Morro Bay City Council
February 24, 2026

CITY OF MORRO BAY
City Council Regular Meeting Agenda

Tuesday, February 24, 2026, 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.
•
• NEW!! Zoom webinar link: https://us02web.zoom.us/j/82429164990 Or Telephone Attendee: 1 (669) 444-9171 or 1 (669) 900-9128 or 1 (346) 248-7799; Webinar ID: 824 2916 4990. Press *9 to raise hand for public comment. •
• Meetings are also livestreamed 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

5. Shared Fire Services

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.g as submitted.

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

1. January 13, 2026 - Special Council Meeting 7

2. February 10, 2026 - Regular Council Meeting 9

3. February 10, 2026 - Special Closed Session Meeting 13

6.b Approval of Proclamations
(City Clerk)
Recommended Action
None.

6.c Adoption of Resolution No. 06-26 Declaring Pursuant to Government Code Section 54221 that Real Property Owned by the City of Morro Bay, Located at 231 Atascadero Road (APN: 065-182-005) is Non-Exempt Surplus Land and not Necessary for the City's Use;
15 Taking Related Actions; and Authorizing Staff to Proceed to Dispose of the Property Pursuant to the Surplus Lands Act
(Community Development Department)
Recommended Action
Adopt Resolution No. 06-26, declaring pursuant to Government Code Section 54221 that real property owned by the City of Morro Bay, located at 231 Atascadero Road (APN: 065-182-005) is non-exempt surplus land and is not necessary for the City’s use; taking related actions; and authorizing Staff to proceed with the disposal of the property pursuant to the requirements of the Surplus Land Act.

6.d Request to approve Resolution No. 07-26 appointing two new Waterfront Master Plan Advisory Committee (WMPAC) members
24 (Community Development Department)
Recommended Action
Adopt Resolution No. 07-26 appointing two new Waterfront Master Plan Advisory Committee (WMPAC) members.

6.e Report on Attendance at the 2026 C-MANC Washington Week Meetings 28 (Harbor Department)
Recommended Action
Receive and file.

6.f Water Reclamation Facility Quarterly Report and Contract Amendments 42 (Public Works Department)
Recommended Action
Receive and file the Fiscal Year (FY) 2026 Quarterly Report for October – December for the Water Reclamation Facility Program (WRF Program); and

1. 2. Approve and authorize the City Manager to execute:

A no cost amendment to the professional services agreement with Rincon Consultants Inc. (Rincon) for professional
environmental permitting consulting services for the Recycled Water Facilities component of the WRF Project to extend the agreement term to December 31, 2026; and
A.

An amendment to the professional services agreement with Kevin Merk Associates (KMA) for biological resources technical support in support of the implementation of the Recycled Water Project in the amount of $43,450 resulting in a not to exceed amount of $154,490, and to extend the agreement term to December 31, 2026; and
B.

An amendment to the professional services agreement with GSI Water Solutions, Inc. (GSI) to provide hydrogeological support services in the amount of $48,400 resulting in a not to exceed amount of $1,796,863, and to extend the agreement term to December 31, 2026.

C.

6.g Approval of Resolution No. 08-26 Authorizing the Police Department to Apply for and Receive Award for the California Highway Patrol (CHP) Cannabis Tax Fund Grant Program (CTFGP) - Small and Mid-Size Law Enforcement Agency, and authorize the City Manager
73 to Execute all Necessary Documents to Accept, Implement, and Carry Out the Terms of the Grant
(Police Department)
Recommended Action
Adopt Resolution No. 08-26 to authorize staff to apply for and accept award of $206,396 grant funds for the purpose of enhancing the Morro Bay Police Department’s impaired-driving enforcement, training, and public-education efforts.

7. PUBLIC HEARING ITEMS

7.a Hearing to Adopt Ordinance No. 677 and 678: Amendments to Zoning Code / Coastal Implementation Plan (IP)
99 (Community Development Department)
Recommended Action
Staff recommend that City Council review Planning Commission recommendations and take the following action:

Adopt Ordinance No. 677, “An Ordinance of the City Council of Morro Bay, California, Amending Chapters 17.29, 17.30, and 17.46 of the Zoning Code, Title 17 of the Morro Bay Municipal Code (MBMC),” with a finding that no further environmental review is required pursuant to State CEQA Guidelines Section 15061(b)(3) and Statutory Exemption Section 15282(h); and

1. Adopt Ordinance No. 678, “An Ordinance of the City Council of Morro Bay, California, Amending Chapters 17.07, 17.08, and 17.23 of the Zoning Code / Coastal Implementation Plan (IP), Title 17 of the Morro Bay Municipal Code (MBMC),” with a finding that no further environmental review is required pursuant to State CEQA Guidelines Section 15061(b)(3) and Statutory Exemption Section 15282(h); and

2.

3. Waive further reading of Ordinance No. 677 and Ordinance No. 678.

8. BUSINESS ITEMS

8.a Presentation and Discussion of the Fiscal Year 2024-25 Annual Comprehensive Financial Report
141
(Finance Department)
Recommended Action
Receive the presentation and provide feedback on the Fiscal Year (FY) 2024- 25 Annual Comprehensive Financial Report (ACFR) for the period of July 1, 2024 through June 30, 2025 (Attachment 1).

8.b Public Meeting to Renew the Morro Bay Tourism Business Improvement District
144
(City Manager / Visit Morro Bay)
Recommended Action
Accept public testimony on the renewal of the Morro Bay Tourism Business Improvement District (MBTBID).

8.c Fiscal Year 2025-26 Mid Year Report 179
(City Manager/Finance Department)
Recommended Action

1. Receive the Fiscal Year (FY) 2025-26 Midyear Budget Report; and Adopt Resolution No. 09-26 authorizing the attached Budget Amendments.

2. 8.d Award of Contract with J Bruce Kies - Contractor/Consultant for the Coleman Park Improvements Phase 1 Project
212
(Public Works Department)
Recommended Action
Award and authorize the City Manager to execute a contract with J Bruce Kies – Contractor, for the Coleman Park Improvements Phase 1 Project (Project) in the amount of $724,874.00 and sign any documents or amendments necessary for the ongoing administration of the contract subject to review and approval by the City Attorney’s Office as to form / legal effect; and

1. Adopt Resolution No. 10-26 to reallocate $194,167 in available capital project funding as defined in the report.

2. 9. COUNCIL DECLARATION OF FUTURE AGENDA ITEMS

10. ADJOURNMENT
The next Regular Meeting will be held on March 10, 2026.

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

SPECIAL MEETING OF CITY COUNCIL
January 13, 2026, 5:00 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 5:07 p.m. with all members present.

2. PUBLIC COMMENT FOR ITEMS ON THE AGENDA
Mayor Wixom opened public comment for items on the agenda; seeing none, the public comment period was closed.

3. SPECIAL MEETING AGENDA ITEM(S)

3.a Adoption of Resolution No. 01-26 Appointing John Craig as City Manager and Approving a City Manager Employment Agreement Between the City of Morro Bay and John Craig
Motion by Mayor Wixom
Seconded by Council Member Luffee
Adopt Resolution No. 01-26 appointing John Craig as the City Manager of the City of Morro Bay and approve an employment agreement between the City of Morro Bay and John Craig.

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

2 CARRIED (5 to 0)

3.b Swearing in of Newly Appointed City Manager, John Craig Mayor Wixom issued the oath of office to incoming City Manager, John Craig.

4. ADJOURNMENT
The meeting adjourned at 5:15 p.m.

Respectfully submitted,
/s/ Dana Swanson, City Clerk

1 MINUTES - MORRO BAY CITY COUNCIL

REGULAR MEETING
February 10, 2026, 5:30 p.m.

Veterans Memorial Hall
209 Surf St., Morro Bay, CA
Members Present: Mayor Carla Wixom
Council Member Jeff Eckles
Council Member Cyndee Edwards
Council Member Zara Landrum
Council Member Bill Luffee
Staff Present: City Manager John Craig
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
_____________________________________________________________________

1. ESTABLISH QUORUM AND CALL TO ORDER
Mayor Pro Tem Eckles established a quorum and called the meeting to order at 5:40 p.m.

Mayor Wixom participated via teleconference while traveling to Washington D.C. on City business.

2. PLEDGE OF ALLEGIANCE

3. REPORTS

3.a Closed Session Report
City Attorney Stack announced the Council met in closed session to discuss two real property negotiation matters: the former Morro Elementary property and former wastewater treatment plant. No reportable action was taken on either item under the Brown Act.

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 None.

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

2. Morro Bay Power Plant (Vistra)

3. Offshore Wind Energy

4. Morro Elementary School

5. Shared Fire Services

4. RECOGNITION AND PRESENTATIONS

4.a Del Mar Elementary Student Presentation - "Project Rock Solid Community"

4.b Measure Q-E Report by CFAC Chair Stephen Peck

5. PUBLIC COMMENT
Mayor Pro Tem Eckles opened public comment.
 Susan Stewart, on behalf of the Chamber of Commerce, announced the first Breakfast on the Bay of 2026 to be held February 18th from 7:30 - 9:00 a.m.  Ray Riordan, Morro Bay Chamber of Commerce Board Member, announced the return of the Avocado Margarita Festival, tentatively scheduled for Saturday, October 3rd.
 Linda Winters, Morro Bay, provided a Monday night dinner update and called attention to the tremendous value of community volunteers.  Rebecca Frimmer, Morro Bay, echoed her son's safety concerns at the intersection of Elena Street and Greenwood and requested the City consider stop signs going east and west.
 Betty Winholtz, Morro Bay, reflected on Mr. Peck's report, noting Measure Q funds were not intended for salaries and the allocation resolution passed during COVID in 2021 received little public input. She objected to mingling of funds and urged the Council to agendize further discussion on this issue.  Margaret Carman, Morro Bay, offered suggestions for promoting the upcoming Waterfront Master Plan Workshop and asked that one be held on a weekend.  Melissa Karas, By the Sea Productions, invited all to the first show of the season, The Last Romance, February 13-15. Visit www.bytheseaproductions.org to purchase tickets.
 Judy Setting, Morro Bay, was impressed by the Del Mar Elementary presentation and announced Cayucos Community Church is hosting a dinner at the Cayucos Veterans Hall on Monday, February 16th.

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.

3 Mayor Pro Tem Eckles opened public comment for items on the Consent Agenda:
 Betty Winholtz, Morro Bay, requested a correction to the minutes presented as Item 6.a.2, offered an alternative approach to the Morro Creek stabilization project, and regarding Item 6.f, noted the Recreation & Parks Commission requested two revisions to its By-Laws. Lastly, she requested an overhead projector and a reasonable amount of time for public comment on each agenda item.
 Margaret Carman, Morro Bay, spoke on behalf of another resident regarding Item 6.e., stating residents believe this should not be an emergency project as another alternative is available.

End of public comment.

Council Member Luffee pulled Item 6.c. Council Member Landrum pulled Item 6.f.

Motion by Council Member Eckles
Seconded by Council Member Luffee
Approve Consent Items 6.a, 6.b, 6.d and 6.e as submitted.

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

6.a Approval of Minutes
Approve as submitted.

1. January 27, 2026 - Regular Council Meeting

2. January 27, 2026 - Special Closed Session Meeting

6.b Approval of Proclamations
None.

6.c Second Quarter Investment Report (period ending December 31, 2025) for Fiscal Year (FY) 2025-26
At Council's request, City Manager Craig and Finance Director Conrad provided an overview of cash balances by fund.

Motion by Council Member Luffee
Seconded by Council Member Landrum
Receive the Second Quarter Investment Report (period ending December 31, 2025) for FY 2025-26.

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

4 6.d Second Reading and Adoption of Ordinance No. 676 Establishing Local Business Regulations for Massage Establishments and Technicians Approve second reading and adoption of Ordinance No. 676, “An Ordinance of the City Council of the City of Morro Bay, California adding Chapter 5.65 to Title 5 of the Morro Bay Municipal Code Regulating Massage Establishments and Professionals.”

6.e Status Update, Reconfirm Emergency, and Approval of Temporary Construction easement for Morro Creek Bank Stabilization Project

1. Receive and file status update and reconfirm the declaration of emergency for the Morro Creek Bank Stabilization Project by four fifths vote; and

2. Approve the temporary construction easement associated with the Morro Creek Bank Stabilization Project; and

3. Authorize the City Manager to execute the Temporary Construction Easement and related documents on behalf of the City.

6.f Adoption of Proposed Changes to the Council Policies & Procedures Staff responded to Council questions.

Motion by Council Member Landrum
Seconded by Council Member Luffee
Adopt Resolution No. 05-26 approving revisions to the Council Policies & Procedures (“Policies”) to reflect recent changes to The Brown Act established by Senate Bill 707.

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

7. PUBLIC HEARING ITEMS
None.

8. BUSINESS ITEMS
None.

9. COUNCIL DECLARATION OF FUTURE AGENDA ITEMS
None.

10. ADJOURNMENT
The meeting adjourned at 6:52 p.m.

Respectfully submitted,
/s/ Dana Swanson, City Clerk

1 MINUTES - MORRO BAY CITY COUNCIL

CLOSED SESSION MEETING
February 10, 2026, 4:30 p.m.

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

1. ESTABLISH QUORUM AND CALL TO ORDER
Mayor Wixom participated via teleconference while traveling to Washington D.C. on City business, and called the meeting to order at 4:30 p.m. with all members present.

2. SUMMARY OF CLOSED SESSION ITEMS

3. CLOSED SESSION PUBLIC COMMENT
Mayor Wixom opened public comment for items on the agenda; seeing none, the public comment period was closed.

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; John Craig, City Manager; Brian Stack, City Attorney Negotiations: Price and Terms of Payment

4.b CONFERENCE WITH REAL PROPERTY NEGOTIATOR - GOVERNMENT CODE SECTION 54956.8

2 Property: APNs 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; Emily Conrad, Finance Director; John Craig, City Manager; Brian Stack, City Attorney Negotiations: Price and Terms of Payment

5. RECONVENE IN OPEN SESSION
The City Council reconvened in Open Session and City Attorney Stack announced the Council did not take any reportable action in accordance with the Brown Act.

6. ADJOURNMENT
The meeting adjourned at 5:24 p.m.

Respectfully submitted,
/s/ Dana Swanson, City Clerk

AGENDA NO: 6.c
MEETING DATE: February 24, 2026
Prepared By: AA Dept Review: AS
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council DATE: February 18, 2026 FROM: Airlin Singewald, Community Development Director
SUBJECT: Adoption of Resolution No. 06-26 Declaring Pursuant to Government Code Section 54221 that Real Property Owned by the City of Morro Bay, Located at 231 Atascadero Road (APN: 065-182-005) is Non-Exempt Surplus Land and not Necessary for the City’s Use; Taking Related Actions; and Authorizing Staff to Proceed to Dispose of the Property Pursuant to the Surplus Lands Act

RECOMMENDED ACTION
Adopt Resolution No. 06-26, declaring pursuant to Government Code Section 54221 that real property owned by the City of Morro Bay, located at 231 Atascadero Road (APN: 065-182-005) is non-exempt surplus land and is not necessary for the City’s use; taking related actions; and authorizing Staff to proceed with the disposal of the property pursuant to the requirements of the Surplus Land Act.

ALTERNATIVES
The Council could modify Staff’s recommendation or choose not to declare the property as surplus land.

FISCAL IMPACT
There is no significant or immediate fiscal impact from declaring the property surplus. The appraised value of the listed property is $2,150,000. Should the City reach agreement for sale of the property, any proposed purchase and sale agreement would require future consideration and approval by the City Council.

BACKGROUND
Surplus Lands Act Process
The Surplus Lands Act (California Government Code Section 54220 et seq.) (“SLA”) requires that the City declare property to be “surplus land” before the City can take any action (sale or lease) to dispose of the real property. Surplus land is land deemed not necessary for a local agency‘s use.

In the fall of 2019, Assembly Bill 1486 amended the SLA to address the current housing crisis by promoting the construction of affordable housing on surplus land. The amendment requires that surplus property, which does not qualify as “exempt” under the SLA, must be made available

through a specific process which provides notice of its availability to housing developers and other local agencies. In addition, the SLA mandates reporting of surplus land inventory to the California Department of Housing and Community Development (“HCD”). The amended SLA became effective on January 1, 2020 and in April of 2021, HCD released guidelines related to administration of the SLA (“Regulations”). These guidelines have since been updated as recently as August of 2024.

In compliance with the SLA, the City must declare the subject property as “surplus” and “non-exempt” (since it does not meet any of the exemption criteria outlined in Section 103 of the Regulations) prior to its sale or lease. After such declaration, the City must comply with the specific process and timelines set by the SLA that are designed to promote the development of affordable housing on surplus land.

The SLA notification process requires the City to send a written Notice of Availability (“NOA”), either by mail or electronically, to (i) other public agencies whose jurisdiction covers the area in which the subject property is located, and (ii) prospective affordable housing developers which have registered with HCD expressing an interest in surplus land within the county. The list of such interested developers is maintained by HCD in an Excel spreadsheet on its website. After the NOA is sent, all recipients have 60 days (“NOA period”) to reply to the City expressing an interest in purchasing the subject property. The SLA then requires that the City enter into a period of good-faith negotiations with responding interested parties for at least 90 days.

The City is not required to sell the subject property for less than its fair market value or upon terms which are not acceptable to it. If the parties, after good faith negotiations, cannot reach an agreement, the City is not required to sell the subject property to any of the responding housing developers.

If the City does not receive any responses during the NOA period, or is unable to reach an agreement with a housing developer within the 90-day negotiation period, the City must notify HCD and provide a detailed summary of its actions in compliance with the SLA. The summary must include information on any good faith negotiations held with responding housing developers.

HCD has 30 days from receipt to review the summary, and if no issues are found, will notify the City that it may proceed to make the subject property available to other developers or interested parties pursuant to standard commercial procedures. It is worth noting that even if the property is not sold to an affordable housing developer, a covenant must still be recorded against the land when sold that mandates that if 10 or more housing units are built on the property within 50 years of the sale, at least 15% of all residential units built must be restricted for affordable housing.

Any proposed purchase and sale agreement – from either the SLA negotiation period or thereafter – will require City Council approval.

Property History
The property was previously owned by The World’s Most Difficult Miniature Golf Course, LLC, who operated a private miniature golf course at the site, until declaring bankruptcy. The City purchased the property and in January 2003 began operating the Teen Center in the building that previously served as the miniature golf course administration/arcade building. The Teen Center closed at the beginning of the pandemic and never reopened. In 2022, the City approved a 5-year contract with the Boys and Girls Club to reopen the Teen Center, but the Boys and Girls Club never occupied the property as they couldn’t afford to renovate the building. The property is being used as temporary office space for City employees during the renovation of a fire-damaged City building, and will be vacated and no longer necessary for City operations upon completion of those renovations, which are estimated to be completed by August 2026

DISCUSSION
The subject property, totaling 1.33 acre, is shown in Exhibit A of the Resolution and includes the following lot, identified by the Assessor’s Parcel Number and a brief description:

1. APN: 065-182-005; Morro Bay Teen Center
The subject property does have several issues that potentially complicate the development of affordable housing on the site, including:
 It’s Visitor Serving Commercial (“VSC”) zoning designation, and exclusion from the Mixed-Use Residential Overlay o Residential uses are not permitted within the VSC zone if properties are not included within the Mixed-Use Residential Overlay
 The high value of the property due to its location
 Existing buildings on the site that would hinder the development of a large scale housing development without demolition
The NOA will include this information and make the appropriate documents available for review on an the City’s website that will be linked on the NOA. Providing this information to potential interested parties for review will provide for full transparency on the nature of the specific property and both its development potential and limitations.

CONCLUSION
If the Council wants the ability to sell the subject property located at 231 Atascadero Road, it must declare it as non-exempt surplus land and follow the SLA notification process outlined above.

Staff recommend Council adopt Resolution No. 06-26 declaring (i) the subject property to be non-exempt surplus land that is unnecessary for the City’s use, and (ii) authorizing Staff to proceed with disposal of the subject property in accordance with the SLA.

ATTACHMENTS

1. Resolution No. 06-26

2. Draft Notice of Availability

PAGE 1 OF 3
RESOLUTION NO. 06-26

RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA
DECLARING PURSUANT TO GOVERNMENT CODE SECTION 54221

THAT REAL PROPERTY OWNED BY THE CITY OF MORRO BAY, LOCATED AT 231 ATASCADERO ROAD (APN: 065-182-005) IS NON-EXEMPT SURPLUS LAND AND NOT NECESSARY FOR THE CITY’S USE; TAKING RELATED ACTIONS; AND

AUTHORIZING STAFF TO PROCEED TO DISPOSE OF THE PROPERTY PURSUANT TO

THE SURPLUS LAND ACT

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 the owner in fee simple of that certain real property located 231 Atascadero Road (APN: 065-182-005) and as further identified on the Site Location Map in Exhibit A, attached hereto, and made a part of hereof ("Property"); and WHEREAS, the Surplus Lands Act (SLA) requires that before a local agency takes any action to sell or lease its property, it must declare the property to be “surplus land;” and WHEREAS, “surplus land” means land owned in fee simple by any local agency for which the local agency’s governing body takes formal action in a regular public meeting declaring that such land is surplus and is not necessary for the agency’s use; and WHEREAS, under the SLA, land is necessary for the City’s use if the land is being used pursuant to a written plan adopted by the City Council for City work or operations; and WHEREAS, the Property is being used as temporary office space for City employees during the renovation of a fire-damaged City building, and will be vacated and no longer necessary for City operations upon completion of those renovations, which are estimated to be completed by August 2026; and
WHEREAS, City staff has evaluated the Property for its potential to be used for City work or operations after renovations of the fire-damaged building are completed, and has determined that the Property is not suitable or necessary for the City’s permanent use; and WHEREAS, the Property does not qualify as exempt under the specific exemptions in the SLA, and the Property is, therefore, non-exempt under the SLA; and WHEREAS, in accordance with the SLA, the City must, among other requirements, give written notice of its availability to certain local agencies and housing sponsors that have notified the State Department of Housing and Community Development (HCD) of their interest in surplus property which list is available on the HCD website; and WHEREAS, the City Council finds that the Property is surplus non-exempt land which is not necessary for the City’s future permanent use as described in Government Code Section 54221(c)(1); and

PAGE 2 OF 3
WHEREAS, the City intends to proceed to dispose of the Property in compliance with the SLA and directs staff to proceed accordingly.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MORRO BAY,

CALIFORNIA, DOES HEREBY RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS:

SECTION 1. The foregoing recitals are true and correct and are incorporated herein by reference.

SECTION 2. As the property is zoned for Visitor Serving Commercial use, contains existing structures and has other constraints to permanent use by the City, the City Council hereby declares that the Property is not necessary for the City’s use and is, therefore, surplus land.

SECTION 3. As the Property does not qualify under any of the exemptions set forth in the SLA, the City Council declares that the Property is non-exempt.

SECTION 4. The City Manager, officers and staff of the City are hereby authorized jointly and severally, to do all things which they may deem necessary or proper to effectuate the purposes of this Resolution and to proceed with the disposition of the Property in compliance with the SLA subject to the City Council’s approval of any sale agreement.

SECTION 5. This resolution shall become effective immediately upon adoption.

PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting thereof held on the ____ day of February 2026 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

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

PAGE 3 OF 3
Exhibit A.

Site Location Map for 231 Atascadero Road
LEGEND
Exhibit Parcel

City Parcels
Street Centerlines

NOTICE OF AVAILABILITY/OFFER TO SELL SURPLUS PROPERTY
231 Atascadero Road
(APN: 065-182-005)

SENT VIA EMAIL ONLY
February 24, 2026
To All Interested Parties:

As required by Govt Code Section 54220 of the State of California, the City of Morro Bay (“City”) is providing notice that the City intends to sell the surplus property located at 231 Atascadero Road (APN 065-182-005) (“Property”).

Notice Period: In accordance with Govt Code Section 54222, please be advised that you have sixty (60) days from the date this notice was emailed (“Notice Period”) to notify the City of your interest in acquiring the Property by providing a letter of interest which, to establish priority as noted below, should be a written proposal with relevant terms including the purchase price. Be advised that (i) this notification does not obligate the City to sell the Property to you; and (ii) the City is not obligated to sell the Property for less than its fair market value.

Priority: If the City receives more than one letter of interest during this Notice Period, pursuant to Govt Code Section 54227, priority is given to entities proposing to develop housing where at least 25% of the units will be affordable to lower income households. If more than one such proposal is received, priority will be given to the proposal with the greatest number of affordable units. If more than one proposal specifies the same number of affordable units, priority will be given to the proposal that has the lowest average affordability level.

Delivery: If you are interested in purchasing the Property, please send your proposal within the Notice Period to: Airlin Singewald, Community Development Director, via email to [email protected]. Please include “231 Atascadero Road” on the email subject line.

For information, contact Airlin at (805) 772-6291.

Negotiation Period: If you are interested and respond timely, be advised that, pursuant to Govt Code Section 54223, the City may enter into at least ninety (90) days of negotiations with you. If no agreement is reached on sales price and terms, the City may market the Property to the general public.

Property Information: The Property is an improved City facility located in a commercially zoned area adjacent to Morro Bay High School near the western terminus of Atascadero Road (Highway 41) with frontage on Atascadero Road. The Property, totaling approximately 1.33 acre, is shown on Attachment 1 and includes the following lot, identified Assessor’s Parcel Number and brief description:

1. APN: 065-182-005; Morro Bay Teen Center
The Property has (i) existing structures, (ii) is zoned Visitor Serving Commercial (VSC), and (iii) is not located within the Residential Mixed-Use Overlay. Housing is not a permitted use under the City’s certified Local Coastal Program for this zoning classification.

Notice of Availability
February 24, 2026

Copies of documents relevant to the Property, including a title report and appraisal are available at the following links:
 Preliminary Title Report:
https://www.morrobayca.gov/DocumentCenter/View/21493/231-Atascadero-Rd_Preliminary-Report---CA  Appraisal:
https://www.morrobayca.gov/DocumentCenter/View/21494/231-Atascadero-Rd_Appraisal-Report--103-S25-1 NOTICE: Anyone proposing to submit a proposal is advised to review the requirements set forth in the Surplus Land Act (Govt Code Sections 54220-54234).

Attachment A: Vicinity Map

Notice of Availability
February 24, 2026

Attachment A.

Vicinity Map for 231 Atascadero Road
LEGEND
Exhibit Parcel

City Parcels
Street Centerlines

Prepared By: AS Dept Review: AS
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council DATE: February 13, 2026 FROM: Airlin Singewald, Community Development Director
SUBJECT: Request to approve Resolution No. 07-26 appointing two new Waterfront Master Plan Advisory Committee (WMPAC) members

RECOMMENDED ACTION
Adopt Resolution No. 07-26 appointing two new Waterfront Master Plan Advisory Committee (WMPAC) members.

ALTERNATIVES
The Council could provide alternative direction to fill the two vacancies on the WMPAC.

FISCAL IMPACT
There is no significant or immediate fiscal impact to appointing new members to the WMPAC. Staff’s time working on the Waterfront Master Plan Update is reimbursable under a California Coastal Commission grant.

BACKGROUND
On March 11, 2025, the City Council adopted a resolution forming the WMPAC to guide the Waterfront Master Plan Update. The City Council determined the WMPAC should include eight representatives, including one representative from each of the City’s five regular advisory boards/commissions, one representative from Embarcadero Master Leaseholds (EML) group, one representative from the Morro Bay National Estuary Program, and one representative the Morro Bay Fisherman’s Organization.

The City Council appointed the following representatives to the WMPAC:

1. Stephen Peck – Citizens Finance Advisory Committee (Chair)

2. Mark Tognazzini – Morro Bay Commercial Fishermen’s Organization (Vicechair)

3. James Costanzo – Recreation and Parks Commission

4. Gene Doughty – Harbor Advisory Board

5. Paul Donnelly – Public Works Advisory Board

6. Mary Witkowski – Planning Commission

7. Cherise Hansson – Embarcadero Master Leaseholders

8. Melodie Grubbs – Morro Bay National Estuary Program
AGENDA NO: 6.d
MEETING DATE: February 24, 2026

2 The WMPAC’s work is expected to conclude in October 2026 when the committee recommends a Draft Waterfront Master Plan to the Planning Commission.

DISCUSSION
There are currently two vacancies on the WMPAC. Melodie Grubbs, the NEP representative, resigned on January 2, 2026 after leaving her position at NEP to pursue a new opportunity. A second vacancy occurred when Gene Doughty’s term on the Harbor Advisory Board concluded, ending his service on the WMPAC.

NEP has nominated Carolyn Geraghty to fill its representative seat on the WMPAC. Carolyn serves as NEP’s Restoration Program Director and is already somewhat familiar with the Waterfront Master Plan, having participated in the environmental stakeholder group in August 2025.

On February 5, 2026, the Harbor Advisory Board nominated Andrea Lueker to fill its vacant seat on the WMPAC. Andrea is a former long-time Morro Bay City Manager with extensive knowledge of the City’s history and operations.

