Morro Bay City Council
March 24, 2026

CITY OF MORRO BAY
City Council Regular Meeting Agenda

Tuesday, March 24, 2026, 5:30 p.m.

Veterans Memorial Hall
209 Surf St., Morro Bay, CA
Mayor Pro Tem Eckles will participate via teleconference from The Westin Phoenix Downtown, 333 North Central Avenue, Phoenix, AZ 85004 Public Participation
Public participation is offered in the following ways:
• Community members may attend the meeting in person at the Morro Bay Veterans Hall.

Alternatively, members of the public may watch the meeting and speak during general Public Comment or on a specific agenda item by logging into the Zoom webinar using the information provided below. Please use the "raise hand" feature to indicate your desire to provide public comment.
•
• Zoom webinar link: https://us02web.zoom.us/j/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

4.a Month of the Child and Child Abuse Prevention Month Proclamation

4.b Arbor Day Proclamation

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.e as submitted.

6.a Approval of Minutes

(City Clerk)
Recommended Action
Approve as submitted.

1. March 10, 2026 - Regular Council Meeting 6

2. March 10, 2026 - Special Closed Session Meeting 13

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

1. Proclamation Declaring April 2026 as Month of the Child and Child Abuse Prevention Month
15 2. 2026 Arbor Day Proclamation 16
(Public Works Department)
Recommended Action
Approve the Arbor Day Proclamation and being a Tree City USA community.

6.c Status Update and Reconfirm Emergency for the Morro Creek Bank Stabilization Project
18 (Public Works Department)
Recommended Action
Receive and file status update and reconfirm the declaration of emergency for the Morro Creek Bank Stabilization Project by four-fifths vote.

6.d Adopt Resolution No. 15-26 Approving Ree's Re-Sail & Curiosities Building Lease Agreement
20 (Harbor Department)
Recommended Action
Adopt Resolution No. 15-26 approving a new building lease agreement for lease site 62 with Ree’s Re-Sail & Curiosities located at 551 Embarcadero.

7. PUBLIC HEARING ITEMS

7.a Resolution Declaring Results of the Majority Protest Proceedings to Renew the Morro Bay Tourism Business Improvement District
51 (City Manager / Visit Morro Bay)
Recommended Action
Conduct the Public Hearing, declaring results of majority protest proceedings, and adopt Resolution No. 16-26 renewing the Morro Bay Tourism Business Improvement District for a 10-year Term.

8. BUSINESS ITEMS

8.a Adoption of the Morro Bay Transit 2025 Short Range Transit Plan 91 (Public Works Department)

Recommended Action
Staff and the Public Works Advisory Board (PWAB) recommend the City Council adopt the Morro Bay Transit Short Range Transit Plan (SRTP).

8.b Recommendation to Approve a Purchase and Sale Agreement with the Cayucos Sanitary District for the Jointly Owned Wastewater Treatment Plant Property Located at 160/180 Atascadero Road and 1700 Embarcadero, take related actions and find no further action
213
environmental review is required under CEQA
(City Manager / City Attorney)
Recommended Action
Adopt Resolution No. 17-26 approving a Purchase and Sale Agreement (Agreement) and Budget Resolution between the City of Morro Bay (City) and Cayucos Sanitary District (CSD) for the purchase by the City of the CSD portion of the jointly owned Former Wastewater Treatment Plant Property (WWTP) located at 160/180 Atascadero Road and 1700 Embarcadero (Property) and other jointly owned assets, in substantially the form attached, subject to review and approval by the City Attorney as to form and legal effect.

1. Authorize the City Manager to execute the Agreement and related escrow documents, and to negotiate and execute non-substantive amendments consistent with the terms approved by the City Council, subject to review and approval by the City Attorney as to form and legal effect; and

2. Authorize the City Manager and City Attorney to undertake due diligence activities during the due diligence period consistent with City procurement requirements and within available appropriations.

