measures.

Staff believes the Council should consider the continuation of our existing practice, which permits public comments exclusively in person or in writing. This approach is not only a pragmatic response to the escalating threats we face but also a commitment to prioritizing the safety and integrity of our meetings.

FINANCE DEPARTMENT

CITY OF MORGAN HILL
December 31, 2023 - 50% of Year Complete
Prepared by:

Monthly Financial and Investment Reports

CITY OF MORGAN HILL, CALIFORNIA
FINANCIAL STATEMENT ANALYSIS - FISCAL YEAR 2023-24
FOR THE MONTH ENDED DECEMBER 2023 – 50% OF YEAR COMPLETE  General Fund – Revenues through December totaled $17.0 million, or about 32% of the budgeted revenues as some of the major revenue categories such as property tax are received later in the fiscal year. With respect to the property tax revenue forecast, the County estimates the City will receive approximately $19.0 million in property tax revenue for the current fiscal year, about $0.5 million more than the budget of $18.5 million. As for sales tax, HdL, the City's sales tax consultant revised the City's current fiscal year sales tax revenue estimate, before tax rebates, to $12.6 million, a slight improvement from prior estimate but still below the current budget by about $0.1 million, partially attributable to falling gas prices.

The chart below shows historical General Fund revenues by major revenue category from FY19-20 through FY22-23 Actual, FY23-24 Budget, and YTD as of December 31, 2023.

General Fund expenditures and encumbrances through December totaled $30.7 million, of which approximately $3.3 million is attributable to outstanding encumbrances, compared to prior year expenditures, including encumbrances, of $29.7 million. This represents an increase of $1.0 million, including encumbrances, compared to the prior year. Excluding the encumbrances, expenditures increased by about $1.0 million mainly due to new programs such as Innovative Transit, continued recovery in Recreation Services, as well as overall cost increases.  Community Services – The Community Services Department’s recreation operations, as reflected in the schedule presented on page 7 of the Monthly Financial and Investments Reports, shows a negative impact to the General Fund of approximately $1.4 million as of December 31, 2023. Recreation Services revenues continue to recover from the pandemic and are on target with budget. $14.5 $16.0 $16.7 $18.1 $18.5
$9.7 $11.0 $12.9 $12.7 $12.7 $4.6
$4.4
$5.9 $5.7 $5.8 $8.3 $5.7
$7.5 $9.3 $10.0
$3.6
$9.7
$9.1 $6.6 $6.5
$40.6
$46.8
$52.1 $52.4 $53.5
$17.0
0 10
20 30
40 50
60 FY19-20 FY20-21 FY21-22 FY22-23 Budget
FY23-24
YTD
FY23-24
Millions ($)
Historical GF Revenues
Property Tax Sales Tax Franchise and Hotel Taxes Service Charges Other

CITY OF MORGAN HILL, CALIFORNIA
FINANCIAL STATEMENT ANALYSIS - FISCAL YEAR 2023-24
FOR THE MONTH ENDED DECEMBER 2023 – 50% OF YEAR COMPLETE The chart below shows the historical net impact of Recreation Operations to the general fund.

Due to longstanding governmental accounting and budgeting convention, the City’s recreation operations are not charged for indirect costs (known in Morgan Hill as “General Fund Administration”) from the central services departments of City Attorney, City Manager, and Administrative Services.

The City’s other governmental funds, such as Development Services, and the proprietary funds, such as Water and Wastewater, and the Information Services Fund, are assessed such charges through the City’s indirect cost allocation plan, prepared in compliance with the guidelines set forth in the Code of Federal Regulations Title 2, Chapter II, Part 200 (formerly OMB Circular No. A-87), which mandates certain calculation and cost allocation practices that must be followed in order to qualify for Federal grant funding, but which also represents best practice for non-grant funded City operations like utilities and information services.
 Development Services Fund – Revenues through December totaled $2.1 million compared to prior year to date amount of approximately $3.5 million. Expenditures, including encumbrances, totaled $2.9 million.
 Debt Service Funds – Expenditures through December totaled $0.6 million. The debt service for the first half of the year includes both interest and principal, while the second half of the year will include interest only. Debt service payments were all scheduled when the bonds were issued and are budgeted for in the months delineated in the underlying bond documents. The General Fund’s portion of the annual debt service payments is approximately $200,000, less than one percent of the General Fund’s budgeted revenues.
($2.0)
($1.5)
($1.0)
($0.5)
$0.0
$0.5
FY14-15 FY15-16 FY16-17 FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 FY22-23 FY23-24 Budget
Millions (S)
Historical Net GF Impact

CITY OF MORGAN HILL, CALIFORNIA
FINANCIAL STATEMENT ANALYSIS - FISCAL YEAR 2023-24
FOR THE MONTH ENDED DECEMBER 2023 – 50% OF YEAR COMPLETE  Wastewater Operations – Revenues through December 31, 2023 totaled $6.4 million. Expenditures and outstanding encumbrances totaled $6.9 million or 44% of the budget. The table below shows historical Wastewater Operations revenues and expenditures from FY19-20 through FY22-23 Actual, FY23-24 Budget, and YTD as of December 31, 2023.
(amount in millions) FY19‐20 FY20‐21 FY21‐22 FY22‐23
Budget
FY23‐24
YTD
FY23‐24
Revenues             11.9 13.3                         14.9 15.3                            15.6                 6.4 Expenditures             12.3 13.3                         14.8 16.0                            15.6                 6.9 Operating Margin              (0.4) ‐               0.1                                (0.7) ‐                              (0.5) Operating Margin
without Encumbrances              (0.1) ‐               0.1                                (0.7) ‐                              (0.4)  Water Operations – Water Operations includes Utility Billing, Water Conservation, and Water Operations. Revenues through December 31, 2023 totaled $8.7 million. Water Operations expenditures, including outstanding encumbrances, totaled $10.1 million. Morgan Hill residents consumed about the same amount of water through December compared to the prior three-year average.

As such, no revenue stabilization water rate was implemented. The table below shows Water Operations revenues and expenditures from FY19-20 through FY22-23 Actual, FY23-24 Budget, and YTD as of December 31, 2023.
(amount in millions) FY19‐20 FY20‐21 FY21‐22 FY22‐23
Budget
FY23‐24
YTD
FY23‐24
Revenues 15.3               16.5             16.0             18.1             19.8                               8.7 Expenditures              16.4            16.5            15.2 18.0                           20.3               10.1 Operating Margin               (1.1)              ‐ 0.8                             0.1                (0.5)                (1.4) Operating Margin
without Encumbrances               (0.1)                ‐ 0.8                                 0.1                (0.5)                 (0.6)  Investments – Eight securities were called, and four new securities were purchased. Total interest earnings received on investments were $454,000 during the month.

% OF ACTUAL PLUS % OF

FUND NAME ACTUAL BUDGET ENCUMBRANCES BUDGET
General $ 17,017,690 32% $ 30,731,548 51%
Development Services 2,103,661 33% 3,088,166 48%
Housing Successor Agency 140,942 59% 858,977 73%
Wastewater Operations 6,403,875 41% 6,903,972 44%
Wastewater Other 4,564,185 46% 9,248,937 21%
Water Operations 8,744,466 44% 10,098,897 50%
Water Other 4,082,035 47% 2,233,388 12%
Other Special Revenues * 3,544,772 42% 3,413,654 36%
Capital Projects & Streets 4,475,766 32% 26,072,435 61% Debt Service 341,928 50% 561,384 83%
Internal Service 6,144,549 48% 7,751,515 57%
TOTAL FOR ALL FUNDS 57,563,868 $ 38% $ 100,962,872 44%
* Includes all Special Revenue Funds except Development Services Fund, Street Funds, and Housing Successor Agency.

REVENUES EXPENSES
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
General
Development
Services
Housing
Successor
Agency
Wastewater
Operations
Wastewater Other
Water Operations
Water Other
Other Special
Revenues *
Capital Projects
& Streets
Debt Service
Internal Service
Morgan Hill YTD Revenue & Expense Summary
December 31, 2023 - 50% of Year Complete
Revenues to Budget Expenses to Budget
Percentage of Actual to Budget
50%

% OF PRIOR YEAR % CHANGE FROM

REVENUE CATEGORY BUDGET ACTUAL BUDGET TO DATE PRIOR YEAR Property Tax 18,472,000 $ 2,774,146 $ 15% 2,694,903 $ 3% Sales Tax 12,673,967 4,391,692 35% 4,458,146 -1%
Franchise Tax 2,983,800 687,037 23% 523,586 31%
Hotel Tax 2,800,000 1,023,294 37% 1,149,936 -11%
Other Agencies 1,011,233 435,995 43% 403,408 8%
Service Charges 10,036,079 5,031,285 50% 4,496,551 12%
Interest/Other 2,143,687 1,211,237 57% 807,705 50%
Transfers In 3,342,540 1,463,004 44% 1,413,239 4%
TOTAL REVENUES 53,463,306 $ 17,017,690 $ 32% 15,947,474 $ 7% 0% 10% 20% 30% 40% 50% 60%
Property Tax
Sales Tax
Franchise Tax
Hotel Tax
Other Agencies
Service Charges
Interest/Other
Transfers In
Total Revenues
Percent of Actual to Budget
Morgan Hill YTD General Fund Revenues
December 31, 2023 - 50% of Year Complete
50%

ACTUAL PLUS PRIOR YTD PLUS % CHANGE FROM
EXPENDITURE CATEGORY BUDGET ENCUMBRANCES % OF BUDGET ENCUMBRANCES PRIOR YEAR Administration $ 6,489,162 $ 3,321,918 51% 3, $ 328,071 0% Community Services 17,780,940 9,262,341 52% 8, 560,791 8% Police 23,056,204 11,394,104 49% 10, 360,731 10%
Fire 9,139,905 4,701,301 51% 4, 451,755 6%
Transfers Out 3,263,767 2,051,884 63% 3, 043,657 -33%
TOTAL EXPENDITURES $ 59,729,978 $ 30,731,548 51% 29, $ 745,005 3% 0% 10% 20% 30% 40% 50% 60% 70%
Administration
Community
Services
Police
Fire
Transfers Out
Total Expenditures
Percent of Actual to Budget
Morgan Hill YTD General Fund Expenditures
December 31, 2023 - 50% of Year Complete
50%

City of Morgan Hill
Recreation Report - Fiscal Year 2023-24
For the Month Ended December 31, 2023
50% of Year Complete
% of
Budget December 2023 YTD Budget
Revenues
Membership Services & Rec Programs 5,656,265 $ 406,231 $ 2,948,027 $ Facility Rentals 1,203,269 95,415 749,523
Community Services 152,498 1,814 14,592
Transfers in 75,000 6,250 37,500
Total Revenues 7,087,032 $ 509,709 $ 3,749,642 $ 53%
Less: Expenditures
Membership & Program Services $ 817,937 7,268,962 $ 3,477,849 $ Facility Rentals 573,524 63,914 294,166
Community Services 672,192 68,309 285,767
Total Expenditures 8,514,679 $ 950,159 $ 4,057,782 $ 48% Net Impact without encumbrances (1,427,647) $ (440,449) $ (308,141) $ Encumbrances - - 1,073,150
Net Impact with encumbrances (1,427,647) $ (440,449) $ (1,381,291) $

The chart below shows cash balances by fund type reconciled to City's financial system:

City of Morgan Hill
Monthly Investment Report ‐ December 31, 2023
The following are the snapshots of City's investment portfolio as of December 31, 2023. The first chart shows the portfolio composition by investment type:

LAIF ‐ <$0.1M
<1%
CA Class ‐ $18.0M
10%
Treasury  ‐ $7.9M
5%
Money Market ‐
$5.2M
3%
Federal Agency Issues ‐
$138.3M
77%
Certificate of Deposits ‐
$2.3M
1%
Bond Reserves/Trust ‐
$7.6M
4%
Investment Portfolio Composition ‐ $179.4 Million
Cash & Other Deposits ‐ <$0.1M
<1% LAIF ‐ <$0.1M
CA Class ‐ $18.0M
Treasury  ‐ $7.9M
Money Market ‐ $5.2M
Federal Agency Issues ‐
$138.3M
Certificate of Deposits ‐
$2.3M
Bond Reserves/Trust ‐
$7.6M
Cash & Other Deposits ‐
<$0.1M
General Fund, $29.0M Community
Development, $0.5M
Housing Successor
Agency/ CDBG, $3.9M
Water ‐ Operations,
$2.9M
Water Other, $26.2M
Sewer ‐ Operations,
Sewer Other, $43.4M $1.5M
Other Special Revenue,
$10.4M
Streets and Capital
Projects (except RDA),
$36.2M
Debt Service, $0.1M
Internal Service,
$24.4M
Agency Funds (assessment
dists./refundable deposits), $0.9M
Cash Balances by Fund Type ‐ $179.4 Million

The following chart illustrates a yield comparison by month among the City's portfolio, LAIF and 2‐Year US Treasury:

The chart below illustrates monthly average days to maturity of the City's portfolio along with the weighted average yield for the past two years:

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%
Dec‐21
Jan‐22
Feb‐22
Mar‐22
Apr‐22
May‐22
Jun‐22
Jul‐22
Aug‐22
Sep‐22
Oct‐22
Nov‐22
Dec‐22
Jan‐23
Feb‐23
Mar‐23
Apr‐23
May‐23
Jun‐23
Jul‐23
Aug‐23
Sep‐23
Oct‐23
Nov‐23
Dec‐23
Yield Portfolio vs. Benchmarks
LAIF City 2 Yr US‐Treasury

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%
680
700
720
740
760
780
800
820
Dec‐21
Jan‐22
Feb‐22
Mar‐22
Apr‐22
May‐22
Jun‐22
Jul‐22
Aug‐22
Sep‐22
Oct‐22
Nov‐22
Dec‐22
Jan‐23
Feb‐23
Mar‐23
Apr‐23
May‐23
Jun‐23
Jul‐23
Aug‐23
Sep‐23
Oct‐23
Nov‐23
Dec‐23
Days Yield
Portfolio Yield and Maturity Trends
Avg Days to Maturity Yield

City of Morgan Hill
Investment Portfolio Detail
As of December 31, 2023
Investment Settlement Cost  Book % of Market YTM Next Call Date of Type CUSIP Date Value Value Portfolio Value at Cost Date Maturity L A I F $              58,174 $              0.0% 58,174 $              3.93% 57,377 California C L A S S          18,013,105        18,013,105 10.0% 18,013,105 $      5.54% US Bank ‐ Portfolio of Securities
Dreyfus Treasury Agency MM 261908107           4,218,140          4,218,140 2.4%          4,218,140 5.26% Treasury Note 91282CCZ2 10/8/2021 1,987,656                     1,993,183 1.1%          1,836,960 1.00% 9/30/2026 9/30/2026 Treasury Note 91282CDV0 2/11/2022 1,977,969                     1,999,050 1.1%          1,992,920 1.44% 1/31/2024 1/31/2024 Treasury Note 9128286R6 3/28/2022 1,996,320                     1,999,417 1.1%          1,980,000 2.34% 4/30/2024 4/30/2024 Treasury Note 912828U24 6/13/2022 1,904,688                     1,938,070 1.1%          1,890,780 3.16% 11/15/2026 11/15/2026 FFCB Bond 3133ELVX9 4/8/2020 2,000,000                     2,000,000 1.1%          1,974,940 0.88% 4/8/2024 4/8/2024 FFCB Bond 3133ELC28 5/27/2020 2,000,000                     2,000,000 1.1%          1,892,080 0.73% 5/27/2024 5/27/2025 FHLMC Bond 3134GVYN2 6/3/2020 2,000,000                     2,000,000 1.1%          1,918,280 0.60% 6/3/2024 12/3/2024 FHLMC Bond 3134GWZG4 10/20/2020 2,000,000                     2,000,000 1.1%          1,865,100 0.60% 4/20/2024 10/20/2025 FHLMC Bond 3134GW3X2 10/27/2020 2,000,000                     2,000,000 1.1%          1,864,540 0.63% 4/27/2024 10/27/2025 FFCB Bond 3133EMFR8 11/3/2020 2,000,000                     2,000,000 1.1%          1,860,020 0.54% 5/3/2024 11/3/2025 FNMA Bond 3135GA4P3 11/18/2020 2,000,000                     2,000,000 1.1%          1,860,800 0.65% 5/18/2024 11/18/2025 FHLMC Bond 3134GXEJ9 11/24/2020 2,000,000                     2,000,000 1.1%          1,859,240 0.64% 5/24/2024 11/24/2025 FFCB Bond 3133EMHF2 11/24/2020 1,000,000                     1,000,000 0.6%              0.60% 5/24/2024 11/24/2025 926,170 FHLMC Bond 3134GXCS1 11/25/2020 3,000,000                     3,000,000 1.7%          2,787,750 0.63% 5/25/2024 11/25/2025 FHLMC Bond 3134GXFA7 11/30/2020 2,000,000                     2,000,000 1.1%          1,859,200 0.65% 5/26/2024 11/26/2025 FFCB Bond 3133EMLC4 12/22/2020 2,000,000                     2,000,000 1.1%          1,846,880 0.47% 6/22/2024 12/22/2025 FHLB Bond 3130AKQ74 1/22/2021 2,000,000                     2,000,000 1.1%          1,855,000 0.63% 1/22/2024 1/22/2026 FNMA Bond 3135G06R9 1/28/2021 2,000,000                     2,000,000 1.1%          1,850,920 0.55% 1/28/2024 1/28/2026 FHLB Bond 3130AKRN8 1/28/2021 2,000,000                     2,000,000 1.1%          1,854,840 0.65% 1/28/2024 1/28/2026 FHLB Bond 3130ALCV4 2/24/2021 2,000,000                     2,000,000 1.1%          1,851,880 0.75% 2/24/2024 2/24/2026 FHLB Bond 3130ALDB7 2/25/2021 2,000,000                     2,000,000 1.1%          1,849,320 0.66% 2/25/2024 2/25/2026 FHLB Bond 3130AKZ25 2/26/2021 2,000,000                     2,000,000 1.1%          1,848,720 0.65% 2/26/2024 2/26/2026 FHLB Bond 3130ALGS7 3/10/2021 2,000,000                     2,000,000 1.1%          1,853,860 0.85% 3/10/2024 3/10/2026 FHLB Bond 3130ALEP5 3/16/2021 2,000,000                     2,000,000 1.1%          1,846,540 0.70% 3/16/2024 3/16/2026 FHLB Bond 3130ALDN1 3/16/2021 2,000,000                     2,000,000 1.1%          1,850,700 0.80% 3/16/2024 3/16/2026 FHLB Bond 3130AMNH1 6/9/2021 2,000,000                     2,000,000 1.1%          1,850,240 1.08% 6/9/2024 6/9/2026 FHLB Bond 3130AMYJ5 6/30/2021 2,000,000                     2,000,000 1.1%          1,843,100 1.00% 6/30/2024 6/30/2026 FHLB Bond 3130AMYP1 7/15/2021 3,000,000                     3,000,000 1.7%          2,769,750 1.13% 1/15/2024 7/15/2026 FHLB Bond 3130AMYS5 7/15/2021 2,000,000                     2,000,000 1.1%          1,895,180 0.85% 1/15/2024 7/15/2025 FHLB Bond 3130ANJC5 8/26/2021 2,000,000                     2,000,000 1.1%          1,824,140 0.80% 2/26/2024 8/26/2026 FHLB Bond 3130ANLW8 8/26/2021 3,000,000                     3,000,000 1.7%          2,751,090 1.00% 2/26/2024 8/26/2026 FHLB Bond 3130ANLZ1 8/26/2021 2,000,000                     2,000,000 1.1%          1,829,100 0.90% 2/26/2024 8/26/2026 FHLB Bond 3130A8XY4 9/13/2021 2,103,340                     2,055,751 1.1%          1,888,720 0.82% 3/11/2024 9/11/2026 FFCB Bond 3133EM4X7 9/28/2021 1,982,960                     1,990,734 1.1%          1,832,040 0.98% 3/10/2024 9/10/2026 FHLB Bond 3130APCH6 9/29/2021 3,000,000                     3,000,000 1.7%          2,752,020 1.13% 3/29/2024 9/29/2026 FHLB Bond 3130ANZE3 9/30/2021 2,000,000                     2,000,000 1.1%          1,836,160 0.88% 3/30/2024 9/30/2026 FHLB Bond 3130AP6N0 9/30/2021 3,000,000                     3,000,000 1.7%          2,746,020 1.05% 3/30/2024 9/30/2026 FHLB Bond 3130AP6M2 9/30/2021 3,000,000                     3,000,000 1.7%          2,743,710 1.02% 3/30/2024 9/30/2026 FHLB Bond 3130APCG8 10/19/2021 2,000,000                     2,000,000 1.1%          1,825,340 1.00% 4/19/2024 10/19/2026 FHLB Bond 3130APNX9 11/18/2021 2,000,000                     2,000,000 1.1%          1,835,740 1.30% 5/18/2024 11/18/2026 FHLB Bond 3130AQHU0 1/19/2022 2,000,000                     2,000,000 1.1%          1,886,720 1.74% 1/19/2024 1/19/2027 FHLB Bond 3130AQKT9 1/25/2022 2,000,000                     2,000,000 1.1%          1,919,380 1.51% 1/25/2024 7/25/2025 FHLB Bond 3130AR4F5 3/10/2022 2,000,000                     2,000,000 1.1%          1,952,840 3.48% 3/10/2024 3/10/2027 FHLMC Bond 3134GXUZ5 6/15/2022 2,000,000                     2,000,000 1.1%          1,967,660 3.28% 6/15/2024 12/15/2025 FHLB Bond 3130ASPE3 7/28/2022 2,000,000                     2,000,000 1.1%          1,974,900 4.30% 1/28/2024 7/28/2027 FNMA Bond 3135GACZ2 11/25/2022 2,000,000                     2,000,000 1.1%          1,995,380 5.40% 5/25/2024 11/25/2024 FHLMC Bond 3134GY4B5 11/28/2022 2,000,000                     2,000,000 1.1%          1,993,500 5.00% 5/15/2024 8/26/2024 FHLB Bond 3130AUFT6 1/27/2023 2,000,000                     2,000,000 1.1%          1,996,580 5.43% 1/27/2024 1/27/2025 FHLB Bond 3130AUP32 1/27/2023 2,250,000                     2,250,000 1.3%          2,240,550 5.98% 1/27/2024 1/27/2028 FHLMCMTN Bond 3134GYGB2 1/30/2023 2,000,000                     2,000,000 1.1%          1,985,860 5.20% 1/26/2024 1/26/2028 FHLMCMTN Bond 3134GYG22 2/16/2023 3,000,000                     3,000,000 1.7%          2,983,380 5.13% 2/16/2024 11/16/2026 FHLB Bond 3130AUTZ7 2/24/2023 2,000,000                     2,000,000 1.1%          1,993,680 6.44% 2/24/2024 2/24/2028 FHLB Bond 3130AUZH0 3/6/2023 2,000,000                     2,000,000 1.1%          1,997,560 6.33% 3/6/2024 3/6/2026 FHLB Bond 3130AV2Z4 3/15/2023 2,000,000                     2,000,000 1.1%          1,999,680 5.35% 3/15/2024 3/15/2024 FHLB Bond 3130AVK92 4/5/2023 3,000,000                     3,000,000 1.7%          2,996,370 5.00% 4/5/2024 4/5/2024