CONCLUSION
Staff is asking the City Council to fill two vacancies on the WMPAC by appointing Carolyn Geraghty as the new NEP representative and Andrea Lueker as the new HAB representative.

Both Carolyn and Andrea are highly qualified to serve on the WMPAC. We are grateful for their willingness to contribute their time and expertise as we work to create a great Waterfront Master Plan that reflects the community’s values and celebrates the unique character of our waterfront.

ATTACHMENT(S)

1. Resolution No. 06-26 Appointing New Members to the Waterfront Master Plan Advisory Committee

01181.0001/254860.1
RESOLUTION NO. 07-26

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA,

APPOINTING NEW MEMBERS TO THE WATERFRONT MASTER PLAN

ADVISORY COMMITTEE (WMPAC)

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’s Waterfront Master Plan, which is part of the City’s Local Coastal Program, has not been updated since it was first adopted in 1996; and WHEREAS, Policy LU-8.1 of the City’s General Plan / Local Coastal Program states that the City will update the 1996 Waterfront Master Plan with a focus on addressing issues of sea level rise and future planning for Morro Rock; and
WHEREAS, on August 27, 2024, the City Council authorized the Community Development Director to submit a grant to the California Coastal Commission under the Local Coastal Program Planning Assistance Grant Program for $750,000 to update the Waterfront Master Plan; and WHEREAS, on January 16, 2025, the City signed a grant agreement (LCP-24-04) with the California Coastal Commission to update the Waterfront Master Plan; and WHEREAS, on March 11, 2025, the City Council approved the formation of a Waterfront Master Plan Advisory Committee (WMPAC) to include a total of eight members, including one representative from each of the City’s five existing advisory bodies/commissions; one representative from the Embarcadero Master Leaseholders group; one representative from the Morro Bay National Estuary Program; and one member from the Morro Bay Fisherman’s Organization; and
WHEREAS, on March 11, 2025, the City Council adopted Resolution 11-25 appointing representatives from each of eight identified groups to serve on the WMPAC; and WHEREAS, in January 2026, the National Estuary Program (NEP) and Harbor Advisory Board (HAB) seats on the WMPAC were vacated; and
WHEREAS, the NEP nominated Carolyn Geraghty to fill the NEP seat on the WMPAC and HAB nominated Andrea Lueker to fill the HAB seat on the WMPAC.

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

01181.0001/254860.1
The City Council appointments to WMPAC are:
i. James Costanzo – Recreation and Parks Commission
ii. Paul Donnelly – Public Works Advisory Board
iii. Carolyn Geraghty – National Estuary Program
iv. Cherise Hansson – Embarcadero Master Leaseholders
v. Andrea Lueker – Harbor Advisory Board
vi. Stephen Peck – Citizens Finance Advisory Committee
vii. Mark Tognazzini – Morro Bay Commercial Fishermen’s Organization viii. Mark Witkowski – Planning Commission
PASSED AND ADOPTED, by the City of Morro Bay City Council, at a regular meeting held on this 24th day of February 2026 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSED:
_______________________________
CARLA WIXOM, Mayor
ATTEST:
____________________________
DANA SWANSON, City Clerk

Prepared By: _ CM_______ Dept Review: ___LT___
City Manager Review: JC City Attorney Review: __BS____
Staff Report
TO: Honorable Mayor and City Council DATE: February 18, 2026 FROM: Chris Munson, Harbor Vitality Director
SUBJECT: Report on Attendance at the 2026 C-MANC Washington Week Meetings

RECOMMENDED ACTION
Receive and file.

ALTERNATIVES
None

FISCAL IMPACT
None.

BACKGROUND/DISCUSSION
On prior authorization of the City Council, a 3-person delegation representing the City of Morro Bay traveled to Washington, DC on February 9–11, 2026 to participate in Congressional and federal agency meetings and participate in the annual California Marine Affairs and Navigation Conference (C-MANC). The trip is largely funded by the Central Coast Joint Cable/Fisheries Liaison Committee.

C-MANC annually hosts Washington Week meetings, where representatives of California Ports and Harbors have the opportunity to remind Congress and various other agencies of the importance of dredging projects, commercial fishing, ocean and coastal management and other coastal-related issues in California. The City of Morro Bay is a long-standing member of C-MANC, and for over 25 years has sent representatives to the “Washington Week” meetings.

While in DC, city representatives engage with city’s federal lobbyist to advocate the city’s distinct interests. This includes addressing critical concerns such as harbor dredging, revetement/seawall repair, back-bay dredging, pier maintenance, along with other infrastructure needs. Discussions also included broader Morro Bay interests such as funding for Fire Station #2.

Mayor Wixom, Harbor Vitality Director Munson, and Harbor Business Manager Lori Thompson represented the City in 2026’s DC week. Enclosed includes:
 Post Meeting Report
 C-MANC Agenda
 Leave Behinds for the Harbor Projects and Fire Station #2 This delegation would like to express appreciation to the Joint Cable Fisheries Liaison Committee for the grant funding, to Harbor and City Hall administrative staff for applying for the grant and AGENDA NO: 6.e
MEETING DATE: February 24, 2026

coordinating travel details, and to the City Manager, Fire Dept. Chief, and Executive Assistant for compiling the briefing paper.

HIGHLIGHTS
Senator Adam Schiff
 Senator Schiff met with the Morro Bay Delegation exclusively for about 30 minutes.  Briefed Sen. Schiff on dredging, back-bay dredging, T-Pier, revetments, commercial fishing, tourism, WIFIA success, PGE/Vistra property status, MB Fire Station earmark request Senator Alex Padilla
 Sen. Padilla greeted the group but had to leave for a hearing  Senator’s staff briefed on dredging, back-bay dredging, T-Pier, revetments, offshore wind, MB Fire Station earmark request
 Senator Padilla’s office is working with Rep. Carbajal’s office on issuing both the WRDA requests submitted by Morro Bay for studying the revetments and back-bay dredging.

Figure 1 – California Senators with Morro Bay Delegation

US Maritime Administration (MARAD)
 North T-Pier identified as a potential project under the Port Infrastructure Grant Program.

MARAD staff provided guidance on applying for the grant which opens in March.

US Army Corps of Engineers
 Discussed upcoming annual dredging and inner channel dredging. Received timing updates.  Identified revetments/seawalls as being USACE’s responsibility.  Informed USACE of Water Resources Development Act (WRDA) requests for revetments and back-bay dredging
Rep. Salud Carbajal
 Rep. Carbajal met with the Morro Bay Delegation exclusively for about 45 minutes.  Briefed Rep. Carbajal on dredging, back-bay dredging, T-Pier, revetments, WRDA 26 requests, MB Fire Station earmark request, commercial fishing, and oyster crop insurance,

CONCLUSION
City staff will follow up with the agencies and Congressional offices for their requests for more information and funding requests. The City has already submitted WRDA requests for USACE feasibility studies of the revetments/seawalls and back-bay dredging. Staff and The Fergusen Group intend to submit Congressionally Directed Spending (CDS) requests for the North T-Pier, Fire Station #2, and back-bay dredging soon. The Port Infrastructure Grant will be assessed as another possible funding opportunity for the North T-Pier.

The City will send another delegation to C-MANC’s Spring Conference in Newport Beach.

ATTACHMENT(S)

1. Post Meeting Report

2. C-MANC Agenda

3. Leave Behinds for the Harbor Projects and Fire Station #2

DC Meetings Report
City of Morro Bay, CA
February 9-10th, 2026
Monday, February 9th
US Maritime Administration (MARAD)
Deputy Maritime Administrator Sang Yi
Peter Simons, Wade Morefield
• FY26 Port Infrastructure NOFO to be released soon (60 day application period) • Briefed on T-Pier, hoist, other infrastructure, commercial fishing opportunities and challenges • Dep. Admin Sang Yi – possible site visit
Bureau of Reclamation (BOR)
Travis Yonts, Management Analyst
Chris Felton, Financial Assistance Manager
Brandee Blumenthal, CGB Regional Liaison
• Briefed on salt water intrusion and possible BOR financial assistance • MB should communicate with the Denver office to explore opportunities US Army Corps of Engineers
Tori White, Office of the Assistant Secretary for Civil Works • Briefed on dredging, revetments, T-Pier projects and WRDA 26 requests • Briefed on MB’s Water Resources Development Act requests • COE noted encroachments on revetments could present challenges US Environmental Protection Agency, Brownfields staff (HQ & Region IX) • Briefed on PGE/Vistra site and potential partnerships and assistance • Targeted Assessment available but would require property owner approval • Community outreach and visioning assistance available • Job training opportunities available under the program Tuesday, February 10th
Senator Adam Schiff
Michael Harris, Policy Advisor
• Briefed Sen. Schiff on dredging, back-bay dredging, T-Pier, revetments, commercial fishing, tourism, WIFIA success, PGE/Vistra property status, MB Fire Station earmark request

Morro Bay - Congressional/Agency Meetings Report – February 2026 2 Senator Alex Padilla
John Watts, Policy Advisor
• Sen. Padilla greeted the group but had to leave for a hearing • Briefed on dredging, back-bay dredging, T-Pier, revetments, offshore wind, MB Fire Station earmark request
Rep. Salud Carbajal
Johanna Montiel, Legislative Director
• Briefed Rep. Carbajal on dredging, back-bay dredging, T-Pier, revetments, WRDA 26 requests, MB Fire Station earmark request, commercial fishing
• Recommended requesting funding for Fire Station
• FY27 earmark requests should open soon

TO BE RESCHEDULED
US Department of Agriculture - Risk Management Agency
• Shellfish crop insurance program opportunities (oysters) • TFG will coordinate virtual meeting
___________________________________________________________________________ Attendees:
• Carla Wixom, Mayor, City of Morro Bay
• Chris Munson, Harbor Vitality Director, City of Morro Bay • Lori Thompson, Harbor Business Manager, City of Morro Bay • Mike Miller, The Ferguson Group
• Chris Cummins, The Ferguson Group

Washington, DC Agenda
February 2026
HILL DAY – Wednesday, February 11
BLUE Group GOLD Group
7:45 am Pre-Meet at Dirksen Senate Cafeteria
Basement Level of Dirksen
8:30 am Constituent Coffee with Senators Padilla and Schiff 106 Dirksen SOB
10:00 am SUBGROUP A
Corey Kuipers, House Energy
& Water Appropriations
Subcommittee Republican
Staff
2362-B Rayburn HOB

SUBGROUP B
Eric Henshall, Deputy Chief
of Staff, Rep. Sam Liccardo
(CA-16)
1117 Longworth HOB
CMANC Member: San Mateo
County Harbor District
10:00 am Ryan Seiger, House
Transportation &
Infrastructure Democratic
Staff
505 Ford HOB
10:45 am Rep. Mark DeSaulnier (CA-10)
– Limited to 5 attendees
2134 Rayburn HOB
CMANC Member: Contra
Costa County
11:00 am Olivia Oo, Policy Advisor,
Office of Senator Adam Schiff
(CA)
112 Hart SOB

11:30 am SUBGROUP A
Christian Kerr, Senior
Legislative Assistant, Office
of Rep. Robert Garcia (CA-42)
109 Cannon HOB
PORTS Caucus Co-Chair
CMANC Member: Port of Long
Beach

SUBGROUP B
Matt Dernoga, Legislative
Director, Office of Rep.

Nanette Barragán (CA-44)
2312 Rayburn HOB
CMANC Members: Port of Los
Angeles & LA County Beaches
and Harbors
11:30 am Senator Alex Padilla (CA)
331 Hart SOB
11:45 am Quick Lunch/Break
Longworth Cafeteria
Basement Level
12:00 pm Quick Lunch/Break
Dirksen Cafeteria
Basement Level
12:15 pm Rep. Josh Harder (CA-9)
209 Cannon HOB
CMANC Members: Port of
Stockton & Contra Costa
County
12:30 pm Katie Williams and Daniela
Todesco, Senate Energy &
Water Appropriations
Subcommittee Republican
and Democratic Staff
124 Dirksen SOB
1:00 pm SUBGROUP A
Ryan Ebrahimy, Legislative
Assistant, Office of Rep.

Dave Min (CA-47)
1034 Longworth HOB
CMANC Member: Newport
Beach

SUBGROUP B
Nicole Golden, Director of
Operations/Legislative
Assistant, Office of Rep.

Scott Peters (CA-50)
2369 Rayburn HOB
CMANC Member: Port of San
Diego
1:00 pm Brady Kenyon, Legislative
Assistant, Office of Senator
Kevin Cramer (ND), Senate
Environment & Public Works
Subcommittee on
Transportation and
Infrastructure Chair
313 Hart SOB

1:30 pm Jack Lincoln, Deputy Chief of
Staff/Legislative Director,
Office of Rep. Ken Calvert
(CA-41)
2205 Rayburn HOB
2:00 pm Ryan Hambleton, House
Transportation &
Infrastructure Republican
Staff
585 Ford HOB
2:30 pm SUBGROUP A
Melissa Andrade, Legislative
Assistant, Office of Rep.

Jared Huffman (CA-2)
2330 Rayburn HOB
CMANC Members: Crescent
City Harbor District, Humboldt
Bay Harbor Recreation and
Conservation District, Noyo
Harbor District, City of
Petaluma, and City of San
Rafael

SUBGROUP B
William Klepp, Legislative
Assistant, Office of Rep.

David Valadao (CA-22)
2465 Rayburn HOB
2:40 pm Rep. Norma Torres (CA-35)
2227 Rayburn HOB
3:00 pm Brooks McVicker, Legislative
Assistant, Office of Rep. Pete
Aguilar (CA-33), House
Democratic Caucus Chair
108 Cannon HOB
3:00 pm Fabian De Armas, Legislative
Assistant, Office of Rep. Ted
Lieu (CA-36), House
Democratic Caucus Vice
Chair
2454 Rayburn HOB
CMANC Members: LA County
Beaches and Harbors & City of
Redondo Beach
3:30 pm Rep. Julia Brownley (CA-26)
2262 Rayburn HOB
CMANC Members: Channel
Islands Harbor/County of
Ventura & Port of
Hueneme/Oxnard Harbor
District
3:30 pm

SUBGROUP A
Gabe Feiner, Legislative Aide,
Office of Rep. Mike Levin (CA-49)
2352 Rayburn HOB
CMANC Members: Port of San
Diego

3:45 pm SUBGROUP B
Rep. Salud Carbajal (CA-24)
2331 Rayburn HOB
CMANC Members: City of
Santa Barbara, City of Morro
Bay, Ventura Port District,
County of Ventura Harbor Dept.
4:00 pm Sophia Danzeisen,
Legislative Assistant, Office
of Rep. John Garamendi (CA-08)
2428 Rayburn HOB
CMANC Members: Contra
Costa County & Port of
Richmond
4:00 pm Nathan Dadap, Senior
Legislative Assistant, Office
of Rep. Kevin Mullin (CA-15)
1404 Longworth HOB
CMANC Members: San Mateo
County Harbor District & Port of
Redwood City
4:30 pm SUBGROUP A
Sydney Dahiyat, Legislative
Assistant, Office of Rep.

Lateefah Simon (CA-12)
1023 Longworth HOB
CMANC Member: Port of
Oakland

SUBGROUP B
Eric Hoffman, Legislative
Counsel, Office of Rep. Mike
Thompson (CA-4)
268 Cannon HOB
CMANC Member: Napa
County
4:30 pm SUBGROUP A
Adam McBride, Policy
Advisor, Office of Rep. Doris
Matsui (CA-7)
2206 Rayburn HOB
CMANC Member: Port of West
Sacramento

SUBGROUP B
Rep. Vince Fong (CA-20)
243 Cannon HOB
5:00 pm 67th Golden State Reception
House Transportation & Infrastructure Committee Room
2167 Rayburn HOB
LEGEND
Appropriations Committee
Authorizing Committee

HARBOR HISTORY
Often called “the Jewel of the Central Coast,” Morro Bay is a close knit community known for its vibrant fishing industry and unique natural beauty. The guardian to the entrance of the Harbor, Morro Rock, has been a landmark and navigational guide for hundreds of years. Chumash Native Americans were the first to cultivate the land and sea near the Rock and its seven volcanic sister peaks.

The town of Morro Bay grew around the turn of the century as schooners arrived in the harbor for trade. Over the years strong fisheries developed in shark, salmon, albacore and abalone.

A man made causeway was built closing the north entrance and connecting the Rock with the mainland in 1933. The south channel was dredged and a breakwater protecting the entrance was constructed during World War II by the Army Corps of Engineers.

The current Embarcadero area was formed from the dredged material. In 1995 Morro Bay was federally designated as a National Estuary and the National Estuary Program was formed to work towards enhancing and maintaining the estuary’s vital habitat.

The City maintains and operates North & South T Piers for transient vessels. A City anchorage area is also available to transient vessels. The City additionally maintains slips and moorings for home ported vessels.

Contacts - City of Morro Bay
Mayor Carla Wixom
[email protected]
Harbor Department
Chris Munson, Harbor Director
[email protected]
Lori Thompson, Harbor Business Manager
[email protected]
805 772-6200
Contact - Project Funding / Legislative Questions
Mike Miller
The Ferguson Group
[email protected]
202 454-3948
Protecting
Morro Bay Harbor
Morro Bay: The only fully protected
Harbor of Refuge for 250 miles of
California's Central Coast.

Live view of
Morro Bay Harbor!
Photo Credit: a.b.pixel Page 37 of 226
North T Pier Rehabilitation | $7M CDS Request
The T-Pier needs major renovations to
remain viable. Engineer’s estimate for
the project is ~ $10M.

Currently serves U.S. Coast Guard,
commercial fishing, City Harbor Patrol,
and California Fish and Wildlife.

The City received $1.5M for the project in
FY23 as a CDS.

Back Bay Dredging | WRDA Feasibility Study
The back bay contains many of
Morro Bay’s moorings and its
largest marina.

High levels of sediment make
navigation unsafe and difficult in
the channel and marina.

Dredging | $4.6M Request


Dredging is critically important to the U.S. Coast Guard, California State Fish and Wildlife, Morro Bay Harbor Patrol, commercial fishing, and recreational boating.

Annual dredging by USACE keeps the Bay navigable and safe.

Morro Bay is the only fully protected Harbor of Refuge for 250 miles of coast.

USACE constructed 6,930 ft of
revetments and seawalls in the 1940’s
in constructing the bay.

The revetments continue to be part of
USACE’s existing federal project and
their responsibility to maintain.

Many sections are in poor to critical
condition. Repairs to the public
portion is estimated to cost $25-55M.

FY 2027 OMB
Request:
$4.6 Million
WRDA Request:

Feasibility Study





FY 2027 
Request $7M
Congressional Directed Spending (CDS)





San Luis Obispo, Humboldt, and Marin Counties are the only California locations of commercial oyster farms. 2022-2023 storms decimated the oyster farms in Morro Bay and are still recovering.

USDA created a Shellfish Pilot Crop Insurance Program, but only included Humboldt and Marin Counties.

USDA Request: Include San Luis Obispo County in
Shellfish Pilot Crop Insurance Program



Revetments/seawalls | WRDA Feasibility Study
Nearby estuary habitats and marshes need adaptations for SLR Dredging the back bay and using the sediment for beneficial reuse will help resolve both issues.

WRDA Request: Feasibility Study
Fisheries – Shellfish Crop Insurance (Oysters) | USDA: Include in Pilot Program

“To
enhance the quality of
life by providing exceptional
emergency services”
www.morrobayca.gov
Morro Bay Fire Department715 Harbor StreetMorro Bay, CA 93442Tel (805)772-6242 Morro Bay
Fire
Department
Bonita Street Fire
Station 2 Construction Project

Benefits of a second
station
• Reduced response times to north
Morro Bay to improve level of service
to community.
• Redundancy of services for improved
disaster resiliency (flood images below
highlight need for northern station to
guarantee emergency service delivery).
• Potential to improve ISO rating for
homeowners’ insurance.

Proposed Project
The Morro Bay City council approved the
design of a new construction 2-story living
quarters to replace the existing Bonita
Street living quarters.

The project is a 1,206 sqft office space on
the first floor and a 1,225 sqft living
quarters on the second floor. Total building
size is 2,431 sqft.

Designed for a 3-person engine company
with 3 bedrooms and 2 bathrooms in living
quarters.

Designed for 30+ years of service life.

Estimated completion cost $2.4m.

Existing building pictured below
Background:
 Opening Bonita Station approved
by City Council 7/26/2004.
 2004 “Flame report” and 2025
Standards of cover recommend
opening this station.
 Engine bay rebuilt 2007 by grant
funding.
 City council approved 2-story
design option 6/10/2025.
 CDP25-021 / CUP25-01
application deemed complete by
planning department 1/22/2026.
 Planning commission hearing
scheduled for 4/7/2026.

How to help:
• Tax deductible donations may be
made to the Friends of the Morro Bay
Fire Department P.O. Box 235 Morro
Bay, CA 93443
• May be dropped off in person at the
Morro Bay Fire Department
Headquarters 715 Harbor Street Morro
Bay, CA 93442

USACE Dredge - Annual
Entrance/Main Channel
FY 27 - $4.6 Million
USACE Dredge - 7-8 years Morro/Inner Channel
FY 25 Funded ~ $10 Million
Back Bay Dredging Channel/Marina
WRDA Request
Marshland
Potential Bene�icial Reuse
SLR Adaptation
State Park Marina
Winter Island
Potential Bene�icial Reuse
Eelgrass Habitat
Sand Spit Potential Bene�icial Reuse
Erosion Repair
Sand Spit Potential Bene�icial Reuse
Nearshore Beach Nourishment
Revetments - WRDA Request
Part of USACE
Exiting Federal Project
North T-Pier
$1.5 Million Funded
FY 27 - $7 Million CDS

CITY OF MORRO BAY
HARBOR

FEDERAL PROJECTS &

FUNDING REQUEST
OVERVIEW - 2026
Shell�ish Crop Insurance (Oysters)
USDA: Include in Pilot Program

Prepared By: DH Dept Review: GK
City Manager Review: JC City Attorney Review: _BS__
Staff Report
TO: Honorable Mayor and City Council DATE: February 19, 2026 FROM: Greg Kwolek – Public Works Director
SUBJECT: Water Reclamation Facility Quarterly Report and Contract Amendments

RECOMMENDED ACTION

1. Receive and file the Fiscal Year (FY) 2026 Quarterly Report for October – December for the Water Reclamation Facility Program (WRF Program); and

2. Approve and authorize the City Manager to execute:

A. A no cost amendment to the professional services agreement with Rincon Consultants Inc. (Rincon) for professional environmental permitting consulting services for the Recycled Water Facilities component of the WRF Project to extend the agreement term to December 31, 2026; and
B. An amendment to the professional services agreement with Kevin Merk Associates (KMA) for biological resources technical support in support of the implementation of the Recycled Water Project in the amount of $43,450 resulting in a not to exceed amount of $154,490, and to extend the agreement term to December 31, 2026; and C. An amendment to the professional services agreement with GSI Water Solutions, Inc. (GSI) to provide hydrogeological support services in the amount of $48,400 resulting in a not to exceed amount of $1,796,863, and to extend the agreement term to December 31, 2026.

DISCUSSION

1. Fiscal Year 2026 Quarterly Report Q2 (Oct 1 - Dec 31, 2025) The purpose of the WRF Quarterly report is to provide project status updates on schedule, budget, key activities, and critical path items as they relate to the WRF program. While the report is intended to focus on the Recycled Water project, it also contains historical information regarding budget and funding for the overall WRF Program. The FY26 Q2 Quarterly Report includes information on project activities between October 1, 2025 and December 31, 2025. See Attachment 1.

AGENDA NO: 6.f

MEETING DATE: February 24, 2026

2. Professional Services Agreement Amendments for the implementation of the Recycled Water Component of the Water Reclamation Facility Program To support the continued implementation of the Recycled Water Project, City Staff is recommending that the City Council approve the following critical path contract amendments. Together, they comprise, along with existing contracts, the necessary next steps to keep the Recycled Water Project moving forward and meeting the deadlines associated with the City’s funding/financing agreements for the WRF Program. Below is a summary of the services for each amendment and associated cost estimate. The Recycled Water Program Proposed Amendments are listed below:

1. Rincon Environmental Support Services No Cost Agreement Extension (Amendment #2) Consider providing a recommendation to City Council regarding approval of a no cost contract Amendment #2 for Rincon Consultants (Rincon) to extend the contract date from December 31, 2025 to December 31, 2026 for environmental services for implementation of the Recycled Water Project.

2. KMA Biological Resources and Technical Support Services Agreement Amendment (Amendment #5)
Consider providing a recommendation to City Council regarding approval of a contract Amendment #5 for Kevin Merk & Associates (KMA) for 2026 biological resources technical support in support of the implementation of the Recycled Water Project in the amount of $39,500 ($43,450 including a 10% contingency), resulting in a not to exceed amount of $154,490 (including contingency). This amendment would additionally extend the agreement expiration date from December 31, 2025 to December 31, 2026. See Attachment 2 for the proposal and fee estimate for this work.

These services include the following tasks:
 Task 1 – Alternatives Review and EIR Consistency
 Task 2 – Biological Field Surveys for Injection Wells  Task 3 – ESHA Avoidance and Setback Reduction Strategy  Task 4 – Team Meetings and Agency Consultation

3. GSI Hydrogeological Services Agreement Amendment (Amendment #6) Consider providing a recommendation to City Council regarding approval of a contract Amendment #6 for GSI Water Solutions (GSI) for preparation of an ASR permit application and compliance reports for the next interim tracer study in the amount of $44,000 ($48,400 including a 10% contingency) resulting in a not to exceed amount of $1,796,863 (including contingency). See Attachment 3 for the proposal and fee estimate for this work.

The Recycled Water Implementation Strategy was approved at the June 24, 2025 City Council Meeting. This strategy includes drilling the additional initial phase injection wells (2 or 3 additional injection wells) and completing a tracer study prior to equipping. The City must obtain a new Aquifer Storage and Recovery (ASR) permit to complete this testing and complete the quarterly and annual regulatory compliance reporting required under the ASR permit.

ATTACHMENTS

1. FY26 Q2 (October-December, 2025) Report for WRF Program

2. Rincon Contract Amendment #2

3. KMA Contract Amendment #5

4. GSI Contract Amendment #6

JANUARY 31, 2026 1
City of Morro Bay
Water Reclamation Facility Program

QUARTERLY REPORT
OCT 1, 2025 THROUGH DEC 31, 2025

INTRODUCTION
The Recycled Water Facilities (RWF) project is a portion of the larger Water Reclamation Facility (WRF) Program. The RWF project is anticipated to be complete by early 2028. This quarterly report includes updates on project status, schedule, program funding, and program budget. The current program budget is $159.84 million and $147.21 million has been spent to date.

RECYCLED WATER PROJECT STATUS
The RWF project is currently in the design phase, and the following activities were completed during this quarter:

Recycled Water Project Status Update (Oct 1, 2025 – Dec 31, 2025) • Environmental/Permitting
o Ongoing activities and upcoming timelines
 The project archeologist is preparing the Phase 3 Report Addendum for the EPA/SHPO to incorporate the additional Phase 3 testing results.  During this quarter, the City continued to coordinate with the Environmental Protection Agency (EPA) regarding the expanded project area that was not previously included in the original BO.
 During this quarter, the City coordinated with the United States Bureau of Reclamation (USBR) the EPA to add USBR as a signatory to the City’s existing Programmatic Agreement (PA) with the EPA. Becoming an added signatory to this agreement will allow USBR to utilize the Environmental Assessment (EA) and Biological Opinion (BO) prepared under the PA to fulfil Morro Bay’s National Environmental Policy Act (NEPA) requirements for their organization. This process is anticipated to be completed in early March 2026 and will allow the City to access the grant funding for reimbursement. In order for the City to ensure grant eligibility for new construction, the Bureau must complete their process to demonstrate compliance with NEPA requirements and issue a Notice to Proceed. • Recycled Water Permitting
o Activities completed
 On October 6, 2025, the Project Team received feedback from the Division of Drinking Water (DDW) on the Draft Title 22 Engineering Report. The City began

QUARTERLY REPORT | WATER RECLAMATION FACILITY PROGRAM | CITY OF MORRO BAY JANUARY 31, 2026 2
preparing responses to DDW’s feedback and revisions to the Engineering Report.