3. Find that no further environmental review is required pursuant to State CEQA Guidelines section 15162.

4. 9. COUNCIL DECLARATION OF FUTURE AGENDA ITEMS

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

REGULAR MEETING
March 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
Harbor Director Chris Munson
_____________________________________________________________________

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

2. PLEDGE OF ALLEGIANCE

3. REPORTS

3.a Closed Session Report
City Attorney Stack announced the Council met in closed session to discuss three real property negotiation matters: Lease Site 62 (551 Embarcadero), the former Morro Elementary, and the former wastewater treatment plant. No reportable action was taken on those items. There was also a Public Employee Performance Evaluation for the City Manager with no reportable action taken 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.

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

2 2. Morro Bay Power Plant (Vistra)

3. Offshore Wind Energy

4. Morro Elementary School

5. Shared Fire Services

4. RECOGNITION AND PRESENTATIONS

4.a Donation Presentation to the Friends of the Morro Bay Fire Department

4.b Lifesaving Award Presentation to three Fire Department Personnel

5. PUBLIC COMMENT
 Linda Winters, Morro Bay, commented on past flooding events that occurred on March 10th.
 Garry Johnson, Morro Bay, urged residents to support Michael Woody for Supervisor District 2.
 Linda Donnelly, Morro Bay, encouraged the Council to approve Item 8d, a purchase and sale agreement for Morro Elementary.

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.
 Betty Winholtz, Morro Bay, requested itemized costs incurred to date and anticipated for the Morro Creek stabilization emergency item.

End of public comment.

Council Member Eckles pulled Item 6.e and staff requested to pull Item 6.c. for clarification.

Motion by Mayor Wixom
Seconded by Council Member Landrum
Approve Consent Agenda Items 6.a and 6.d 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. February 24, 2026 - Regular Council Meeting

2. February 24, 2026 - Special Closed Session Meeting

3 6.b Approval of Proclamations
None.

6.c Adopt Resolution No. 11-26 Approving the Morro Bay Seafood Company, LLC Lease Agreement
Harbor Director Munson presented two changes to the proposed Lease Agreement for Morro Bay Seafood Company, LLC.

Added Section (page 31):

Section 11.09 Termination due to Incompletion of Improvements If the anticipated funding of $550,000 from granting agencies is not realized or insufficient to complete Priority 1 repairs with TENANT’s agreed contribution, the TENANT reserves the right to terminate the lease agreement prior to commencement of the repairs without penalty or responsibility to complete Priority 1 repairs upon thirty (30) days written notice.

Alternatively, upon mutual agreement, CITY and TENENT may renegotiate terms if the funding of $550,000 from granting agencies is not realized or insufficient to complete Priority 1 repairs.

Correction (page 36):

Section 13.03 Operation of Ice Making Machine
(2) TENANT shall be responsible for ice making machine maintenance and repair costs in an amount of not less than Fifteen Ten Thousand Dollars ($10,000) per year. CITY shall be responsible for ice making machine maintenance and repair costs in excess of TENANT’s minimum annual contribution, provided TENANT demonstrates to CITY’s reasonable satisfaction that the ice making machine is being maintained in good working order and repair
Motion by Mayor Wixom
Seconded by Council Member Luffee
Adopt Resolution No. 11-26 approving a new lease agreement for lease site 129W-131W with Morro Bay Seafood Company, LLC located at 1231 Embarcadero with revised language presented by staff.

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

6.d Status Update and Reconfirm Emergency for the Morro Creek Bank Stabilization Project
Receive and file status update and reconfirm the declaration of emergency for the Morro Creek Bank Stabilization Project by four fifths vote.

6.e Adopt Resolution No. 12-26 Approving the Harbor Director's Working Title and Job Description

4 Council Member Eckles explained his reasoning for requesting this title change and desire to give the position the esteem it deserves.

Motion by Council Member Landrum
Seconded by Council Member Eckles
Adopt Resolution No. 12-26 retitling the Harbor Vitality Director Job Title to Harbor Director.