Investment Settlement Cost  Book % of Market YTM Next Call Date of Type CUSIP Date Value Value Portfolio Value at Cost Date Maturity FHLB Bond 3130AVL83 4/6/2023 2,000,000                     2,000,000 1.1%          1,995,460 5.20% 1/7/2024 10/7/2024 FHLB Bond 3130AVQ96 4/17/2023 2,000,000                     2,000,000 1.1%          1,997,660 5.15% 1/17/2024 4/17/2024 FHLB Bond 3130AVNT5 4/28/2023 1,000,000                     1,000,000 0.6%              5.50% 11/25/2024 4/25/2025 999,050 FHLMCMTN Bond 3134GYQZ8 5/11/2023 3,000,000                     3,000,000 1.7%          2,993,460 6.09% 2/11/2024 5/11/2026 FHLMCMTN Bond 3134GYSV5 5/25/2023 2,000,917                     2,000,000 1.1%          1,999,020 5.50% 1/22/2024 06/18/2024 FHLB Bond 3130AWF62 6/13/2023 2,000,000                     2,000,000 1.1%          1,996,960 5.50% 6/13/2024 12/13/2024 FHLB Bond 3130AWEB2 6/26/2023 2,000,000                     2,000,000 1.1%          1,996,860 5.55% 3/26/2024 12/26/2024 FHLMCMTN Bond 3134GYUY6 7/12/2023 2,000,000                     2,000,000 1.1%          1,995,320 6.29% 1/12/2024 7/12/2028 FHLMCMTN Bond 3134GYWC2 7/26/2023 2,000,000                     2,000,000 1.1%          1,995,380 6.00% 1/26/2024 7/26/2028 FHLMCMTN Bond 3134H1HC0 10/30/2023 2,000,000                     2,000,000 1.1%          1,999,800 6.38% 1/30/2024 10/30/2028 FHLB Bond 3130AXS82 11/30/2023 2,000,000                     2,000,000 1.1%          1,996,720 6.10% 2/27/2024 11/27/2028 FHLB Bond 3130AXY36 12/18/2023 2,000,000                     2,000,000 1.1%          2,004,700 5.88% 3/18/2024 12/18/2028 FHLMCMTN Bond 3134H1MK6 12/21/2023 2,000,000                     2,000,000 1.1%          2,001,360 5.40% 6/21/2024 12/21/2026 FHLB Bond 3130AXX60 12/22/2023 1,000,000                     1,000,000 0.6%              6.10% 1/12/2024 12/12/2028 996,970 FHLB Bond 3130AYAG1 12/28/2023 2,000,000                     2,000,000 1.1%          2,001,740 5.50% 6/28/2024 12/28/2028 CD ‐ Ally Bank 02007GM83 3/30/2023 250,000                              0.1% 250,000              5.15% 3/28/2024 3/28/2024 249,773 CD ‐ Western Alliance Bank 95763PLA7 3/30/2023 250,000                              0.1% 250,000              5.30% 1/2/2024 1/2/2024 249,998 CD ‐ Zions Bancorp 98970LC43 3/31/2023 250,000                              0.1% 250,000              5.40% 9/27/2024 9/27/2024 250,590 CD ‐ Pacific Western Bank 69506YYD5 4/5/2023               250,000               0.1% 250,000              5.65% 4/5/2028 4/5/2028 250,540 CD ‐ US Bank 90354KBR8 5/17/2023 250,000                              0.1% 250,000              5.10% 5/16/2024 5/16/2024 249,725 CD ‐ Morgan Stanley Bank 61690DGT9 11/8/2023 250,000                              0.1% 250,000              5.05% 11/8/2028 11/8/2028 255,578 CD ‐ Morgan Stanley Private Bank 61768EE82 11/8/2023 250,000                              0.1% 250,000              5.05% 11/8/2028 11/8/2028 255,578 CD ‐ American Express 02589AF98 11/8/2023 250,000                              0.1% 250,000              5.00% 11/8/2028 11/8/2028 255,038 CD ‐ State Bank India 8562834U7 11/24/2023 250,000                              0.1% 250,000              5.00% 11/24/2028 11/24/2028 258,550 Sub Total/Average $    152,671,989 $   152,694,346 85.1% 146,447,798 $   2.82% WFB Money Market $        1,021,130 $        1,021,130 0.6% $       1,021,130 5.24% Total City Managed/Average $    171,764,397 $   171,786,754 95.2% 165,539,409 $   3.12% Bond Reserve Accounts ‐ Held By Trustees $            375,665 $             0.2% 375,665 $           375,665 Cash/Deposits $              33,452 $               0.0% 33,452 $              33,452 PARS and CALPERS CERBT Trust $         7,187,404 $         7,187,404 4.0% $        8,233,151 GRAND TOTAL/AVERAGE $    179,360,918 $    179,383,275 100.0% 174,181,677 $

Invested Book Value % of Market
in Fund Yield End of Month Total Value
Investments
State Treasurer LAIF - City All Funds Pooled 3.93% $ 58,174 0.0% $ 57,377 California CLASS All Funds Pooled 5.54% 18,013,105 10.0% 18, 013,105 US Bank - Portfolio of Securities All Funds Pooled 2.82% 152,694,3 46 85.1% 146,447,798 WFB MMA All Funds Pooled 5.24% 1,021,130 0.6% 1,021,130 SUBTOTAL $ 171,786,754 95.8% $ 165,539,409
Bond Reserve Accounts - held by trustees
Zions Bank - Civic Center/Library Facility
Blackrock Liq Fund Debt Service 4.47% 539 0.0% 539
Zions Bank - MH Police Facility Lease Revenue Bonds
Blackrock Liq Fund Debt Service 4.47% 686 0.0% 686
BNY - RDA Bonds
Dreyfus Cash Mgmt 521 Agency Fund 4.96% 104,607 0.1% 104,607 Zions Bank - Madrone Bus Park Taxable/ Tax Exempt 2015
Blackrock Liquidity Temp Fund-2015 Agency Fund 4.47% 269,833 0.2% 269,833 SUBTOTAL 375,665 0.2% 375,665
Other Cash/Deposits
General Checking All Funds (12,398) 0.0% (12,398)
Workers' Comp Administrators Workers' Comp 30,000 0.0% 30,000 Petty Cash & Emergency Cash General Fund 15,850 0.0% 15,850 CALPERS CERBT - OPEB Trust 4,887,404 2.7% 5,592,925
PARS - PENSION Trust 2,300,000 1.3% 2,640,226
SUBTOTAL 7,220,856 4.0% 8,266,603
Total Cash and Investments $ 179,383,275 100.0% $ 174,181,677

CASH ACTIVITY SUMMARY
FY 2023-24
07/01/2023 Change in 12/31/2023
Fund Type Balance Cash Balance Balance
General Fund 32,352,753 $ (3, $ 29, 320,042) $ 032,711
Community Development 1,831,559 (1, 288,763) 542,797
Housing Successor Agency/ CDBG 4,202,736 ( 3, 352,162) 850,574 Water - Operations 2,585,170 2, 312,216 897,386
Water Other 23,673,105 2, 26, 531,302 204,406
Sewer - Operations 907,428 1, 553,316 460,744
Sewer Other 44,135,046 ( 43, 726,308) 408,738
Other Special Revenue 8,827,861 1, 10, 539,580 367,442
Streets and Capital Projects (except RDA) 40,486,238 (4, 36, 257,444) 228,795 Debt Service 342,534 ( 219,401) 123,133
Internal Service 25,139,787 ( 24, 786,621) 353,165
Agency Funds (assessment dists./refundable deposits) 8,515,969 (7, 602,585) 913,384 Total $ 193,000,187 $ (13,616,912) $ 179,383,275
Note: See Investment Porfolio Detail for maturities of "Investments." Market values are obtained from the City's investment brokers' monthly reports.

I certify that information on the investment report has been reconciled to the general ledger and bank statements and that there are sufficient funds to meet the expenditure requirements of the City for the next six months. The portfolio is in compliance with the City of Morgan Hill Investment Policy and all State laws and regulations.

Prepared by: ____________________________________ Approved by:

Gina Nazareno, Senior Accountant
Reviewed by: ____________________________________
Dat Nguyen, Finance Director Caitlin Jachimowicz, Treasurer

CITY OF MORGAN HILL CASH AND INVESTMENT REPORT
FOR THE MONTH OF DECEMBER 31, 2023
FOR THE FISCAL YEAR OF 2023-24

City of Morgan Hill
Year to Date Revenues - Fiscal Year 2023-24
For the Month Ended December 31, 2023
50% of Year Complete

CURRENT INCR (DECR)
ADOPTED AMENDED YTD % PRIOR FROM PRIOR %

BUDGET BUDGET ACTUAL OF BUDGET YTD YTD CHANGE
010 GENERAL FUND
TAXES
Property Tax - Secured/Unsecured $ 15,245,000 15,745,000 $ 2,690,913 17% $ 2,558,679 $ 132,234 5% Property Tax - RPTTF Residual Distribution 2,527,000 2,527,000 n/a - - n/a - Property Tax - Supplemental Roll 200,000 200,000 83,233 42% 136,224 (52,991) -39% Sales Tax 12,218,967 12,218,967 4,244,260 35% 4,341,707 (97,446) -2% Public Safety Sales Tax 455,000 455,000 147,431 32% 116,439 30,992 27% Transient Occupancy Taxes 2,800,000 2,800,000 1,023,294 37% 1,149,936 (126,642) -11% Franchise (Refuse ,Cable ,PG&E) 2,873,800 2,983,800 687,037 23% 523,586 163,452 31% Property Transfer Tax 510,000 510,000 199,651 39% 172,990 26,661 15% TOTAL TAXES 36,829,767 37,439,767 9,075,820 24% 8,999,560 76,260 1%

LICENSES/PERMITS
Business License 170,000 170,000 160,095 94% 126,775 33,319 26% Other Permits 53,975 53,975 22,852 42% 23,288 (436) -2% TOTAL LICENSES/PERMITS 223,975 223,975 182,947 82% 150,063 32,883 22%

FINES AND PENALTIES
Parking Enforcement 3,019 3,019 5,061 168% 2,774 2,288 82% Bails & Fines 47,875 47,875 23,665 49% 17,622 6,044 34% Administrative Citations 20,000 20,000 17,802 89% 6,685 11,117 166% TOTAL FINES AND PENALTIES 70,894 70,894 46,529 66% 27,080 19,448 72%

OTHER AGENCIES
Motor Vehicle in-Lieu 40,800 40,800 n/a - - n/a -
Other Revenue - Other Agencies 971,089 1,011,233 43% 403,408 435,995 32,587 8% TOTAL OTHER AGENCIES 1,011,889 1,052,033 435,995 41% 403,408 32,587 8%

CHARGES CURRENT SERVICES
Police False Alarm Charge 33,248 33,248 17,129 52% 14,231 2,898 20% Business License Application Review 53,000 83,000 69,006 83% 18,923 50,083 265% Membership Services & Rec Programs 5,656,265 5,656,265 2,948,027 52% 2,552,173 395,854 16% Facility Rentals 1,203,269 1,203,269 749,523 62% 526,512 223,011 42% Community Services 152,498 152,498 14,592 10% 36,998 (22,406) -61% General Administration Overhead 1,822,869 1,822,869 881,185 48% 887,704 (6,519) -1% Other Charges Current Services 1,084,930 1,084,930 32% 460,010 351,824 (108,186) -24% TOTAL CURRENT SERVICES 10,006,079 10,036,079 5,031,285 50% 4,496,551 534,733 12%

OTHER REVENUE
Use of money/property 583,850 683,850 651,895 95% 325,402 326,493 100% Other Revenues 234,168 614,168 21% 132,169 130,217 (1,952) -1% TOTAL OTHER REVENUE 818,018 1,298,018 782,112 60% 457,571 324,540 71%

TRANSFERS IN
One Time Transfer 180,000 180,000 90,000 50% 90,000 0% - Public Safety Facilities Fund 50,000 50,000 25,000 50% 25,000 0% - Supplemental Law Enforcement Fund 100,000 100,000 n/a - - n/a - Countywide Solid Waste 373,000 468,680 186,500 40% 177,500 9,000 5% Streets 949,760 949,760 364,454 38% 342,687 21,767 6%
Park Maintenance 650,000 650,000 325,000 50% 325,002 0% (2) Sewer Operations 394,000 394,000 197,000 50% 187,500 9,500 5% Water Operations 394,000 394,000 197,000 50% 187,500 9,500 5% Open Space 81,100 81,100 40,550 50% 40,550 n/a -
Park Development 75,000 75,000 37,500 50% - 37,500 n/a
TOTAL TRANSFERS IN 3,246,860 3,342,540 1,463,004 44% 1,413,239 49,765 4% TOTAL GENERAL FUND 52,207,482 53,463,306 17,017,690 32% 15,947,474 1,070,216 7%

SPECIAL REVENUE FUNDS
202 STREET MAINTENANCE
Gas Tax 2105 - 2107.5 954,952 954,952 361,117 38% 342,687 18,430 5% Interest / Other Revenue/Other Charges 7 78 8 3,337 4278% 1,342 1,995 149% 202 STREET MAINTENANCE 955,030 955,030 364,454 38% 344,029 20,426 6%

City of Morgan Hill
Year to Date Revenues - Fiscal Year 2023-24
For the Month Ended December 31, 2023
50% of Year Complete

CURRENT INCR (DECR)
ADOPTED AMENDED YTD % PRIOR FROM PRIOR %

BUDGET BUDGET ACTUAL OF BUDGET YTD YTD CHANGE

SPECIAL REVENUE FUNDS
205 SUPPLEMENTAL LAW ENFORCEMENT FUND
Interest Income 1,905 1,905 5,099 268% 1,446 3,653 253% Police Grant/SLEF/JAG 100,000 100,000 111,159 111% 90,271 20,888 23% 205 SUPPLEMENTAL LAW ENFORCEMENT FUND 101,905 101,905 116,258 114% 91,717 24,541 27% 206 DEVELOPMENT SERVICES
Building Fees 3,455,600 3,495,600 1,500,894 43% 2,052,248 (551,354) -27% Planning Fees 1,645,444 1,645,444 308,422 19% 404,839 (96,416) -24% Engineering Fees 1,190,852 1,190,852 183,044 15% 853,225 (670,181) -79% Other Revenue/Current Charges - - n/a 205,364 111,300 (94,064) -46% 206 DEVELOPMENT SERVICES 6,291,896 6,331,896 2,103,661 33% 3,515,676 (1,412,015) -40% 207 LONG RANGE PLANNING 1,013,392 1,013,392 357,634 35% 536,264 (178,629) -33% 215 and 216 HCD BLOCK GRANT
Interest Income/Other Revenue 325 325 279% 338 907 569 169% 215 and 216 HCD BLOCK GRANT 325 325 907 279% 338 569 169% 225 ASSET SEIZURE 1,298 1,298 1,390 107% 537 853 159%
229 LIGHTING AND LANDSCAPE 200,028 200,028 2,604 1% 792 1,811 229% 230 COMMUNITY FACILITIES DISTRICT 37,914 37,914 2,036 5% 548 1,488 272% 232 ENVIRONMENTAL PROGRAMS 590,223 590,223 285,772 48% 269,488 16,284 6% 234 MOBILE HOME PARK RENT STAB. 584 584 2,576 441% 3,892 (1,316) -34% 236 HOUSING MITIGATION 4,456,924 4,456,924 1,715,840 38% 415,623 1,300,218 313% 240 EMPLOYEE ASSISTANCE 20,889 20,889 4,260 20% 3,997 263 7% 246 COUNTYWIDE SOLID WASTE 1,645,138 1,944,000 1,053,585 54% 803,802 249,784 31% 247 ENVIRONMENT REMEDIATION 1,358 1,358 1,909 141% 714 1,196 167% 255 HOUSING SUCCESSOR AGENCY 239,202 239,202 140,942 59% 254,100 (113,158) -45% TOTAL SPECIAL REVENUE FUNDS 15,556,107 15,894,969 6,153,829 39% 6,241,517 (87,688) -1%

CAPITAL PROJECTS FUNDS
301 PARK DEVELOPMENT 1,673,505 1,673,505 234,402 14% 1,636,253 (1,401,851) -86% 302 PARK MAINTENANCE 363,038 363,038 42,672 12% 502,166 (459,494) -92% 303 LOCAL DRAINAGE 447,897 447,897 275,320 61% 900,452 (625,132) -69% 304 LOCAL DRAINAGE/NON AB1600 30,901 30,901 18,766 61% 110,661 (91,894) -83% 306 AGRICULTURE & OPEN SPACE PRESERVATION 4,036 4,036 110,082 2727% 47,538 62,544 132% 308 STREET CIP 4,486,656 4,486,656 1,221,141 27% 2,348,100 (1,126,958) -48% 309 TRAFFIC IMPACT 1,276,925 1,276,925 346,647 27% 3,522,956 (3,176,309) -90% 315 PUBLIC SAFETY FACILITIES IMPACT 801,703 801,703 213,657 27% 77,304 136,353 176% 346 PUBLIC FACILITIES NON-AB1600 822,102 822,102 175,285 21% 375,870 (200,586) -53% 347 PUBLIC FACILITIES IMPACT 176,602 176,602 62,291 35% 22,412 39,879 178% 348 LIBRARY 657,457 657,457 201,419 31% 60,505 140,914 233% 350 UNDERGROUNDING 22,520 22,520 23,302 103% 8,706 14,597 168% 355 SCHOOL PEDESTRIAN/TRAFFIC SAFETY 492,717 492,717 30,983 6% 208,672 (177,689) -85% 360 COMMUNITY/REC IMPACT FUND 1,142,697 1,142,697 351,944 31% 313,630 38,315 12% 375 QUIMBY FEE 610,860 610,860 803,399 132% 1,542,915 (739,516) -48% TOTAL CAPITAL PROJECTS FUNDS 13,009,616 13,009,616 4,111,312 32% 11,678,138 (7,566,826) -65%

DEBT SERVICE FUNDS
420 CIVIC CENTER DEBT 290,850 290,850 148,011 51% 147,137 874 1% 441 POLICE FACILITY BOND 387,792 387,792 193,917 50% 193,755 162 0% TOTAL DEBT SERVICE FUNDS 678,642 678,642 341,928 50% 340,893 1,036 0%

City of Morgan Hill
Year to Date Revenues - Fiscal Year 2023-24
For the Month Ended December 31, 2023
50% of Year Complete

CURRENT INCR (DECR)
ADOPTED AMENDED YTD % PRIOR FROM PRIOR %

BUDGET BUDGET ACTUAL OF BUDGET YTD YTD CHANGE

ENTERPRISE FUNDS
640 WASTEWATER OPERATION
Sewer Service Fees 15,200,000 15,200,000 6,232,069 41% 6,248,799 (16,731) 0% Interest Income/Transfers 39,704 39,704 27,958 70% 15,844 12,114 76% Other Revenue/Current Charges 329,403 329,403 143,848 44% 225,019 (81,170) -36% 640 WASTEWATER OPERATION 15,569,107 15,569,107 6,403,875 41% 6,489,662 (85,787) -1% 641 WASTEWATER EXPANSION
Interest Income 40,173 40,173 304,183 757% 120,533 183,650 152% Development Impact Fee 4,388,986 4,388,986 1,342,827 31% 489,322 853,505 174% Transfer From-643 (Sewer Replacement) - - - n/a 3,748,942 (3,748,942) -100% 641 WASTEWATER EXPANSION 4,429,159 4,429,159 1,647,010 37% 4,358,797 (2,711,787) -62% 642 WASTEWATER RATE STABILIZATION 192,000 192,000 136,693 71% 39,742 96,951 244% 643 WASTEWATER CAPITAL PROJECT 5,204,512 5,204,512 2,780,482 53% 3,344,590 (564,108) -17% TOTAL SEWER FUNDS 25,394,778 25,394,778 10,968,059 43% 14,232,791 (3,264,731) -23% 650 WATER OPERATION
Water Sales 18,500,000 18,500,000 8,059,307 44% 7,538,635 520,672 7% Meter Install & Service 50,000 50,000 46,949 94% 62,982 (16,033) -25% Transfers-In / Interest Income 606,318 606,318 337,974 56% 296,404 41,570 14% Other Revenue/Current Charges 630,464 630,464 300,236 48% 399,502 (99,266) -25% 650 WATER OPERATION 19,786,782 19,786,782 8,744,466 44% 8,297,522 446,943 5% 651 WATER EXPANSION
Interest Income/Other Revenue/Transfer 28,855 28,855 42,638 148% 15,282 27,356 179% Development Impact Fee 1,720,216 1,720,216 327,481 19% 136,412 191,069 140% 651 WATER EXPANSION 1 1,749,071 ,749,071 370,119 21% 151,694 218,425 144% 652 WATER RATE STABILIZATION - 45,623 - n/a 16,989 169% 28,633 653 WATER CAPITAL PROJECT 6,948,348 6,948,348 3,666,293 53% 2,586,996 1,079,296 42% TOTAL WATER FUNDS 28,484,201 28,484,201 12,826,500 45% 11,053,202 1,773,298 16% TOTAL ENTERPRISE FUNDS 53,878,979 53,878,979 23,794,560 44% 25,285,993 (1,491,433) -6%

INTERNAL SERVICE FUNDS
730 INFORMATION SYSTEMS 2,493,922 2,493,922 1,254,312 50% 1,120,107 134,205 12% 740 BUILDING MAINTENANCE 1,675,215 1,675,215 838,669 50% 827,873 10,796 1% 741 BUILDING REPLACEMENT 859,973 859,973 476,491 55% 425,100 51,391 12% 745 CIP ADMINISTRATION 2,059,092 2,059,092 902,935 44% 536,618 366,317 68% 760 UNEMPLOYMENT INSURANCE 2,940 2,940 3,909 133% 1,571 2,338 149% 770 WORKERS COMPENSATION 997,442 997,442 477,070 48% 441,117 35,953 8% 790 EQUIPMENT REPLACEMENT 1,725,990 1,725,990 709,808 41% 561,111 148,697 27% 791EMPLOYEE BENEFITS 849,796 849,796 427,681 50% 405,102 22,580 6% 795 GENERAL LIABILITY INSURANCE 2,103,483 2,103,483 1,053,673 50% 992,030 61,643 6% TOTAL INTERNAL SERVICE FUNDS 12,767,853 12,767,853 6,144,549 48% 5,310,629 833,920 16% TOTAL FOR ALL FUNDS 148,098,679 $ 149,693,365 $ 57,563,868 $ 38% $ 64,804,643 $ (7,240,775) -11%

City of Morgan Hill
Year to Date Expenses - Fiscal Year 2023-24
For the Month Ended December 31, 2023
50% of Year Complete

CURRENT

FUND MONTH PERCENT OF
NO. FUND/ACTIVITY ACTUAL AMENDED YTD OUTSTANDING TOTAL TOTAL TO PRIOR

EXPENSES BUDGET EXPENSES ENCUMBRANCE ALLOCATED BUDGET YTD 010 GENERAL FUND
I. ADMINISTRATION
CITY COUNCIL 17,837 $ 435,652 $ 179,392 $ - $ 179,392 $ 41% 234,340 $ .