The City is anticipating providing responses to DDW in the next quarter. o Ongoing activities and upcoming timelines
 During this quarter, the City continued to coordinate with the Coastal San Luis Resource Conservation District (CSLRCD) and California Coastal Commission (CCC) on the Chorro Levee Project and on the Agricultural Mitigation Program update. • Engineering Design
o Ongoing activities and upcoming timelines
 During this quarter, the City continued to work towards selecting the sites for the additional two or three injection wells to be included in the initial phase of the project.
 During this quarter, the project design engineer and hydrogeologist progressed toward completion of design plans for injection well drilling and well construction.  During this quarter, the project design engineer progressed toward completion of design plans for injection well equipping and recycled water pipelines.  During this quarter, the City received a draft appraisal for the easement values for the proposed injection and monitoring wells. The Project Team is in the process of finalizing the appraisal documentation and preparing an offer for the property owner.
• Hydrogeologic Analysis and Design
o Activities completed
 On October 16, 2025, the City completed Cone-Penetration (CPT) corings as part of the hydrogeological investigations in the Fisherman’s storage area/Harbor area on Vistra property for the injection well siting.  During this quarter, the project hydrogeologist proposed recycled water monitoring well sites to DDW for their consideration. DDW has provided preliminary approval of these sites and stated DDW will provide additional review and comment upon receipt of the final, confirmed locations and screen intervals of all injection, monitoring, and extraction wells.
 During this quarter, the combined quarterly/annual reports required under the City’s Aquifer Storage and Recovery (ASR) permit were submitted (available on GeoTracker).
o Ongoing activities and upcoming timelines
 During this period, the project hydrogeologist continued to evaluate which injection well locations are most favorable from a hydrogeological perspective and preparation of the design of the downhole components of the injection wells.
• Funding/Financing
o Activities completed
 On November 24, 2025 the City met with SRF to provide a project timeline update and discussed how to move forward with the schedule change.  The City prepared and submitted the Water Infrastructure Finance and Innovation Act (WIFIA) Funding and Financing Quarterly Report.  The City prepared and submitted the Integrated Regional Water Management (IRWM) Funding and Financing Quarterly Report.

QUARTERLY REPORT | WATER RECLAMATION FACILITY PROGRAM | CITY OF MORRO BAY JANUARY 31, 2026 3
o Ongoing activities and upcoming timelines
 City Staff and the Recycled Water Program Team are coordinating with the funding financing agencies to provide quarterly reports, environmental documentation, and other required documentation.
 The City continued coordination with the Bureau of Reclamation on finalizing the NEPA EA for the Title XVI Grant.

JANUARY 31, 2026 4

RECYCLED WATER PROJECT SCHEDULE
Figure 1. Recycled Water Summary Schedule

JANUARY 31, 2026 5

PROGRAM BUDGET
Table 1 lists actual expenditures for each program component and the percent of the budget expended. The WRC and Conveyance Facilities components of the project were closed out in 2024.

Table 1. WRF Program Expenditures
Program
Component
Previous
Total
Expenditures
July-Sept 2025
Expenditures (1)
Total Expenditures
To Date
FY 25/26 Budget
(2)
Percent
Budget
Expended
RWF $3,311,042 $153,943.72 $3,464,986 $9,424,174 37%
General Project $24,861,953 $70,293 $24,932,246 $30,968,609 81% WRC Plant $77,895,236 $0 $77,895,236 $79,123,216 98%
Conveyance $40,912,624 $4,730 $40,917,354 $40,324,350 101% Total $146,980,855 $228,966.75 $147,209,822 $159,840,349 92% (1) Oct-Dec 2025 total expenditures as tallied on the Accounts Payable Report run on Jan 7, 2026, including all invoices accrued through Dec 31, 2025.
(2) See page 352 of the FY 24/25 budget adopted by Council. No additional funds for this project were added with the approval of the FY 25/26 budget.
(3) Although the Conveyance budget has been closed out, invoices for Phase 2 archeological testing (conveyance) sample processing was received this quarter

PROGRAM FUNDING
Table 2. WRF Program Funding Sources
Funding Agency(1) Funding Type Total Funding Spent to Date Funding Available Notes
SRF Construction
Loan Loan $66,604,638 $64,910,849 $1,693,789 Terms: 0.9%, 30 years SRF Loan
Forgiveness
Loan
Forgiveness N/A N/A N/A $5M
SRF Construction
Loan Amendment Loan $21,172,000 $0 $21,172,000 Terms: 0.9%, 30 years WIFIA Loan $61,700,336 $46,259,157 $15,441,179 Terms: 0.83%, 35 years
SRF Planning Loan Loan $10,300,000 $10,300,000 $0 Terms: 0.9%, 30 years
Recycled Water
Planning Grant Grant $75,000 $75,000 $0
Costs reimbursed
upon request
USBR - Title XVI Grant $9,310,095 $0 $9,310,095
Executed
Agreement
IRWM Grant $1,200,000 $0 $1,200,000
Executed
Agreement
City of Morro Bay Water/Sewer
Fund $25,664,815 $25,664,815 $0 Subject to loan reimbursement All Sources Total $196,026,884 $$147,209,821 $48,817,063 (1) Abbreviations: SRF – State Revolving Fund; EPA – Environmental Protection Agency; WIFIA – Water Infrastructure Finance & Innovation Act; USBR – United States Bureau of Reclamation; IRWM – Integrated Regional Water Management.

QUARTERLY REPORT | WATER RECLAMATION FACILITY PROGRAM | CITY OF MORRO BAY JANUARY 31, 2026 6

OTHER PROGRAM UPDATES
WWTP Decommissioning
• Although the WWTP Decommissioning is part of the WRF Project, it is funded separately from the other phases of the project and is not included in the budget and expenditures listed in the tables above.
• While the City had intended to complete the Phase 4 (WWTP Decommissioning) archeological investigations at the same time as the Phase 3 (Recycled Water Facilities) investigations in August 2025 to save on mobilization costs, the City was not able to conduct investigations at this time. Consent from Cayucos Sanitary District was required to complete these investigations on the jointly-owned property, and Cayucos Sanitary District did not grant permission at this time, as negotiations regarding the other aspects of decommissioning are still ongoing.
• The new timeline for the archeological investigation is to be determined but is anticipated to be done prior to March 2026. The City is currently coordinating with Cayucos Sanitary District and the project archeologist to reschedule these investigations.

Extraction Well Siting
• The Extraction Well Project is funded through the Water/Sewer Fund and is separate from the WRF Project.
• On October 17, 2025, the City conducted hydrogeological investigations (Cone Penetration Testing) at a potential extraction well location. The drill rig hit refusal at 43ft due to a large cobble, so the City was unable to obtain data between 43ft below surface and bedrock. • On December 22-23, 2025, the City conducted hydrogeological and archeological investigations (sonic coring) at two potential extraction well locations. The sonic drill rig was selected for this investigation to avoid refusal issues seen with the CPT testing, as well as to provide samples for archeological investigations. The City was able to successfully complete coring to bedrock.
• During this quarter, the City continued to coordinate with property owners on the potential extraction well locations.
• During this period, the City received a draft appraisal for the easement values of one of the proposed extraction well locations. The Project Team is in the process of finalizing the appraisal documentation and preparing an offer for the property owner.

Historical information on the WRF Program and previous quarterly reports are available on the program website: https://morrobaywrf.com/.

01181.0001/657125.1 Page 1 of 2
AMENDMENT NO. 2 TO THE

AGREEMENT FOR CONSULTANT SERVICES

AMONG THE CITY OF MORRO BAY AND
RINCON CONSULTANTS, INC.
______________________________________________________________________________ This Amendment No. 2 is entered on the 24th day of February 2026 by and between the CITY OF MORRO BAY, a municipal corporation (City), and RINCON CONSULTANTS, INC., a California corporation (Consultant). City and Consultant are sometimes referred to individually as “Party” and collectively “Parties.”

RECITALS
WHEREAS, City and Consultant entered into an agreement as of March 1st, 2023, whereby Consultant agreed to prepare an Environmental Assessment for the Water Reclamation Facility (Project), which was approved by the City Council for a Not to Exceed Amount of $43,532.00 (Agreement); and
WHEREAS, the City requires additional Environmental Review Support services to support the implementation of the Recycled Water Component of the Water Reclamation Facility Program; and
WHEREAS, Consultant has specific knowledge and experience to provide technical oversight needed to accomplish necessary tasks required to meet the City Council's goals for the Project; and
WHEREAS, the Agreement was amended on the 14th day of November 2023 to add additional scope and increase the Not-to-Exceed amount by One Hundred Eighty-Six Thousand Nine Hundred Ninety-Nine Dollars and Fifty-Five Cents ($186,999.55), for a new revised total Not to Exceed Amount of Two Hundred Thirty Thousand Five Hundred Thirty-One and Fifty-Five Cents ($230,531.55) (Amendment No. 1);
NOW THEREFORE, City and Consultant mutually agree to amend the Agreement, as follows:

1. Unless otherwise expressly stated herein or the context requires, all terms shall have the same meaning as provided in the Agreement.

2. The expiration date for the Amended Agreement is hereby extended from December 31, 2025 through December 31, 2026.

3. The effective date of this Amendment No. 2 shall be deemed to be December 31, 2025 (Effective Date).

01181.0001/657125.1 Page 2 of 2
IN WITNESS WHEREOF, the parties will be deemed to have caused this Amendment No. 2 to be executed by their duly authorized representatives as of the Effective Date.

CITY OF MORRO BAY
By: _____________________________
John Craig___________________,
City Manager
Attest:
_________________________________
Dana Swanson, City Clerk

Approved As To Form:
_________________________________
Brian Stack, City Attorney
RINCON CONSULTANTS, INC.

By: _____________________________
Its _________________ Jennifer Haddow, President

01181.0001/801613.1 Page 1 of 3

CITY OF MORRO BAY
AMENDMENT NO. 5 TO THE AGREEMENT

FOR CONSULTANT SERVICES

BETWEEN THE CITY OF MORRO BAY AND
KEVIN MERK ASSOCIATES, LLC.

This Amendment No. 5 is entered on the 24th day of February 2026 by and between the City of Morro Bay, a municipal corporation (“City”) and Kevin Merk Associates, LLC, a California limited liability company (“Consultant”). City and Consultant are sometimes referred to individually as “Party” and collectively “Parties.”

RECITALS
WHEREAS, City and Consultant entered into an agreement as of January 21, 2021, for consulting services related to the Water Reclamation Facility Lift Stations and Offsite Pipelines (Project) for a not to exceed amount of $71,310.00 (Agreement); and
WHEREAS, the Parties amended the Agreement to extend the contract expiration date from June 30th, 2022 to December 31st, 2022 with no increase in compensation (Amendment No. 1); and WHEREAS, the Parties amended the Agreement as of August 23, 2022, to provide for additional time for the entire Agreement (Amendment No. 2); and
WHEREAS, the Parties amended the Agreement to extend the contract expiration date from December 31st, 2022 to June 30th, 2023 with no increase in compensation (Amendment No. 3); and
WHEREAS, the Parties amended the Agreement to extend the contract expiration date from June 30th, 2023 to December 31, 2025, to expand the scope, and to increase the Not to Exceed amount by Thirty-Nine Thousand Seven Hundred Thirty Dollars and No Cents ($39,730.00), for a new revised total Not to Exceed of One Hundred Eleven Thousand Forty Dollars and No Cents ($111,040.00) for the entire Agreement (Amendment No. 4); and WHEREAS, the Agreement. Amendment No. 1, Amendment No. 2, Amendment No. 3, and Amendment No. 4 are hereinafter referred to as the Amended Agreement; and WHEREAS, the current Not to Exceed of One Hundred Eleven Thousand Forty Dollars and No Cents ($111,040.00) does not include any contingency; and WHEREAS, the City requires additional Biological Resources Technical Support services to support the implementation of the Recycled Water Component of the Water Reclamation Facility Program; and

01181.0001/801613.1 Page 2 of 3
WHEREAS, Consultant has specific knowledge and experience to provide technical oversight needed to accomplish necessary tasks required to meet the City Council's goals for the Project; NOW THEREFORE, City and Consultant again mutually agree to amend the Amended Agreement as follows:

1. The revised scope of services to be provided by Consultant, pursuant to the Amended Agreement, as hereby amended, shall include the Scope of Work and Fee Rates, as set forth in Exhibits A and C, which are incorporated herein by this reference. In the event of any inconsistency between terms in Exhibits A and C (excepting Scope of Work and Fee Rates) and the Amended Agreement, the terms of the Amended Agreement shall govern. No other terms and conditions from Exhibit As and C, other than the amended description of the Scope of Work and Fee Rates, shall apply to the Amended Agreement, unless specifically agreed to by City in writing.

2. The Not to Exceed amount is increased from the previous amount of One Hundred Eleven Thousand Forty Dollars and No Cents ($111,040.00) by Forty-Three Thousand Four Hundred Fifty Dollars ($43,450.00) for a new revised total Not to Exceed of One Hundred Fifty‑Four Thousand Four Hundred Ninety Dollars and No Cents ($154,490.00) for the Amended Agreement as herein amended.

3. Of the total Not to Exceed amount of for the Amended Agreement, Three Thousand Nine Hundred Fifty Dollars and No Cents ($3,950.00) is contingency which can be executed by the City Manager via written authorization.

4. This Amendment No. 5 ratifies all prior amendments to the Amended Agreement. The expiration date for the Amended Agreement, as hereby ratified, is extended from December 31, 2025 through December 31, 2026.

5. The compensation is to be paid by the City to the Consultant for consulting services related to the Water Reclamation Facility Indirect Potable Reuse (IPR) Project.

6. Except as expressly stated herein, the terms and conditions of the Amended Agreement remain in full force and effect and unless otherwise expressly stated herein or the context requires, all terms shall have the same meaning as provided in the Amended Agreement.

7. The effective date of this Amendment No. 5 shall be deemed to be June 30, 2023, excepting that the terms of Sections 1 and 2 hereof shall take effect November 14, 2023.

01181.0001/801613.1 Page 3 of 3
IN WITNESS WHEREOF, the parties will be deemed to have caused this Amendment No. 5 to be executed by their duly authorized representatives as of the Effective Date.

CITY OF MORRO BAY KEVIN MERK ASSOCIATES LLC
By: _____________________________ By: _____________________________ John Craig ___________________,
City Manager Its _________________
Attest:
_________________________________
Dana Swanson, City Clerk

Approved As To Form:
_________________________________
Brian Stack, City Attorney
2/18/26 Principal Biologist

01181.0001/813182.1 A-1

EXHIBIT A

SCOPE OF SERVICES
I. Consultant will perform services described in Consultant’s Proposal and Scope of Work attached hereto.

II. All work product is subject to review and acceptance by City and must be revised by Consultant without additional charge to City until found satisfactory and accepted by the City.

KMA
Kevin Merk Associates, LLC | P.O. Box 318, San Luis Obispo, CA 93406 | 805.748.5837 Environmental Consulting Services
February 10, 2026
City of Morro Bay
595 Harbor Street
Morro Bay, CA 93442
Attention: Daniel Heimel
Subject: On-Call Services Proposal - Biological Resources Technical Support for the Morro Bay Indirect Potable Reuse Project, Morro Bay, California Dear Mr. Heimel:

Kevin Merk Associates, LLC (KMA) is pleased to submit this proposal to provide biological resources consulting services to support ongoing planning and design efforts for the City of Morro Bay’s Indirect Potable Reuse (IPR) project. As we have discussed, KMA will continue to assist the team on a time and materials basis during project development phases. We would continue to support the agency consultation process, including coordination with U.S. Environmental Protection Agency and the U.S. Fish and Wildlife Service. We would also provide technical input as it pertains to biological resources including jurisdictional drainages and wetlands, and other Environmentally Sensitive Habitat Areas (ESHA) such as coastal dunes for development of injection wells. We would review proposed alternatives to ensure consistency with the Final Environmental Impact Report prepared for the Water Reclamation Facility, and help with ESHA avoidance and mitigation strategy development to make sure the project minimizes impacts to important resources in the project area. At your direction, we would attend meetings and review design iterations, conduct field work, and share data through the preparation of maps and reports. We also anticipate communicating with you and the team by phone and email on a regular basis, as well as supporting regulatory agency consultation during the course of the work program.

We would provide our services on a time and materials reimbursement basis against a not to exceed budget of $39,500 consistent with our current fee schedule and the attached cost estimate spreadsheet. Expenses such as vehicle reimbursement and field equipment costs would be included with this amount.

Thank you. We look forward to our continued collaboration on this project. If you have any questions regarding our anticipated scope of work, please call me directly.

Sincerely,
KEVIN MERK ASSOCIATES, LLC
Kevin B. Merk
Principal Biologist
Attachments: 2026 Fee Schedule
Cost Estimate Spreadsheet

KMA
January 2026
KEVIN MERK ASSOCIATES, LLC
Standard Fee Schedule for Environmental Services
The following sets forth the billing rates for our personnel.

Professional and Technical Personnel Rate
Principal ....................................................................................................................$180/hour Senior Associate ....................................................................................................$160/hour Biologist ....................................................................................................................$140/hour GIS Specialist...........................................................................................................$130/hour Word Processor/Administrative Assistant.............................................$ 90/hour Expert witness services consisting of depositions and in-court testimony will be charged at a rate of $360/hour.

Representative Equipment Unit Rate
Sound Level Meter................................................................................................$125/day Hypsometer.............................................................................................................$ 75/day Wind Meter..............................................................................................................$ 35/day Temperature-pH-Conductivity Meter........................................................$ 35/day GPS (sub-meter precision)...............................................................................$250/day Infrared/Wildlife Camera.................................................................................$ 75/day Photocopying and Printing
Photocopies will be charged at a rate of $0.17/copy for single-sided copies and $0.27 for double-sided copies. Colored copies will be charged at a rate of $2.00/copy for single-sided and $3.00/copy for double-sided or 11x17” copies.

Reimbursable Expenses
Expenses associated with completing a project are termed Reimbursable Expenses. These expenses do not include the hourly billing rates described above. Reimbursable expenses include, but are not limited to the following.

1. Direct costs associated with the execution of a project are billed at cost plus 15% to cover General and Administrative services. Direct costs include, but are not limited to, subcontractor services, authorized travel expenses, permit charges and filing fees, printing and graphic charges, sample handling and shipment, equipment rental other than covered by the above charges, etc.

2. Vehicle use in company-owned two wheel drive vehicles will be billed at a day rate of $100/day and $150/day for 4x4 vehicles plus $0.90/mile over 50 miles per day. Rental vehicles will be billed at cost plus 15%. For transportation in employee owned automobiles, a rate of $0.90/mile will be charged.

01181.0001/813182.1 C-1

EXHIBIT C

SCHEDULE OF COMPENSATION
I. City will compensate Consultant for the Services performed upon submission of a valid invoice.

II. The total compensation for the Services shall not exceed the Contract Sum, as provided in the Agreement.

III. The base fee, contingency, optional tasks, and total agreement amount are as follows:

Base Fee
Consultant shall not be compensated for any services satisfactorily rendered in connection with its performance of this Agreement which are in addition to those set forth in the Base Fee included herein, unless such additional services are authorized in advance and in writing by the City Manager. Consultant shall be compensated for any additional services in the amounts and in the manner as agreed to by the City Manager and Consultant at the time City’s written authorization is given to Consultant for the performance of said services. The Base Fee is Thirty-Nine Thousand Five Hundred Dollars and No Cents ($39,500.00).

Contingency
The City Manager may approve additional work not to exceed ten percent (10%) of the Base Fee included in Exhibit C of Thirty-Nine Thousand Five Hundred Dollars and No Cents ($39,500.00).

In no event shall the sum of the authorized contingency exceed an amount of Three Thousand Nine Hundred Fifty Dollars and No Cents ($3,950.00).

Optional Tasks
There are no optional tasks included in this scope or fee.

Total Agreement Amendment Amount
The total amount for this agreement amendment, including the contingency and optional tasks, shall not exceed Forty-Three Thousand Four Hundred Fifty Dollars ($43,450.00). Any additional work in excess of this amount must be approved by the City Council.

See the attached fee estimate on the next page.

Task Cost Hours Principal
Biologist
Senior
Biologist GIS/Graphics Admin Assist
$180/hr $160/hr $130/hr $90/hr
Task 1 - Alternatives Review and EIR Consistency $9,540 58 32 16 8 2 Task 2 - Biological Field Surveys for Injection Wells $11,100 66 40 20 4 2 Task 3 - ESHA Avoidance and Setback Reduction Strategy $10,340 62 40 12 8 2 Task 4 - Team Meetings and Agency Consultation $8,020 46 40 4 2 Expenses (vehicle, field equip., etc.) $500
Total Budget Estimate $39,500 232 152 52 20 8
KMA
Kevin Merk Associates, LLC
Budgetary Cost Estimate - On-Call Biological Resources Services for Morro Bay's Indirect Potable Reuse Project

01181.0001/657125.1 Page 1 of 4
AMENDMENT NO. 6 TO THE

AGREEMENT FOR CONSULTANT SERVICES

AMONG THE CITY OF MORRO BAY AND
GSI WATER SOLUTIONS, INC.
______________________________________________________________________________ This Amendment No. 6 is entered on the 24th day of February 2026 by and between the CITY OF MORRO BAY, a municipal corporation (City), and GROUND WATER SOLUTIONS INC., dba GSI WATER SOLUTIONS INC., an Oregon corporation (Consultant). City and Consultant are sometimes referred to individually as “Party” and collectively “Parties.”

RECITALS
WHEREAS, City and Consultant entered into an agreement as of October 31, 2018, whereby Consultant agreed to perform Phase 1 and Phase 2 hydrogeological services to support the permitting and design of injection wells for potable reuse for the Water Reclamation Facility (Project), which was approved by the City Council for a Not to Exceed Amount of $351,000.00 (Agreement); and
WHEREAS, on November 10, 2020, the City Council reviewed and approved changes for the Project that would increase the Not to Exceed Amount of $351,000.000 by $530,000.00 for a revised Not to Exceed amount of $881,000.00 for Consultant’s satisfactory completion of Phase 3 for the Project and authorized the City Manager to sign such Amendment No. 1 (Amendment No. 1); and
WHEREAS, included in the Amendment No. 1 was an approved contingency amount of up to $220,250 or 25 percent of the amount to be paid pursuant to the Amendment No. 1 that could be authorized by the City Manager for additional services (Contingency); and WHEREAS, the City Manager previously authorized use of $52,650.00 of the Contingency budget for previously completed work outside of the original scope of services to increase the authorized budget for Consultants to Not-to-Exceed Amount of $933,650.00 and thus the sum of $167,600.00 of the Contingency was remaining; and
WHEREAS, through the course of providing the requested services in Amendment No. 1, numerous challenges (associated with permitting, well site access, coordination with other Project work and other requests from City) have been satisfactorily responded to by Consultant.

These additional, out-of-scope services from Consultant have resulted the need to again use a portion of the Contingency; and
WHEREAS, Consultant has provided a proposal for the completion of the requested services for Not-to-Exceed $147,213.00; and
WHEREAS, City Staff and WRF Subcommittee reviewed Consultant’s proposal and determined use of an additional portion of the Contingency budget is warranted due to the unforeseen project

01181.0001/657125.1 Page 2 of 4
conditions and additional services requested from Consultant and approved the Interim City Manager to approve the use of Contingency budget; and
WHEREAS, on May 8, 2023, the Interim City Manager reviewed and approved changes for the Project that would increase the Not-to-Exceed Amount set forth in the Agreement as amended to that date by a Not-to-Exceed Amount of $147,231.00 from $933,650.00 to $1,080,863.00, through use of Contingency Budget for Consultant’s satisfactory completion of Phase 3 for the Project and signed such as Amendment No. 2 (Amendment No. 2); and WHEREAS, with approval of the Amendment No. 2, $20,387.00 of the Contingency remained available; and
WHEREAS, on November 11, 2023, the City Council approved Amendment No. 3 with the Consultant to provide additional Hydrogeologic Technical Support services to support the implementation of the Recycled Water Component of the Water Reclamation Facility Program to increase the previous Not-to-Exceed Amount of One Million Eighty Thousand Eight Hundred Sixty-three Dollars and No Cents ($1,080,863.00) by Two Hundred Thirty Thousand Nine Hundred Dollars and No Cents ($230,900.00), for a new revised total Not-to-Exceed Amount of One Million Three Hundred Eleven Thousand Seven Hundred Sixty-Three Dollars and No Cents ($1,311,763.00); and
WHEREAS, on June 11 2024, the City Council approved Amendment No. 4 with the Consultant to provide services for the Phase 4 Scope of Work and to increase the previous Not-to-Exceed Amount of One Million Three Hundred Eleven Thousand Seven Hundred Sixty-Three Dollars and No Cents ($1,311,763.00) by Thirty Nine Thousand Six Hundred Dollars and No Cents ($39,600.00), for a new revised total Not-to-Exceed Amount of One Million Three Hundred Fifty-One Thousand Three Hundred Sixty-Three Dollars and No Cents ($1,351,363.00); and WHEREAS, on June 24 2025, the City Council approved Amendment No. 5 with the Consultant to provide services for the Phase 4 Scope of Work and other tasks out lined in the Scope of Work attached to Amendment No.5 and to increase the previous Not-to-Exceed Amount of One Million Three Hundred Fifty-One Thousand Three Hundred Sixty-Three Dollars and No Cents ($1,351,363.00) by Three Hundred Ninety-Seven Thousand One Hundred Dollars and No Cents ($397,100.00) for a new revised total Not-to-Exceed Amount of One Million Seven Hundred Forty-Eight Thousand Four Hundred Sixty-Three Dollars and No Cents ($1,748,463.00) for the Amended Agreement, as herein amended; and
WHEREAS, the Agreement, Amendment No.1, Amendment No. 2, Amendment No. 3, Amendment No. 4, and Amendment No. 5 are hereinafter collectively referred to as the “Amended Agreement;” and
WHEREAS, the City requires additional Hydrogeologic Technical Support services to support the implementation of the Recycled Water Component of the Water Reclamation Facility Program; and

01181.0001/657125.1 Page 3 of 4
WHEREAS, Consultant has specific knowledge and experience to provide technical oversight needed to accomplish necessary tasks required to meet the City Council's goals for the Project.

NOW, THEREFORE, City and Consultant mutually agree to further amend the Amended Agreement as follows:

1. Unless otherwise expressly stated herein or the context requires, all terms shall have the same meaning as provided in the Agreement.

2. The revised scope of services to be provided by Consultant, pursuant to the Amended Agreement, as hereby amended, shall include the tasks included in Scope of Work, as set forth on pages 1-6 of Exhibit A hereto, which are incorporated herein by this reference and are additive to, and not a replacement of, prior work performed under the Amended Agreement.

The compensation to be paid for the Scope of Work shall be paid in accordance with the terms of the Amended Agreement on a time and material basis and shall increase the previous Not-to-Exceed Amount of One Million Seven Hundred Forty-Eight Thousand Four Hundred Sixty-Three Dollars and No Cents ($1,748,463.00) by Forty‑Eight Thousand Four Hundred Dollars and No Cents ($48,400.00) for a new revised total Not-to-Exceed Amount of One Million Seven Hundred Ninety‑Six Thousand Eight Hundred Sixty‑Three Dollars ($1,796,863.00) for the Amended Agreement, as set forth in Exhibit C. Consultant shall not be compensated for any services rendered in connection with its performance of the Scope of Work, which are in addition to those set forth herein, unless such additional services are authorized in advance and in writing by the City Manager in accordance with the Amended Agreement.

3. The Not-to-Exceed amount described in the Original Agreement through Amendment No. 4 ($1,351,363.00) does not include the unused contingency associated with those amendments.

The unused contingency associated with those amendments is the original contingency added in Amendment No. 1 ($220,250.00) minus the authorized contingency ($52,650.00 + $147,213.00) for a remaining contingency of $20,387.00. This authorized contingency was moved to the Not-to-Exceed amount of ($1,351,363.00). The Not-to-Exceed amounts described in Amendments No. 5 and No. 6 include contingency, none of which has been used to date. Amendment 5 includes a contingency of $26,100.00 and Amendment 6 includes a contingency of $4,400.00 The total unused contingency available is $50,887.00 to date.

4. Except as expressly stated herein, all other terms and conditions in the Agreement shall remain in full force and effect.

5. The contract expiration date for the Amended Agreement shall remain December 31, 2026.

6. The effective date of this Amendment No. 6 shall be deemed to be February 24, 2026 (Effective Date).

IN WITNESS WHEREOF, the Parties have caused this Amendment No. 6 to be executed by their duly authorized representatives.

01181.0001/657125.1 Page 4 of 4
CITY OF MORRO BAY GSI WATER SOLUTIONS, INC.
a municipal corporation
By: _____________________________
John Craig,
By: _____________________________
Matt Kohlbecker
City Manager President
Dated: February , 2026 Dated: February , 2026
By: ___________________________
Liesl Deck
Chief Financial Officer
Dated: February __, 2026
Attest:
________________________
Dana Swanson, City Clerk
Approved As To Form:
_________________________
Brian Stack, City Attorney
18 18

01181.0001/813182.1 A-1

EXHIBIT A

SCOPE OF SERVICES
I. Consultant will perform services described in Consultant’s Scope of Work attached hereto.

II. All work product is subject to review and acceptance by City, and must be revised by Consultant without additional charge to City until found satisfactory and accepted by City.

GSI Water Solutions, Inc. 418 Chapala Street, Suite H, Santa Barbara, CA 93101 www.gsiws.com Scope of Work and Fee Estimate
To: Dan Heimel, Confluence ES
From: Tim Thompson and Dave O’Rourke, GSI Water Solutions Date: February 9, 2026
RE: City of Morro Bay, ASR Permit Renewal
Introduction
GSI Water Solutions (GSI) is pleased to present this scope of work and fee estimate (Proposal) to assist the City of Morro Bay (City) with technical support for the application to secure a new ASR permit from the Central Coast Regional Water Quality Control Board (Regional Board) in accordance with Water Quality Order 2012-0010. This permit is needed in association with the City’s planned Indirect Potable Reuse (IPR) program, which is a component of the City’s larger efforts associated with the Water Reclamation Facility program.