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

8.a San Luis Obispo Council of Governments (SLOCOG) Final Transportation Expenditure Plan for Potential Transportation Sales Tax Measure City Manager Craig introduced James Worthley, Deputy Director of San Luis Obispo Council of Governments, to present the report and respond to Council inquiries.

Mayor Wixom opened public comment on Item 8.a.
 Betty Winholtz, Morro Bay, complimented SLOCOG for this measure and encouraged the Council to approve and actively support it.  Nicole Dorfman, Morro Bay, asked if Morro Bay has sole discretion to determine what projects are funded and whether the money could be used for staff time & project management costs.

End of public comment.

Mr. Worthley was invited to respond to additional questions.

Motion by Mayor Wixom
Seconded by Council Member Luffee

1. Adopt Resolution No. 13-26 approving the San Luis Obispo Council of Governments (SLOCOG) Final Draft Transportation Expenditure Plan (Plan) for a potential Transportation Sales Tax Measure.

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

8.b Response to Letter of Interest from Los Osos Community Services District (Los Osos CSD) regarding Shared Fire Protection and Emergency Medical Services (EMS)

5 Fire Chief McCrain presented the report and responded to Council inquiries.

Mayor Wixom opened public comment for Item 8.b.
 Lucia Stone, Morro Bay and Los Osos property owner, spoke in support of the opportunity for shared fired and EMS services.
 Betty Winholtz, Morro Bay, was supportive of providing the information requested but hoped it wasn't assumed the City would move forward should the Los Osos CSD select us.

End of public comment.

Staff and Council confirmed this is just a step in the process and does not bind the City to provide services.

There was Council consensus to deliver the City's response to the letter of interest exploring shared fire and EMS services to the Los Osos CSD.

8.c Quarterly Update on the Status of City Council 2025-2027 Goals The Council took a brief recess at 6:59 p.m. and reconvened at 7:08 p.m.

City Manager Craig presented the report and responded to Council inquiries.

Mayor Wixom opened public comment for Item 8.c; seeing none, the public comment period was closed.

No formal action was taken by the City Council.

8.d Recommendation to Approve a Purchase and Sale Agreement with San Luis Coastal Unified School District for the Property Know as Morro Elementary School located at 1130 and 1330 Napa Avenue in Morro Bay, California
(APNs 066-280-045 and 066-044-011), take related actions and find the action exempt from CEQA
City Manager Craig presented the report and responded to Council inquiries.

Mayor Wixom opened public comment for Item 8.d.
 Jim Gross, Morro Bay resident and member of the Chamber of Commerce Business Advisory Committee, appreciated staff's response to his written comments with respect to entitlements and hoped future developers would get a strong sense for what type of housing the City desires during the due diligence period.
 D'Arcy Castro, Morro Bay resident and Friends of Morro Elementary representative, thanked the Council and subcommittee for making it possible to get to this point and looked forward to hopefully saving this site for community use.
 Nicole Dorfman, Morro Bay resident and member of Friends of Morro Elementary, thanked the Council and subcommittee and offered her strong support moving forward.

6  Courtney Shepler, Morro Bay resident and member of the Chamber of Commerce Business Advisory Committee, appreciated the tremendous amount of work thus far and hoped future discussions would include economic scenarios, funding sources and trade-offs against other priorities. She encouraged broad community outreach to make sure all voices have an opportunity to speak.
 Lucia Stone, Morro Bay and Los Osos property owner, thanked the City Council and staff for their perseverance making this happen.  Judy Setting, Morro Bay, extended deep gratitude to the Council and subcommittee for working toward preserving Morro Elementary and this property, and hoped to incorporate housing for seniors and the disabled while preserving the buildings, charter school and sports fields.  Betty Winholtz, Morro Bay, encouraged the City to respond to various questions raised by community members and was disappointed the Naylor Act and soccer fields weren't discussed.

End of public comment.

City Attorney Stack and City Manager Craig responded to questions raised during public comment.