CITY ATTORNEY 92,527 1,081,241 432,081 113,474 545,555 50% 389,636 CITY MANAGER 71,592 886,041 351,482 20,034 371,516 42% 309,449 HUMAN RESOURCES 90,415 898,203 415,998 - 415,998 46% 414,067

COUNCIL SVCS & RECORDS MGMT
Council Svcs & Records Mgmt 49,502 628,281 257,786 - 257,786 41% 268,251 Elections 3,212 37,728 14,965 - 14,965 40% 9,750
COUNCIL SVCS & RECORDS MGMT 52,714 666,009 272,751 272,751 - 41% 278,000 FINANCE 200,084 2,522,016 969,225 567,482 1,536,706 61% 859,123 TOTAL ADMINISTRATION 525,170 6,489,162 2,620,929 700,990 3,321,918 51% 2,484,615 II. COMMUNITY SERVICES
Membership Services & Rec. Programs 817,937 7,268,962 3,477,849 998,009 4,475,858 62% 3,115,590 Recreation Facility Rentals 63,914 573,524 294,166 27,016 321,182 56% 253,296 Innovative Transit 53,147 850,612 282,127 514,242 796,369 94% 194,155 Community Services 68,309 672,192 285,767 48,126 333,893 50% 275,927 Park Maintenance 113,362 1,567,049 542,717 61,320 604,038 39% 617,805 Environmental Services 49,083 472,354 181,661 4,446 186,107 39% 111,061 Countywide Solid Waste Program 47,418 907,406 199,320 - 199,320 22% 176,248 Street Maintenance 224,379 3,025,578 1,117,173 192,235 1,309,408 43% 1,025,550 Downtown Maintenance 30,910 345,237 132,582 22,092 154,674 45% 87,467 Cable Television 8,071 74,940 44,794 - 44,794 60% 9,004 COMMUNITY SERVICES 1,476,530 15,757,854 6,558,156 1,867,486 8,425,642 53% 5,866,103 CODE COMPLIANCE 38,136 340,153 115,115 - 115,115 34% 85,386 INFRASTRUCTURE PLANNING & CONGESTION MGMT 415,141 43,830 173,265 - 173,265 42% 155,820 ECONOMIC DEVELOPMENT PROGRAMS 81,178 1,267,792 486,406 61,913 548,319 43% 403,160 TOTAL COMMUNITY SERVICES 1,639,674 17,780,940 7,332,942 1,929,399 9,262,341 52% 6,510,469 III. PUBLIC SAFETY
POLICE
PD Administration 153,475 1,735,700 811,430 41,628 853,058 49% 782,697 Field Operations 1,146,622 11,210,613 5,589,527 32,407 5,621,934 50% 5,007,658 Support Services 246,122 3,586,324 1,379,414 583,800 1,963,214 55% 1,382,014 Emergency Services/Haz Mat 26,109 222,865 109,905 - 109,905 49% 103,041 Special Operations 375,307 4,098,765 1,853,008 - 1,853,008 45% 2,006,419 Dispatch Services 201,755 2,201,937 992,985 - 992,985 45% 1,015,886 POLICE 2,149,390 23,056,204 10,736,269 657,835 11,394,104 49% 10,297,716 FIRE 921,742 9,139,905 4,647,017 54,284 4,701,301 51% 4,082,231 TOTAL PUBLIC SAFETY 3,071,132 32,196,109 15,383,286 712,118 16,095,405 50% 14,379,947 IV. TRANSFERS
Other 108,647 3,263,767 2,051,884 2,051,884 - 63% 3,043,657 TOTAL TRANSFERS 108,647 3,263,767 2,051,884 2,051,884 - 63% 3,043,657 TOTAL GENERAL FUND 5,344,623 59,729,978 27,389,040 3,342,507 30,731,548 51% 26,418,688

City of Morgan Hill
Year to Date Expenses - Fiscal Year 2023-24
For the Month Ended December 31, 2023
50% of Year Complete

CURRENT

FUND MONTH PERCENT OF
NO. FUND/ACTIVITY ACTUAL AMENDED YTD OUTSTANDING TOTAL TOTAL TO PRIOR

EXPENSES BUDGET EXPENSES ENCUMBRANCE ALLOCATED BUDGET YTD

SPECIAL REVENUE FUNDS
202 STREET MAINTENANCE 433 954,952 367,050 - 367,050 38% 345,207 205 PUBLIC SAFETY/SUPP.LAW 107 101,289 645 - 645 1% 626 206 DEVELOPMENT SERVICES FUND
Planning 174,987 1,847,544 826,165 272 826,437 45% 796,181 Building 250,802 2,563,441 1,171,008 100,396 1,271,405 50% 1,049,748 Engineering 234,736 1,974,680 885,318 105,006 990,324 50% 803,145 206 DEVELOPMENT SERVICES FUND 660,525 6,385,665 2,882,491 205,674 3,088,166 48% 2,649,074 207 LONG RANGE PLANNING 77,861 1,581,133 407,948 18,178 426,126 27% 441,511 215/216 CDBG 7 83 42 - 50% 42 40
225 ASSET SEIZURE 65 782 391 - 50% 391 380
229 LIGHTING AND LANDSCAPE 12,689 234,554 68,837 3,429 72,266 31% 94,705 230 COMMUNITY FACILITIES DISTRICT 2,732 41,249 18,209 - 18,209 44% 17,582 232 ENVIRONMENT PROGRAMS 59,802 561,335 221,845 15,139 236,984 42% 244,524 234 MOBILE HOME PARK 76 907 454 - 50% 454 440
236 HOUSING MITIGATION 179,284 1,541,126 494,601 218,314 712,915 46% 395,814 240 EMPLOYEE ASSISTANCE 79 20,946 2,473 - 2,473 12% 4,390 246 COUNTYWIDE SOLID WASTE PROGRAM 419,872 2,078,493 713,374 1,229,775 1,943,149 93% 738,290 255 HOUSING SUCCESSOR AGENCY 107,122 1,172,110 629,810 229,167 858,977 73% 644,767 TOTAL SPECIAL REVENUE FUNDS 1,520,653 14,674,624 5,808,169 1,919,677 7,727,846 53% 5,595,343

CAPITAL PROJECT FUNDS
301 PARK DEVELOPMENT 25,880 2,285,298 436,449 103,582 540,030 24% 680,608 302 PARK MAINTENANCE 339,063 660,850 761,061 - 761,061 115% 331,357 303 LOCAL DRAINAGE 2,312,416 7,119,361 2,784,473 1,486,523 4,270,996 60% 745,863 304 LOCAL DRAIN. NON-AB1600 1,386 410,006 166,152 21,516 187,668 46% 43,251 306 AGRICULTURE & OPEN SPACE PRESERVATIO 247,600 8,133 48,800 - 48,800 20% 62,927 308 STREET CIP 390,559 5,499,004 4,266,504 596,132 4,862,637 88% 6,298,861 309 TRAFFIC IMPACT 319,853 5,827,301 536,948 3,745,157 4,282,104 73% 3,661,004 315 PUBLIC SAFETY FACILITIES IMPACT 334,689 10,717,603 1,255,547 8,462,903 9,718,450 91% 371,457 346 PUBLIC FAC.NON AB1600 382 1,321,382 56,362 13,711 70,073 5% 22,872 347 PUBLIC FACILITIES IMPACT 7,440 1,529,278 84,639 45,000 129,639 8% 14,577 348 LIBRARY IMPACT 18,529 222,349 111,175 - 111,175 50% 111,458 350 UNDERGROUNDING 98 1,194,738 588 - 588 0% 571
355 SCHOOL PEDESTRIAN & TRAFFIC SAFETY 1,711 916,562 21,161 3,428 24,588 3% 36,964 360 COMM/REC CENTER IMPACT 1,331 2,756,259 122,687 557,016 679,703 25% 587,400 375 QUIMBY FEE 1,190 1,403,605 17,872 - 17,872 1% 74,254 TOTAL CAPITAL PROJECTS FUNDS 3,762,659 42,111,196 10,670,417 15,034,967 25,705,385 61% 13,043,423

DEBT SERVICE FUNDS
420 CIVIC CENTER DEBT 270 290,852 238,218 - 238,218 82% 235,073 441 POLICE FACILITY BOND DEBT 358 387,792 323,166 - 323,166 83% 316,576 TOTAL DEBT SERVICE FUNDS 628 678,644 561,384 - 561,384 83% 551,650

City of Morgan Hill
Year to Date Expenses - Fiscal Year 2023-24
For the Month Ended December 31, 2023
50% of Year Complete

CURRENT

FUND MONTH PERCENT OF
NO. FUND/ACTIVITY ACTUAL AMENDED YTD OUTSTANDING TOTAL TOTAL TO PRIOR

EXPENSES BUDGET EXPENSES ENCUMBRANCE ALLOCATED BUDGET YTD

ENTERPRISE FUNDS
SEWER
640 WASTEWATER OPERATIONS 1,704,610 15,560,361 6,831,961 72,011 6,903,972 44% 8,018,018 641 WASTEWATER CAPITAL EXPANSION 3,307,344 26,223,607 3,898,788 422,783 4,321,571 16% 2,355,605 642 WASTEWATER RATE STABILIZATION 156 1,872 936 - 936 50% 909 643 WASTEWATER CAPITAL PROJECTS 701,708 17,522,286 2,229,373 2,697,057 4,926,430 28% 6,376,329 TOTAL SEWER FUND(S) 5,713,819 59,308,126 12,961,058 3,191,851 16,152,909 27% 16,750,861 WATER
Water Operations 1,716,678 18,485,381 8,645,556 686,187 9,331,743 50% 7,237,468 Utility Billing 112,931 1,192,638 488,785 86,015 574,800 48% 443,329 Water Conservation 29,460 644,730 183,574 8,780 192,354 30% 122,363 650 WATER OPERATIONS 1,859,070 20,322,749 9,317,915 780,982 10,098,897 50% 7,803,160 651 WATER CAPITAL EXPANSION 106,372 2,479,364 413,298 66,259 479,556 19% 357,801 652 WATER RATE STABILIZATION 117 1,403 702 - 50% 702 681 653 WATER-CAPITAL PROJECTS 146,855 16,010,730 1,259,676 493,454 1,753,130 11% 282,248 TOTAL WATER FUND(S) 2,112,414 38,814,246 10,991,590 1,340,695 12,332,285 32% 8,443,889 TOTAL ENTERPRISE FUNDS 7,826,233 98,122,372 23,952,649 4,532,545 28,485,194 29% 25,194,751

INTERNAL SERVICE FUNDS
730 INFORMATION SYSTEMS 240,592 2,683,931 1,232,201 282,085 1,514,286 56% 1,056,420 740 BUILDING MAINTENANCE 146,811 1,781,790 704,463 77,586 782,049 44% 617,871 741 BUILDING REPLACEMENT - 1,501,100 39,456 12,035 51,491 3% 68,526 745 CIP ADMINISTRATION 194,432 2,061,046 870,736 1,245 871,981 42% 911,694 760 UNEMPLOYMENT - 15,000 11,826 - 11,826 79% 10,642
770 WORKERS COMPENSATION 16,257 1,048,265 646,937 - 646,937 62% 616,263 790 EQUIPMENT REPLACEMENT 33,018 1,245,240 110,400 1,067,656 1,178,056 95% 326,065 791 EMPLOYEE BENEFITS FUND 225,606 750,000 333,131 - 333,131 44% 423,040 795 GEN. LIABILITY INSURANCE 12,440 2,551,193 2,361,758 2,361,758 - 93% 1,688,179 TOTAL INTERNAL SERVICE FUNDS 869,156 13,637,565 6,310,908 1,440,607 7,751,515 57% 5,718,701 REPORT TOTAL $ 19,323,952 $ 228,954,379 $ 74,692,568 $ 26,270,304 $ 100,962,872 44% 76,522,555 $

City of Morgan Hill
Fund Activity Summary - Fiscal Year 2022-23
For the Month Ended December 31, 2023
50% of Year Complete
Beginning Year to-Date
Fund Fund Balance YTD % of YTD % of Deficit or
No. Fund Description 07-01-23 Actual Budget Actual Budget Carryover Reserved1 Unreserved 010 GENERAL FUND 33,175,566 $ 17, $ 32% 27, 017,690 $ 46% (10, 389,040 $ 3, 371,351) $ 19, 342,507 $ 461,708 TOTAL GENERAL FUND $ 33,175,566 $ 17,017,690 32% $ 27,389,040 46% $ (10,371,351) $ 3,342,507 $ 19,461,708 202 STREET MAINTENANCE 68,927 $ 364,454 38% $ 367,050 46% $ (2,596) $ - $ 66,331 205 PUBLIC SAFETY/SUPPL. LAW 319,867 116,258 114% 45% 645 115,613 - 435,480 206 DEVELOPMENT SERVICES (426,677) 2,103,661 33% 2, 882,491 45% ( 778,831) 205,674 (1,411,182) 207 LONG RANGE PLANNING 1,276,770 357,634 35% 407,948 26% (50, 313) 18,178 1,208,279 215 / 216 CDBG 30,767 907 279% 50% 42 865 - 31,632
225 ASSET SEIZURE 102,496 1,390 107% 50% 391 999 - 103,495 229 LIGHTING AND LANDSCAPE 191,949 2,604 1% 68,837 29% (66, 234) 3,429 122,286 230 COMMUNITY FACILITIES DISTRICT 150,651 2,036 5% 18,209 44% (16, 173) - 134,478 232 ENVIRONMENTAL PROGRAMS 328,270 285,772 48% 221,845 40% 63,927 15,139 377,058 234 MOBILE HOME PK RENT STAB. 76,297 2,576 441% 50% 454 2,123 - 78,420 235 SENIOR HOUSING 239,361 n/a - n/a - - - 239,361
236 HOUSING MITIGATION 5,698,654 1,715,840 38% 494,601 32% 1, 221,239 218,314 6,701,579 240 EMPLOYEE ASSISTANCE 61,893 4,260 20% 2,473 12% 1,787 - 63,680 246 COUNTYWIDE SOLID WASTE 239,294 1,053,585 141% 713,374 34% 340,211 1,229,775 (650,270) 247 ENVIRONMENT REMEDIATION 140,690 1,909 141% n/a - 1,909 - 142,599 255 HOUSING SUCCESSOR AGENCY 4,001,427 140,942 59% 629,810 54% ( 488,868) 229,167 3,283,392 TOTAL SPECIAL REVENUE FUNDS $ 12,500,636 $ 6,153,829 39% $ 5,808,169 40% $ 345,660 $ 1,919,677 $ 10,926,619 301 PARK DEV. IMPACT FUND $ 1,426,990 $ 234,402 14% $ 436,449 19% ( $ 202,047) $ 103,582 $ 1,121,362 302 PARK MAINTENANCE 2,489,205 42,672 12% 761,061 115% (718,389) 1, - 770,816 303 LOCAL DRAINAGE 11,817,863 275,320 61% 2, 784,473 39% (2, 509,153) 1,486,523 7,822,188 304 LOCAL DRAINAGE/NON-AB1600 1,343,736 18,766 61% 166,152 41% ( 147,386) 21,516 1,174,834 306 AG. AND OPEN SPACE PRESERVATION 541,496 110,082 2727% 48,800 20% 61,282 - 602,778 308 STREET CIP 4,078,203 1,221,141 27% 4, 266,504 78% (3, 045,363) 596,132 436,707 309 TRAFFIC IMPACT FUND 3,727,580 346,647 27% 536,948 9% ( 190,301) 3,745,157 (207,877) 315 PUBLIC SAFETY FACILITIES IMPACT 3,050,728 213,657 27% 1, 255,547 12% (1, 041,891) 8,462,903 (6,454,066) 346 PUBLIC FACILITIES NON-AB1600 2,943,797 175,285 21% 56,362 4% 118,923 13,711 3,049,009 347 PUBLIC FACILITIES IMPACT FUND 1,099,809 62,291 35% 84,639 6% (22, 348) 45,000 1,032,461 348 LIBRARY IMPACT FUND 1,408,238 201,419 31% 111,175 50% 90,245 1, - 498,483 350 UNDERGROUNDING 1,626,301 23,302 103% 588 0% 22,715 1, - 649,016 355 SCHOOL PEDESTRIAN/TRAFFIC SFTY 92,077 30,983 6% 21,161 2% 9,823 3,428 98,472 360 COMM/REC CTR IMPACT FUND 992,228 351,944 31% 122,687 4% 229,257 557,016 664,469 375 QUIMBY FEE 1,621,885 803,399 132% 17,872 1% 785,527 2, - 407,412 TOTAL CAPITAL PROJECT FUNDS $ 38,260,136 $ 4,111,312 32% $ 10,670,417 25% $ (6,559,106) $ 15,034,967 $ 16,666,063 420 CIVIC CENTER DEBT $ 175,864 $ 148,011 51% $ 238,218 82% (90, $ 207) $ 76 $ 85,581 441 POLICE FACILITY BOND DEBT 166,725 193,917 50% 323,166 83% ( 129,249) 97 37,379 TOTAL DEBT SERVICE FUNDS $ 342,589 $ 341,928 50% $ 561,384 83% $ (219,456) $ 173 $ 122,960 640 WASTEWATER OPERATIONS $ 4,670,817 $ 6,403,875 41% 6, $ 831,961 44% ( $ 428,086) 72,011 4,170,720 641 WASTEWATER IMPACT FUND* 21,350,081 1,647,010 37% 3, 898,788 15% (2, 251,778) 422,783 18,675,520 642 WASTEWATER RATE STABILIZATION 2,799,081 136,693 71% 50% 936 135,757 2, - 934,838 643 WASTEWATER CAPITAL PROJECTS 15,601,623 2,780,482 53% 2, 229,373 13% 551,108 2,697,057 13,455,675 650 WATER OPERATIONS 4,444,824 8,744,466 44% 9, 317,915 46% ( 573,450) 780,982 3,090,392 651 WATER IMPACT FUND* 2,969,960 370,119 21% 413,298 17% (43, 178) 66,259 2,860,523 652 WATER RATE STABILIZATION 3,183,868 45,623 n/a 50% 44,921 702 3, - 228,789 653 WATER -CAPITAL PROJECT 15,548,298 3,666,293 53% 1, 259,676 8% 2, 406,617 493,454 17,461,460 TOTAL ENTERPRISE FUNDS $ 70,568,552 $ 23,794,560 44% $ 23,952,649 24% $ (158,089) $ 4,532,545 $ 65,877,917 730 INFORMATION SERVICES $ 793,101 $ 1,254,312 50% 1, $ 232,201 46% 22,111 $ $ 282,085 $ 533,127 740 BUILDING MAINTENANCE 7,256 838,669 50% 704,463 40% 134,206 77,586 63,877 741 BUILDING REPLACEMENT 4,309,501 476,491 55% 39,456 3% 437,036 12,035 4,734,501 745 CIP ENGINEERING 9,209 902,935 44% 870,736 42% 32,199 1,245 40,163 760 UNEMPLOYMENT 303,137 3,909 133% 11,826 79% (7,917) - 295,220 770 WORKERS COMPENSATION 2,152,498 477,070 48% 646,937 62% ( 169,867) 30,000 1,952,631 790 EQUIPMENT REPLACEMENT 7,665,968 709,808 41% 110,400 9% 599,408 1,067,656 7,197,720 791 EMPLOYEE BENEFITS FUNDS (124,893) 427,681 50% 333,131 44% 94,551 - (30,342) 795 GEN. LIABILITY INSURANCE 932,477 1,053,673 50% 2, 361,758 93% (1, 308,085) ( - 375,608) TOTAL INTERNAL SERVICE FUNDS $ 16,048,254 $ 6,144,549 48% $ 6,310,908 46% $ (166,359) $ 1,470,607 $ 14,411,288 Revenues Expenses Preliminary Ending Fund Balance

City of Morgan Hill
Fund Activity Summary - Fiscal Year 2022-23
For the Month Ended December 31, 2023
50% of Year Complete
Beginning Year to-Date
Fund Fund Balance YTD % of YTD % of Deficit or
No. Fund Description 07-01-23 Actual Budget Actual Budget Carryover Reserved1 Unreserved Revenues Expenses Preliminary Ending Fund Balance

SUMMARY BY FUND TYPE
GENERAL FUND GROUP 33,175,566 $ 17, $ 32% 27, 017,690 $ 46% (10, 389,040 $ 3, 371,351) $ 19, 342,507 $ 461,708 SPECIAL REVENUE GROUP 12,500,636 6, 39% 5, 153,829 40% 808,169 1, 345,660 10, 919,677 926,619 DEBT SERVICE GROUP 342,589 50% 341,928 83% ( 561,384 173 219,456) 122,960 CAPITAL PROJECTS GROUP 38,260,136 4, 32% 10, 111,312 25% (6, 670,417 559,106) 15,034,967 16,666,063 ENTERPRISE GROUP 70,568,552 23,794,560 44% 23, 952,649 24% ( 158,089) 4,532,545 65,877,917 INTERNAL SERVICE GROUP 16,048,254 6,144,549 48% 6, 310,908 46% ( 166,359) 1,470,607 14,411,288 TOTAL ALL GROUPS $ 170,895,733 $ 57,563,868 38% 74, $ 692,568 33% (17, $ 128,700) $ 26,300,476 $ 127,466,556 For Enterprise Funds: Unrestricted fund balance = Fund balance net of fixed assets and long-term liabilities. *Unreserved fund balance includes bond proceeds reserved for projects listed in bond documents. 1 Amount restricted for encumbrances, fixed asset replacement, long-term receivables, and bond reserves.

City Manager's Signature Authority
Contracts and Agreements Between $25,000 to $60,000 Entered From 10/18/2023 to 1/23/2024 Vendor Name Description of Service Begin Date End Date Department Amount Renne Public Law Group Grant Support Contract 10/26/2023 6/30/2024 PS $50,000 South County Compassion
Center
Morgan Hill Safe Parking "Focus"
Program 4/25/2023 6/30/2024 DS $52,000
Boucher Law, PC Provide Outside Council 1/15/2023 12/31/2024 CAO $30,000 Davis Farr, LP TOT On-Call Audit Services 11/29/2023 12/31/2025 Fin $60,000 Urban Field Studio
Affordable Housing Project Design and
Conceptual Arch services for Auto
Dealer Development 12/12/2023 12/31/2024 DS $55,000
Tucker Construction, Inc. City Hall Lobby Renovations 11/7/2023 2/17/2024 PS $58,754 Biggs Cardosa Associates,
Inc.

Repair Concrete Spalling for UPRR
Undercrossing on Monterey Road 11/26/2023 10/1/2025 PS $44,500 Burr Plumbing and Pumping,
Inc.