Scope of Work
Presented below is a scope of work for preparing the application materials and associated work to obtain a new ASR permit for activities associated with the City’s Indirect Potable Reuse program.

Task 1 –Prepare Technical Report and other application materials GSI will prepare the comprehensive Technical Report which is a required component of the application for enrollment in the Regional Board ASR permit, Water Quality Order 2012-0010 (WQO). The technical report will cover the required topics as listed in Attachment C of the WQO. There will be efficiencies in the report preparation effort because a similar report was prepared in 2021 for a previous ASR permit, also for the City’s IPR program.

GSI will also prepare the “Form 200” and associated materials that are part of the application package.

Task 2 – Prepare Quarterly and Annual Compliance Reports This task includes preparation of the four (4) quarterly reports and two (2) annual reports that will be required as part of the monitoring and reporting requirements of the ASR permit. This effort does not include the preparation of a technical memorandum that will be necessary following the injection tracer testing planned for the future injection wells (IW-2, IW-3 and possibly IW-4) – this effort will be captured in a future scope of work to be prepared in mid 2026 which will include the planning and oversight of the tracer testing.

General Assumptions
 This proposal was prepared in accordance with published guidance as indicated, and the proposed work is intended to follow standard industry practices and protocols using common technologies.

CITY OF MORRO BAY, ASR PERMIT RENEWAL
GSI Water Solutions, Inc.  2
 We anticipate 2 to 3 meetings and/or technical consultations with regulatory agencies and other project parties for the development of the permit application materials. If these meetings and technical consultations result in work-scope modifications, such modifications are not included or budgeted within the scope presented in this proposal.

Statement of Limitations
GSI’s work product is intended for use by the City and is not intended for reliance by third parties unless otherwise specified in this scope of work. If requested by the City, a reliance letter will be reviewed and considered by GSI. Completion of a reliance letter may be subject to an additional fee and reliance will be subject to the same terms and conditions referenced above.

Fee Estimate and Schedule
Fees for these services will be on a time-and-materials basis and. GSI will not exceed the proposed budget without prior approval from the City. For planning purposes, GSI’s proposed budget to provide services described in the Scope of Work above the tasks on a time-and-materials basis is $44,000.

GSI’s Fee Schedule is provided as Attachment A. GSI can begin work within one week from notice to proceed.

The anticipated duration for Task 1 is approximately 1 month.

Description Total
Task 1 – Prepare Technical Report and associated application materials $20,000
Task 2 – Prepare Quarterly and Annual Compliance Reports $24,000 Project Totals $44,000
We thank you for your consideration of this proposal and look forward to continuing to support the City with this important project.

Sincerely,
GSI Water Solutions, Inc.

Tim Thompson, PG, CHg
Principal Water Resources Consultant

2026 GSI Fee Schedule
Labor Category Hourly Rate
Technical Professionals
Principal II $300 – $370
Principal I $275 – $330
Senior Managing II $245 – $315
Senior Managing I $220 – $255
Managing II $190 – $225
Managing I $180 – $210
Senior Project II $170 – $200
Senior Project I $160 – $190
Project II $150 – $180
Project I $140 – $170
Staff II $130 – $160
Staff I $120 – $150
Other Services
GIS/Graphics/Database $130 – $185
Editor/Documents $130 – $160
Administration $95 – $130
The hourly rate for trial preparation and expert witness testimony is 1.5 times the standard billing rate shown above.

Expenses
• Mileage: IRS authorized rate/mile plus 10 percent markup • Direct expenses and outside services: Cost plus 10 percent markup • Enterprise GIS: $100 per month for the duration of use *Hourly rates are subject to annual increases on the contract anniversary date.

01181.0001/813182.1 C-1

EXHIBIT C

SCHEDULE OF COMPENSATION
I. City will compensate Consultant for the Services performed upon submission of a valid invoice.

II. The total compensation for the Services shall not exceed the Contract Sum, as described in the Agreement.

III. The base fee, contingency, optional tasks, and total Agreement Amendment amount are as follows:

Base Fee
Consultant shall not be compensated for any services satisfactorily rendered in connection with its performance of this Agreement which are in addition to those set forth in the Base Fee included herein, unless such additional services are authorized in advance and in writing by the City Manager. Consultant shall be compensated for any additional services in the amounts and in the manner as agreed to by the City Manager and Consultant at the time City’s written authorization is given to Consultant for the performance of said services. The Base Fee is Forty-Four Thousand Dollars and No Cents ($44,000.00)
Contingency
The City Manager may approve additional work not to exceed ten percent (10%) of the Base Fee included in Exhibit C of Forty-Four Thousand Dollars and No Cents ($44,000.00). In no event shall the sum of the authorized contingency exceed an amount of Four Thousand Four Hundred Dollars and No Cents ($4,400.00).

Optional Tasks
There are no optional tasks included in this scope or fee.

Total Agreement Amendment Amount
The total amount for this agreement amendment, including the contingency and optional tasks, shall not exceed Forty‑Eight Thousand Four Hundred Dollars and No Cents ($48,400.00). Any additional work in excess of this amount must be approved by the City Council.

IV. Consultant shall perform the following tasks at the following rates: See the attached fee estimate on the next page.

GSI Water Solutions, Inc. 418 Chapala Street, Suite H, Santa Barbara, CA 93101 www.gsiws.com Scope of Work and Fee Estimate
To: Dan Heimel, Confluence ES
From: Tim Thompson and Dave O’Rourke, GSI Water Solutions Date: February 9, 2026
RE: City of Morro Bay, ASR Permit Renewal
Introduction
GSI Water Solutions (GSI) is pleased to present this scope of work and fee estimate (Proposal) to assist the City of Morro Bay (City) with technical support for the application to secure a new ASR permit from the Central Coast Regional Water Quality Control Board (Regional Board) in accordance with Water Quality Order 2012-0010. This permit is needed in association with the City’s planned Indirect Potable Reuse (IPR) program, which is a component of the City’s larger efforts associated with the Water Reclamation Facility program.

Scope of Work
Presented below is a scope of work for preparing the application materials and associated work to obtain a new ASR permit for activities associated with the City’s Indirect Potable Reuse program.

Task 1 –Prepare Technical Report and other application materials GSI will prepare the comprehensive Technical Report which is a required component of the application for enrollment in the Regional Board ASR permit, Water Quality Order 2012-0010 (WQO). The technical report will cover the required topics as listed in Attachment C of the WQO. There will be efficiencies in the report preparation effort because a similar report was prepared in 2021 for a previous ASR permit, also for the City’s IPR program.

GSI will also prepare the “Form 200” and associated materials that are part of the application package.

Task 2 – Prepare Quarterly and Annual Compliance Reports This task includes preparation of the four (4) quarterly reports and two (2) annual reports that will be required as part of the monitoring and reporting requirements of the ASR permit. This effort does not include the preparation of a technical memorandum that will be necessary following the injection tracer testing planned for the future injection wells (IW-2, IW-3 and possibly IW-4) – this effort will be captured in a future scope of work to be prepared in mid 2026 which will include the planning and oversight of the tracer testing.

General Assumptions
 This proposal was prepared in accordance with published guidance as indicated, and the proposed work is intended to follow standard industry practices and protocols using common technologies.

CITY OF MORRO BAY, ASR PERMIT RENEWAL
GSI Water Solutions, Inc.  2
 We anticipate 2 to 3 meetings and/or technical consultations with regulatory agencies and other project parties for the development of the permit application materials. If these meetings and technical consultations result in work-scope modifications, such modifications are not included or budgeted within the scope presented in this proposal.

Statement of Limitations
GSI’s work product is intended for use by the City and is not intended for reliance by third parties unless otherwise specified in this scope of work. If requested by the City, a reliance letter will be reviewed and considered by GSI. Completion of a reliance letter may be subject to an additional fee and reliance will be subject to the same terms and conditions referenced above.

Fee Estimate and Schedule
Fees for these services will be on a time-and-materials basis and. GSI will not exceed the proposed budget without prior approval from the City. For planning purposes, GSI’s proposed budget to provide services described in the Scope of Work above the tasks on a time-and-materials basis is $44,000.

GSI’s Fee Schedule is provided as Attachment A. GSI can begin work within one week from notice to proceed.

The anticipated duration for Task 1 is approximately 1 month.

Description Total
Task 1 – Prepare Technical Report and associated application materials $20,000
Task 2 – Prepare Quarterly and Annual Compliance Reports $24,000 Project Totals $44,000
We thank you for your consideration of this proposal and look forward to continuing to support the City with this important project.

Sincerely,
GSI Water Solutions, Inc.

Tim Thompson, PG, CHg
Principal Water Resources Consultant

2026 GSI Fee Schedule
Labor Category Hourly Rate
Technical Professionals
Principal II $300 – $370
Principal I $275 – $330
Senior Managing II $245 – $315
Senior Managing I $220 – $255
Managing II $190 – $225
Managing I $180 – $210
Senior Project II $170 – $200
Senior Project I $160 – $190
Project II $150 – $180
Project I $140 – $170
Staff II $130 – $160
Staff I $120 – $150
Other Services
GIS/Graphics/Database $130 – $185
Editor/Documents $130 – $160
Administration $95 – $130
The hourly rate for trial preparation and expert witness testimony is 1.5 times the standard billing rate shown above.

Expenses
• Mileage: IRS authorized rate/mile plus 10 percent markup • Direct expenses and outside services: Cost plus 10 percent markup • Enterprise GIS: $100 per month for the duration of use *Hourly rates are subject to annual increases on the contract anniversary date.

Prepared By: AW Dept Review: AW
City Manager Review: JC City Attorney Review: __BS____
Staff Report
TO: Honorable Mayor and City Council DATE: February 18, 2026 FROM: Amy Watkins, Chief of Police
SUBJECT: Approval of Resolution No. 08-26 Authorizing the Police Department to Apply for and Accept Award for the California Highway Patrol (CHP) Cannabis Tax Fund Grant Program (CTFGP) – Small and Mid-Size Law Enforcement Agency, and authorize the City Manager to Execute all Necessary Documents to Accept, Implement, and Carry Out the Terms of the Grant

RECOMMENDED ACTION
Adopt Resolution No. 08-26 to authorize staff to apply for and accept award of $206,396 grant funds for the purpose of enhancing the Morro Bay Police Department’s impaired-driving enforcement, training, and public-education efforts.

FISCAL IMPACT
Staff anticipates time allocated to this effort will be reimbursed through the grant.

BACKGROUND
With the passage of Proposition 64 in 2016, The Control, Regulate, and Tax Audit Use Marijuana Act (AUMA), California voters mandated the state to set aside funding for the CHP to provide grants to local governments and Qualified Nonprofit Organizations for the education, prevention, and enforcement of impaired driving laws pursuant to Section 34019(f)(3)(B) Revenue and Taxation Code (RTC).

DISCUSSION
The Morro Bay Police Department is eligible to apply for the California Highway Patrol (CHP) Cannabis Tax Fund Grant Program (CTFGP) – Small and Mid-Size Law Enforcement Agency.

The Morro Bay Police Department seeks to reduce traffic injuries and fatalities caused by drivers impaired by alcohol, cannabis, or other drugs. Funding from the CHP Cannabis Tax Fund Grant will enhance our impaired-driving enforcement, training, and public-education efforts.

Grant Funds will be used to purchase and equip a marked patrol vehicle dedicated to DUI/DUID enforcement. This vehicle will expand our operational capacity and serve as a visible deterrent during high-visibility enforcement activities. It will be deployed during planned saturation patrols and in areas or timeframes with elevated impaired-driving risk.

The department proposes to conduct 12 DUI saturation patrols, with at least three operations per quarter, each staffed by two officers. These patrols will focus on identifying and arresting impaired drivers, including cannabis-impaired motorists.

AGENDA NO: 6g
MEETING DATE: February 24, 2026

To strengthen our investigative capabilities, the department aims to train four officers as Drug Recognition Experts (DREs). Travel and training funds will support officer attendance at certified DRE courses and specialized impaired driving enforcement training.

The department also plans to obtain two electronic message board trailers to support public-education efforts. These boards will display safety messages, discourage impaired driving, and increase community awareness about the dangers and consequences of driving under the influence.

Through targeted enforcement, enhanced officer training, and proactive community outreach, this project will improve roadway safety and reduce impaired-driving collisions in Morro Bay.

CONCLUSION
Staff recommends Council approve the application for and acceptance of $206,396 in grant funds for the purpose of enhancing the Morro Bay Police Department’s impaired-driving enforcement, training, and public education efforts.

ATTACHMENT(S)

1. Resolution No. 08-26 Authorizing Grant Application

2. Draft Grant Application - California Highway Patrol (CHP) Cannabis Tax Fund Grant Program (CTFGP) – Small and Mid-Size Law Enforcement Agency.

RESOLUTION NO. 08-26

RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA

TO APPROVE THE SUBMITTAL OF A CALIFORNIA HIGHWAY PATROL (CHP) CANNABIS TAX FUND GRANT PROGRAM (CTFGP) – SMALL AND MID-SIZE LAW ENFORCEMENT AGENCY GRANT APPLICATION FOR UP TO $206,396

T H E C I T Y C O U N C I L
City of Morro Bay, California
WHEREAS, the California Highway Patrol (CHP) provides grants to local governments to enhance the department’s enforcement, training, and public education efforts related to impaired driving.

WHEREAS, the City Council authorizes the City Manager to apply for and receive grant funds for the purpose of enhancing the Morro Bay Police Department’s impaired-driving enforcement, training, and public-education efforts.

WHEREAS, if recommended for funding by the California Highway Patrol, the City Council authorizes the City Manager to accept a grant up to two hundred six thousand three hundred and ninety-six dollars ($206,396); and
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Morro Bay, the City Manager is hereby authorized and directed to execute all necessary documents to implement and carry out the terms of the grant.

PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting thereof held on the 24
th day of February 2026, on the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSE:
_________________________________
CARLA WIXOM, Mayor
ATTEST:
_________________________________________
DANA SWANSON, City Clerk

Morro Bay police Department
Prepared by Morro Bay Police Department
for California Highway Patrol (CHP) Law Enforcement: Small and Mid-Size Organizations/Agencies FY2026/2027 Primary Contact: Nicole Taylor

Opportunity Details
Opportunity Information
Title
Law Enforcement: Small and Mid-Size Organizations/Agencies FY2026/2027 Description
Law Enforcement grants provide financial assistance to allied agencies for the education, prevention, and the enforcement of laws related to driving under the influence of alcohol and other drugs, including cannabis and cannabis products.

The intent of the program is to educate the public regarding the dangers of impaired driving, enforce impaired driving laws on the roadway, and improve the Organization/Agency’s effectiveness through training and development of new strategies.

Awarding Agency Name
California Highway Patrol
Agency Contact Name
Cannabis Grants Unit (CGU)
Agency Contact Phone
916-843-4360
Agency Contact Email
[email protected]
Fund Activity Categories
Education, Law, Justice and Legal Services
Manager
Cannabis Grants Unit (CGU)
Opportunity Posted Date
1/7/2026
Public Link
https://www.gotomygrants.com/Public/Opportunities/Details/b8803dd1-6173-4b9a-9057-ebac0b94c8fd Is Published
Yes
Funding Information
Opportunity Funding
$13,000,000.00
Funding Sources
State
Funding Source Description
With the passage of Proposition 64 in 2016, The Control, Regulate, and Tax Adult Use Marijuana Act (AUMA), California voters mandated the state to set aside funding for the CHP to provide grants to local governments and Qualified Nonprofit Organizations for the education, prevention, and enforcement of impaired driving laws pursuant to Section 34019 (f)(3)(B) Revenue and Taxation Code (RTC).

Funding Restrictions
State Agencies/Departments, please refer to Section 34019 (f)(3)(B) RTC and California Code of Regulations, Title 13,

Morro Bay police Department
Morro Bay Police Department

Division 2, Chapter 13, for additional information.

Award Information
Award Range
$500,000.00 Ceiling
Award Period
07/01/2026 - 06/30/2027
Award Type
Competitive
Indirect Costs Allowed
No
Matching Requirement
No
Submission Information
Submission Window
01/07/2026 8:00 AM - 02/23/2026 5:00 PM
Submission Timeline Type
One Time
Submission Timeline Additional Information
GRANT APPLICATIONS ARE DUE FEBRUARY23, 2026, BY5:00 PM PST.

Grant Applicants are advised to ask submittal questions well before the deadline. The Cannabis Grants Unit (CGU) cannot guarantee an immediate response and the Grant Management System (GMS) will automatically close at 5:00 PM PST. Once a Grant Application is submitted through the GMS, Grant Applicants may not add, edit, or delete any Grant Application information.

Question Submission Information
Question SubmissionOpen Date
01/07/2026 8:00 AM
Question Submission Close Date
02/23/2026 5:00 PM
Question Submission Email Address
[email protected]
Question Submission Additional Information
GRANT APPLICATIONS ARE DUE FEBRUARY23, 2026, BY5:00 PM PST.

CGU Office Hours:

Monday through Friday
8:00 am to 5:00 pm
Attachments
FY26-27 RFA - Law Enforcement Small and Mid-Size
FY26-27 Grant Application Evaluation Criteria
Eligibility Information

Morro Bay police Department
Morro Bay Police Department

Eligibility Type
Public
Additional Eligibility Information
Small and Mid-Size Law Enforcement Organizations/Agencies, with the primary function of enforcing traffic laws, which includes responding to calls, making arrests, and issuing citations, pursuant to the California Penal Code, California Vehicle Code, and California Health and Safety Code
Small-Size Law Enforcement Organizations/Agencies: 100 employees or less Mid-Size Law Enforcement Organizations/Agencies: 500 employees or less Additional Information
Additional Information URL
https://www.chp.ca.gov/programs-services/programs/cannabis-tax-fund-grant-program Award Administration Information
State Award Notices
Awards will be announced in May and June 2026.

Administrative and National Policy Requirements
The California Highway Patrol (CHP) adopted regulations within Title 13 of the California Code of Regulations (CCR), Division 2, by adding Chapter 13, which govern the CHP, Cannabis Tax Fund Grant Program.

These regulations outline:
* Grant Provisions
* Grant Project Types
* Specific Grant Application Requirements
* Grant Evaluation Criteria
* Necessary Administrative Procedures for the Program
Regulations can be found at:
https://www.chp.ca.gov/programs-services/programs/cannabis-tax-fund-grant-program/program-regulations Reporting
Quarterly Reporting is required and due within 14 calendar days after the close of each quarter.

Quarter One (Q1): July 1 - September 30
Quarter Two (Q2): October 1 - December 31
Quarter Three (Q3): January 1 - March 31
Quarter Four (Q4): April 1 - June 30
Other Information
Please ensure your Organization/Agency has the capability to electronically sign required documents (ex: Grant Agreement).

Morro Bay police Department
Morro Bay Police Department

Project Information
Application Information
Application Name
Morro Bay police Department
Award Requested
$208,395.04
Total Award Budget
$208,395.04
Primary Contact Information
Name
Nicole Taylor
Email Address
[email protected]
Address
850 Morro Bay Blvd
Morro Bay, CA 93442
Phone Number
(805) 772-6233

Morro Bay police Department
Morro Bay Police Department

Project Description

1. Organization/Agency Representatives
Organization/Agency Section/Unit (subdivision) to administer the Grant Agreement.

Morro Bay Police Department
Organization/Agency Representative
Complete the following fields with the appropriate Organization/Agency representatives for the Grant Agreement. The completed fields will auto-populate in the Grant Agreement, so please ensure each individual will be the point of contact throughout the Project Performance Period.

The Authorized Official is authorized to enter into a Grant Agreement with signing authority The Authorized Financial Contact maintains financial records, documentation, and recipient of warrant The Administrative Contact is responsible for day-to-day administration Authorized Official Name (first and last)
Amy Watkins
Authorized Official Title
Chief of Police
Authorized Official Address (Street)
850 Morro Bay Blvd
Authorized Official Address (City, State, and ZIP Code) Morro Bay, CA 93442
Authorized Official Phone Number (with area code)
805-772-6237
Authorized Official Email Address
[email protected]
Authorized Financial Contact Name (first and last)
Melissa Atchison
Authorized Financial Contact Title
Finance Manager
Authorized Payment Reimbursement Address (Street) MUST MATCH FI$CAL FORM 595 Harbor Street
Authorized Payment Reimbursement Address (City, State, and ZIP Code) MUST MATCH FI$CAL FORM Morro Bay, CA 93442
Authorized Financial Contact Phone Number (with area code) 805-771-7202
Authorized Financial Contact Email Address
[email protected]
Administrative Contact Name (first and last)
Tony Mosqueda

Morro Bay police Department
Morro Bay Police Department

Administrative Contact Title
Commander
Administrative Contact Phone Number (with area code)
805-772-6234
Administrative Contact Email Address
[email protected]

Morro Bay police Department
Morro Bay Police Department

2. Senate/Assembly/Congressional/County Information
To determine the State Senate District(s), State Assembly District(s), and California Congressional District(s), copy and paste the below URL in your browser and search:
https://gis.data.ca.gov/maps/CDEGIS::legislative-districts-in-california-2/about Select one or more State Senate District(s) where the proposed Project activities will occur. To make multiple selections, hold down the Ctrl key and click each one.

State Senate 17
Select one or more State Assembly District(s) where the proposed Project activities will occur. To make multiple selections, hold down the Ctrl key and click each one.

State Assembly 30
Select one or more California Congressional District(s) where the proposed Project activities will occur. To make multiple selections, hold down the Ctrl key and click each one.

California Congressional District 24
Select one or more California counties where the proposed Project activities will occur. To make multiple selections, hold down the Ctrl key and click each one.

San Luis Obispo
Number of residents (population) that your Organization/Agency serves. 11000

Morro Bay police Department
Morro Bay Police Department

3. Statistical Data
Ensure the responses below align with the statistical data provided within the Grant Application. If a question is not applicable, please input "0" or "N/A".

Number of schools in your jurisdiction.

Elementary Schools Middle Schools High Schools Colleges/Universities Number of Schools 1 0 1 0
Number of law enforcement personnel within your Organization/Agency. 18 Does your Organization/Agency have specifically designated traffic enforcement personnel who conduct driving under the influence (DUI) enforcement operations?
Yes
No
How often does your agency conduct DUI enforcement activities (e.g., roving patrols, saturation patrols, checkpoints)?* Weekly Average Monthly Average Yearly Average
Enforcement Activities 4
How many law enforcement personnel have attended Standard Field Sobriety Test (SFST), Advanced Roadside Impaired Driving Enforcement (ARIDE), and/or Drug Recognition Evaluator (DRE) training?

SFST ARIDE DRE
Number of Trained Law Enforcement Personnel 9 4 1
How many certified DREs does your Organization/Agency currently have? 1 How many law enforcement personnel are certified SFST and/or DRE Instructors?

SFST DRE
Number of Certified Instructors 0 1
What in-service training does your Organization/Agency offer related to DUI? The Morro Bay Police Department works with other agencies to ensure our personnel are adequately trained in DUI/ARIDE/SFST enforcement. Field Training Officers are also tasked with training new officers on how to conduct DUI / DUID investigations during their initial in-field training after the police academy.

Is training conducted at your Organization/Agency or at an alternate facility? Within agency
Alternate facility
Does your law enforcement personnel participate in training with local city attorneys and/or district attorneys? Yes
No
Grant-Funded Equipment
Have Cannabis Tax Fund Grant Program Grant Funds been utilized to purchase equipment (an acquisition cost of at least $5,000)?

Morro Bay police Department
Morro Bay Police Department

Yes
No
If yes, list the fiscal year of the Grant Agreement and EACH equipment item.

EXAMPLE ONLY
FY21-22 = Two Message Boards
FY22-23 =One DUI Vehicle

Morro Bay police Department
Morro Bay Police Department

4. Project Description
Project Types: Please select each Project type included in your Project.

Enforcement Efforts
Law Enforcement Training
Public Education and/or Prevention
Provide a brief overview/synopsis (a paragraph) of the proposed Project. PLEASE DO NOT COPYAND PASTE TABLES IN FIELD - TYPE INFORMATION IN FIELD.

The Morro Bay Police Department seeks to reduce traffic injuries and fatalities caused by drivers impaired by alcohol, cannabis, or other drugs. Funding from the CHP Cannabis Tax Fund Grant will enhance our impaired-driving enforcement, training, and public-education efforts.

Grant Funds will be used to purchase and equip a marked patrol vehicle dedicated to DUI/DUID enforcement. This vehicle will expand our operational capacity and serve as a visible deterrent during high-visibility enforcement activities.

It will be deployed during planned saturation patrols and in areas or timeframes with elevated impaired-driving risk.

The department proposes to conduct 12 DUI saturation patrols, with at least three operations per quarter, each staffed by two officers. These patrols will focus on identifying and arresting impaired drivers, including cannabis-impaired motorists.

To strengthen our investigative capabilities, the department aims to train four officers as Drug Recognition Experts (DREs). Travel and training funds will support officer attendance at certified DRE courses and specialized impaired-driving enforcement training.

The department also plans to obtain two electronic message board trailers to support public-education efforts. These boards will display safety messages, discourage impaired driving, and increase community awareness about the dangers and consequences of driving under the influence.

Through targeted enforcement, enhanced officer training, and proactive community outreach, this project will improve roadway safety and reduce impaired-driving collisions in Morro Bay.

Morro Bay police Department
Morro Bay Police Department

5. Problem Statement
Clearly identify the problem/need (Problem Statement) in your local community, which is the reason for requesting grant funds. If applicable, provide recent and high-level statistical data that directly supports the problem/need in your local community. PLEASE DO NOT COPYAND PASTE TABLES IN FIELD - EITHER TYPE INFORMATION IN FIELD OR ATTACH DOCUMENT.

Morro Bay is a coastal community of approximately 10,500 residents; however, its population frequently doubles or triples during weekends, holidays,and peak tourist seasons. As a major visitor destination with a vibrant waterfront, surf culture,and year‑round special events, the City experiences sustained increases in vehicletrafficand impaired‑driving risk.This influx places significant demand on public safety resources, particularly in theareas of DUI and drug‑impaired driving enforcement.

Morro Bay is located within 15 miles of Cuesta Collegeand California PolytechnicState University,San Luis Obispo— two largeinstitutions whosestudents regularly travel to the City for beach and recreation activities.This younger demographic,coupled with a thriving tourism economy,contributes to higher rates of substance‑related incidents, including cannabis use while driving.

Cannabis accessibility within city limits further increases impairment‑related risk. Morro Bay has two licensed cannabis retail storefronts, both of which attract local residents and a substantial number of out‑of‑area visitors.The combination of legal cannabis availability, destination tourism,and highway access creates an environment where cannabis‑impaired driving is an ongoing public safety concern.This makes the City a strong candidatefor the CHP Cannabis TaxFund Grant Program, which specifically focuses on reducing cannabis‑related traffic harms through education, training,and enforcement.

Over the past threeyears, Morro Bay Police Department (MBPD) has conducted numerous DUIand DUID investigations culminating in thefollowing arrests:
2023: 58
2024: 82
2025: 59
A significant portion of thesearrests involved drug impairment or combined alcohol‑and‑drug impairment,consistent with statewidetrends following cannabis legalization. During thesamethree‑year period, MBPD investigated 241 traffic collisions, including 68 injury collisions and two fatalities. Alcohol,cannabis and/or other drug impairment was identified as a contributing factor in multipleincidents:
2023: 6
2024: 13
2025: 8
Thesefigures demonstratethat impaired driving—including cannabis impairment—remains a persistentand serious threat to public safety within the City.TheEmbarcadero district,a high‑trafficarea with numerous bars, restaurants, and touristattractions, presents particularly elevated risk dueto its combination of vehiclecongestion and heavy pedestrian activity.

Seasonal and event‑driven spikes in alcohol and drug‑impaired driving arealso well‑documented locally. Alcohol and cannabis‑related DUI incidents increase during:

Summer tourism months
Major holidays (Memorial Day, Independence Day,Labor Day,Thanksgiving–New Year’s) High‑profileevents such as Halloween,Super Bowl Sunday, Cinco de Mayo,and locally hosted festivals These patterns align closely with the CHP Cannabis TaxFund Grant’s intent to support targeted, data‑driven enforcement operations and community education efforts.

MBPD continues to make proactiveimpaired‑driving enforcementa priority, but the Department requires additional training,equipment,and staffing support to effectively identify alcohol and cannabis impairmentand conduct high‑quality DUI / DUID investigations. Investment in advanced training such as ARIDE, SFST,and DRE certification is essential to improving officers’ ability to recognizealcohol and cannabis‑related impairment,especially in cases involving poly‑substance use—now one of the most common DUI patterns seen locally.