Motion by Council Member Landrum
Seconded by Council Member Luffee

1. Adopt Resolution No. 14-26 approving a Purchase and Sale Agreement and Budget Resolution between the City of Morro Bay (City) and San Luis Coastal Unified School District (District) for the purchase of the property commonly known as Morro Elementary School;

2. Authorize the City Manager to execute the Agreement and related escrow documents, and to negotiate and execute non-substantive amendments consistent with the terms approved by the City Council, subject to review and approval by the City Attorney as to form and legal effect; and

3. Authorize the City Manager to undertake due diligence activities during the due diligence period, including engaging a project manager and specialized consultants, consistent with City procurement requirements and within available appropriations.

4. Find the action is not a project or in the alternative exempt from the California Environmental Quality Act under Guidelines Sections 15378, 15061(b)(3) and 15301.

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

9. COUNCIL DECLARATION OF FUTURE AGENDA ITEMS
None.

7 10. ADJOURNMENT
The meeting adjourned at 8:07 p.m.

Respectfully submitted,
/s/ Dana Swanson, City Clerk

1 MINUTES - MORRO BAY CITY COUNCIL

CLOSED SESSION MEETING
March 10, 2026, 3:30 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
Harbor Vitality Director Chris Munson
_____________________________________________________________________

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

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

3. SUMMARY OF CLOSED SESSION ITEMS

4. THE COUNCIL WILL CONVENE IN CLOSED SESSION

4.a CONFERENCE WITH REAL PROPERTY NEGOTIATOR - GOVERNMENT CODE SECTION 54956.8
Property: Lease Site 62, 551 Embarcadero, Ree's Re-Sail & Curiosities Property Negotiators: Marie & Randolph Rollings
Agency Negotiators: Chris Munson, Harbor Vitality 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
Property: APNs 066-280-045 and 066-044-011, 1130/1330 Napa Ave., Morro Elementary
Property Negotiators: San Luis Coastal Unified School District

2 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.c CONFERENCE WITH REAL PROPERTY NEGOTIATOR - GOVERNMENT CODE SECTION 54956.8
Property: APNs 066-331-032, -033, and -034; 160/180 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

4.d PUBLIC EMPLOYEE PERFORMANCE EVALUATION
Conduct an employee evaluation of the City Manager pursuant to Government Code Section 54957.

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

6. ADJOURNMENT
The meeting adjourned at 4:55 p.m.

Respectfully submitted,
/s/ Dana Swanson, City Clerk

A PROCLAMATION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY
DECLARING APRIL 2026 AS “MONTH OF THE CHILD”
AND “CHILD ABUSE PREVENTION MONTH”

CITY COUNCIL
City of Morro Bay, California
WHEREAS, the Morro Bay City Council recognizes that every moment in a child's life is an opportunity for learning and growth, and that the quality of these experiences helps determine a child’s resilience, well-being, and success in school and in life; and WHEREAS, all children deserve caring adults, safe environments, and meaningful opportunities that allow them to thrive, and it is the shared responsibility of families, educators, community members, and local leaders to support children during their most important years of development; and
WHEREAS, children deserve our collective investment, and investing in strong early childhood systems—including access to quality child care and early learning opportunities— supports not only the healthy development of children and the stability of families, but also contributors to the economic vitality and long-term prosperity of our community; and WHEREAS, April – recognized as the Month of the Child and Child Abuse Prevention Month – provides an opportunity to celebrate the wonder and promise of childhood while reaffirming our commitment to ensuring that each and every child has access to safe, nurturing environments at home, in child care, at school, and throughout the community; and WHEREAS, the City of Morro Bay joins community partners, including the San Luis Obispo County Early Care and Education Planning Council, in working toward a future where all families can find and afford quality care for their children, and where early childhood professionals are valued for their critical role they play in building strong foundations for children and families; and
WHEREAS, during Child Abuse Prevention Month, our community also raises awareness of the many children who experience abuse or neglect and renews our commitment to strengthening families, supporting prevention efforts, and ensuring that every child grows up safe, supported, and valued.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Morro Bay does hereby proclaim the month of April 2026 as the "Month of the Child” and “Child Abuse Prevention Month” and encourages all residents to recognize the importance of investing in children, supporting families, and working together to ensure that every child in our community has the opportunity to grow, learn, and thrive.

