Morro Bay City Council
September 23, 2025

CITY OF MORRO BAY
City Council Regular Meeting Agenda

Tuesday, September 23, 2025, 5:30 p.m.

Veterans Memorial Hall
209 Surf St., Morro Bay, CA
Public Participation
Public participation is offered in the following ways:
• Community members may attend the meeting in person at the Morro Bay Veterans Hall.

Alternatively, members of the public may watch the meeting and speak during general Public Comment or on a specific agenda item by logging into the Zoom webinar using the information provided below. Please use the "raise hand" feature to indicate your desire to provide public comment.
•
Zoom webinar link:
https://us02web.zoom.us/j/82722747698?pwd=aWZpTzcwTHlRTk9xaTlmWVNWRWFU QT09
•
• Password: 135692
Or Telephone Attendee: 1 (408) 638-0968 or 1 (669) 900-6833 or 1 (346) 248-7799; Webinar ID: 827 2274 7698; Password: 135692: Press *9 to raise hand for public comment.
•
• Meetings are also broadcast on cable Channel 20 and streamed on the City's website.

Community Members are encouraged to submit agenda correspondence via email to the City Council at [email protected] prior to the meeting. Agenda correspondence received by 10:00 a.m. on the meeting day will be posted on the City website. •
Pages

1. ESTABLISH QUORUM AND CALL TO ORDER

2. PLEDGE OF ALLEGIANCE

3. REPORTS

3.a Closed Session Report

3.b Mayor and Councilmembers' Reports, Announcements and Presentations

3.c City Manager Reports, Announcements and Presentations

3.d Subcommittee Reports - Verbal Update of Current Subcommittee Activities

1. Water Reclamation Facility & Morro Bay / Cayucos Sanitary District JPA

2. Morro Bay Power Plant (Vistra)

3. Offshore Wind Energy

4. Morro Elementary School

4. RECOGNITION AND PRESENTATIONS
None.

5. PUBLIC COMMENT
Members of the audience wishing to address the Council on City business matters not on the agenda may do so at this time. For those desiring to speak on items on the agenda, but unable to stay for the item, may also address the Council at this time.

Public comment is an opportunity for members of the public to provide input to the governing body. To increase the effectiveness of the Public Comment Period, the City respectfully requests the following guidelines and expectations be followed:
•
Those desiring to speak are asked to complete a speaker slip, which are located at the entrance, and submit it to the City Clerk. However, speaker slips are not required to provide public comment. •
When recognized by the Mayor, please come forward to the podium to speak. Though not required, it is helpful if you state your name, city of residence and whether you represent a business or group. Unless otherwise established by the Mayor, comments are to be limited to three minutes.
•
All remarks should be addressed to Council, as a whole, and not to any individual member thereof.
•
The Council respectfully requests that you refrain from making slanderous, profane or personal remarks against any elected official, commission and/or staff.
•
Please refrain from public displays or outbursts such as unsolicited applause, comments or cheering.
•
Any disruptive activities that substantially interfere with the ability of the City Council to carry out its meeting will not be permitted and offenders will be requested to leave the meeting.
•
Your participation in City Council meetings is welcome and your courtesy will be appreciated.
•
The Council in turn agrees to abide by its best practices of civility and civil discourse according to Resolution No. 07-19.
•

6. CONSENT AGENDA

Unless an item is pulled for separate action by the City Council, the following actions are approved without discussion. The public will also be provided an opportunity to comment on consent agenda items.

Recommended Action
Approve Consent Agenda items 6.a through 6.h as submitted.

6.a Approval of Minutes
(City Clerk)
Recommended Action
Approve as submitted.

1. September 9, 2025 - Regular Council Meeting 6

2. September 9, 2025 - Special Closed Session Meeting 11

6.b Proclamations
(City Clerk)
Recommended Action
Approve as submitted.

1. Proclamation declaring September 21 - 27, 2025 as the 21st Annual Sea Otter Awareness Week
13 6.c Equipment donation from the Friends of the Morro Bay Fire Department 14 (Fire Department)
Recommended Action
Accept the donated equipment from the Friends of the Morro Bay Fire Department and authorize the City Manager to execute the Donation Agreement.

6.d Adoption of Resolution No. 49-25 Reaffirming the City's Pledge to Follow Best Practices of Civility and Civil Discourse
19 (Interim City Manager)
Recommended Action
Adopt Resolution No. 49-25 reaffirming the City's Civil Discourse Policy.

6.e Ordinance No. 672 amending Morro Bay Municipal Code Chapter 8.12 pertaining to Weeds, Rubbish, and Defensible Space
23 (Fire Department)
Recommended Action
Adopt Ordinance No. 672, "An Ordinance of the City Council of the City of Morro Bay, California, Amending Title 8 (Health and Safety) of the Morro Bay Municipal Code to amend and rename Chapter 8.12 Weeds, Rubbish and Defensible Space."

6.f National Opioid Settlement Agreements with Purdue Pharma, the 30

Sackler Family and Secondary Manufacturers
(City Attorney)
Recommended Action
Approve Settlement Agreements and Participation Forms for the City’s participation in the National Opioid Settlement Agreements with Purdue Pharma, Sackler Family and opioid manufacturers Alvogen, Amneal, Apotex, Hikma, Indivior, Mylan, Sun and Zydus (“Secondary Manufacturers”)

1. Reaffirm approval of California State-Subdivision Agreements Regarding Distribution and Use of Settlement Funds relating to the National Opioid Settlement Agreements

2. Adopt Resolution No. 50-25 approving and authorizing the City Manager to carry out all necessary acts such that the City can participate in the National Opioid Settlements with Purdue Pharma, the Sackler Family and Secondary Manufacturers, including signing necessary documents and transmittal thereof as necessary.

3. Approve disbursement of settlement funds to County (default option) while reserving option for direct distribution of further settlement funds to City in the future.

4. 6.g Approve Crill's Saltwater Taffy Inc. Master Lease Agreement 36 (Harbor Department)
Recommended Action
Adopt Resolution No. 51-25 approving new lease agreement for Crill's Saltwater Taffy located at 1247 Embarcadero.

6.h Fourth Quarter Investment Report (period ending June 30, 2025) for Fiscal Year (FY) 2024-25
87 (Finance Department)
Recommended Action
Receive the attached Fourth Quarter Investment Report (period ending June 30, 2025) for FY 2024-25.

7. PUBLIC HEARING ITEMS

7.a Continued Public Hearing and Adoption of Resolution No. 47-25 Updating and Establishing Various User and Regulatory Fees 91 (Finance Department)
Recommended Action
Continue the public hearing, receive the presentation of the user and regulatory fees, including Council member comments and staff

responses, and adopt Resolution No. 47-25 updating and establishing various user and regulatory fees, including any changes agreed upon by Council majority during the meeting.

8. BUSINESS ITEMS
None.

9. COUNCIL DECLARATION OF FUTURE AGENDA ITEMS

10. ADJOURNMENT
The next Regular Meeting will be held on October 14, 2025.

This agenda is subject to amendment up to 72 hours prior to the date and time set for the meeting. Please refer to the agenda posted at City Hall, 595 Harbor Street, Morro Bay, CA 93442 for any revisions or call the Clerk's office at (805) 772-6205 for further information.

Materials related to an item on this agenda submitted to the City Council after distribution of the agenda packet are available for public inspection upon request by calling the City Clerk's office at (805) 772-6205.

In compliance with the Americans Disability Act, if you need special assistance to participate in a City meeting, please contact the Clerk's office 24 hours prior to the meeting to insure reasonable arrangements can be made to provide accessibility to the meeting.

1 MINUTES - MORRO BAY CITY COUNCIL

REGULAR MEETING
September 9, 2025, 5:30 p.m.

Veterans Memorial Hall
209 Surf St., Morro Bay, CA
Members Present: Mayor Carla Wixom
Council Member Cyndee Edwards
Council Member Jeff Eckles
Council Member Zara Landrum
Council Member Bill Luffee
Staff Present: Interim City Manager Andrea Lueker
City Attorney Brian Stack
City Clerk Dana Swanson
Finance Director Emily Conrad
Public Works Director Greg Kwolek
Community Development Director Airlin Singewald
Police Chief Amy Watkins
Fire Chief Dan McCrain
Harbor Vitality Director Chris Munson
_____________________________________________________________________

1. ESTABLISH QUORUM AND CALL TO ORDER
Mayor Wixom called the meeting to order at 5:30 p.m. with all members present.

2. PLEDGE OF ALLEGIANCE

3. REPORTS

3.a Closed Session Report
City Attorney Stack announced the Council met in Closed Session to discuss three real property matters involving the Morro Elementary site, Morro Dunes RV Park, and the former wastewater treatment plant site and no reportable action was taken under the Brown Act. Mr. Stack was authorized to disclose the Council directed staff to submit an offer to the School District for the entire Morro Elementary site and reminded the public final approval of that agreement would have to be done in an open and noticed meeting.

3.b Mayor and Councilmembers' Reports, Announcements and Presentations

2 3.c City Manager Reports, Announcements and Presentations

3.d Subcommittee Reports - Verbal Update of Current Subcommittee Activities
a. Water Reclamation Facility & Morro Bay / Cayucos Sanitary District JPA
b. Morro Bay Power Plant (Vistra)
c. Offshore Wind Energy
d. Morro Elementary School

4. RECOGNITION AND PRESENTATIONS

5. PUBLIC COMMENT
 Will Benedict, San Luis Obispo Bicycle Club, announced the Lighthouse Century Bicycle Ride on Saturday, September 27th.
 Aaron Ochs, Morro Bay, commented on the life and legacy of John Weiss.  Linda Winters, Morro Bay, remembered John Weiss in her comments, attended the Kent Nagano concert to raise funds for Morro Elementary, and provided a Monday Night Dinner update.
 Penni Dougherty, Morro Bay, expressed concern about fire safety and need for weed abatement ordinance enforcement, particularly around State Park.
 Linda Donnelly, Morro Bay, stated there were interruptions on the Channel 20 and SLO-Span meeting feeds.
 Barry Branin, Morro Bay, urged the City to focus on selling excess property to fund the purchase of Morro Elementary.
 Michelle Leicester-Cadaret, Morro Bay, supported weed abatement efforts and eliminating wood burning firepits.

End of public comment.

6. CONSENT AGENDA
Unless an item is pulled for separate action by the City Council, the following actions are approved without discussion. The public will also be provided an opportunity to comment on consent agenda items.

Mayor Wixom opened public comment for items on the Consent Agenda.  Dina Lundquist, Morro Bay Chamber of Commerce CEO, commented in support of the proposed lease agreement for office space at 695 Harbor Street.

3 End of public comment.

Council Member Edwards pulled Item 6.c.

Motion by Council Member Landrum
Seconded by Council Member Luffee
Approve Consent Agenda items 6.a and 6.b as submitted.

Ayes (5): Mayor Wixom, Council Member Edwards, Council Member Eckles, Council Member Landrum, and Council Member Luffee
CARRIED (5 to 0)

6.a Approval of Minutes
Approve as submitted.
a. August 26, 2025 - Regular Council Meeting
b. August 26, 2025 - Special Closed Session Meeting

6.b Designation of Voting Delegate and Alternate at League of California Cities 2025 Annual Conference Business Meeting

1. Select Mayor Wixom as the voting delegate for the upcoming annual business meeting to be held at the League of California Cities Annual Conference; and

2. Authorize the City Clerk to complete the League of California Cities’ online submission form attesting that council action was taken and affirming the selection of the voting delegate.

6.c Approval of a Month-to-Month Lease Agreement with the Morro Bay Chamber of Commerce for Office Space at 695 Harbor Street Council Member Edwards commented in support of the continued use of 695 Harbor Street as a collaborative space for the Chamber and Visit Morro Bay.

Motion by Council Member Edwards
Seconded by Council Member Luffee
Review and approve a month-to-month Lease Agreement for office space at 695 Harbor Street with the Morro Bay Chamber of Commerce.

Ayes (5): Mayor Wixom, Council Member Edwards, Council Member Eckles, Council Member Landrum, and Council Member Luffee CARRIED (5 to 0)

7. PUBLIC HEARING ITEMS

4 7.a Introduction and First Reading of Ordinance No. 672, of the Morro Bay Municipal Code to amend Chapter 8.12 pertaining to Weeds, Rubbish, and Defensible Space
Fire Chief McCrain presented the report and responded to Council inquiries.

Mayor Wixom opened the public hearing and public comment for Item 7.a.  Penni Dougherty, Morro Bay, expressed frustration with the lack of responsiveness by State Parks to weed abatement requests.  Jeff Heller, Morro Bay, spoke in strong support of the proposed ordinance.
 Betty Winholtz, Morro Bay, was concerned the proposed ordinance would require removal of healthy trees, and wanted a clear understanding of how parcels were defined.
 Betsy Gaudette-Cross, Morro Bay, asked who was responsible for clearing the area between the fence and the road near the former Chevron property.
 Michelle Leicester-Cadaret, Morro Bay, agreed with the need for weed abatement around the former Chevron property and
suggested the City emphasize the use of non-corrosive and nontoxic solutions to remove weeds.

End of public comment.

Mayor Wixom closed the public hearing.

Motion by Council Member Edwards
Seconded by Council Member Luffee
Introduce for first reading by title only, with further reading waived, Ordinance No.672, “An Ordinance of the City Council of the City of Morro Bay, California, Amending Title 8 (“Health and Safety) of the Morro Bay Municipal Code to amend and rename Chapter 8.12 Weeds, Rubbish and Defensible Space.”

8. BUSINESS ITEMS

9. COUNCIL DECLARATION OF FUTURE AGENDA ITEMS
Council Member Eckles proposed and received support for the review of the City's revenue policy established by Resolution No. 52-21. There was consensus to bring this back before the next budget cycle, potentially with midyear budget review.

10. ADJOURNMENT
The meeting adjourned at 6:57 p.m.

5 Respectfully submitted,
/s/ Dana Swanson, City Clerk

1 MINUTES - MORRO BAY CITY COUNCIL

CLOSED SESSION MEETING
September 9, 2025, 3:30 p.m.

City Hall Conference Room
595 Harbor Street, Morro Bay, CA
Members Present: Mayor Carla Wixom
Council Member Cyndee Edwards
Council Member Jeff Eckles
Council Member Zara Landrum
Council Member Bill Luffee
Staff Present: Interim City Manager Andrea Lueker
City Attorney Brian Stack
Public Works Director Greg Kwolek
Community Development Director Airlin Singewald
Finance Director Emily Conrad
_____________________________________________________________________

1. ESTABLISH QUORUM AND CALL TO ORDER
Mayor Wixom called the meeting to order at 3:30 p.m. with all members present.

2. SUMMARY OF CLOSED SESSION ITEMS

3. CLOSED SESSION PUBLIC COMMENT
Judy Setting, Morro Bay, encouraged the Council to submit an offer for acquisition of Morro Elementary and the Open Space area.

End of public comment.

4. THE COUNCIL WILL CONVENE IN CLOSED SESSION

4.a CONFERENCE WITH REAL PROPERTY NEGOTIATOR -
GOVERNMENT CODE SECTION 54956.8
Property: APNs 066-280-045 and 066-044-011, 1130/1330 Napa Ave., Morro Elementary
Property Negotiators: San Luis Coastal Unified School District Agency Negotiators: Airlin Singewald, Community Development Director; Emily Conrad, Finance Director; Andrea Lueker, Interim City Manager; Brian Stack, City Attorney

2 Negotiations: Price and Terms of Payment

4.b CONFERENCE WITH REAL PROPERTY NEGOTIATOR -
GOVERNMENT CODE SECTION 54956.8
Property: 1700 Embarcadero, Morro Dunes RV Park
Property Negotiators: Kathy Claasen, Morro Dunes Trailer Park & Campgrounds, Inc.

Agency Negotiators: Greg Kwolek, Public Works Director; Airlin Singewald, Community Development Director; Andrea Lueker, Interim City Manager; Brian Stack, City Attorney
Negotiations: Price and Terms of Payment

4.c CONFERENCE WITH REAL PROPERTY NEGOTIATOR -
GOVERNMENT CODE SECTION 54956.8
Property: APN 066-331-032, -033, and -034; 160 and 180 Atascadero Road and 1700 Embarcadero
Property Negotiator: Cayucos Sanitary District
Agency Negotiators: Greg Kwolek, Public Works Director; Andrea Lueker, Interim City Manager; Brian Stack, City Attorney
Negotiations: Price and Terms of Payment

5. RECONVENE IN OPEN SESSION
The City Council reconvened in Open Session. City Attorney Stack announced the Council met in Closed Session to discuss three real property matters involving the Morro Elementary site, Morro Dunes RV Park, and the former wastewater treatment plant site and no reportable action was taken under the Brown Act. Mr. Stack was authorized to disclose the Council directed staff to submit an offer to the School District for the entire Morro Elementary site and reminded the public final approval of that agreement would have to be done in an open and noticed meeting.

6. ADJOURNMENT
The meeting adjourned at 5:10 p.m.

Respectfully submitted,
/s/ Dana Swanson, City Clerk

A PROCLAMATION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA,
DECLARING SEPTEMBER 21 – SEPTEMBER 27, 2025 AS
THE 21
st ANNUAL SEA OTTER AWARENESS WEEK

CITY COUNCIL
City of Morro Bay, California
WHEREAS, the southern sea otter, a keystone species, plays a critical role in maintaining the health and resilience of nearshore marine ecosystems, including vital kelp forests and seagrass beds, both of which are essential for supporting marine biodiversity and combating climate change; and
WHEREAS, sea otters have been historically hunted to the brink of extinction, with their population once reduced to approximately 50 individuals in the early 1900s, but due to the protections afforded by the federal Endangered Species Act, the Marine Mammal Protection Act, and California state law, their population has begun to recover and now numbers are around 3,200 individuals; and
WHEREAS, the southern sea otter continues to face numerous threats, including high levels of mortality from great white shark bites and the impacts of climate change, which are constraining their range to a small fraction of their historical habitat, thereby limiting their ability to expand and fully recover; and
WHEREAS, the ecological benefits of sea otters extend beyond marine ecosystems, as their presence near shorelines can help humans monitor the health of coastal waters by detecting pollutants and pathogens that threaten both marine and human communities; and WHEREAS, the protection and recovery of southern sea otters contribute not only to the biodiversity of the Pacific Coast but also to the broader fight against climate change by supporting carbon-sequestering habitats that remove harmful carbon dioxide from the atmosphere; and WHEREAS, we proclaim our steadfast commitment to the continued protection, expansion, and recovery of the southern sea otter population, recognizing their indispensable role in sustaining vibrant and resilient coastal ecosystems. We encourage all efforts to mitigate the threats they face and to foster the restoration of their historical range, ensuring a healthier, more sustainable future for both wildlife and people along our cherished coastlines.

NOW, THEREFORE, BE IT RESOLVED, that the Morro Bay City Council does hereby proclaim September 21 – September 27, 2026, to be the 21 st Annual “Sea Otter Awareness
Week.”

IN WITNESS WHEREOF I have
hereunto set my hand and caused the
seal of the City of Morro Bay to be
affixed this 23rd day of September 2025
_____________________________
Carla Wixom, Mayor
City of Morro Bay, California

Prepared By: __DM________ Dept Review: ___DM_____
City Manager Review: _ AL______City Attorney Review: _BS__ Staff Report
TO: Honorable Mayor and City Council DATE: September 12,2025 FROM: Daniel McCrain, Fire Chief
SUBJECT: Equipment donation from the Friends of the Morro Bay Fire Department

RECOMMENDED ACTION
Accept the donated equipment from the Friends of the Morro Bay Fire Department and authorize the City Manager to execute the Donation Agreement.

ALTERNATIVES
None as the donation offer complies with the City’s Donation Policy as established by Resolution No. 61-19.

FISCAL IMPACT
The value of donated equipment totals $8,799.00. This total is for a DJI Matrice 4T Public Safety and Rapid Response Drone Kit with Spotlight and DJI AS1 Speaker.

BACKGROUND
The Morro Bay Fire Department received a donated DJI Matrice 4T Public Safety and Rapid Response Drone Kit with Spotlight and DJI AS1 Speaker that was purchased by the Friends of the Morro Bay Fire Department in August 2025. This equipment will only be used by qualified and properly licensed Fire Department staff. Multiple department members are currently in the process of getting licensed by the FAA to operate this specialty equipment for emergency response. Drone technology has emerged as a valuable tool for first responders in search and rescue situations, fire location, post fire evaluation, Haz-mat detection, and communicating with victims. This equipment was received by the Morro Bay Fire Department on August 26, 2025.

The Friends of the Moro Bay Fire Department board made a request for a release of liability for the donated equipment. The Friends of the Morro Bay Fire Department is a 501(c)(3) Non-Profit organization whose mission is,

1. To establish and maintain an association of persons interested in public safety;

2. To focus public attention on fire safety, services, facilities and needs;

3. To support and cooperate with the Morro Bay Fire Department to enhance safety, services, and facilities for the community;

4. To stimulate gifts, endowments, and bequests.

AGENDA NO: 6.c
MEETING DATE: September 23, 2025

In support of this mission the Friends of the Morro Bay Fire Department has generously donated these valuable pieces of equipment to the Fire Department and the community of Morro Bay.

Providing a release of liability for these donated items will help to ensure the Friends of the Morro Bay Fire Department will be able to continue making donations of valuable and much needed equipment to the Morro Bay Fire Department in the years to come without assuming unnecessary liability which may preclude future donations. This action is also consistent with the City’s Donation Policy established by Resolution 61-19 which requires City Council approval to accept donations exceeding $5,000.

ATTACHMENT(S)

1. Friends of MB Fire Dept Donation Acceptance Agreement Drone

DONATION AGREEMENT

BY THE FRIENDS OF THE MORRO BAY FIRE DEPARTMENT

TO THE CITY OF MORRO BAY
THIS AGREEMENT is made and entered into this 23 day of September, 2025, and is effective as of the 23 day of September, 2025 (“Agreement”), by and between the CITY OF MORRO BAY, a municipal corporation of the State of California (hereinafter GRANTEE and “City”), and FRIENDS OF THE MORRO BAY FIRE DEPARTMENT, a California nonprofit corporation, (hereinafter GRANTOR).

WITNESSETH
WHEREAS, GRANTEE provides emergency response for the whole community of Morro Bay; and
WHEREAS, the DJI Matrice 4T Public Safety and Rapid Response Drone kit is intended to support public safety; and
WHEREAS, the Fire Department has not had sufficient funds to purchase this specialty equipment; and
WHEREAS, GRANTOR is a not-for-profit community group established to help improve the Fire Services in Morro Bay; and
WHEREAS, GRANTOR desires to assist GRANTEE by purchasing and donating the DJI Matrice 4T Public Safety and Rapid Response Drone kit; and NOW, THEREFORE, THE PARTIES AGREE, as follows:

1. Subject to the terms of this Agreement, on or before September 23, 2025, GRANTOR agrees to donate to GRANTEE an unopened and unaltered DJI Matrice 4T Public Safety and Rapid Response Drone Kit for use by the Fire Department and the City, with consideration to GRANTOR that GRANTEE’S use of the exercise equipment at GRANTEE’S discretion furthers GRANTOR’S established goal of improving public safety in Morro Bay.

2. GRANTOR agrees that the DJI Matrice 4T Drone donated shall be the sole and separate property of City. GRANTEE agrees to assume ownership of the DJI Matrice 4T Drone and to release GRANTOR from liability for any damages or claims arising out of GRANTEE’s use of the equipment and unrelated to any breach of this Agreement by GRANTOR.

3. Neither GRANTOR nor GRANTEE may assign any rights or obligations created by this Agreement to any other person without the prior written approval of the other party.

4. The terms and conditions of this Agreement can only be amended in writing approved and signed by GRANTOR and GRANTEE.

5. MISCELLANEOUS PROVISIONS
A. The Caption
The captions of the various sections, paragraphs, and subparagraphs of the Agreement are for convenience only and shall not be considered nor referred to for resolving questions of the interpretation.

B. No Third Party Beneficiary
This Agreement shall not be construed or deemed to be an Agreement for the benefit of any third party or parties, and no third party shall have any claim or right of action hereunder for any cause whatsoever.

C. Severability Clause
In case any one or more of the provisions contained herein shall, for any reason, be held invalid, illegal, or unenforceable in any respect, it shall not affect the validity of the other provisions which shall remain in full force and effect.

D. No Pledging of GRANTEE'S Credit
Under no circumstances shall GRANTOR have the authority or power to pledge the credit of GRANTEE or incur any obligation in the name of GRANTEE.

E. Venue
This Agreement shall be interpreted, construed and governed both as to validity and to performance of the parties in accordance with the laws of the State of California. Legal actions concerning any dispute, claim or matter arising out of or in relation to this Agreement shall be instituted in the Superior Court of the County of San Luis Obispo, State of California, or any other appropriate court in such county, and GRANTOR covenants and agrees to submit to the personal jurisdiction of such court in the event of such action. In the event of litigation in a U.S. District Court, venue shall lie exclusively in the Central District of California, in the County of San Luis Obispo, State of California.

F. Non-liability of GRANTOR Officers and Employees
No officer or employee of GRANTOR shall be personally liable to the GRANTEE, or any successor in interest, in the event of any default or breach by GRANTOR or for any amount which may become due to GRANTOR or to its successor, or for breach of any obligation of the terms of this Agreement.

G. Interpretation
The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of this Agreement or any other rule of construction which might otherwise apply.
///
///

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first herein above set forth.

City of Morro Bay Friends of the Morro Bay Fire Department __________________________ _________________ _________
Andrea Lueker, Interim City Manager Mike Pond, President _________________________________
Elaine Giannini, Secretary
APPROVED AS TO FORM:
__________________________
Brian Stack, City Attorney
ATTEST:
__________________________
Dana Swanson, City Clerk

Staff Report
TO: Honorable Mayor and City Council DATE: September 15, 2025 FROM: Andrea Lueker, Interim City Manager
SUBJECT: Adoption of Resolution No. 49-25 Reaffirming the City’s Pledge to Follow Best Practices of Civility and Civil Discourse

RECOMMENDED ACTION
Adopt Resolution No. 49-25 reaffirming the City’s Civil Discourse Policy.

DISCUSSION
In November 2015, the City Council adopted Resolution No. 70-15 (Attachment 1) pledging to follow best practices of civility and civil discourse and committing, on behalf of appointed officials and staff, to promote the use of and adherence to the principles of civility and civil discourse in conducting business with appointed and elected officials, staff and residents.

In 2018, elected representatives at the County and all seven cities in San Luis Obispo County affirmed a Code of Civility and the Morro Bay City Council reaffirmed the importance of civility and civil discourse with the adoption of Resolution No. 27-18. The policy was most recently reaffirmed in January 2019 with the adoption of Resolution No. 07-19 and is memorialized in Section 1.3.5 of the City Council Polices & Procedures.

Civility is about how people treat each other and involves the display of respect for those who have positions with which one disagrees. Even though disagreement plays a necessary role in governance, it is key to focus on the strengths and weaknesses of proposed solutions to community problems, to listen for the concerns and values that underlie diverse perspectives, and to try to identify points of agreement and common ground. Civil discourse is engagement in dialogue intended to enhance understanding, and serves to improve public policy decisions through respectful courteous, constructive and orderly communication.

In coordination with Mayor Wixom, staff is presenting a refreshed version of Civility and Civil Discourse Policy for consideration of adoption and posting at the entrance to the Veterans Hall (Council Chamber) as a reminder and encouragement to all those participating in public meetings.

CONCLUSION
Adopt Resolution No. 49-25, establishing a Civil Discourse Policy and direct staff to post the Resolution at the entrance to the Council Chamber as a reminder and encouragement to all those participating in public meetings.

AGENDA NO: 6.d
MEETING DATE: September 23, 2025
Prepared By: __DS____ Dept Review:_____
City Manager Review: ___AL_____ City Attorney Review: __BS______

ATTACHMENTS

1. Resolution No. 07-19

2. Proposed Resolution No. 49-25

RESOLUTION NO. 49-25

RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA,

PLEDGING TO FOLLOW BEST PRACTICES OF CIVILITY AND CIVIL DISCOURSE

T H E C I T Y C O U N C I L
City of Morro Bay, California
WHEREAS, a healthy democracy respects the people’s right to debate issues with passion; and not only tolerates disagreement but welcomes it in order to refine ideas and create policies that benefit the greater good; and WHEREAS, Civility isn’t passive politeness; it is characterized by actively listening, seeking areas of commonality, bridging divides, and respecting differences with dignity when they cannot be resolved; and WHEREAS, it is imperative to cultivate an environment of mutual respect and cooperation within our city, to ensure the well-being of all its inhabitants and the efficacy of our governance; and WHEREAS, in 2015, 2018 and 2019, the Morro Bay City Council adopted resolutions pledging to follow best practices of civility and civil discourse in conducting business with appointed and elected officials, staff and citizens; and WHEREAS, as elected officials entrusted with the responsibility of representing all our constituents, we have a duty to lead by example in promoting civility and fostering an atmosphere conductive to respectful dialogue and collaboration.

NOW, THEREFORE, BE IT RESOLVED, by the City Council, City of Morro Bay, California, that we, along with the Appointed Officials and Staff of the City of Morro Bay, establish this Code of Civility as a promise to each other, and to the residents and institutions we serve, that we will conduct our debates in ways that allow for the widest range of opinions on ideas and policies, yet also respect the dignity, integrity and rights of those with whom we might disagree.

In our deliberations, we pledge to:
 Listen first, making an honest effort to understand views and reasoning of others by listening to understand, not listening to find fault, allowing thoughtful discussion to lead to the best possible outcomes; and  Respect different opinions, by inviting and considering different perspectives, allowing space for ideas to be expressed, opposed and clarified in a constructive manner; and  Show courtesy, by treating all colleagues, staff and members of the public in a professional and courteous manner whether in person, online, or in written communication, especially when we disagree; and  Disagree constructively, striving to advance solutions to community issues; when faced with disagreement, we do more than simply share our concerns with differing positions, we work to propose a course of action for mutual benefit; and
 Speak truthfully without accusation, and avoid distortion in all our meetings; and  Debate the policy not the person, focusing on the issues, and not personalizing the debate or using other tactics that divert attention from the issue.

PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting thereof held on the 23rd day of September 2025, on the following vote:

AYES:

NOES:

ABSENT:
_____________________________
CARLA WIXOM, Mayor
ATTEST:
_____________________________
DANA SWANSON, City Clerk

Prepared By: ____DM______ Dept Review: ___DM_____
City Manager Review: _AL______City Attorney Review: ___BS______ Staff Report
TO: Honorable Mayor and City Council DATE: September 10, 2025 FROM: Daniel McCrain, Fire Chief
SUBJECT: Ordinance No. 672 amending Morro Bay Municipal Code Chapter 8.12 pertaining to Weeds, Rubbish, and Defensible Space

RECOMMENDATION
Adopt Ordinance No. 672, “An Ordinance of the City Council of the City of Morro Bay, California, Amending Title 8 (Health and Safety) of the Morro Bay Municipal Code to amend and rename Chapter

8.12 Weeds, Rubbish and Defensible Space.”

ALTERNATIVES
Provide alternate direction.

FISCAL IMPACT
No fiscal impact identified.