Morro Bay police Department
Morro Bay Police Department

Grant funding will enable MBPD to:

Increase DUI / DUID enforcement operations and saturation patrols Expand publiceducation and awareness campaigns related to alcohol / cannabis‑impaired driving Train additional officers in ARIDE and DRE certification Acquiretools and technology needed to enhanceroadsideimpairment detection Reducealcohol / cannabis‑related collisions, injuries,and fatalities With alcohol / cannabis‑impaired driving representing one of the City’s most significantand growing public safety challenges, CHP Cannabis TaxFund Grant support will directly enhance MBPD’s capacity to protect residents,visitors, and roadway users whilealigning with statewide goals to mitigatecannabis‑related traffic harm.

Statistical Data/Report(s)

Morro Bay police Department
Morro Bay Police Department

6. Performance Measures/Scope of Work (Proposed Solution) Detail EACH Project activity/item below, which will serve as your goals and objectives for the Project. For EACH goal/objective, include estimated timelines (ex: monthly, quarterly), quantitative measurements (ex: reduction of DUI/DUID by %), and resources (Budget Line Items) needed to successfully complete the Project activities with justification detailing how it will enhance/support the Project. NOTE: These goals and objectives must be consistent with the Budget. PLEASE DO NOT COPYAND PASTE TABLES IN FIELD - TYPE INFORMATION IN FIELD. 12 DUISaturation Patrols (Q1= 3, Q2=3, Q3=3, Q4=3) Aim to reduce DUI/DUID incidents and accidents by 10% which will improve roadway safety in the community.
2 Message Board Trailers for DUIEnforcement and Educational messaging. (Q1=Purchase, Q2-=Receive, Q2-4= Use to complete enforcement and education. We will utilize the message boards to educate and notify the public regarding DUI/DUID saturation patrols and other pertinent information regarding DUI/DUID and traffic safety throughout the year. 1 Patrol vehicle (Q1= Purchase, Q2= Receive, Q3-Q4= Deploy into the field and readily available for DUI enforcement).

DUIEnforcement vehicle available to officers for DUI saturation patrols and enforcement.

Development of department personnel (Q1-4= Send 4 officers to DRE training classes). Developing department personnel through training to aid in enforcement as well as train instructors to conduct in-house trainings throughout the year.

EXAMPLE ONLY
16 DUI Saturation Patrols (Q1 = 4, Q2 = 4, Q3 = 4, Q4 = 4): Aimto reduce DUI/DUID deaths by 10%, which will improve roadway safety in the community.
2 DUI Checkpoints (Q2 = 1, Q4 = 1): Aimto reduce DUI/DUID by 15%, which will reduce the number of impaired drivers in the community.
4 Message Boards for DUI Checkpoints and Educational Messaging (Q1 = Purchase, Q2 = Receive, Q2-Q4 = Use to complete DUI Checkpoints and education): We will utilize the Message Boards to notify the public of an approaching DUI Checkpoint. In between DUI Checkpoints, we will display educational messaging against driving under the influence.
4 Educational Presentations at local high schools (Q1 = 1, Q2 = 1, Q3 = 1, Q4 = 1): Aimto contact at least 100 students each quarter to increase awareness of driving under the influence. The presentations will educate students on the implications of driving impaired.

NOTE: The number of activities listed for each Performance Measure must match the number of activities listed in the Budget.

Morro Bay police Department
Morro Bay Police Department

7. Project Performance Evaluation
Provide the method of evaluation to show Project effectiveness and positive impact(s) on the community. These strategies shall include captured quantitative/qualitative data and a communication plan to share Project results with both internal and external stakeholders. PLEASE DO NOT COPYAND PASTE TABLES IN FIELD - TYPE INFORMATION IN FIELD.

Project performance will be evaluated primarily through analysis of traffic‑safety data, including DUI/DUID arrests, DUI‑related collisions, and overall impaired‑driving trends in the city. Enforcement productivity and any measurable reduction in impaired‑driving incidents will serve as key indicators of the effectiveness of the funded operations, equipment, and training.

The Grant Director will conduct quarterly evaluations to assess progress toward project goals, reviewing statistical data, deployment effectiveness, officer activity levels, and training achievements. Findings will guide any necessary adjustments to enforcement strategies throughout the year to ensure the project remains on track.

A comprehensive final evaluation will be completed in the fourth quarter, summarizing annual accomplishments, challenges, training progress, and significant grant‑related activities. The report will assess whether project goals and objectives were met, exceeded, or not achieved, and will provide explanations and recommendations for any unmet objectives.

Additionally, evaluation outcomes and key project highlights will be shared with internal and external stakeholders through social‑media outreach, local media, the department’s annual report, and at community meetings and special events. These communication efforts will enhance transparency, strengthen community engagement, and highlight the city’s commitment to reducing impaired‑driving incidents.

Morro Bay police Department
Morro Bay Police Department

8. Program Sustainability
Describe the plan for reducing reliance on future grant funding. Include a summary and timeframe to continue efforts when grant funds are either not available or significantly reduced. PLEASE DO NOT COPYAND PASTE TABLES IN FIELD - TYPE INFORMATION IN FIELD.

The Morro Bay Police Department is committed to sustaining this program and reducing reliance on future grant funding. If the requested resources are awarded, the department will build long‑term capacity that continues beyond the grant period. Officers receiving advanced impaired‑driving and DRE training will also be trained/assigned as department field training officers (FTOs), allowing the department to provide ongoing, in‑house training to current and future personnel without the need for additional grant support. Enhancing our FTO's instructional capability ensures that specialized impaired‑driving training becomes a permanent part of the department’s operations.

The durable equipment requested through this grant—including the DUI/DUID enforcement vehicle and electronic message boards—will not require annual replacement. Once purchased, these assets will remain in service for several years, with only routine maintenance funded through the department’s regular operating budget.

While future funding may be requested to support DUI/DUID saturation patrols, the department anticipates that improved enforcement, increased public education, and higher levels of officer expertise will contribute to a long‑term reduction in impaired‑driving incidents. As violations decline and community awareness increases, the overall need for saturation patrols—and the level of external funding required to support them—is expected to decrease.

Morro Bay police Department
Morro Bay Police Department

9. Administrative Support
Describe the administrative support, including the Organization/Agency’s grant experience, personnel, and physical resources needed to successfully complete the Project within the Project Performance Period. PLEASE DO NOT COPY AND PASTE TABLES IN FIELD - TYPE INFORMATION IN FIELD.

The Morro Bay Police Department has successfully managed state and federal performance grants in previous years and has established administrative systems to ensure full compliance with all reporting and operational requirements.

This project has strong support from department leadership, supervisors, and administrative staff, all of whom are committed to overseeing the grant throughout the performance period.

The department will provide the necessary administrative oversight, including financial tracking, data collection, quarterly reporting, and coordination of training and enforcement activities. Dedicated personnel will monitor progress to ensure the project remains on schedule and aligned with grant objectives. Every effort will be made to ensure the success of this program and to continue the core elements of the project beyond the grant year through sustained training, durable equipment, and ongoing departmental commitment.

Morro Bay police Department
Morro Bay Police Department

10. Other Grant Programs
Impaired Driving Grant Activities
Has your Organization/Agency previously received grant funding for impaired driving activities? Yes
No
If yes, detail the outcome. PLEASE DO NOT COPYAND PASTE TABLES IN FIELD - TYPE INFORMATION IN FIELD.

The Morro Bay Police Department last received funding for impaired driving activities in 2014. This funding was from the Office of Traffic Safety "Avoid the 14", and was administered by the San Luis Obispo Police Department. The Morro Bay Police Department was just one of 14 agencies in the county that was part of the grant program.

Unfortunately, we do not have any statistics from that grant.

Has or will your Organization/Agency submit a proposal to another grant program for this Project (ex: funds for the same components as this Project, or similar/related components that will be completed during the same time period as this Project)?
Yes
No
If yes, detail the granting Organization/Agency. In addition, clearly distinguish which tasks would be funded by the CTFGP and which tasks would be funded by another Organization/Agency. PLEASE DO NOT COPYAND PASTE TABLES IN FIELD - TYPE INFORMATION IN FIELD.

Other Funding Sources
Are any personnel dedicated to this Project funded by other sources or grants, including salary support? Yes
No
If yes, detail which source/grant. PLEASE DO NOT COPYAND PASTE TABLES IN FIELD - TYPE INFORMATION IN FIELD.

Morro Bay police Department
Morro Bay Police Department

11. Terms and Conditions
By submitting your Grant Application, you agree to the following Terms and Conditions:

I certify, under penalty of perjury, that the information I entered in this Grant Application is true and complete to the best of my knowledge. I further understand that any false, incomplete, or incorrect statements may result in my disqualification from the grant process or dismissal from receiving grants funded by the California Highway Patrol (CHP), Cannabis Tax Fund Grant Program. I authorize the California Highway Patrol, Cannabis Grants Unit (CGU), to investigate referenced documents or other documents submitted to the program to check the accuracy of the information provided.

I agree with the Request for Application, the above Terms and Conditions, and the California Code of Regulations, Title 13, Division 2, Chapter 13, Sections 1890.00 through 1890.27.

IAgree
When using the GMS (EUNA), I authorize the state to take my requested action by an electronic means and authorize the state to accept the combination of my User ID and password in lieu of my written signature.

IAgree
My password is unique to me and is to remain confidential. Iwill not allow other individuals to use my User ID and password to access the GMS (EUNA).

IAgree
It is my responsibility to maintain the confidentiality of GMS (EUNA) information.

IAgree
Once I submit the Grant Application, I am unable to add, edit, or delete anyGrant Application information.

IAgree
Confidentiality Notice: All documents submitted as a part of the Cannabis Tax Fund Grant Program Grant Application are public documents and may be subject to a request pursuant to the California Public Records Act. The CHP, CGU, cannot ensure the confidentiality of any information submitted in or with this Grant Application (Gov. Code, § 6250 et seq.).

IAgree
Generated Income Disclaimer: There will be no program income generated from this grant. Nothing in this Grant Application shall be interpreted as a requirement, formal or informal, that a particular law enforcement officer issue a specified or predetermined number of citations, in pursuance of the goals and objectives. Although special emphasis will be placed upon violations specific to this Grant Application, appropriate enforcement action will be taken for all observed violations.

IAgree
Grant funds shall not replace (supplant) any federal, state and/or local funds that are appropriated or earmarked for the same purpose and are routine and/or existing state and local expenditures. Supplanting is the deliberate reduction in the amount of federal, state, or local funding appropriated to an existing program or activity because grant funds are awarded for the same purpose. It is the responsibility of the Grant Applicant to ensure supplanting does not occur.

IAgree
Financial Information Systemfor California Government Agency Taxpayer ID (FI$Cal Form) A FI$Cal Form is required for reimbursement. If the Grant Applicant does not have a completed FI$Cal Form at final Grant Application submission time, the Grant Applicant may submit the completed FI$Cal Form via email to CGU prior to execution of the Grant Agreement. NOTE: The “Remit-To Address" on the FI$Cal Form MUST match the “Official Address to Receive Reimbursement Payment” you entered in Form #1. Organization/Agency Representative. This address shall be the official address on file with FI$Cal and the State Controller’s Office (SCO) to receive warrants (Reimbursement Request Payments). Forms are located on the Cannabis Tax Fund Grant Program's website at https://www.chp.ca.gov/programs-services/programs/cannabis-tax-fund-grant-program.

IAgree
FI$Cal Form
City Council or County Resolution
A county, city, district, or other public body shall provide a copy of a resolution, order, motion, or ordinance of local

Morro Bay police Department
Morro Bay Police Department

governing body, which by law has the authority to enter into an agreement authorizing execution of a Grant Agreement. If the Grant Applicant does not have a signed resolution at final Grant Application submission time, the Grant Applicant may submit a signed resolution via email to CGU prior to execution of the Grant Agreement. NOTE: The resolution MUST explicitly state the Organization/Agency has delegated authority to enter into a Grant Agreement for the requested amount.

IAgree

Morro Bay police Department
Morro Bay Police Department

Budget
Proposed Budget Summary
Expense Budget
Grant Funded Total Budgeted
Personnel
12 DUISaturation patrols $50,656.80 $50,656.80
Subtotal $50,656.80 $50,656.80
Travel
DRE Training $14,287.00 $14,287.00
Subtotal $14,287.00 $14,287.00
Equipment
DUIEnforcement Vehicle $60,000.00 $60,000.00
Message board trailers (x2) $55,000.00 $55,000.00
Outfitting Cost: Decals $1,050.00 $1,050.00
Outfitting Costs (sirens, cage, etc) $26,201.24 $26,201.24 Outfitting costs: Radio $1,200.00 $1,200.00
Subtotal $143,451.24 $143,451.24
Total Proposed Cost $208,395.04 $208,395.04
Revenue Budget
Grant Funded Total Budgeted
Grant Funding
Award Requested $208,395.04 $208,395.04
Subtotal $208,395.04 $208,395.04
Total Proposed Revenue $208,395.04 $208,395.04
Proposed Budget Detail
See attached spreadsheet.

Proposed Budget Narrative
Personnel
Costs may include compensation for wages, such as overtime, and benefits (annual leave and sick leave) for work

Morro Bay police Department
Morro Bay Police Department

directly related to, and consistent with, the Project. Personnel hours will be awarded based on the number of CTFGP grant-funded Project activities approved by CGU. To be eligible for reimbursement, personnel services must occur within the Project Performance Period. Please note, full salary positions are not allowed. Itemize separate Budget line items by Project activity (ex: one Budget line item for DUISaturation Patrol; one Budget line item for DUI Checkpoint). Combine wages and benefits in the same Budget line item for each Project activity. For EACH Budget line item, the narrative shall include: * Number of times Project activity will occur * Classification(s) assigned to the Project activity * Rate (range of pay) for each classification working Project activity (notate regular or overtime pay) * Total number of hours for each Project activity. EXAMPLE: 16 DUISaturation Patrols. 160 Total hours x $100 an hour (highest hourly rate) = Total cost $16,000. Sergeant OT rate with benefits $80-$100 per hour, Officer OT rate with benefits $60-$80 per hour. NOTE: If engaging in CTFGP grant-funded Saturation Patrols, DUICheckpoints, or other enforcement activities in areas where the applicant does not have primary traffic jurisdiction, the applicant should consult with the agency having primary traffic jurisdiction. NOTE: The number of activities listed for each Budget line item must match the number of activities listed in the Performance Measures. 12 DUI Saturation patrols
12 saturation patrols @ 10 hour each 240 total hours 240 hours @ 211.07 (Sergeant OT rate with benefits)= 50,656.80
Travel
Costs may include travel associated with approved in-state and out-of-state Project-related conferences, seminars, workshops, and trainings. The most economical mode of travel, in terms of direct expenses to the Project, must be used. Out-of-state travel is only allowed in exceptional situations. Upgraded services are ineligible expenses. Travel amount should only be calculated for the event days. Extended days for personal travel will not be reimbursed. To be eligible for reimbursement, travel must occur within the Project Performance Period. Travel expenses for all Grant Applicants shall follow the policy established by the State of California for its employees regarding travel reimbursement and shall not exceed the rates paid to exempted, excluded, and represented State of California employees. For maximum allowed per diem rates, including meals and lodging, please visit the California Department of Human Resources (CalHR) website: https://www.calhr.ca.gov/employees/Pages/travel-reimbursements.aspx. Reimbursement for conferences or training symposiums is permitted only for individuals with expertise relevant and critical to DUI/DUID enforcement, training, or education that directly benefits the project.

Itemize separate Budget line items for each trip. For EACH trip (if applicable), the narrative shall include: * Trip name (If not provided, CGU approval for the conference/training must be obtained prior to booking travel) * Range of classifications traveling *Number of Travelers * Project-related transportation costs (ex: mileage) * Per diem (meals) * Lodging *Total Cost EXAMPLE: SFST Training. 1 Officer, Mileage = $60, Per diem = $94.50, Incidentals = $7.50, Lodging = $145 (includes taxes), Total Cost = $307 NOTE: The number of activities listed for each Budget line item must match the number of activities listed in the Performance Measures.

DRE Training
Send (4) officers to DRE Training Training 102 hours 14 days lodging @ $169.00 x 4 officers= $ 9,464 14 days meals & incidentals @ $68 x 4 officers = $3,808 Mileage estimated 350 miles @ .725 x 4 officers= $1,015 Equipment
Costs may include non-expendable, tangible, personal property having a normal useful life of more than one year, and an acquisition cost of at least $5,000 (ex: four identical assets, which cost $1,250 each, for a total of $5,000, are not considered an equipment purchase). Equipment shall be directly related and necessary to complete CTFGP grant-funded DUI/DUID enforcement, checkpoint, and education Project activities taking place in the Applicant’s jurisdiction (ex: message board for DUI checkpoints). Equipment should be purchased at the beginning of the Project Performance Period. To be eligible for reimbursement, Equipment must be purchased and received within the Project Performance Period. Itemize separate Budget line items for each Equipment item. If requesting outfitting, include outfitting in the total cost of the vehicle. Any equipment or items permanently affixed to the vehicle are considered/classified as outfitting (ex: lights, sirens, decals, prisoner cage). Items such as flashlights, cones, signs and computers are not considered vehicle outfitting. The requestor shall only request to outfit the vehicle with the standard equipment similar to the rest of their vehicle fleet. Please refer to Annex A of the Request for Application (RFA) for ineligible expenses. For EACH Budget line item, the narrative shall include: * Description of equipment item * Quantity * Unit cost * Outfitting cost, if applicable * Total cost * Correlating CTFGP activity. EXAMPLE:

DUI/DUID Enforcement Patrol Vehicle 1@ $80,000 + Outfitting $40,000 = $120,000 for Checkpoint and DUI/DUID Saturation Patrols NOTE: The number of activities listed for each Budget line item must match the number of

Morro Bay police Department
Morro Bay Police Department

activities listed in the Performance Measures.

Outfitting Costs (sirens, cage, etc)
Outfitting costs for vehicle (Refer to Annex A) for the standard equipment to the rest of our vehicle fleet.

DUI Enforcement Vehicle
Cost of a new fleet vehicle specific to DUI enforcement Outfitting Cost: Decals
decals specific to morro bay police department fleet vehicles Outfitting costs: Radio
Radio for the fleet vehicle outfitting
Message board trailers (x2)
Message Board trailers for notifying the public of DUI/DUID enforcement and education

Morro Bay police Department
Morro Bay Police Department

AGENDA NO: 7.a
MEETING DATE: February 24, 2026
Prepared By: __AS______ Dept Review: ____
City Manager Review: JC City Attorney Review: _BS__
Staff Report
TO: Honorable Mayor and City Council DATE: February 9, 2026 FROM: Airlin Singewald, Community Development Director
SUBJECT: Hearing to Adopt Ordinance No. 677 and 678: Amendments to Zoning Code / Coastal Implementation Plan (IP)

RECOMMENDED ACTION
Staff recommend that City Council review Planning Commission recommendations and take the following action:

1. Adopt Ordinance No. 677, “An Ordinance of the City Council of Morro Bay, California, Amending Chapters 17.29, 17.30, and 17.46 of the Zoning Code, Title 17 of the Morro Bay Municipal Code (MBMC),” with a finding that no further environmental review is required pursuant to State CEQA Guidelines Section 15061(b)(3) and Statutory Exemption Section 15282(h); and

2. Adopt Ordinance No. 678, “An Ordinance of the City Council of Morro Bay, California, Amending Chapters 17.07, 17.08, and 17.23 of the Zoning Code / Coastal Implementation Plan (IP), Title 17 of the Morro Bay Municipal Code (MBMC),” with a finding that no further environmental review is required pursuant to State CEQA Guidelines Section 15061(b)(3) and Statutory Exemption Section 15282(h); and

3. Waive further reading of Ordinance No. 677 and Ordinance No. 678.

ALTERNATIVES
The City Council may direct staff to modify or eliminate any of the proposed Zoning Code amendments. If the Council proposes any substantial revision not previously considered by the Planning Commission during its hearing, the revision shall first be referred back to the Planning Commission for report and recommendation. However, the Commission is not required to hold a public hearing. The failure of the Planning Commission to report within 45 days after the referral shall be deemed a recommendation to approve the amendments and shall be returned to the Council for adoption.

FISCAL IMPACT
The proposed Zoning Code amendments will not result in a significant fiscal impact. The proposed amendments were prepared using General Fund revenue in the Community Development Department’s Fiscal Year 25-26 budget.

BACKGROUND
Plan Morro Bay is the City’s combined General Plan / Local Coastal Plan (LCP). The LCP consists of the Coastal Land Use Plan (LUP), Coastal Land Use Map, and Coastal Implementation Plan (IP), which is a portion of the City’s Zoning Code indicated by an “IP” notation throughout sections of the Zoning Code document. The General Plan, LUP, and Coastal Land Use Map were adopted by the City Council in May 2021 and certified by the Coastal Commission in August 2021. As a part of the Plan Morro Bay work effort, the City Council adopted Ordinance No. 654 in November 2022, which included a comprehensive update to the City’s Zoning Code / IP (Title 17 of the MBMC). In March 2024, the Coastal Commission certified the LCP amendment for the City’s comprehensive Zoning Code update.

A key feature of the 2022 Zoning Code that differs from its previous iteration (adopted by City Council in 1995) is the separation of IP chapters from the rest of the document. This makes it easier to amend certain parts of the Zoning Code that do not impact coastal resource protection measures, as amendments to a chapter in the IP must be certified by the Coastal Commission.

Amendments that do not involve the IP may be recommended by the Planning Commission and voted on by City Council.

In this amendment package, two provisions will ultimately need to be forwarded to the Coastal Commission for certification, if approved by the Council: the Sloping Lot Adjustment and the Blufftop Height Standard. The remaining amendments (Measure A-24, ADU Ordinance updates, and the Sign Ordinance) are to receive a final decision by the City Council.

DISCUSSION
Sloping Lot Adjustment – 17.07.030 Development Standards (IP) & 17.23.140 Sloping Lots (IP) Prior to the last update, the Zoning Code contained a “sloping lot setback adjustment” that enabled homes on certain sloping lots to locate a garage with a 5-foot minimum front setback. Depending on the total area of the lot, the normal setback in residential zones is 10, 15, or 20 feet. This adjustment helps minimize excessive grading and allows for the more practical development of homes on sloping lots. The adjustment only applies to residential lots with a slope of 15% or more, and where the centerline of the right-of-way is 7-feet above or below the front half of the lot at a point 50-feet away from that centerline.

When the Zoning Code was updated in 2022, the Sloping Lot Adjustment was not included in the final document adopted by the City Council and certified by the Coastal Commission. Looking at previous staff reports and public hearing minutes, staff cannot determine why this provision was not carried forward in the new code. Recently, a project was brought before Planning Commission that would have benefited from this adjustment. Since neighboring homes received this adjustment under the previous Zoning Code, to ensure consistency, the Planning Commission recommended the City Council direct staff to bring forward a future amendment reinstating the Sloping Lot Adjustment. On December 9, 2025, the City Council accepted this recommendation and authorized staff to process the requested amendment.

Exhibit A to Ordinance No. 678 contains the red-line edits to bring the adjustment back into the Zoning Code. To accomplish this, two sections of the Code need to be amended: Section

17.07.030 (Development Standards) and Section 17. 23.140 (Sloping Lots). Both sections are located within the IP, meaning they will need to be certified by the Coastal Commission if approved by the City Council.

Measure A-24 – 17.46.100 Voter Approval Required to Change Land Use Designations for Specified Parcels
The next amendment writes Measure A-24 into the Zoning Code. Measure A-24 was approved by Morro Bay voters on November 5, 2024, and prohibits any changes to the land use designations of specified Visitor Serving Commercial and/or Commercial/Recreational Fishing parcels along the City’s waterfront, unless such designation changes are approved by voters.

Redline edits to Section 17.46, Amendments to the General Plan, Zoning Code, and Zoning Map, are attached in Exhibit C to Ordinance No. 677. This amendment amounts to the addition of one new subsection at the end of Section 17.46 and is not included in the IP.

Blufftop Height Standard – 17.08.030 (Commercial) Development Standards (IP) When the Zoning Code was updated in 2022, the Beach Street Specific Plan (1986) was repealed and some of its standards were incorporated into Title 17. The Beach Street Specific Plan contained a standard that limited building height to below the top of the adjacent bluff, located between Beach and Surf Streets and to the east of Front Street. This standard, however, was not included in the Zoning Code update.

Since the specific plan was repealed with the Zoning Code update, staff have received public comment requesting this standard’s addition back into the Ordinance. During the General Plan Progress Report to the Planning Commission on November 5, 2025, Commissioners recommended the City Council direct staff to bring forward a future Zoning Code amendment to bring the standard back into the Ordinance. On December 9, 2025, the City Council accepted this recommendation and authorized staff to process the requested amendment.

Exhibit E of Ordinance No. 678 shows the blufftop height standard brought back into the Zoning Code in MBMC Section 17.08.030, (Commercial) Development Standards (IP). The proposed additions amount to a reference in the development standards table, followed by an additional provision explaining the standard below. Because this section of the Zoning Code is located within the IP, it must be certified by the Coastal Commission following Council approval.

ADU Ordinance Updates – 17.30.040 Accessory Dwelling Units The Zoning Code contains the City’s ADU Ordinance, which must be updated frequently to reflect ADU legislation passed each year at the State level. The proposed amendments shown in Exhibit B to Ordinance No. 677 make up the changes necessary to be in compliance with State ADU law.

These changes are mandatory, and while the City can adopt standards in some cases to be more permissive than State law, the City may not implement standards that further restrict what is minimally required by the State. All of the changes in Exhibit B represent the minimum requirements set forth by the State, with no additional steps taken to be more permissive where allowed. The recent provisions of State legislation reflected in the update are listed below:
 SB 1211 (2024): Allows up to 8 detached ADUs to be created on a lot with an existing multifamily dwelling, provided that the number of ADUs does not exceed the number of existing units on the lot. Alternatively allows up to 2 detached ADUs on a lot with a proposed multifamily dwelling.
o Note: other parts of this bill are included in the section below, as the provisions introduced were already incorporated into the City’s ADU Ordinance.

 AB 1154 (2025): Narrows the JADU owner occupancy requirement to now only apply when the JADU shares sanitation facilities (bathrooms) with the single-family dwelling.

The property owner does not need to live on the property if the JADU has its own bathroom. The bill also prohibits JADUs from being used as short-term rentals, however, the Zoning Code already prohibits this.
 SB 543 (2025): Amends existing State law to specify that statutory references to allowable square footage of an ADU or JADU refer to the square footage of “interior livable space.” Additionally, it clarifies that development impact fees may not be imposed on an ADU that has 750 or fewer square feet of interior livable space, or on a JADU with 500 or fewer square feet of interior livable space. Further, ADUs and JADUs with 500 or fewer square feet of interior livable space are exempt from paying school impact fees. The law also expands the number of ADUs possible on different lot types by clarifying existing laws. o Note: other parts of this bill are included in the section below, as the provisions introduced were either already incorporated into the City’s ADU Ordinance, or represent a change in process.

Additionally, the following laws have been enacted by the State but reflect a procedural change, rather than a new permitting standard, and do not require a Zoning Code text amendment:
 AB 976 (2023): Permanently removed owner-occupancy requirements for ADUs.  AB 1033 (2023): Allows homeowners to sell their ADUs separately from the main house, essentially converting them into condos. Jurisdictions must adopt a local ordinance to enable this; it is not automatic. This option is not included in the proposed amendments to the City’s ADU Ordinance.
 AB 1332 (2023): Streamlines ADU approvals by requiring local agencies to establish a process for pre-approved ADU plans. The City has a predesigned ADU program that can be accessed on the Planning Division’s website.
 AB 434 (2023): Gives the Department of Housing and Community Development (HCD) power to enforce ADU laws over non-compliant jurisdictions.  SB 477 (2024): Made State law governing ADUs and JADUs easier to read and navigate by relocating numerous Government Code sections into a new chapter. Changes from this law were only organizational.
 AB 2533 (2024): Prohibits a local agency from denying a permit for an unpermitted ADU or JADU that was constructed before January 1, 2020, unless the local agency makes a finding that correcting the violation is necessary to comply with conditions that would otherwise deem a building substandard.
 AB 1211 (2024): Prohibits a local agency from requiring the replacement of off-street parking spaces if an uncovered parking space is demolished in conjunction with the construction of, or is converted to, an ADU. Also prohibits a local agency from imposing any objective development or design standards onto ADUs and clarifies the definition of livable space for purposes of the provisions governing ADUs. o Note: part of this bill was included in the section above (to be incorporated into the text of the Zoning Code), but other parts of the bill were already in effect in the ADU Ordinance as currently written.
 AB 462 (2025): Local agencies with a certified LCP must now approve or deny a completed CDP application for an ADU within 60 days. It also eliminates the ability to appeal a CDP for an ADU to the Coastal Commission. The law also relaxes the rules governing the issuance of a certificate of occupancy for an ADU in disaster-affected areas.  SB 9 / SB 543 (2025): Renders any local ADU ordinance that is not submitted to HCD within 60 days of adoption null and void. Additionally, the bills also render a local ordinance

null and void if HCD issues findings that the ordinance does not comply with State law and the local agency fails to respond to HCD within 30 days. o Note: this SB 9 is not to be confused with 2021’s SB 9, which deals with urban lot splits.
 SB 543 (2025): Requires local agencies to determine whether an ADU application is complete within 15 business days of submittal. If the application is incomplete, the local agency must provide the applicant with a list of incomplete items within the same 15-day period. It also requires the agency to review a resubmitted application for completeness within 15 business days. The jurisdiction must also provide the applicant with a “written appeal” process for any incompleteness determinations or denial, either to the Planning Commission or City Council, or both. The jurisdiction must then provide a final written determination on the appeal within 60 business days of receiving the appeal.