IN WITNESS WHEREOF I have hereunto
set my hand and caused the seal of the City
of Morro Bay to be affixed this 24th day of
March 2026.
_______________________________

CARLA WIXOM, MAYOR
City of Morro Bay, California

Prepared By: CM Dept Review: GK
City Manager Review: JC City Attorney Review: ______
Staff Report
TO: Honorable Mayor and City Council DATE: March 11, 2026 FROM: Carlos Mendoza, Public Works Maintenance Division Manager SUBJECT: 2026 Arbor Day Proclamation

RECOMMENDED ACTION
Approve the Arbor Day Proclamation and being a Tree City USA community.

ALTERNATIVES
The City Council may provide other direction to staff.

BACKGROUND/ DISCUSSION
The Tree City USA program was created by the Arbor Day Foundation in 1976 to encourage cities to establish urban forestry programs, maintain and expand public trees, and promote community stewardship of urban forests. The City has been recognized as a Tree City for 29 consecutive years.

To achieve a Tree City USA status the City must meet four core standards:
 Maintain a tree board or department.
 Have a tree ordinance.
 Spend at least $2 per capita on urban forestry.
 Pass a proclamation celebrating Arbor Day.

This proclamation fulfills one of the four core standards to become a Tree City and proclaims Arbor Day in Morro Bay to be Friday April 24th. The City currently meets the other three standards.

The City has also received a 2025 Growth Award from the Arbor Day Foundation for the second consecutive year. The award is given to communities that are already accredited as Tree City USA and showcase enhanced levels of tree care and community involvement throughout the year.

Residents are encouraged to join the City and Morro Bay in Bloom on April 4 th from 8:30 am-12:30
pm for a community event. Volunteers will gather at Tidelands Park and participate in any of six community projects, including art activities, gardening projects, and tree planting. To learn more about the event or sign up, please visit morrobayinbloom.org.

ATTACHMENT(S)

1. Proclamation
AGENDA NO: 6.b.2
MEETING DATE: March 24, 2026

A PROCLAMATION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA
DECLARING APRIL 24TH

AS ARBOR DAY

CITY COUNCIL
City of Morro Bay, California
WHEREAS, in 1872 J. Sterling Morton proposed to the Nebraska Board of Agriculture that a special day be set aside for the planting of trees; and WHEREAS, this holiday, called Arbor Day, was first observed with the planting of more than a million trees in Nebraska; and
WHEREAS, Arbor Day is now observed throughout the nation and the world; and WHEREAS, trees can reduce the erosion of our precious topsoil by wind and water, cut heating and cooling costs, moderate the temperature, clean the air, produce oxygen and provide habitat for wildlife; and,
WHEREAS, trees are a renewable resource giving us paper, wood for our homes, fuel for our fires and countless other wood products; and
WHEREAS, trees in our city increase property values, enhance the economic vitality of business areas, and beautify our community; and
WHEREAS, trees, wherever they are planted, are a source of joy and spiritual renewal; and
WHEREAS, Morro Bay has been recognized for twenty-nine (29) years as a Tree City USA by the National Arbor Day Foundation and desires to continue its tree-planting ways.

NOW, THEREFORE BE IT RESOLVED, that the Morro Bay City Council does hereby proclaim April 24th as ARBOR DAY in the City of Morro Bay, and urges all citizens to support efforts to protect our trees and forests and encourage them to continue their planting ways.

IN WITNESS WHEREOF I have
hereunto set my hand and cause the
seal of the City of Morro Bay to be
affixed this 24th day of March 2026.