El Toro Fire Station Sewer Repair
Project 1/9/2024 3/11/2024 PS $47,415

Memorandum
Date: January 25, 2024
To: Christina Turner, City Manager
From: Chris Ghione, Public Services Director
Subject: Youth Sports and Recreation Tourism
In preparation for the Youth Sports and Recreation Tourism topic at the upcoming City Council Goal Setting Workshop on February 2 and 3, 2024, links to foundational documents are provided below:

City of Morgan Hill General Plan 2035
Areas of Focus: Goal ED-4 & HC-3
https://www.morganhill.ca.gov/DocumentCenter/View/22839/MH2035-General-Plan--- December-2017
Bikeways, Trails, Parks and Recreation Master Plan
Area of Focus: Appendix D
https://www.morganhill.ca.gov/1429/Master-Plan-for-Parks-Trails-and-Bikeway Park and Trail Planning
https://www.morganhill.ca.gov/1489/Park-Open-Space-and-Trail-Planning Sand Volleyball Demand and Facility Analysis
https://www.morganhill.ca.gov/DocumentCenter/View/40375/3237001_MorganHillSandVolley ball_Final-Report?bidId=
Condit Road Sports Facilities Master Plan
Prior City Council Agenda Item Materials
Staff Report
Master Plan
Community Survey Summary
Presentation

17575 Peak Avenue
Morgan Hill, CA 95037-4128
TEL: (408) 779-7271
FAX: (408) 779-3117
www.morganhill.ca.gov

ECONOMIC DEVELOPMENT BRIEFING
The Economic Blueprint is founded on guiding principles from the General Plan, Morgan Hill 2035, and incorporates feedback from over 400 residents, businesses, and community leaders engaged and invested in the future of Morgan Hill. The Blueprint is intended to further the Community's quality of life by attracting investment, development, and jobs that will ensure continued economic prosperity, which in turn generates revenues to support essential City services and improve critical City infrastructure. The Blueprint was developed over a 2-year collaborative process and adopted unanimously by the City Council in 2017.

The Blueprint has been focused on driving economic prosperity and vitality by advancing 13 strategies and 35 action items across the following four key industries:

Innovation and Advanced Manufacturing: Grow existing companies, attract new industry, and grow high-quality jobs. Support and advance the entitlement and permit process of new developments. Promote and market Morgan Hill as a premier location for commercial and industrial investment.

Retail: Grow retail offerings and strengthen commercial nodes. Develop a retail incubator program and a retail concentration strategy. Utilize incentives and available tools to attract new investments that increase both jobs and revenue to the Community.

Tourism: Grow leisure, agriculture, wine country and recreational tourism. Continue to nurture Downtown’s transformation as a community gathering place. Implement Property Based Improvement District and manage parking supply. Support additional lodging investments and partner with Visit Morgan Hill to implement activations that support tourism and vibrancy.

Healthcare: Grow and foster medical and diagnostic services by advancing and supporting the entitlement process for medical facilities. Promote and market Morgan Hill as a desired location for medical and diagnostic providers.

Over the course of the last 6 years, City staff have completed over 85% of the action items identified in the Blueprint. Below is an overview of the key achievements of the action items identified in the Blueprint. A more detailed description and analysis of each action item is included in Attachment 1.

Innovation and Advanced Manufacturing
Over the course of the last five years, the City of Morgan Hill has been very deliberate within the Innovation and Advanced Manufacturing industry to encourage new investment and development.

The City has enabled multiple Fee Freeze and Fee Financing Agreements with developers to encourage their investment in new projects. As a result, the City has grown its industrial inventory to approximately 7.7 million square feet with another 500,000+ square feet under construction and an additional 500,000~ square feet going through entitlement. When the Blueprint was adopted, the industrial vacancy rate ranged between 19% to 21%. In recent years, the industrial vacancy rate significantly decreased down to 3% to 6%, which essentially meant there was no available inventory which caused existing businesses to expand elsewhere. The recent addition of the new industrial buildings has brought the vacancy rate to approximately 11.1%. Today the City of Morgan Hill has new buildings to support expansion of existing companies and is well positioned to be the destination for the advanced manufacturing industry in Silicon Valley.

In 2021, the City enacted a new Industrial Preservation and Optimization Policy to protect industrial lands as employment lands while also encouraging medical uses.

To encourage continued investment and to foster an environment that supports business growth, the City has deployed the ChooseMorganHill.com website accompanied with a Permitting Portal (OpenCounter), conducted annual Manufacturing Day events to promote the industry, and actively marketed available/vacant industrial locations in key business publications. The City also helped coproduce two virtual webinars with the Silicon Valley Business Journal to highlight and promote the industrial and commercial investment opportunities in Morgan Hill.

The City of Morgan Hill has developed a significant competitive advantage with the development of new industrial properties to support the development and investment of innovation, advanced manufacturing, and research and development (R&D) users.

The main goal under the Innovation and Advanced Manufacturing pillar is to actively communicate with property owners and brokers to support the tenanting of the new industrial buildings. One key policy opportunity is to update the parking standards and minimums to capitalize on available land to maximize industrial investment and job creation. When the opportunity arises, the City should strengthen language in the General Plan to conform with the Economic Blueprint’s strategies.

Additionally, the City should work with property owners to amend restrictive Planned Developments (PD) and/or create Zoning Overlays to increase user flexibility, as well as explore incentives to encourage office and professional development.

Retail
The City of Morgan Hill has 1.3 MSF of developed retail/commercial space. Given Morgan Hill’s relatively small population (currently approximately 45,000) and a shared retail trade area with South San Jose and Gilroy, the City is viewed as “over-retailed,” making retail development challenging.

While the retail vacancy rate is low at 5.1%, the City has experienced long-term vacancies for “Junior Tenant” spaces at Cochrane Plaza (25K SF) and Laurel Oaks (26K SF) and has been challenged to attract development in three fully entitled shopping centers: Madrone Village Phase II (4.4 acres), Cochrane Commons Phase II (135K SF), and Evergreen Village (10+ acres). Although there are a handful of buildings and large retail spaces that have experienced prolonged vacancies, there are no current blight issues associated with these buildings or locations. In fact, many small businesses struggle to find available space to locate or relocate within the commercial/retail space in the City of Morgan Hill. In December 2023, the City Council requested information regarding a Commercial

Vacancy Tax. In response to this request, City staff has prepared a memo to address the benefits and challenges of implementing a Commercial Vacancy Tax (Attachment 2).

In 2018, the City completed the Monterey Corridor Study which included a Retail Capacity Study that suggests that at full build out, Morgan Hill can only support an additional 1.3 MSF of new retail development, therefore, the City needs to be strategic to prevent allowing retail in areas that will not be successful and will ultimately compete and ‘water down’ the retail viability of premium retail centers. The Study narrowed the sites along the Monterey Corridor that could be viable for retail development. As a result, City staff have implemented a Retail Concentration Strategy to prioritize retail development areas so that the City does not undermine core retail hubs. With this in mind, staff provides land use recommendations to allow for modification of certain projects. Recent examples include Cochrane Commons II and The Gates on Monterey.

In late 2022, the City created a Downtown Property Business Improvement District (PBID) to enhance Downtown’s safety and cleanliness, increase sales tax generation, and actively manage and market the Downtown District as a destination. The Downtown Morgan Hill Improvement District (DMHID) has begun managing the “Sidewalk Saturday” outdoor retail program and conducted a sidewalk power-washing program to help clean the Downtown sidewalks. In addition, DMHID is also underway publishing a Downtown business marketing brochure.

The Economic Development team actively engages with retail brokers and participates at the regional International Council of Shopping Center (ICSC) Conferences to stay abreast of market trends, learn from industry experts, meet with potential users, and build relationships. Additionally, staff regularly updates the City’s retail marketing materials, maintains a blog, and issues an eNewsletter.

The Downtown District has seen significant growth mostly in food and beverage venues. Sales tax collection from this district has outpaced growth from other shopping centers. A challenge for Downtown is the limited available and modern retail space. Staff will work with property owners to support the rehabilitation of older buildings. It is unlikely that another mixed-use development will be developed in the next few years but in the meantime, staff will continue to create and promote programming for creative retailing like the outdoor retail market, Sidewalk Saturdays.

Lastly, with the State’s passage of AB2011 and SB6 in 2023 along with the State’s delay in approving the City’s Housing Element, Commercial and Retail lands are under extreme pressure to either develop as commercial properties or potentially be developed as residential. The best strategy to prevent the conversion to residential, is to attract investment and develop those lands with sales tax and job generating uses. In alignment with the Economic Blueprint, City staff will continue to bring forward its recommendations on policies, incentives and zoning changes that best support the growth of sales tax, transient occupancy tax (TOT), and property tax to support the General Fund and long-term fiscal sustainability. In December 2023, the City Manager shared Morgan Hill’s Commercial Preservation Strategy with the City Council (Attachment 3) Tourism
In 2019, the City of Morgan Hill successfully implemented the Tourism Business Improvement District (TBID), Visit Morgan Hill, to support the marketing and promotion of Morgan Hill as a regional destination for recreation, agritourism and dining. Unfortunately, immediately after its launch and hiring of its second Executive Director (February 2020), the COVID-19 pandemic decimated the tourism and hospitality industry. While it was a rough start, Visit Morgan Hill has completed the following significant milestones:
• Completed a Destination Strategic Plan
• Completed a Tourism Branding and Launch Campaign

• Established Comprehensive, High-Performing Marketing Programs • Established Processes and Benchmarks for Hotel Sales Leads • Established Local and Regional Partnerships
Visit Morgan Hill’s focus is to build recognition and develop partnerships that will generate new opportunities that will attract visitors to the area and generate spending and overnight stays, resulting in added Transient Occupancy Tax (TOT) and Sales Tax revenue to the City. In 2023, the City renewed the Tourism Business Improvement District (TBID) for an additional ten (10) years with the ability to increase its current 1.5% tax rate to up to 3% over the 10 years. This will allow Visit Morgan Hill to continue to actively promote and drive tourism initiatives for the City of Morgan Hill and capitalize on the post-pandemic economic cycle of improved tourism and hospitality.

Attracting visitors increases spending that supports the local economy while generating additional sales tax revenue for the City. In addition, a more direct and significant gain is when visitors spend the night at a local hotel and contribute to the City’s Transient Occupancy Tax which represents 5% of the City’s General Fund. Currently, the City has two Upscale class hotels, four Upper Mid-scale class hotels, and two new hotels in the pipeline. The other hotels are lower scale hotels and have long-term stays that do not significantly contribute to the City’s TOT. Growing, improving, and diversifying the City’s lodging options is a critical component to the tourism strategy and the City’s economic sustainability. Hotel development is happening throughout the region and Morgan Hill has not always been able to capitalize on the hotel development cycles. In 2022, the City Council adopted a new Hotel Incentive Strategy and Policy to attract new hotels and support existing hotels’ reinvestment in their facilities.

Lastly, it is important to note that both the Edes Art Gallery (to be completed June 2024) and Hotel MOHI (to be completed December 2025) are both under construction in the Downtown. When completed, these projects will be significant catalysts to attracting new investment and businesses to Downtown.

The most substantial impact the City can have on continuing to grow tourism is two-fold. First, the City needs to grow and diversify lodging options. There are four sites that currently allow hotel development by right in Morgan Hill. The City should encourage hotel development on these sites in addition to working with existing properties to update their facilities. Secondly, the City needs to advocate for the creation of new tourism assets, while also maintaining and growing the City’s sports and recreation venues. In a separate report, the Council will receive an update on the plans to grow youth sports and other recreation facilities. City staff are currently working on updating the entertainment permitting process to support more live music and entertainment.

Healthcare
Morgan Hill residents have long expressed the desire to gain access to a full range of healthcare and medical services. In addition to providing expanded services for residents, growing the City’s healthcare industry will help create high-quality jobs for residents, many of whom are employed in the medical industry.

Santa Clara County purchased the DePaul Health Center in 2018. In late 2023, the County completed significant renovations and will soon offer Primary Care, Urgent Care with extended hours and weekends, Pediatrics, Women’s Health, Outpatient Pharmacy Services, Laboratory Services, and Imaging Services.

To grow medical services in Morgan Hill, the City updated the zoning code to allow medical services in almost all zoning designations in the City, including residential, commercial, and industrial areas.

Staff have been actively promoting available locations for new medical uses and facilities.

In recent years, the City rezoned the southeast corner of Juan Hernandez Drive and Barrett Avenue for the future development of new healthcare and medical facilities. The City’s Economic Development Team has worked with the property owner/developer to promote and market Morgan Hill as a desirable location for medical users. Staff have been working with the developer to increase existing capacity of medical at the site to meet market demand. A PD amendment is underway that could double the medical development on this site. The property owner/developer issued an RFP and has been in negotiations with a medical provider to purchase the site. City staff believes that a land acquisition of this site by a leading healthcare provider is imminent. Once the transaction is complete, the Economic Development Team will work internally to support the entitlement and permitting process to expedite construction of any new medical facilities.

Currently, the main focus for the healthcare segment is to support the entitlement of the Rosewood Medical Center and to continue to market and promote the area for medical services.

Other Notable Economic Development Highlights
In addition to the work program associated with the Economic Blueprint, it is important to note that many of the above action items were accomplished despite the considerable challenges and impacts caused by the COVID-19 pandemic, in 2020 to 2022. In an effort to minimize the negative impacts upon businesses, the City quickly pivoted to prioritize and implement the City’s Economic Development Business Recovery Plan to support the recovery of the restaurant industry, retailers, and small businesses, to encourage tourism, and support new investment. Some of the most notable successes from the Recovery Plan include:
• Designed and facilitated the Sidewalk Saturdays Retail Program • Co-directed and co-produced a Morgan Hill Tourism video with Visit Morgan Hill • Created and Implemented Outdoor Dining Program and Manual 2024 Economic Development Workplan
The City’s 2024 Economic Development efforts will continue to focus on the basic pillars of economic development while continuing to implement the Economic Blueprint with additional action items designed to address existing barriers to entry for commercial and industrial investment while leveraging the City’s strengths and opportunities. The reduction and elimination of these barriers can assist in the attraction of new investment. Economic Development staff will continue to focus on the fundamental work of business retention and expansion, marketing and promotions, supporting development and investment, and the implementation of policies and programs. Below is an overview of that work:

Business Retention & Expansion
The most fundamental pillar of the City’s economic development efforts are business retention and expansion. The team connects with new businesses, performing annual sites visits, and connects with the largest employers and sales tax revenue generators. The team then follows up on any needs the company may have expressed. These activities take an inordinate amount of time and effort as we are assisting businesses of all sizes and all industries with the information, tools, resources and support they need to thrive.

Marketing & Promotions
To maintain and attract investment, the team manages a wide range of marketing and promotional activities. These activities include updating and maintaining the ChooseMorganHill.com website, City Economic Development Website, blog, and social media platforms, as well as sharing information via the Choose Morgan Hill eNewsletter. City staff will continue to create advertorials and partner with business publications to advertise and promote the City. Staff also regularly attend regional conferences and events to meet with companies, developers, and brokers.

Development & Investment
Internally, the economic development team serves as the permitting and planning ombudsman for developers and businesses to help ensure a timely review of applications and plans.

Policies & Programs
The team constantly reviews City zoning, identifies industry best practices, identifies opportunities to reduce barriers, conducts research and market studies, and ultimately makes policy recommendations to the City Council for their review and adoption. The team manages a number of incentive and business support programs including the Fee Freeze, Fee Financing, Outdoor Dining, Auto Incentive, and now the Hotel Incentive Programs. In addition, the team also collaborates with partners such as utility providers and the State to share available incentive programs, tax credits, and to problem solve development issues.

In 2023, the City of Morgan Hill was selected as one of ten cities in the nation to participate in an Economic Mobility Cohort with the International City/County Management Association (ICMA) through a grant from the Gates Foundation. The City received a grant to explore local economic mobility strategies. This work and grant were timely as the City’s Housing Element had identified the need for the City to connect Spanish-speaking residents to local housing and job opportunities.

Through this process, the City has learned that one in four businesses in Morgan Hill are Hispanic owned, yet less than 5% of the COVID recovery loans issued to Morgan Hill businesses went to Hispanic-owned businesses. Staff recognizes the opportunity for workforce development and a shift to be more intentional in supporting all businesses.

Success Metrics
Overall, the Economic Blueprint has proven to be a very useful tool for the City to attract investment.

Staff regularly tracks a number of metrics listed in the Economic Blueprint to monitor our progress on critical measures that impact the City’s fiscal sustainability, quality of life, job growth and tourism goals. Below is a comparison on how these metrics have changed since 2017.

Much progress has been made on the action items listed in the Economic Blueprint and the City has benefited from this strategic and visionary document. The City has increased the number of jobs available to residents and has done fairly well with sales tax and property tax growth. As the City evaluates the future relevance and viability of the Blueprint, current market conditions and challenges should be considered, and the overall economic development goals should be reaffirmed.

Current Market Conditions
While the economy continues to feel sluggish after the COVID-19 pandemic and its long-lasting impacts, we find that the market in Morgan Hill is stronger than before. The City now has some of the newest industrial products available in the region. Downtown is thriving as a dining destination with additional investment underway. While the City’s population decreased slightly, it benefited from the new work-from-home trend. The City’s sales tax and property tax collection is at par or better than other cities. Today, the City has a TBID and a Downtown PBID, two economic engines that expand the City’s capacity to attract tourism and support Downtown.

However, the City is still faced with the challenge that greenfield development is expensive. In addition, current high interest rates, lack of available workforce, delays in building materials, supply chain issues have all impacted many of the commercial and industrial sectors and development.

Perhaps the biggest threat to the City’s long term economic sustainability continues to be the loss of commercial and industrial properties to housing. The City is facing a number of Builders Remedy projects that threaten our job-generating and tax-generating lands. Additionally, City Hall is burdened by the growing State mandates and review timelines that impact our review process and place the commercial and industrial projects at a disadvantage.

The City has significant opportunities with the new industrial buildings to attract companies and jobs to our Community. The boutique hotel and the fine art gallery will continue to grow Downtown as a destination and support the City’s tourism goals. The expansion of the DePaul medical center will soon provide much needed medical services to the Community and soon the Rosewood Medical Center will secure a medical provider who will provide additional jobs and needed services to the Community.

Conclusion:

The Economic Blueprint has helped improve the City’s economic sustainability and quality of life.

The four industries of Tourism, Retail, Healthcare, Manufacturing and Advanced Manufacturing remain relevant to Morgan Hill. While much progress has been made, several critical action items remain to be completed. Some key work ahead includes:
• Updating Floor Area Ratio (FAR) requirement for commercial and industrial development. • Updating parking requirements for commercial/industrial developments. • Updating restrictive Planned Developments (site-specific zoning) to promote commercial investment and development.
• Expanding Zoning Overlays to support additional retail, auto, and hotel uses. • Updating City ordinances to encourage entertainment venues to support business vitality and promote tourism.
• Promoting workforce development and economic mobility activities.

During the Goal Setting Workshop, the Council should consider the following questions:

Questions:

1. Does the Council feel the Economic Blueprint remains a viable economic development strategy for the City of Morgan Hill?

2. Does the Council continue to prioritize and support Economic Development as a strategic priority for the City?

3. Does the Council want to support policies and programs to help the development of commercial and industrial lands?

4. Should concessions given to housing projects also be given to commercial and industrial development?

Attachments:

1. Economic Blueprint Action Items

2. Commercial Vacancy Tax Memo

3. Commercial Preservation Strategy Memo

4. Economic Development Advertisements

5. Silicon Valley Business Journal Articles

6. Marketing Materials

INDUSTRY
Action
Item

STRATEGY & ACTION ITEMS STATUS COMMENTS
1 Adopt an Employment (Industrial) Land Preservation Policy Complete 2 Strengthen General Plan language to prevent conversion of Industrial Lands
3 Create a Telecommunications Master Plan (MP) to improve access to fiber Complete Shifted from MP to implement actions under the guidance of the Telecommunications Report 4 Update Zoning Code and Parking Requirements to modernize Zoning Code and allow for new hybrid of developments that are considered "Class A" industrial of "Flex Space"
5 Explore incentive programs to attract industry-specific development On-going
Consider incentive program for office development
6 Allow greater intensification (FAR) and taller buildings to increase value of Employment Lands Requires GP Amendment
7 Complete the Monterey Corridor Flex-Zoning update and optimize development opportunity Complete
8 Streamline permitting process by allowing Administrative Approvals as part of Zoning Code Update Complete
9 Deploy Open-Counter Online Business Ombudsman Platform Complete 10 Market Economic Blueprint vision, process & incentives to attract business investment On-going
11 Formalize City's Expedited Process and market it On-going 12 Connect education assets to industry On-going
Mfg Roundtable, Mfg Day, Employer Tours
complete. Opportunity for additional workforce
development/internship programs.

FOSTER AN ENVIRONMENT THAT SUPPORTS BUSINESS GROWTH

IMPROVE AND FACILITATE DEVELOPMENT OF CRITICAL INFRASTRUCTURE

PRESERVE INDUSTRIAL LANDS
2017 Economic Blueprint Work Program

INNOVATION &

ADVANCED

MANUFACTURING

SUPPORT EDUCATIONAL FACILITIES & A LIFE LONG LEARNING ECOSYSTEM

ATTRACT DEVELOPMENT
ATTACHMENT 1

13 Develop a Retail Concentration Strategy Complete
14 Continually revisit retail industry trends & requirements On-going 15 Pursue sports recreation uses as anchor tenants, increase permitted use allowance up to 15K sq. ft. Complete
16 Re-evaluate and propose changes to shopping center - Site Specific Zoning Requirements
On-going
17 Update zoning to allow incidental wine, beer and alcohol tasting rooms and distilleries in Downtown and throughout the City in Commercial and Industrial Zoned Areas
Complete i.e. Alara Cellars, Lightpost Winery
18 Promote co-working in Commercial nodes On-going
19 Identify parking management strategies On-going
Implementing delivery/drop off zones, short-term
parking
20 Encourage housing development & office tenants On-going 21 Create Business Improvement District (BID) to support Downtown improvements and programming Complete
22 Terminate Administrative Permit Process for Morgan Hill Plaza Shopping Center Complete

RETAIL FLEXIBILITY
RETAIL

SUPPORT DOWNTOWN DEVELOPMENT

23 Upgrade the Outdoor Sports Center & Aquatics Center
(infrastructure & amenities) On-going
Master Plan Update completed, improved lighting
and grass
24 Develop a Financing Plan to construct and operate new sports/recreation facilities
25 Ensure General Plan and Zoning Code address bed & breakfasts, Airbnb and hotel development
Amend Zoning Code to allow B&B in residential
areas
26 Develop plan to help upgrade or transition aging hotel facilities On-going Hotel Incentive Plan complete. Some redevelopment limited by FAR or Zoning.
27 Identify pre-approved lodging sites Complete Only 4 sites allow hotels by right 28 Work with hotels to develop a Tourism Based Improvement District (TBID) to help finance Capital Improvements to sports recreation facilities and to promote and market the region Complete TBID is not funding capital improvements
29 Collaborate with regional partners to enhance branding, marketing and promotions or regional assets On-going
30 Target retail attraction to sport recreation, entertainment, boutique and food retailers
On-going
31 Continue to create a lively Downtown with entertainment offerings On-going Updating Entertainment and Noise Ordinance 32 Ensure General Plan & Zoning Code allow medical uses Complete 33 Identify & market pre-approved medical sites On-going 34 Increase outreach and engagement with medical service providers On-going 35 Create & implement a targeted marketing campaign On-going

EXPAND LOCATIONS OF WHERE MEDICAL USES ARE ALLOWED

ACTIVELY PROMOTE LOCATIONS FOR MEDICAL USES

SUPPORT LODGING

LEVERAGE RESOURCES THROUGH PROFESSIONAL LINKAGES AND PARTNERSHIPS

MEDICAL

SUPPORT A TOURISM ENVIRONMENT

TOURISM

ENHANCE FACILITY UTILIZATION AND GROW SPORTS/RECREATION FACILITIES

1 Memorandum
Development Services
Date: January 19, 2024
To: Christina Turner, City Manager
From: Matt Mahood, Economic Development Director
Subject: Commercial Vacancy Tax
Summary: This memorandum is in response to a City Council request for information about the implementation of a Commercial Vacancy Tax. A Commercial Vacancy Tax is a policy instrument employed to combat the issue of extended vacancies in commercial real estate. This type of tax is imposed on owners of commercial properties that remain unoccupied for a specified period as a way to incentivize property owners to lease their properties and deter property owners from holding onto properties for speculative purposes.