BACKGROUND
At the September 9, 2025, Regular Meeting, Council was presented a report and proposed Ordinance No. 672 entitled “An Ordinance of the City Council of the City of Morro Bay, California, Amending Title 8(“Health and Safety) of the Morro Bay Municipal Code to amend and rename Chapter 8.12 Weeds, Rubbish and Defensible Space
A link to the September 9
th staff report, attachments and presentations can be found here.

CONCLUSION
The Fire Department is recommending a municipal code ordinance update of Chapter 8.12 of the Morro Bay Municipal Code to provide for improved defensible space within the City of Morro Bay to reduce the loss of life and property due to fire.

ATTACHMENT(S)

1. Ordinance No. 672 amending MBMC Chapter 8.12
AGENDA NO: 6.e
MEETING DATE: September 23, 2025

ORDINANCE NO. 672

AN ORDINANCE OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA
AMENDING TITLE 8 (HEALTH AND SAFETY) OF THE
MORRO BAY MUNICIPAL CODE TO AMEND AND RENAME CHAPTER 8.12 WEEDS,

RUBBISH AND DEFENSIBLE SPACE

T H E C I T Y C O U N C I L
City of Morro Bay, California
WHEREAS, the City of Morro Bay (“City”) is an incorporated city within the State of California; and
WHEREAS, the City Council finds that the prevention of fires is a matter of both local and statewide concern; and
WHEREAS, the City Council finds that vegetation fires are extremely costly to property owners, residents, and local and state agencies; and pose a serious threat to the preservation of the public peace, health, and safety; and
WHEREAS, nuisance weed, brush, and debris pose a danger to life and property by increasing the risk and severity of fires; and
WHEREAS, each year, serious injuries and property damage occur from fires supported by unmanaged weeds, brush, and debris; and
WHEREAS, based on the continued occurrence of vegetation fires affecting communities throughout the state, the City desires to amend its Municipal Code to increase defensible space requirements in order to proactively reduce fire hazards within the City.

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF MORRO BAY CALIFORNIA, DOES ORDAIN AS FOLLOWS:

SECTION 1. Recitals. The recitals set forth above are true and correct and are hereby adopted as findings in support of this Ordinance as if fully set forth herein.

SECTION 2. Severability. If any section, subsection, sentence, clause or phrase of this Ordinance is for any reason held invalid by a court of competent jurisdiction, such a decision shall not affect the validity of the remaining portions of this Ordinance. The City Council declares that it would have passed this Ordinance and each section, subsection, sentence, clause, or phrase thereof, irrespective of the fact that one or more sections, subsections, sentences, clauses, or phrases, be declared invalid.

SECTION 3. Potential Conflicts. All ordinances and parts of ordinances in conflict with those sections amended or added herein are hereby expressly superseded by this ordinance.

SECTION 4. Effective Date. This Ordinance shall not become effective and in full force and effect until 12:01 a.m. on the thirty-first day after its final passage. However, within fifteen (15) days after adoption by the City Council, the Ordinance shall be published once, together with the names of the Council Members voting thereon, in a newspaper of general circulation within the City.

SECTION 5. Chapter 8.12 of Title 8 of the Morro Bay Municipal Code is renamed from Weeds and Rubbish to Weeds, Rubbish and Defensible Space.

SECTION 6. Chapter 8.12.010 of Title 8 of the Morro Bay Municipal Code is amended to read in its entirety as follows:
 8.12.010 - Definitions.

As used in this chapter:
“Defensible space” means the buffer that landowners are required to create on their property between a "Building or Structure" and the plants, brush and trees or other items surrounding the "Building or Structure" that could ignite in the event of a fire. “Building or Structure” means anything constructed that is designed or intended for support, enclosure, shelter, or protection of persons, animals, or property, having a permanent roof that is supported by walls or posts that connect to, or rest on the ground. "Enforcement official" means any employee or department head of the city charged with the duty of enforcing ordinances of the city, the county or laws of the state. "Nuisance weeds, brush and debris" means weeds which when mature, bear the wingy or downy seeds which will attain such a large growth as to become a fire menace when dry, or which are otherwise noxious or dangerous. This includes, but is not limited to:

A. Weeds growing upon street, sidewalks or private property; B. Sage brush, chaparral and other bush or weed which attain such large growth as to become a fire hazard or menace to adjacent property;
C. Poison oak and poison ivy when conditions of growth are such as to constitute a menace to the public health;
D. Dry grass, stubble, brush, litter or other flammable material which endangers the public safety by creating a fire hazard or public nuisance;
E. Any living or dead vegetation where size, concentration, chemical applications, poisons, infestation and combustibility is, or may become, a cause for a fire hazard or public nuisance. "Occupier" means the person occupying or otherwise in real or apparent charge and control of the premises affected.
"Owner" means the owner of record of the premises affected.

SECTION 7. Chapter 8.12.020 of Title 8 of the Morro Bay Municipal Code is amended to read in its entirety as follows:
 8.12.020 - Authority to declare nuisance and abate.

The city council may declare by resolution as a public nuisance and abate:

A. Weeds growing in any location within the city, whether on public or private land, including all fire hazard severity zone designations.

B. All rubbish, refuse and dirt upon parkways or sidewalks, and all rubbish and refuse upon private property in the city.

C. Defensible space requirements can be found in Public Resource Code (PRC) § 4291, 14 California Code of Regulations (CCR) § 1299.03, and Board of Forestry (BOF) General Guidelines.

SECTION 8. Chapter 8.12.080 of Title 8 of the Morro Bay Municipal Code is amended to read in its entirety as follows:
 8.12.080 - Method of removal or abatement.

A. Removal or abatement shall include cutting or spraying with chemicals or solutions to destroy or retard the growth of weeds or other vegetation and the removal and hauling of such destroyed vegetation and other flammable material to a legal disposal site. Not allowed are removal methods which incorporate burning, discing, tilling or any form of excavation.

B. The height of a cut shall not exceed that of the highest adjusted level of a standard rotary lawnmower. The property owner shall provide a twenty-foot abatement zone along such property line where brush and bush growth pose a fire hazard to adjoining property. No piles or clumps shall remain, and any cut material deposited to within ten feet of adjoining properties or the street right-of-way as a result of cutting, removal, weather or negligence shall be removed at the owner's expense. The completed abatement shall be to all property lines and to the edge of street paving.

All sidewalk, gutter and street areas shall be left clean.

B. The following guidelines are a minimum requirement and shall apply to all parcels within the city limits regardless of Fire hazard Severity Zone designation. Updates to Public Resource Code (PRC) § 4291, 14 California Code of Regulations (CCR) § 1299.03, and Board of Forestry (BOF) General Guidelines will be the controlling standards for weed abatement. Updated requirements shall be published in the annual “Notice to Clear Weeds and Debris” flyer.

Zone 1-Within 30 feet of all structures or to the property line:
• Remove all branches within 10 feet of any chimney or stovepipe outlet, PRC § 4291(a)(2) and 14 CCR § 1299.03(a)(2).
• Remove leaves, pine needles, or other vegetation on roofs, gutters, decks, porches, stairways, etc. PRC § 4291 (a)(4) and 14 CCR § 1299.03(a)(1). • Remove dead tree or shrub branches that overhang roofs, below or adjacent to windows, or which are adjacent to wall surfaces, PRC § 4291 (a)(3) and 14 CCR § 1299.03(a)(2). • Remove all dead and dying grass, plants, shrubs, trees, branches, leaves, weeds, and pine needles, 14 CCR § 1299.03(a)(1).
• Remove or separate fuels to maintain spacing between vegetation to interrupt the fire’s path. Prune limbs; separate plants and ground cover, PRC § 4291(a)(1) and BOF General Guidelines item 1.
• Remove flammable vegetation and items that could catch fire which are adjacent to, or under, combustible decks, balconies, and stairs, 14 CCR § 1299.03(a)(4). • Relocate exposed wood piles outside of Zone 1 unless completely covered in a fireresistant material, 14 CCR § 1299 .03(a)(3). C.

Zone 2-Within 30–100 feet of all structures or to the property line:

• Cut annual grasses and forbs down to a maximum height of 4 inches, 14 CCR § 1299.03(b)(2)(B).
• Remove fuels to create proper horizontal and vertical spacing among shrubs and trees, and remove lower tree limbs, BOF General Guidelines item 4. • All exposed woodpiles must have a minimum of 10 feet clearance, down to bare mineral soil, in all directions, 14 CCR § 1299.03(b)(2)(C).
• Remove all dead and dying trees, branches, shrubs, or other plants, and surface debris.

Loose surface litter, normally consisting of fallen leaves or needles, twigs, bark, and cones, shall be permitted to a depth of 3 inches, 14 CCR § 1299.03(b)(2)(A). • Logs or stumps embedded in the soil must be removed or isolated from other vegetation, BOF General Guidelines item 3.
• Outbuildings and Liquid Propane Gas (LPG) storage tanks shall have 10 feet of clearance to bare mineral soil and no flammable vegetation for an additional 10 feet around their exterior, 14 CCR § 1299.03(c)(1)
The fire chief shall determine the appropriate manner in which said public nuisances must be abated.

Large parcels or open space
• Large parcels or open space lots shall clear a minimum of 100’ from the property line in addition to the above requirements around any structures. ///
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C. The fire chief shall determine the appropriate manner in which said public nuisances must be abated.

INTRODUCED at a regular meeting of the City Council of Morro Bay, held on the 9th day of September 2025 by motion of Councilmember Edwards and seconded by Councilmember Luffee.

PASSED AND ADOPTED on the ____ day of September 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSE:

____________________________
CARLA WIXOM, Mayor
ATTEST:
______________________________
DANA SWANSON, City Clerk
APPROVED AS TO FORM:
_____________________________________
BRIAN STACK, City Attorney

STATE OF CALIFORNIA )

COUNTY OF SAN LUIS OBISPO )

CITY OF MORRO BAY )
I, Dana Swanson, CITY CLERK FOR THE CITY OF MORRO BAY, HEREBY CERTIFY the foregoing Ordinance Number 672 was duly adopted by the City Council of the City Council of the City Morro Bay at a regular meeting of said Council on the ___ day of _______ 2025 and that it was so adopted on by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSE:

IN WITNESS WHEREOF I have hereunto set my hand and affixed the official seal of the City of Morro Bay, California, this ______ day of _______________, 2025.

DANA SWANSON, City Clerk

Staff Report
AGENDA NO: 6.f
MEETING DATE: September 23, 2025
Prepared By: ____BJS____ Dept Review:_____
City Manager Review: ___AL_____ City Attorney Review: ______ TO: Honorable Mayor and City Council DATE: September 18, 2025

FROM: Brian J. Stack, City Attorney
SUBJECT: National Opioid Settlement Agreements with Purdue Pharma, the Sackler Family and Secondary Manufacturers

RECOMMENDED ACTION

1. Approve Settlement Agreements and Participation Forms for the City’s participation in the National Opioid Settlement Agreements with Purdue Pharma, Sackler Family and opioid manufacturers Alvogen, Amneal, Apotex, Hikma, Indivior, Mylan, Sun and Zydus (“Secondary Manufacturers”)

2. Reaffirm approval of California State-Subdivision Agreements Regarding Distribution and Use of Settlement Funds relating to the National Opioid Settlement Agreements

3. Adopt Resolution No. 50-25 approving and authorizing the City Manager to carry out all necessary acts such that the City can participate in the National Opioid Settlements with Purdue Pharma, the Sackler Family and Secondary Manufacturers, including signing necessary documents and transmittal thereof as necessary.

4. Approve disbursement of settlement funds to County (default option) while reserving option for direct distribution of further settlement funds to City in the future.

ALTERNATIVES
Do not approve settlement agreements and related items; or, opt in for City receipt of settlement funds rather than default to County receipt of settlement funds.

FISCAL IMPACT
If the City participates, the funds will automatically be allocated to the County, unless the City elects to receive the funds directly. The City may elect to receive direct payment to City (rather than default to the County) if requested more than 60 days prior to an applicable payment date.

If the City does not participate at all, then the City’s share is reduced under the settlement agreements and the reduced amount goes to the State of California.

Final payment amounts will depend on the number of entities that participate, settlement administrator costs, and discounted pre-payment options that may be exercised in the future by settling parties. Under the settlement agreements, payment periods range from 1 to 15 years depending on the settling party. Assuming payments from this most recent round of national opioid settlements total over $500 million to California, the City would be allocated approximately $70,000 in settlement payments, bringing the total potential City allocation to approximately $700,000 including previously approved settlements.

2 Since 2021, approximately $190,000 has been allocated to the City and disbursed to the County for use under the County’s Opioid Settlement Funds program, which includes consultation with City Managers.

Staff previously recommended the City (at least initially) default its funds to the County rather than receive funds directly or default the funds to the State of California. The use of settlement funds is restricted and the City did not necessarily have the infrastructure, resources and personnel to directly use the settlement funds in compliance with the settlements. Furthermore, direct receipt of the funds requires annual reporting obligations and possible audits. The City always maintains the right to elect receiving the funds directly upon further review and analysis of potential City allowable uses of the funds and reporting resources.

BACKGROUND
In 2021, the City entered into settlement agreements with McKesson Corporation, Cardinal Health, Inc., and AmerisourceBergen Corporation. (collectively, the “Distributors”) and Johnson & Johnson, Janssen Pharmaceuticals, Inc., Ortho-McNeil-Janssen Pharmaceuticals, Inc., and Janssen Pharmaceutica, Inc. (collectively, the “Manufacturer”) (“2021 Settling Defendants”). The 2021 settlement agreement related to litigation (the City was not a party to this litigation) by various States, cities, and counties relating to the 2021 Settling Defendants’ manufacture and distribution of opioids and, in particular, the impact of such activities upon the national opioid epidemic (“2021 Settlement”).

In 2023, the City entered into similar settlement agreements with Teva, Allergan, Walmart, Walgreens, and CVS, who are additional defendants that are retailers and manufacturers of opioids (“2023 Settling Defendants”). These settlement agreements with the 2023 Settling Defendants contained similar terms as the 2021 Settlement (“2023 Settlement”).

In 2024, the City entered in another national settlement with the Kroger (“Kroger Settlement”).

The terms of the Kroger Settlement were similar to the 2021 Settlement and the 2023 Settlement, which includes the requirement that a critical mass of participation is required, provides for a broad release from liability relating to opioids, and, further, direct or indirect payment of settlement funds to the various local agencies agreeing to participate. Additional information about these settlements can be found here: https://nationalopioidsettlement.com/

DISCUSSION
With respect to the release that would be required for the latest round of settlements, similar to the previous national opioid settlements, it is a very broad release covering any activities by the settling parties relating to opioids, such as those relating to manufacture, distribution, or sale of opioids within the City.

With respect to settlement amounts, the Purdue Pharma and Sackler settlements would provide up to $6.5 billion to participating states/subdivisions paid over a 15-year period, with California eligible to receive up to $440 million. Under the Secondary Manufacturers settlements, up to $806 million would be provided to participating states/subdivisions, with California eligible to receive up to $70 million. Similar to the prior settlement agreements, the more local agencies that participate, the more funds will be available. Based on existing allocation percentages, the City’s total share could be around $70,000. However, like previous settlements, the actual amount will not be known until the process has been completed.

3 Similar to the prior settlement agreements, the use of the funds is restricted to opioid remediation (e.g., addiction treatment programs). By default, these funds are allocated to the County, but the City is able to elect to receive a direct distribution at any time, provided that the election is made at least 60 days prior to a distribution date; however, use of the funds also requires strict accounting requirements. These requirements only apply to the City if it elects to receive direct distributions.

Approval of Recommendation No. 1 and 2 would authorize the City to participate in the National Opioid Settlements with Purdue Pharma, the Sackler Family and the Secondary Manufacturers and, reaffirm approval the subdivision allocation agreement with the State of California regarding the distribution and use of settlement funds consistent with the settlement agreements. (Attachments 1, 2, and 3).

Approval of Recommendation No. 3 would approve and authorize the City Manager to carry out all necessary acts such that the City can participate in the settlement agreements, including signing necessary documents and transmittal thereof as necessary.

Approval of Recommendation No. 4 affirms that City reserves the option to request direct distribution of further settlement funds to City in the future.

Council approval and authorization for execution, submission, and receipt of all required documents must be completed by September 30, 2025 for the Purdue and Sackler Family settlements and October 8, 2025 for the Secondary Manufacturer settlements.

ATTACHMENTS

1. Settlement Agreements with Purdue Pharma, Sackler Family and Secondary Manufacturers available at https://nationalopioidsettlement.com/purdue-sacklerssettlements/ and https://nationalopioidsettlement.com/additional-settlements/

2. California State-Subdivision Agreements Regarding Distribution and Use of Settlement Funds (Master Distributor Settlement example, available at https://oag.ca.gov/sites/default/files/media/final-proposed-ca-state-subdivisionagreement-distributors-settlement.pdf

3. Resolution No. 50-25 approving and authorizing the City Manager to carry out all necessary acts such that the City can participate in the National Opioid Settlement with Purdue Pharma, Sackler Family and Secondary Manufacturers, including signing necessary documents and transmittal thereof as necessary.

01181.0001/1013686.1
RESOLUTION NO. 50-25

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA,

AUTHORIZING THE CITY OF MORRO BAY TO ENTER INTO

NATIONAL OPIOID SETTLEMENT AGREEMENTS WITH

PURDUE PHARMA, SACKLER FAMILY AND SECONDARY
MANUFACTURERS; AGREE TO THE TERMS OF THE

RELATED STATE-SUBDIVISION AGREEMENTS AND
AUTHORIZE ENTRY INTO THE RELATED STATESUBDIVISION ALLOCATION AGREEMENTS; AND

AUTHORIZING THE CITY MANAGER TO CARRY OUT
FURTHER ACTS RELATED TO THE CITY’S

IMPLEMENTATION OF NATIONAL OPIOID SETTLEMENT

AGREEMENTS

T H E C I T Y C O U N C I L
City of Morro Bay, California
WHEREAS, the United States continues to face an ongoing public health crisis of opioid abuse, addiction, overdose, and death, forcing the State of California and California counties and cities to spend billions of dollars each year to address the direct consequences of this crisis; and, WHEREAS, pending in the U.S. District Court for the Northern District of Ohio is a multidistrict litigation (“MDL”) being pursued by numerous public entity plaintiffs against the manufacturers and distributors of various opioids based on the allegation that the defendants’ unlawful conduct caused the opioid epidemic; and,
WHEREAS, a proposed nationwide tentative settlement has been reached with Purdue Pharma L.P. and the Sackler Family (“Purdue-Sackler Settlement”); and, WHEREAS, a proposed nationwide tentative settlement has been reached with opioid manufacturers Alvogen, Amneal, Apotex, Hikma, Indivior, Mylan, Sun and Zydus (“Secondary Manufacturers Settlement”); and,
WHEREAS, as part of the Purdue-Sackler Settlement and Secondary Manufacturers Settlement (collectively “Settling Parties”), local subdivisions, including certain cities, that are not plaintiffs in the MDL may participate in the settlement in exchange for a release of claims (“Participating Subdivision”); and,
WHEREAS, copies of the terms of the proposed Purdue-Sackler and Secondary Manufacturers Settlement have been set forth in national settlement agreements and related forms (“Settlement Agreements”); and,
WHEREAS, copies of the Settlement Agreements have been made available to the City Council with this Resolution; and,
WHEREAS, the Settlement Agreements provide, among other things, for payments collectively totaling up to potentially over $5 billion to settling government entities in the United States, including to the State of California and Participating Subdivisions upon occurrence of certain events as defined in the Settlement Agreements (“California Opioid Funds”); and,

WHEREAS, in order to become a Participating Subdivision, the City must enter into participation agreements which allow participation in the Settlement Agreements; and, WHEREAS, California local governments in the MDL have previously engaged in extensive discussions with the State Attorney General’s Office (“AGO”) as to how the California Opioid Funds will be allocated, which has resulted in the California State-Subdivision Agreements Regarding Distribution and Use of Settlement Funds (“Allocation Agreement”) from the national opioid settlements; and,
WHEREAS, a copy of the previous Allocation Agreement for the Distributor National Opioid Settlement has been made available to the City Council with this Resolution and is expected to substantially mirror the final Allocation Agreements for the subject settlements; and, WHEREAS, under the Settlement Agreements, certain local subdivisions that did not file a lawsuit against the Settlement Defendants may qualify to participate in the settlements and obtain settlement funds; and,
WHEREAS, the City is eligible to participate in the Settlement Agreements and become a CA Participating Subdivision; and,
WHEREAS, City’s share of the CA portion of the settlement funds will be determined based upon a final calculation as provided in the final Allocation Agreements (the “Local Allocation”); and,
WHEREAS, a CA Participating Subdivision that is a city will be allocated its Local Allocation share as of the date on which it becomes a Participating Subdivision. The Local Allocation share for a city that is a CA Participating Subdivision will be paid to the county in which the city is located, unless the city elects to take a direct election of the settlement funds, so long as: (a) the county is a CA Participating Subdivision, and (b) the city has not advised the Settlement Fund Administrator that it requests direct payment at least 60 days prior to a Payment Date; and, WHEREAS, it is the intent of this Resolution to authorize the City to enter into the Settlement Agreements with the Settling Parties by executing the participation agreements and to enter into the Allocation Agreements by executing the signature pages to those agreements.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MORRO BAY, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS:

Section 1. Recitals. The Recitals set forth above are true and correct and are incorporated into this Resolution by this reference.

Section 2. Approval and Authorization. The City Manager is hereby approved and authorized to settle and release the City’s claims against the Settling Parties in exchange for the consideration set forth in the Settlement Agreements, Participation Agreements, Allocation Agreements, and all exhibits thereto.

Section 3. Further Acts. The City Manager is hereby authorized to carry out all necessary acts such that the City can participate in and implement the Settlement Agreements, including, without limitation, execution and transmittal (as necessary) of the Participation Agreements, Allocation Agreements, and all related documents; and the direct election or deferral of settlement payments in accordance with the City’s approved budget, as may be amended.

Section 4. Ratification. All actions heretofore taken by the City Council and other appropriate public officers and agents of the City with respect to the matters contemplated under this Resolution are hereby ratified, confirmed and approved.

Section 5. Certification, Adoption and Effective Date. That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. This Resolution shall be effective immediately upon passage and adoption.

PASSED, APPROVED AND ADOPTED by the City Council, City of Morro Bay, at a regular meeting held on the 23rd day of September, 2025 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSE:
______________________________
CARLA WIXOM, Mayor
ATTEST:
_____________________________
DANA SWANSON, City Clerk

Prepared By: ___CM Dept Review: __ lt _
City Manager Review: ____AL____ City Attorney Review: __BS____ Staff Report
TO: Honorable Mayor and City Council DATE: September 16, 2025 FROM: Chris Munson, Harbor Vitality Director
Lori Thompson, Harbor Business Manager
SUBJECT: Approve Crill’s Saltwater Taffy Inc. Master Lease Agreement

RECOMMENDED ACTION
Adopt Resolution No. 51-25 approving new lease agreement for Crill’s Saltwater Taffy located at 1247 Embarcadero.

ALTERNATIVES
The City Council can choose not to approve the lease agreement.

FISCAL IMPACT
In FY 2024/25, Crill’s provided $12,100.96 in minimum rent and $15,393.13 in percentage of gross for a total of $27,494.09 to the Harbor Fund. The current minimum rent is $12,500 with 5% gross sales. The new lease maintains the same percentage of gross and minimum rent structure with CPI increases.

The new lease terms will provide $25,000 up front toward the construction of the HarborWalk or public restroom improvements and an additional $25,000 to be paid during the term of the lease.

The City's general fund will benefit from continued tax revenue.

BACKGROUND
Crill’s Saltwater Taffy has been in business since 1970’s and was started by Horton and Savanah Williams. It has been in the family with Don working at Crill’s since 1978 and Wendy since 1982. The current 20-year lease was approved in 2008 and expires on June 30, 2028. The minimum rent was set at $8,000 and has increased by CPI to $12,500.

The lease site is 1,360 square feet, but the building itself is only 749 square feet and is located in the Measure D area.

Long lease extensions are often granted based off the amount proposed improvements that go beyond typical maintenance and repair. However, due to its size and Measure D status, the lease site is limited in what it may be used for and what improvements are allowed.

AGENDA NO: 6.g
MEETING DATE: September 23, 2025

The existing lease terms included a requirement for the leaseholder to provide $15,000 toward HarborWalk improvements once a project was initiated. Since the project wasn’t initiated, $15,000 was not collected.

DISCUSSION
Since the lease site is in the Measure D area, with limitations and cannot expand or further develop, the leaseholder has proposed $96,681.72 in interior and exterior improvements. While these could be considered standard maintenance and repair, the overall amount of improvements and a deadline to complete them by June 30, 2028, is a significant investment in the site and commitment.

The lease site is too small to include a public restroom, whereas other lease sites are required to provide restroom facilities. Lease sites are also required to construct a portion of the HarborWalk or provide funding towards it. To address this, the new lease will include $50,000 which can be used toward the construction of the HarborWalk, the public restrooms at the base of the North T-Pier or other Harbor capital improvement projects in the vicinity that the City Council may direct in the future.

These funds will be placed and held in the newly created Harbor Improvement Cost-Sharing fund, which is within the Harbor Fund. Having these funds readily available will also help by serving as matching funds for potential grants for projects like the public restroom or HarborWalk.

TERMS
Term Length: 15 years
The existing lease has 2 years and 9 months remaining. The new lease will extend the term 15 years, 17 years and 9 months in total; expiring on June 30, 2043.

Rent: Current minimum rent (w/ CPI) and 5% of gross sales The lease site’s minimum rent will be set at $12,500.00 and adjusted annually by CPI. In addition, the new annual minimum rent for the five-year period commencing on each appraisal adjustment date shall be the greater amount of seventy-five percent of the average total yearly rent payable during the previous five-year period or eight percent of the fair market value of the Premises.

In addition to the annual minimum rent, Crill’s agrees to continue to pay to the City an additional 5% percentage of Crill’s gross sales for the use and occupancy of the Premises, less the Minimum Rent paid for the FY reporting period.

Payments toward Harborwalk / Restrooms: $25,000 upfront and $25,000 due The leaseholder will pay $25,000 upfront. to account for the $15,000 in the current lease toward the HarborWalk which was not collected and would now be approximately $25,000 after inflation. The leaseholder will pay an additional $25,000 during the term of the new lease, but if the repayment is delayed until later in the term, the amount will adjust for CPI. The leaseholder currently intends to pay the full $50,000 upfront. The $50,000 in total can be used toward the HarborWalk, North T-Pier restrooms or other Harbor capital improvement projects in the vicinity that the City Council may direct in the future.

Improvements: $96,681.72
Leaseholder will provide exterior and interior improvements by June 30, 2028. A cost breakdown and concept drawing is included in the proposal. The leaseholder provided quotes from contractors. These improvements include:

A. Chain-link trash enclosure with privacy slats
B. Exterior of building
C. Exterior and interior painting
D. Windows
E. Flooring
F. Counter tops and shelves
Façade Improvements
The leaseholder will develop a Facade Improvement Plan to submit to the Harbor Department for approval. The plan will include exterior enhancements (i.e. flower boxes, lighting, menu) to ensure a well-maintained appearance.

Updated Lease Language
The lease language has been updated to be consistent with the Harbor Department’s current Lease Management Policy. The lease also includes penalties for not meeting the June 30, 2028 deadline to complete the identified improvements and for identified maintenance and repair issues that go unaddressed.

CONCLUSION
The leaseholder has accepted the City’s terms after negotiations. They are motivated to continue doing business in Morro Bay and carry out the improvements.

ATTACHMENTS

1. Resolution No. 51-25 Approving the Lease Agreement for Crill’s Saltwater Taffy, Inc

2. Lease Agreement for Crill’s Saltwater Taffy, Inc.

RESOLUTION NO. 51-25

RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA
APPROVING A 17-YEAR AND 9-MONTH MASTER LEASE AGREEMENT FOR LEASE SITE 137 BETWEEN THE CITY OF MORRO BAY AND
CRILL’S SALTWATER TAFFY, INC.,
LOCATED AT 1247 EMBARCADERO

T H E C I T Y C O U N C I L
City of Morro Bay, California
WHEREAS, the City of Morro Bay is the lessor of certain properties on the Morro Bay Waterfront described as City Tidelands leases and properties; and WHEREAS, Crill’s Saltwater Taffy (“Tenants”) have been the lessee of Lease Site 137 since the 1970’s, and are tenants in good standing; and WHEREAS, Tenants wish to continue the operation of a candy store and undertake exterior improvements to enhance the overall appearance of the building; and, WHEREAS, Tenants agree to contribute a total of Fifty Thousand Dollars ($50,000) to the City, to be applied toward Harbor capital improvement projects like HarborWalk or public restroom improvements; and;
WHEREAS, in accordance with the City’s Master Lease Policy, the City and Tenants have agreed to a new 17-year and 9-month lease agreement for Lease Site 137 located at 1247 Embarcadero.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Morro Bay, California, as follows:

1. The attached new Master Lease Agreement for Lease Site 137 is hereby approved.

2. The Mayor is hereby authorized to execute said Master Lease Agreement.

PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting thereof held on the 23rd day of September 2025 on the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSE:
______________________________
Carla Wixom, Mayor
ATTEST:

Dana Swanson, City Clerk

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L E A S E
This LEASE is made and entered into by and between the CITY OF MORRO BAY, a municipal corporation of the State of California herein called CITY, and Crill’s Saltwater Taffy, Inc., a California corporation, herein called TENANT. (CITY and TENANT, at times, are referred to herein individually as Party and collectively as Parties)

WITNESSETH
WHEREAS, the State of California granted certain tide and submerged lands located within the CITY limits of CITY to the County of San Luis Obispo and to its successors, being Chapter 1076, Statutes of 1947, as amended by Chapter 413, Statutes of 1955, Chapter 1874, Statutes of 1957, and Chapter 70, Statutes of 1960, first extraordinary session; which Statutes may be amended from time to time by the Legislature of the State of California; all of which Statutes are expressly recognized and agreed to be in full force and effect by the Parties; and WHEREAS, the Parties hereto recognize and agree, on July 17, 1964, CITY succeeded to all of the right, title and interest of the County of San Luis Obispo in and to all of the tide and submerged lands conveyed to said County by the State of California pursuant to the above mentioned acts; and
WHEREAS, judgment has been entered on October 14, 1968, in the case of City of Morro Bay, Plaintiff, versus County of San Luis Obispo, and State of California, Defendants, by the Superior Court of the State of California in and for the County of San Luis Obispo, #30417, adjudging and decreeing, among other things, the title to said tide and submerged lands so conveyed by the State of California to the County of San Luis Obispo in trust, as set forth above, passed automatically to CITY upon the date of its incorporation as a city on the 17th day of July, 1964; and
WHEREAS, TENANT accepts the within Lease with full knowledge there is no warranty of title in and to the within described premises by CITY to TENANT; and WHEREAS, in order to develop and improve Morro Bay Harbor and to assist in carrying out the provisions of the tideland grant as aforesaid, and in order to provide facilities for the accommodation of those using Morro Bay Harbor, CITY desires to lease to TENANT the within described property upon the terms and conditions set forth herein;

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NOW, THEREFORE, in consideration of the covenants to be performed and the rental to be paid by TENANT to CITY, CITY leases to TENANT, and TENANT leases from CITY, all of the following premises (herein collectively referred to as the "Premises") in the CITY of Morro Bay, County of San Luis Obispo, State of California, described as follows:

Lease Site 137
This Premises is delineated on Parcel Map of the CITY of Morro Bay Resolution No. 77- 74, document entitled “Lease Sites Map” dated November 1974, consisting of Thirteen (13) sheets and designated as the official reference document for said Tideland Trust lease sites, adopted on December 9, 1974, by the CITY Council of Morro Bay, San Luis Obispo County, California. A copy of one (1) sheet is attached hereto as Exhibit A and made a part hereof by reference.