Once the amendments to the City’s ADU Ordinance are adopted by the City Council, Community Development Department staff will forward the updated ordinance to HCD for compliance review, in accordance with SB 9 and SB 543.

Sign Ordinance Updates – 17.29 Signs
Exhibit A to Ordinance No. 677 outlines proposed changes to the Sign Ordinance (MBMC 17.29) intended to address issues pertaining to gas station signage that have arisen since the ordinance went through a major overhaul in 2022. Namely, the current code does not permit electronic changeable copy signs, the kind typically seen at gas stations to advertise the price of fuel, to be installed anywhere within City limits. This also had the unintended consequence of giving all existing signs a legal nonconforming status. The proposed changes to the Sign Ordinance bring these signs back into conformance with the Zoning Code, while also allowing new gas stations the same sign allowance as their competitors.

Following extensive input from Morro Bay community members and business owners, the updated Sign Ordinance, adopted in 2022, fully restructured sign regulations within the city. The current sign code splits the commercial areas of the city into designated “sign districts” which determine the type, size, and other aspects of signage allowed. Each type of sign has standards that apply in all sign districts, and standards that only apply in a given district.

Section 17.29.120 of the sign code also designates performance standards for signs citywide.

This section contains the following regulation:

G. Changeable Copy Signs. For the purpose of this ordinance, blackboards and whiteboards are not considered changeable copy signs.

1. Electronic Changeable Copy Signs. No sign shall be designed so that characters, letters, or illustrations can be changed or rearranged electronically without altering the face or surface of the sign.

2. Mechanical Changeable Copy Signs. Signs that are designed so that characters, letters, or illustrations can be changed or rearranged mechanically shall not be allowed unless specified in the sign district design guidelines.

The distinction between electronic and mechanical changeable copy signs was newly added in the 2022 Zoning Code, along with the prohibition on electronic changeable copy signs and the restriction of mechanical changeable copy signs to only the Quintina and North Main sign districts.

Under the 1997 Zoning Ordinance, changeable copy signs were exempt from requiring a permit, given that the original structure of the sign was permitted. Section 17.68.070 of the 1997 Zoning Ordinance states the following:

The following signs or modifications to signs shall not require a sign permit. These exceptions shall not be construed as relieving the owner of the sign from the responsibility of its safe erection and safe and attractive maintenance, and its compliance with applicable provisions of this chapter or any other law or chapter regulating same:

A. Changing Copy. The changing of the advertising copy or message of an approved sign specifically designed for the use of replaceable copy.

This difference between the 1997 and 2022 Zoning Codes came to the attention of the Planning Division recently due to an inquiry from a gas station regarding permitting a digitally changing fuel price sign. Under current sign regulations, digitally changing signs of any kind cannot be newly permitted. All existing digital fuel price signs within City limits, which were permitted under the 1997 code, are now legal nonconforming under the current code.

As part of this Zoning Code amendment package, the Planning Division is proposing a minor edit (Exhibit A to Ordinance No. 677) to the sign code to allow electronic changeable copy signs that display gas station fuel prices, as well as those displaying time or temperature. This would provide equal signage opportunities to all gas stations in Morro Bay and bring existing gas station signs back into conformance with City code.

The update changes Section 17.29.120 as follows:

Electronic Changeable Copy Signs. No sign shall be designed so that characters, letters, or illustrations can be changed or rearranged electronically without altering the face or surface of the sign, except electronic message boards displaying time, temperature, or required prices of gasoline or similar fuels.

Planning Division staff conducted research on sign standards for digitally changing signs and fuel price signs in other jurisdictions across California and found that the above condition is a common way that sign codes address this issue. This language is also present in the sign codes of the Cities of San Luis Obispo and Grover Beach. This amendment is a straight-forward approach to rectify the existing nonconformance of permitted digital gas station price signs and allow for the permitting of new electronic fuel price signs.

PLANNING COMMISSION RECOMMENDATION
On January 20, 2026, the Planning Commission held a duly noticed public hearing to consider the proposed amendments to the Zoning Code / IP. This resulted in the adoption of Planning Commission Resolution No. 01-26 by a 5-0 vote, forwarding a favorable recommendation to the City Council (Attachment 3) in unanimous support of the adoption of the proposed amendments.

Included in the forwarded recommendation is a request for City Council to direct staff to begin research on broadening the scope of the Blufftop Height Standard. If so directed, research would include visual analysis, stakeholder outreach to affected parcels, consideration of development impacts, and more. The approved minutes from the Planning Commission hearing are included as Attachment 4.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)
No further environmental review is required pursuant to State CEQA Guidelines Section 15061(b)(3) and Statutory Exemption Section 15282(h).

State CEQA Guidelines Section 15061(b)(3) states a project is exempt from CEQA if “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.” The proposed Zoning Code Amendments will not have an impact on the environment. Any project on a property affected by the Zoning Code Amendments would receive site specific environmental review at the time of project application.

The proposed Zoning Code Amendments that update Accessory Dwelling Unit standards are statutorily exempt from CEQA consistent with Section 15282(h) of the State CEQA Guidelines, which lists “the adoption of an ordinance regarding second units in a single family or multifamily residential zone by a city or council to implement the provisions of Sections 65852.1 and 65852.2 of the Government Code as set forth in Section 21080.17 of the Public Resources Code,” as a being statutorily exempt from the provisions of CEQA.

PUBLIC NOTICE
Notice of a public hearing on this item was published in the New Times SLO newspaper on February 12, 2026, as a 1/8th page legal display ad as required for items affecting more than 1,000 residents, due to the City-wide nature of Zoning Code / IP amendments. Notice of this hearing was also provided to the San Luis Coastal Unified School District and the California Coastal Commission in accordance with MBMC 17.46.060(C).

CONCLUSION
The proposed amendments before the Council reflect the recommendation made by the Planning Commission during their public hearing on the item held on January 20, 2026. Staff recommends the City Council review the Planning Commission recommendation and adopt Ordinance No. 677 and Ordinance No. 678. In addition, Council may direct staff to begin preliminary research on broadening the area affected by the Blufftop Height Standard to protect public views.

ATTACHMENTS

1. Ordinance No. 677, 2026 Zoning Code Amendments
a. Exhibit A – 17.29.120 Performance Standards for Signs Redlines b. Exhibit B – 17.30.040 Accessory Dwelling Unit Redlines c. Exhibit C – 17.46 Amendments to the General Plan, Zoning Code, and Zoning Map Redlines

2. Ordinance No. 678, 2026 Implementation Plan Amendments a. Exhibit A – 17.07.030 Development Standards (IP) and 17.23.140 Sloping Lots (IP) Redlines
b. Exhibit B – 17.08.030 Development Standards (IP) Redlines

3. Planning Commission Resolution No. 01-26

4. Approved Minutes of the January 20, 2026 Planning Commission Hearing

1 ORDINANCE NO. 677

AN ORDINANCE OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA,
AMENDING CHAPTERS 17.29, 17.30, AND 17.46 OF THE ZONING CODE, TITLE 17 OF THE MORRO BAY CITY MUNICIPAL CODE
(MBCMC)

THE CITY COUNCIL
City of Morro Bay, California
WHEREAS, California Government Code Section 65300 requires the City adopt a comprehensive, long-term general plan for the physical development of the City; and WHEREAS, in May 2021 the City of Morro Bay (the “City”) adopted a comprehensive update to its General Plan and Local Coastal Program Coastal Land Use Plan (LCP) known as Plan Morro Bay; and
WHEREAS, in November 2022, to implement Plan Morro Bay, the City adopted a comprehensive update to its Zoning Code / Coastal Implementation Plan (IP) via Ordinance 654 which was subsequently submitted to the California Coastal Commission as an LCP amendment application for certification and certified in 2024 following amendments adopted by the City Council in 2023; and
WHEREAS, amendments to the Zoning Code / IP are necessary to provide consistency with the General Plan/LCP and to ensure compliance with the California Coastal Act; and WHEREAS, on November 5, 2025, the City of Morro Bay Planning Commission (the “Planning Commission”), upon review of the 2024 Annual General Plan Progress Report, recommended the City of Morro Bay City Council (the “City Council”) authorize staff to amend certain sections of the Zoning Code to reinstate previously repealed sections of the Zoning Code, improve clarity and consistency, and comply with the latest State Accessory Dwelling Unit (ADU) laws; and
WHEREAS, December 9, 2025, the City Council, upon review of the 2024 Annual General Plan Progress Report, authorized the Planning Commission’s recommended Zoning Code amendments; and
WHEREAS, on January 20, 2026, the Planning Commission conducted a public hearing in a hybrid format with both an in-person meeting at the Morro Bay Veterans Memorial Building, 209 Surf Street, Morro Bay, CA 93442 as well as through virtual public participation provided telephonically through Zoom, for the purpose of considering a favorable recommendation to the City Council for adoption of the Zoning Code / IP Amendments; and WHEREAS, at said hearing, the Planning Commission adopted Resolution No. PC 01-26, recommending City Council adoption of the proposed Zoning Code / IP amendments, making the

2 finding that no further environmental review is necessary pursuant to CEQA State Guidelines Section 15162; and
WHEREAS, on February 24, 2026, the City Council conducted a duly-noticed public hearing in a hybrid format with both an in-person meeting at the Morro Bay Veterans Memorial Building, 209 Surf Street, Morro Bay, CA 93442 as well as through virtual public participation provided telephonically through Zoom, for the purpose of considering the proposed Zoning Code IP amendments, including the Planning Commission’s recommendation.

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

SECTION 1. Recitals. The City Council hereby declares and adopts the foregoing recitals and findings as true and correct and they are incorporated herein.

SECTION 2. Municipal Code Amendments. The City Council hereby adopts the proposed Ordinance, amending Title 17 (Zoning), Chapter 17.29 (Signs) of the Morro Bay Municipal Code as shown in Exhibit A – MBMC Section 17.29.120: Performance Standards for Signs.

SECTION 3. Municipal Code Amendments. The City Council hereby adopts the proposed Ordinance, amending Title 17 (Zoning), Chapter 17.30 (Standards for Specific Uses) of the Morro Bay Municipal Code as shown in Exhibit B – MBMC Section 17.30.040: Accessory Dwelling Units.

SECTION 4. Municipal Code Amendments. The City Council adopts the proposed Ordinance, amending Title 17 (Zoning), Chapter 17.46 (Amendments to the General Plan, Zoning Code, and Zoning Map) of the Morro Bay Municipal Code as shown in Exhibit C – MBMC Section 17.46: Amendments to the General Plan, Zoning Code, and Zoning Map.

SECTION 5. CEQA Findings. No further environmental review is required pursuant to State CEQA Guidelines Section 15061(b)(3) and Statutory Exemption Section 15282(h).

State CEQA Guidelines Section 15061(b)(3) states a project is exempt from CEQA if “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.” The proposed Zoning Code Amendments will not have an impact on the environment. Any project on a property affected by the Zoning Code Amendments would receive site specific environmental review at the time of project application.

The proposed Zoning Code Amendments that update Accessory Dwelling Unit standards are statutorily exempt from CEQA consistent with Section 15282(h) of the State CEQA Guidelines, which lists “the adoption of an ordinance regarding second units in a single family or multifamily residential zone by a city or council to implement the provisions of Sections 65852.1 and 65852.2 of the Government Code as set forth in Section 21080.17 of the Public Resources Code,” as a being statutorily exempt from the provisions of CEQA.

SECTION 6. Severability. If any section, subsection, phrase, or clause of this ordinance or any part thereof is for any reason held to be unconstitutional or otherwise unenforceable, such

3 decision shall not affect the validity of the remaining portions of this ordinance or any part thereof.

The City Council hereby declares that it would have passed this ordinance and each section, subsection, phrase or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional or otherwise unenforceable.

SECTION 7. Effective Date. This Ordinance shall take effect 30 days after its adoption and upon certification required as an operation of law.

SECTION 8. Certification. The City Clerk shall certify as to the passage and adoption of this Ordinance and shall cause the same to be posted and codified in the manner required by law.

PASSED AND ADOPTED on the ___ day of _______________, 2026, 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

4 STATE OF CALIFORNIA )

COUNTY OF SAN LUIS OBISPO )

CITY OF MORRO BAY )
I, Dana Swanson, City Clerk for the City of Morro Bay, California, do hereby certify that the foregoing Ordinance No. 677 was duly passed and adopted by the City Council of the City of Morro Bay at the regular meeting thereof, held on the ____ day of ________ 2026, 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 , 2026.
______________________________
DANA SWANSON, City Clerk

EXHIBIT A
ORDINANCE NO. 677

17.29.120 Performance standards for signs.

A. Public Nuisance Prohibited. Regardless of whether or not a permit is required, no sign may be constructed or placed in such manner as to create a public hazard or nuisance.

B. Code Compliance. Permanent signs and supporting structures thereof shall be installed in accordance with the building code.

C. Emissions and Noise. No sign may emit visible smoke, vapor, bubbles, confetti, particles, or detectable odor, or be made with mechanical equipment that creates noise.

D. Illumination. Signs with any type of illumination are subject to all of the following standards:

1. All lighting is subject to necessary electrical permits.

2. All newly fabricated illuminated signs shall incorporate light-emitting diodes (LEDs) or an equally energy efficient light source.

3. Illuminated signs that are larger than ten square feet in area shall not be switched on during daylight hours. All newly fabricated signs larger than ten square feet in area shall incorporate an automatic, light-activated on/off switch.

4. All illuminated signs shall be turned off by ten p.m. or at the time the business closes, whichever is later. Excluding lodging establishments, except when adjacent or within residential districts.

5. External lighting shall be properly shielded to prevent glare upon an adjacent public right-of-way or adjacent property.

6. Illumination shall be constant in intensity and color and shall not consist of flashing, animated or changing lights as to not be distracting to pedestrians, motorists, or neighboring property.

7. No sign shall emit or reflect light exceeding ten foot-candle power at ten feet from the face of the sign.

8. Waterfront properties shall not have any illuminated signs on the western, bay-facing façades to prevent glare into the bay
E. Animation or Movement. No sign may incorporate, in any manner, any moving part or parts or any flashing, moving, rotating, pulsating or intermittent lighting, with the exception of approved time and temperature displays and barber poles.

F. Attention-Getting Devices. No sign or any other advertising display may incorporate flags, banners, or streamers constructed of cloth, canvas, light fabric, paper, cardboard, wallboard or other light materials which are suspended, mounted, or attached in a manner which allows movements of the sign by atmospheric conditions; nor may any sign incorporate searchlights, string lights, rope lights, festoon lights, flashing lights, balloons, bubbles, fans, or similar devices for attracting attention. This definition, however, shall exclude fabric signs which are securely and permanently attached to a rigid framework (e.g. awning signs as defined in this chapter) or building in a manner which inhibits movement, and fabric projecting signs which are securely and permanently anchored on at least two opposite sides.

G. Changeable Copy Signs. For the purpose of this ordinance, blackboards and whiteboards are not considered changeable copy signs.

1. Electronic Changeable Copy Signs. No sign shall be designed so that characters, letters, or illustrations can be changed or rearranged electronically without altering the face or surface of the sign, except electronic message boards displaying time, temperature, or required prices of gasoline or similar fuels.

EXHIBIT A
ORDINANCE NO. 677

2. Mechanical Changeable Copy Signs. Signs that are designed so that characters, letters, or illustrations can be changed or rearranged mechanically shall not be allowed unless specified in the sign district design guidelines.

H. Electronic Images. No sign may display still or moving images which have been electronically recorded or stored or which have been received from an off-site source or service.

I. Inflatable Sign Elements. No sign shall incorporate any element or elements that are made of flexible material designed to be filled with gas or air.

J. Tire Stacks. No sign shall be placed on, attached to, or supported by stacked tires.

K. Vehicle Display. No sign shall be mounted, placed or displayed on a vehicle, trailer, or boat, with the exception of:

1. Signs advertising such vehicle, trailer, or boat for sale in locations where sale of vehicles is permitted.

2. Those signs and displays described in Section 21100(p)(2) of the California Vehicle Code.

L. Obscenities. No sign shall include matter that is offensive or disgusting by accepted standards of morality and decency.

M. Egress. No sign may obstruct any fire escape, required exit, window or door opening intended as a means of egress.

N. Ventilation. No sign may interfere with any opening required for ventilation.

O. Persons or Animals. No human or animal shall be used as advertising such that the advertising is intended to, or does in fact, attract the attention of passing motorists to a business or service; and where such advertisement constitutes an off-premise sign.

P. Traffic Hazard. No sign may be located in such a manner as to constitute a traffic hazard or obstruct the view of any authorized traffic sign or signal device, nor may any sign be constructed in a manner that can be confused with any authorized traffic sign, signal, or device.

Q. Interference with Pedestrians. No sign shall be placed or constructed on a sidewalk, dock, pier, boardwalk, or designated coastal accessway if such sign, in any way, impedes the right-of-way for pedestrians or with egress of occupants from legally parked vehicles or vessels.

R. Interference with Harbor-Related Activity. No sign shall be placed or constructed on a sidewalk, dock, pier, boardwalk, or designated coastal accessway if such sign, in any way, impedes the free movement, loading, or unloading of watercraft or interferes with commercial harbor-related industry. A dock sign may only be placed on docks or gangways owned, leased, rented, or otherwise legally controlled by the sign's owner.

S. Obstruction of Protected View Corridors. Within the area of the city encompassed by the waterfront master plan, no sign or other display greater than thirty inches in height shall be placed or constructed in any view corridor established by a coastal development permit. An exception to this provision may be made by the community development director for signs required to ensure public safety or signs indicating coastal access if the director determines that a height greater than thirty inches is necessary to accomplish the sign's intended purpose.

T. Interference with Utilities. No sign may be placed or constructed that fails to maintain clearance from or interferes with electrical conductors, communications equipment or lines, surface and underground facilities and conduits for water, sewage, gas, electricity and communications equipment or lines. Signs shall not be placed in public utility easements unless express written permission from the affected public utility is obtained.

EXHIBIT A
ORDINANCE NO. 677

U. Materials. No permanent sign may be constructed of insubstantial materials that will be subject to rapid deterioration, as determined by the community development director. This provision, however, shall not apply to temporary signs or to signs mounted on the interior surface of a window.

V. Orientation. With the exception of projecting (pub) signs, no sign may be placed or constructed which is so oriented as to be viewed primarily across an adjacent private property line. All signs must be visible directly from a public right-of-way, other public open space or from a parking lot, walkway, or courtyard on the same site as the sign, without view lines extending over private property different from that on which the sign is located.

EXHIBIT B
ORDINANCE NO. 677

17.30.040 Accessory dwelling units.

Accessory dwelling units shall comply with all provisions of the base, overlay, or specific plan district, except as modified by this section.

A. Residential Density. An accessory dwelling unit is a residential use that is consistent with the existing general plan and zoning designations for the parcel and any accessory dwelling unit constructed pursuant to this section shall not be considered as a dwelling unit in density calculations.

B. Primary Dwelling Unit Required. The lot must be in a zoning district that allows single-unit, two-unit, or multi-unit dwellings and contain an existing primary dwelling unit at the time an application for an accessory dwelling unit is submitted, or the application for the accessory dwelling unit may be made in conjunction with the development of the primary dwelling. Covenants, conditions, and restrictions that either effectively prohibit or unreasonably restrict the construction or use of an accessory dwelling unit or a junior accessory dwelling unit in such a zoning district are void and unenforceable per Civic Code Section 4751.

C. Number and Type of Units.

1. Lots with Existing or Proposed Single-Unit Dwellings. a. One detached accessory dwelling unit or one accessory dwelling unit within the existing or proposed space of a single-unit dwelling; and
b. One accessory dwelling unit converted from existing space within a proposed or existing primary home or within the existing space of an accessory structure; and c. b. One junior accessory dwelling unit within the existing or proposed space of a single-unit dwelling, including an attached garage.

2. Lots with Existing or Proposed Two Unit or Multi-Unit Dwellings. a. Accessory dwelling units up to the number of existing multi-unit dwellings, with a maximum of eight, that must be detached from the primary units; or b. Up to two accessory dwelling units on properties with a proposed multi-family dwelling; and
c.b. Up to twenty-five percent the number of units within a multi-unit structure, with a minimum of one accessory dwelling unit, constructed within portions of the multi-unit structure that are not used as livable space.
c. Junior accessory dwelling units are prohibited on multi-family properties.

D. Standards for Attached and Detached Accessory Dwelling Units.

1. Floor Area.
a. Detached Accessory Dwelling Units. Maximum one thousand square feet of interior livable space for studio and one-bedroom accessory dwelling units, up to one thousand two hundred square feet of interior livable space for accessory dwelling units with two or more bedrooms.
b. Attached Accessory Dwelling Units. The total floor area of an accessory dwelling unit that is attached to the primary dwelling unit shall not exceed one thousand square feet of interior livable space.

EXHIBIT B
ORDINANCE NO. 677

2. Setbacks. Accessory dwelling units shall comply with the setback standards applicable to other structures within the district in which the lot is located except that the minimum interior side and rear setbacks shall be four feet.

3. Design and Materials. The exterior design and materials of the accessory dwelling unit shall match the architecture and materials used in the primary building.

E. Standards for Accessory Dwelling Units Constructed Within Existing or Proposed Structures. For purposes of this subsection, in order to be considered an existing structure, the structure must be a legally permitted structure that conforms to current zoning or is legal nonconforming as to current zoning.

1. Floor Area. The accessory dwelling unit shall be contained entirely within the permitted floor area of the primary residence or accessory structure on the same lot as the primary residence. A maximum one hundred fifty square feet expansion to existing floor area is allowed to accommodate ingress and egress for accessory dwelling units that are not designed as junior accessory dwelling units.

2. Exterior Access. Exterior access that is independent from the primary residence shall be provided.

3. Setbacks. The interior setbacks shall be sufficient for fire and safety.

4. Junior Accessory Dwelling Unit. Accessory dwelling units within existing or proposed single-unit dwellings may be designed as a junior accessory dwelling units subject to the following standards. a. Floor Area. Maximum five hundred square feet of interior livable space. b. Efficiency Kitchen Required. The junior accessory dwelling unit shall have an efficiency kitchen which shall include all of the following.
i. A cooking facility with appliances, including at a minimum a one burner installed range, an oven or convention microwave, a ten cubic foot refrigerator and freezer combination unit, and a sink that facilitates cold and hot water. ii. A food preparation counter and storage cabinets that are of reasonable size in relation to the size of the junior accessor dwelling unit. c. Sanitation Facilities. A junior accessory dwelling unit may include separate sanitation facilities or may share sanitation facilities with the existing structure. A junior accessory dwelling unit that shares sanitation facilities with the existing single-unit dwelling shall provide interior access to the existing single-unit dwelling that is separate from the exterior access.
d. Owner Occupancy Required. The owner of the single-unit dwelling in which the junior accessory dwelling unit is located shall reside in either the remaining portion of the structure or the junior accessory dwelling unit, if the junior accessory dwelling unit includes separate sanitation facilities from the existing structure.

F. Conversions.

1. Setbacks. No setback shall be enforced for an existing living area or accessory structure or a structure constructed in the same location and to the same dimensions as an existing structure that is converted to an accessory dwelling unit or to a portion of an accessory dwelling unit.

2. Parking. If enclosed or covered parking for the primary dwelling is converted or demolished in conjunction with the construction of an accessory dwelling unit, replacement parking is not required, except as provided in Section 17.14.040 B.

EXHIBIT B
ORDINANCE NO. 677

G. Required Parking. Automobile parking is not required for an accessory dwelling unit, except as provided in Section 17.14.040 B. Required parking for the primary dwelling shall be provided pursuant to Chapter 17.27, Parking and Loading.

H. Sale Limitations. Accessory dwelling units may be rented separately from the primary residence, but may not be sold or otherwise conveyed separate from the primary residence, except as allowed pursuant to Government Code Section 65852.2. Junior accessory dwelling units are prohibited from being sold separately from the primary residence.

I. Rental Limitations. Rental terms shall be a minimum of thirty consecutive days.

J. Permit Review.

1. Permit applications for accessory dwelling units shall be considered and approved ministerially without discretionary review or a hearing within sixty days from receipt of a completed application if there is an existing single-family or multifamily dwelling on the lot or when the permit application for a proposed single-unit or multi-unit dwelling is acted upon. All agencies involved in the review of an accessory dwelling unit permit, including utility districts, city departments, and special corporations, shall be subject to the sixty-day review period.

2. In the coastal resource protection (CRP) overlay district, a coastal development permit pursuant to Chapter 17.39, Coastal Development Permits (IP) may be required.

3. Permit applications for accessory dwelling units and junior accessory dwelling units shall not require, as a condition of approval, the correction of nonconforming zoning conditions, building code violations, or unpermitted structures on the property that do not present an imminent threat to public health and safety and are not affected by the construction of the new unit.

K. Development Impact Fees. Payment of development impact fees are required as follows:

1. ADUs with a floor area of 750 square feet of interior livable space or less shall not pay development impact fees.

2. JADUs with a floor area of 500 square feet or less of interior livable space shall not pay development impact fees.

3. ADUs with floor area greater than 750 square feet shall be charged development impact fees that are proportional in relation to the square footage of the primary structure, shown on the Master Fee Schedule.

4. ADUs and JADUs with a floor area of 500 square feet or less of interior livable space shall not pay school impact fees.

EXHIBIT C
ORDINANCE NO. 677

Chapter 17.46 AMENDMENTS TO THE GENERAL PLAN, ZONING CODE, AND

ZONING MAP
Sections:

17.46.010 Purpose.

This chapter establishes a process for consideration and review of general plan and zoning amendments.

More specifically, the purpose of this chapter is to:

A. Establish procedures for making changes to the general plan to address changes in applicable law and problems and opportunities that were unanticipated at the time of general plan adoption or the last amendment.

B. Establish procedures for making changes to the text of this title or to the zoning map whenever the public necessity, convenience, general welfare, or good zoning practice justify such amendment, consistent with the general plan.
(Ord. No. 662, § 2, 12-13-23)

17.46.020 Applicability.

The procedures in this chapter shall apply to:

A. All proposals to change the text of the general plan and the maps that illustrate the application of its provisions, and
B. All proposals to change the text of this title, a zoning district classification, or a zoning district boundary line shown on the zoning map.
(Ord. No. 662, § 2, 12-13-23)

17.46.030 Initiation.

An amendment to the general plan, zoning code, or zoning map may be initiated by any qualified applicant identified in Section 17.36.020, Application Forms and Fees, or a motion of the city council. (Ord. No. 662, § 2, 12-13-23)

17.46.040 Application requirements.

Applications for a general plan or zoning amendment shall be filed with the director in accordance with the provisions set forth in Section 17.36.020, Application Forms and Fees. In addition to any other application requirements, the application for a general plan or zoning amendment shall include such additional information and supporting data as considered necessary to process the application. (Ord. No. 662, § 2, 12-13-23)

17.46.050 Maximum number of general plan amendments.

Except as otherwise provided by applicable law, no mandatory element of the general plan can be amended more frequently than four times during any calendar year. Subject to that limitation, an amendment may be made at any time, as determined by the city council. Each amendment may include more than one change to the general plan.
(Ord. No. 662, § 2, 12-13-23)

17.46.060 Review procedures and public notice.

A. Staff Report. The director shall prepare a report and recommendation to the planning commission on any application for an amendment. The report shall include, but is not limited to, a discussion of how the proposed amendment complies with the purposes of this chapter, a determination as to whether the proposed amendment is consistent with other plans that the city council has adopted, and an environmental document prepared in compliance with the California Environmental Quality Act.

B. Public Hearing Required. All amendments shall be referred to the planning commission, which shall hold at least one public hearing on any proposed amendment.

C. Public Notice. At least ten days before the date of the public hearing, the planning division shall provide notice consistent with Section 17.36.060, Public Notice. Notice of the hearing also shall be mailed or delivered at least ten days prior to the hearing to the San Luis Coastal Unified School District and any other local agency expected to provide essential facilities or services to the property that is the subject of the proposed amendment.
(Ord. No. 662, § 2, 12-13-23)

17.46.070 Planning commission hearing and recommendation.

A. Planning Commission Hearing. The planning commission shall conduct a public hearing in conformance with Section 17.36.070, Conduct of Public Hearings.