CARLA WIXOM, Mayor
City of Morro Bay, California

Prepared By: GK Department Review: GK

City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council DATE: March 17, 2026 FROM: Greg Kwolek – Public Works Director
SUBJECT: Status Update and Reconfirm Emergency for the Morro Creek Bank Stabilization Project

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

STATUS UPDATE
On November 18, 2025, the City Council adopted an emergency declaration by unanimous vote for the Morro Creek Bank Stabilization Project (Project) due to the sudden 2023 erosion event that created an ongoing and imminent threat to adjacent public and private property. Since then, City staff have been focused on obtaining permission from the property owner to perform the work, preparing design, and coordinating permitting with the California Coastal Commission, United States Army Corps of Engineers (USACE), Regional Water Quality Control Board (RWQCB), and California Department of Fish and Wildlife (CDFW).

There has been project progress since the last status update on March 10, 2026:
 To comply with the Emergency Coastal Development Permit (ECDP) granted by the Community Development Department on March 4
th, which requires construction begin within
30 days, the City is targeting mobilization of the contractor on April 1, 2026.  Ongoing coordination with USACE and RWQCB has determined that the terms and conditions associated with Nationwide Permit 13 for bank stabilization are more appropriate and effective for this repair work compared to Regional General Permit 63 for emergency conditions. USACE has agreed to the proposed plan and will expedite Nationwide Permit 13 which will avoid the need to go back and do additional work at a future date.  The Water Board has also agreed to this approach and will expedite their review and issuance of a 401 Water Quality Certification to meet the time conditions of the Emergency Coastal Development Permit. This will allow the repair as proposed as well as the habitat enhancement and restoration elements, i.e., tree root wads, invasive species removal, and planting natives.
 The City’s emergency declaration remains in effect, and we will follow the requirements of the Emergency Coastal Development Permit and California Department of Fish and Wildlife’s emergency notification procedures to complete the project as proposed as soon as possible.

As of the date of this staff report, construction is expected to begin on the week of Monday, March 30, 2026. Construction, including restoration work, is expected to take three to four weeks. Beyond the construction timeline, the City will be responsible for habitat mitigation monitoring and reporting for five years.

AGENDA NO: 6.c
MEETING DATE: March 24, 2026

EMERGENCY STATUS
Under Public Contract Code Section 22050, the City Council must review the emergency action at each regularly scheduled meeting and confirm there is a need to continue the emergency action by a four-fifths vote. Because additional time is needed to complete the emergency response, staff recommends the City Council reaffirm by a four-fifths vote that the local emergency continues to exist. If reaffirmed, Staff would continue to return to City Council at each regularly scheduled meeting to report on any emergency actions taken and for a determination whether there continues to be a need for the emergency action. After initial project completion, staff would bring one last item to confirm termination of the emergency declaration.

ATTACHMENT(S)
None.

Prepared By: CM Dept Review: LT
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council DATE: March 17, 2026 FROM: Chris Munson, Harbor Director
Lori Thompson, Harbor Business Manager
SUBJECT: Adopt Resolution No. 15-26 Approving Ree’s Re-Sail & Curiosities Building Lease Agreement

RECOMMENDED ACTION
Adopt Resolution No. 15-26 approving a new building lease agreement for lease site 62 with Ree’s Re-Sail & Curiosities located at 551 Embarcadero.

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

FISCAL IMPACT
The lease site currently generates $1,300 a month under the master leaseholder’s expiring agreement, or $15,600 annually. The new building lease agreement would generate $1,500 a month, or $18,000 annually in rent.

BACKGROUND
The current interim leaseholders are Todd and Tamara Baston (the Bastons) who sublease a portion of 62/62W to Ree’s Re-Sail and Curiosities.

Following a Request for Proposals (RFP) issued in 2018 to redevelop the site, the City Council approved a five-year Interim lease agreement for Lease Site 62/62W with the Bastons (formerly operating as Kayak Horizons).

In September 2019, after the previous tenant vacated the site at the end of their lease, the interim lease agreement was amended to extend the term by 18 months, allowing additional time for the leaseholder to complete redevelopment plans.

On May 20, 2025, the Bastons notified the City they were withdrawing from the 2018 Redevelopment RFP. Their interim lease term expires on March 31, 2026.