Article 1 FIXED TERM
Section 1.01 Term.

The term of this Lease is a period of 17 years and 9 months, commencing October 1, 2025 (the "Commencement Date"). The term of this Lease will terminate without notice on June 30, 2043, unless sooner terminated as herein provided.

Section 1.02 No Extensions.

The term of this Lease will not be extended nor will this Lease be renewed. Requests for continued use of the Premises will be treated as an application for a new lease and will require appropriate application to the CITY with all required supporting information and documents, CITY Council approval and the execution of a new CITY lease, containing the then most current terms, covenants, conditions and rent schedules.

Section 1.03 Hold Over.

If TENANT holds the Premises after the expiration of the term of this Lease with the consent of the CITY, express or implied, then such holding over (in the absence of a written agreement between CITY and TENANT with respect thereto) will be deemed to create a tenancy from month-to-month, terminable on 30-days’ written notice from either Party to the other, at a monthly rental equal to two hundred percent (200%) of the average total Rent per month for the twelve (12) months immediately preceding the expiration of this Lease, and otherwise subject to each and every term, covenant and condition of this Lease.

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Section 1.04 Replacement.

Subject to the next paragraph, as of the Commencement Date, this Lease will extinguish and replace every prior lease between CITY and TENANT respecting the Premises, if any. Any right or interest held by the TENANT pursuant to any existing lease with respect to the Premises, which is not granted pursuant to this Lease, will be extinguished as of the Commencement Date of this Lease.
(Note: the following paragraph to be included only if the lease is associated with a development/redevelopment project on the site)
If on or before ___________, 20__, TENANT does not provide satisfactory evidence, as approved by CITY’S Harbor Director and City Attorney, TENANT has obtained all the financing necessary to commence and complete the Project (as defined in Section 13.__), then (i) this Lease will automatically terminate, without any notice to TENANT, and be of no force and effect and (ii) the lease between CITY and TENANT for the Premises that was in effect prior to this Lease, if any, will be automatically reinstituted and remain in full force and effect subject to all of that lease’s terms and conditions.

Article 2 RENT
Section 2.01 Annual Minimum Rent.

TENANT agrees to pay to CITY a minimum guaranteed annual rental for the use and occupancy of the Premises, in an initial amount of $12,500.00 per year (the "Minimum Rent"), payable in advance and at the option of TENANT either in equal semiannual installments or equal monthly instalments. If paid in equal semiannual installments, then such installments must be on January 1 and July 1 each year during the term of the Lease. If the Commencement Date is other than January 1 or July 1, then TENANT must pay, on the Commencement Date, the proportionate amount of the Minimum Rent payable for the period from the Commencement Date until the next payment date of January 1 or July 1, as the case may be. If the term of the Lease expires on a date other than December 31 or June 30, then TENANT'S final installment of Minimum Rent must be proportionate to the time remaining in the term. If paid in equal monthly installments, then each\ monthly installment must be paid no later than the tenth day of each applicable month. All Rent, including the Minimum Rent and the Percentage Rent, must be paid in lawful money of the United States of America, without offset or deduction and must be paid to CITY at City Hall located at 595 Harbor Street, Morro Bay, California, or at such other place or places CITY may from time to time designate by written notice delivered to TENANT.

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Section 2.02 CPI Adjustment to Annual Minimum Rent.
(1) The Parties agree, as of every July 1 following the Commencement Date (each, a "CPI Adjustment Date"), except as outlined in section 2.03 hereof, the annual Minimum Rent will be adjusted in direct proportion to any upward or downward movement in the Consumer Price Index for January 1, 2025, which is hereby agreed to be 337.508 (Base Index). The percentage adjustment for any given year will be based on the monthly average Index for the calendar year immediately preceding the CPI Adjustment Date as compared with the Base Index.

The Consumer Price Index referred to herein is the Consumer Price Index (all items indexes, all urban consumers) for Los Angeles – Long Beach – Anaheim, California, compiled and published by the United States Department of Labor, Bureau of Labor Statistics, 1982-84 Base Year = 100 (the "Index")
(2) The Annual Minimum Rent will be adjusted as of each CPI Adjustment Date, and will remain in effect as adjusted until the next CPI Adjustment Date. As an illustration only, if the Base Index (Jan. 1, 1999 CPI) is 166.1 and the monthly average CPI for 2000 is 171.6, then the percentage increase is equal to 3.31%. Therefore, the Minimum Rent would be increased by

3.31% as of July 1, 2001, and would continue at that rate through June 30, 2002. (3) If the United States Department of Labor, Bureau of Labor Statistics, ceases to compile and make public the Index as now constituted and issued, but substitutes another index in its place, then said substituted index must be used for the purpose of adjusting the Minimum Rent for the Premises. If the Index is changed so the base year differs from that in effect on the Lease Commencement Date, then the Index must be converted in accordance with the conversion factor published by the United States Department of Labor, Bureau of Labor Statistics.

Section 2.03 Calculation of New Minimum Rent.

At the end of the initial five years and of each five-year period thereafter, a new Minimum Rent will be calculated for the following five-year period (each, a "Subsequent Rental Period") as follows:

A. The Minimum Rent will be subject to adjustment by appraisal as of the fifth anniversary of the Commencement Date and every five years thereafter (each, an "Appraisal Adjustment Date"). CITY, at its own cost and expense, will retain an independent qualified appraiser for determination of the fair market value of the Premises. Not more than nine months prior to each Appraisal Adjustment Date, CITY will provide written notice to TENANT of the pending appraisal and the appraiser selected by the CITY to determine the fair market value of the Premises, excluding fixtures and improvements, unless such are expressly included in the

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description of the leasehold interest created by this Lease. If TENANT does not reject CITY's appraiser in writing and within thirty days after CITY's notice of its determination, then the Minimum Rent for the Subsequent Rental Period will be in the amount determined by CITY as outlined in this Section 2.03. If TENANT rejects CITY's appraiser within 30 days following CITY's notice to TENANT, then within 15 days after such 30-day period, each Party, at its own cost, will select an independent professionally designated appraiser who is a member of the American Institute of Real Estate Appraisers, or the Society of Real Estate Appraisers with a designation of MAI (Member of American Institute), SRPA (Senior Real Estate Analysis), to appraise the fair market value of the Premises. CITY may rely on its original appraisal, or select a new appraiser, at its cost. If a Party does not appoint an appraiser within 15 days after the other Party has given notice of the name of its appraiser, then the single appraiser appointed will be the sole appraiser. Each appraiser will conduct an independent appraisal within 30 days after appointment. If the Parties are unable to agree on the Minimum Rent for the Subsequent Rental Period within 30 days after receiving the appraisal(s), then each Party will select one member of a three-member committee. The two so selected members will select the third member, and this committee will, by majority vote, select one or the other of the appraisals. The Minimum Rent determined on the basis of the selected appraisal will be final and binding and all costs associated with the three-member committee will be paid equally by CITY and TENANT.

B. In the event the appraisal process is not concluded on or before the Appraisal Adjustment Date, the Minimum Rent will be adjusted retroactively to such Appraisal Adjustment Date as set out hereinbelow when said appraisal process is completed.

C. The total Rent payable, including both the Minimum Rent and the Percentage Rent for each year within the applicable previous five-year period, will be averaged to produce the average annual total Rent payable for such previous period.

D. The new Minimum Rent for the five-year period commencing on each Appraisal Adjustment Date will be eight percent of the fair market value of the Premises (as established in paragraph A. above.) The new Minimum Rent will be divided by two to determine the semiannual payments and will be paid by TENANT to CITY on the first of each January and July thereafter, or paid monthly at the option of TENANT. This new Minimum Rent will be adjusted each following year in proportion to any increase in the Consumer Price Index as set out in Section 2.02 of this Lease. The Base Index will be adjusted upon each Calculation of new Minimum Rent as set out in this section so the Base Index for CPI adjustment will be the Consumer Price Index for January 1 of the year of the calculation of new Minimum Rent.

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Section 2.04 Percentage Rent.

A. In addition to the Minimum Rent, TENANT agrees to pay to CITY, at the time and in the manner hereinafter specified, as additional Rent for the use and occupancy of the Premises, a sum equal to five percent (5%) of TENANT'S Gross Sales as hereinafter defined, less the amount of the Minimum Rent paid pursuant to this Lease (the "Percentage Rent").

B. The term "Gross Sales," as used herein, means (subject to the exceptions and authorized deductions as hereinafter set forth), the total selling price and the total gross amount received by TENANT from all rentals, merchandise sold and services rendered in, on or from the Premises by TENANT, its sublessees, licensees, or concessionaires, both for cash and on credit including, but not limited to, rentals of dockage space, leasing and servicing operations and ticket sales, and if on credit whether or not payment be actually made therefore, all charges for services, alterations or repairs made in or upon the Premises; the gross amount received by TENANT for merchandise sold pursuant to orders received in the Premises, though filled elsewhere; and the gross amount received by TENANT from any and all other sources of income derived from the business conducted upon the Premises.

C. Notwithstanding the other provisions of Section 2.04, the term "Gross Sales" does not include the following items, and such items may be deducted from Gross Sales to the extent they have been included therein or have been included in a prior computation of Gross Sales or for which a Percentage Rent has been paid under this Lease to CITY:
(1) Credits and refunds made to customers for merchandise returned or exchanged; (2) Any sales or excise taxes otherwise includable in Gross Sales as defined in this Section because such taxes are part of the total selling price of merchandise or services rendered in, from, or on the Premises, where TENANT must account for and remit the taxes to the government entity or entities by which they are imposed; and (3) With respect to credit card sales, fees retained or withheld by the issuer and/or merchant bank pursuant to TENANT'S credit card acceptance agreement, and (4) Rental payments to TENANT from sublessees whose total gross sales are included in gross sales computations.

D. TENANT ,must keep or cause to be kept full, complete, and accurate records, and books of account in accordance with accepted accounting practices showing the total amount of Gross Sales, as defined herein, made each calendar month in, on or from the Premises.

TENANT must keep said records and books of account within San Luis Obispo County and will notify CITY in advance of their location at all times. Furthermore, TENANT must, at the time of sale and in the presence of the customer, cause the full selling price of each piece of merchandise, each rental received and each service rendered in, on or from the Premises to be

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recorded in a cash register or cash registers that have cumulative totals and are sealed in accordance with standard commercial practices. Said records, books of account and cash register tapes, including any sales tax reports or income tax returns TENANT may be required to furnish any government or governmental agency, and income and bank statements must, at all reasonable times, be open to the inspection of CITY, CITY'S auditor, or other authorized representative or agent of CITY, if necessary. TENANT consents to the release of sales tax information to CITY and on demand will furnish to CITY a copy of the sales tax reports, quarterly reports and any audit reports of sales for confidential internal use of the CITY in determining Gross Sales for TENANT. TENANT consents and authorizes CITY to request such information directly from the State Board of Equalization or other state agency with which sales tax information is filed.

E. By July 31 of each year, TENANT must furnish CITY with a statement, to be certified by TENANT as current, true and accurate, which must set forth the Gross Sales of each department, sublessee, licensee and concession operating in, on or from the Premises for the previous 12 calendar months, ending June 30, just concluded, and the authorized deductions, if any, therefrom; and with it TENANT must pay to CITY the amount of the Percentage Rent, which is due to CITY as shown thereby. If TENANT, at any time, causes an audit of sales of TENANT'S business to be made by a public accountant, then TENANT must furnish CITY with a copy of said audit without cost or expense to CITY. CITY may, once in any twelve-month period, cause an audit of the business of TENANT to be made by a certified public accountant or CITY personnel of CITY'S own selection. TENANT must, upon receiving written notice of CITY'S desire for such an audit, deliver and make available all such books, records and cash register tapes to the certified public accountant or CITY personnel selected by CITY.

Furthermore, TENANT must promptly, on demand, reimburse CITY for the full cost and expense of said audit, if the audit discloses the questioned statement or statements understated Gross Sales by 5 percent or more but less than ten percent. In the event an audit performed at CITY'S request discloses TENANT understated Gross Sales by less than 5 percent, the cost of such audit will be paid by CITY. In the event any audit or other review of records discloses the amounts reported as Gross Sales were understated by TENANT by 10 percent or more, CITY will not only be entitled to recover from TENANT all costs of audit and review, but will also be entitled to recover from TENANT a penalty equal to two times the Percentage Rent due pursuant to this Lease on such unreported amounts. Whenever any audit discloses that Gross Sales were understated by any amount, TENANT must immediately pay the additional Percentage Rent therein shown to be payable by TENANT to CITY, together with interest at the Default Rate thereon, from the date the Percentage Rent was payable until the date paid.

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F. CITY will be entitled at any time within five years after the receipt of any such Percentage Rent payment, to question the sufficiency of the amount thereof or the accuracy of the statement or statements furnished by TENANT to justify the same. For the purpose of enabling CITY to check the accuracy of any such statement or statements, TENANT must, for said period of five years after submission to CITY of any such statement, keep all of TENANT'S records, including sales tax returns, all cash register tapes, income tax returns and income and bank statements and other data which in any way bear upon or are required to establish in detail TENANT'S Gross Sales and any authorized deductions therefrom as shown by any such statements and must, upon request, make the same available to CITY for examination.

Section 2.05 Reimbursements.

If TENANT fails to perform any term or covenant of this Lease, then CITY may, but is not obligated to, perform such term or covenant, and TENANT must reimburse CITY therefore as additional Rent hereunder. As an illustration and not as a limitation, if TENANT fails to procure the insurance required by this Lease, then CITY may, but is not obligated to, obtain such insurance, with the cost of the premiums being due to CITY upon demand as additional Rent.

Section 2.06 Penalty and Interest.
(1) If any Rent is not received within ten days following the date on which the Rent first became due, then TENANT must pay a late penalty of ten percent of the amount of the Rent in addition to the Rent.
(2) In addition to the penalty, TENANT must pay interest at the rate of one percent per month or fraction thereof or the maximum amount permitted by law as of the date this Lease is signed, whichever is greater (the "Default Rate"), on the amount of the Rent, exclusive of the penalty, from the date on which Rent first became delinquent until paid. The term "Rent" includes any sums advanced by the CITY and any unpaid amounts due from TENANT to the CITY.

Article 3 USE OF PREMISES
Section 3.01 Permitted Uses.

The Premises must, during the term of this Lease, be used for the purpose of operating and conducting thereon and therein the uses permitted by, and in compliance with TENANT’S Conditional Use Permit if applicable, or any other use permits approved by CITY in its governmental capacity, as they may be amended from time to time, and for no other purpose. At

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the Commencement Date, such uses include candy making, take-out food and beverages, and retail sales.

Section 3.02 Unauthorized Use.

TENANT agrees to allow only those uses authorized in Section 3.01, hereinabove and any unauthorized use thereof constitutes a breach of this Lease and may, at the option of CITY, terminate this Lease.

Section 3.03 Operation of Business - Hours of Operation.

Failure to actively and diligently conduct the business authorized herein constitutes a breach of this Lease and may, at the option of CITY, terminate this Lease. (1) TENANT must, during the term of this Lease, conduct business of the nature specified in Section 3.01 of this Lease on the Premises in an efficient and diligent manner and keep the Premises open for the conduct of business continuously and without interruption for at least six hours each day of the year, except one day each week and legal holidays. This provision does not apply if the Premises is closed and the business of TENANT is temporarily shut down for a period not to exceed 14 calendar days in any calendar year to make necessary repairs, maintenance or other construction deemed necessary by TENANT. This provision does not apply if the Premises is closed and the business of TENANT is temporarily shut down as authorized or required by the City Manager or on account of strikes, walkouts, or causes beyond the control of TENANT or for not more than three days out of respect to the memory of an officer, employee, or close relative of any officer or employee of TENANT. (2) TENANT must operate TENANT'S business on the Premises with due diligence and efficiency and in like manner as comparable businesses operated in CITY or the coastal area of San Luis Obispo County, so as to produce the maximum amount of Gross Sales and gross receipts from services, which may be produced from TENANT'S business; and TENANT at all times must carry on Premises, a stock or merchandise of such size, character, and quality as is reasonable, designed to produce the maximum return to TENANT, when the sale of merchandise is a permitted use under this Lease.

Section 3.04 Competition.

During the term of this Lease, TENANT must not directly nor indirectly acquire or establish any similar or competing business within a radius of five miles from the location of the Premises; provided, however, that TENANT may, with prior written approval from CITY, own or operate more than one business, whether or not competing and similar, along the Embarcadero

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upon one or more CITY lease sites. The purpose of this section is to prevent and prohibit TENANT from reducing revenue to CITY by diverting business from the operation at the Premises to another similar business owned by TENANT within the CITY, but not upon a CITY lease site from which CITY is paid rent based on Gross Sales.

Section 3.05 Environmental Considerations and Hazardous Materials. (1) TENANT must, at all times, comply with applicable environmental regulations, including, where applicable and practical, government- and industry-adopted environmental best management practices and programs.
(2) TENANT must not transport, use, store, maintain, generate, dispose, release, treat or discharge any "Hazardous Material" (as defined below) upon or about the Premises (such activities being hereafter referred to as "Hazardous Materials Activities"), nor permit TENANT'S employees, agents, or contractors to engage in Hazardous Materials Activities upon or about the Premises, except as allowed by applicable law. The term "Hazardous Material" for purposes hereof means any chemical, substance, material or waste or component thereof which is now or hereafter listed, defined or regulated as a hazardous or toxic chemical, substance, material or waste or component thereof by any federal, state or local governing or regulatory body having jurisdiction, or which would trigger any employee or community "right-to-know" requirements adopted by any such body. All Hazardous Materials Activities at the Premises must be conducted strictly in accordance with all applicable laws and regulations. If TENANT transports, or has transported, any hazardous waste from the Premises, then such transportation must be done only by a contractor duly licensed to haul hazardous waste and only a duly licensed site approved by TENANT'S liability insurer must be used for disposal of that hazardous waste.
(3) TENANT must promptly notify CITY of: (i) any enforcement, cleanup or other regulatory action taken or threatened by any governmental or regulatory authority with respect to the presence of any Hazardous Material on the Premises or the migration thereof from or to other property, (ii) any demands or claims made or threatened by any party against TENANT or the Premises relating to any loss or injury resulting from any Hazardous Material on or from the Premises, and (iii) any matters where TENANT is required by applicable law to give a notice to any governmental or regulatory authority respecting any Hazardous Material on the Premises.

CITY has the right (but not the obligation) to inspect the Premises, to take such remedial action on the Premises, as CITY may deem appropriate, and to join and participate, as a party, in any legal proceedings or actions affecting the Premises initiated in connection with any environmental, health or safety law.

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(4) If any Hazardous Material is released, discharged or disposed of by TENANT or its employees, agents or contractors, on or about the Premises in violation of the foregoing provisions, TENANT must immediately notify CITY. CITY may elect either to take such remedial action as CITY deems appropriate, in which event TENANT must reimburse CITY for all costs thereof within ten days after demand, or direct TENANT to perform such remediation.

If CITY directs TENANT to perform the remediation, then TENANT must immediately take such remedial action, as CITY directs. TENANT must, properly and in compliance with applicable laws, clean up and remove the Hazardous Material from the Premises and any other affected property at TENANT'S expense. If CITY directs TENANT to perform remediation hereunder and if TENANT fails to comply with the provisions of this Section within five days after written notice by CITY, or such shorter time as may be required by applicable law or in order to minimize any hazard to persons or property, then CITY may (but is not be obligated to) arrange for such compliance directly or as TENANT'S agent through contractors or other parties selected by CITY at TENANT'S expense (without limiting CITY'S other remedies under this Lease or applicable law).

Section 3.06 Tidelands Trust.

In addition to the obligations set forth in this Article, TENANT must use and occupy the Premises in strict compliance with the Tidelands Trust purposes, as established by law or interpretation of the California State Lands Commission.

Section 3.07 Compliance with Law.

TENANT must, at no cost to CITY, comply with all of the requirements of all local, municipal, county, state and federal authorities now in force, or which may hereafter be in force, pertaining to the Premises, and faithfully observe in the use of the Premises all local, municipal and county rules, regulations and ordinances and state and federal statutes, rules, regulations and orders now in force or which may hereafter be in force (collectively, "Legal Requirements"); provided, that TENANT will not be required to comply with any Legal Requirement imposed by CITY that would substantially deprive TENANT of a material benefit under this Lease, unless such Legal Requirement has been imposed or required (i)_ by a county, state or federal authority or (ii) to preserve public health and safety and applied to similar businesses within CITY’S jurisdiction.. The judgment of any court of competent jurisdiction, or the admission of TENANT in any action or proceeding against TENANT, whether CITY be a party thereto or not, that TENANT has violated any such Legal Requirement in the use of the Premises will be conclusive of that fact as between CITY and TENANT.

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Section 3.08 Waste or Nuisance.

TENANT must not commit or permit the commission by others of any waste on the Premises; TENANT must not maintain, commit, or permit the maintenance or commission of any nuisance as defined by law on the Premises; and TENANT must not use or permit the use of the Premises for any unlawful purpose.

Section 3.09 Use by CITY.
(1) Subject to TENANT's rights hereunder to possession of the Premises, CITY may grant licenses to, or otherwise authorize, other persons and entities permitting uses of the Morro Bay Harbor.
(2) CITY also retains and reserves for itself, its successors and assigns, all oil, gas, petroleum and other mineral or hydrocarbon substances in and under the lands leased hereby together with right to prospect and extract all such substances.

Article 4 CONSTRUCTION, ALTERATION AND REPAIRS
Section 4.01 Construction Approval.
(1) TENANT must not make or permit any other person to make any alterations or structural additions or structural modifications to the Premises or to any structure thereon or facility appurtenant thereto if the cost thereof exceeds Ten Thousand Dollars ($10,000), without the prior written consent of CITY. The consent to be obtained pursuant to this Section 4.01(1) must be requested from the Harbor Director, or the City’s designee, for CITY. If the Harbor Director or any future successor to the duties of the City’s Harbor Director, or the City’s designee, gives such consent to proceed, then it is understood such consent is given by CITY only in its capacity as the landlord under this Lease and not as the permit-issuing authority.

TENANT remains obligated to obtain any needed building permits and comply with all applicable land use entitlement processes.
(2) Where required by the Morro Bay Municipal Code, California Coastal Act, Corps of Engineers or any other state or federal agency having authority over the proposed project, then all Conditional Use Permits, Concept Plans, Precise Plans, Coastal Development Plans, and any other required plans or permits must be applied for and approved prior to any construction, alteration or repairs.

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Section 4.02 Construction Bond.
(1) Prior to the commencement of any construction the cost of which is greater than the amount of One Hundred Thousand Dollars ($100,000), TENANT must file, with CITY’S City Clerk, a final detailed Civil Engineer's, Registered Architect's or Licensed and Bonded General Contractor's estimate of the cost of construction and installation of improvements on the Premises. Said estimate must be submitted to CITY’S City Engineer for approval. TENANT must file with the City Clerk a faithful performance bond, in a form and issued by a corporate surety company satisfactory to CITY, in an amount satisfactory to CITY, but not in excess of 100% of the final detailed cost estimate, securing the faithful performance of TENANT or its contractor in the completion of said construction.
(2) TENANT must also file with the City Clerk a labor and materials bond, in a form and issued by a corporate surety company satisfactory to CITY, in an amount satisfactory to CITY, but not in excess of 100% of the final detailed cost estimate, securing the payment of all claims for the performance of labor or services on, or the furnishing of materials for, the performance of said construction.
(3) In lieu of the above referenced bonds, TENANT may post cash deposits or may make other mutually satisfactory arrangements to guarantee the completion of construction projects.

In the event the contractor bonds the project, CITY may be named as additional indemnitee to comply with these requirements.

Section 4.03 Mechanics' Liens.

At all times during the term of this Lease, TENANT must keep the Premises and all buildings, installations and other improvements now or hereafter located on the Premises free and clear of all liens and claims of liens for labor, services, materials, supplies, or equipment performed on or furnished to the Premises. TENANT further agrees to, at all times, save CITY free and harmless and indemnify and defend CITY against all claims for labor or materials in connection with any improvement, repairs, or alterations on the Premises, and the cost of defending against such claims, including reasonable attorneys' fees. If TENANT fails to pay and discharge or cause the Premises to be released from such liens or claim of liens within 10 days after the filing of such lien or levy, then TENANT must, upon written notification, immediately deposit with CITY a bond conditioned for payment in full of all claims on which said lien or levy has been filed. Such bond must be acknowledged by TENANT as principal and by a company or corporation, licensed by the Insurance Commissioner of the State of California to transact the business of a fidelity and surety insurance company as surety. The beneficiary of any security instrument, which instrument is on record with CITY, must have the right to file a claim for

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payment from such a bond on behalf of TENANT. CITY has the right to post and keep posted on the Premises notices of non-responsibility and any other notices that may be provided by law or which CITY may deem proper for the protection of CITY and Premises from such liens.

TENANT must give CITY notice at least 20 days prior to commencement of any work on the Premises to afford CITY the opportunity to post such notices.

Section 4.04 Ownership of Improvements.

The Parties agree CITY has the option and right to require TENANT to remove all buildings, structures, installations, improvements of any kind or other property belonging to or placed upon the Premises by TENANT at the termination of this Lease, however occurring, providing CITY gives notice, in writing, no later than thirty days prior to the termination of this Lease, of its decision to require such improvements be removed. The Parties agree, if CITY exercises its option, then at the termination of this Lease, however occurring, TENANT will have sixty days thereafter to remove all buildings, structures, facilities, installations, improvements and other property belonging to TENANT from the Premises. If CITY exercises such option and TENANT fails to remove all such improvements and other property within sixty days after the termination of this Lease, then CITY has the right to have any or all such improvements and other property removed at the expense of TENANT. If CITY does not exercise its option to remove (or require the removal of) the improvements and other property, then title to such improvements and other property vests in CITY and TENANT must not remove same.

Article 5 LEASEHOLD MORTGAGES
Tenant must not mortgage, securitize or hypothecate the leasehold interest created by this Lease, in whole or any part, without the prior written approval of CITY, as evidenced by a resolution of the City Council of CITY.

CITY will not approve financing related to or using that leasehold interest created by this Lease as collateral, unless such financing is (i) to install or construct capital improvements on the Premises, (ii) to install or construct CITY-requested public improvements or provide other benefits in the Tidelands Trust area, the latter as approved by the Harbor Director or (iii) to reduce the interest rate of existing, approved debt secured by leasehold interest created by this Lease without redeeming any equity in the leasehold interest.

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Article 6 REPAIRS, MAINTENANCE AND RESTORATION
Section 6.01 Maintenance by TENANT.
(A) At all times during the term of this Lease, TENANT must, at TENANT'S own cost and expense, keep and maintain, in good order and repair and in a safe and “broom clean” condition, all improvements now or hereafter on the Premises, including any public spaces, common areas, rights-of-way, sidewalks and other areas or spaces, even if not on the Premises but utilized as part of TENANT’S business operations. Furthermore, TENANT must, at TENANT'S own cost and expense, maintain at all times during the term of this Lease the whole of the Premises and other areas utilized for TENANT’S business operations as described above in a clean, sanitary, neat and orderly “broom clean” condition. CITY may, at the sole option of CITY, but not obligation,, clean, clear, maintain or repair the Premises, any improvements thereon or areas used by TENANT, as described above, at TENANT'S cost and expense, in the event TENANT fails to clean, clear maintain or make repairs, in accordance with this Section to the satisfaction of CITY, after 15-days' written notice to TENANT from CITY of CITY'S intent to exercise this option.
(B) In addition to, and not exclusive of, any other remedies available to CITY under law or equity, the parties agree that in the event TENANT fails to comply with any terms of maintenance or repair requirements under this Section 6.01 or Section 6.04, CITY’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties’ inability to predict impacts to environment, CITY sales tax or Rent revenues, health or safety matters, and other relevant factors. Within the (15) days following written notice as described in this section, TENANT will either correct the deficiencies or have a schedule for repairs approved by the Habor Director in writing. It is therefore agreed that the TENANT may be required by CITY to pay to the CITY, in accordance with the following schedule for each and every calendar day of delay beyond fifteen (15) days following written notice from CITY or exceedance of the schedule for repair of such maintenance or repair deficiencies, the following sums due for each day’s delay:
 The sum of one hundred dollars ($100.00) per day for the first sixty (60) days.  The sum of two hundred dollars ($200.00) per day for the following sixty (60) days.
 The sum of three hundred dollars ($300.00) per day for the following sixty (60) days.

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(C) If maintenance and repair deficiencies are not corrected within one hundred and eighty days (180), TENANT may be declared in default of this Lease. Nothing in this Section shall limit or waive any legal rights or remedies available to the CITY; the remedies available to CITY in this Section are not exclusive but are cumulative with and in addition to all remedies now or hereafter allowed by law or elsewhere provided in this Lease.

Section 6.02 Legal Requirements.

At all times during the term of this Lease, TENANT, at no cost to CITY, must:
(1) Make all alterations, additions, or repairs to the Premises or the improvements or facilities on the Premises required by any Legal Requirements (as defined in Section 3.07, above);
(2) Observe and comply with all Legal Requirements respecting the Premises or the improvements or facilities located thereon;
(3) Obtain all required permits pursuant to the Morro Bay Municipal Code or State law prior to the initiation of any repair or maintenance activity; and (4) Indemnify, defend and hold harmless CITY and the property of CITY, including the Premises, from any and all liability, loss, damages, fines, penalties, claims and actions resulting from TENANT'S failure to comply with and perform the requirements of this section.

Section 6.03 Failure to Repair.

In the event failure to repair results in a hazardous or unsafe condition, CITY has the right and option, but not the obligation, to close and prohibit access to the unsafe portion of the Premises until such repairs are completed and accomplished and the Premises rendered safe for public use. In addition, if TENANT fails to repair any hazardous or unsafe condition within ten days after written notice thereof from CITY, then CITY has the right, but not the obligation, to perform such repair at TENANT'S expense. TENANT must reimburse CITY for any such repair undertaken by CITY, promptly upon CITY'S demand, as additional Rent. Failure by CITY to enforce any of the provisions of this Article does not constitute a waiver of these provisions and CITY may, at any time, enforce all of the provisions of this Article, requiring all necessary repairs, rebuilding or replacement.

Section 6.04 Inspection by CITY.

CITY or CITY'S agents, representatives, or employees may enter the Premises at all reasonable times for the purpose of inspecting the Premises to determine whether TENANT is

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complying with the terms of this Lease and for the purpose of doing other lawful acts that may be necessary to protect CITY'S interest in the Premises under this Lease or to perform CITY'S duties under this Lease or in its governmental capacity.