While this strategy can aid in addressing urban blight, there are potential challenges associated with this tax, as its effectiveness can vary based on market conditions and the specifics of its implementation. Key considerations include setting an appropriate tax rate that is effective yet not overly burdensome, establishing clear criteria for assessing vacancies, providing exemptions or exceptions under certain circumstances such as economic downturns, and ensuring efficient administrative oversight for the assessment, collection, and enforcement of the tax. Overall, while a commercial vacancy tax aims to promote occupancy in commercial properties and invigorate local economies, it is not a common strategy as the unintended consequences could be more damaging to the City’s goal to attract quality and long-term investment. Very few cities use this program and those that do are larger cities that suffer from extensive vacancies and struggle with resulting blight issues. Below are some recent implementation examples:

1. San Francisco: Implemented a vacancy tax in which property owners are charged a fee for spaces vacant for over six months. Revenue collected from the vacancy tax is applied towards affordable housing initiatives. San Francisco's Commercial Vacancy Tax, introduced in 2020, is a municipal initiative targeting long-standing vacancies in commercial properties. The tax was proposed largely in response to the practice of landlords intentionally keeping properties vacant, often holding out for higher-paying tenants. This policy applies specifically to ground floor, street-facing commercial ATTACHMENT 2

2 properties in 32 designated districts within the City. The tax rates start at $250 per linear foot of storefront facing the street, escalating to $500 in the second year and $1,000 for each subsequent year. A key aspect of the policy is the requirement for every owner, lessee, and sublessee of a taxable commercial space to file a Commercial Vacancy Tax Return, irrespective of whether the space is vacant. This filing helps determine who is responsible for paying the tax, which generally falls on the party entitled to possession of the property. Enforcement and compliance of the tax fall under the purview of the San Francisco Office of the Treasurer and the Tax Collector. Its success and impact, however, continue to be subjects of debate, especially in the evolving landscape of urban commercial real estate.
https://codelibrary.amlegal.com/codes/san_francisco/latest/sf_business/0-0-0-48971

2. Oakland: Implemented Measure W in 2018, known as the Vacant Property Tax, imposes a tax on a range of properties, with rates varying based on the property type. Residential and non-residential properties are taxed at a rate ranging between $3,000 to $6,000 per parcel. The tax is also applicable to undeveloped parcels at a rate of $6,000 per parcel. A property is deemed vacant if it is utilized for less than 50 days within a calendar year.

Property owners are notified annually about the potential applicability of this tax and are provided with an opportunity to contest the vacancy status or apply for exemptions through the Oakland Vacant Property Tax Portal.
https://cao-94612.s3.us-west-2.amazonaws.com/documents/Measure-W-City-ofOakland.pdf https://cao-94612.s3.us-west-2.amazonaws.com/documents/Vacant-Property-TaxOrdinance-13571-CMS.pdf

3. Berkley: Implemented Measure M in 2022, also known as the Vacancy Tax, to address real estate speculation and encourage the utilization of vacant residential properties. This tax only applies to residential units. This policy applies to residential units vacant for over six months within a year. Initially, the tax is set at $3,000 for the first property and $6,000 for each additional property. After the first year, these rates double, reaching $6,000 to $12,000 per unit, with adjustments for inflation. The measure primarily targets properties consistently vacant for extended periods, as identified in the Rent Registry.

Exemptions are in place for specific scenarios such as nonprofits, low-income seniors, owner-occupied properties with fewer than four units, properties under construction, or in probate. The tax aims to deter speculative practices by corporate property owners and address the social issue of neighborhood blight due to long-term vacancies. However, some concerns have been raised regarding the tax's broad application and its potential effectiveness in Berkeley's unique rental market.

3 https://berkeleyca.gov/sites/default/files/documents/Measure%20M%20- %20November%208%2C%202022%20Election.pdf
Administrative Challenges:

Implementing a vacancy tax necessitates the establishment of robust mechanisms for monitoring and verifying vacant properties, a process that can be resource-intensive and complex. This challenge has been evident even in a city as resource rich as San Francisco, which has encountered difficulties in administering such a tax. Municipalities must define clear criteria to determine what constitutes a 'vacant' property, considering factors like the duration of vacancy, reasons for vacancy, and the specific type of commercial property. This task is further complicated when dealing with properties that are only partially occupied or used intermittently.

Furthermore, the potential for property owners to circumvent the tax, perhaps by falsely reporting occupancy or exploiting legislative loopholes, presents another layer of complexity. To counteract these challenges, municipalities must develop reliable systems for monitoring and reporting as well as stringent enforcement mechanisms. This could include conducting regular inspections and audits to ensure compliance.

Economic Considerations:

The economic considerations surrounding the implementation of a commercial vacancy tax are multifaceted, requiring a careful balance to ensure both effectiveness and fairness. At its core, the tax is designed to incentivize property owners to lease out persistent vacant commercial spaces, thereby reducing vacancy rates and stimulating local economic activity. However, the tax raises significant concerns about its broader economic impact. While it can generate additional revenue for local governments, which can be reinvested in community services or infrastructure improvements, there is a risk that property owners might transfer the cost of the tax to tenants through higher rents. Such an outcome could counteract the intended effect of the tax and place a greater financial burden on businesses. Moreover, the tax could negatively influence the overall investment in commercial properties. In areas with lower demand, the additional financial burden might deter investment, leading to unintended consequences such as decreased property values or reduced economic development. Implementing a progressive tax structure or providing exemptions for certain owners could help mitigate these concerns. Finally, the policy must be adaptable to changing market conditions. Economic downturns, shifts in commerce trends, and other market dynamics can significantly affect the demand for commercial space. Allowing flexibility in the policy, such as temporary suspensions or adjustments during economic downturns, could be crucial in mitigating negative impacts on property owners and the wider economy. While a commercial vacancy tax presents an opportunity to address urban challenges and stimulate economic activity, its success hinges on a nuanced understanding of its economic implications.

4 Alternative Approaches:

Alternative approaches to address prolonged commercial property vacancies beyond the implementation of a vacancy tax can encompass a variety of strategies. One such approach involves modifying zoning and land use regulations and simplifying the permitting process to allow a broader spectrum of uses within commercial zones. Financial incentives also serve as a compelling alternative. Rather than penalizing property owners for vacancies, cities can offer tax credits, reduced property taxes, or renovation subsidies to those who lease their vacant spaces.

Public-Private Partnerships (PPPs) present an opportunity for joint initiatives to activate vacant spaces, potentially leading to community spaces or business incubators, with shared investment and benefits to the parties involved. Finally, encouraging temporary use of vacant spaces through pop-up shops, art installations, or event spaces can bring immediate life to areas with high vacancy rates.

For example, the City of Santa Cruz created “Downtown Pops” a Retail Pilot Program in which the City leased the ground floor directly from the private property owner and then provided a subsidized sublease of the space to retail startups as a way to create a pipeline of retailers that can eventually cover the full rent. Alternatively, the City can engage with community groups in repurposing vacant properties which can lead to innovative, and community-serving uses, such as gardens, markets, or cultural centers. In summary, there are several collaborative approaches that the City can use to encourage the occupancy of commercial properties that may be more effective than a punitive tax.

Fiscal Impacts
Because a Commercial Vacancy Tax is a new tax, in order to be implemented, it would require voter approval. The estimated staff time to prepare the ballot measure is approximately 15 hours.

The cost for the ballot measure is approximately $60,000 if placed on the ballot of a regular election in which there are also Council seats on the ballot.

Current Vacancy Rates
The most current vacancy rates in Morgan Hill are 11.1% for industrial and 5.1% for commercial/retail. Morgan Hill is considered to have a low vacancy rate. Historically, Morgan Hill has had a 2-3% vacancy rate in the industrial category, but with the completion of several projects over the last 12 months, the City’s vacancy rate has grown but so too has the City’s ability to retain businesses that need to grow and expand and increased the City’s ability to attract new businesses. Although there are a handful of buildings and large retail spaces that have experienced prolonged vacancies, there are no current blight issues associated with these buildings or locations. In fact, many small businesses struggle to find available space to locate or relocate within the commercial/retail space in the City of Morgan Hill.

5 Conclusion
After evaluating the potential implementation of a Commercial Vacancy Tax in Morgan Hill, staff have determined that this approach is not advisable. The potential administrative costs and the tax's possible deterrent effect on investment and development outweigh the uncertain gains.

The broader economic impacts of a vacancy tax are also not entirely predictable at this point.

1 Memorandum
Development Services
Date: January 10, 2024
To: Christina Turner, City Manager
From: Matthew Mahood, Economic Development Director
Subject: Morgan Hill Commercial Preservation Strategy
Summary: This memorandum is in response to a City Council request for information about the City of Morgan Hill’s strategy to preserve and protect Commercial Zoned lands.

With the State’s passage of Assembly Bill 2011 (AB2011) and Senate Bill 6 (SB6), which took effect on July 1, 2023, locally zoned Commercial or Retail lands are under extreme pressure to either develop as commercial properties or potentially be developed as residential. The specific standards that apply for AB2011 and SB6 are complicated, but the following link provides a technical overview of the provisions of AB2011 and SB6. The following is a brief summary of each law.

AB2011
AB2011 creates a CEQA-exempt, ministerial approval process for multifamily housing developments.

The law provides for slightly different qualifying criteria (1) for 100-percent affordable projects and (2) for mixed-income projects located in "commercial corridors." AB 2011 projects must pay prevailing wages to construction workers, among other labor standards. AB 2011 contains significant locational/geographic criteria including no housing within 500 feet of a freeway.

SB6
SB6 does not create any new approval process. However, projects meeting SB 6 criteria may invoke SB 35 and the Housing Accountability Act. SB 6 projects may be either a 100-percent residential project or a mixed-use project where at least 50 percent of the square footage is dedicated to residential uses. SB 6 applications are not exempt from CEQA but need not provide any affordable housing. SB 6 projects are required to pay prevailing wages and utilize a "skilled and trained workforce." SB 6 does not apply to properties located on or adjoined to a site where more than one-third is dedicated to industrial use.

The two State laws not only apply to undeveloped greenfields, but also to existing Commercial or Retail properties that may be underperforming.

ATTACHMENT 3

2 The City’s Economic Development Department in partnership with the Planning Department has done an assessment of the vacant commercial property across the City. The City currently has approximately 120 acres of vacant commercial/retail land. Staff believes that approximately 95 acres are at high-risk of conversion and 25 acres are at a lower risk of conversion. It is believed that established Planned Development districts that include master plans could be exempt from AB2011 and SB6, but it is unknown whether that interpretation would be challenged. Staff is unable to assess which developed commercial/retail properties are at risk of conversion, but those commercial/retail sites that are struggling with high vacancy rates or those with businesses that are struggling will be at a higher risk than those that have higher performing retail users.

The Economic Development division’s approach to the preservation and utilization of commercial properties has been driven by the goals and objectives outlined in the City’s 2035 General Plan and 2017 Economic Blueprint (EBP).

Preserve Industrial Lands
EBP Action #1 – Adopt an Employment (Industrial) Land Preservation Policy As vacant land becomes more constrained, pressure to convert industrial and commercial lands to residential will intensify to meet the growing housing demand and the new pressures from AB2011 and SB6. In March 2022, the City Council adopted the Industrial Land Preservation and Optimization Policy placing restrictions on non-employment generating uses while increasing the ability of a preferred use, medical office, to locate within the light industrial zones.

Attract Development
EBP Action #4 – Update the Zoning Code
The main tool the City has to regulate land development is the Zoning Code. To attract companies to locate or expand in Morgan Hill, the City should ensure the zoning regulations are modernized to support today’s industry trends. Since the approval of the EBP, the City has implemented numerous zoning text amendments to support economic development. Recently the City Council approved the Vehicle Sales (-VS) Overlay increasing the amount of land available to attract potential auto dealers. Auto dealers are a preferred user of commercial lands since they generate significant general fund revenue. City staff will continue to look for opportunities to update the Zoning Code to attract preferred users.

EBP Action #5 – Explore Incentive Programs to Attract Industry-Specific Development Often the cost of new development is cost prohibitive, especially during periods of high economic growth where the cost of construction is continuously increasing, interest rates are high, cost of land is high, and impact fees are high. The City can explore and utilize incentive programs to freeze fees, finance impact fees, and create incentive programs for preferred uses. The City Council has recently approved fee freeze agreements and fee financing agreements to support additional future commercial and industrial development, as well as approved the Hotel Incentive Program (October 2022). The City Council has previously used incentives to attract Vehicle Sales users to the City of Morgan Hill.

3 Retail Attraction
EBP Action 13 – Develop a Retail Concentration Strategy In order to keep the key commercial corridors healthy, the City should consider eliminating retail/commercial requirements where retail is not going to succeed. The City has been generally supportive of the recent General Plan amendments that have occurred to rezone commercial properties located at:
• Cochrane Commons II by Browman Development – Originally proposed to include 350,000 square feet of retail, the site has been vacant for 16 years despite multiple proposals and tenant solicitations. The project was amended in November 2022 to include 498 residential units and maintain 135,000 square feet of retail space.
• The Gates by City Ventures – A 3.82-acre site along Monterey Road converted from commercial to mixed-use. Due to the site’s location and natural features, this site was going to be very difficult to develop as a stand-alone retail/commercial site. The 2015 Lisa Wise Consulting retail report for the Monterey Corridor identified retail nodes that should be prioritized and protected.

This site was not identified as an important retail site. Staff worked with and supported the housing development that maintained a very small retail footprint consistent with the goal to concentrate retail in areas that will help support that use.

EBP Action #14 – Continually Revisit Retail Industry Trends & Requirements The retail industry is dynamic and constantly evolving. The Economic Development team engages in numerous activities related to retention and attraction, brand and marketing, and collaboration with brokers and developers. The following are a few examples areas where staff engages with the purpose to stay abreast of retail trends, promote retail opportunities, and develop relationships with retail brokers:
• International Council of Shopping Centers (ICSC) – Opportunity to meet with commercial users, developers, and commercial real estate brokers who are expanding. • Silicon Valley Business Journal Publications and events. • Silicon Valley Economic Development Alliance Annual Conference • On-going communication with commercial real estate brokers. • On-going communication with property owners and developers. • On-going communication and retention/expansion visits to key sales tax generators. • Quarterly HDL Sales Tax Report Review
• Regular webinars focused on retail trends and analysis.

Next Steps
The City Economic Development staff will continue to prioritize the retention and development of commercial retail users across the City to generate new and increased sales tax that is critical to the fiscal sustainability of the City. City staff continue to bring forward its recommendations on policies, incentives and zoning changes that best support the growth of sales tax, transient occupancy tax (TOT), and property tax to support the General Fund and long-term fiscal sustainability.

ATTACHMENT 4

7/29/22, 3:55 PM Here's what's new in Downtown Morgan Hill — shops, a wine tasting room and an art gallery - Silicon Valley Business Journal https://www.bizjournals.com/sanjose/news/2022/07/29/morgan-hill-downtown-2022.html?utm_source=st&utm_medium=en&utm_campaign=ae&utm_c… 1/2

TOMAS OVALLE
Bartender Austin Gillespie pours a
beer at The Running Shops and
Hops, which used to be a running
shoe store but morphed into a
popular brewery in Morgan Hill.

Here's what's new in Downtown
Morgan Hill
Jul 29, 2022, 3:24pm PDT Updated: Jul 29, 2022, 3:38pm PDT The Business Journal's List this week
enumerates the biggest non-retail
employers in Morgan Hill, largely a
mix of manufacturers, construction
firms and high-tech companies.

But this 45,000-resident city in
southern Santa Clara Count also
boasts a pedestrian-friendly, touristattracting downtown that has some buildings that are more than a century
old. And that area appears to be
thriving.

Morgan Hill's downtown strip —
centered around Monterey Road
between East Main Avenue and East Fifth Street — has added several new shops, eateries and a wine tasting room this year. At least one downtown establishment is planning to expand.

Here are some of the newer venues you can visit:

FOR THE EXCLUSIVE USE OF
[email protected]
From the Silicon Valley Business Journal:
https://www.bizjournals.com/sanjose/news/2022/07/29/morganhill-downtown-2022.html ATTACHMENT 5

7/29/22, 3:55 PM Here's what's new in Downtown Morgan Hill — shops, a wine tasting room and an art gallery - Silicon Valley Business Journal https://www.bizjournals.com/sanjose/news/2022/07/29/morgan-hill-downtown-2022.html?utm_source=st&utm_medium=en&utm_campaign=ae&utm_c… 2/2 Alara Cellars, 90 E. 3rd St., Suite 70: Janu Arasu began to explore wine making in 2013. Two years later, she produced her first vintage for Alara Cellars. She opened a tasting room elsewhere in 2017 but shut it down when the Covid-19 pandemic hit. Arasu opened its new downtown location in April. It's the only wine tasting room in Morgan Hill's center, she said.
"It feels great to reopen and it feels great to be a part of downtown Morgan Hill, especially now," she said. "It's just this next up-andcoming downtown area with a lot of new restaurants and new businesses. It feels good to be a part of it."
Colibri Gallery, 17505 Monterey Road: Longtime Morgan Hill residents Daniel and Kathy McCranie opened this art gallery and framing shop in Fall 2020. The business had its best month ever in April, gallery Director Ellie Honl said. She declined to say exactly how much revenue it made, but said it pulled in $15,000 more than expected. With the wind at its back, Colibri, which has a focus on Bay Area artists, is getting ready to grow.
"We are going to be breaking ground this fall on a two-story, custom-designed building that will have an art gallery, wine bistro, event space and also space to hold art workshops," Honl said.

Urbn Ranch, 17270 Monterey Road, Suite 100: Erika Dellamaggiore opened this home and garden accessories store with her sister and mother in May. They wanted to create a shop where "people can come, chill out," said Dellamaggiore, a Morgan Hill resident for 32 years. The store has a vintage vibe with retro items, furniture, flowers and gifts.
"A lot of people say, 'I just want to hang out here.' That makes me happy," she said.

Tomas Ovalle
Staff Photographer
Silicon Valley Business Journal

8/19/22, 11:13 AM Morgan Hill gets industrial with opening of Butterfield 5, new Shoe Palace HQ (Video) - Silicon Valley Business Journal https://www.bizjournals.com/sanjose/news/2022/08/04/morgan-hill-industrial-policy.html?s=print 1/6

TOMAS OVALLE
The Butterfield 5 property at 18225
Butterfield Boulevard in Morgan
Hill.

Morgan Hill carves industrial
path to bring more advanced
manufacturing to city (Video)
Aug 4, 2022, 7:00am PDT Updated: Aug 4, 2022, 1:23pm PDT Editor's note: Join the Business
Journal for a special virtual event Aug.
11 to hear more about Morgan Hill's
approach to development. Register
for the free event here.

A few minutes north of Morgan Hill’s
downtown stand five new buildings in
a 410,000-square-foot campus called
the Butterfield 5 Tech Park.

It’s everything the city of Morgan Hill
wants: new industrial space for a
region that’s hungry for it, buildings that are suitable for advanced manufacturing and life-sciences uses with key amenities like numerous electric-vehicle charging stations. Plus, Butterfield 5 is something Morgan Hill’s leaders definitely do not want it to be — a warehouse distribution center for the likes of Amazon.com Inc.

FOR THE EXCLUSIVE USE OF
[email protected]
From the Silicon Valley Business Journal:
https://www.bizjournals.com/sanjose/news/2022/08/04/morganhill-industrial-policy.html

8/19/22, 11:13 AM Morgan Hill gets industrial with opening of Butterfield 5, new Shoe Palace HQ (Video) - Silicon Valley Business Journal https://www.bizjournals.com/sanjose/news/2022/08/04/morgan-hill-industrial-policy.html?s=print 2/6 Trammell Crow, the Dallas-based commercial real estate developer, built Butterfield 5 before signing a tenant for the project. In June, as it finished construction, Trammell sold the development for $111 million — more than $291 a square foot — to Invesco Ltd., an Atlanta-based investment management company.

The addition of the industrial center wasn’t just big for Morgan Hill, a city of 48,000 in the southern portion of Santa Clara County. It was the only new industrial development that came online in the second quarter in all of Silicon Valley at a time when demand for such space in the area outpaces available supply by millions of square feet.
“Morgan Hill is going to have attention for a good stretch,” said Brian Matteoni, executive vice president of CBRE, which is handling leasing for Butterfield 5. “They have an existing base of occupiers, some blue-ribbon companies, that have already landed in the market over the years. So it’s a proven sector of Silicon Valley.” The city has about 6.8 million existing square feet of industrial, R&D and warehouse space, according to the latest quarterly report from brokerage firm Colliers. That’s about 2% of the entire industrial stock of Silicon Valley — in a city that’s just under thirteen square miles in size.

With strong demand for industrial space in the region, real estate investors are being drawn to Morgan Hill, and the city government is augment its healthy retail sector with additional industrial employers.
“There’s only so much retail that 48,000 people can support,” said Matthew Mahood, the city’s economic development director. He continued: “The more employers and employees that come into a city ... that’s going to ultimately support additional commercial retail.

Manufacturing gets advanced
Located within the 380-acre Morgan Hill Ranch Business Park – the fifth largest business park in Silicon Valley – Butterfield 5 is just one of several recent industrial developments in the city. Among the others:

8/19/22, 11:13 AM Morgan Hill gets industrial with opening of Butterfield 5, new Shoe Palace HQ (Video) - Silicon Valley Business Journal https://www.bizjournals.com/sanjose/news/2022/08/04/morgan-hill-industrial-policy.html?s=print 3/6 A 501,314-square-foot industrial development Trammel Crow is readying for construction on the eastern side of U.S. Highway 101, south of the Cochrane Road exit.

Silicon Valley Glass’ 31,172-square-foot headquarters and manufacturing facility, which it completed last year.

Shoe Palace’s newly built industrial and office building, which is nearly double the space of its previous headquarters next door.

The shoe retailer sold that building — a 258,122-square-foot facility — in early June.