B. Recommendation to Council. Following the public hearing, the planning commission shall make a recommendation on the proposed amendment to the city council. Such recommendation shall include the reasons for the recommendation, findings related to supporting the recommendation, and the relationship of the proposed amendment to applicable plans, and shall be transmitted to the city council in the form of a council staff report, prepared by planning staff, with a copy of the approved minutes from the planning commission meeting.
(Ord. No. 662, § 2, 12-13-23)

17.46.080 City council hearing and action.

A. City Council Hearing. After receiving the report from the planning commission, the city council shall hold at least one duly-noticed public hearing. The notice shall include a summary of the planning commission recommendation. If the planning commission has recommended against the adoption of such amendment, the city council is not required to take any further action unless an interested party files a written request for a hearing with the city clerk within ten days after the planning commission action.

B. City Council Action. After the conclusion of the hearing, the city council may approve, revise, or deny the proposed amendment. If the council proposes any substantial revision not previously considered by the

planning commission during its hearings, the revision shall first be referred back to the planning commission for report and recommendation, but the planning commission shall not be required to hold a public hearing.

The failure of the planning commission to report within forty-five days after the referral, shall be deemed a recommendation to approve and the amendment shall be returned to council for adoption. (Ord. No. 662, § 2, 12-13-23)

17.46.090 General plan consistency required for zoning amendments.

The planning commission shall not recommend and the city council shall not approve a zoning amendment unless the proposed amendment is found to be consistent with the general plan. (Ord. No. 662, § 2, 12-13-23)

17.46.100 Voter Approval Required to Change Land Use Designations for Specified Parcels On November 5, 2024, Morro Bay voters approved a ballot initiative (Measure A-24) to amend the City of Morro Bay General Plan / Local Coastal Program in order to prohibit, unless approved by voters, any changes to the land use designations of Visitor Serving Commercial and/or Commercial/Recreation Fishing, for Specified Parcels as shown in Measure A-24, Exhibit B – Parcels/Areas Affected by this Initiative. The Specified Parcels generally include approximately 103 acres of real property, including the harbor east of Morro Rock, 63 acres of former power plant portions along sides of Embarcadero Road from Beach Street to Atascadero Road, and along Coleman Drive. As required by A-24, any request to change the land use designations of Specified Parcels shall require voter approval, in addition to the applicable procedures in this Chapter.

1 ORDINANCE NO. 678

AN ORDINANCE OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA,
AMENDING CHAPTERS 17.07,17.08, AND 17.23 OF THE ZONING
CODE / COASTAL IMPLEMENTATION PLAN (IP), TITLE 17 OF

THE MORRO BAY CITY MUNICIPAL CODE (MBMC)

THE CITY COUNCIL
City of Morro Bay, California
WHEREAS, California Government Code Section 65300 requires the City adopt a comprehensive, long-term general plan for the physical development of the City; and WHEREAS, in May 2021 the City of Morro Bay (the “City”) adopted a comprehensive update to its General Plan and Local Coastal Program Coastal Land Use Plan (LCP) known as Plan Morro Bay; and
WHEREAS, in November 2022, to implement Plan Morro Bay, the City adopted a comprehensive update to its Zoning Code / Coastal Implementation Plan (IP) via Ordinance 654 which was subsequently submitted to the California Coastal Commission as an LCP amendment application for certification and certified in 2024 following amendments adopted by the City Council in 2023; and
WHEREAS, amendments to the Zoning Code / IP are necessary to provide consistency with the General Plan/LCP and to ensure compliance with the California Coastal Act; and WHEREAS, on November 5, 2025, the City of Morro Bay Planning Commission (the “Planning Commission”), upon review of the 2024 Annual General Plan Progress Report, recommended the City of Morro Bay City Council (the “City Council”) authorize staff to amend certain sections of the Zoning Code to reinstate previously repealed sections of the Zoning Code, improve clarity and consistency, and comply with the latest State Accessory Dwelling Unit (ADU) laws; and
WHEREAS, on December 9, 2025, the City Council, upon review of the 2024 Annual General Plan Progress Report, authorized the Planning Commission’s recommended Zoning Code amendments; and
WHEREAS, on January 20, 2026, the Planning Commission conducted a public hearing in a hybrid format with both an in-person meeting at the Morro Bay Veterans Memorial Building, 209 Surf Street, Morro Bay, CA 93442 as well as through virtual public participation provided telephonically through Zoom, for the purpose of considering a favorable recommendation to the City Council for adoption of the Zoning Code / IP Amendments; and WHEREAS, on January 20, 2026, the Planning Commission adopted Resolution No. PC 01-26, recommending City Council adoption of the proposed Zoning Code / IP amendments,

2 making the finding that no further environmental review is necessary pursuant to CEQA State Guidelines Section 15162; and
WHEREAS, on February 24, 2026, the City Council conducted a duly-noticed public hearing in a hybrid format with both an in-person meeting at the Morro Bay Veterans Memorial Building, 209 Surf Street, Morro Bay, CA 93442 as well as through virtual public participation provided telephonically through Zoom, for the purpose of considering the proposed Zoning Code IP amendments, including the Planning Commission’s recommendation.

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

SECTION 1. Findings. The City Council finds:

A. The above referenced recitals are true and correct and material to the adoption of this Ordinance and are incorporated herein by reference.

B. The proposed Zoning Ordinance / IP amendments will not be injurious or detrimental to the health, safety, comfort, general welfare, or well-being of the persons residing or working in the neighborhood.

C. The Local Coastal Plan IP amendments are intended to further the goals of the California Coastal Act, as set forth in Section 30001.5 of the Public Resources Code, to:

1. Protect, maintain, and where feasible, enhance and restore the overall quality of the coastal zone environment and its natural and artificial resources.

2. Assure orderly, balanced utilization and conservation of coastal zone resources taking into account the social and economic needs of the people of the state.

3. Maximize public access to and along the coast and maximize public recreational opportunities in the Coastal Zone consistent with sound resources conservation principles and constitutionally protected rights of private property owners.

4. Assure priority for coastal-dependent and coastal-related development over other development on the coast.

5. Encourage state and local initiatives and cooperation in preparing procedures to implement coordinated planning and development for mutually beneficial uses, including educational uses, in the Coastal Zone.

D. Pursuant to the California Coastal Act of 1976, no amendment to the IP shall be legally effective in the Coastal Zone until the amendment is certified by the California Coastal Commission. If the California Coastal Commission certifies the LCP amendment conditioned on substantive changes being made, then the City Council will consider the adoption of modifications to incorporate those substantive changes. If the Coastal Commission certifies this Ordinance conditioned on non-substantive changes being made to this Ordinance, then the City Clerk is authorized to amend this Ordinance to reflect those non-substantive changes.

3 SECTION 2. Municipal Code Amendments. The City Council hereby adopts the proposed amendments to Title 17 (Zoning), Chapter 17.07 (Development Standards) and Chapter 17.23 (Sloping Lots) of the Morro Bay Municipal Code as shown in Exhibit A – MBMC Section

17.07.030: Development Standards (IP) and Section 17.23.140: Sloping Lots (IP), pending review and certification by the California Coastal Commission.

SECTION 3. Municipal Code Amendments. The City Council hereby adopts the proposed amendments to Title 17 (Zoning), Chapter 17.08 (Development Standards) of the Morro Bay Municipal Code as shown in Exhibit B – MBMC Section 17.08.030: Development Standards (IP), pending review and certification by the California Coastal Commission.

SECTION 5. CEQA Findings. No further environmental review is required pursuant to State CEQA Guidelines Section 15061(b)(3) and Statutory Exemption Section 15282(h).

State CEQA Guidelines Section 15061(b)(3) states a project is exempt from CEQA if “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.” The proposed Zoning Code Amendments will not have an impact on the environment. Any project on a property affected by the Zoning Code Amendments would receive site specific environmental review at the time of project application.

The proposed Zoning Code Amendments that update Accessory Dwelling Unit standards are statutorily exempt from CEQA consistent with Section 15282(h) of the State CEQA Guidelines, which lists “the adoption of an ordinance regarding second units in a single family or multifamily residential zone by a city or council to implement the provisions of Sections 65852.1 and 65852.2 of the Government Code as set forth in Section 21080.17 of the Public Resources Code,” as a being statutorily exempt from the provisions of CEQA.

SECTION 6. Severability. If any section, subsection, phrase, or clause of this ordinance or any part thereof is for any reason held to be unconstitutional or otherwise unenforceable, such decision shall not affect the validity of the remaining portions of this ordinance or any part thereof.

The City Council hereby declares that it would have passed this ordinance and each section, subsection, phrase or clause thereof irrespective of the fact that any one or more sections, subsections, phrases, or clauses be declared unconstitutional or otherwise unenforceable.

SECTION 7. Effective Date. This Ordinance shall take effect upon certification of the Coastal Commission as required by the California Coastal Act of 1976. //
//
//
//

4 SECTION 8. Certification. The City Clerk shall certify as to the passage and adoption of this Ordinance and shall cause the same to be posted and codified in the manner required by law.

PASSED AND ADOPTED on the ___ day of _______________, 2026, 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

5 STATE OF CALIFORNIA )

COUNTY OF SAN LUIS OBISPO )

CITY OF MORRO BAY )
I, Dana Swanson, City Clerk for the City of Morro Bay, California, do hereby certify that the foregoing Ordinance No. 678 was duly passed and adopted by the City Council of the City of Morro Bay at the regular meeting thereof, held on the ____ day of ________ 2026, 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 , 2026.
______________________________
DANA SWANSON, City Clerk

EXHIBIT A
ORDINANCE NO. 678

17.07.030 Development standards (IP).

Table 17.07.030 A, Development Standards—RS districts, and Table 17.07.030 B, Development Standards— RL, RM, and RH districts, prescribe the development standards for residential districts. Additional regulations are denoted in the right hand column. Section numbers in this column refer to other sections of this code. Additional development standards are specified following the tables below.

TABLE 17.07.030 A: DEVELOPMENT STANDARDS—RS DISTRICTS
Standard RS-A RS-B Additional
Lot Size (square feet) Information
2,500 sq ft or
less
2,501 to 4,300
sq ft
4,301 sq ft and
greater
Lot and Density Standards
Minimum
Density
(units/acre)

4.1 Maximum
Density
(units/acre)

7.0; or as allowed for SB 9 related development
pursuant to

17.07.030 A
Maximum Lot
Coverage (%
of lot)
50 50 45 50 See Section

17.02.030 H,
Determining
Lot Coverage
Building Form and Location Standards
Maximum
Building
Height (ft)
25 25 25
For parcels
west of
Highway 1 and
north of No
Name Creek,
no portion of
any structure
except vents
and chimneys
may extend
above the 50
foot elevation
above sea
level
14; 17 if roof
pitch is 4:12 or
greater
See Section

17.02.030.C,
Measuring
Height
and Section

17.23.070,
Heights and
Height
Exceptions
Maximum
Number of
Stories
n/a n/a n/a 1 See Section

17.02.030 C.2,
Measuring the
Number of
Stories

EXHIBIT A
ORDINANCE NO. 678

Maximum
Building Wall
Height (ft)
30 30 30 n/a
Minimum
Setbacks (ft)
Front 10 15 20 15 See Section

17.02.030 J,
Determining
Setbacks
(Yards),
Section

17.23.140,
Sloping Lots,
Section

17.23.050,
Encroachments
into Required
Setbacks,
and Section

17.27.100 F,
Driveway
Length and
Accessibility
Interior Side 3 10% of lot
width, max 5
5 5
Corner Side 6 20% of lot
width, max 10
10 15
Rear 5 5 10 5 See Section

17.23.050,
Encroachments
into Required
Setbacks
TABLE 17.07.030 B: DEVELOPMENT STANDARDS—RL, RM, AND RH DISTRICTS Standard RL RM RH Additional
Information
Lot and Density Standards
Minimum Density
(units/acre)
0 7.1 15.1
Maximum
Density
(units/acre)
4; or as allowed
for SB 9 related
development
pursuant to

17.07.030 A
15 27
Maximum Lot
Coverage (% of
lot)
45 50 60 See Section

17.02.030 H,
Determining Lot
Coverage

EXHIBIT A
ORDINANCE NO. 678

Building Form and Location Standards
Maximum
Building Height
(ft)
25 25 30 See Section

17.23.070,
Heights and
Height Exceptions
Maximum Wall
Height (ft)
30 n/a n/a
Minimum
Setbacks (ft)
For attached single-unit dwellings, required setbacks apply to the ends of rows of the dwellings.

Front 20 Lots 2,500 sf or
less: 10;
Lots 2,501 to
4,300 sf: 15;
Lots 4.301 sf or
greater: 15 on
West St,
otherwise 20
15 See Section

17.02.030 J,
Determining
Setbacks (Yards),
and Section

17.23.050,
Encroachments
into Required
Setbacks
See Section

17.27.100 F,
Driveway Length
and Accessibility
Interior Side 10 10% of lot width,
min 3, max 5
5 See Section

17.02.030 J,
Determining
Setbacks (Yards),
and Section

17.23.050,
Encroachments
into Required
Setbacks
Corner Side 10 20% of lot width,
min 5, max 10
20% of lot width,
min 5, max 10
See Section

17.02.030 J,
Determining
Setbacks (Yards),
and Section

17.23.050,
Encroachments
into Required
Setbacks
See Section

17.27.100 F,
Driveway Length
and Accessibility

EXHIBIT A
ORDINANCE NO. 678

Rear 20 5 5, 20 when
abutting an RL
District
See Section

17.02.030 J,
Determining
Setbacks (Yards),
and Section

17.23.050,
Encroachments
into Required
Setbacks
Landscaping and Open Space Standards
Minimum
Landscaping (% of
lot)
35 n/a n/a See Chapter

17.25,
Landscaping
Minimum Open
Space (sq ft per
residential unit)
n/a Studio: 50
1-bedroom: 100
2 or more
bedrooms: 150
See Section

17.23.100, Open
Space
A minimum of 50
square feet of
private open
space shall be
provided per unit.

Additional Development Standards.

A. Senate Bill (SB) 9 Related Development. In the RS and RL districts, two dwelling units are allowed per lot if the following standards are met:

1. The proposed development shall not be located in any of the following areas:
a. Prime farmland or farmland of statewide importance.
b. Wetlands.
c. High or very high fire hazard severity zone.
d. Hazardous waste site.
e. Within a delineated earthquake fault zone.
f. Within a special flood hazard area/subject to a letter of map revision. g. Within regulatory floodway.
h. Lands identified for conservation in an adopted natural community conservation plan. i. Habitat for protected species.
j. Lands under conservation easement.
k. Within a historic district or property included on the state historic resources inventory, as defined in Section 5020.1 of the Public Resources Code, or within a site that is designated or listed as a city or county landmark or historic property or district pursuant to a city or county ordinance.

EXHIBIT A
ORDINANCE NO. 678

2. The proposed development shall not require demolition or alteration of any of the following types of housing:
a. Housing that is subject to a recorded covenant, ordinance, or law that restricts rents to levels affordable to persons and families of moderate, low, or very low income. b. Housing that is subject to any form of rent or price control through a public entity's valid exercise of its police power.
c. Housing that has been occupied by a tenant in the last three years.

3. The proposed development shall not be located on a lot on which an owner of residential real property has exercised the owner's rights under Chapter 12.75 (commencing with Section 7060) of Division 7 of Title 1 to withdraw accommodations from rent or lease within fifteen years before the date that the development proponent submits an application.

4. The proposed development shall not involve the demolition of more than twenty-five percent of the existing exterior structural walls.

5. A maximum of two residential units are allowed per lot, inclusive of accessory dwelling units and junior accessory dwelling units.

6. Each unit constructed pursuant to this subsection shall comply with all provisions of the base, overlay, or specific plan district, except as modified by this section. a. Interior Side and Rear Setbacks. A minimum four foot side and rear setback is required; however no setback is required for an existing structure or a structure constructed in the same location and to the same dimensions as an existing structure. b. Parking. A minimum of one space per unit shall be provided unless:
i. The lot is located within one-half mile walking distance of either a high-quality transit corridor, as defined in subdivision (b) of Section 21155 of the Public Resources Code, or a major transit stop, as defined in Section 21064.3 of the Public Resources Code.
ii. There is a car share vehicle located within one block of the lot. c. Rental Limitations. Rental terms shall be a minimum of thirty consecutive days.

7. If located in the coastal zone, the project must also be found consistent with all applicable provisions of the LCP, including those specified in Section 17.14.040 B. (Ord. No. 662, § 2, 12-13-23)

17.23.140 Sloping lots (IP).

The following standards apply to development on lots with an average slope of fifteen percent or greater prior to grading.

A. Downhill Facing Building Elevation. The building elevation facing the downslope shall have a maximum height of twenty feet from finished grade with sufficient articulation from that building face to the next highest story to minimize the visual height and bulk as viewed from the lowest finished grade.

B. Articulation. The apparent size of exterior wall surfaces visible from off the site shall be minimized through the use of bays, recesses, stepbacks, overhangs, landscaping, and/or other means of horizontal and vertical articulation to create changing shadow lines and break up massive forms.

C. Foundation Design. The use of multi-level foundations (floor levels separated by a minimum of four feet) shall be the standard design for residential structures unless an alternative design, with less grading, is approved through the design review process as more appropriate for the site.

D. Underfloors. Areas between the lowest floor and finished grade shall not exceed six feet in height.

E. Decks. No portion of the walking surface of a deck with visible underpinnings shall exceed a height of six feet above grade. Decks shall be integrated into the architecture of the structure, and not appear as an add-on to the primary building mass.

F. Sloping Lot Adjustment. Notwithstanding any other requirements in this title, in cases where the elevation of the front half of the lot at a point fifty feet from the centerline of the public right-of-way is seven feet above or below the grade of said centerline, a private garage, attached or detached, may be built to within five feet of the front line of the lot, provided that the garage has an automatic rolling type garage door opener. For lots located below street grade only, the garage roof portion of the structure may be permitted to extend ten feet above the street grade at the garage location unless the height of the residence is allowed to be constructed taller in which case the garage may be permitted to be constructed to the height of the rest of the residence.

FIGURE 17.23.140: SLOPING LOTS
(Ord. No. 662, § 2, 12-13-23)

EXHIBIT B
ORDINANCE NO. 678

17.08.030 Development standards (IP).

Table 17.08.030, Development Standards—Commercial and Mixed Use Districts, prescribes the development standards for commercial and mixed use districts. Additional regulations are denoted in the right hand column.

Section numbers in this column refer to other sections of this code.

TABLE 17.08.030: DEVELOPMENT STANDARDS—COMMERCIAL AND MIXED USE DISTRICTS Standard NC CC DC VSC TMU Additional
Information
Lot and Density Standards
Minimum
Density
(residential
dwelling
units/acre)
applicable
only to
residential and
mixed-use
development

4.1 15.1 n/a n/a 15.1
Maximum
Density
(residential
dwelling
units/acre)
15 27 27 As allowed
in the
Mixed Use
Residential
Overlay,
Chapter

17.16 27 See Section 17.24,
Affordable Housing,
Density Bonuses, and
Other Incentives
Maximum
Floor Area
Ratio (FAR),
applicable
only to non-residential
floor area

1.0 1.25 0.5 1.25 1.0 See Section 17.02.030
G, Determining Floor
Area Ratio
Building Form and Location Standards
Maximum
Height (ft)
25, up to
30 pursuant
to (A)
30 30, 25
within 20
ft of a
Residential
District
30 (D) 30 See Section 17.02.030
C, Measuring Height
Section 17.23.070,
Heights and Height
Exceptions
Minimum
Setbacks (ft)
Front 5, 10
adjacent
to a
0, 10
adjacent
to a
0, 10
adjacent
to a
0 15
See
also
See Section 17.02.030
J, Determining
Setbacks (Yards),

EXHIBIT B
ORDINANCE NO. 678

Residential
District
Residential
District
See also
(B) below
Residential
District
(C)
below
Section 17.23.050,
Encroachments into
Required Setbacks,
and Section 17.27.100
F, Driveway Length
and Accessibility
Corner Side 5, 10
adjacent
to a
Residential
District
0, 10
adjacent
to a
Residential
District
See also
(B) below
0, 10
adjacent
to a
Residential
District
0 10 See Section 17.02.030
J, Determining
Setbacks (Yards),
Section 17.23.050,
Encroachments into
Required Setbacks,
and Section 17.27.100
F, Driveway Length
and Accessibility
Interior Side 5 0, 10
adjacent
to a
Residential
District
0, 10
adjacent
to a
Residential
District
0, 10
adjacent
to a
Residential
District
0 See Section 17.02.030
J, Determining
Setbacks (Yards), and
Section 17.23.050,
Encroachments into
Required Setbacks
Rear 5 for
buildings
up to 15 ft
in height;
10 for
buildings
over 15 ft
in height
0, 10
adjacent
to a
Residential
District
0, 10
adjacent
to a
Residential
District
0, 10
adjacent
to a
Residential
District
5 See Section 17.02.030
J, Determining
Setbacks (Yards), and
Section 17.23.050,
Encroachments into
Required Setbacks
Open Space Standards
Minimum
Open Space
(sq ft per
residential
unit)
50 50 50 50 50 See Section

17.23.100, Open
Space
A. Additional Height Allowance, NC District. The planning commission may allow up to thirty feet to encourage roofline variations and sloping roof treatments provided that the additional height is necessary for such roof treatment and that corridors protecting significant views are provided.

Furthermore, to prevent long, unvarying rooflines, the planning commission shall consider the following guidelines when allowing a project to exceed twenty-five feet in height.

1. For buildings fronting on Main Street, not more than one-third of the west elevation of the building roofline and, if different, not more than one-third of the elevation of the longest building roofline should exceed twenty-five feet in height. This standard is intended as a guideline, not a

EXHIBIT B
ORDINANCE NO. 678

strict requirement, and the planning commission may vary from this guideline as deemed necessary and useful to meet the intent of this section.

2. To the extent practical, significant view opportunities shall be preserved and protected through the use of view corridors and air space easements.

B. Required Building Location, CC District. The following building location requirements apply in the CC district.

1. Build-to Line. Buildings shall be located within ten feet of street-facing property lines for at least sixty percent of the linear street frontage.

2. Corner Build Area. Buildings shall be located within ten feet of the property line within thirty feet of the street corner.

3. Frontage Improvements. The area between buildings and the property line shall be improved as part of a wider sidewalk, outdoor dining/seating area, or with landscaping.

4. Exceptions. These requirements may be modified or waived through design review upon finding that:
a. Entry courtyards, plazas, entries, or outdoor eating areas are located adjacent to the property line and buildings are built to the edge of the courtyard, plaza, or dining area; or b. The building incorporates an alternative entrance design that creates a welcoming entry feature facing the street.

FIGURE 17.08.030(C): REQUIRED BUILDING

LOCATION, CC DISTRICT
C. Front Setback, TMU District. Where twenty-five percent or more of the lots on the same block face have been improved with buildings, the minimum front setback requirement shall be the average of the actual front setback of all improved lots on such block face or fifteen feet, whichever is less.

EXHIBIT B
ORDINANCE NO. 678

D. Additional Height Limitations, VSC District between Beach Street and Surf Street. In the VSC District between Beach Street and Surf Street, no portion of any building shall exceed the elevation of the bluff located to the east of Front Street.
(Ord. No. 662, § 2, 12-13-23)

RESOLUTION NO. PC 01-26

A RESOLUTION OF THE MORRO BAY PLANNING COMMISSION FORWARDING A

FAVORABLE RECOMMENDATION TO THE MORRO BAY CITY COUNCIL FOR

ADOPTION OF ZONING CODE / COASTAL IMPLEMENTATION PLAN

AMENDMENTS AND FINDING THAT NO FURTHER ENVIRONMENTAL REVEW IS REQUIRED PURSUANT TO STATE CEQA GUIDELINES SECTION 15162 WHEREAS, California Government Code Section 65300 requires the City adopt a comprehensive, long-term general plan for the physical development of the City; and WHEREAS, in May 2021 the City adopted a comprehensive update to its General Plan and Local Coastal Program Coastal Land Use Plan (LCP) known as Plan Morro Bay; and
WHEREAS, in November 2022 the City adopted a comprehensive update to its Zoning Code / Coastal Implementation Plan via Ordinance 654 which was subsequently submitted to the California Coastal Commission as an LCP amendment application for certification and certified in 2024 following amendments adopted by the City Council in 2023; and
WHEREAS, amendments to the Zoning Code /Coastal Implementation Plan (IP)are necessary to provide consistency with the General Plan/LCP and to ensure compliance with the California Coastal Act; and
WHEREAS, the City determined that the General Plan /LCP, including Plan Morro Bay’s Zoning Code/ Coastal Implementation Plan (IP) (also referred to herein as “Project”) was a project requiring review pursuant to the California Environmental Quality Act (CEQA), Public Resources Code 21000 et seq. and that an Environmental Impact Report (EIR) was prepared to evaluate the potential environmental effects of the Project; and WHEREAS, on May 26, 2021, the City Council adopted Resolution 20-21, certifying the EIR for the General Plan Update (State Clearinghouse Number SCH#2021111026), adopting Findings of Fact and Statement of Overriding Considerations and a Mitigation Monitoring and Reporting Program; and

Planning Commission Resolution #01-26
Zoning Code / Implementation Plan Amendments

WHEREAS, the Planning Commission of the City of Morro Bay (the “City”) conducted a public hearing on January 20, 2026 conducted in a hybrid format with both an in-person meeting at the Morro Bay Veterans Memorial Building, 209 Surf Street, Morro Bay, CA 93442 as well as through virtual public participation provided telephonically through Zoom, for the purpose of considering a favorable recommendation to the Morro Bay City Council for adoption of the Zoning Code / Coastal Implementation Plan Amendments (“Project”); and
WHEREAS, notice of the public hearing was provided at the time and in the manner required by law; and
WHEREAS, the Planning Commission has duly considered all evidence, including the written and oral staff report, presentation, public testimony on the Project, and whether the Project should be adopted; and
WHEREAS, the written staff report and exhibits to the staff report regarding the Project are found to be true and accurate in all respects and is incorporated herein by this reference;
WHEREAS, prior to the final consideration and any possible approval of any and all physical aspects of the proposed Project, the Planning Commission and all City legislative bodies involved with the proposed Project will consider the Project and the Planning Commission recommends all other governmental agencies and legislative bodies that must review or approve, if at all, the proposed Project do the same; and WHEREAS, the Planning Commission has completed review of the Project and related materials.

NOW, THEREFORE, BE IT RESOLVED by the Planning Commission of the City of Morro Bay recommends that the City Council finds for approval and adoption of the Zoning Code / Coastal Implementation Plan based upon the following findings:

Planning Commission Resolution #01-26
Zoning Code / Implementation Plan Amendments

Section 1: California Environmental Quality Act
Finding: No further environmental review is required pursuant to State CEQA Guidelines Section 15061(b)(3) and Statutory Exemption Section 15282(h).

Evidence: State CEQA Guidelines Section 15061(b)(3) states a project is exempt from CEQA if “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.” The proposed Zoning Code Amendments will not have an impact on the environment. Any project on a property affected by the Zoning Code Amendments would receive site specific environmental review at the time of project application.

The proposed Zoning Code Amendments that update Accessory Dwelling Unit standards are statutorily exempt from CEQA consistent with Section 15282(h) of the State CEQA Guidelines, which lists “the adoption of an ordinance regarding second units in a single family or multifamily residential zone by a city or council to implement the provisions of Sections 65852.1 and 65852.2 of the Government Code as set forth in Section 21080.17 of the Public Resources Code” as a being statutorily exempt from the provisions of CEQA.

Section 2: The Local Coastal Plan Implementation Program Amendments are intended to further the goals of the California Coastal Act, as set forth in Section 30001.5 of the Public Resources Code, to:

Protect, maintain, and where feasible, enhance and restore the overall quality of the coastal zone environment and its natural and artificial resources.

Assure orderly, balanced utilization and conservation of coastal zone resources taking into account the social and economic needs of the people of the state.

Maximize public access to and along the coast and maximize public recreational opportunities in the coastal zone consistent with sound resources conservation principles and constitutionally protected rights of private property owners.

Assure priority for coastal-dependent and coastal-related development over other development on the coast.

Planning Commission Resolution #01-26
Zoning Code / Implementation Plan Amendments

Encourage state and local initiatives and cooperation in preparing procedures to implement coordinated planning and development for mutually beneficial uses, including educational uses, in the coastal zone.

Pursuant to Morro Bay Municipal Code Section 17.64.080, no amendment to the Coastal Implementation Plan portion of Zoning Ordinance shall be legally effective in the coastal zone until the amendment is certified by the Coastal Commission. If the Coastal Commission certifies this Ordinance conditioned on substantive changes being made, then the Council will introduce and adopt another ordinance to incorporate those substantive changes. If the Coastal Commission certifies this Ordinance conditioned on non-substantive changes being made to this Ordinance, then the City Clerk is authorized to amend this Ordinance to reflect those non-substantive changes.

Section 3: The Zoning Code Amendments are intended to further the goals of the State of California to address the growing housing crisis, pursuant to Government Code Section 65852.2 – 65852.22, to:

Provide an affordable type of home to construct in California, provide a source of income for homeowners, allow extended families to be near one another while maintaining privacy, provide more affordable housing options for renters, and give homeowners the flexibility to share independent living areas with family members and others, while allowing older adults to age in place.

ACTION. The Planning Commission does hereby forward a favorable recommendation to the City Council to adopt the Zoning Code / Coastal Implementation Plan Amendments.