Section 6.05 TENANT'S Duty to Restore Premises.
(1) Except as provided in Section 6.07 below, if at any time during this Lease, any improvements now or hereafter on the Premises are destroyed in whole or in part by the elements, or any other cause not the fault of TENANT or CITY, then this Lease will continue in full force and effect and TENANT, at TENANT'S own cost and expense, must repair and restore the damaged or destroyed improvement(s) according to the original plan thereof or according to such modified plans therefor as are approved in writing by CITY. The work of permitting, repair and restoration must be (i) commenced by TENANT within 180 days after the damage or destruction occurs, (ii) pursued with due diligence, and (iii) completed not later than 12 full calendar months after the work is commenced, unless the Parties mutually agree, in writing, to an extension. In all other respects, the work of repair and restoration must be done in accordance with the requirements for construction work on the Premises set forth in Article 4 of this Lease.

Any failure by TENANT either to commence or to complete repair and restoration as required by this Section 6.06 constitutes a material default under this Lease. (2) Any and all insurance proceeds that become payable at any time during the term of this Lease because of damage to or destruction of any improvements on the Premises will be paid to TENANT and applied by TENANT toward the cost of repairing and restoring the damaged or destroyed improvements in the manner required by this Section 6.06, or, if this Lease is terminated, then applied as provided in Section 6.07. Except as set forth in Section 6.08 below, TENANT'S obligation to restore pursuant to this Section exist whether or not funds are available from insurance proceeds.

Section 6.06 Termination of Lease for Destruction.
(1) Notwithstanding the provisions of Section 6.06 of this Lease, TENANT has the option of terminating this Lease as provided in this Section 6.07 if:
(a) During the last 15 years of the term of this Lease, any improvement now or hereafter on the Premises are so damaged or destroyed by the elements or any cause, not the fault of TENANT or CITY, the improvement cannot be repaired and restored as required by Section 6.06 of this Lease at a cost not exceeding 35 percent of the cost of replacing all improvements if they had been totally destroyed at the time of such damage; or

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(b) During the last 10 years of the term of this Lease, any improvement now or hereafter on the Premises are so damaged or destroyed by the elements or any cause, not the fault of TENANT or CITY, the improvement cannot be repaired and restored as required by Section 6.06 of this Lease at a cost not exceeding 15 percent) of the cost of replacing all improvements if they had been totally destroyed at the time of such damage. (2) TENANT may exercise its right to terminate pursuant to this Section 6.07 by providing written notice to CITY within 180 days following damage or destruction as described herein. Such termination is effective on the last day of the calendar month following the month in which TENANT provides its notice.
(3) If TENANT fails to commence or complete repair and restoration as required by Section 6.06, then CITY has all rights and remedies with respect to TENANT’S default, including, but not limited to, termination of this Lease pursuant to Article 11. (4) If this Lease is terminated as a result of damage or destruction, then any insurance proceeds received with respect to the improvements will be applied or distributed in the following order:
(a) first, to the demolition of the improvements and removal of all demolition debris; then
(b) to any accrued and unpaid Rent as of the effective date of the termination; then
(c) to each Lender under a Leasehold Encumbrance, in order of lien priority, an amount not to exceed the amount due under such Leasehold Encumbrance; then (d) to CITY, an amount equal to the present value, as of the date of termination, of the total Minimum Rent for the remainder of the Term; then (e) the remaining proceeds, if any, to TENANT.

Section 6.07 Destruction Due to Risk Not Covered by Insurance.

Notwithstanding anything to the contrary in Section 6.06 of this Lease, TENANT has the right to terminate this Lease, at any time, if the improvements on the Premises are damaged or destroyed by a casualty for which TENANT is not required under this Lease to carry insurance and the cost to repair or restore such improvements exceeds 50 percent of the fair market value of all the improvements on the Premises immediately prior to the damage or destruction.

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Article 7 INDEMNITY AND INSURANCE
Section 7.01 Indemnity Agreement.
(1) TENANT hereby agrees to indemnify, defend and hold harmless CITY, and the property of CITY (including the Premises and any improvements now or hereafter on the Premises), and CITY'S officers, officials, employees and volunteers from any and all liability, claims, loss, damages, and expenses, including reasonable attorney’s fees and litigation expenses, resulting from TENANT'S occupation and use of the Premises or any negligent act or omission of the TENANT or any of its officers, subtenants, employees, contractors, invitees or anyone for whom TENANT may be liable, specifically including, without limitation, any liability, claim, loss, damage, or expense arising by reason of:
(a) The death or injury of any person, including TENANT or any person who is an officer, employee, contractor, subtenant, invitee or agent of TENANT, or by reason of the damage to or destruction of any property, including property owned by TENANT or by any person who is an employee or agent of TENANT, from any cause whatever while such person or property is in or on the Premises or in any way connected with the Premises or with any of the improvements or personal property on the Premises;
(b) The death or injury of any person, including TENANT or any person who is an officer, employee, contractor, subtenant, invitee or agent of TENANT, or by reason of the damage to or destruction of any property, including property owned by TENANT or any person who is an officer, employee, contractor, subtenant, invitee or agent of TENANT, caused or allegedly caused by either (i) the condition of the Premises or any improvement placed on the Premises by TENANT, or (ii) any act or omission on the Premises by TENANT or any person in, on, or about the Premises with or without the permission and consent of TENANT; (c) Any work performed on the Premises or materials furnished to the Premises at the insistence or request of TENANT or any person or entity acting for or on behalf of TENANT;
(d) TENANT'S failure to perform any provision of this Lease or to comply with any Legal Requirement imposed on TENANT or the Premises. (2) TENANT'S obligations pursuant to this Section to indemnify and hold harmless do not extend to any liability, claim, loss, damage or expense arising from CITY'S active negligence or willful misconduct.

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Section 7.02 Liability Insurance.

During the term of this Lease, TENANT must maintain at its cost Commercial General Liability insurance with coverages as described in CITY”S HARBOR DEPARTMENT LEASE MANAGEMENT POLICY, as may be updated or changed from time to time at the sole discretion of the CITY. Such coverages must insure against claims for bodily injury (including death), property damage, contractual liability, personal injury and advertising injury occurring on the Premises or from operations located in any part of the Premises. Such insurance must afford protection in amounts no less than One Million Dollars ($1,000,000) per occurrence for bodily injury, personal injury and property damage; provided, that if insurance with a general aggregate limit is used, then either the general aggregate limit will apply separately to the Premises or the general aggregate limit will be twice the occurrence limit stated in this Section. All liability insurance carried by TENANT hereunder will name CITY, its officers, officials, employees and volunteers as additional insureds, and be primary insurance with respect to such additional insureds. TENANT must include all its subtenants as insureds under TENANT's liability policies or furnish separate certificates and endorsements for each subtenant. All coverages for subtenants must comply with all requirements of this Article Seven.

Section 7.03 Worker's Compensation.

TENANT must maintain at TENANT'S own expense and keep in full force and effect during the term of this Lease, Worker's Compensation Insurance as provided by law. Said insurance must contain a waiver of subrogation rights against CITY. TENANT must also maintain employer's liability insurance with minimum coverage of $1,000,000 per accident for bodily injury or disease.

Section 7.04 Property Insurance.

TENANT must, at its cost, at all times during the term of this Lease keep all improvements and other structures on the Premises, as well as any and all additions, improvements and betterments thereto, insured for 100 percent) of their full replacement cost with no co-insurance provision against loss or destruction by the perils covered by "all risk" (excluding earthquake) property damage insurance policies. Any loss coverage under such insurance must be payable to TENANT, CITY, and any Lender under a Leasehold Encumbrance approved pursuant to Article 5 of this Lease, as their interests may appear, and such proceeds must be used and applied in the manner required by Article 6 of this Lease.

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Section 7.05 Additional Coverage.

TENANT must also maintain, at its sole expense, the insurance described in this Section 7.05.
(1) If TENANT has (or is required by any Legal Requirement to have) a liquor license and is selling or distributing alcoholic beverages on the Premises, then TENANT must maintain liquor liability coverage in appropriate amounts. TENANT must require any subtenant who has (or is required by any Legal Requirement to have) a liquor license and who is selling or distributing alcoholic beverages on the Premises, to maintain such coverage. (2) TENANT must maintain "all risk" (excluding earthquake) property damage insurance covering TENANT's personal property located at the Premises, in amounts not less than the full replacement value of such personal property. CITY has no interest in the proceeds of such insurance.
(3) TENANT must obtain and maintain any additional insurance coverages CITY may reasonably require. As illustration only and not as a limitation, in appropriate circumstances such additional insurance may include increased general liability limits, business interruption coverage, business automobile liability, boiler and machinery insurance or builder's risk insurance. TENANT, however, is not required to maintain additional coverages that are in excess of those typically maintained by similarly situated tenants in the Morro Bay area.

Section 7.06 General Requirements.

Except as specifically provided to the contrary, all the insurance required pursuant to this Article Seven is subject to the requirements of this Section 7.06. (1) Maintenance of proper insurance coverage is a material element of this Lease and failure to maintain or renew coverage or to provide evidence of coverage and/or renewal may be treated by the CITY as a material breach of contract. TENANT must forward CITY”S specifications and forms to TENANT’S insurance agent for compliance. (2) CITY may, at any time, require TENANT to increase the minimum coverage limits for insurance required by this Lease, but every such increase must be reasonable under the circumstances.
(3) All policies must be issued by insurance companies authorized to issue such insurance in California, with an A.M. Best's rating of no less than A:VII. (4) Any deductibles or self-insured retentions must be declared to and approved by CITY. At the option of CITY, either: (i) the insurer must reduce or eliminate such deductibles

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or self-insured retentions as respects CITY, its officers, officials, employees and volunteers or (ii) TENANT must provide a financial guarantee satisfactory to CITY guaranteeing payment of losses and related investigations, claim administration and defense expenses. (5) Each insurance policy required by this Lease must be endorsed to state coverage will not be cancelled or reduced, except after 30-days' prior written notice by certified mail, return receipt requested, has been given to CITY.
(6) TENANT must furnish CITY with certificates and amendatory endorsements effecting the coverage required by this Lease. The endorsements must be on forms provided by CITY or on other than CITY's forms; provided, that those endorsements or policies conform to the requirements. All certificates and endorsements are to be received and approved by CITY before use of the Premises, and promptly following any renewal or replacement. CITY reserves the right, at any time, to require complete, certified copies of all required insurance policies, including endorsements effecting the coverage required by these specifications. (7) TENANT'S insurance coverage must be primary insurance as respects CITY, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by CITY, its officers, officials, employees, or volunteers will be excess of TENANT'S insurance and will not contribute with it.

Section 7.07 No Subrogation.

TENANT agrees, in the event of loss due to any of the perils for which it has agreed to provide insurance, TENANT will look solely to its insurance for recovery. TENANT hereby grants to the CITY, on behalf of any insurer providing insurance to either TENANT or CITY with respect to TENANT'S occupancy of the Premises, a waiver of any rights to subrogation, which any such insurer of TENANT may acquire against CITY by virtue of the payment of any loss under such insurance. Each insurance policy required under this Lease, including those insuring TENANT against claims, expense, or liability for injury to persons or property, must provide the insurer will not acquire by subrogation any right to recovery.

Section 7.08 TENANT'S Waiver.

TENANT hereby waives any right of recovery against CITY for each claim, expense, liability, or business interruption, or other loss, except where caused by CITY'S active negligence or willful misconduct. TENANT agrees, to the extent TENANT fails to acquire insurance, TENANT will not have any claim against CITY for any loss that results from a risk or peril that would have been included in such insurance.

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Section 7.09 Insurance Not a Limit.

The insurance requirements of this Article 7 are independent of, and do not limit or modify, TENANT'S indemnification, defense, hold harmless and other obligations pursuant to this Lease.

Article 8 TAXES AND FEES
Section 8.01 TENANT to Pay Taxes.

TENANT must pay, before delinquency, all taxes and assessments levied upon or assessed to TENANT on the Premises by reason of this Lease or of any equipment, appliances, improvement, or other development of any nature whatsoever, erected, installed, or maintained by TENANT or by reason of the business or other activity of TENANT upon or in connection with the Premises. TENANT must pay all possessory interest taxes applicable to the Premises.

Section 8.02 TENANT to Pay License and Permit Fees.

TENANT must pay any fees imposed by Legal Requirements for licenses or permits for any business or activities including construction by TENANT upon the Premises.

Section 8.03 Utilities.

TENANT must (i) pay, or cause to be paid and (ii) hold harmless CITY and the property of CITY, including the Premises, from all charges for the furnishing of gas, water, electricity, telecommunication service, and for other public utilities to the Premises during the term of this Lease and for the removal of garbage and rubbish from the Premises during the term of this Lease.

Article 9 CONDEMNATION
Section 9.01 Total Condemnation.

If title and possession to all of the Premises is permanently taken for any public or quasipublic use under any statute, or by the right of eminent domain, then this Lease will be considered terminated on the date that possession of the Premises is taken; and both CITY and TENANT will thereafter be released from all obligations, including Rent, all of which will be prorated to the date of termination, except those specified in Section 9.02 of this Lease.

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Section 9.02 Condemnation Award.

Any compensation or damages awarded or payable because of the permanent taking of all or any portion of the Premises by eminent domain will be allocated between CITY and TENANT as follows:
(1) All compensation or damages awarded or payable for the taking by eminent domain of any land that is part of the Premises will be paid to and be the sole property of CITY free and clear of any claim of TENANT or any person claiming rights to the Premises through or under TENANT.
(2) All compensation or damages awarded or payable which is specifically attributed by the taking party to the "good will" of TENANT'S business will be paid to and be the sole property of TENANT.
(3) All compensation or damages awarded or payable because of any improvements constructed or located on the portion of the Premises taken by eminent domain where only a portion of the Premises is taken by eminent domain, and TENANT is not entitled to or does not terminate this Lease, will be applied in the manner specified in Section 9.04 toward the replacement of such improvements with equivalent new improvements on the remaining portions of the Premises.
(4) All compensation or damages awarded or payable because of any improvements constructed or located on the portion of the Premises taken by eminent domain where this Lease is terminated because of the taking by eminent domain, whether all or only a portion of the Premises is taken by eminent domain, will be allocated between CITY and TENANT as follows:
(a) That percentage of the compensation or damages awarded or payable because of the improvements that equals the percentage of the full term of this Lease that has, at the time of the taking, not expired will belong to and be the sole property of TENANT. (b) That percentage of the compensation or damages awarded or payable because of the improvements that equals the percentage of the full term of this Lease that has, at the time of the taking, expired will belong to and be the sole property of CITY. (c) The term "time of taking," as used in this Section, means 12:01 a.m. of the date the agency or entity exercising the eminent domain power, takes title to or the date it takes physical possession of the portion of the Premises, whichever first occurs. (5) Any severance damages awarded or payable because only a portion of the Premises is taken by eminent domain will be the sole and separate property of CITY.

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Section 9.03 Termination for Partial Taking.

If, during the term of this Lease, title and possession of only a portion of the Premises is taken for any public or quasi-public use under any statute, or by right of eminent domain, then TENANT may, at TENANT'S option, terminate this Lease by serving written notice of termination on CITY within 90 days after TENANT has been deprived of actual physical possession of the portion of the Premises taken for such public use. This Lease will terminate on the first day of the calendar month following the calendar month in which the notice of termination described in this section is served on CITY. On termination of this Lease, pursuant to this Article, all subleases and subtenancies in or on the Premises or any portion of the Premises created by TENANT under this Lease will also terminate and the Premises must be delivered to CITY free and clear of all such subleases and subtenancies; provided, however, that CITY may, at CITY'S option, by mailing written notice to a subtenant allow any subtenant to attorn to CITY and continue such subtenant's occupancy on the Premises as a TENANT of CITY. On termination of this Lease pursuant to this section, however, both CITY and TENANT will be released from all obligations under this Lease, except those specified in Section 9.02 of this Lease.

Section 9.04 Rent Abatement for Partial Taking.

If, during the term of this Lease, title and possession of only a portion of the Premises is taken under the power of eminent domain by any public or quasi-public agency or entity and TENANT does not terminate this Lease, then this Lease will terminate as to the portion of the Premises taken under eminent domain on the date actual physical possession of the portion taken by eminent domain is taken by the agency or entity exercising the eminent domain power.

Furthermore, the Rent payable under this Lease will, as of that time be reduced in the same proportion of the Premises taken by eminent domain bears to the full value of the Premises at that time; provided however, that TENANT will make a good faith effort to replace any improvements or facilities with equivalent new facilities on the remaining portion of the Premises and do all other acts at TENANT'S own cost and expense required by the eminent domain taking to make the remaining portion of the Premises fit for the use specified in this Lease.

Section 9.05 Conveyance in Lieu of Eminent Domain.

A voluntary conveyance by CITY, with the consent of TENANT, of title to all or a portion of the Premises to a public or quasi-public agency or entity in lieu of and under threat by such agency or entity to take the same by eminent domain proceedings will be considered a

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taking of title to all or such portion of the Premises under the power of eminent domain subject to the provisions of this Article.

Section 9.06 Temporary Taking.

If the possession of the Premises or any portion thereof are taken under the power of eminent domain by any public or quasi-public agency or entity for a limited period not extending beyond the term of this Lease, then this Lease will not terminate (except as provided in this Section 9.06) and TENANT must continue to perform all its obligations hereunder, except only to the extent TENANT is prevented from performing such obligations by reason of such taking.

TENANT will be entitled to receive the entire amount of compensation or damages awarded because of such temporary taking. If a temporary taking extends for more than 36 months, then TENANT will have the right to terminate this Lease, and TENANT will be entitled to receive, out of the compensation or damages awarded because of such temporary taking, the amount that is attributable to the period of time up until the effective date of TENANT'S termination of this Lease.

Article 10 ASSIGNMENT AND SUBLEASING
Section 10.01 No Assignment Without CITY'S Consent.

Except as provided in this Article 10, TENANT must not assign or otherwise transfer this Lease, any right or interest in this Lease, or any right or interest in the Premises or any of the improvements that may now or hereafter be constructed or installed on the Premises without the express written consent of CITY first had and obtained. Any assignment or transfer by TENANT without the prior written consent of CITY, as evidenced by a resolution of the City Council, whether it be voluntary or involuntary, by operation of law or otherwise, is void and may, at the option of CITY, terminate this Lease. A consent by CITY to one assignment will not be deemed to be a consent to any subsequent assignment of this Lease by TENANT. CITY will not unreasonably nor arbitrarily withhold its approval to the assignment or transfer of this Lease to an assignee who is financially reliable and qualified to conduct the business for which this Lease was granted. It is mutually agreed TENANT'S qualifications are a part of the consideration for granting of this Lease and said party does hereby agree to maintain active control and supervision of the operation conducted on the Premises.

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Section 10.02 Change of Ownership as Assignment.

For purposes of this Article 10, the following transactions will be deemed to be assignments or transfers:
(1) If TENANT is a partnership or limited liability company:
(a) A change in ownership effected voluntarily, involuntarily, or by operation of law, within a 12-month period, of 25 percent or more of the partners or members or 25 percent or more of the partnership or membership interests; or
(b) The dissolution of the partnership or limited liability company without its immediate reconstitution.
(2) If TENANT is a closely held corporation (i.e., one whose stock is not publicly held and not traded through an exchange or over the counter):
(a) The sale or other transfer, within a 12-month period, of more than an aggregate of 25 percent of the voting shares of TENANT (other than to immediate family members by reason of gift or death); or
(b) The dissolution, merger, consolidation, or other reorganization of TENANT.

Section 10.03 Application for Assignment.

A condition of an assignment is TENANT must file with CITY an application to assign its leasehold interest prepared by the prospective assignee. Concurrently with filing the application, TENANT must pay a reasonable fee associated with the cost of processing said application, in cash or certified or cashier's check to enable CITY adequately to investigate the proposed assignee's qualifications, financial reliability and suitability as a permitted assignee.

CITY is not be required to account for the use of the sum paid. If the proposed assignee's net worth, financial reliability and qualifications on the date of assignment are not sufficient to reasonably guarantee successful operation of the Premises in compliance with all applicable CITY, County, State and federal requirements, then CITY may withhold approval of the assignment or condition it upon TENANT'S guarantee of such assignee's obligations hereunder for such period as CITY deems advisable. Net worth means the amount by which the total of all assets exceed the total of all liabilities as determined in accordance with general accepted accounting principles as approved by CITY'S auditor, or other authorized representative or agent.

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Section 10.04 Probate Transfer of Assignment.

If TENANT is an individual, nothing herein contained will prevent the transfer of this Lease by trust, will, or by operation of law under the intestacy provisions of the California Probate Code as it may be amended from time to time. Probate sale of the leasehold interest will not be permitted without the consent of the CITY, evidenced by a City Council resolution, first had and obtained.

Section 10.05 No Sublease Without CITY'S Consent.

TENANT must not sublease the whole nor any part of the Premises, or license, permit, or otherwise allow any other person (the employees of TENANT excepted) to occupy or use the Premises, or any portion thereof, without the prior written consent of CITY’s Harbor Director, or any future successor to the duties of the City’s Harbor Director. The process for obtaining that consent will not begin until TENANT has filed an application to sublease and paid a reasonable fee, as determined by CITY, associated with the cost of processing the application. A consent to one subletting, occupation, licensing or use will not be deemed to be a consent to any subsequent subletting, occupation, licensing or use by another person. Any sublease or license without CITY'S written consent is void, and may, at CITY'S option, terminate this Lease. CITY will not unreasonably nor arbitrarily withhold its consent to sublet to one who is qualified and financially reliable. CITY'S consent to any occupation, use, or licensing will be in CITY'S sole and absolute discretion. Notwithstanding any provisions herein to the contrary, the terms "assignment," "subletting," "occupation," or "use," are not to be construed or interpreted to mean or include the temporary, short-term renting or leasing of boat slips, motel, hotel, or apartment accommodations, if any, on the Premises.

Section 10.06 Subtenant Subject to Lease Terms.

Any and all subleases must be expressly made subject to all the terms, covenants, and conditions of this Lease. In no event will the term of any sublease extend beyond the term of this Lease. Subject to Section 10.09, termination of this Lease prior to the expiration of this Lease term also terminates any and all subleases. A breach of the terms of this Lease by a subtenant constitutes a breach on the part of TENANT and subjects both the subtenant and TENANT to all the remedies provided to CITY herein and by law. Failure by any subtenant to report Gross Sales or to pay Percentage Rent due from subtenant constitutes a breach of this Lease. TENANT hereby agrees to and does guarantee payment of such Percentage Rent due by a subtenant under the terms of this lease.

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Section 10.07 Consent to Sublease Agreement.

Prior to any consent by CITY to any sublease hereof, TENANT, CITY and any subtenant must have executed the CITY’S Consent to Sublease Agreement making CITY a third party beneficiary, whereby the subtenant agrees to be bound by all of the terms, covenants and conditions of this Lease. Further, it is agreed by TENANT any default by the subtenant of any of the terms, covenants and conditions of this Lease will be a violations by TENANT of this Lease and all remedies of CITY for such violation, including termination of this Lease, may immediately be enforceable by CITY against TENANT. TENANT must apply any and all monies received from any subtenant first to the payment of obligations of the subtenant to CITY.

Section 10.08 TENANT and Guarantor Remain Liable.

Prior to approval by CITY to any sublease hereof, TENANT must agree to be primarily and jointly and severally liable to CITY for all obligations due CITY by any subtenant, including the payment of rents; and TENANT must agree CITY may proceed directly against TENANT for any obligation owed to CITY by the subtenant. If this Lease is guaranteed, then neither the sublease nor CITY'S approval thereof will release the guarantor from its obligations pursuant to the guaranty.

Section 10.09 Nondisturbance.

On the terms set forth below, CITY may enter into agreements with subtenants establishing, in the event of any termination of this Lease prior to the expiration date, CITY will not terminate or otherwise disturb the rights of the subtenant under such sublease, but will instead honor such sublease as if that sublease had been entered into directly between CITY and such subtenant, conditioned upon such subtenant's agreement to attorn to CITY and full performance of all obligations under the sublease in question ("Non-Disturbance Agreement").

CITY agrees to execute a Non-Disturbance Agreement in connection with a particular sublease; provided, that Tenant provides CITY with a copy of the sublease, and the Non-Disturbance Agreement is customary in form and substance and otherwise reasonably acceptable to CITY.

Article 11 DEFAULT AND TERMINATION
Section 11.01 Abandonment by TENANT.

If TENANT breaches this Lease and abandon all or any part of the Premises prior to the scheduled expiration of the term of this Lease, then CITY may continue this Lease in effect by not terminating TENANT'S right to possession of the Premises, in which event CITY may, at its

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option, enforce all CITY'S rights and remedies under this Lease including the right to recover the Rent specified in this Lease as it becomes due under this Lease.

Section 11.02 Termination for Breach by TENANT.

All covenants and agreements contained in this Lease are declared to be conditions to this Lease and to the term hereby demised to TENANT. If TENANT fails to perform any covenant, condition, or agreement contained in this Lease, except for payment of any Rent or other monetary amount due, and such failure is not cured within 30 days after written notice thereof is served on TENANT, then CITY may terminate this Lease immediately, and in the event of such termination, TENANT will have no further rights hereunder and TENANT must thereupon forthwith remove from the Premises and will have no further right or claim thereto and CITY will immediately thereupon have the right to re-enter and take possession of the Premises, subject only to appropriate legal process.

Section 11.03 Termination for Failure to Pay Rent.

If any payment of Rent is not made as herein provided and such failure to pay is not cured within three days after written notice thereof is served on the TENANT, then CITY will have the option to immediately terminate this Lease; and in the event of such termination, TENANT will have no further right or claim thereto and CITY will immediately thereupon have the right to re-enter and take possession of the Premises, subject only to appropriate legal process.

Section 11.04 Lender May Cure Default.

CITY hereby affords the lender under any Leasehold Encumbrance of record with CITY the right to cure any default by TENANT of the covenants, conditions, or agreements hereof, as provided in Article 5 of this Lease.

Section 11.05 Damages for Breach.

If TENANT defaults in the performance of any covenant, condition or agreement contained in this Lease and the default be incurable or not be cured within the time period set forth hereinabove, then CITY may terminate this Lease and:
(1) Bring an action to recover from TENANT:
(a) The worth at the time of award of the unpaid Rent which had been earned at the time of termination of the Lease;

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(b) The worth at the time of award of the amount by which the unpaid Rent, which would have been earned after termination of the Lease until the time of award exceeds the amount of rental loss that TENANT proves could have been reasonably avoided; (c) The worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of rental loss that TENANT proves could be reasonably avoided; and
(d) Any other amount necessary to compensate CITY for all detriment proximately caused by TENANT'S failure to perform its obligations under this Lease; and (2) Bring an action, in addition to or in lieu of the action described in subparagraph (1) of this Section, to re-enter and regain possession of the Premises in the manner provided by the laws of unlawful detainer of the State of California then in effect.

Section 11.06 Cumulative Remedies.

The remedies available to CITY in this Article are not exclusive, but are cumulative with and in addition to all remedies now or hereafter allowed by law or elsewhere provided in this Lease.

Section 11.07 Waiver of Breach.

The waiver by CITY of any breach by TENANT of any of the provisions of this Lease does not constitute a continuing waiver or a waiver of any subsequent breach by TENANT either of the same or a different provision of this Lease.

Section 11.08 Surrender of Premises.

On expiration or sooner termination of this Lease, TENANT must surrender the Premises, and, subject to Section 4.04, all improvements in or on the Premises, and all facilities in any way appertaining to the Premises, to CITY in good, safe, and clean condition, reasonable wear and tear excepted.

Article 12 MISCELLANEOUS
Section 12.01 Notices.

Any and all notice or demands by or from CITY to TENANT, or TENANT to CITY, must be in writing. They must be served either personally, or by registered or certified mail.

Any notice or demand to CITY must be given to:

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Harbor Director
1275 Embarcadero Road
Morro Bay, CA 93442
with a copy to:

City Manager of the City of Morro Bay
City Hall
595 Harbor Street
Morro Bay, CA 93442
Any notice or demand to TENANT must be given at:

Crill’s Saltwater Taffy, Inc.
1247 Embarcadero Road
Morro Bay, CA 93442
Such addresses may be changed by written notice by either Party to the other Party.

Section 12.02 Governing Law and Jurisdiction.

This Lease, and all matters relating to this Lease, are governed by the laws of the State of California in force at the time any need for interpretation of this Lease or any decision concerning this Lease arises. CITY and TENANT consent to exclusive personal and subject matter jurisdiction in the Superior Court of the State of California in and for the county where the Premises are located, and each Party waives any claim such court is not a convenient forum.

Each Party hereby specifically waives the provisions of California Code of Civil Procedure Section 394, and any successor statute thereto.

Section 12.03 Binding on Successors.

Subject to the provisions herein relating to assignment and subletting, each and all of the terms, conditions, and agreements herein contained will be binding upon and inure to the benefit of the successors and assigns of any and all of the Parties; and all of the Parties hereto are jointly and severally liable hereunder.

Section 12.04 Partial Invalidity.

If any provision of this Lease is held by a court of competent jurisdiction to be either invalid, void, or unenforceable, then the remaining provisions of this Lease will remain in full force and effect unimpaired by the holding.

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Section 12.05 Sole and Only Agreement.

Subject to the provisions of the second paragraph of Section 1.04 (used only if second paragraph of that section is used), (i) this Lease, including all exhibits incorporated by reference, constitutes the sole and only agreement between CITY and TENANT respecting the Premises and the leasing of the Premises to TENANT and (ii) any other agreements or representations respecting the Premises and their leasing to TENANT by CITY, which are not expressly set forth in this Lease, are null and void. The lease terms herein specified correctly set forth the obligations of CITY and TENANT as of the date of this Lease.[NOTE: See 12.07] Section 12.06 Modification.

This Lease can only be modified, amended or altered pursuant to a written amendment executed by the Mayor and attested to by City Clerk, pursuant to prior City Council approval.

Notwithstanding City Council approval, no amendment will become effective until it is in fact executed by the Mayor and attested to by City Clerk and approved as to form by the City Attorney (or designee). TENANT understands this Lease cannot be modified, amended or altered by oral statements by any person representing CITY, including the Mayor and City Clerk.

TENANT specifically agrees not to rely on oral statements, purported oral waivers, or purported oral modifications and agrees not to rely upon purported written modifications unless they meet the requirements of this Section. If the title of any person authorized to act for CITY under this Lease is changed during the term of this Lease, then the person who succeeds to substantially the same responsibilities with respect to CITY will have the authority to act for CITY under this Lease.

Section 12.07 Time of Essence.

Time is expressly declared to be the essence of this Lease.

Section 12.08 Memorandum of Lease for Recording.

CITY and TENANT agree, at the request of either at any time during the term of this Lease, to execute a Memorandum of Lease or "short form" of this Lease, which shall describe the Parties, set forth a description of the Premises, specify the term of this Lease, and incorporate this Lease by reference.

Section 12.09 Force Majeure.