A joint venture of Ridge Capital Investors and Westbrook Partners paid about $45 million, or $174 a foot, for the Shoe Palace building, located at 755 Jarvis Dr. The purchase was the first in Morgan Hill for Ridge or Westbrook. The firms made the move to get closer to south Santa Clara County’s manufacturing hub, said CBRE’s Matteoni, who brokered the deal and is the property’s leasing agent.

There’s a lot of “truly organic growth” in advanced manufacturing happening in the area, said David Karol, Ridge’s managing director.

Companies that are already operating in Morgan Hill are continuing to expand there. That’s helping spur demand for spaces like the former Shoe Palace headquarters, he said.

This momentum isn’t by accident, city officials say. But it’s starting to become self-sustaining. Investments by well known companies offers a signal to other businesses that the Morgan Hill market is maturing, said Edith Ramirez, who had Mahood’s job before becoming assistant city manger.
“Our economic blueprint and our vision to support growth puts us in a position to attract investors like Trammell Crow,” she said.

Ridge and Westbrook decided to buy an older property rather than developing a new one, because they could see a return more quickly, Karol said. Ridge Capital, Westbrook and the CBRE team are putting $2 million into a renovation and expect to put it up for lease within a short window, he said.

But even as it stands, the property has a lot to like, Karol said.

Originally constructed for Abbott Labs’ manufacturing operations,

8/19/22, 11:13 AM Morgan Hill gets industrial with opening of Butterfield 5, new Shoe Palace HQ (Video) - Silicon Valley Business Journal https://www.bizjournals.com/sanjose/news/2022/08/04/morgan-hill-industrial-policy.html?s=print 4/6 it has plenty of electrical capacity for cooling and to power operations and has copious amounts of parking for employees. “Where can anyone get more than 200,000 square feet under one roof, with that sort of power, parking and cooling?” he said.

What the city doesn’t want
While Morgan Hill embraces its industrial sector, it’s saying no to warehouse distribution facilities.
“Morgan Hill has been more of a rural community for much of its history,” said Mahood. “The challenge that we have is protecting a very high quality of life that the residents have come to expect, while we also try to grow our employment base, and our revenue base.”
Mahood, who stepped into his job last summer after nine years as head of the Silicon Valley Organization, said that balancing act is what led to a “conversation about how we don’t want to be a distribution center city.”
In mid-March, the City Council adopted what it called an Industrial Preservation and Optimization Policy that would essentially eliminate the construction of any future large warehouse, distribution, or parcel sorting facilities in Morgan Hill. In November, city voters will decide if it stays.

The policy was part of a larger economic framework set up in 2017 to bolster advanced manufacturing — a natural goal given that 20% of Morgan Hill’s workforce already was in that sector, Ramirez said.

As the city matures, its industrial space is becoming more constrained and “severely” limited, said Nick Gaich, CEO of the Morgan Hill Chamber of Commerce.
“How we preserve that for our future economies is very important,” he said.

The city’s industrial policy imposes a number of restrictions — including new limits on dock door heights, door-to-square-footratios and ceiling heights — as a way to guarantee that only new manufacturing and research-and-development projects get built.

8/19/22, 11:13 AM Morgan Hill gets industrial with opening of Butterfield 5, new Shoe Palace HQ (Video) - Silicon Valley Business Journal https://www.bizjournals.com/sanjose/news/2022/08/04/morgan-hill-industrial-policy.html?s=print 5/6 “That really signals to the business development community that we’re going to prohibit future large distribution use,” Mahood said. “We are going to encourage advanced manufacturing uses.” Part of that effort involves actively recruiting manufacturing companies to Morgan Hill, said Gaich, the founder of healthcare consulting firm Gaich and Associates, which is based in the city.

Instead of Morgan Hill being seen as a “commuter town,” the policy aims to turn the city into a destination for employers and a potential home for their employees, he said.
“It’s a way to just memorialize the community’s intent with directly where we want to go,” said Gaich, who also co-owns Craft Roots, a vegan bar and grill in the city’s downtown.
“Preserving the industrial land that we have in front of us for advanced manufacturing, research, development, etc. is an important element of us continuing to grow and mature,” he said.

Supply and demand
Morgan Hill’s rise arise as an industrial hub comes as demand for such space throughout Silicon Valley keeps rising. Across the region, CBRE recently counted 44 potential tenants or companies shopping for space averaging at least 132,000 square feet. In total, demand for industrial space amounts to 5.8 million square feet, according to a CBRE report analyzing regional real estate in the second quarter. Yet there were only five properties with more than 100,000 square feet available for lease, the report stated.

Ridge Capital’s Karol expects demand to remain high. With dwindling land available for new ground-up development and rising construction costs, investors are trying to satisfy prospective tenants with existing industrial. “The supply is going to be a challenge in the near term,” Karol said.

Even existing industrial space is harder to find these days. In part that’s because of pressure to demolish and convert older industrial spaces to other “better and higher uses,” said Colin Yasukochi, CBRE’s executive director of the Tech Insights Center.

Industrial was previously considered a “lower value use” that many municipalities have not prioritized, because it’s low-density,

8/19/22, 11:13 AM Morgan Hill gets industrial with opening of Butterfield 5, new Shoe Palace HQ (Video) - Silicon Valley Business Journal https://www.bizjournals.com/sanjose/news/2022/08/04/morgan-hill-industrial-policy.html?s=print 6/6 Yasukochi said. That perception is starting to change. “You could probably argue that these days, it’s the best performing property out there by far,” he said.

Rents are only expected to go higher because of the demand and supply imbalance, Yasukochi said.

At the end of the second quarter, Morgan Hill had both an 11.1% vacancy and availability rate, the second highest in the region. The only area to have more industrial space available was downtown San Jose, which has less than half of Morgan Hill’s overall industrial square footage.

While it’s one of the only cities left with industrial space, it’s also one of the cheapest places to lease such properties. The average rent there is $1.25 per square foot, compared to $1.43 a foot in North San Jose or $1.63 a foot in Fremont, according to Jones Lang LaSalle Inc.

But these rents aren’t likely to stay low for long, said Karol. “We do see that the supply is not keeping up with demand – currently, historically, or going forward,” Karol said. “So we think [supply] will continue to cause upward pressure on rents as well.”
Even the economic uncertainty that’s hit many sectors of the economy isn’t enough to temper enthusiasm for Morgan Hill’s industrial market, Karol said. One reason for that is that manufacturing work has to be done on site. And having workers physically inside industrial facilities gives investors a more tangible idea of how these spaces are used, Karol said.

One of the final hurdles for Morgan Hill is a perception that the city is further away from the epicenter of Silicon Valley than it actually is, Ramirez said.
“For us, growing that connective tissue with the rest of Silicon Valley is interesting,” she said.

Chelsea Nguyen-Fleige
Reporter
Silicon Valley Business Journal

8/8/22, 9:21 PM undefined
https://www.bizjournals.com/sanjose/news/2022/08/08/matthew-mahood-talks-morgan-hill.html?s=print 1/5

TOMAS OVALLE
Matt Mahood, Morgan Hill's
economic development director, is
a big believer in the South County
city.

Matthew Mahood reflects on a
year spent as Morgan Hill's
economic development director
Aug 8, 2022, 3:25pm PDT
Editor's note: Join the Business
Journal for a special virtual event Aug.
11 to hear more about Morgan Hill's
approach to development. Register
for the free event here.

Matthew Mahood has been leading
Morgan Hill's economic development
efforts for a little more than a year
now.

In some ways, it was a big change
from Mahood's last job. For nine
years, he had been CEO of the Silicon
Valley Organization, now known as the San Jose Chamber of Commerce. Mahood exited the SVO in October 2020 amid a
controversy over a racist ad that was posted on the organization's website as part of its political action committee's campaign against a City Council candidate. (Come back Tuesday for the second part

FOR THE EXCLUSIVE USE OF
[email protected]
From the Silicon Valley Business Journal:
https://www.bizjournals.com/sanjose/news/2022/08/08/matthewmahood-talks-morgan-hill.html

8/8/22, 9:21 PM undefined
https://www.bizjournals.com/sanjose/news/2022/08/08/matthew-mahood-talks-morgan-hill.html?s=print 2/5 of this interview, where Mahood talks about that incident and its aftermath.)
But in other ways, being Morgan Hill's economic development director is a kind of return to form for Mahood — the 56 year old has long been a business booster. That's largely what he did as head of the SVO and, for the nine years preceding that, as the CEO of the Sacramento Metropolitan Chamber of Commerce. In his latest role, he can also draw on his earlier business experiences; before his chamber days, Mahood was a top manager at Webvan Group Inc., BAX Global Inc. and FedEx Corp.

I chatted with Mahood earlier this month about his decision to take the Morgan Hill job and what the city is doing to encourage companies to do business there. The following excerpts were edited for length and clarity.

Before you took this job, what was your interaction with the city of Morgan Hill?
I'd had a long-standing relationship with the city and Edith Ramirez in the Office of Economic Development, because we had worked collaboratively on several projects. And I had met with several of their companies during my time with the (San Jose) Chamber of Commerce, coming down and meeting with their businesses.

When Morgan Hill put together their economic development blueprint, Edith actually came to me as a leader in the business community and said, "Hey, can I get some of your input on this process? And, what do you think should be some of Morgan Hill's priorities in economic development?"
I also spent some time coming down to Morgan Hill, as my wife and I liked to hike and get out and do things on the weekend. We had really kind of discovered downtown Morgan Hill several years ago.

So, I kind of knew the community. I didn't know it in depth, but I knew the momentum and the energy that was developing in Morgan Hill.

How did the job come about?
It was probably, six, seven months after I left the SVO. I was doing a job search, and I saw a posting for an economic development

8/8/22, 9:21 PM undefined
https://www.bizjournals.com/sanjose/news/2022/08/08/matthew-mahood-talks-morgan-hill.html?s=print 3/5 manager/director position in (the) city of Morgan Hill. I reached out to Edith and said, "Hey, what do you think? Do you think I'm a potential fit for this job?" I think her response was, "Are you kidding?" And I said, "No, I'm not kidding." And so, then she says, "Yeah, but there's a process." And I'm like, "OK."
Before I'd even applied for the job, we started having a conversation about me doing some consulting on a project that they were working on — their industrial preservation policy, where they needed some help. After that, I threw my name in the hat, and then went through their interview process, which was rigorous.

Was there a learning curve for you, shifting from a chamber of commerce to city work?
One year later, I'm still learning. I spent 32 years in the private sector, doing economic development and problem solving, always from an employer perspective or from a business perspective.

Then to jump to the public side, seeing the processes and the policies, and understanding why those are in place, navigating that process from a city perspective, it's very different.

I think that's in part why they hired me, to bring this private-sector perspective. Morgan Hill is viewed as being business friendly, but how do you make it even more business friendly? How do you make it even more responsive? How do you look at processes to make them better and streamline them and kind of give it a privatesector perspective? But at the same time, you need to protect the interests of the city and the community.

How do you go about doing that, making Morgan Hill more business friendly?
As an organization, what's interesting is we're talking about our values. What's our belief system? We say we're business friendly, but what does that really mean? How quickly can we react when somebody brings in a plan for a building? Do we just check the boxes and give them the plan back and say, "Thanks, but this is what you need to go fix?" Or do we walk them through the process and help them solve for the problems that they might have in their development proposal?

8/8/22, 9:21 PM undefined
https://www.bizjournals.com/sanjose/news/2022/08/08/matthew-mahood-talks-morgan-hill.html?s=print 4/5 I often use the example of a gentleman who I helped recruit when I was at the Sacramento Metro Chamber a long time ago. He had this mantra, "get the customer to success." So ultimately, what I want our mantra to be within City Hall is, "The business community, they are our customers. The developers, they are our customers.

They're paying for services. They're paying for plan reviews and reports. How do we help them get to success?"
How do you encourage more industrial projects to move to Morgan Hill?
Unlike our neighbors to the north, we do have available land, and we actually do have some pretty large available properties now.

There's a 260,000 square-foot-advanced manufacturing facility that's available now. You have 410,000 square feet at Butterfield 5 (Tech Park) where the shelves are built but they need some tenant improvements. But within six months with tenant improvements, boom, you're ready. That's not the case to the north. And the rents (here) are lower. And, look, it's 20 miles down the 101 to Morgan Hill, so it's a pretty quick drive. The business parks are right off the freeway, with easy access, and access to a workforce that's based in Morgan Hill.

Beyond industrial, how do you go about bolstering the
city's hospitality industry?
Morgan Hill has some unique assets. We obviously are part of the Santa Clara County wine region. We have some amazing wineries and our first downtown tasting room. Also, Morgan Hill has a burgeoning and growing wedding venue industry and a downtown hotel that's getting back under construction later this fall. We are the home of Specialized Bicycle (Components), so we're building a brand around being a great place to come and bicycle.

And the last piece, I think, is the Sports Center in Morgan Hill. It's an outdoor recreational facility. It's got 10 full-size athletic fields for soccer. It has an aquatic center that's known for being very fast and a lot of records have been set there. The hosting of regional sporting events in Morgan Hill helps bring a lot of weekend stays into the community as well. And those folks like to go out and eat.

They like to go do other activities.

8/8/22, 9:21 PM undefined
https://www.bizjournals.com/sanjose/news/2022/08/08/matthew-mahood-talks-morgan-hill.html?s=print 5/5 Longer term, we're looking at how do we develop other
recreational activities and utilize some of our other assets to build upon the agricultural roots of Morgan Hill to make it kind of a destination place to come visit.

J. Jennings Moss
Editor-in-Chief and General Manager
Silicon Valley Business Journal

1/25/24, 9:47 AM Morgan Hill is growing up but wants to maintain its small town charm - Silicon Valley Business Journal https://www.bizjournals.com/sanjose/news/2023/10/13/morgan-hill-2023-real-estate-snapshot-special.html 1/4 By Kevin V. Nguyen – Reporter, Silicon Valley Business Journal Oct 13, 2023

FOR THE EXCLUSIVE USE OF
[email protected]
From the Silicon Valley Business Journal:
https://www.bizjournals.com/sanjose/news/2023/10/13/morgan-hill-2023-realestate-snapshot-special.html SUBSCRIBER CONTENT:

A woman walks down Monterey Rd. where many of the restaurants are situated in Morgan Hill.

TOMAS OVALLE / SILICON VALLEY BUSINESS JOURNAL

COMMERCIAL REAL ESTATE
'THE CITY CHECKS ALL OF THE BOXES'
Morgan Hill is growing up but wants to maintain its smalltown charm.

1/25/24, 9:47 AM Morgan Hill is growing up but wants to maintain its small town charm - Silicon Valley Business Journal https://www.bizjournals.com/sanjose/news/2023/10/13/morgan-hill-2023-real-estate-snapshot-special.html 2/4 Listen to this article 5 min
Morgan Hill has been operating with the same economic blueprint since 2017.

The city has long been known as an emerging rural town with land and open space available for development. In recent years, city officials have focused on providing opportunities for its residents, old and new, to be able to work in town.

According to the city’s office of economic development, more than 75% of Morgan Hill’s nearly 50,000 residents leave the city to go to their jobs, usually heading north. In order to make the city less of a bedroom community, officials are focused on growing and providing space for four industries within its borders: industrial and advanced manufacturing, hospitality, retail, and health care.
“Morgan Hill has benefitted from having a clear economic plan,” said Edith Ramirez, the city’s assistant manager for community development. “That provided a clear path to advance zoning for sectors that the city wanted to support.” The fruits of that labor have appeared in the following:

Butterfield 5 Technology Park: A recently completed five-building industrial campus, developed by Trammell Crow/CBRE and sold to Atlanta-based Invesco Ltd. last year for $119 million.

Cochrane Tech at 101: Another Trammell Crow/CBRE development that broke ground late last year and will contain more than 500,000 square feet of industrial space.

Hotel MOHI: A five-story luxury boutique hotel to be located in the city’s popular downtown. Paused during the pandemic, the project has recently gotten approvals and financing to expand from 60 to 73 guest rooms. Construction has resumed and is expected to be complete by December 2025.

Shoe Palace: Sold its 258,122-square-foot headquarters and warehouse for $45 million and moved into a brand new facility next door that’s twice the size.

While Morgan Hill continues to enjoy steady population growth, it hasn’t been immune from the recent economic slowdown that’s affected the broader Silicon Valley region,

1/25/24, 9:47 AM Morgan Hill is growing up but wants to maintain its small town charm - Silicon Valley Business Journal https://www.bizjournals.com/sanjose/news/2023/10/13/morgan-hill-2023-real-estate-snapshot-special.html 3/4 said Matthew Mahood, the city’s economic development director. He pointed to the temporarily paused Hotel MOHI project.
“People with expansion plans started to move back on them,” Mahood said.

The vacancy rate for industrial space in Silicon Valley held steady at below 3% in the third quarter, according to CBRE. But with the recent completion of Butterfield 5 with tenant signed yet and Shoe Palace’s old headquarters now vacant and available for lease, that number has spiked to near 14% in Morgan Hill, Mahood said. “We have the room for people to move into,” he said. “Now, we just need them to do it.” Morgan Hill has enlisted CBRE to market those properties. The city’s fundamental selling points remain strong, said Rob Shannon, an executive vice president at the brokerage.

Shannon’s team has been selling prospective companies located north on U.S. Highway 101 on the idea of relocating, he said.

Edith Ramirez is the City of Morgan Hill's Assistant City Manager for Development Services, overseeing the Development Services Department in Morgan Hill and Matt Mahood, Economic Development Director, City of Morgan Hill.

TOMAS OVALLE

1/25/24, 9:47 AM Morgan Hill is growing up but wants to maintain its small town charm - Silicon Valley Business Journal https://www.bizjournals.com/sanjose/news/2023/10/13/morgan-hill-2023-real-estate-snapshot-special.html 4/4 “A space like (Butterfield 5) is huge for anyone that wants to scale or consolidate multiple operations,” Shannon told The Business Journal. He continued: “Morgan Hill (now) has the Class A space that can accommodate those demands.”
Among the things the city can accommodate are manufacturing of products related to artificial intelligence, data servers or electric car batteries, Shannon said. “The city checks all of the boxes,” he said. “The average household income is high and the population is technical, which means a lot of smart people are choosing this place.” Growth for whom?
More money making its way down south is good for business. But Morgan Hill can’t just focus on catering to the already affluent, said Mahood, who previously served as the CEO of San Jose’s Chamber of Commerce.
“We need affordable housing for our teachers and service workers, not just CEOs,” Mahood said.

If the city doesn’t make good on that commitment, state law may interfere with Morgan Hill’s carefully laid-out commercial plans.

Like San Jose to its north, Morgan Hill hasn’t yet gotten the state Department of Housing and Community Development to sign off on its blueprint for housing development for the next eight years. The state has directed the city to build 1,037 new homes by 2031.

Morgan Hill has until the end of the year to get the state to approve its plan for developing those residences.

While it awaits that approval, it is subject to the so-called builder’s remedy, a process that limits cities’ ability to block residential projects as long as those developments include a certain amount of affordable housing. The builder’s remedy can be used to get around cities’ zoning rules or general plans.

Morgan Hill has already seen several proposals made under the provision, Mahood said. “That is concerning,” Mahood said.

Still, he’s optimistic overall.

ATTACHMENT 6

Aquatics Center
Outdoor Sports Center
Monterey Rd
Madrone PkwyMadrone Pkwy
Monterey Rd
Monterey Rd
W Dunne Ave
W Edmundson Ave
Butterfield Blvd
Hale Ave
SanPedro Ave
E Dunne Ave E Dunne Ave
ConditRd
E Main Ave
E Main Ave W Main Ave
Watsonville Rd
Cochrane Rd
Cochrane Rd
Tennant Ave
ButterfieldBlvd
Railroad Ave
Tennant Ave
E Middle Ave
Maple Ave
Fisher Ave
Juan Hernandez Dr

DOWNTOWN DOWNTOWN
Madrone Madrone
Business Park Business Park
Madrone
Concord Circle
Business Park
Morgan Hill Ra gan Hill Ranch an Hill R n Hill Ranch
Business Pa Busines Business P siness Park
Morgan Hill Ranch
Business Park
Centennial
Recreation
Center
City Hall
Library Caltrain Depot
Morgan Hill
Community and
Cultural Center
6 5
2 8
14 15
7 3
11 10
13 4
1 12
9 E Dunne Ave

DOWNTOWN

BUSINESS PARKS

CITY PARKS

SCHOOLS

CITY FACILITIES
The City of Morgan Hill is committed to
ensuring its current and future residents are
provided access to diverse housing options.

The City’s housing mission is to improve,
preserve, and create safe, quality housing
for residents at all income levels and provide
both rental and ownership opportunities.

Morgan Hill is a community of
approximately 47,000 residents. There are
15,233 housing units in the community of
which 2,429 are rentals. The City manages
a robust Below Market Rate inventory of 615
units. There are approximatley 835 units
processing entitlements with a total of 2,900
units in the pipeline.
408-779-7272 • morganhill.ca.gov
17575 Peak Ave. Morgan Hill, CA 95037

CITY OF MORGAN HILL
Production of New
Affordable Housing Units
THE 5 PILLARS

OF HOUSING
Preservation of Existing
Affordable Housing Inventory
Promotion of
Housing Programs
Prevention of
Homelessness
Protection of Quality of Life for
New and Existing Neighborhoods

HOUSING PROJECTS
Cochrane Commons Phase II - 498 Units
Vida - 398 Units
New Horizons - 320 Units
Crosswinds - 269 Units
Jemcor - 249 Units
Borello Ranch Estates - 243 Units
Rosewood - 120 Units
Jasper - 101 Units
DeNova Homes - 93 Units
Morgan Hill Senior Housing - 82 Units
Royal Oak Village - 73 Units
Manzanita Park - 67 Units
The Magnolias - 66 Units
The Lumberyard - 49 Units
Andalusia - 46 Units
1 2
3 5
4 6
7 8
9 11
12 13
14 15
10 Housing Units
in the Pipeline
Processing
Entitlements
Affordable Units
(includes extremely low, very
low, and low-income units).
2,900 835 615

HOUSING PROJECTS

KEY WITH DEFINITIONS
Processing Entitlements: The project is in the
process to seek City approval for its proposed
development.

Processing Building Permits: The project is in
the process of obtaining construction documents/
permits.

Approved: The project has acquired all permits
required to start construction.
1 Description: Mixed-use project with
up to 498 multi-family and rental units
(75 affordable), and up to 135,000 SF
of commercial.

Status: Processing Entitlements
by Browman Development
Cochrane Commons Phase II
2 Description: 398 Rental units (78
affordable), located between Monterey
Road & Butterfield Boulevard.

Status: Under Construction
by MBK Rental Living
Vida
3 Description: Mixture of 320
single-family units (46 affordable),
located on Hill Road & Barrett Avenue.

Status: Processing Entitlements
by Morgan Hill Devco
New Horizons
6 Description: 243 Single-family units,
located south of Cochrane Road between
Peet Road and Half Road.

Status: Approved
by Toll Brothers
Borello Ranch Estates
7 Description: 120 Multi-family units
(9 affordable), located on the
southeast quadrant of Juan Hernandez
& Barrett Avenue.

Status: Processing Building Permits
by Brookfield
Rosewood
4 Description: 269 Multi-family units
(40 affordable), located by Half Road
to the east.