PASSED AND ADOPTED by the Morro Bay Planning Commission at a regular meeting thereof held on this 20th day of January, 2026 on the following vote:

AYES: Witkowski (m), Ingraffia (s), Meyer, Solu, de Fazio NOES:

ABSENT:

ABSTAIN:

Eric Meyer, Chairperson
ATTEST
Airlin Singewald, Planning Secretary
The foregoing resolution was passed and adopted this 20th day of January, 2026.

1 MORRO BAY PLANNING COMMISSION

REGULAR MEETING MINUTES
January 20, 2026, 6:00 p.m.

Veterans Memorial Hall
209 Surf St., Morro Bay, CA
Members Present: Chairperson Eric Meyer
Vice-Chairperson Joe Ingraffia
Planning Commissioner Tony DeFazio
Planning Commissioner John Solu
Planning Commissioner Mary Witkowski
Staff Present: Community Development Director Airlin Singewald Senior Planner Susana Toner
Associate Planner Erik Valentine
_____________________________________________________________________

1. ESTABLISH QUORUM AND CALL TO ORDER
The meeting was called to order at 6:00 p.m.

2. PLEDGE OF ALLEGIANCE

3. PLANNING COMMISSIONER ANNOUNCEMENTS
None

4. PUBLIC COMMENT
Chairperson Meyer opened the Public Comment period.

None given.

Chairperson Meyer closed the Public Comment period.

5. PRESENTATIONS
None

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

6.a Approval of Minutes
a. October 7, 2025 Regular Meeting Minutes

2 Ayes (5): Chairperson Meyer, Vice-Chairperson Ingraffia, Commissioner DeFazio, Commissioner Solu, and Commissioner Witkowski
CARRIED (5 to 0)
b. October 21, 2025 Regular Meeting Minutes
Ayes (4): Chairperson Meyer, Vice-Chairperson Ingraffia, Commissioner Solu, and Commissioner Witkowski
Abstain (1): Commissioner DeFazio
CARRIED (4 to 0)
c. November 5, 2025 Special Meeting Minutes
Ayes (4): Chairperson Meyer, Commissioner DeFazio, Commissioner Solu, and Commissioner Witkowski
Abstain (1): Vice-Chairperson Ingraffia
CARRIED (4 to 0)

7. PUBLIC HEARING ITEMS

7.a Plan Morro Bay: Zoning Code/Implementation Plan (IP) Amendments Erik Valentine, Associate Planner, presented the staff report.

Chairperson Meyer reflected the agenda comment from Shirley Fraser received prior to the meeting.

Chairperson Meyer opened the Public Comment period.
 Betty Winholtz, Morro Bay, thanked staff for bringing forward A-24, and commented on Blufftop Height Standards, ADUs/JADUs, and the sign code.
 Shirley Fraser, Morro Bay, commented that she is in support of reinstating blufftop height and wants to protect private views.  Jeff Heller, Morro Bay, thanked Planning Commission, did not know these things were omitted and thanked staff for wanting to put it back in.

Chairperson Meyer closed the Public Comment period.

Staff answered questions to the commissioners.

General discussion with Commissioners.

Motion by Commissioner Witkowski
Seconded by Vice-Chairperson Ingraffia
Ayes (5): Chairperson Meyer, Vice-Chairperson Ingraffia, Commissioner DeFazio, Commissioner Solu, and Commissioner Witkowski

3 CARRIED (5 to 0)

8. BUSINESS ITEMS
None

9. FUTURE AGENDA ITEMS
 Commissioner Witkowski would like a future agenda item to provide a status update on the Waterfront Master Plan.
 Vice-Chairperson Ingraffia wants to propose bringing some examination of the fire codes in place and a presentation on the subject.

10. COMMUNITY DEVELOPMENT DIRECTOR COMMENTS
Director Singewald commented that the next WMPAC meeting is on February 5th and the agenda item is a Comprehensive Background Report, and will discuss the upcoming workshop on February 25th.

He then mentioned upcoming Planning Commission meetings, one project is scheduled for the February 3rd meeting, no current projects are scheduled for the February 17th meeting, and we plan to bring the 2025 General Plan progress report to the March 17th meeting.

11. ADJOURNMENT
The meeting adjourned at 7:01 PM.
7:01 PM.

AGENDA NO: 8.a
MEETING DATE: February 24, 2026
Prepared By: MA/EC Department Review: EC
City Manager Review: JC City Attorney Review: _BS___
Staff Report
TO: Honorable Mayor and City Council DATE: February 18, 2026 FROM: Emily Conrad, Finance Director
SUBJECT: Presentation and Discussion of the Fiscal Year 2024-25 Annual Comprehensive Financial Report

RECOMMENDED ACTION
Receive the presentation and provide feedback on the Fiscal Year (FY) 2024-25 Annual Comprehensive Financial Report (ACFR) for the period of July 1, 2024 through June 30, 2025 (Attachment 1).

BACKGROUND
In the City’s ongoing commitment to transparency and fiscal accountability, the City completes an Annual Comprehensive Financial Report (ACFR). In 2021 the City issued a Request for Proposal (RFP) for auditing services and Brown Armstrong Accountancy Corporation (Brown Armstrong) was selected as the most responsive proposer. The City entered into agreement with Brown Armstrong to perform auditing services for the fiscal years ending June 30, 2021, 2022, 2023, 2024, and 2025, with the option to renew for two additional fiscal years (2026 through 2027). The auditors performed remote review of expenditures, revenues, contracts, and general accounting processes for both accuracy and internal controls (fraud prevention).

DISCUSSION
Annual Comprehensive Financial Report
Lindsey Zimmerman, Certified Public Accountant (CPA) and Partner at Brown Armstrong, was the partner-in-charge of this year’s audit. Ms. Zimmerman has over 22 years of auditing experience including over 12 years of governmental auditing experience. Her specialties include counties, cities, special districts, retirement systems, non-profits, oil and gas, and for-profit organizations. She will present the FY 2024-25 auditor’s report to the City Council on February 24th, including highlights from the ACFR.

Highlights of the FY 2024-25 ACFR results include the following:

Independent Auditor’s Report (pages 1-3)
The auditors have given reasonable assurance that the City’s financial statements for the year ended June 30, 2025 “present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2025, and the respective changes in financial position, and, where applicable, cash flows thereof for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America.”

Management’s Discussion and Analysis (MD&A) (pages 5-14) This section provides an explanation of what is included in the City’s basic financial statements and provides supplementary information in addition to the financial statements. It outlines financial highlights for the fiscal year and presents summary data for the City on an entity-wide basis.

Information is provided in this section with a year-to-year view, explaining how net position and fund balances have changed between fiscal years ending June 30, 2024 and June 30, 2025. This section outlines what is reported as part of the General Fund, Nonmajor Governmental Funds, and Proprietary Funds throughout the report. The section also breaks down the unassigned fund balance in the General Fund’s components, including the main General Fund (operating fund) ($3.9 million), Unfunded Compensable Leave ($0.3 million), Emergency Reserve ($7.9 million), Capital Accumulation Fund ($0.2 million), and Vehicle Replacement Fund ($0.6 million). This total unassigned fund balance of $12.9 million is a $0.4 million decrease over the prior fiscal year when the total unassigned fund balance across all components of the General Fund was $13.3 million.

The decrease is due to planned spending from the Capital Accumulation Fund for the Annual Pavement Management Program.

Statement of Net Position and Statement of Activities (pages 18-21) The Statement of Net Position and Statement of Activities serve as a useful indicator of a government’s financial position. On June 30, 2025, the City’s net position had increased by $8.2 million over June 30, 2024. While the Governmental Activities had a net position decrease of $3.3 million due to planned spending on capital improvements, the Business-Type Activities had an increased net position of $11.5 million. The increase in Business-Type Activities is due to intentionally growing fund balance in the Water and Sewer Funds in preparation of commencement of the debt service payments in FY 2027-28. Additionally, the net position across Business-Type Activities increased by $4.1 in investment returns, a fund performance that is not expected to repeat in FY 2025-26 due to declining interest rates. Finally, the Sewer Fund received $0.7 million in one-time insurance payments for damages sustained in the storms and flooding in January/March 2023.

Basic Financial Statements (pages 18-46)
This section contains basic financial statements, including the Government-wide statement of Net Position (pages 18-19) and Statement of Activities (pages 20-21), financial statements Governmental Funds (pages 27-30), Proprietary Funds (pages 32-41), and Fiduciary Funds (pages 45-46). The Statement of Activities is where activity by department and revenue source is presented. The Fiduciary Funds statements now present the Pension Trust Fund and the Other Postemployment Benefit (OPEB) Trust Fund in addition to the Custodial Fund. The footnotes portion of this section provides details on significant items such as the City’s cash and investments, its long-term obligations related to loan payables, pension related debt and compensated absences, the net pension liability for both the City’s miscellaneous and public safety pension plans, and a discussion of the City’s other post-employment benefit plans.

The Citywide total net pension unfunded accrued liability (UAL) was approximately $33.3 million as of the most recent measurement date of June 30, 2024, a decrease of approximately $0.3 million since the prior measurement date of June 30, 2023. See pages 90-91 for more detail. The Citywide net Other Post-Employment Benefit (OPEB) liability was approximately $507,000 as of June 30, 2025, a decrease of approximately $121,000 since June 30, 2024. See page 94 for more detail. The City has established Section 115 Trusts for both the pension and OPEB liabilities to build resources for future pension contribution increases. The trust balances as of reporting date of June 30, 2025 were $3.2 million in the pension trust and $2.8 million in the OPEB trust. See pages 45-46 for more detail.

Required Supplementary Information (pages 87-95)
The Budgetary Comparison Schedule for the General Fund and Pension Plan Contributions are provided in this section.

Supplementary Information (pages 98-131)
This section lists the nonmajor governmental special revenue funds and provides balance sheets and budget-to-actual information and changes in fund balance for nonmajor governmental funds.

These funds each represent less than 10% of the City’s total governmental fund assets/ liabilities/ revenues/ expenditures and approximately 5% of the City’s total assets /liabilities /revenues /expenditures across all funds.

Statistical Section (pages 135-185)
This section presents ten-year historical financial data for the City to help the reader understand how the City’s financial well-being has changed over time, the City’s revenue and debt capacity, demographic and economic information to provide context for the City’s financial activities.

State Mandated Reports (Attachments 2, 3, 4, and 5)
The following annual reports have been completed and attached for your review:
 FY 2024-25 Annual Street Report
 FY 2024-25 Granted Public Trust Lands Annual Report
 FY 2025-26 Prop 172 Maintenance of Effort Report
The Annual Street Report, Annual Transit Operator Financial Transactions Report, and Annual City Financial Transactions Report are required to be filed annually with the State of California State Controller’s Office and summarize the city’s fiscal year financial activity. The Annual Transit Operator Financial Transactions Report and Annual City Financial Transactions Report are still in progress and will be brought back to City Council’s consent agenda once filed. The FY 2024-25 Granted Public Trust Lands Annual Report is filed with the State Lands Commission and summarizes the fiscal year financial activity specific to the Harbor Fund. The FY 2025-26 Prop 172 MOE Report is also required to be filed annually with the county and state regarding the reporting of City Prop 172 sales tax revenues received and the City’s budgeted allocation of funding to Public Safety from other City revenue sources not including Prop 172 revenues.

CONCLUSION
The FY 2023-24 ACFR was awarded a Certificate of Achievement for Excellence in Financial Reporting. The FY 2024-25 ACFR will also be submitted to the Government Finance Officers Association (GFOA) for consideration for excellence in financial reporting.

Lindsey Zimmerman from Brown Armstrong will present the FY 2024-25 audit report to the City Council.

Weblinks and Attachments

1. FY 2024-25 Annual Comprehensive Financial Report

2. FY 2024-25 114 SAS Report/Auditor Communication

3. FY 2024-25 Annual Street Report

4. FY 2024-25 Granted Public Trust Lands Annual Report

5. FY 2025-26 Prop 172 Maintenance of Effort Report

Prepared By: ________ Dept Review: ___ ___
City Manager Review: JC City Attorney Review: __BS____
Staff Report
TO: Honorable Mayor and City Council DATE: February 12, 2026 FROM: John Craig, City Manager
Michael Wambolt, Executive Director, Visit Morro Bay CEO SUBJECT: Public Meeting to Renew the Morro Bay Tourism Business Improvement District

RECOMMENDED ACTION
Accept public testimony on the renewal of the Morro Bay Tourism Business Improvement District (MBTBID).

FISCAL IMPACT
This fiscal impact of renewing the MBTBID for a 10-year term would be a continuation of funding for the operations of Visit Morro Bay as well as an increase in General Fund administrative fee revenue.

The City would continue to collect and distribute to MBTBID its 3% assessment rate on short-term room rental revenue. Compensation for the provision of that service would continue to be in the form of an administrative fee equal to 3% of the amount of assessments, the purpose being to offset the cost of providing the service. Based on MBTBID’s earnings estimates, the administrative fee revenue is estimated at $36,000, but will vary depending on the total annual short-term room rental revenue.

BACKGROUND
The MBTBID is a benefit assessment district proposed to continue a revenue source to help fund Sales, Marketing, Communications and Destination Development programs for certain Morro Bay lodging businesses and vacation rental businesses. This approach has been used successfully in other destination areas throughout the state to improve tourism and drive additional room nights to assessed businesses. The renewed MBTBID includes all lodging businesses and vacation rental businesses, collectively referred to as “assessed businesses”, existing and in the future, available for public occupancy located within the boundaries of the City of Morro Bay (City).

On April 27, 2009, City Council approved Ordinance No. 546 amending the Morro Bay Municipal Code and establishing the MBTBID pursuant to the Parking and Business Improvement Area Law of 1989 (‘89 Law) with a one-year renewal cycle. On June 8, 2021, the Council adopted Resolution No. 28-21 re-establishing an assessment of 3% of gross short-term room rental revenue for all lodging businesses and vacation rental businesses pursuant to the Parking and Business Improvement Area Law of 1994 (‘94 Law) for a five-year term ending June 30, 2026.

Assessed business owners decided to pursue renewal of the MBTBID in order to continue a revenue source devoted to marketing Morro Bay as a tourist, meeting and event destination. If renewed, the MBTBID would generate approximately $1,200,000 on an annual basis for promotion of travel and tourism specific to Morro Bay.

AGENDA NO: 8.b
MEETING DATE: February 24, 2026

TOURISM BUISNESS IMPROVEMENT DISTRICTS
Tourism Business Improvement Districts (TBIDs) utilize the efficiencies of private sector operation in the market-based promotion of tourism. These special assessment districts allow assessed business owners to organize their efforts to increase tourism. Business owners within the TBID fund the TBID, and those funds are used to provide services that are desired by and benefit the assessed businesses within the TBID.

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

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

MANAGEMENT DISTRICT PLAN
The Management District Plan (Plan) (Attachment 1) includes the proposed boundary of the MBTBID, a service plan and budget and a proposed means of governance. The MBTBID will include all lodging businesses and vacation rental businesses, collectively referred to as “assessed businesses”, existing and in the future, available for public occupancy located within the boundaries of the City, as shown on the map in the Plan.

The annual assessment rate is three percent (3%) of gross short-term sleeping room rental revenue.

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

The renewed MBTBID will have a ten (10) year term, beginning July 1, 2026, or as soon as possible thereafter, and ending ten (10) years from its start date.

The City will be responsible for collecting the assessment on a monthly basis (including any delinquencies, interest, and overdue charges) from each assessed business. The City shall forward the assessments to Visit Morro Bay, which will have the responsibility of managing MBTBID programs as provided in the Plan. The City shall be paid a fee equal to three percent (3%) of the amount of assessment collected to cover its costs of collection and administration.

MBTBID RENEWAL PROCESS
January 27, 2026 RESOLUTION OF INTENTION HEARING (COMPLETED) Upon the submission of a written petition, signed by the business owners in the renewed MBTBID who will pay more than fifty percent (50%) of the assessments proposed to be levied, the City Council (Council) may initiate proceedings to renew the MBTBID by the adoption of a resolution expressing its intention to renew the MBTBID.

Petition Status: Petitions in favor of MBTBID renewal were submitted by assessed businesses, which represent more than fifty percent (50%) of the total MBTBID assessment. This majority petition allowed the Council to initiate proceedings for MBTBID renewal at the January 27, 2026 meeting.

No later than
February 7, 2026 NOTICE (COMPLETED)
The 94 Law requires the City to mail written notice to the owners of all businesses proposed to be assessed within the MBTBID. Mailing the notice begins a mandatory forty-five (45) day period in which assessed business owners may protest MBTBID renewal.

February 24, 2026 PUBLIC MEETING
Allow public testimony on the renewal of the MBTBID and levy of assessments.

No Council action required.

March 24, 2026 FINAL PUBLIC HEARING
If written protests are received from the owners of businesses in the renewed MBTBID which will pay fifty percent (50%) or more of the assessments proposed to be levied, and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such businesses shall be taken for a period of one (1) year from the date of the finding of a majority protest by the Council .

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

CONCLUSION
Holding the public meeting will result in a public hearing on March 24, 2026 on the renewal of the MBTBID and the levy of assessments on certain lodging businesses and vacation rental businesses.

ATTACHMENT(S)

1. Morro Bay TBID Management District Plan

2026-2036

MORRO BAY

TOURISM BUSINESS IMPROVEMENT DISTRICT

MANAGEMENT DISTRICT PLAN
Prepared pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq.

November 18, 2025

Table of Contents
I. OVERVIEW ......................................................................................................................................3 II. BACKGROUND................................................................................................................................5 III. ACCOMPLISHMENTS ....................................................................................................................6 IV. BOUNDARY.....................................................................................................................................7 V. ASSESSMENT BUDGET AND SERVICES ......................................................................................9 A. ANNUAL SERVICE PLAN.................................................................................................................................... 9 B. ANNUAL BUDGET........................................................................................................................................... 11 C. CALIFORNIA CONSTITUTIONAL COMPLIANCE ................................................................................................ 11 D. ASSESSMENT ................................................................................................................................................... 12 E. INTEREST AND OVERDUE CHARGES............................................................................................................... 13 F. TIME AND MANNER FOR COLLECTING ASSESSMENTS..................................................................................... 14 VI. GOVERNANCE.............................................................................................................................. 15 A. OWNERS’ ASSOCIATION.................................................................................................................................. 15 B. BROWN ACT AND CALIFORNIA PUBLIC RECORDS ACT COMPLIANCE ............................................................. 15 C. ANNUAL REPORT............................................................................................................................................ 15 APPENDIX 1 – LAW .................................................................................................................................... 16 APPENDIX 2 – ASSESSED BUSINESSES................................................................................................... 28 Prepared by
Civitas
www.civitasadvisors.com

MBTBID Management District Plan 3
November 18, 2025
I. OVERVIEW
Developed by Morro Bay lodging businesses, Morro Bay vacation rental businesses and Visit Morro Bay (VMB), the Morro Bay Tourism Business Improvement District (MBTBID) is an assessment district proposed to continue to provide specific benefits to payors by funding Sales, Marketing, Communications, and Destination Development promotion efforts for assessed businesses. This approach has been used successfully in other destination areas throughout the country to provide the benefit of additional room night sales directly to payors. The MBTBID was initially formed in 2009 pursuant to the Parking and Business Improvement Area Law of 1989. In 2021, the original MBTBID was disestablished and a new MBTBID was formed under the Property and Business Improvement District Law of 1994 for a five (5) year term. Morro Bay lodging businesses, Morro Bay vacation rental businesses and VMB now wish to renew the MBTBID for an additional ten (10) year term.

Location: The renewed MBTBID includes all lodging businesses and vacation rental businesses, collectively referred to as “assessed businesses”, existing and in the future, available for public occupancy located within the boundaries of the City of Morro Bay (City), as shown on the map in Section IV.

Services: The MBTBID is designed to provide specific benefits directly to payors by increasing awareness and demand for room night sales. Sales, Marketing, Communications and Destination Development programs, and other improvements and activities set forth in this Management District Plan (Plan), will increase demand for overnight tourism and market payors as tourist, meeting and event destinations, thereby increasing demand for room night sales.

Budget: The total MBTBID annual assessment budget for the initial year of its ten (10) year operation is anticipated to be approximately $1,200,000. A similar assessment budget is expected to apply to subsequent years, but this assessment budget is expected to fluctuate as room sales do, and as businesses open and close.

Cost: The annual assessment rate is three percent (3%) of gross short-term sleeping room rental revenue. Based on the benefit received, assessments will not be collected on stays of more than thirty (30) consecutive days; and on any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty.

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

Duration: The renewed MBTBID will have a ten (10) year life, beginning July 1, 2026, or as soon as possible thereafter, and ending ten (10) years from its start date. After ten (10) years, the MBTBID may be renewed pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq. (94 Law) if assessed business owners support continuing the MBTBID programs.

MBTBID Management District Plan 4
November 18, 2025
Management: VMB shall continue to serve as the MBTBID’s Owners’ Association. The Owners’ Association is charged with managing funds and implementing programs in accordance with this Plan, and must provide annual reports to the City Council.

MBTBID Management District Plan 5
November 18, 2025
II. BACKGROUND
TBIDs are an evolution of the traditional Business Improvement District. The first TBID was formed in West Hollywood, California in 1989. Since then, over 100 California destinations have followed suit. In recent years, other states have begun adopting the California model –Illinois, Minnesota, Massachusetts, Montana, South Dakota, Washington, Colorado, Texas and Louisiana have adopted TBID laws. Several other states are in the process of adopting their own legislation. The cities of Wichita, Kansas and Newark, New Jersey used an existing business improvement district law to form a TBID. Additionally, some cities, like Portland, Oregon and Memphis, Tennessee have utilized their home rule powers to create TBIDs without a state law.

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

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

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

There are many benefits to TBIDs:
• Funds must be spent on services and improvements that provide a specific benefit only to those who pay;
• Funds cannot be diverted to general government programs; • They are customized to fit the needs of payors in each destination; • They allow for a wide range of services;
• They are designed, created and governed by those who will pay the assessment; and • They provide a stable, long-term funding source for tourism promotion. 0 20
40 60
80 100
120
Number of Districts
Operating in California

MBTBID Management District Plan 6
November 18, 2025
III. ACCOMPLISHMENTS
• Staff of three including Executive Director, Tourism Coordinator and Administrative. • Development and launch of new official website in FY2024-26, www.MorroBay.org • Developed three-year strategic plan for 2022-2026.
• Development of “Come Get Salty” destination brand.
• Produced brand awareness study to understand brands impact and awareness. • Develop digital marketing strategy
• Develop social media marketing strategy
• Launched “Salt of Morro Bay” video campaign series to showcase unique businesses and personalities of Morro Bay.
• Published new visitor guide and distributed over 40,000 copies. • Updated the visitor kiosk at the entrance of the city. • Developed and launched promotion months for offseason travel. o Wine Month, Restaurant Month, Adventure Month and Lodging Deals • Relaunched and sponsored events that were lost during Covid o City Wide Yard Sale
o Morro Bay Car Show
o Morro Bay KiteFest
o Lighted Boat Parade
o Morro Bay Bird Festival
o Avocado Margarita Festival 2022
• Partnered with City of Morro Bay and local non-profits to produce new events. o Morro Bay Ironman 70.3
o Morro Bay Family Fun Day
o Morro Bay Maritime Festival
o Tunes at Tidelands
• Grant to Morro Bay in Bloom to support their I HEART Morro Bay beautification project. • Developed strategic sales efforts identify key domestic and international market opportunities.
• Contracted with intentional representation agencies in United Kingdom and German. • Hosted 15 international familiarization tours to Morro Bay, to build awareness in the global marketplace.
• Attended eight international trade shows to create opportunities for our lodging stakeholders.
• Conducted Tourism Economic Impact Study in FY2024-25, to understand and benchmark tourism economic impact
• Conducted Future Visitor Profile Study, to understand the travelers need. • Conducted Equity, Diversity & Inclusion Asset Alignment Study. • Conducted Short Term Vacation Rental Impact Study
• Launched over $600,000 of reserve funds to combat tourism impacting issues. I.E Hwy One closure, weather impacts, tourism slowdowns.

MBTBID Management District Plan 7
November 18, 2025
IV. BOUNDARY
The MBTBID will continue to include all lodging businesses and vacation rental businesses, existing and in the future, available for public occupancy within the boundaries of the City, as shown in the map below.

Lodging business means: any structure, or any portion of any structure, which is occupied or intended or designed for occupancy by transients for dwelling, lodging, or sleeping purposes, and includes any hotel, inn, tourist home or house, motel, studio hotel, bachelor hotel, lodging house, rooming house, apartment house, dormitory, public or private club at a fixed location or other similar structure or portion thereof; and shall further include any space, lot, area or site in any or other similar conveyance that is occupied or intended or designed for occupancy by transients dwelling, lodging or sleeping purposes. For purposes of this Plan, the definition of "lodging business" shall not include mobile homes, house trailers, trailer courts, recreational vehicle parks, mobilehome parks, camps, parks or lot where a trailer, tent, recreational vehicle, mobile home, motorhome or similar conveyance that is occupied or intended or designed for occupancy by transients dwelling, lodging or sleeping purposes.

Vacation rental means: the rental of any structure or any portion of any structure for occupancy for dwelling, lodging or sleeping purposes for thirty (30) consecutive calendar days or less in duration, including detached single-family residences, condominiums, duplexes, twinplexes, townhomes and multiple-family dwellings.

A complete listing of assessed businesses within the renewed MBTBID can be found in Appendix 2.

MBTBID Management District Plan
8 November 18, 2025

MBTBID Management District Plan 9
November 18, 2025
V. ASSESSMENT BUDGET AND SERVICES
A. Annual Service Plan
Assessment funds will be spent to provide specific benefits conferred or privileges granted directly to the payors that are not provided to those not charged, and which do not exceed the reasonable cost to the City of conferring the benefits or granting the privileges. The privileges and services provided with the MBTBID funds are Sales, Marketing, Communications, and Destination Development programs, and other improvements and activities set forth in this Plan, available only to assessed businesses.

A service plan assessment budget has been developed to deliver services that benefit the assessed businesses. A detailed annual assessment budget will be developed and approved by the VMB Board.

The chart below illustrates the initial annual assessment budget allocations. These activities and allocations will also apply in subsequent years. The total initial assessment budget is estimated to be $1,200,000.

Although actual revenues will fluctuate due to market conditions, the proportional allocations of the budget shall remain the same. However, the VMB Board shall have the authority to adjust budget allocations between the categories by no more than fifteen percent (15%) of the total budget per year.

A description of the proposed improvements and activities for the initial year of operation is below.

The same activities are proposed for subsequent years. In the event of a legal challenge against the MBTBID, any and all assessment funds may be used for the costs of defending the MBTBID.

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

Sales, Marketing,
Communications,
and Destination
Development,
$960,000
80%
Administration,
$120,000
10%
Contingency/Reserve,
$84,000
7%
City Collection Fee,
$36,000
3%

INITIAL ANNUAL ASSESSMENT BUDGET -
$1,200,000

MBTBID Management District Plan 10
November 18, 2025
Sales, Marketing, Communications and Destination Development A Sales, Marketing, Communications and Destination Development program will promote assessed businesses as tourist, meeting, and event destinations. The Sales, Marketing, Communications and Destination Development program will have a central theme of promoting the destination as a desirable place for overnight visits. The program will have the goal of increasing overnight visitation and room night sales at assessed businesses, and may include, but is not limited to, the following activities:
• Internet marketing efforts to increase awareness and optimize internet presence to drive overnight visitation and room sales to assessed businesses; Print ads in magazines and newspapers, television ads, and radio ads targeted at potential visitors to drive overnight visitation and room sales to assessed businesses;
• Building the Morro Bay branding and local destination marketing to attract overnight visitation to assessed businesses and the MBTBID;
• Attendance of trade shows to promote assessed businesses; • Sales blitzes for assessed businesses;
• Familiarization tours of assessed businesses;
• Preparation and production of collateral promotional materials such as brochures, flyers and maps featuring assessed businesses;
• Attendance of professional industry conferences and affiliation events to promote assessed businesses;
• Lead generation activities designed to attract tourists and group events to assessed businesses;
• Director of Sales and General Manager meetings to plan and coordinate tourism promotion efforts for assessed businesses;
• Education of hospitality staff on service and safety (related to alcohol and food) designed to create a visitor experience that will bring repeat visits to assessed businesses; • Education of lodging business management and the Owners’ Association on marketing strategies best suited to meet assessed businesses’ needs; • Comprehensive and integrated wayfinding signage system (subject to City approval); • Services designed to improve the visitors experience such as, but not limited to, beautification and/or the creation of new arts, cultural and educational activities to drive overnight visitation and room sales to assessed businesses(subject to City approval); and • Other activities that increase the profile and notoriety of the destination as an overnight travel destination and promote greater room night sales for assessed businesses.

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

Collection Fee
The City shall be paid a fee equal to three percent (3%) of the amount of assessment collected to cover its costs of collection and administration.

Contingency / Reserve
The budget includes a contingency line item to account for lower than anticipated assessments. If