If either Party hereto is delayed or hindered in or prevented from the performance of any act required hereunder by reason of a strike, lock-out, labor trouble, inability to procure

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materials, failure of power, governmental moratorium, riot, insurrection, war, pandemic or other reason of a like nature not the fault of the Party delaying in performing work or doing any act required under the terms of this Lease, then performance and doing of such act will be excused for the period of such delay. The Parties understand and agree, the foregoing will not extend any period of time for the payment of Rent or other sums payable by either Party or any period of time for the written exercise of an option or right by either Party.

Article 13 SPECIAL PROVISIONS PECULIAR TO THIS LEASE SITE The following provisions apply to this Lease site only:

Section 13.01 Requirement to Cost-Share the City’s Future HarborWalk Project and North T-Pier Restrooms.

TENANT is responsible for a portion of the CITY’S anticipated costs for the HarborWalk and/or North T-Pier Restroom projects currently envisioned by the CITY on or near the Premises, in the amount of $25,000, due on the commencement date. TENANT shall also contribute an additional $25,000 to the CITY for a portion of CITY’S costs for the HarborWalk and/or North T-Pier Restroom projects on or near the Premises pursuant to an agreed upon payment plan with the City which TENANT shall establish within sixty (60) days from execution of this Lease and which must account for CPI increases for any payment plan that extends beyond six months from the commencement date. CITY may construct these projects, or any other future Harbor capital improvement projects on or near the premises that may be directed by the City COUNCIL, at any time at the sole discretion of CITY. The funding will be held in a Harbor Improvement Cost-Sharing fund to be used when the CITY constructs the Harborwalk and/or restrooms, or any other future Harbor capital improvement projects directed by the City COUNCIL. TENANT shall be solely responsible for any other sidewalk or entry work TENANT desires to complete on TENANT’S premises in excess of the HarborWalk.

Failure by TENANT to make any of the payments provided in this section shall result in immediate termination of the Lease and surrender of the Premises.

Section 13.02 Facade Improvements.

TENANT shall, within a timeframe reasonably agreed upon with the CITY following the execution of this Lease, prepare and submit to the CITY for approval a comprehensive Façade Improvement Plan for TENANT’S business premises. The plan shall include, but is not limited to, enhancements such as installation of decorative elements (e.g., flower boxes), redesign and replacement of menu displays, upgrades to exterior lighting, and improvements to trash

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enclosures to ensure an attractive and well-maintained appearance. TENANT shall be responsible for implementing the approved Façade Improvement Plan at TENANT’S sole cost and expense and shall maintain the improvements in good condition throughout the Lease term.

Section 13.03 Exterior and Interior Improvements.
(1) CITY and TENANT agree TENANT will construct improvements to the Premises as outlined in the TENANT’S proposal (Exhibit B). Improvements specific to the Lease Premises include:

A. Chain-link trash enclosure with privacy slats
B. Exterior of building
C. Exterior and interior painting
D. Windows
E. Flooring
F. Counter tops and shelves
(2) TENANT shall complete the Improvements specific to the Premises by June 20, 2028 (3) Liquidated Damages: If work is not completed in strict compliance with Sections

13.03 (1) (2) of this Lease, it is understood, acknowledged and agreed that the CITY will suffer damage. It is therefore agreed that the TENANT and its sureties shall pay to the CITY the sum of $100.00 for each and every calendar day of delay beyond the completion date set in this Lease..

TENANT expressly understands, acknowledges and agrees that such liquidated damages can and shall be imposed if the TENANT does not make the identified improvements by the completion date. If the CITY accepts work or makes any payment under this Lease after a default by reason of delays, the acceptance of such work and/or payment(s) shall in no respect constitute a waiver or modification of any provisions regarding Improvement deadlines, a completion schedule, or the accrual of liquidated damages. This Section does not exclude recovery of damages under the default provisions of this Lease and is expressly in addition to the City’s ability to seek other legal or equitable damages. To the extent required by Government Code section 4215, TENANT shall not be assessed liquidated damages for delay in completion of the work when such delay was caused by the failure of the CITY or owner of a utility to provide for removal or relocation of utility facilities.

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EXECUTED on ________________, 2025, at________________________ County, California.

CITY OF MORRO BAY TENANT
_________________________________
, MAYOR
By: ________________________________

By: ________________________________
ATTEST:
_________________________________
, CITY CLERK
APPROVED AS TO FORM:
_______________________________________
, CITY ATTORNEY

City of Morro Bay
01181.0024/656492.1 JWP A-1

EXHIBIT A

COPY OF PARCEL MAP

City of Morro Bay
01181.0024/656492.1 JWP A-2

EXHIBIT B
CRILL’S SALTWATER TAFFY PROPOSAL

City of Morro Bay
01181.0024/656492.1 JWP

L E A S E
by and between
the CITY OF MORRO BAY
("CITY")
and
CRILL’S SALTWATER TAFFY, INC.
("TENANT")

City of Morro Bay
01181.0024/656492.1 JWP -iTABLE OF CONTENTS
Article 1 FIXED TERM.............................................................................................................2 Section 1.01 Term..............................................................................................2 Section 1.02 No Extensions. ..............................................................................2 Section 1.03 Hold Over......................................................................................2 Section 1.04 Replacement..................................................................................3 Article 2 RENT..........................................................................................................................3 Section 2.01 Annual Minimum Rent. ................................................................3 Section 2.02 CPI Adjustment to Annual Minimum Rent. .................................4 Section 2.03 Calculation of New Minimum Rent..............................................4 Section 2.04 Percentage Rent. ...........................................................................6 Section 2.05 Reimbursements............................................................................8 Section 2.06 Penalty and Interest.......................................................................8 Article 3 USE OF PREMISES...................................................................................................8 Section 3.01 Permitted Uses. .............................................................................8 Section 3.02 Unauthorized Use..........................................................................9 Section 3.03 Operation of Business - Hours of Operation.................................9 Section 3.04 Competition...................................................................................9 Section 3.05 Environmental Considerations and Hazardous Materials...........10 Section 3.06 Tidelands Trust. ..........................................................................11 Section 3.07 Compliance with Law.................................................................11 Section 3.08 Waste or Nuisance. .....................................................................12 Section 3.09 Use by CITY...............................................................................12 Article 4 CONSTRUCTION, ALTERATION AND REPAIRS .............................................12 Section 4.01 Construction Approval................................................................12 Section 4.02 Construction Bond. .....................................................................13

City of Morro Bay
01181.0024/656492.1 JWP -iiSection 4.03 Mechanics' Liens.........................................................................13 Section 4.04 Ownership of Improvements.......................................................14 Article 5 LEASEHOLD MORTGAGES .................................................................................14 Article 6 REPAIRS, MAINTENANCE AND RESTORATION ............................................15 Section 6.01 Maintenance by TENANT..........................................................15 Section 6.02 Seawalls and Revetment. ............Error! Bookmark not defined.

Section 6.03 Legal Requirements. ...................................................................16 Section 6.04 Failure to Repair. ........................................................................16 Section 6.05 Inspection by CITY.....................................................................16 Section 6.06 TENANT'S Duty to Restore Premises........................................17 Section 6.07 Termination of Lease for Destruction.........................................17 Section 6.08 Destruction Due to Risk Not Covered by Insurance...................18 Article 7 INDEMNITY AND INSURANCE ..........................................................................19 Section 7.01 Indemnity Agreement. ................................................................19 Section 7.02 Liability Insurance. .....................................................................20 Section 7.03 Worker's Compensation..............................................................20 Section 7.04 Property Insurance. .....................................................................20 Section 7.05 Additional Coverage. ..................................................................21 Section 7.06 General Requirements.................................................................21 Section 7.07 No Subrogation. ..........................................................................22 Section 7.08 TENANT'S Waiver.....................................................................22 Section 7.09 Insurance Not a Limit. ................................................................23 Article 8 TAXES AND FEES..................................................................................................23 Section 8.01 TENANT to Pay Taxes...............................................................23 Section 8.02 TENANT to Pay License and Permit Fees. ................................23 Section 8.03 Utilities........................................................................................23

City of Morro Bay
01181.0024/656492.1 JWP -iiiArticle 9 CONDEMNATION..................................................................................................23 Section 9.01 Total Condemnation....................................................................23 Section 9.02 Condemnation Award. ................................................................24 Section 9.03 Termination for Partial Taking. ..................................................25 Section 9.04 Rent Abatement for Partial Taking. ............................................25 Section 9.05 Conveyance in Lieu of Eminent Domain....................................25 Section 9.06 Temporary Taking. .....................................................................26 Article 10 ASSIGNMENT AND SUBLEASING .....................................................................26 Section 10.01 No Assignment Without CITY'S Consent. .................................26 Section 10.02 Change of Ownership as Assignment. ........................................27 Section 10.03 Application for Assignment........................................................27 Section 10.04 Probate Transfer of Assignment. ................................................28 Section 10.05 No Sublease Without CITY'S Consent.......................................28 Section 10.06 Subtenant Subject to Lease Terms..............................................28 Section 10.07 Consent to Sublease Agreement. ................................................29 Section 10.08 TENANT and Guarantor Remain Liable....................................29 Section 10.09 Nondisturbance. ..........................................................................29 Article 11 DEFAULT AND TERMINATION..........................................................................29 Section 11.01 Abandonment by TENANT........................................................29 Section 11.02 Termination for Breach by TENANT.........................................30 Section 11.03 Termination for Failure to Pay Rent. ..........................................30 Section 11.04 Lender May Cure Default. ..........................................................30 Section 11.05 Damages for Breach....................................................................30 Section 11.06 Cumulative Remedies. ................................................................31 Section 11.07 Waiver of Breach. .......................................................................31 Section 11.08 Surrender of Premises. ................................................................31

City of Morro Bay
01181.0024/656492.1 JWP -ivArticle 12 MISCELLANEOUS .................................................................................................31 Section 12.01 Notices. .......................................................................................31 Section 12.02 Governing Law and Jurisdiction.................................................32 Section 12.03 Binding on Successors. ...............................................................32 Section 12.04 Partial Invalidity..........................................................................32 Section 12.05 Sole and Only Agreement...........................................................33 Section 12.06 Modification................................................................................33 Section 12.07 Time of Essence..........................................................................33 Section 12.08 Memorandum of Lease for Recording........................................33 Section 12.09 Force Majeure. ............................................................................33 Article 13 SPECIAL PROVISIONS PECULIAR TO THIS LEASE SITE.................................34 Section 13.01 Requirement to Cost-Share the City’s Future HarborWalk Project and North T-Pier Restrooms. .................................................................................34 Section 13.02 Facade Improvements. ................................................................34 Section 13.03 Exterior and Interior Improvements............................................34

City of Morro Bay -Crill’s 2025
01181.0024/656492.1 JWP

Prepared By: EC____ Dept Review: _EC____
City Manager Review: ____AL__ City Attorney Review:

BS
Staff Report
TO: Honorable Mayor and Councilmembers DATE: September 12, 2025 FROM: Emily Conrad, Finance Director
SUBJECT: Fourth Quarter Investment Report (period ending June 30, 2025) for Fiscal Year (FY) 2024-25

RECOMMENDED ACTION
Receive the attached Fourth Quarter Investment Report (period ending June 30, 2025) for FY 2024-25.

FISCAL IMPACT
There is no fiscal impact associated with this recommendation.

DISCUSSION
The Fourth Quarter Investment Report for FY 2024-25 is summarized below:
(1) Par Value is the face value of investments.
(2) Market Value is the amount in which investments could be sold. (3) WAM is the Weighted Average Maturity, the average time a security will mature.

The City’s investments earned a year-to-date total interest of $3,463,542 in FY2024-25, an increase of $521,661 over prior fiscal year which had total interest earnings of $2,941,881. The level of investment remained steady year over year. It was an increased cash balance that allowed greater interest to be earned, despite the slight decrease in interest rates through the 2024-25 fiscal year. Cash balances grew due to a combination of interest earnings and decreased capital spending.

AGENDA NO: 6.h
MEETING DATE: September 23, 2025
Cash and Pooled Investment Portfolio at June 30, 2025
Institution Par Value¹ Market
Value² WAM³
Mechanics Bank (interest earning accounts) 34,146,873 34,146,873 0 LAIF 39,733,341 39,733,341 0
Zions Bancorporation (CDs and Treasury Notes) 11,934,000 11,995,088 112 Subtotal Pooled Investment Portfolio 85,814,214 85,922,915 Mechanics Bank (operating/non-interest earning) 4,280,859 4,280,859 0 TOTAL IN TREASURY 90,095,073 90,203,774

The Mechanics Bank interest rate ended the year slightly higher than LAIF by 0.12%, though the rate did decrease slightly from 4.70% on July 1, 2024 to 4.52% on June 30, 2025. The LAIF interest rate decreased as well from 4.48% to 4.40%.

Next fiscal year, six certificates of deposit (CDs) will mature, and staff will explore investment options. The matured instruments will either be replaced by new CDs or the funds reinvested in additional treasury bonds. The instruments will be selected based on the more favorable rate of return over time. Staff will monitor interest rates closely to maximize earnings.

CONCLUSION
Staff recommends that the City Council receive the Fourth Quarter Investment Report (period ending June 30, 2025) for Fiscal Year 2024-25.

ATTACHMENT(S)

1. Fourth Quarter Investment Report for FY 2024-25 (period ending June 30, 2025)

LIQUID INSTRUMENTS

INVESTMENT

OR CUSIP PAR PURCHASE MARKET ACCRUED MARKET W/ INTEREST MATURITY DAYS TO NUMBER INSTITUTION VALUE PRICE VALUE INCOME ACCRUED INC. RATE DATE MATURITY LAIF LOCAL AGENCY INVESTMENT FUND 39,733,341 39,733,341 39,780,954 435,320 40,216,274 4.40% DAILY 1 POOLED MONEY INVESTMENT ACCOUNT:
39,733,341 39,733,341 39,780,954 435,320 40,216,274
MM MECHANICS BANK - MONEY MARKET 29,319,290 29,319,290 29,319,290 - 29,319,290 4.52% DAILY 1 SWEEP MECHANICS BANK - SWEEP 4,827,584 4,827,584 4,827,584 - 4,827,584 0.01% DAILY 1 MONEY MARKET ACCOUNT: 34,146,873 34,146,873 34,146,873 - 34,146,873 SUBTOTAL LIQUID INSTRUMENTS: 73,880,214 73,880,214 73,927,827 435,320 74,363,147

NON-LIQUID INSTRUMENTS

INVESTMENT

OR CUSIP PAR PURCHASE MARKET ACCRUED MARKET W/ INTEREST MATURITY DAYS TO NUMBER INSTITUTION VALUE PRICE VALUE INCOME ACCRUED INC. RATE DATE MATURITY 795451BQ5 Zions Bank-Sallie Mae 245,000 245,000 244,952 3,994 248,946 3.40% 7/7/2025 7 20825WAZ3 Zions Bank-Connexus Cred. Union 249,000 249,000 248,711 - 248,711 3.40% 8/15/2025 46 27002YFE1 Zions Bank-Eaglebank - Bethesda 249,000 249,000 248,643 270 248,913 3.30% 8/18/2025 49 30960QAV9 Zions Bank-Farmers Insurance Group 249,000 249,000 249,534 126 249,659 4.60% 1/26/2026 210 90352RDA0 Zions Bank-US Alliance FCU Rye NY 249,000 249,000 250,424 128 250,552 4.70% 5/26/2026 330 39573LEC8 Zions Bank-Greenstate Credit Unions 248,000 248,000 249,896 966 250,862 4.90% 6/1/2026 336 254673Q33 Zions Bank-Discover Bank Greenwood 245,000 245,000 243,185 3,038 246,223 3.35% 8/17/2026 413 22282XAF7 Zions Bank-Covantage Cr Un Antigo WI 247,000 247,000 247,352 1,067 248,419 4.15% 8/24/2026 420 130162AX8 Zions Bank-California Cr Un Glendale 243,000 243,000 246,060 4,218 250,278 5.15% 8/28/2026 424 444425AC6 Zions Bank-Hughes Fed Cr Un Tuscon Az 248,000 248,000 251,232 35 251,267 5.15% 8/31/2026 427 065427BG0 Zions Bank-Bank Utah Ogden Utah 244,000 244,000 244,351 4,248 248,599 4.10% 1/26/2027 575 856285G21 Zions Bank-State Bank of India NY 250,000 250,000 241,317 1,690 243,007 1.75% 2/9/2027 589 25844MBN7 Zions Bank-Dort Finl Cr Un Grand Blanc 246,000 246,000 249,935 3,041 252,977 5.00% 2/26/2027 606 41138NAB4 Zions Bank-Hapo Comnty Cr Un Richland 248,000 248,000 251,959 985 252,944 5.00% 2/26/2027 606 02589ABQ4 Zions Bank-American Express Natl 247,000 247,000 238,955 1,529 240,485 2.00% 3/9/2027 617 14042TFJ1 Zions Bank-Capital One 246,000 246,000 240,531 1,419 241,951 2.70% 4/13/2027 652 19058RAE1 Zions Bank-Coastal1 Cr Un Pawtucket RI 249,000 249,000 249,991 - 249,991 4.15% 1/31/2028 945 05580A4P6 Zions Bank-BMW Bk North Amer Utah 244,000 244,000 250,602 1,430 252,031 4.90% 11/17/2028 1,236 61690D5J3 Zions Bank-Morgan Stanley Bk NA 244,000 244,000 245,694 938 246,631 4.25% 5/29/2029 1,429 61776NSR5 Zions Bank-Morgan Stanley Private Bk 244,000 244,000 245,694 938 246,631 4.25% 5/29/2029 1,429

CERTIFICATES OF DEPOSIT
4,934,000 4,934,000 4,939,018 30,059 4,969,077
3133EP5S0 Zions Bank-Federal Farm Cr Bks 3,000,000 2,988,009 3,032,154 35,615 3,067,769 4.25% 3/20/2028 994 3133EP3B9 Zions Bank-Federal Farm Cr Bks 2,000,000 1,989,780 2,014,462 31,571 2,046,034 4.13% 2/13/2029 1,324

FEDERAL FARM CREDIT
5,000,000 4,977,789 5,046,617 67,186 5,113,803
91282CKA8 Zions Bank-US Treasury Note 2,000,000 1,984,850 2,009,453 30,767 2,040,220 4.13% 2/15/2027 595 U.S. TREASURY NOTES & BONDS
2,000,000 1,984,850 2,009,453 30,767 2,040,220
SUBTOTAL NON-LIQUID INSTRUMENTS: 11,934,000 11,896,639 11,995,088 128,012 12,123,100 85,814,214 85,776,853 85,922,915 563,332 86,486,247
6/30/2025 6/30/2025
567,914 3,463,542 86.131% 4.153% 113

QUARTERLY

ACCRUED

INTEREST AS
OF

CITY OF MORRO BAY

QUARTERLY PORTFOLIO PERFORMANCE

WEIGHTE
D

AVERAGE

DAYS TO

MATURITY

WEIGHTED

AVERAGE

RATE OF

EARNINGS
6/30/2025
YTD

RECORDED

INTEREST AS
OF
% OF LIQUID

PORTFOLIO

HOLDINGS
TOTAL LIQUID AND NON-LIQUID INVESTMENTS:

CITY OF MORRO BAY

QUARTERLY PORTFOLIO PERFORMANCE
6/30/2025

QUARTERLY PERFORMANCE COMPARISON - PORTFOLIO VS LAIF
6/30/2024 9/30/2024 12/31/2024 3/31/2025 6/30/2025
Portfolio - weighted average rate of earnings 4.270% 4.428% 4.303% 4.298% 4.153% LAIF - quarterly earnings rate 4.550% 4.710% 4.620% 4.480% 4.400% Portfolio over -(under) LAIF -0.280% -0.282% -0.317% -0.182% -0.247%

PUBLIC AGENCY RETIREMENT SERVICES (PARS) - LEAGALLY RESTRICTED INVESTMENTS EXCLUDED FROM WEIGHTED PORTFOLIO PARS OPEB Public Agency Retirement Services 2,785,710 7.81 DAILY DAILY 1 PARS Pension Trust Public Agency Retirement Services 3,186,418 6.49 DAILY DAILY 1 5,972,128

CHANGES FROM PRIOR QUARTERLY REPORT

MATURED INSTRUMENTS PAR PURCHASE INTEREST PURCHASE MATURITY

CERTIFICATES OF DEPOSIT VALUE PRICE RATE DATE DATE
33715LFH8 Zions Bank-First Technology FCU 248,000 248,000 5.050% 5/26/2023 5/27/2025 53052LAT6 Zions Bank-Liberty FCU Evansville 248,000 248,000 5.000% 5/24/2023 5/27/2025 U.S. OBLIGATIONS
TOTAL MATURED VALUE 496,000

NEW INSTRUMENTS PURCHASE INTEREST PURCHASE MATURITY

CERTIFICATES OF DEPOSIT PRICE RATE DATE DATE
61690D5J3 Zions Bank-Morgan Stanley Bk NA 244,000 244,000 4.250% 5/28/2025 5/29/2029 61776NSR5 Zions Bank-Morgan Stanley Private Bk 244,000 244,000 4.250% 5/28/2025 5/29/2029 U.S. OBLIGATIONS
TOTAL NEW INSTRUMENTS 488,000
Portfolio holdings as of the quarter ended 06/30/2025, are in compliance with the current Investment Policy. With 86.131% of the portfolio held in liquid instruments, allowing the City to meet cash flow needs for at least six months, in compliance with the investment policy approved by the City Council in June 2025. The investment policy will be updated annually as required by state law.

Prepared By: _AS/EC_ Dept Review: ______
City Manager Review: __AL___ City Attorney Review: _BS___ Staff Report
TO: Honorable Mayor and City Council DATE: September 15, 2025 FROM: Airlin Singewald, Community Development Director
Emily Conrad, Finance Director
SUBJECT: Continued Public Hearing and Adoption of Resolution No. 47-25 Updating and Establishing Various User and Regulatory Fees

RECOMMENDED ACTION
Continue the public hearing, receive the presentation of the user and regulatory fees, including Council member comments and staff responses, and adopt Resolution No. 47-25 updating and establishing various user and regulatory fees, including any changes agreed upon by Council majority during the meeting.

FISCAL IMPACTS
The fee study commissioned by the City has identified approximately $390,000 in potential additional cost recovery across the General Fund, Harbor Operating Fund, Water Operating Fund, and Sewer Operating Fund. The proposed fees in the study (Attachment 6) in most cases represent the full cost to deliver services, but no more than the full cost, and thereby decrease the City’s subsidy of private discretionary activity.

If the City Council adopts the staff recommendation to phase in the majority of proposed Planning and Building fee increases over 2.5 years, the cost recovery is estimated as:
 $80,000 in FY 2025-26 (January 1 - June 30, 2025)
 $280,000 in FY 2026-27
 $390,000 in FY 2027-28

BACKGROUND
Morro Bay Municipal Code Chapter 3.34, Master Fee Schedule, stipulates how the City will amend the Master Fee Schedule. Relevant sections of that chapter are included below for reference.

3.34.010 – Established
The City Master Fee Schedule is established, which shall set forth a consolidated listing of fees as fixed and adopted by the City Council, in accordance with all applicable provisions of state and city laws.

AGENDA NO: 7.a
MEETING DATE: September 23, 2025

3.34.020 – Fee Revisions and Reviews
Any fees included in the Master Fee Schedule may be reviewed and revised annually by the City Council. The City’s cost of providing the services shall be computed and reflected in these fees. The fees shall then be enumerated and the revised Master Fee Schedule adopted by resolution of the City Council.

Recovering the costs of providing fee-related services directly influences the City’s fiscal health and increases the City’s ability to meet the service level expectations of fee payers. The services for which the City imposes a user or regulatory fee typically derive from an individual person or entity’s action, request, or behavior. Therefore, except in cases where there is an overwhelming public benefit generated by the City’s involvement in individual action, a fee for service ensures that the individual bears most, if not all, of the cost incurred by the City to provide that service. When a fee targets “100% or full cost recovery,” the individual is bearing the entirety of the cost. When a fee targets less than full cost recovery, another City revenue source – in most cases, the General Fund – subsidizes the individualized activity. In other words, all taxpayers bear the costs for the City providing services to the benefit of a specific individual.

California cities regularly conduct fee studies to validate fee amounts imposed and to optimize the overall portfolio of revenues available to the municipality to fund its services. Industry practice and fiscal conditions in the state have led most cities to link cost recovery for services of individual action, cause, or benefit to that same individual through user fee revenue, relieving the agency’s general revenues as much as possible for use toward services of broader community benefit, such as public safety services and other administrative services.

Each fiscal year, the City reviews and updates its Master Fee Schedule and periodically undertakes a comprehensive fee study to assess the full cost of providing services and to recommend appropriate fee adjustments. In 2022, the City engaged a consultant (ClearSource Financial Consulting) to conduct its first comprehensive user fee study since 2019.

On August 12, 2025, the City Council reviewed the user fee study. During the meeting, staff and the City’s consultant presented the study findings and proposed updates to the fee schedule and responded to questions from the Council. The discussion primarily centered on the proposed Planning and Building fees. Council members raised questions regarding building permit requirements, the methodology used to calculate the fees, and the potential impact of fee increases on the City’s housing production and economic development objectives. While Council members expressed concern about increasing Planning and Building fees to cost recovery levels, there seemed to be consensus on phasing fee increases over time.

The Council voted unanimously to continue the item to September 23, 2025 to allow the Council additional time to provide staff with a list of their specific comments, questions, and concerns regarding the proposed fee schedule update.

Since the August 12, 2025 City Council meeting, staff met individually with each Council member to discuss the proposed fee updates. After reviewing Council member comments during and after the August 12 Council meeting, staff has revised the Planning and Building sections of the proposed Master Fee Schedule. Staff’s updated recommendations are described in detail in Attachments 1-4 and summarized below.

The following discussion includes a list of Council member comments (with staff responses) that were

brought up at the August 12, 2025 Council meeting. Staff are prepared to address these comments and questions at the City Council meeting.

DISCUSSION
Administrative / City Clerk Fees
Council members had the following questions and comments regarding this section of the proposed fee schedule:

Comment: Council member Landrum proposed not increasing the appeal fees for non-land use administrative decisions and short-term rental permit decisions and proposed possibly reducing them.

Staff response: The staff time to process an appeal for non-land use administrative decisions translates to $3,438 per appeal. The proposed fee increase of $8, from $336 to $344, equates to 10 percent cost recovery. The staff time to process an appeal for short-term rental permit decisions translates to $632 per appeal. The proposed fee increase of $296, from $336 to $632, would result in 100 percent cost recovery. The City’s short-term rental ordinance requires an independent third-party to conduct the hearing when an applicant appeals a City decision to deny an STR permit. The higher appeal fee for STR permits reflects the City’s direct cost of hiring a hearing officer to conduct an appeal hearing per the ordinance.

Finance / Administrative Services Fees
Council members had the following questions and comments regarding this section of the proposed fee schedule:

Comment: Council member Eckles proposed maintaining business license fees at current rates.

Staff response: There are two business license processing fees in this category, one for new licenses and one for renewal licenses.
a. New license fee: The user fee study indicated this fee is below actual cost by $28 and recommended increasing the fee to $65. The fee is based on a total processing time of 0.5 hours, and the actual time it currently takes to process a new business license from application submission to delivery of the tax certificate can be two hours, sometimes longer. Staff anticipate the processing will eventually take an average of

0.5 hours once software issues have been resolved and staff have been fully onboarded, ideally by July 2026. Until that time, both the current fee of $37 and the proposed fee of $65 are lower than the actual cost of providing services, therefore staff recommends adopting this fee at $65.
b. Renewal license fee: The user fee study indicated this fee is $15 below actual cost and recommended increasing the fee from $18 to $32. The fee is based on a total processing time of 0.25 hours, and the actual time it currently takes to process a renewal business license from application submission to delivery of the tax certificate is the same as processing a new application due to the implementation of in-house services. Staff anticipate renewal processing will eventually take an average of 0.25 hours and will certainly be less than two hours upon completion of a full year cycle of

in-house administration. Until that time, both the current fee of $18 and the proposed fee of $32 are significantly lower than the actual cost of providing services, therefore staff recommends adopting this fee at $32.

Building Fees
Summary
The proposed Building Fees are presented in three sections:

A. Fees for Commonly Requested and Minor Miscellaneous Building Permit Types.

B. Permit and Plan Review Fee for New Buildings, Additions, Tenant Improvements, and Residential Remodels, and Combined Mechanical, Electrical, and/or Plumbing Permits.

C. Other Fees.

Refer to Attachments 2-4 for a complete and detailed listing of these fees, along with staff’s recommendations for modifying each fee.

A. Fees for Commonly Requested and Minor Miscellaneous Building Permit Types Recommendation: Review new information, which shows an estimate of the current fees for each permit type, and vote to approve Section A of the proposed Building fee schedule, as shown in Attachment 2.

Alternative: Direct staff to update the fee schedule to base all plan check and inspection fees on valuation, as with the current schedule. This doesn’t apply to rooftop solar which is set at a flat rate by State law.

This section introduces a new addition to the Master Fee Schedule and a revised method for calculating building permit inspection and plan check fees for smaller, frequently requested permit types. Instead of using valuation-based fees, this section adopts flat-rate fees for common permit categories. This approach, which is used by many jurisdictions, offers several advantages:
 It’s easier to understand, giving contractors and homeowners clearer expectations regarding permit costs for typical projects.
 It ensures consistent pricing for similar permit types, regardless of their estimated value.

Under a valuation-based system, two nearly identical projects could incur different fees due to differing valuations.

Council members had the following questions and comments regarding this section of the proposed fee schedule:

Comment: Council members questioned whether building permits were required for these smaller project types, such as a water heater change out.

Staff response: The City of Morro Bay is mandated by State law to enforce the California Building Code. The proposed fee schedule is not increasing or otherwise changing State mandated building permit requirements. The City’s building inspector works on behalf of the

residents of Morro Bay to ensure that contractors are correctly performing work to code. This oversight is a vital public service that helps safeguard both life and property.

Comment: Council members were concerned that this section of the fee study states “varies” instead of listing the City’s current fee for each permit type in the table.

Staff response: The fee study lists “varies” for the current fee because it is currently based on project valuation. As previously noted, the existing fee schedule calculates all building permit inspection and plan check fees using a valuation-based method. To assist the Council in its decision-making, staff estimated an average project valuation for each permit type and calculated an approximate current fee based on those assumptions. While the analysis indicates that the proposed flat-rate fees are generally in line with current fees, this comparison should be interpreted with caution, as the current fees can vary significantly depending on the specific project valuation.

Comment: Council member Eckles proposed reducing the Rooftop Solar Permit fee to promote renewable energy.

Staff response: This fee is not proposed to increase and is already capped by State law (AB 1124) to promote Statewide renewable energy goals. The State law caps fees, meaning the Council would have the legal authority to lower the current fee. This would have fiscal impacts, however, especially considering that rooftop solar is a common City permit type. The Council could also consider this change at a future date in the context of a broader discussion about the cost and benefits of various options to promote renewable energy.

Summary
This section of the proposed Master Fee Schedule is to make the City’s building permit fee calculations more user-friendly and consistent. The proposed flat-rate fees do not change or expand State mandated building permit requirements and are comparable to the City’s current valuationbased fees for an average project of the same type.