Status: Processing Entitlements
by Dividend Homes
Crosswinds
5 Description: 249 Rental units (100%
affordable), located along Monterey Road
at Madrone Parkway.

Status: Under Construction
by Jemcor Development Partners
Jemcor
10 Description: 82 Age-restricted rental
units (100% affordable), located on
Monterey Road & San Pedro Avenue.

Status: Under Construction
by Beacon
Morgan Hill Senior Housing
11 Description: 73 Rental units (100%
affordable, 36 units dedicated to farm
worker housing) located along Watsonville
Road, south of Monterey Road.

Status: Under Construction
by UHC
Royal Oak Village
8 Description: 101 Multi-family
units (15 affordable) and 2,900 SF
of commercial retail, located at
18110 Monterey Road.

Status: Under Construction
by Trumark Properties
Jasper
9 Description: 93 Multi-family units
(14 affordable), located at 19380
Monterey Road.

Status: Approved
by DeNova Homes
DeNova Homes
14 Description: 49 Multi-family units and
3,076 SF office space in conjunction with
the realignment of Depot Street, located
on the East side of Depot Street.

Status: Under Construction
by Van Daele
The Lumberyard
15 Description: 46 Single-family residential
units (4 affordable).

Status: Processing Building Permits
by Dividend Homes
Andalusia
12 Description: 67 Multi-family units
(10 affordable), located on Monterey
Road & Tilton Avenue.

Status: Approved
by North Corridor Investors
Manzanita Park
13 Description: 66 Rental units
(100% affordable), located at 17965
Monterey Road.

Status: Approved
by First Community Housing
The Magnolias

2024 City Council
Annual Goal Setting Workshop
February 2 and

3, 2024

WELCOME
1

ICE BREAKER
2

Workshop Agenda
3 Friday, February 2nd – Day 1
• 2023 Accomplishments
• 2022-2023 Sustainable Morgan Hill
• 2022-2023 Strategic Priorities Workplan
• Future Council Initiated Agenda Items
• Remote Public Comments and Public Video
• Financial Update
• Development Services Fund and Housing
Laws

Workshop Agenda
4 Saturday, February 3rd – Day 2
• Recap of City Council Goal Setting – Day 1
• 2024-2025 Sustainable Morgan Hill
• Youth Sports and Recreation Tourism
• Economic Development

2023
Accomplishments

6

City Council Ongoing Priorities
• Enhancing Public Safety and Quality of Life
• Protecting the Environment and Preserving Open Space
and Agricultural Land
• Maintaining and Enhancing Infrastructure
• Supporting our Youth, Seniors, and Entire Community
• Fostering a Positive Organizational Culture
• Preserving and Cultivating Public Trust
• Preserving our Community History
• Enhancing Diversity and Inclusiveness
• Advocating for Local, Regional, and State Legislative Initiatives
Sustainable Morgan Hill
7

2022-2023 Strategic Priorities
• Fiscal Sustainability
• Affordable Housing and Homelessness
• Community Outreach, Engagement, and
Messaging
• Economic Development
• Transportation
Sustainable Morgan Hill (Cont’d)
8

League of California Cities
2024 Advocacy Priorities
9 1. Safeguard local revenues and bolster local economic development.

2. Strengthen climate change resiliency and disaster preparedness.

3. Improve public safety in California communities.

4. Expand investments to prevent and reduce homelessness and increase the supply of affordable housing.

Cities Association of Santa
Clara County
10 • Public Safety
• Sustainability and Resiliency/Climate Change
• Housing and Homelessness
• Mental Health
• Older Adults

Review of 2022-2023
Strategic Priorities Workplan
11

2022
-
2023
Strategic
Priorities
Workplan

12 Review
Future Council Initiated
Agenda Items
13

Remote Public Comments
& Public Video
14

Fiscal Years 2024-2026
Budget Planning
15

2 Year Budget Process
16 February
1 st Year
City Council Goal Setting
Workshop
February – April
Budget Development
April
Recommended Budget Made
Available to the Public
May
Budget Workshop
June
Public Hearing and Budget
Adoption
January
2 nd Year
City Council Goal Setting
Workshop
February – June
In-depth Budget Review Process
Mid Cycle Update (Yr. 2)
Budget Adjustments, as needed

• City Council Goal Setting – February 2 and 3
• Budget Community Townhall – March 18 or 25
• Planning Commission Meeting – Review of CIP – conformance with General Plan – April 9
• Parks and Recreation Commission Meeting – Review of CIP – April 16
• Recommended Budget to City Council and Community – April 26 • Recommended Budget Presented to City Council – May 1
• Budget Community Townhall – May 11 or 18
• City Council Budget Workshop – May 22
• City Council Budget Public Hearing – June 19
Key Budget Dates
17

• Tax revenue growth rate is decreasing
• Recreation revenue gradually restoring to
pre-COVID levels albeit slower than
expected
• Expenses increasing due to inflation,
contractual increases, and new MOUs
• Continued conservative spending
General Fund Budget –
Big Picture
18

FY 2023-24 = $18.8M $19.0M, 35% of GF
General Fund – Property Tax
19

• Includes excess ERAF of $2.4 million
• Potential negative impact from the
Governor’s latest budget of about 8% or
$200K/year
• Potential negative impact from SCO audit
(current and retroactive) adjustment to
excess ERAF of about $2.0 million
General Fund – Property Tax
(cont.)
20

FY 2023-24 = $12.7M $12.6M, 24% of GF
General Fund – Sales Tax
21 State

6.0%
City of MH

1.0%
Local Transportation Fund

0.25%
1976 Transit

0.50%
VTA 2000 Measure A

0.50%
VTA 2008 Measure B

0.125%
VTA 2016 Measure B

0.50%
County Measure A

0.125%
Caltrain Measure RR

0.125%
Allocation of Sales Tax Rate
(Current Sales Tax Rate 9.125%)

FY 2023-24 = $7.1M $7.0M, 13% of GF
General Fund –
Recreation Services
22 Recreation
• Facility Rental Fees
• Recreation Membership Fees
• Classes

FY 2023-24 = $2.8M $2.6M, 5% of GF
General Fund –
Transient Occupancy Tax
23 Morgan Hill TOT Rate = 11%,
100% of proceeds to MH, not shared

• Both Water and Sewer operations revenue
are tracking budget
• Finalizing sewer rate study
Enterprise Funds Update
24

Updated General Fund Forecast
25 62% 52%
43%
34%
27%
20%
63%
52%
41%
29%
22%
16%
0%
10%
20%
30%
40%
50%
60%
70%
Actual Amended Forecast Forecast Forecast Forecast
22-23 23-24 24-25 25-26 26-27 27-28
Fund Balance Min. Level 15% of Revenues Fund Balance Goal 25% of Revenues GF Forecast at August 23, 2023 GF Forecast at January 8, 2024

Discretionary Revenues
26

Resources that are not legally restricted for
certain uses and can be allocated based on
City Council priorities. This generally includes
tax revenue such as property, sales, hotel,
and business license, and the General
Fund’s unrestricted fund balance.

This is revenue that the City Council can
allocate as it desires to fund local priorities.

Definition: Discretionary Revenues
27

General Fund: Discretionary
Revenues
28 FY 2023-24 GF Amended Budget: $53.5M
Charges for Current
Services
$10.1
19%
Fines and Penalties
$0.1
0%
Other Revenue
$0.6
1%
Revenue From
Other Agencies
$1.1
2%
Tax Revenues
$37.4
70%
Total Licenses
and Permits
$0.2
1%
Transfers-In
$3.3
6%
Use Of Money And
Property
$0.7
1%

Local Government Priorities
29 City
• Municipal Services:
police, fire, animal
control, parks, public
works, water,
wastewater, solid
waste, community
services and general
governance.
• Regulations:

Land use, building,
codes, etc.

County
• Welfare & Social
Services
• Courts and Criminal
Justice System
• Municipal Services &
Regulations for the
unincorporated areas

Primary Funding Sources:
• Police – City General Fund (Taxes)
• Fire – City General Fund (Taxes)
• Pavement Rehab – Statewide Gas Tax, Regional Sales Tax, City General Fund (Taxes)
• Street Maintenance – Statewide Gas Tax, City General
Fund (Taxes)
• Park Maintenance – City General Fund (Taxes)
• Downtown Maintenance – City General Fund (Taxes)
• Water/Wastewater – (Fees)
• Solid Waste – Franchise (Fees)
Funding for Municipal Services
30

• Additional staffing to keep up with growth
• Public Safety equipment replacement
• Revenue loss from RDCS suspension
Unfunded General Fund Needs
31

Other Services Funded from the General Fund
• Economic Development
• Recreation – Non-Cost Recovery (Senior
Center and Teen Center)
• Environmental Services
• Community Promotions/Partner
Organizations
Funding for Municipal Services
32

33 Fiscal
Sustainability
Briefing

The City will continue to be financial stewards of
its resources and assets to ensure long-term
fiscal sustainability. Through the budget
development process, the City, within the fiscal
sustainability path, will prudently carry out the City
Council’s priorities, while maintaining adequate
fund balance reserves. The City will continue to
explore new or expand existing revenue sources
to ensure fiscal sustainability.

Sustainable Morgan Hill
Fiscal Sustainability Definition
34

• Updated Budget Policy to set aside budget
savings
• Formed the PBID to help support the
growing needs of Downtown
• Regularly review and update fees as
necessary to catch up with costs and needs
Steps Taken
35

• Ongoing inflation pressures
• Slow to outright recession forecast in the
near term
• The City’s need for services increases as
the City continues to grow
Opportunities and Challenges
36

• Continue to seek grant funding opportunities
• Identify new revenue sources to fund City
services in the medium to long-term
• Maintain focus on cost containment
• Negotiate fiscally responsible labor
agreements
• Prioritize Economic Development
opportunities that create jobs, revenue, and
enhance quality of life
Ongoing Workplan
37

Questions?

Development Services Fund
39

Phases of Development Process
40 Exploration
Planning
Entitlements
&
Public
Hearings
Building
Review
&
Review of
Offsite Work
Building
Permits
&
Impact Fees
Inspections
&
Revisions

Phases of Development Process
41 • Project timelines typically range between 2-5 Years • 206 Fund supports planning, building, land use engineering • Funds received at 3 stages of development process only • Not all services are cost recovery

Development Fund
Challenges
• 206 Fund inherently designed
with peaks and lows in budget
due to timing of projects
• Many services not funded or
adjusted
• pre-development
• certain fees
• appeals
• counter service
• public information
• non-project related work
• Fee schedules lag behind actual
costs
• Legislative mandates & review
schedules
Structural Economy
• Development is cyclical and
unpredictable
• Bigger and more complex
projects
• High interest rates
• Lack of materials, workforce and
overall high construction costs
• Slow down of home repair
projects

Questions?

Housing Laws
Update
44

New Housing Laws
45 2023
56 new
laws
signed!

SB423 - SB 35 Update
46 • Extends SB35 to 2036
• Expands to localities where HCD has not approved housing element for the 6th and 7th cycles
• Revises fire hazard area exclusions and specifies mitigation measures • Rental projects required to:
• Provide at least 10% of units at 50%AMI
• Comply with local inclusionary that requires greater than 10% at 50% AMI
• Eliminates authority to conduct public oversight over project • Requires local agency to hold public comment meeting before project application in moderate- or low-resource areas or areas of high segregation and poverty
• Authorizes CA Department of General Services to determine SB 35 compliance and eligibility for developments on land owned by or leased to state

AB 1218 - Replacement
Housing
47 • Requires a project that will require the demolition of occupied or vacant protected units to:
• Replace all existing or demolished protected units,
• Include a minimum amount of residential units,
• Allow existing occupants to occupy their units until 6 months before the start of construction activities, and
• Provide relocation benefits to the existing occupants of any protected units that are lower income households
• Right of first refusal for a comparable unit available in the new housing development to the existing occupants of any protected units that are lower income households
• Must develop replacement housing prior to or concurrent with development project and in same jurisdiction
• May contract with another entity to develop replacement housing

SB 684 - Subdivisions for Up to 10
Lots/Units
48 Ministerially consider, without discretion or review hearing, subdivision map that meets 12 criteria
Key points:
• Results in ≤ 10 lots or housing units
• Multifamily zone
• Not larger than 5 acres
• New lots not smaller than 600 sq ft
• May impose objective zoning, subdivision or design standards, unless project cannot achieve 30 units/acre
• Must issue building permit based on subdivision map without a final map. May require that certificate of occupancy will not be issued unless final map recorded
• Must approve or deny an application within 60 days of complete application, no action = deemed approved
EFFECTIVE JULY 1, 2024

SB 4 - Affordable Housing on Faith
and Higher Education Land
49 • Housing project to be a “use by right” on land owned by independent institutions of higher education or religious institutions • Property must be owned before 1/1/2024
• 100% Affordability Requirements - up to 20% moderate income • Permitted ancillary uses on ground floor depending on zone type • Allowed Density – 30 units/acre in residential zone, 40 units/acre in non-residential zone
• One story above max height allowed on parcel or if adjacent parcel allows taller, the taller height
• Time constraints for consistency and approval or deemed approved • Bill sunsets 1/1/2036

AB1490 - Extremely Affordable
Adaptive Reuse
50 • Allows conversion of motels, hotels, transient lodging, etc. to extremely low-income housing
• Must meet following criteria:
• Restrict 100% of units to lower-income and at least 50% to very low-income (subject to recorded deed restriction)
• Not on or adjoined to site with industrial use
• If ≥ 50 units must provide onsite management services • Does not eliminate any existing open space on parcel
• Must provide disapproval determinations within:
• 60 days for projects ≤ 150 units
• 90 days for projects > 150 units
• May impose objective design standards except:
• Any maximum density or maximum floor area ratio requirements • Any requirement to add additional parking or open space

CEQA and Housing
51 AB 1449 – Affordable Housing Exemption
• Exempts affordable housing projects from CEQA(financing, lease or sale of property, etc.) - even legislative actions
• Qualifying project must meet 10 criteria, including
• 100% affordable to lower income households, except for managers' units
AB1633 - CEQA Violations treated as Housing Accountability Act (HAA) Violations
• Defines “disapprove the housing development project” as also including any instance in which a local agency fails to make a determination of whether the project is exempt from CEQA or fails to adopt a negative declaration or addendum for the project, to certify an environmental impact report for the project, or to approve another comparable environmental document, if certain conditions are satisfied

AB 1287 Density Bonus Law
changes: Increased Density and
Incentives
52 Creates a new stackable density bonus (bonus on top of bonus) specifically designed to facilitate construction of middle-income housing and additional very low-income housing
• Provides the first opportunity to receive a density bonus for moderate income rental units
• Project must propose to construct sufficient very low-income, lowincome, or moderate-income units to achieve a 50% base density bonus (i.e., 15% very low-income, or 24% low-income, or 44% moderate-income)
• Option to commit to constructing additional very low-income or moderate-income units as part of the project and receive an additional density bonus at specified percentages
• Project could obtain a 100% density bonus if providing the required percentage of affordable units

AB 713 - Revised Definitions of
Maximum Density and
Development Standard
53 • “Maximum allowable residential density” or “base density” means the greatest number of units allowed under the zoning ordinance, specific plan, or land use element of the general plan
• “Development standard” includes a development standard adopted by local initiative or by referendum

AB1332 – Pre-Approved Accessory
Dwelling Units
54 • Local agencies must adopt a preapproval program for accessory dwelling units by 1/1/2025
• Program must
• Accept plan submissions for preapproval without restricting who may submit plans
• Review based on the standards in Government Code Section 65852.2
• May charge applicant for the preapproval of plans same fees as an applicant seeking approval of anADU
• Must post the preapproved plans and applicant contact information on agency’s website, plans must be removed from website within 30 days of receiving a request from applicant
• 30-day review period for detached accessory dwelling unit application using preapproved plans

Accessory Dwelling Units
55 AB 976
• Owner occupancy prohibition made permanent
AB 1033
• Separate sale - local agencies can adopt an ordinance to permit the separate conveyance of an accessory dwelling unit from the primary dwelling unit
• The ordinance must include 5 requirements defined in the statute

Parking
56 AB894 – Shared Parking
• Property owner can enter into shared parking agreements with others and shared parking counts towards development’s required parking
• Requirements:
• At least 20% of a development’s parking is not occupied • Contiguous, within 2,000 feet (walking route), or shuttle • Noticing/meeting requirements – unless City passes process ordinance
• Can require recordation
AB1317 Unbundled Parking
• Residential developments with 16+ units must “unbundle” parking from the lease of a residential unit
• Applicable to residential developments issued a certificate of occupancy after 1/1/2025
• Applicable in several counties, but only inAlameda and Santa Clara Counties in Bay Area

Questions
57

City Council
Goal Setting Workshop
Day 2
58

59 EDITS?

City Council Ongoing Priorities
• Enhancing Public Safety and Quality of Life
• Protecting the Environment and Preserving Open Space
and Agricultural Land
• Maintaining and Enhancing Infrastructure
• Supporting our Youth, Seniors, and Entire Community
• Fostering a Positive Organizational Culture
• Preserving and Cultivating Public Trust
• Preserving our Community History
• Enhancing Diversity and Inclusiveness
• Advocating for Local, Regional, and State Legislative Initiatives
Sustainable Morgan Hill
60

2022-2023 Strategic Priorities
• Fiscal Sustainability
• Affordable Housing and Homelessness
• Community Outreach, Engagement, and
Messaging
• Economic Development
• Transportation
Sustainable Morgan Hill (Cont’d)
61

Youth Sports & Recreation
Tourism Outlook
62

CITY COUNCIL

GOAL STUDY SESSION
February 3, 2024
Economic Development Strategy

Economic Development
64 The City’s Economic Development efforts focus on implementing the 2017 Economic Blueprint strategies and actions to help build longterm fiscal sustainability and improve quality of life for residents. This will be achieved by attracting jobs and commercial investment which generate revenues to support essential City services and improve critical City infrastructure.

2017 Economic Blueprint
65 The Blueprint is founded on guiding principles from the General Plan, Morgan Hill 2035, and incorporates
feedback from over 400 residents, businesses, and
community leaders over a 2-year long collaborative
process.

The Blueprint is intended to further the Community's
quality of life by attracting investment, development,
and jobs that will ensure continued economic
prosperity.

A CLEAR VISION

SPECIFIC STRATEGIES AND ACTIONS
INDUSTRY Action
Item

STRATEGY & ACTION ITEMS STATUS COMMENTS
1 Adopt an Employment (Industrial) Land Preservation Policy Complete 2 Strengthen General Plan Language to Prevent Conversation of Industrial Lands
3 Create a Telecommunications Master Plan to Improve Access to Fiber Complete Shifted from MP to implement actions under the guidance of the Telecommunicaiton Report. 4 Update Zoning Code and Parking Requirements to Modernize Zoning Code and Allow for New Hybrid of Developments that are Cosidered "Class A" Industrial of "Flex Space"
5 Explore Incentive Programs to Attract Industry-Specific Development On-going Consider Incentive Program for Office Development.
6 Allow Greater Intensification (FAR) and Taller Buildings to Increase Value of Employment Lands Requires GP Amendment. 7 Complete the Monterey Corridor Flex-Zoning Update and Optimize Development Opportunity Complete
8 Streamline Permitting Process by allowing Administrative Approvals as Part of Zoning Code Update Complete
9 Deploy Open-Counter Online Business Ombudsman Platform Complete 10 Market Economic Blueprint Vision, Process & Incentives to Attract Business Investment On-going
11 Formalize City's Expedited Process and Market it On-going 12 Connect Education Assets to Industry On-going
Mfg Roundtable, Mfg Day, Employer Tours
complete. Opportunity for additional workforce
development/internship programs.

PRESERVE INDUSTRIAL LANDS

INNOVATION &

ADVANCED MANUFACTURING

SUPPORT EDUCATIONAL FACILITIES & A LIFE LONG LEARNING ECOSYSTEM

ATTRACT DEVELOPMENT

FOSTER AN ENVIRONMENT THAT SUPPORTS BUSINESS GROWTH

IMPROVE AND FACILITATE DEVELOPMENT OF CRITICAL INFRASTRUCTURE 13 Develop a Retail Concentration Strategy Complete
14 Continually Revisit Retail Industry Trends & Requirements On-going 15 Pursue Sports Recreation Uses as Anchor Tenants, increase Permitted Use Allowance up to 15k sq. ft. Complete
16 Re-evaluate and Propose Changes to Shopping Center - Site Specific Zoning Requirements On-going
17 Update Zoning to Allow Incidental Wine, Beer and Alcohol Tasting Rooms and Distilleries in Downtown and Throughout the City in Commercial and Industrial Zoned Areas
Complete i.e. Alara Cellars, Lightpost Winery.
18 Promote Co-Working in Commercial Nodes On-going
19 Identify Parking Management Strategies On-going
Implementing delivery/drop off zones, short-term
parking.
20 Encourage Housing Development & Office Tenants On-going 21 Create Business Improvement District (BID) to Support Downtown Improvements and Programming Complete
22 Terminate Administrative Permit Process for Morgan Hill Plaza Shopping Center Complete

RETAIL FLEXIBILITY
RETAIL

SUPPORT DOWNTOWN DEVELOPMENT
23 Upgrade the Outdoor Sports Center & Aquatics Center
(Infrastructure & Amenities) On-going Master Plan Update completed, improved lighting and grass. 24 Develop a Financing Plan to Construct and Operate New Sports/Recreation Facilities
25 Ensure General Plan and Zoning Code Address Bed & Breakfasts, Airbnb and Hotel Development
Amend Zoning Code to allow B&B in residential
areas.
26 Develop Plan to Help Upgrade or Transition Aging Hotel Facilities On-going Hotel Incentive Plan complete. Some redevelopment limited by FAR or Zoning.
27 Identify Pre-Approved Lodging Sites Complete Only 4 sites allow hotels by right. 28 Work with Hotels to Develop a Tourism Based Improvement District (TBID) to help Finance Capital Improvements to Sports Recreation Facilities and to Promote and Market the Region Complete TBID is not funding capital improvements
29 Collaborate with Regional Partners to Enhance Branding, Marketing and Promotions or Regional Assets On-going 30 Target Retail Attraction to Sport Recreation, Entertainment, Boutique and Food Retailers On-going
31 Continue to Create A Lively Downtown with Entertainment Offerings On-going Updating Entertainment and Noise Ordinance 32 Ensure General Plan & Zoning Code Allow Medical Uses Complete 33 Identify & Market Pre-Approved Medical Sites On-going 34 Increase Outreach and Engagement with Medical Service Providers On-going On-going activity
35 Create & Implement a Targeted Marketing Campaign On-going

EXPAND LOCATIONS OF WHERE MEDICAL USES ARE ALLOWED

ACTIVELY PROMOTE LOCATIONS FOR MEDICAL USES

SUPPORT LODGING

LEVERAGE RESOURCES THROUGH PROFESSIONAL LINKAGES AND PARTNERSHIPS

MEDICAL

SUPPORT A TOURISM ENVIRONMENT

TOURISM

ENHANCE FACILITY UTILIZATION AND GROW SPORTS/RECREATION FACILITIES ▪ Four Industries
▪ 13 Strategies
▪ 35 Action Items
✓ 85% Complete

TANGIBLE PERFORMANCE METRICS
▪Sales Tax increased
by 32.8%
▪Property Tax
increased by 77.9%
▪ Local jobs grew by

20.9%
2017
Baseline Jan-24
Unemployment Rate for Residents of Morgan Hill 4.1% 4.00% Jobs/Housing Ratio 1.42 1.54
Number of Retail Businesses in Morgan Hill 112 103
Amount of Annual Sales Tax Revenue (Millions) $9.49 $12.60 Amount of Annual Property Tax Revenue (Millions) $10.68 $19.00 Amount of Annual TOT (Millions) $2.74 $2.60
Commercial Vacancy Rate 5.2% 5.3%
Amount of Total Jobs in Morgan Hill 15,700 18,985
Business to Business Revenue (Millions) $1.18 $1.17
Number of Medium Sized Companies 115 125
Percentage of Residents That Work in Morgan Hill 28.0% 35.0% Number of Hotel Rooms Available for Occupancy 898 898
Hotel Occupancy as Reported by Hoteliers 70.0% 65.3%
Success Metric Indicator
Maintain
Quality Of Life
Tourism
Job Growth
Fiscal
Sustainability
And Resilancy

BLUEPRINT HIGHLIGHTS

INNOVATION & ADVANCED

MANUFACTURING
• 1M SF of new built Industrial space
• 500K SF under Construction
• 500K SF in Entitlement Process
• Local companies expanding: GSA, Lin Engineering, Marki Microwave, Paramit, Pinnacle, Techcon Construction, Silicon Valley Glass, Sunbasket, Toray Advanced Composite
• New companies: Applied Motion, Duke Empirical, HCT, Level10 Construction, Medius, Micro-Mechanics
• Adopted an Industrial Preservation & Optimization Policy • Multiple Fee Freeze & Fee Financing Agreements

INNOVATION & ADVANCED

MANUFACTURING

72 • Attract innovation & advanced
manufacturing companies
• Support entitlement and permitting process
of expanding businesses
• Support entitlement of pipeline
development
• Protect remaining industrial land

INNOVATION & ADVANCED

MANUFACTURING FOCUS

RETAIL
73 • Completed Monterey Corridor Study
Including Retail Capacity—informs Retail
Concentration
• COVID-19 Business Recovery
• Outdoor Dining Program
• Consideration of Downtown Lane Reduction
& Beautification
• Outdoor Retail Market—Sidewalk Saturdays
• Created Downtown Property Based
Improvement District (PBID)
• Downtown Activations
• Supported a number of new retail tenant
attractions

RETAIL
74

RETAIL FOCUS
75 • Identify and recruit new retail
• Focus on auto dealers and hotel development
• Downtown Improvements with PBID
• Continue retail incubation activities

HEALTHCARE
76 • Renovation of DePaul Medical Center
• Updated Zoning Code
• Expanded medical uses in Light
Industrial
• Approved 150K SF for new medical
Focus:
• Support the Rosewood Medical
Center
• Continue marketing and attraction of
medical users
DePaul Medical Center
Rosewood Medical Center

TOURISM
77 • Created & renewed Tourism Business
Improvement District (TBID)
• Completed draft of Condit Road Sports Facilities
Master Plan
• Collecting TOT from Short Term Rentals
• Co-produced award-winning Tourism video
• Supported VMH strategic planning and marketing
• Approved additional room inventory for
Downtown boutique hotel
• Created Hotel Incentive Program (HIP)
• New Holiday Inn Express on Cochrane Rd. under
entitlement

TOURISM FOCUS
78 • Grow and diversify hotel/lodging room
inventory
• Explore opportunity for Bed and Breakfast
• Encourage & incentivize hotel development
• Promote music & entertainment
• Support the investment of sport and recreation
facilities
• Support completion of Downtown boutique
hotel and fine-art gallery

SWOT ANALYSIS
79 • High Cost of Impact Fees on Greenfield
Development
• Lack of Available Space in Downtown
• Population under 50,000
• Current Market and Economic Conditions
• Expensive to Build (Cost of Construction,
High Interest Rates)
• Downtown Hotel & Gallery
• Newest Industrial Buildings in Region
• DePaul Renovation & Rosewood Medical
• Hotel Incentive Program
• Auto Overlay Zone & Incentives
• Place-Branding Activities to support Tourism
(music, entertainment, maker’s retail, outdoor
living, art, sports-recreation, etc.)
• ELEVATE Morgan Hill - Economic Mobility
• Loss of Job and Revenue-Generating Lands
• Impacted City Review Process
• Business Unfriendly Image
• Destination for Industry with Available
Industrial Inventory
• Economic Engines: TBID and PBID
• Thriving and Active Downtown
• Available Commercial Properties
• Economic Development Vision/Strategy
Strengths
Opportunities
Weaknesses
Threats

ECONOMIC DEVELOPMENT ON-GOING

WORK PROGRAM
• Business Support, Tools, Resources &
Information
• Businesses of all sizes and all industries
Business
Retention &
Expansion
• Website, Blogs, Social Media, eNewsletter,
Advertising, Conferences, Events,
Presentations, & Community meetings
Marketing &
Promotion
• Ombudsman, Grants, Tax Programs, Broker
Communication
Support
Development &
Investment
• Incentives, Zoning, Research & Studies Policy &
Programs

Strategic
Efforts
• Updating Floor Area Ratio (FAR)
• Updating parking requirements
• Updating PDs
• Expanding Zoning Overlays
• Updating Entertainment & Noise regulations
• Promoting workforce development and economic
mobility activities

POLICY CONSIDERATIONS

1. Does the Council feel the Economic Blueprint remains a relevant & viable economic development strategy for the City of Morgan Hill?

2. Does the Council continue to prioritize and support Economic Development as a strategic priority for the City?

3. Does the Council want to support policies and programs to help the development of commercial and industrial lands?

4. Should concessions given to housing projects also be given to commercial and industrial development?

QUESTIONS?

Significant Project Updates
1 Last updated January 26, 2024

Phases of Development Projects
• Processing Entitlements- The project is in the process to seek City approval for its proposed development.
• Processing Building Permits- The project is in the process of obtaining construction documents/permits.
• Approved- The project has acquired all permits required to start construction.
• Under Construction- The project is under construction. • Complete- Project construction is finalized and ready for occupancy or is occupied.
2

Link to Morgan
Hill's Development
Projects
Development Projects
Residential Projects
Commercial Projects
Industrial Projects
Other Projects

Residential
Projects
4

Vida (Butterfield
Village Apartments)
Description:
• 398 Rental units (78 affordable)
Location:
• 25 Acres, located between Monterey
Road & Butterfield Boulevard, South
of Jarvis Drive & North of Digital
Drive
Status:
• Under Construction
Project Page (HTML)

Jemcor
(Monterey-Miner)
Description:
• 249 Rental units (100% affordable)
Location:
• 7.5 Acres, located along Monterey
Road at Madrone Parkway
Status:
• Under Construction
Project Page (HTML)
8

Borello Ranch Estates
(Cochrane-Toll
Brothers)
Description:
• 243 Single-family residential units
Location:
• 122 Acres, located South of Cochrane
Road between Peet Road and Half
Road
Status:
• Under Construction
Project Page (HTML) Page 194 of 233
Rosewood- Residential
(Lillian Commons)
Description:
• 120 Multi-family units
(9 affordable)
Location:
• 19.67 Acres, located on the
Southeast quadrant of Juan
Hernandez and Barrett Avenue
Status:
• Under Construction
Project Page (HTML)

Monterey-Jasper
Trumark
Description:
• 101 Multi-family units (15 affordable)
and 2,900 SF of commercial retail
Location:
• 5.67 Acres, located on 18110
Monterey Road, adjacent to the
intersection of Monterey and Old
Monterey Roads
Status:
• Under Construction
Project Page (HTML) Page 196 of 233
Morgan Hill
Senior Housing
Description:
• 82 Age-restricted rental units (100%
affordable)
Location:
• 2 Acres, located by Monterey Road,
San Pedro Avenue, and Church Street
Status:
• Under Construction
Project Page (HTML)

Royal Oak Village
(Watsonville Hordness)
Description:
• 73 Rental units (100% affordable, 36
units dedicated to farm worker housing)
Location:
• 7.64 Acres, located along Watsonville
Road, South of Monterey Road
Status:
• Under Construction
Project Page (HTML)

The Lumberyard
(Depot-Latala)
Description:
• 49 Multi-family units and 3,076 SF
office in conjunction with
realignment of Depot Street
Location:
• East side of Depot Street, north of
East Dunne Avenue
Status:
• Under Construction
Project Page (HTML) Page 199 of 233
Crosswinds
(Half-Dividend)
Description:
• 269 Multi-family units (40 affordable)
Location:
• 31 Acres, located by Half Road to the
East, Mission Boulevard and De Paul
Drive
Status:
• Processing Building Permits
Project Page (HTML)

Denova Homes
(Monterey-Kerley)
Description:
• 93 Multi-family units (14 affordable)
Location:
• 4.6 Acres, located at 19380 Monterey
Road
Status:
• Processing Building Permits
Project Page (HTML) Page 201 of 233
Spring-Giancola
Description:
• 23 Single-family units (3 affordable)
Location:
• 2.7 Acres, located on Spring Avenue
and Lone Hill Drives, 335 Spring
Avenue
Status:
• Processing Building Permits
Project Page (HTML) Page 202 of 233
Manzanita Park
Description:
• 67 Multi-family units (10 affordable)
Location:
• 5.8 Acres, located by Monterey
Road and Tilton Avenue
Status:
• Processing Building Permits
Project Page (HTML) Page 203 of 233
Tennant Square
(Tennant-Osito)
Description:
• 16 Multi-family units (2 affordable)
Location:
• 0.99 Acres, located on Tennant
Avenue, between Church Street and
Vineyard Boulevard
Status:
• Processing Building Permits
Project Page (HTML)

Cochrane Commons
(Phase 2)
Description:
• Master-planned Mixed-Use Project
with up to 498 multi-family units and
rental units (75 affordable) and up to
135,000 SF of commercial
Location:
• 33.5 Acres, located on the North- West corner of highway 101 & Cochrane Road
Status:
• Phase 2 Planned Development
Entitlements complete
• 108-unit residential project
processing entitlements
Project Page (HTML)

Magnolias
(Monterey-First
Community Housing)
Description:
• 66 Rental units (100% affordable)
Location:
• 1.5 Acres, located at 17965 Monterey
Road, near Wright Avenue
Status:
• Entitlements Approved
Project Page (HTML) Page 206 of 233
The Gates (MontereyCity Ventures)
Description:
• Mixed-use Project consisting of 49
multi-family units (7 affordable) and
5 commercial flex units
Location:
• 3.8 Acres, located on the southwest
quadrant of Monterey Road and
Cochrane Road
Status:
• Entitlements Approved
Project Page (HTML) Page 207 of 233
New Horizons (Hill,
Morgan Hill Devco,
LLC)
Description:
• 338 Multi-family units, including 76
age-restricted units (51 affordable)
Location:
• 69.43 Acres, located Northeast
quadrant of Hill Road and Barrett
Avenue
Status:
• Processing Entitlements
Project Page (HTML) Page 208 of 233
Commercial
Projects
22

Edes Gallery
(Monterey-McCranie)
Description:
• 6,600 SF Building for a Fine-art
Gallery
Location:
• 0.115 Acres, located on the
Southwest corner of Monterey Road
and 2nd Street in Downtown
Status:
• Under Construction
Project Page (HTML)

Hotel MOHI
Description:
• 73-Room Boutique Hotel
Location:
• 1.09 Acres, located on East of
Monterey Road between 1st and 2nd
Street
Status:
• Under Construction
Project Page (HTML)

East Dunne-Au Energy
Description:
• A request for a CUP to remodel the
existing gas station to include a larger
convenience store with additional
pump stations
Location:
• Southeast corner of East Dunne and
Walnut Grove, 810 East Dunne Ave
Status:
• Processing Building Permits
Project Page (HTML)

Catalyst Kids
Description:
• 8,420 SF Child- Care Facility
Location:
• .57 Acres, located on the Northwest
corner of Barrett Avenue &
Butterfield Boulevard
Status:
• Processing Building Permits
Project Page (HTML)

Luxe at Monterey Road
Description:
• Design Review for a remodel of the
exterior façade of the existing
building and add outdoor seating
along Monterey Road and West
1st Street
Location:
• Southwest corner of Monterey Road
and West 1st Street
Status:
• Processing Building Permits
Project Page (HTML) Page 214 of 233
Holiday Inn Express
Description:
• New 114 room hotel in Evergreen
Village commercial center
Location:
• 2.2 Acres, located on Cochrane Road in
the northeast corner of Evergreen
Village.

Status:
• Processing Building Permits
Project Page (HTML)

Chick-fil-A
Description:
• CUP and design permit for Chick-fil-A
restaurant with drive-through
Location:
• 1.63 Acres, at the Southwest corner of
Cochrane Road and Sutter Blvd, 18599
Sutter Blvd
Status:
• Entitlements Approved
Project Page (HTML)

Peak-Amas
Description:
• Residential care facility with 48 units
Location:
• 1.94 Acres, located on Peak Avenue
and West Dunne Avenue, 17090 Peak
Avenue
Status:
• Entitlements Approved
Project Page (HTML)

World Oil
Description:
• Reconstruction of existing gas station
Location:
• .48 Acres, located on 16720
Monterey Road
Status:
• Entitlements Approved
Project Page (HTML) Page 218 of 233
Rosewood-Medical
(Lillian Commons)
Description:
• Entitlements approved for a 124,500
square foot medical/commercial
development. Application is for an
additional 150,000 square feet of
capacity to expand medical
footprint.

Location:
• 10.07 Acres, located at the southeast
corner of Juan Hernandez Drive and
Barrett Avenue
Status:
• Processing Entitlements
Project Page (HTML)

Industrial
Projects
33

Techcon
Description:
• 55,000 SF of Office, warehouse, and
manufacturing space in two
buildings, 45,000 square feet and
10,000 square feet, on two parcels
Location:
• 3.34 Acres, located at 480 Cochrane
Circle, North of the intersection of
Cochrane Road and Monterey Road
Status:
• 10,000 square foot building Under
Construction (as pictured)
Project Page

Cochrane Tech
(Redwood Tech)
Description:
• 501,314 SF of Industrial space
spread across 5 separate buildings
and 4 legal lots
Location:
• 29 Acres, located West of DePaul
Road, South of Cochrane Road
Status:
• Under Construction
Project Page

Anaerobe Systems
(Concord-Cox)
Description:
• 4,500 SF Fermentation research
facility
Location:
• 1.41 Acres, located on the Southwest
quadrant of Tennant and Railroad
Avenue, at 15906 Concord Circle
Status:
• Processing Building Permits
Project Page

Railroad-Goyal
Description:
• 21,000 SF of Industrial development
and freight terminal
Location:
• 2.66 Acres, located on the East side
of Railroad Avenue, 16500 Railroad
Avenue
Status:
• Processing Building Permits
Project Page

Mersho
Investments
38 Description: • Six separate industrial
buildings totalling 420,000
square feet.

Location: • Six sites totalling 22.76
Acres, located throughout
Madrone Parkway and
Jarvis Drive
Status: • 5 sites
- Processing
Entitlements
• 760 Jarvis - Processing
Building Permits
Project Page Not Available

Other
Projects
39

Voices Charter School
Description:
• 28,230 SF Public charter school
(Development of K-8)
Location:
• 2.02 Acres, located North of Cosmo
Avenue and West of Monterey Road
Status:
• Under Construction
Project Page Page 227 of 233
West Hills
Community Church
Description:
• Remodel and expansion of an
existing religious facility
Location:
• 5.75 Acres, located on 16695 De Witt
Avenue
Status:
• Processing Entitlements
Project Page Page 228 of 233
Public Comment

From: Joe Baranowski
To: Christina Turner; Mark Turner; Rene Spring; Yvonne Martinez Beltran; Marilyn Librers; Donald Larkin; Edith Ramirez; Matt Mahood; Jennifer Carman; Chris Ghione; Firechief Cc: Michelle Bigelow
Subject: [EXTERNAL] Goal Setting Workshops, February 2nd & 3rd, 2024 - Non-Agenda Public Comment Date: Monday, January 22, 2024 6:18:20 PM
Re: 2024 Goal Setting Workshops - will there be any Goals? Hello all,
I noticed the invitation to join the City Council Goal Setting Workshops in last week's 411 newsletter which prompted me to offer the following thoughts in advance of the meeting after having attended these events for the past three years.

Mr. Turner recently commented that he would barf if there was any discussion on ‘council norms’ during the upcoming 2024 Goal Setting Workshop, and (paraphrasing) that his desire was to focus on economic / fiscal issues.

HOORAY, that’s a step in the right direction!
If ‘council norms’ do get left off the agenda, the barfable amount of time that has been spent talking about how to run a meeting every year can be repurposed for discussing some of the impending fiscal issues which the City faces. But what about, ya know, goals?
Among an almost unlimited number of ways to think about goals, the SMART goal methodology first outlined by George Doran [1] has gained a broad following. In his article, Doran noted that for goals to have a meaningful impact, they can’t be amorphous and inarticulate but must be measurable and achievable.

Leaving out some important aspects for the sake of brevity, a condensed summary of SMART goals could be stated like this:

Specific: Well defined, clear, and unambiguous. Generally, the narrower and more specific a goal is, the clearer the steps to achieving it will be. What is to be accomplished and why is achieving the goal important? Measurable: Specific criteria defined that allows [2] progress toward accomplishing the goal to be tracked and monitored.

Achievable: Ensuring the goal is realistic and possible to complete within a set time frame. (Implies that resources including money and people have to be given proper consideration.)
Relevant: Making sure the goal aligns with the values and long-term needs and objectives. (In this case alignment should always mean with respect to Public Interest, what is best for most residents and businesses in Morgan Hill and our surrounding communities.)

Timely: With a clearly defined timeline, including a starting date and a target date.

Given the twice-yearly Goal Setting Workshops are a significant investment in time for the staff, the City Council and anyone who participates, one would assume that looking through the meeting presentations, agenda packets, or video archive of past meetings would reveal easily identifiable goals, whether they conform exactly to the SMART framework or not.

However, that is not the case. Go ahead and look. There are many pages of slides, tables and lists that contain statements like this:

Attract Innovation, Advanced Manufacturing, and R&D companies Market and promote Morgan Hill
Identify new revenue sources to fund City services in the medium to long-term Advocate for Expansion of Highway 101 between Morgan Hill and Gilroy to reduce pass-through traffic and improve
Vehicles Miles Traveled (VMT) policy and thresholds to streamline the CEQA process
These statements are sometimes explicitly called ‘goals’ but are also mixed in with, or restated as ‘priorities in what are given various names such as (departmental) ‘workplans’.Not much needs to be said why these lists, however useful, do not convey the information that is expected of well articulated goals. They are not specific, give no indication of what metrics will be used to measure progress, and define no timeline. Whether they are relevant and achievable is either left to purely speculative guesswork or impossible to tell.

It may be the case that what has been presented in the Goal Setting Workshops is supposed to be understood as some sort of ‘short form’ version of goals which are documented in a meaningful goal setting methodology that has purposely not been made visible to the public. If that is an accurate assumption, I would suggest changing the name of these meetings to “Stuff the Staff is going to spend time working on workshops”. And, providing a link to documents which the public may review to understand what the goals actually are.

It is recognized that it requires far more time, attention, and effort to write and/or discuss goals verse lists of stuff the staff is going to work on. However, because of the consequences of my observation that follows, I would much rather have an actual Goal Setting Workshop even if time only allows for the most important five or so goals to be presented, discussed, modified and agreed upon.

My observation is, I think, a self-evident corollary to Doran’s view that goals must be

specific, measurable, achievable, relevant and timely if they are to have meaningful impact: If the stuff our government is spending time working on isn't having a meaningful impact, it's a waste of taxpayer money and will not lead to a sustainable Morgan Hill - no matter how noble the workplans are or how hard the staff works on them.

Regards,
Joe Baranowski
[1] "There's a S.M.A.R.T. Way to Write Management's Goals and Objectives”, Management Review, 1981, volume 70, issue 11
[2] On Tracking Goals
Allowing goals to be tracked by identifying specific, measurable, progress metrics in the goal definition doesn’t really do any good unless the goals are actually tracked.

Of course, tracking progress towards agreed upon goals implies accountability and if there isn’t going to be any accountability, why bother with setting goals in the first place?
The implications can be seen by example.

The one instance that I recall an identifiable goal being discussed in a MH city council goal setting workshop was in January 2020. Former Fire Chief Hess told the council and the community that one of his goals was to have the City adopt the recommended Emergency Response time performance objectives.

Specific:The recommendation came directly from a comprehensive Standards of Coverage Assessment study that was completed in 2019 which had been presented to the council in December 2019 and unanimously accepted. - 7 min 30 secs for first due engine company (3 FF’s)
- 11 min 30 secs for first alarm assignment (14 FF’s)
Why is achieving the goal (adopting performance objectives) important? "We need to have a target in order to achieve a goal of providing excellent public safety."
"We’re not going to be able to get there overnight, but we need to have a goal that we are shooting for. We need a target in order to achieve our goal." "Establishing performance objectives will ensure we do not decrease our level of

service as the City grows."
Measurable: Self-evident. Write staff report, write formal resolution, schedule item for agenda, City Council pass the resolution that defines emergency response time performance goals.

Achievable: City Council had already accepted the findings of the Assessment of Coverage report and all the author's (Citygate) recommendations.Chief Hess made it clear (see above) the important “next step” he was asking for was not meeting the performance objectives which would take time but ‘just’ to formally adopt the recommendations!
Relevant: This should be self-evident to anyone who says that Public Safety is a priority but given that nothing has happened in four years, the community has every reason to wonder if the council and staff didn’t agree with the Citygate’s and the Chief’s stated relevance or whether public safety is simply not really a priority Timely: No specific timeline was stated. However, the recency of the performance recommendations, the fact that the council had accepted the report and recommendations just one month earlier and the very limited scope of what was required to accomplish the goal implied that the Chief’s desire was to have the performance objectives adopted as a ‘next step’, i.e. in a matter of months.

Chief's Hess confidence that having the City formally adopt Fire & EMS response times objectives would "ensure we do not decrease our level of service as the City grows" may have not been realized even if his January 2020 SMART Goal hadn't just completely disappeared. However, what is clear, in my opinion, is that approving projects that were never planned for or considered in the 2035 General Plan EIR which will throw many tens of thousands of additional vehicle trips on an "assumed complete" Transportation Network that was identified as being needed to support 'just' the development that was planned, but which has largely been ignored, has an extremely high probability of doing exactly what the Chief's goal was intended to prevent: the level of Fire & EMS service which the 2019 Assessment of Coverage study showed was already far below generally accepted standards, will decrease even further. Especially in the north-east quadrant.

The Morgan Hill community deserves to understand what the City is doing, specifically, to try and make Morgan Hill an economically sustainable place to live.

It's time to define Goals that are specific, relevant, and measurable and to track the progress of those goals.

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