If the Council is concerned about identifying permit requirements and fees for specific project types, the Council could eliminate this section of the proposed Master Fee Schedule and continue calculating all building permit inspection and plan check fees based on valuation; except for solar, which must be flat rate per State law.

B. Permit and Plan Review Fee for New Buildings, Additions, Tenant Improvements, and Residential Remodels, and Combined Mechanical, Electrical, and/or Plumbing Permits Recommendation: Phase cost recovery of identified Building permit fees over 2.5 years, with equal increases on 1/1/2026, 7/1/2026, and 7/1/2027 as shown in Attachment 3.

Alternative: The Council could provide alternative direction to staff regarding Building fees. Setting fees below cost recovery will affect the City’s ability to maintain existing service levels.

This section provides the City’s standard method for calculating building permit plan check and inspection fees based on project valuation. This is the section used to calculate fees for new buildings, additions, tenant improvements, residential remodels, and combined mechanical, electrical, and/or plumbing permits.

The primary Council comment regarding this section of the proposed fee schedule centered on the overall cost of permit fees and concerns about discouraging new development in Morro Bay. Council members had the following questions and comments regarding this section of the proposed fee schedule:

Comment: Council members questioned whether maintaining low building permit fees could attract developers to help the City meet housing and economic development goals.

Staff Response: The cost of building permits is generally not a primary factor in site selection decisions. Builders tend to prioritize considerations such as quality of life, available services and amenities, and proximity to employment centers and family. In fact, many of the most sought-after locations for development have some of the highest permit fees, reflecting their ability to maintain and deliver a high standard of public services.

Comment: Council members also asked why the City would seek cost recovery of permit fees when the City benefits from increased property tax from new development.

Staff response: Although new development generates additional property and sales tax revenue for the City’s General Fund, it also creates increased demand for municipal services, placing additional strain on General Fund resources. Numerous studies have found that, overall, new residential development often results in a net negative fiscal impact for cities.

Comment: Council member Eckles proposed limiting the initial fee increase to 10 percent with the possibility to phase additional fee increases.

Staff response: The proposed Planning and Building fees in Attachments 1-4 include a column labelled “10% Increase (Over FY24-25)”. This is a reference point showing the fee level that would result from a one-time 10 percent increase over the current fee.

Summary
The Council’s primary concern with this section is the impact of fee increases on the City’s housing and economic development goals. For the reasons described above, staff does not expect the proposed fee increases to affect development activity in Morro Bay. That said, in response to previous Council deliberation, staff recommends implementing the building permit fee increases in phases to give builders time to adapt. The phasing schedule is shown in detail in Attachment 3 and summarized below:
 Phase cost recovery over 2.5 years, with equal increases on 1/1/2026, 7/1/2026, and 7/1/2027.

 This will provide an increase on January 1, 2026, as originally proposed, and then allow the fee schedule update cycle to sync with the fiscal year on July 1, 2026.  This schedule allows the City to reach cost recovery of building fees in the near term while providing the building industry with enough notice and time to adjust.

C. Other Fees
Recommendation: Phase cost recovery of identified Building permit fees over 2.5 years, with equal increases on 1/1/2026, 7/1/2026, and 7/1/2027; establish new fees (#1, #22, #23, and #24) effective 1/1/2026; delete fees #2, #10, and #18; and incorporate other revisions as shown in Attachment 4.

Alternative: The Council could provide alternative direction to staff regarding building permit fee levels. Setting fees below cost recovery will affect the City’s ability to maintain existing service levels.

Section C of the Building fee schedule lists miscellaneous fees to recover City costs associated with permit review, plan check, and inspections. This section also establishes fees that the City is legally mandated to collect on behalf of the State. Attachment 4 provides a detailed description by line item of the fee study and staff recommendations.

Staff recommends deleting the Business License Inspection Fee based on previous Council comments. Staff also recommends deleting the Damaged Building Survey and Missed Inspection fees. These were newly proposed fees and, consistent with Council member comments, staff recommends continuing to provide these services without charging new fees.

Council members had the following questions and comments regarding this section of the proposed fee schedule:

Comment: Council members asked why the fee study is recommending a Permit Processing Fee.

Staff response: The building permit fees described in Sections A and B of the Building fee schedule are calculated to cover the City’s plan check and inspection costs. The Permit Processing Fee covers the City’s administrative costs to intake, prepare, and issue permits.

Comment: Council member Eckles proposed limiting the initial fee increase to 10 percent with the possibility to phase in additional fee increases.

Staff response: The proposed Planning and Building fees in Attachments 1-4 includes a column labelled “10% Increase (Over FY24-25)”. This is a reference point showing the fee level that would result from a one-time 10 percent increase over the current fee. The text in this column is red when a 10 percent increase would exceed cost recovery.

Summary
Staff recommends phasing cost recovery over 2.5 years for the identified “Other” Building fees, with the following exceptions:

 Delete newly proposed Business License Inspection fee (#2).  Delete newly proposed Damaged Building Survey fee (#10).  Delete newly proposed Missed Inspection fee (#18).
 Add new Permit Process fee (#1) effective January 1, 2026 to cover the administrative cost of intaking and issuing permits. This fee covers the City’s costs in addition to the plan check and inspection fees.
 Add new Duplicate Copy of Permit fee (#22) effective January 1, 2026.  Add new Duplicate Copy of Certificate of Occupancy fee (#23) effective January 1, 2026.

Planning Fees
Recommendation: Phase cost recovery of identified Planning fees over 2.5 years, with equal increases on 1/1/2026, 7/1/2026, and 7/1/2027; increase required deposit amounts for direct billed permit types effective 1/1/2026; reduce Affordable Housing assistance application fee (Planning fee #1) and Reasonable Accommodations fee (Planning fee #2) to $0; increase vacation rental monitoring fee to cost recovery effective 1/1/2026; add new Planning hourly bill rates (Planning fees #75-77); and incorporate other revisions as shown in Attachment 1.

Alternative: The Council could provide alternative direction to staff regarding Planning fees. Setting fees below cost recovery will affect the City’s ability to maintain existing service levels.

This section covers the fee study’s recommendations and Council comments regarding the proposed Planning permit fees, including:
 Coastal Development Permits
 Environmental Determinations
 Zoning Code and General Plan Amendments
 Land Use Permits
 Miscellaneous Planning Permits and Fees
These fees cover City services that are mandated by State law and the City’s Municipal Code. The purpose of these permits is to ensure that new development is compatible with the community’s character, minimizes neighborhood impacts, and protects coastal resources. Planning permits also give the public an opportunity to participate in the planning process. Most planning permits require environmental review under the California Environmental Quality Act (CEQA).

The overarching theme of Council comments regarding the proposed Planning fees is that they may discourage development. As stated above, staff does not expect fee increases to hinder development activity in Morro Bay. Builders often prioritize quality of life, amenities, and proximity to jobs and family, even in areas with high permit fees that reflect strong public services. In addition, builders value time and certainty in process over permit cost. The City’s recent comprehensive zoning code update streamlined development in the City by lowering land use and coastal development permit requirements for smaller residential projects, including some additions. Under the new zoning code and proposed fee schedule, these projects can be approved administratively in 2-3 months with a $3,700 Planning fee compared to 6-9 months with a $17,572 Planning fee.

Council members had the following questions and comments regarding this section of the proposed fee schedule:

Comment: Council member Eckles proposed limiting the initial fee increase to 10 percent for most Planning permits with the possibility to phase in additional fee increases.

Staff response: The proposed Planning and Building fees in Attachments 1-4 include a column labelled “10% Increase (Over FY24-25)”. This is a reference point showing the fee level that would result from a one-time 10 percent increase over the current fee. The text in this column is red when a 10 percent increase would exceed cost recovery.

Comment: Council member Eckles proposed reducing the Sign Permit fees to promote economic development.

Staff response: With Council direction, staff will make this change. The Council should recognize that this would be a reduction to the current fees. This change could also be made at a future date in the context of a larger economic development strategy that evaluates the costs and benefits of various economic development strategies beyond lowering sign permit fees.

Comment: Council members questioned how Planning fees were calculated.

Staff response: To calculate the cost of service for Planning Fees, the City and our consultant calculated the average number of hours that all City staff (Planning, Building, Engineering, Fire, Police, Harbor, etc.) spend to complete each task when reviewing and processing the identified permit type. This involves significant analysis and review of plans and technical studies; preparing detailed staff reports with findings and conditions; multiple meetings with applicants, design professionals, and consultants; public hearing notices; and attendance at hearings.

Summary
Staff recommends phasing cost recovery over 2.5 years for most Planning fees, with the following exceptions:
 Increase Vacation Rental Monitoring fee (Planning fee #26) to full cost recovery ($709 to $764) on January 1, 2026.
 Reduce Certificate of Compliance additional lot (Planning fee #42) and Lot Mergers (Planning fee #43) to cost recovery on January 1, 2026.  Reduce Revision to Existing Permits (Planning Commission) Major Revision (Planning fee #64) to cost recovery on January 1, 2026.
 Increase required deposits for direct billed projects on January 1, 2026. This includes Environmental Impact Reports (Planning fee #15), Zoning Amendments and Annexations (Planning fees #44-47), General Plan Amendments (Planning fees #48 and 49). The increased deposit is not a fee increase, as these projects are processed at actual time and material costs per direct billing agreements.
 Reduce Affordable Housing assistance application fee (Planning fee #1) and Reasonable Accommodations fee (Planning fee #2) to $0.

 Add new Planning hourly bill rates (Planning fees #75-77).  Incorporate other text changes and edits shown in Attachment 1.

This will allow the City to maintain service levels to continue timely processing of Planning permits.

As described above, these fee levels are not expected to deter development in Morro Bay.

Engineering, Encroachment Permit, and Utility Services Fees  Engineering, encroachment permit fees, and discrete utility services fees are collected to recover the costs associated with activities such as improvement plan review, permitting, and construction inspection, review and inspection of work conducted within the City right-of-way and new meter installations.
 Plan review, permit processing and field inspection fees have been restructured to enhance the correlation between services provided and fees collected. The proposed fee methodology scales to allow for lower fees for less complex projects and higher fees for more complex projects.
 Full cost recovery is targeted from proposed fees.

Public Safety Fees: Fire and Police Fees
While most City public safety services such as emergency response and routine patrol services are tax funded services, the City’s public safety departments provide certain discrete services that are typically recovered via fees and charges. Examples include:
 Fire prevention services for review of new construction and certain operations  Vehicle impound and release and requests for special reports.

Fees for these services are proposed to be adjusted to recover the City’s costs of service.

Harbor Fees
Fees for Harbor are market-based fees and are primarily proposed to be adjusted by the prior year change in annual cost inflation.

Comment: Council member Eckles proposed the T-Pier Electrical Convenience Fee should be increased from $4/day to $25/day to cover electricity charges and maintenance of outlets.

Staff response: The daily rate for docking at the pier is typically less than $25/day; increasing the electrical fee to $25/day may appear misaligned with Harbor Fees in totality.

Comment: Council member Eckles proposed the Triangle Lot Trailer/Boat Storage monthly rate should be increased from the current $120 to at least $145 in response to demand and comparable storage costs.

Staff response: The fee study compared to other storage in town and ultimately recommended a $4 increase to $124/month to be in line with market rates.

Comment: Council member Landrum proposed that moorings for large or luxury vessels should be higher.

Staff response: The Guest Mooring daily rate is currently calculated at $0.45/foot to account for size of vessel.

Recreation Services Fees
Fees for Recreation Services are market-based fees and are primarily proposed to be adjusted by the prior year change in annual cost inflation.

Comment: Council member Luffee proposed that 501(c)3s pay only a $432 event fee.

Staff response: The City’s Event Policy and related fees is a pending item being reviewed by staff for presentation to the Recreation & Parks Commission and City Council at future meetings.

Regional Fee Comparison
Similar fees are collected by communities throughout the region and the State. The proposed fee amounts cannot and do not exceed the City’s cost of service and are in-range of amounts charged by other jurisdictions. Current and proposed fees were compared to amounts collected by other agencies.

For sampling purposes, the fee comparison examined fees for:
 City of Atascadero
 City of Grover Beach
 City of Paso Robles
 City of Pismo Beach
 Community of Oceano
 City of San Luis Obispo
 County of San Luis Obispo
For Morro Bay, outcomes will show that proposed fees may range from low, mid, to upper end of regional fee spectrum depending on the service provided. This is common among municipalities due to differing levels of service and review included among various fee categories. Scenarios considered range from smaller scale projects to larger scale projects.

ATTACHMENTS

1. Planning Fees - Before and After Illustration

2. Building Fees – Part A - Before and After Illustration

3. Building Fees – Part B - Before and After Illustration

4. Building Fees – Part C - Before and After Illustration

5. Resolution No. 47-25
5a. Exhibit A – Illustration of Current and Proposed Fees from the 8/12/25 Council Meeting to be revised based on Council direction received at the 9/23/25 Meeting.

6. User and Regulatory Fee Study

CITY OF MORRO BAY Color Code Decrease Increase No Change Other Change

BEFORE AND AFTER ILLUSTRATION - PLANNING FEES
FY24-25 Cost of Service
10% Increase
(Over FY24-25)
Annual Increase
(3 Year Phase In) January 1, 2026 July 1, 2026 July 1, 2027 Staff Notes Affordable Housing In-Lieu
1 Funding assistance application fee $ 875 $ 1,528 $ 963 No fee Change to "No fee". Uncommon fee type. 2 Reasonable Accommodation (ADA) fee (no fee required if in conjunction with other discretionary permit) $ 170 $ 478 $ 187 No fee Change to "No fee". Uncommon fee type.

Coastal Permits - May be billed at direct cost
3 Coastal Development Permit (CDP) (Administrative) $ 1,664 $ 3,725 $ 1,830 $ 687 $ 2,351 $ 3,038 $ 3,725 Phase in full cost recovery over 2.5 years. 4 Coastal Permit in combination with Conditional Use Permit No fee No change. 5 Coastal Permit in combination with Tentative Parcel Map or Tentative Tract Map No fee No change. 6 Regular CDP without CUP (Planning Commission) - New SFD and additions over 25% in coastal appeals area, Multiple Dwelling, Office, Commercial, Convention, Industrial & Institutional.
$ 15,990 $ 17,572 $ 17,589 $ 527 $ 16,517 $ 17,045 $ 17,572 Phase in full cost recovery over 2.5 years. 7 Additions between 10% and 25% to SFD in Coastal Appeals area (Planning Commission) $ 6,923 $ 9,741 $ 7,615 $ 939 $ 7,862 $ 8,802 $ 9,741 Phase in full cost recovery over 2.5 years. 8 Emergency Permit (excluding required regular CDP) $ 1,222 $ 2,483 $ 1,344 $ 420 $ 1,642 $ 2,063 $ 2,483 Phase in full cost recovery over 2.5 years.

Other administrative - Tree removal, private $ 673 $ 1,146 $ 740 $ 158 $ 831 $ 988 $ 1,146 Phase in full cost recovery over 2.5 years.

Environmental - May be billed at direct cost
10 Categorical Exemption Notice of Exemption $ 79 $ 382 $ 87 $ 101 $ 180 $ 281 $ 382 Change fee title: Notice of Exemption. 11 Negative Declaration $ 4,764 $ 7,640 $ 5,240 $ 959 $ 5,723 $ 6,681 $ 7,640 Phase in full cost recovery over 2.5 years. 12 Mitigated Negative Declaration
Contract amount +
25% administrative
fee; $12,224
Deposit
Contract amount
+ 25%
administrative
fee; $12,224
Deposit
No change.
13 In House MND - Fee per Application $ 7,862 $ 12,224 $ 8,648 $ 1,454 $ 9,316 $ 10,770 $ 12,224 Phase in full cost recovery over 2.5 years. 14 Filing Fee - for environmental document $ 230 $ 382 $ 253 $ 51 $ 281 $ 331 $ 382 Phase in full cost recovery over 2.5 years. a) City $ 230 $ 382 $ 253 $ 51 $ 281 $ 331 $ 382 Phase in full cost recovery over 2.5 years. b) County $ 81 $ 81 New fee reflects County's filing fee. 15 Environmental Impact Report (Contract amount + 25% administrative fee to be deducted from deposit) $ 5,000 $ 10,000 Deposit only. Actual cost will exceed deposit.

Miscellaneous
16 Sidewalk Vending Permit - Fee for both initial fee and annual renewal fee $ 391 $ 478 $ 430 $ 29 $ 420 $ 449 $ 478 Phase in full cost recovery over 2.5 years. 17 Letter regarding land use confirmation or other research - per hour cost $ 187 $ 191 $ 206 $ 1 $ 188 $ 190 $ 191 Phase in full cost recovery over 2.5 years. 18 Development Agreement - charged at fully allocated hourly rates for all personnel involved, plus any outside costs. $10,000 deposit $10,000 deposit No change. 19 Extra Planning Commission meeting - Applicant requested continuance $ 2,573 $ 3,056 $ 2,830 $ 161 $ 2,734 $ 2,895 $ 3,056 Phase in full cost recovery over 2.5 years. 20 Fine, in addition to permit fee
2x permit fee +
plus $51 per day -
after notice
2x permit fee +
plus $51 per day -
after notice
No change.
21 Appeal of City Decision, Excluding Coastal Development Permits in the Appeals Jurisdiction and Short-term Rental Permits - Refundable if Appellant prevails $ 336 $ 3,438 $ 370 $ 344 Cost remains significantly below cost recovery. 22 Appeal of Short-Term Rental Permit Decision Denials $ 632 $ 632 New fee. Applies only to denials of STR permit due to outside hearing officer. 23 Telecomm Facility - Administrative (new fee) $ 182 $ 382 $ 200 $ 67 $ 249 $ 315 $ 382 Phase in full cost recovery over 2.5 years. 24 Street name/ Rename Processing $ 417 $ 764 $ 459 $ 116 $ 533 $ 648 $ 764 Phase in full cost recovery over 2.5 years. 25 Commercial Cannabis Operating Permit - New $ 10,416 $ 12,606 $ 11,458 $ 730 $ 11,146 $ 11,876 $ 12,606 Phase in full cost recovery over 2.5 years. 26 Commercial Cannabis Operating Permit - Annual Renewal $ 6,102 $ 7,640 $ 6,712 $ 513 $ 6,615 $ 7,127 $ 7,640 Phase in full cost recovery over 2.5 years.

Activity Description
Staff Recommended Phasing

CITY OF MORRO BAY Color Code Decrease Increase No Change Other Change

BEFORE AND AFTER ILLUSTRATION - PLANNING FEES
FY24-25 Cost of Service
10% Increase
(Over FY24-25)
Annual Increase
Activity Description (3 Year Phase In) January 1, 2026 July 1, 2026 July 1, 2027 Staff Notes Staff Recommended Phasing
27 Vacation Rental Monitoring and Administration Fee - annual permit fee $ 709 $ 764 $ 780 $ 18 $ 764 Full cost recovery on Jan. 1, 2026. 28 Conceptual Review Fee - Fee is credited toward any future discretionary permit application within 24 months. Per Application. $ 6,023 $ 6,685 $ 6,625 $ 221 $ 6,244 $ 6,464 $ 6,685 Phase in full cost recovery over 2.5 years.

Notification Fees
29 Planning Commission Hearing $ 541 $ 573 $ 595 $ 11 $ 552 $ 562 $ 573 Phase in full cost recovery over 2.5 years. 30 Administrative Permit Noticing $ 463 $ 478 $ 509 $ 5 $ 468 $ 473 $ 478 Phase in full cost recovery over 2.5 years.

Sign Permits
31 Sign Permits $ 703 $ 764 $ 773 $ 20 $ 723 $ 744 $ 764 Phase in full cost recovery over 2.5 years. 32 Sidewalk Sign or Dock Sign Permit $ 373 $ 382 $ 410 $ 3 $ 376 $ 379 $ 382 Phase in full cost recovery over 2.5 years. 33 Sign Exception Permit $ 4,073 $ 6,112 $ 4,480 $ 680 $ 4,753 $ 5,432 $ 6,112 Phase in full cost recovery over 2.5 years. 34 Master Sign Program - New $ 1,511 $ 1,528 $ 1,662 $ 6 $ 1,517 $ 1,522 $ 1,528 Phase in full cost recovery over 2.5 years. 35 Master Sign Program amendment $ 703 $ 764 $ 773 $ 20 $ 723 $ 744 $ 764 Phase in full cost recovery over 2.5 years. 36 Fines - temporary, beyond time allowed by Ordinance - per day after notice given $ 59 $ 59 $ 59 $ 59 No change. 37 Fines - Permanently attached sign w/o permit - per day after notice $ 59 $ 59 $ 59 $ 59 No change.

Subdivisions (May be billed at direct cost)
38 Tentative Parcel Map Application $ 7,888 $ 9,932 $ 8,677 $ 681 $ 8,569 $ 9,251 $ 9,932 Phase in full cost recovery over 2.5 years. 39 Tentative Tract Map 0 to 10 lots, add $100 per lot over 10 lots, cost per map $ 15,246 $ 17,572 $ 16,771 $ 775 $ 16,021 $ 16,797 $ 17,572 Phase in full cost recovery over 2.5 years. 40 Lot Line Adjustment, per application $ 2,721 $ 3,056 $ 2,993 $ 112 $ 2,833 $ 2,944 $ 3,056 Phase in full cost recovery over 2.5 years. 41 Certificate of compliance (legal determination) - initial fee covers up to 4 lots $ 1,440 $ 1,528 $ 1,584 $ 29 $ 1,469 $ 1,499 $ 1,528 Phase in full cost recovery over 2.5 years. 42 Additional fee per lot over 4 lots $ 302 $ 287 $ - $ - $ 287 Reduce fee to cost recovery. 43 Lot Mergers $ 2,721 $ 1,528 $ - $ - $ 1,528 Reduce fee to cost recovery.

Text Amendments & Annexations (May Shall be billed at direct cost) Replace "May be" with "Shall" 44 Zone Ordinance Changes/Local Coastal Plan if contracted - contract amount + 25% administrative fee. Fee amount becomes an initial deposit. This is not a fee but a heading to the following fees. Delete and renumber. 45 Minor (single section revisions/additions) deposit for cost of staff and outside consultant $ 5,787 $ 7,640 $ 6,366 $ 7,640 Deposit only. Full cost recovery on Jan. 1, 2026. 46 Major (multiple sections revised/added) deposit for cost of staff and outside consultant $ 11,574 $ 15,280 $ 12,731 $ 15,280 Deposit only. Full cost recovery on Jan. 1, 2026. 47 Specific Plan (Billed as deposit with charges at the fully allocated hourly rates for all personnel involved + any outside costs). If contracted = cost +25% administration fee. Fee amount becomes an initial deposit for cost of staff and outside consultant. $ 5,787 $ 7,640 $ 6,366 $ 7,640 Deposit only. Full cost recovery on Jan. 1, 2026.

General Plan / Local Coastal Plan or Zoning Amendment (Shall be billed at direct cost) Add: "Shall be billed at direct cost" consistent with zoning amendments. 48 If contracted - cost + 25% administrative fee. Fee amount becomes an initial deposit. $ 5,787 $ 7,640 $ 6,366 $ 7,640 Deposit only. Full cost recovery on Jan. 1, 2026. 49 Major (multiple sections revised/added) deposit for cost of staff and outside consultant $ 11,574 $ 15,280 $ 12,731 $ 15,280 Deposit only. Full cost recovery on Jan. 1, 2026. 50 Planned Development (-PD) Overlay District (processed concurrent with Conditional use Permit) $10,000 deposit $10,000 deposit No change.
51 Annexations - Deposit to be determined by staff. Billed at fully allocated staff cost. If contracted- contract amount + 25% administrative fee. Deposit for cost of staff and outside consultant.
$ 11,574 $ 11,574 No change.

Time Extensions
52 Time Extensions - Administrative $ 345 $ 382 $ 380 $ 12 $ 357 $ 370 $ 382 Phase in full cost recovery over 2.5 years. 53 Time Extensions for Tract Maps and Parcel Maps. Used after exhaustion of administrative time extensions above (Planning Commission) $ 4,147 $ 6,112 $ 4,562 $ 655 $ 4,802 $ 5,457 $ 6,112 Phase in full cost recovery over 2.5 years.

CITY OF MORRO BAY Color Code Decrease Increase No Change Other Change

BEFORE AND AFTER ILLUSTRATION - PLANNING FEES
FY24-25 Cost of Service
10% Increase
(Over FY24-25)
Annual Increase
Activity Description (3 Year Phase In) January 1, 2026 July 1, 2026 July 1, 2027 Staff Notes Staff Recommended Phasing
54 Time extension for CUP, regular Coastal Permits and variance. Used after exhaustion of administrative time extensions above (Planning Commission) $ 2,999 $ 3,820 $ 3,299 $ 274 $ 3,273 $ 3,546 $ 3,820 Phase in full cost recovery over 2.5 years.

Use Permits
All use permits may be billed at direct cost at the discretion of the Community Development Director and the scheduled fee would then be deemed as a deposit. All Projects in the Planned Development Overlay require a Use Permit. 55 Conditional Use Permit $ 15,990 $ 17,572 $ 17,589 $ 527 $ 16,517 $ 17,045 $ 17,572 Phase in full cost recovery over 2.5 years. 56 Design Review Permit (Planning Commission) $ 8,181 $ 9,837 $ 8,999 $ 552 $ 8,733 $ 9,285 $ 9,837 Phase in full cost recovery over 2.5 years. 57 Design Review Permit (Administrative) $ 2,721 $ 3,247 $ 2,993 $ 175 $ 2,896 $ 3,072 $ 3,247 Phase in full cost recovery over 2.5 years. 58 Design Review Permit in Combination with Regular CDP No fee No change. 59 CUP for Occupancy Change in Non-residential Zones $ 6,782 $ 7,449 $ 7,460 $ 222 $ 7,004 $ 7,227 $ 7,449 Phase in full cost recovery over 2.5 years. 60 CUP for additions to non-conforming uses, not adding units $ 7,062 $ 9,471 $ 7,768 $ 803 $ 7,865 $ 8,668 $ 9,471 Phase in full cost recovery over 2.5 years. 61 Minor Use Permit $ 2,721 $ 3,629 $ 2,993 $ 303 $ 3,024 $ 3,326 $ 3,629 Phase in full cost recovery over 2.5 years. 62 Temporary Use Permit - Longer than 10 days $ 2,036 $ 2,483 $ 2,240 $ 149 $ 2,185 $ 2,334 $ 2,483 Phase in full cost recovery over 2.5 years. 63 Temporary Use Permit - 7 consecutive days or 10 non-consecutive $ 732 $ 955 $ 805 $ 74 $ 806 $ 881 $ 955 Phase in full cost recovery over 2.5 years. 64 Revision to Existing Permits (Planning Commission) Major Revision $ 10,577 $ 9,471 $ 9,471 Fee reduction 65 Major revision while processing $ 5,944 $ 6,112 $ 6,538 $ 56 $ 6,000 $ 6,056 $ 6,112 Phase in full cost recovery over 2.5 years. 66 Minor revision to existing permits (Administrative minor revision) $ 832 $ 1,719 $ 915 $ 296 $ 1,128 $ 1,423 $ 1,719 Phase in full cost recovery over 2.5 years. 67 Modification (Planning Commission) $ 6,687 $ 8,213 $ 7,356 $ 509 $ 7,196 $ 7,704 $ 8,213 Phase in full cost recovery over 2.5 years. 68 Modification (Administrative) $ 832 $ 1,337 $ 915 $ 168 $ 1,000 $ 1,169 $ 1,337 Phase in full cost recovery over 2.5 years. 69 Variance $ 6,687 $ 7,640 $ 7,356 $ 318 $ 7,005 $ 7,322 $ 7,640 Phase in full cost recovery over 2.5 years. 70 Variance or Modification (Planning Commission) processed with other permits $ 1,210 $ 1,528 $ 1,331 $ 106 $ 1,316 $ 1,422 $ 1,528 Phase in full cost recovery over 2.5 years.

Document Storage Fee - Planning & Building
71 First page of plan set $ 18 $ 18 No changes
72 Fee for each additional page of plan set $ 8 $ 8 No changes 73 First non-plan set page (8 1/2 x 11 to 11 x 17) $ 5 $ 5 No changes 74 Fee for each additional non-plan set page $ 1 $ 1 No changes Hourly Billing Rages and/or Rates for Services Not Otherwise Listed Above 75 In House Planning (per hour) $ 191 $ 191 New fee. Actual cost. 76 Specialized Attorney Review Actual Cost New fee.
77 Contract Service Providers
Actual Cost +25%
Admin Fee
New fee.

CITY OF MORRO BAY Color Code Decrease Increase No Change Other
Change

BEFORE AND AFTER ILLUSTRATION - BUILDING FEES
Est. Avg. Valuation
Current Fee (Based on
Est. Avg. Valuation)
Cost of Service
(Excluding Permit
Processing Cost)
Proposed Fee
(with $75
Processing Fee) Difference
1 HVAC Change-Out-Residential $ 17,500 $ 455 $ 180 $ 255 $ (200) 2 Water Heater Change-Out Residential $ 3,000 $ 205 $ 135 $ 210 $ 5 3 Re-Roof - Residential (without calcs) $ 15,000 $ 390 $ 270 $ 345 $ (45) 4 Siding - Residential $ 12,000 $ 312 $ 270 $ 345 $ 33
5 Service Panel Upgrade - Residential $ 2,500 $ 205 $ 180 $ 255 $ 50 6 Battery Backup Storage - Residential $ 20,000 $ 520 $ 180 $ 255 $ (265) 7 Electric Vehicle Charger $ 1,500 $ 205 $ 180 $ 255 $ 50 8 Generator - Residential $ 10,000 $ 260 $ 180 $ 255 $ (5) 9 Rooftop Solar Permit - Residential No change No change a) 15kW or less $450 $450 $450
b) Above 15kW
$450 base fee, plus
$15 per kW for each kW
above 15kW
$450 base fee, plus
$15 per kW for each
kW above 15kW
$450 base fee, plus
$15 per kW for
each kW above
15kW
10 Rooftop Solar Permit - Non-Residential No change No change a) 50kW or less $1,000 $1,000 $1,000
b) 50kW - 250kW $1,000 base fee, plus
$7 per kW for each kW
up to 250kW
$1,000 base fee,
plus $7 per kW for
each kW up to
$1,000 base fee,
plus $7 per kW for
each kW up to
c) Above 250kW $2,400 base fee, plus
$5 per kW for each kW
above 250kW
$2,400 base fee,
plus $5 per kW for
each kW above
$2,400 base fee,
plus $5 per kW for
each kW above
11 Ground-Mount Solar $ 40,000 $ 1,040 $ 360 $ 435 $ (605) Fee Description
A. Fees for Commonly Requested and Minor Miscellaneous Building Permit Types. Fees shown in this section (Section A.) include all applicable inspections, and plan review fees. Additional permit processing fees apply. Additional fees may apply for services provided by other City departments (e.g. Planning Review), Technology Enhancement Fees, and Fees Collected on Behalf of Other Agencies.

CITY OF MORRO BAY Color Code Decrease Increase No Change Other
Change

BEFORE AND AFTER ILLUSTRATION - BUILDING FEES
Est. Avg. Valuation
Current Fee (Based on
Est. Avg. Valuation)
Cost of Service
(Excluding Permit
Processing Cost)
Proposed Fee
(with $75
Fee Description Processing Fee) Difference
A. Fees for Commonly Requested and Minor Miscellaneous Building Permit Types. Fees shown in this section (Section A.) include all applicable inspections, and plan review fees. Additional permit processing fees apply. Additional fees may apply for services provided by other City departments (e.g. Planning Review), Technology Enhancement Fees, and Fees Collected on Behalf of Other Agencies.
12 Swimming Pool / Spa Equipment Change-out Only $ 10,000 $ 260 $ 180 $ 255 $ (5) 13 Swimming Pool Replaster $ 6,500 $ 205 $ 180 $ 255 $ 50 14 Residential Voluntary Seismic Retrofit $ 7,000 $ 205 $ 270 $ 345 $ 140 15 Retaining Wall / CMU Wall
a) Wall under 6' in height $ 5,000 $ 205 $ 360 $ 435 $ 230 b) Wall over 6' in height
i) up to 100 LF $ 20,000 $ 520 $ 720 $ 795 $ 275
ii) each additional 100 LF $ 10,000 $ 260 $ 45 $ 120 $ (140) 16 Window / Sliding Glass Door - Retrofit / Repair
a) Up to 5 $ 5,000 $ 205 $ 180 $ 255 $ 50
b) Over 5 $ 12,000 $ 312 $ 550 $ 625 $ 313
17 Fences Requiring a Building Permit $ 6,000 $ 205 $ 180 $ 255 $ 50 Avg. Change $ (1)

CITY OF MORRO BAY Color Code Decrease Increase No Change Other Change

BEFORE AND AFTER ILLUSTRATION - BUILDING FEES
B. Permit and Plan Review Fee for new Buildings, Additions, Tenant Improvements, Residential Remodels, and Combined Mechanical, Electrical, and/or plumbing Permits.

FY24-25
Cost of
Service
10% Increase
(Over FY24-25)
Annual Increase
(3 Year Phase In) January 1, 2026 July 1, 2026 July 1, 2027 Staff Notes Building Permit and Plan Review Fee
1 Based on Valuation as Determined by the Building Official (50% due at submittal / 50% due at issuance) (fee is calculated at "a+b+c")
a) Valuation: from $1 - $3,000 $ 205 $ 270 $ 226 $ 22 $ 227 $ 248 $ 270 Phase in full cost recovery
over 2.5 years.
b) Valuation: applies to portion above $3,001 and below $1,000,000 .026 x total
valuation $ 0.046 $ 0.029 $ 0.00667 $ 0.033 $ 0.039 $ 0.046 Phase in full cost recovery
over 2.5 years.
c) Valuation: applies to portion above $1,000,000
.0075 x portion of
valuation over
$1,000,000 $ 0.013 $ 0.0083 $ 0.0018 $ 0.009 $ 0.011 $ 0.013 Phase in full cost recovery
over 2.5 years.

Fee Description
Staff Recommended Phasing

CITY OF MORRO BAY Color Code Decrease Increase No Change Other Change

BEFORE AND AFTER ILLUSTRATION - BUILDING FEES
C. Other Fees
FY24-25 Cost of Service
10% Increase
(Over FY24-25)
Annual Increase (3
Year Phase In) January 1, 2026 July 1, 2026 July 1, 2027 Staff Notes 1 Permit Processing Fee $75.00 $75.00 New fee. Covers administrative cost of permit processing. 2 Business License Inspection Fee
a) Residential Home Occupation $90.00 $0.00
b) Non-Residential $90.00 $0.00
3 In-lieu Housing Fee - per square foot $0.45 $0.45 $0.45 No change. 4 General Plan Maintenance 8% surcharge on all
Building Permits
8% surcharge on all
Building Permits No change.
5 I.T. Service Fee
$0.0075 x valuation
(valuation capped at
$1,000,000)
$0.0075 x valuation
(valuation capped at
$1,000,000)
No change.
6 Strong Motion Instruments (SMI) Fee Calculation
a) Residential $0.50 or valuation x
.00013
$0.50 or valuation x
.00013 No change.
b) Commercial $0.50 or valuation x
.00028
$0.50 or valuation x
.00028 No change.
7 Building Standards (SB 1473) Fee Calculation (Valuation) a) $1 - $25,000 $1 $1 No change.
b) $25,001 - $50,000 $2 $2 No change.
c) $50,000 - $75,000 $3 $3 No change.
d) $75,000 - $100,000 $4 $4 No change.
e) Each Add'l $25,000 or fraction thereof Add $1 Add $1 No change. 8 Temporary Certificate of Occupancy (per 30 days) $450.00 $450 No change. 9 Building Re-Address Processing $72 $135 $79 $21 $93 $114 $135 Phase in full cost recovery over 2.5 years. 10 Damaged Building Survey (Fire, Flood, Vehicle Damage, etc.) $270 Not needed. Delete. 11 Demolition
a) Demolition - Commercial $273 $360 $300 $29 $302 $331 $360 Phase in full cost recovery over 2.5 years. b) Demolition - Residential $182 $225 $200 $14 $196 $211 $225 Phase in full cost recovery over 2.5 years. 12 Unsafe Building repair, demolition or moving structure Charged at Cost Charged at Cost No change. 13 Permits - Change Ownership/Add Contractor - Per Request $145 $180 $160 $12 $157 $168 $180 Phase in full cost recovery over 2.5 years. 14 Permit / Application Reinstatement Fee $200 $225 $220 $8 $208 $217 $225 Phase in full cost recovery over 2.5 years. 15 Permit Extension of Time - Per Request $72 $90 $79 $6 $78 $84 $90 Phase in full cost recovery over 2.5 years. 16 After Hours Inspection (per hour) (4-hour minimum) $91 $216 $100 $42 $133 $174 $216 Phase in full cost recovery over 2.5 years. 17 Re-inspection Fee (2nd Time of More) (per hour) $176 $180 $194 $1 $177 $179 $180 Phase in full cost recovery over 2.5 years. 18 Missed Inspection Fee $90 $90 Not needed. Delete.
19 Additional Plan Review required by changes, additions, revisions to the approved plans. Fee is per hour with a 1 hour minimum. $176 $180 $194 $1 $177 $179 $180 Phase in full cost recovery over 2.5 years. 20 Additional Plan Review Required, applies to 3rd resubmittal (4th overall submittal) (per hour) $176 $180 $194 $1 $177 $179 $180 Phase in full cost recovery over 2.5 years.

Fee Description
Staff Recommended Phasing
Not needed. Delete fee.

CITY OF MORRO BAY Color Code Decrease Increase No Change Other Change

BEFORE AND AFTER ILLUSTRATION - BUILDING FEES
C. Other Fees
FY24-25 Cost of Service
10% Increase
(Over FY24-25)
Annual Increase (3
Fee Description Year Phase In) January 1, 2026 July 1, 2026 July 1, 2027 Staff Notes Staff Recommended Phasing
21 Use of outside consultants for special plan checking and inspection. Charged at Cost + 25% Administration Fee
Charged at Cost + 25%
Administration Fee No change.
22 Duplicate Copy of Permit $30 $30 New fee.
23 Duplicate Copy of Certificate of Occupancy $30 $30 New fee. 24 Construction and Demolition Waste Management Review Fee $90 $90 New fee. 25 Inspection for which no fee is otherwise indicated - per hour, 1 hour minimum - Use for Certificate of Occupancy $176 $180 $194 $1 $177 $179 $180 Phase in full cost recovery over 2.5 years.

Violation Fees
26 Fee for commencing construction without permit(s). This in addition to the standard building permit fees. 2x the permit fee 2x the permit fee No change. 22

RESOLUTION NO. 47-25

RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA,

UPDATING AND ESTABLISHING VARIOUS USER AND REGULATORY FEES

T H E C I T Y C O U N C I L
City of Morro Bay, California
WHEREAS, user and regulatory fees are established by the City Council; and WHEREAS, the City recently completed a study to identify the cost of providing various user and regulatory fee-related services; and
WHEREAS, the study examined fee-related services provided by the City, the costs reasonably borne by the City in providing those services, the beneficiaries of those services, and the revenues produced by those paying fees and charges for direct services; and WHEREAS, the City Council finds that providing these services is of direct benefit to applicants both separate and apart from the general benefit to the public; and therefore, in the interests of fairness to the general public, the City desires to better recover the costs of providing these services from applicants who have sought or require the City's services by revising its schedule of fees; and
WHEREAS, the City Council hereby finds that the study provides adequate evidence to conclude that the revised fees do not exceed the cost to provide the services for which the fees are charged; and
WHEREAS, pursuant to California Government Code section 66016, et seq., specific fees to be charged for services must be adopted by City Council resolution or ordinance, after providing notice and holding a public hearing; and
WHEREAS, a public hearing on the proposed Master Fee Schedule for FY 2025-26 was properly noticed to be held on August 12, 2025 in compliance with all applicable legal requirements; and
WHEREAS, the public hearing and discussion were continued to a date certain of September 23, 2025 in compliance with all applicable legal requirements; and WHEREAS, historically the City has consolidated various fees, rates, and charges in a Master Fee Schedule including development impact fees adopted pursuant to the procedural and substantive requirements of Government Code Section 66000 et seq. (“Mitigation Fee Act”); and WHEREAS, in order to increase clarity regarding the user and regulatory fees governed by this resolution and ensure that development impact fees adopted and governed by separate actions are not inadvertently reviewed along with user and regulatory fees, these items will be identified in distinct schedules moving forward; and
WHEREAS, development impact fees are not being considered, modified, or increased as part of this resolution; and

WHEREAS, the City Council desires that annually the City Manager, or City Manager designee may update the fees by an amount not to exceed the prior year annual percentage change in the Consumer Price Index All Urban Consumers, Los Angeles-Long Beach-Anaheim, CA (CPI). If the CPI does not change or goes down in a given year, no change shall be made to the fee schedule that year; and
WHEREAS, in adopting this Resolution, the City Council is taking action only on those fees for the services, programs or products set forth in Exhibit “A” which have been modified from prior resolutions of the City Council. The remaining fees that have not been modified from prior resolutions shall remain in full force and effect; and
WHEREAS, the City Council finds that the project is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21080(b)(8) and CEQA Guidelines 15273(a)(1) because of the subject fees are designed to defray the portion of the Town’s operating expenses associated with processing applications; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Morro Bay, California, that the.

SECTION 1. City’s User and Regulatory Fee Schedule is amended as outlined in “Exhibit A”, attached hereto.

SECTION 2. Fees adopted by this Resolution shall be effective January 1, 2026, over sixty days after adoption.

PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting thereof held on the 23rd day of September 2025, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSED:

CARLA WIXOM, Mayor
ATTEST:

DANA SWANSON, City Clerk

Exhibit “A”

Before and After Illustration of Fees

Description Page
Administrative / City Clerk Fees 1
Finance / Administrative Services Fees 2
Building Fees 3
Planning Fees 9
Engineering, Encroachment Permit, and Utility Services Fees 15 Fire Fees 20
Police Fees 26
Harbor Fees 29
Parks and Recreation Fees 33
City of Morro Bay
Before and After Illustration of Fees

City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - ADMINISTRATIVE / CITY CLERK FEES Current Fee Cost of Service Proposed Fee Change
Proposed
Cost Recovery Note
1 Photocopies per page (unless otherwise defined) $0.40 $0.40 $0.00 2 Photocopies (per 11" x 17" page) $0.70 $0.70 $0.00
3 Copies - Digital - per device $5.79 $10 $4
4 Certified Copies of City Documents $25 $25 $0
5 Records Request (retrieval of FPPC filings 5 or more years old) $5.79 $5 ($1) 6 Mailing of Printed Materials/Devices Actual Cost Actual Cost 7 Appeal fee for non-land use administrative decisions, excluding short-term rental permit decisions – Refundable if Appellant Prevails
$336 $3,438 $344 $8 10%
8 Appeal of Short-Term Rental Permit Decision $336 $632 $632 $296 100% 9 Elections filing fee - Notice of intention to circulate petition. This amount is refundable under Elections Code Section 9202(b), with conditions (limited by State law) $200 $200 $0
10 Candidate Filing Fee per Candidate (limited by State law) $25 $25 $0 Activity Description

1 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - FINANCE / ADMINISTRATIVE SERVICES FEES Current Fee Cost of Service Proposed Fee Change
Proposed
Cost Recovery Note
Business License Processing Fees
1 Business License – New $37 $65 $65 $28 100%
2 Business License – Renewal $18 $32 $32 $15 100%
Insufficient Funds Charge
(per CA Civil Code Section 1719)
3 First Instance of Insufficient Funds $25 $0 $25 $0
4 Second and Subsequent Instances $35 $0 $35 $0
Utility Billing
5 Water Service Application Fee Per Account (MBMC13.04.100) $58 $65 $65 $7 100% 6 Physical Posting of Shut-off Notice at Customer Location $43 $43 $43 $0 100% 7 Refundable/Transferable Deposit - Residential Tenants Only On Signup (MBMC13.04.220) $100 $0 $100 $0 8 Deposit Required for Service Termination for Delinquent Non-Payment (Residential Tenants Only, if a Deposit Has Not Previously Been Collected)
$100 $0 $100 $0
Activity Description

2 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - BUILDING FEES
Current Fee Cost of Service Proposed Fee Fee Change Proposed Cost Recovery Note 1 HVAC Change-Out - Residential varies $180 $180 varies 100% 2 Water Heater Change-Out - Residential varies $135 $135 varies 100% 3 Re-Roof - Residential (without calculations) varies $270 $270 varies 100% 4 Siding - Residential varies $270 $270 varies 100%
5 Service Panel Upgrade - Residential varies $180 $180 varies 100% 6 Battery Backup Storage - Residential varies $180 $180 varies 100% 7 Electric Vehicle Charger - Residential varies $180 $180 varies 100% 8 Generator - Residential varies $180 $180 varies 100%
9 Rooftop Solar Permit - Residential
a) 15kW or less $450 $450 [a]
b) Above 15kW $450 base fee, plus $15 per
kW for each kW above
15kW
$450 base fee, plus $15 per
kW for each kW above
15kW
[a]
10 Rooftop Solar Permit - Non-Residential
a) 50kW or less $1,000 $1,000 [a]
b) 50kW – 250kW $1,000 base fee, plus $7
per kW for each kW above
50kW up to 250kW
$1,000 base fee, plus $7
per kW for each kW above
50kW up to 250kW
[a]
c) Above 250kW $2,400 base fee, plus $5
per kW for each kW above
250 kW
$2,400 base fee, plus $5
per kW for each kW above
250 kW
[a]
11 Ground-Mount Solar varies $360 $360 varies 100%
12 Swimming Pool/Spa Equipment Change-out Only varies $180 $180 varies 100% 13 Swimming Pool Replaster varies $180 $180 varies 100% 14 Residential Voluntary Seismic Retrofit varies $270 $270 varies 100% Fee Description
A. Fees for Commonly Requested and Minor Miscellaneous Building Permit Types. Fees shown in this section (Section A.) include all applicable inspection, and plan review fees. Additional permit processing fees apply. Additional fees may apply for services provided by other City Departments (e.g. Planning Review), Technology Enhancement Fees, and Fees Collected on Behalf of Other Agencies.

3 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - BUILDING FEES
Fee Description Current Fee Cost of Service Proposed Fee Fee Change Proposed Cost Recovery Note A. Fees for Commonly Requested and Minor Miscellaneous Building Permit Types. Fees shown in this section (Section A.) include all applicable inspection, and plan review fees. Additional permit processing fees apply. Additional fees may apply for services provided by other City Departments (e.g. Planning Review), Technology Enhancement Fees, and Fees Collected on Behalf of Other Agencies. 15 Retaining Wall / CMU Wall
a) Wall Under 6' in height varies $360 $360 varies 100% b) Wall Over 6' in height
i) Up to 100 LF varies $720 $720 varies 100%
ii) Each Additional 100 LF varies $45 $45 varies 100%
16 Window / Sliding Glass Door - Retrofit / Repair
a) Up to 5 varies $180 $180 varies 100%
b) Over 5 varies varies See Permit Fee Table
17 Fences Requiring a Building Permit varies $180 $180 varies 100% [a] Total fees shall not exceed amounts outlined in California Government Code 66015(a)(1).

4 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - BUILDING FEES
Current Fee Cost of Service Proposed Fee Fee Change Proposed Cost Recovery Note 1 Building Permit and Plan Review Fee
Based on Valuation as Determined by the Building Official (50% due at submittal / 50% due at issuance) (fee is calculated at "a+b+c") a) Valuation: from $1 - $3,000 $205 $270 $270 $65 100%
b) Valuation: applies to portion above $3,001 and below $1,000,000 .026 x total valuation $0.046 .046 x total valuation .20 x total valuation c) Valuation: applies to portion above $1,000,000 .0075 x portion of valuation over $1,000,000
$0.013 .013 x portion of valuation
over $1,000,000
.005 x total valuation
Fee Description
Determination of Valuation for Fee-Setting Purposes
B. Permit and Plan Review Fee for New Buildings, Additions, Tenant Improvements, Residential Remodels, and Combined Mechanical, Electrical, and/or Plumbing Permits ● Project valuations shall be based on the total value of all construction work, including all finish work, roofing, electrical, plumbing, heating, air conditioning, elevators, fire-extinguishing systems and any other permanent equipment. If, in the opinion of the Building Official, the valuation is underestimated on the application, the permit shall be denied, unless the applicant can show detailed estimates to meet the approval of the Building Official. Final building permit valuation shall be set by the Building Official. For determining project valuations for new construction, the Building Official may use data published by the International Code Council (ICC) (building valuation data table, typically updated in February and August of each year). The final building permit valuation shall be set at an amount that allows the City to recover its costs of applicant plan check, permit and inspection activities.

Note: For construction projects with permit fees calculated using Section B, additional fees apply for permit issuance. Additional fees may apply for services provided by other City Departments (e.g. Planning Review), and Fees Collected on Behalf of Other Agencies (e.g. State of California).

5 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - BUILDING FEES
Current Fee Cost of Service Proposed Fee Fee Change Proposed Cost Recovery Note 1 Permit Processing Fee $75 $75 100%
2 Business License Inspection Fee
a) Residential Home Occupation $90 $90 100%
b) Non-Residential $90 $90 100%
3 In-lieu Housing Fee (if unit not affordable housing) - per square foot $0.45 $0.45 4 General Plan Maintenance 8% surcharge on all
Building Permits
8% surcharge on all
Building Permits
5 I.T. Service Fee $0.0075 x valuation
(valuation capped at
$1,000,000)
$0.0075 x valuation
(valuation capped at
$1,000,000) 6 Strong Motion Instrumentation (SMI) Fee Calculation a) Residential $0.50 or valuation x .00013 $0.50 or valuation x .00013 b) Commercial $0.50 or valuation x .00028 $0.50 or valuation x .00028 7 Building Standards (SB 1473) Fee Calculation (Valuation) a) $1 - $25,000 $1 $1
b) $25,001 - $50,000 $2 $2
c) $50,001 - $75,000 $3 $3
d) $75,001 - $100,000 $4 $4
e) Each Add'l $25,000 or fraction thereof Add $1 Add $1 8 Temporary Certificate of Occupancy (per 30 Days) $450 $450 100% 9 Building Re-Address Processing $72 $135 $135 $63 100% 10 Damaged Building Survey (Fire, Flood, Vehicle Damage, Etc.) $270 $270 100% 11 Demolition
a) Demolition - Commercial $273 $360 $360 $87 100%
b) Demolition - Residential $182 $225 $225 $43 100%
12 Unsafe Building repair, demolition or moving structure Charged at Cost Charged at Cost 100% 13 Permits – Change Ownership/Add Contractor-Per Request $145 $180 $180 $35 100% 14 Permit/Application Reinstatement Fee $200 $225 $225 $25 100% 15 Permit Extension of Time-Per Request $72 $90 $90 $18 100% C. Other Fees
Activity Description

6 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - BUILDING FEES
Current Fee Cost of Service Proposed Fee Fee Change Proposed Cost Recovery Note C. Other Fees
Activity Description
Other Fees
16 After Hours Inspection (per hour) (4-hour minimum) $91 $216 $216 $125 100% 17 Re-inspection Fee (2nd Time or More) (per hour) $176 $180 $180 $4 100% 18 Missed Inspection Fee $90 $90 100%
19 Additional Plan Review required by changes, additions, revisions to the approved plans. Fee is per hour with a 1 hour minimum
$176 $180 $180 $4 100%
20 Additional Plan Review Required, applies to 3rd resubmittal (4th overall submittal) (per hour)
$176 $180 $180 $4 100%
21 Use of outside consultants for special plan checking and inspection Charged at Cost + 25% Administration Fee
Charged at Cost
+ 25% Administration Fee
100%
22 Duplicate Copy of Permit $30 $30 100%
23 Duplicate Copy of Certificate of Occupancy $30 $30 100% 24 Construction and Demolition Waste Management Review Fee $90 $90 100% 25 Inspection for which no fee is otherwise indicated - per hour, 1 hour minimum – Use for Certificate of Occupancy
$176 $180 $180 $4 100%
Violation Fees
26 Fee for commencing construction without permit(s). This is in addition to the standard building permit fees.
2x the permit fee 2x the permit fee

7 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - BUILDING FEES
Group (2021 International Building Code) IA IB IIA IIB IIIA IIIB IV VA VB A-1 Assembly, theaters, with stage 335.89 324.58 316.94 304.93 286.87 278.00 295.62 266.02 257.55 A-1 Assembly, theaters, without stage 307.39 296.08 288.44 276.42 258.37 249.50 267.12 237.51 229.05 A-2 Assembly, nightclubs 269.94 261.93 254.48 245.85 230.56 223.99 237.02 209.57 202.79 A-2 Assembly, restaurants, bars, banquet halls 268.94 260.93 252.48 244.85 228.56 222.99 236.02 207.57 201.79 A-3 Assembly, churches 311.88 300.57 292.93 280.91 263.30 254.43 271.60 242.45 233.98 A-3 Assembly, general, community halls, libraries, museums 266.07 254.76 246.12 235.10 216.33 208.46 225.80 195.47 188.01 A-4 Assembly, arenas 306.39 295.08 286.44 275.42 256.37 248.50 266.12 235.51 228.05 B Business 260.69 251.13 241.86 231.65 210.99 202.73 222.56 186.21 177.81 E Educational 273.46 263.96 255.62 245.04 228.69 217.00 236.61 200.36 193.94 F-1 Factory and industrial, moderate hazard 160.20 152.78 143.34 138.64 123.55 117.41 132.48 102.44 95.93 F-2 Factory and industrial, low hazard 159.20 151.78 143.34 137.64 123.55 116.41 131.48 102.44 94.93 H-1 High Hazard, explosives 149.46 142.04 133.60 127.90 114.12 106.97 121.74 93.00 0.00 H234 High Hazard 149.46 142.04 133.60 127.90 114.12 106.97 121.74 93.00 85.50 H-5 HPM 260.69 251.13 241.86 231.65 210.99 202.73 222.56 186.21 177.81 I-1 Institutional, supervised environment 262.22 252.95 244.31 235.67 215.42 209.47 235.71 193.82 187.73 I-2 Institutional, hospitals 434.15 424.59 415.32 405.12 383.35 0.00 396.02 358.57 0.00 I-2 Institutional, nursing homes 302.01 292.45 283.18 272.97 253.83 0.00 263.88 229.05 0.00 I-3 Institutional, restrained 295.86 286.31 277.03 266.83 247.95 238.69 257.74 223.17 212.77 I-4 Institutional, day care facilities 262.22 252.95 244.31 235.67 215.42 209.47 235.71 193.82 187.73 M Mercantile 201.37 193.36 184.91 177.28 161.72 156.15 168.45 140.73 134.95 R-1 Residential, hotels 264.67 255.41 246.77 238.13 218.35 212.40 238.17 196.75 190.67 R-2 Residential, multiple family 221.32 212.06 203.42 194.78 175.96 170.01 194.82 154.36 148.28 R-3 Residential, one- and two-family 209.61 203.74 198.94 195.12 188.41 181.45 191.77 175.86 165.67 R-4 Residential, care/assisted living facilities 262.22 252.95 244.31 235.67 215.42 209.47 235.71 193.82 187.73 S-1 Storage, moderate hazard 148.46 141.04 131.60 126.90 112.12 105.97 120.74 91.00 84.50 S-2 Storage, low hazard 147.46 140.04 131.60 125.90 112.12 104.97 119.74 91.00 83.50 U Utility, miscellaneous 114.09 107.37 99.89 95.60 85.13 79.54 90.99 67.39 64.19 Building Valuation Data Table

8 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - PLANNING FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Cost Recovery Note
Affordable Housing In-Lieu
1 Funding assistance application fee $878 $1,528 $1,528 $650 100% 2 Reasonable Accommodation (ADA) fee (no fee required if in conjunction with other discretionary permit)
$170 $478 $478 $307 100%
Coastal Permits - May be billed at direct cost
3 Coastal Development Permit (CDP) (Administrative) $1,664 $3,725 $3,725 $2,060 100% 4 Coastal Permit in combination with Conditional Use Permit No Fee No Fee $0 5 Coastal Permit in combination with Tentative Parcel Map or Tentative Tract Map No Fee No Fee $0 6 Regular CDP Without CUP (Planning Commission) - New single family and single family additions over 25% in coastal appeals area, Multiple Dwelling, Office, Commercial, Convention, Industrial & Institutional
$15,990 $17,572 $17,572 $1,582 100%
7 Additions between 10% and 25% to a Single Family Dwelling in Coastal Appeals area (Planning Commission)
$6,923 $9,741 $9,741 $2,818 100%
8 Emergency Permit (excluding required regular CDP) $1,222 $2,483 $2,483 $1,261 100% 9 Other administrative – Tree Removal, private $673 $1,146 $1,146 $473 100% Environmental - May be billed at direct cost
10 Categorical Exemption $79 $382 $382 $303 100%
11 Negative Declaration $4,764 $7,640 $7,640 $2,876 100% 12 Mitigated Negative Declaration, Contracted Out Contract amount + 25% administrative
fee; $12,224 Deposit
Contract amount
+ 25% administrative
fee; $12,224 Deposit
13 In House MND - Fee per Application $7,862 $12,224 $12,224 $4,362 100% 14 Filing Fee - for environmental document
a) City $230 $382 $382 $152 100%
b) County $81 [a]
15 Environmental Impact Report
(Contract amount + 25% administrative fee to be deducted from deposit) $5,000 deposit $10,000 deposit deposit
Activity Description

9 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - PLANNING FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Note
Miscellaneous
16 Sidewalk Vending Permit - Fee for both Initial fee and annual renewal fee $391 $478 $478 $87 100% 17 Letter regarding land use confirmation or other research – per hour cost $187 $191 $191 $4 100% 18 Development Agreement – charged at fully allocated hourly rates for all personnel involved, plus any outside costs
$10,000 deposit $10,000 deposit deposit
19 Extra Planning Commission Meeting -Applicant Requested Continuance $2,573 $3,056 $3,056 $483 100% 20 Fine, in addition to permit fee Two times the permit fee + plus $51 per day –
after notice.

Two times the permit
fee + plus $51 per day –
after notice.
$0
21 Appeal of City Decision, Excluding Coastal Development Permits in the Appeals Jurisdiction and Short-Term Rental Permits – Refundable if Appellant Prevails $336 $3,438 $344 $8 10%
22 Appeal of Short-Term Rental Permit Decision $336 $632 $632 $296 100% 23 Telecomm Facility – Administrative (new fee) $182 $382 $382 $200 100% 24 Street name/Rename Processing $417 $764 $764 $347 100% 25 Commercial Cannabis Operating Permit – New $10,416 $12,606 $12,606 $2,190 100% 26 Commercial Cannabis Operating Permit – Annual Renewal $6,102 $7,640 $7,640 $1,538 100% 27 Vacation Rental Monitoring and Administration Fee- annual permit fee $709 $764 $764 $55 100% 28 Conceptual Review Fee – Fee is credited toward any future discretionary permit application within 24 months. Per Application
$6,023 $6,685 $6,685 $662 100%
Notification Fees
29 Planning Commission Hearing $541 $573 $573 $32 100%
30 Administrative Permit Noticing $463 $478 $478 $15 100%

10 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - PLANNING FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Note
Sign Permits
31 Sign Permit $703 $764 $764 $61 100%
32 Sidewalk Sign or Dock Sign Permit $373 $382 $382 $9 100% 33 Sign Exception Permit $4,073 $6,112 $6,112 $2,039 100% 34 Master Sign Program - New $1,511 $1,528 $1,528 $17 100% 35 Master Sign Program amendment $703 $764 $764 $61 100% 36 Fines – Temporary, beyond time allowed by Ordinance – per day after notice given $59 $59 $0 37 Fines – Permanently attached sign w/o permit – per day after notice $59 $59 $0 Subdivisions (May be billed at direct cost)
38 Tentative Parcel Map Application $7,888 $9,932 $9,932 $2,044 100% 39 Tentative Tract Map 0 to 10 lots, add $100.00 per lot over 10 lots, cost per map $15,246 $17,572 $17,572 $2,326 100% 40 Lot Line Adjustment, per application $2,721 $3,056 $3,056 $335 100% 41 Certificate of compliance (legal determination) – initial fee covers up to 4 lots. $1,440 $1,528 $1,528 $88 100% 42 Additional fee per lot over 4 lots $302 $287 $287 ($16) 100% 43 Lot Mergers $2,721 $1,528 $1,528 ($1,193) 100%
Text Amendments & Annexations - May be billed at direct cost 44 Zone Ordinance Changes/Local Coastal Plan
If contracted – contract amount + 25% administrative fee. Fee amount becomes an initial deposit.
45 Minor (single section revisions/additions) deposit for cost of staff and outside consultant
$5,787 $7,640 $7,640 $1,853 100%
46 Major (multiple sections revised/added) deposit for cost of staff and outside consultant $11,574 $15,280 $15,280 $3,706 100% 47 Specific Plan (Billed as deposit with charges at the fully allocated hourly rates for all personnel involved + any outside costs). If contracted = cost + 25% administration fee.

Fee amount becomes an initial deposit for cost of staff and outside consultant. $5,787 $7,640 $7,640 $1,853 100%

11 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - PLANNING FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Note
General Plan/Local Coastal Plan or Zoning Amendment
If contracted – cost + 25% administrative fee. Fee amount becomes an initial deposit. 48 Minor (single section revisions/additions) deposit for cost of staff and outside consultant
$5,787 $7,640 $7,640 $1,853 100%
49 Major (multiple sections revised/added) deposit for cost of staff and outside consultant $11,574 $15,280 $15,280 $3,706 100% 50 Planned Development (-PD) Overlay District Plan (processed concurrent with Conditional Use Permit)
minimum deposit fee
$10,000
minimum deposit fee
$10,000
deposit
51 Annexations – Deposit to be determined by staff. Billed at fully allocated staff cost. If contracted – contract amount + 25% administrative fee. Deposit for cost of staff and outside consultant
$11,574 $10,000 deposit deposit
Time Extensions
52 Time Extension - Administrative $345 $382 $382 $37 100% 53 Time Extensions for Tract Maps and Parcel Maps. Used after exhaustion of administrative time extensions above (Planning Commission) $4,147 $6,112 $6,112 $1,965 100%
54 Time extension for CUP, regular Coastal Permits and variance. Used after exhaustion of administrative time extensions above (Planning Commission) $2,999 $3,820 $3,820 $821 100%

12 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - PLANNING FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Note
Use Permits
All use permits may be billed at direct cost at the discretion of the Community Development Director and the scheduled fee would then be deemed as a deposit. All Projects in the Planned Development Overlay require a Use Permit 55 Conditional Use Permit (CUP) $15,990 $17,572 $17,572 $1,582 100% 56 Design Review Permit (Planning Commission) $8,181 $9,837 $9,837 $1,656 100% 57 Design Review Permit (Administrative) $2,721 $3,247 $3,247 $526 100% 58 Design Review Permit in Combination with Regular CDP No Fee No Fee $0 59 CUP for Occupancy Change in Non-residential Zones $6,782 $7,449 $7,449 $667 100% 60 CUP for additions to non-conforming uses, not adding units $7,062 $9,741 $9,741 $2,679 100% 61 Minor Use Permit $2,721 $3,629 $3,629 $908 100%
62 Temporary Use Permit – Longer than 10 days $2,036 $2,483 $2,483 $447 100% 63 Temporary Use Permit – 7 consecutive days or 10 non-consecutive days $732 $955 $955 $223 100% 64 Revision to Existing Permits (Planning Commission) Major Revision $10,577 $9,741 $9,741 ($836) 100% 65 Major revision while processing $5,944 $6,112 $6,112 $168 100% 66 Minor revision to existing permits (Administrative minor revision) $832 $1,719 $1,719 $887 100% 67 Modification (Planning Commission) $6,687 $8,213 $8,213 $1,526 100% 68 Modification (Administrative) $832 $1,337 $1,337 $505 100% 69 Variance $6,687 $7,640 $7,640 $953 100%
70 Variance or Modification (Planning Commission) processed with other permits $1,210 $1,528 $1,528 $318 100% Document Storage Fee - Planning & Building
71 First page of plan set $18 $18 $0
72 Fee for each additional page of plan set $8 $8 $0
73 First non-plan set page (8 1/2 x 11 to 11 x 17) $5 $5 $0 74 Fee for each additional non-plan set page $1 $1 $0

13 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - PLANNING FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Note
Hourly Billing Rates and/or Rates for Services Not Otherwise Listed Above 75 In-House Planning (per hour) $191 $191 100%
76 Specialized Attorney Review Actual Cost 100%
77 Contract Service Providers Actual Cost + 25%
Admin Fee
100%
[a] Amount shown is intended to mirror County filing fee. In the event of discrepancy between amount shown and actual fee adopted by the County, the actual County fee shall supersede the amount shown. [b] In addition to amounts shown, applicant is responsible for all costs collected on behalf of other agencies (e.g., LAFCO), all costs of specialized attorney services, all outside agency/vendor costs, etc.

14 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - ENGINEERING, ENCROACHMENT PERMIT, AND UTILITY SERVICES FEES Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Cost Recovery Note

ENGINEERING DEVELOPMENT REVIEW FEES
City Engineer Map Review Fees Subdivisions - (Public Works) 1 Final Map - Tract, minimum fee (MBMC16.24.040J) $7,562 $8,448 $8,448 $886 100% 2 Final Map – Tract, Per lot for every lot over 4 lots $293 $384 $384 $91 100% 3 Final Parcel Maps $5,660 $6,144 $6,144 $484 100%
4 Map Amendment Review, minimum fee $1,804 $2,304 $2,304 $500 100% PUBLIC IMPROVEMENT PLANS (Inspections/Plan Review - time and materials costs may be added to minimum, when actual cost exceeds the minimum fee) 5 Public/Subdivision Improvement Plan Check, and Inspection as a Percentage of the approved Engineer’s estimate for Subdivision Improvements 7% 7% 7% $0
6 Lot Line Adjustment, per application $2,555 $3,072 $3,072 $517 100% 7 Lease Line Adjustment, per application $2,555 $4,608 $4,608 $2,053 100% Abandonment Process
8 Street/R-O-W Abandonment Process $8,490 $9,216 $9,216 $726 100% 9 Summary Abandonment $4,263 $4,608 $4,608 $345 100%
10 Right of Way Dedication, per permit $616 $768 $768 $152 100% Activity Description

15 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - ENGINEERING, ENCROACHMENT PERMIT, AND UTILITY SERVICES FEES Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Note
Encroachment Permits (MBMC13.16.140)
Time and materials costs may be added to minimum, when actual cost exceeds the minimum fee (Public Works)
11 Regular – Surface Improvements (up to 20 lineal feet; includes inspection) $377 $384 $384 $7 100% 12 Each additional 20 lineal feet (includes (1) inspection) $218 $192 $192 ($26) 100% 13 Regular – Underground Improvements
a) 0-50 Square Feet $630 $768 $768 $138 100%
b) 50-100 Square Feet $850 $960 $960 $110 100%
c) 100+ Square Feet $850 + $1.50/sf over
100sf
varies $960 + $1.50/sf over
100sf
$110 + $0.00/sf over
100sf
100%
14 Special Encroachment Agreement - Private Encroachments into the Public R/W a) Applicant Provided Electronic Exhibit (8 1/2" x 11") $750 $768 $768 $18 100% b) City Provided Electronic Exhibit (8 1/2" x 11") $1,483 $1,536 $1,536 $53 100% 15 Annual Utility Encroachment Permit $4,478 $5,376 $5,376 $898 100% 16 Wide Load Permit with Traffic Control Plans - Per Year (Set by State of California) $90 $90 $0 17 Wide Load Permit with Traffic Control Plans - One Time (Set by State of California) $16 $16 $0 18 Temporary Encroachment Agreement
Permit for non-construction activities that encroach into City R/W for a limited time. (e.g., Rolloff/Dumpster, Storage Container, Restricted Parking, etc.) $189 $192 $192 $3 100%
19 Administrative citation for failure to correct a violation shall be charged per 1.03.050 of the Municipal Code
See Municipal Code See Municipal Code See Municipal Code Streets & Sidewalks
20 Agreement for Deferral of Improvements (pending Planning Commission and City Council approval) - Plus current San Luis Obispo Recording Fees $961 $3,072 $3,072 $2,111 100%
Planning and Engineering Development Review Fees
21 Additional Plan Review Required, applies to 3rd resubmittal (4th overall submittal) $168 $192 $192 $24 100%

16 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - ENGINEERING, ENCROACHMENT PERMIT, AND UTILITY SERVICES FEES Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Note
Storm Water Fees (Public Works)
Single Family
22 Planning review of preliminary stormwater plan, per application $192 $192 $192 ($0) 100% 23 Building permit review of stormwater plan, per permit $392 $384 $384 ($8) 100% 24 Inspection of stormwater facility/erosion control, per application $236 $192 $192 ($44) 100% Commercial/Multi-Family
25 Planning review of preliminary stormwater plan, per application $384 $384 $384 $0 100% 26 Building permit review of stormwater plan, per permit $784 $960 $960 $176 100% 27 Inspection of stormwater facility/erosion control, per application $472 $576 $576 $104 100% Trees
28 Notification $369 $384 $384 $15 100%
29 Appeal to Planning Commission $369 $1,536 $1,536 $1,167 100% 30 Re-appeal to City Council (if denied by Planning Commission) $369 $1,536 $1,536 $1,167 100% 31 Tree Removal Permit (MBMC12.08.110) $369 $384 $384 $15 100% Inspection and Review Fees (Public Works)
32 Review encroachment permit application exhibit for changes to approved building plans
$168 $384 $384 $216 100%
33 Additional inspection required after 3 inspections $168 $192 $192 $24 100% 34 Fee for commencing construction without permit(s).

This is in addition to the standard Encroachment Permit. 2 times the permit fee 2 times the permit fee
35 Traffic Control Plan Check Inspection, per submittal $163 $192 $192 $29 100% 36 Post-Construction Stormwater Requirements (PCRs) Inspection (Commercial/MultiFamily)Charged at Cost + 25% Administration Fee
Charged at Cost + 25%
Administration Fee
37 Trench/Asphalt Resurfacing Inspection
a) 0-50 Square Feet $109 $192 $192 $83 100%
b) 50-100 Square Feet $217 $288 $288 $71 100%
c) 101+ Square Feet $288 + $1.50/sf over
100sf
varies $288 + $1.50/sf over
100sf
38 Use of Outside Engineering Consultants for Special Plan Checking and/or Inspection Charged at Cost + 25% Administration Fee
Charged at Cost + 25%
Administration Fee

17 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - ENGINEERING, ENCROACHMENT PERMIT, AND UTILITY SERVICES FEES Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Note
WATER
39 Water Meter Installation Contractor provides
service line install.

Meter cost is the actual
cost of the meter plus
the actual costs of parts
for City install of meter
and meter box. Partial
credit may apply if staff
are able to use existing
parts.

Contractor provides
service line install.

Meter cost is the actual
cost of the meter plus
the actual costs of parts
for City install of meter
and meter box. Partial
credit may apply if staff
are able to use existing
parts.
40 Connection Permit - This is in addition to an Encroachment Permit. $187 $262 $262 $75 100% 41 Water Meter Re-Read $79 $87 $87 $9 100%
42 Reconnection Fee for Non-Payment of Water Service
a) During Regular Business Hours
i) Low Income $103 $131 $61 ($42) 46% [a]
ii) All Others $103 $131 $131 $28 100%
b) During Non-Business Hours
i) Low Income $685 $450 $182 ($503) 40% [a]
ii) All Others $685 $450 $450 ($235) 100%
43 Water meter lock and any other damage. Subject to Police investigation and potential prosecution for theft of water and tampering with City Property Time and materials
44 Water Meter Testing (Remove, test and replace meter), per test plus outside cost of testing. Fee refunded if meter test indicates an overage of greater than 2%. $308 $328 $328 $20 100%
45 Water Equivalency Unit (WEU) "In-Lieu" Fee - per WEU required. In-lieu fee is an alternative for an applicant that does not provide the WEU offset, as required and set by Council Resolution
2 x $3,851/WEU
required = $7,702
2 x $3,851/WEU
required = $7,702
46 Fire Hydrants Meter Installation and Removal for Contractor Use (MBMC13.04.360):

Rental, per day plus cost of water at current rate structure. $296 $328 $328 $31 100%
47 Hydrant Meter Rental, per day plus cost of water at current rate structure. $5 per day and $1,500 refundable deposit.

Water Meter will be
$5 per day and $1,500
refundable deposit.

Water Meter will be
$0
48 Certificate of Compliance – Water Retrofit $91 $98 $98 $7 100%

18 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - ENGINEERING, ENCROACHMENT PERMIT, AND UTILITY SERVICES FEES Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Note

WASTEWATER
49 Connection Permit - This is in addition to an Encroachment Permit. $187 $262 $262 $75 100% 50 Raising Manhole to Grade, fee per manhole $187 $197 $197 $9 100% 51 Sewage Spill Cleanup - cost of providing service Fully Allocated Hourly Rate for all staff
involved
Fully Allocated Hourly
Rate for all staff
involved Pre-Treatment Inspections
52 FOG Inspection $60 $60 $0
53 FOG Re-inspection $60 $60 $0
54 Pre-Treatment Class S annual permit fee $462 $462 $0 55 Pre-Treatment Class G annual permit fee $44 $44 $0
56 Pre-Treatment Class F annual permit fee $15 $15 $0
Other Fees
57 Dedication 15 Gallon Tree and Plaque Actual Cost of Labor and Parts
Actual Cost of Labor
and Parts
58 Dedication Bench and 1 Plaque Space Actual Cost of Labor and Parts
Actual Cost of Labor
and Parts
59 Dedication Whole Bench with 3 Plaque Spaces Actual Cost of Labor and Parts
Actual Cost of Labor
and Parts
60 Dedication for 1 or 2 Plaque Space(s) on existing Memorial Bench Actual Cost of Labor and Parts
Actual Cost of Labor
and Parts
61 Other Park Amenity Dedication To Be Determined on an individual basis
To Be Determined on an
individual basis
Flood Hazard Development Permit (MBMC14.72.040)
Time and materials costs may be added to minimum, when actual cost exceeds the minimum fee (Public Works)
62 Flood Hazard Development Permit, minimum fee
a) SFR and Duplex $435 $576 $576 $141 100%
b) Commercial and Multi-family up to 1/2 Acre $600 $768 $768 $168 100% c) Commercial and Multi-family over 1/2 Acre $1,000 $1,152 $1,152 $152 100% 63 Flood plain letter $192 $192 $192 ($0) 100%
[a] For residential customers who demonstrate to the City a household income below 200 percent of the federal poverty line, the City will limit any service restoration charges during normal operating hours to fifty dollars ($50), and during nonoperational hours to one hundred fifty dollars ($150). These limits are subject to an annual adjustment for changes in the Bureau of Labor Statistics Consumer Price Index for All Urban Consumers (CPI-U) beginning January 1, 2021. [b] Fees listed are based on the estimated number of hours required to perform a standard service request and the typical cost of materials required to perform the requested service. For service requests that are anticipated to require efforts or materials, in excess of those typically required, the Department reserves the right to bill the service recipient, for Department costs anticipated to be incurred in excess of the fee shown in this schedule.

19 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - FIRE FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Cost Recovery Charge Basis Note

FIRE SPECIFIC ITEMS
1 Water Based Fire Protection Systems: [a]
a) Fire Sprinkler Commercial/Multi Family/Other - New System i) Plan Review (up to 50 heads) $501 $501 varies 100% per installation ii) Inspection (up to 50 heads) $683 $683 varies 100% per installation b) Fire Sprinkler Commercial/Multi Family/Other - Alteration i) Plan Review (up to 25 heads) $228 $228 varies 100% per installation ii) Inspection (up to 25 heads) $319 $319 varies 100% per installation c) Fire Sprinkler, Per additional head - New or Alteration i) Plan Review $1 $1 varies 100% per head
ii) Inspection $2 $2 varies 100% per head
d) Fire Sprinkler Single Family/Duplex - New System
i) Plan Review $364 $364 varies 100% per installation
ii) Inspection $546 $546 varies 100% per installation
e) Fire Sprinkler Single Family/Duplex - Alteration of Existing System i) Plan Review $137 $137 varies 100% per installation
ii) Inspection $273 $273 varies 100% per installation
f) Standpipe
i) Plan Review (per vertical standpipe) $364 $364 varies 100% per system ii) Inspection (per vertical standpipe) $728 $728 varies 100% per system g) Fire Protection Underground System
i) Plan Review $546 $546 varies 100% each
ii) Inspection $728 $728 varies 100% each
h) Per Additional Sprinkler Riser or Hydrant
i) Plan Review $182 $182 varies 100% each
ii) Inspection $364 $364 varies 100% each
2 Fire Alarm System: [a]
a) Fire Alarm - New System
i) Plan Review (up to 25 devices) $319 $319 varies 100% per system ii) Inspection (up to 25 devices) $455 $455 varies 100% per system b) Fire Alarm - Alteration
i) Plan Review (up to 5 devices) $182 $182 varies 100% per system ii) Inspection (up to 5 devices) $273 $273 varies 100% per system c) Per Additional Device
i) Plan Review - New or Alteration $3 $3 varies 100% per device ii) Inspection - New or Alteration $4 $4 varies 100% per device Activity Description

20 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - FIRE FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Charge Basis Note
3 Alternative Automatic Extinguishing Systems: [b]
a) Dry, Wet, CO2, Halon, UL 300, Clean Agent, Spray Booth, Other i) Plan Review $273 $273 varies 100% per system
ii) Inspection $410 $410 varies 100% per system
4 Other Fire Construction Reviews and Inspections: [b]
a) LPG, Cryogenics, Compressed Gas, Medical Gas, Battery Storage Systems, Industrial Oven, & other Fire Construction Permit i) Plan Review $455 $455 varies 100% per system
ii) Inspection $546 $546 varies 100% per system
b) Public School Access & Water Supply Plan Check (hourly) - Minimum 1 hour review deposit required
$182 $182 varies 100% per review [c]
c) Alternative Materials & Methods of Construction (hourly) - Minimum 1 hour review deposit required
$182 $182 varies 100% per review [c]
5 Fire Code Verification:
a) Operational Permit, Special Event or Temporary Use Event Plan Review/Application Code Review and Presubmittal Planning Related Reviews (hourly) - Minimum 1/2 hour review deposit, additional time billed at hourly rate
$91 $91 varies 100% per 1/2 hour [c]
b) Operational and Special Event permit inspection (hourly) - additional time billed at hourly rate
$182 $182 varies 100% per hour [c]
c) Special Events or Temporary Use Events Review - Minimum 1/2 hour review, additional time billed at hourly rate
$182 $182 varies 100% per hour [c]
d) Inspection Outside of Normal Work Hours - Hourly Rate $218 $218 varies 100% per hour [f] 6 California Fire Code Verification $182 $182 varies 100% per hour 7 Plan Review Performed by City-Approved Consultant Consultant Cost + 15% Admin Fee
Consultant Cost +
15% Admin Fee

21 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - FIRE FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Charge Basis Note

OTHER MISCELLANEOUS FEES
8 Fire Hazard Real Estate Inspection Fee $182 $182 varies 100% per hour; 1 hour minimum
9 Annual R-1/R-2 Occupancy Inspection: [b]
a) Base Fee (per building) $91 $91 varies 100% per inspection b) Per Unit Fee $5 $5 varies 100% per unit beyond 3
10 Fire Clearance Inspection: [d]
a) Less than 500 SqFt $137 $137 varies 100% per certificate b) 501 - 1,000 SqFt $182 $182 varies 100% per certificate c) 1,001 - 3,000 SqFt $273 $273 varies 100% per certificate d) Greater than 3,000 SqFt $501 $501 varies 100% per certificate 11 Research $91 $91 varies 100% per half-hour
12 Re-Inspection Fee $182 $182 varies 100% per hour [h] 13 Service Required in Excess of Standard. Applies to all fees listed in schedule.

See footnote
$182 $182 varies 100% per hour [e]
14 Supplemental Plan Check Fee (per hour for more than two reviews) $182 $182 varies 100% per hour 15 New Construction Plan Check: [g]
a) A - Assembly $364 $364 varies 100% each
b) B, I, M - Business, Institutional, Mercantile $364 $364 varies 100% each c) E, R-2 - Educational, Multi-Family $364 $364 varies 100% each d) F, S, H - Factory, Storage, Hazardous $455 $455 varies 100% each e) All Tenant Improvements $182 $182 varies 100% each
f) U - Utility Structures and Buildings $182 $182 varies 100% each g) All Shell Buildings $364 $364 varies 100% each
h) Other $182 $182 varies 100% per hour
16 Records Management $10 varies per sheet
17 Work Without a Permit 2x applicable fee
18 Special Request for Fire Department Personnel Services overtime rate by rank
per person

22 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - FIRE FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Charge Basis Note
[a] Fee includes up to two plan checks or three inspections. Additional costs to be recovered at staff hourly rate. [b] Fee includes up to two plan checks or two inspections. Additional costs to be recovered at staff hourly rate. [c] Actual costs - may also be charged by actual costs using the fully burdened hourly rates plus any outside consultant costs if applicable. Review time exceeding initial hours assumed for establishing deposit is billed at hourly rate. [d] Fee includes research and up to two inspections. Additional costs to be recovered at staff hourly rate. [f] Inspection outside normal work hours will require hourly fees in addition to other required fees. [g] Planning submittals for fire review and related correspondence, meetings, etc. may be charged for at hourly rate during the construction plan review. [h] Fees associated with review of tank installations/underground storage/hazardous materials will be set to match fees adopted by regional CUPA. [e] Each fee listed in this schedule is based on the estimated number of hours required to perform a standard service request. The standard number of hours estimated can be calculated by dividing the fee amount by $182, the Division's fullyburdened hourly rate. For example, a fee amount of $364 assumes roughly 2.00 hours will be required to perform a standard request for the fee related service. Review and inspection efforts that exceed the standard number of hours used to calculate the fee by more than one hour will be billed hourly for any time spent in excess of the standard hours built into the fee.

23 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - FIRE FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Cost Recovery Charge Basis Note
1 Fire & Safety Inspection Program
(Fees Collected Through Business Licensing)
a) B2 Business Inspection (4-Yr Self Inspection Program) $47 $49 $49 $0 100% Each b) Non-B2 Business Inspection (Annual Inspection) $166 $182 $182 $0 100% Each 2 Engine Company Business Inspection
a) First Inspection No Charge $132 No Charge $0 0% Each b) Second Inspection No Charge $132 No Charge $0 0% Each c) Third and Subsequent Inspections $411 $132 $396 ($15) varies Each 3 Annual Weed and Hazard Abatement
a) First Inspection No Charge $132 No Charge $0 0% Each b) Second and Subsequent Inspections $230 $132 $264 $34 varies Each c) Administrative Citation for Failure to Correct a Violation See MBMC See MBMC Each 4 Incident Response
a) Negligent Incidents: Response Due to Negligent/Malicious Act (e.g., DUI Traffic Accident, Climber on Morro Rock, Incendiary Fire, Negligent Hazardous Material Incident, Negligent Confined Space Incident, etc.) Personnel Charges,
As Specified in
Equipment and
Personnel Charges,
Plus Actual Cost of
Materials and
Outside Services
Personnel Charges,
As Specified in
Equipment and
Personnel Charges,
Plus Actual Cost of
Materials and
Outside Services
Each
b) Excessive or Malicious False Alarms: Emergency Response Due to "Failure to Notify" When Working on or Testing Fire/Alarm System Personnel Charges,
As Specified in
Equipment and
Personnel Charges,

0.5 hours min
Personnel Charges,
As Specified in
Equipment and
Personnel Charges,

0.5 hours min
Each
c) Alarm System Malfunction Resulting in 2 in 30 Days or 3 in 12 Months Personnel Charges, As Specified in
Equipment and
Personnel Charges,
Plus Actual Cost of
Materials
Personnel Charges,
As Specified in
Equipment and
Personnel Charges,
Plus Actual Cost of
Materials
Each
5 Cause and Origin Investigation Reports $435 $455 $435 $0 96% Per Report 6 Non-Renewal of Required Annual Permit 2x Applicable Permit Fee
2x Applicable Permit
Fee
7 Failure to Obtain Permit 2x Applicable Permit
Fee
2x Applicable Permit
Fee
8 Administrative Citation for Failure to Correct a Violation See MBMC See MBMC Each Activity Description

24 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - FIRE FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Charge Basis Note
9 Equipment and Personnel Charges
a) Equipment Varies CalOES CFAA Rate
b) Personnel
i) Fire Chief $268 $268 100% Per Hour
ii) Deputy Chief / Fire Marshal $182 $182 100% Per Hour iii) Administrative Technician $97 $97 100% Per Hour
iv) Fire Captain / Paramedic $149 $149 100% Per Hour
v) Fire Engineer $129 $129 100% Per Hour
vi) Firefighter $118 $118 100% Per Hour

25 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - POLICE FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Cost Recovery Charge Basis Note
1 Tow/Taxi Service Provider Application Fee $2,131 $2,163 $2,163 $32 100% 2 Taxi Operator Permit Application Fee $1,068 $1,158 $1,158 $90 100% 3 Taxi Operator Permit Application Renewal Fee $176 $177 $177 $1 100% 4 Second Hand Dealer Permit - City Application Fee (does not include Department of Justice fee) (MBMBMC5.40.330)
$1,227 $1,359 $1,359 $132 100%
5 Second Hand Dealer Permit renewal - City Application Fee (does not include Department of Justice fee) (MBMC5.40.330)
$333 $177 $177 ($156) 100%
6 Massage Therapist/Parlor Permit Application Fee
(MBMBMC5.40.330)
$176 $177 $177 $1 100%
7 Special Events Hourly Hourly Fully Burdened Hourly Rate for all staff involved
[a]
8 ABC Permit (each permit) $91 $101 $101 $9 100%
9 Special Event Equipment Fee-Per day, Per message board $54 $54 $0 Support Services Activity
10 Digital Photo Reproduction to CD, per device $5 $5 $0 11 Audio/Video Tape Reproduction - per device $5 $5 $0
12 Record Searches/Reviews/Clearance/ Responses - per hour, 1 hour minimum-fee per letter
$79 $153 $153 $74 100%
Officer Activity
13 Equipment Citation Sign Off $17 $26 $17 $0 66%
14 Vehicle Impound Fee Administrative Costs (CVD 22850.5) $225 $234 $234 $9 100% 15 Abandoned Vehicle Removal (junk vehicles/parts) $225 $234 $234 $9 100% 16 Firearms-seizure/storage (PC 33880) $148 $153 $153 $5 100% Activity Description

26 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - POLICE FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Charge Basis Note
State Mandated Costs
17 Concealed Weapons Permit $130 $254 $208 $78 82% [b]
18 Renewal of Concealed Weapons Permit
a) Renewal Permit $28 $203 $80 $52 39%
b) Amended Permit $11 $203 $11 ($1) 5%
19 Subpoena
a) Civil Subpoena Appearance Fee (per day; per employee) varies Actual Cost; with $275 per day initial amount
[c],[d],[e]
b) Subpoena Duces Tecum / Civil Subpoena for Records
i) Compliance Fee $15 $15 $0 [f]
ii) Standard Document Reproduction - per page up 8.5" x 14"
$0.10 $0.10 $0 [f]
iii) Microfilm Reproduction - per page $0.20 $0.20 $0 [f] iv) Oversize Document Reproduction or Documents
Requiring Special Processing
Actual Cost Actual Cost [f]
v) Clerical Costs (per hour) $24 $24 $0 [f]
vi) Postage Actual Cost Actual Cost [f]
vii) Third Person Witness of Offsite Record Retrieval and Return
Actual Cost Actual Cost [f]
20 Delinquent Parking Citation Copy, per page (VC 40206.5) $0.40 $0.40 $0 21 Repossessed Vehicle (set by California GC 41612) $15 $15 $0 22 Live Scan Fingerprint Fees (PC 13300(e))-per request $41 $51 $51 $10 100% Cost Recovery
23 DUI Emergency Response (MBMC3.40.030) Actual Cost Actual Cost Per Government Code Section 53155, charge the
actual costs incurred up to
$12,000 per response for
all responding personnel.

False Alarm Response (after 3rd false alarm in a year) (MBMC

9.22.020)
24 1st response within a year No Charge $195 No Charge
25 2nd response within a year No Charge $195 No Charge
26 3rd and subsequent response within a year $449 $195 $449 $0

27 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - POLICE FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Activity Description Cost Recovery Charge Basis Note
Commercial Cannabis Business Permits
27 Commercial Cannabis business – Initial employee background investigation fee for each regular employee investigation conducted.
$544 $603 $603 $59 100%
28 Commercial Cannabis business - Annual employee background investigation renewal fee for each regular employee
investigation conducted.
$272 $302 $302 $30 100%
29 Commercial Cannabis business – Initial
owner background investigation fee for each owner
investigation conducted.
$671 $704 $704 $32 100%
30 Commercial Cannabis business – annual
owner background investigation fee for each owner
investigation conducted.
$336 $352 $352 $16 100%
00 [f] California Evidence Code Section 1563.
[b] Does not include DOJ or other fees (PC25455), fee per permit. 20% of permit fee is paid at time of application, 80% of permit fee paid upon issuance. Actual costs of psychological testing, if any, are added to the above fees. Permit requires fingerprinting.
[c] Actual amounts paid shall be calculated in accordance with California Government Code 68096.1. (a) Any employee of a local agency who is obliged by a subpoena to attend a civil action or proceeding as a witness in litigation in a matter regarding an event or transaction that he or she perceived or investigated in the course of his or her duties, to which that local agency is not a party, shall receive the salary or other compensation to which he or she is normally entitled from that local agency during the time that he or she prepares for his or her response and appearance, during the time that he or she travels to and from the place where the court or other tribunal is located and while he or she is required to remain at that place pursuant to the subpoena. He or she shall also receive from that local agency the actual necessary and reasonable traveling expenses he or she incurred in complying with the subpoena. (b) The party at whose request the subpoena is issued shall reimburse the local agency for the full cost incurred by the local agency in paying the employee his or her salary or other compensation and traveling expenses as provided for in this section, for each day that the employee is required to remain in attendance pursuant to the subpoena. The amount of two hundred seventy-five dollars ($275), together with the subpoena, shall be tendered to that local agency for each day that the employee is required to remain in attendance pursuant to the subpoena. (c) If the actual expenses should later prove to be less than the amount tendered, the excess of the amount tendered shall be refunded. (d) If the actual expenses should later prove to be more than the amount tendered, the difference shall be paid to the local agency by the party at whose request the subpoena was issued. [d] Actual amounts paid shall be calculated in accordance with California Government Code 68097.2. (b) The party at whose request the subpoena is issued shall reimburse the public entity for the full cost to the public entity incurred in paying the peace officer, firefighter, state employee, trial court employee, or specified county employee his or her salary or other compensation and traveling expenses as provided for in this section, for each day that the peace officer, firefighter, state employee, trial court employee, or specified county employee is required to remain in attendance pursuant to the subpoena. The amount of two hundred seventy-five dollars ($275), together with the subpoena, shall be tendered to the person accepting the subpoena for each day that the peace officer, firefighter, state employee, trial court employee, or specified county employee is required to remain in attendance pursuant to the subpoena. (c) If the actual expenses should later prove to be less than the amount tendered, the excess of the amount tendered shall be refunded. (d) If the actual expenses should later prove to be more than the amount deposited, the difference shall be paid to the public entity by the party at whose request the subpoena is issued. [e] Salary/other compensation shall be determined based on the City's most current adopted salary schedule (top step) by position, subject to existing MOU provisions and minimums for court appearances. If preparation, service, or travel is provided during overtime hours, the City shall use overtime rate for calculating actual costs, subject to existing MOU provisions and minimums for court appearances. [a] Based on benefitted, overtime rate for personnel providing support.

28 City of Morro Bay

BEFORE AND AFTER ILLUSTRATION - HARBOR FEES
Current Fee Cost of Service Proposed Fee Fee Change
Proposed
Cost Recovery Note
1 Commercial Fishing Slips – monthly rate per foot $8 $8.26 $0.26 2 Commercial Fishing Slip Waiting List Deposit $435 $435 $0 3 Head Float Berth – monthly rate $290 $300 $10
4 Skiff Storage Fee – annual rate $100 $103 $3
Transient Slips – monthly sublease rate per foot
5 Commercial (set to market rate) $12.55 $12.60 $0.05
6 Non-Commercial Fishing (set to market rate) $15.60 $15.65 $0.05 Transient Slips – daily rate per foot
7 Commercial $1.14 $1.18 $0.04
8 Non-Commercial Fishing $1.76 $1.82 $0.06
9 T-Piers – daily rate per foot $0.52 $0.45 ($0.07)
10 A1-5 Anchorage Area – first 5 days $0.00 $0.00 $0.00 11 A1-5 Anchorage Area – daily rate/foot over 5 days. $0.41 $0.41 $0.00 12 Temporary Moorage – large vessels or equipment requiring special accommodation or assistance – per foot
$2.00 $2.07 $0.07
Impound Fee
13 Impound Fee $258 $283 $266 $9 94%
14 Impounded Vessels – daily storage rate per foot $2.00 $2.07 $0.07 Activity Description