The retail space is 450 square feet, with an additional 227 square feet upstairs for a total of 677 square feet. The site included a water lease but has since become unusable with the loss of the dock.

DISCUSSION
The subtenant, Ree’s Re-Sail and Curiosities, would like to continue doing business from the lease AGENDA NO: 6.d
MEETING DATE: March 24, 2026

site. The master leaseholder was asked if they would consider a holdover arrangement to allow the subtenants to operate, but they were not interested.

The Harbor Department plans to issue an RFP for the lease site in the near future and is currently evaluating options to enhance the site’s viability given its limited size.

As it will take several months to complete the RFP process and finalize a new long-term lease agreement, entering into a short-term building lease would allow the existing subtenant to continue doing business, prevent the building from remaining vacant, and generate interim revenue for both the Harbor Fund and sales tax contributions to the General Fund.

RECOMMENDED TERMS
Rent: $1,500
The proposed rent is a fixed monthly rate with no percentage of gross revenue. The amount reflects an increase from the previous $1,300 to account for removal of the percentage of gross rent structure.

The rate equates to approximately $2.22 per square foot.

Lease Term Length: Month-to-month
The lease will operate on a month-to-month basis. Either the City or the tenant may terminate the agreement with 30 days’ written notice.

Maintenance and Repairs
The tenant will be responsible for all interim maintenance and repairs costs associated with the building, minus normal wear and tear. If the repair costs exceed what the tenant can reasonably afford, they may elect to terminate the lease under the 30-day notice provision.

CONCLUSION
Entering into a short-term building lease will allow the current subtenant to continue doing business, prevent a building from being vacant, and generate revenue for both the Harbor Fund and General Fund.

ATTACHMENTS

1. Resolution No. 15-26 Approving Ree’s Re-Sail & Curiosities Building Lease Agreement

2. Proposed Building Lease Agreement

RESOLUTION NO. 15-26

RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA

APPROVING MONTH TO MONTH BUILDING LEASE AGREEMENT
FOR LEASE SITE 62 LOCATED AT 551 EMBARCADERO
BETWEEN THE CITY OF MORRO BAY AND REE’S RE-SAIL & CURIOSITIES

T H E C I T Y C O U N C I L
City of Morro Bay, California
WHEREAS, the City of Morro Bay is the lessor of certain properties on the Morro Bay Waterfront described as City Tidelands leases and properties; and WHEREAS, Ree’s Re-Sail & Curiosities (“Tenant”) have been a subtenant at Lease Site 62/62W since February 15, 2025, and are tenants in good standing; and WHEREAS, the Harbor Department and Tenant have negotiated in good faith and mutually agreed to the terms of a new building lease agreement; and, WHEREAS, the lease term shall be on a month-to-month basis, allowing either party to terminate the agreement with thirty (30) days’ written notice; and WHEREAS, the monthly rent is established at a fixed rate of $1,500, with no percentage of gross revenue; and
WHEREAS, the tenant shall be responsible for all interim maintenance and repairs to the building, excepting normal wear and tear, with the ability to terminate the lease upon thirty (30) days’ written notice if such costs exceed what the tenant can reasonably afford.

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

1. The attached new Building Lease Agreement for Lease Site 62 is hereby approved.

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

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

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSE:
______________________________
CARLA WIXOM, Mayor
ATTEST:

DANA SWANSON, City Clerk

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COMMERCIAL BUILDING L E A S E
This LEASE is made and entered into by and between the CITY OF MORRO BAY, a municipal corporation of the State of California herein called CITY, and REE’S RE-SAIL & CURIOSITIES, herein called TENANT. (CITY and TENANT, at times, are referred to herein individually as Party and collectively as Parties)

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

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

Lease Site ____62_________________
This Premises is delineated on Parcel Map of the CITY of Morro Bay Resolution No. 77- 74, document entitled “Lease Sites Map” dated November 1974, consisting of Thirteen (13) sheets and designated as the official reference document for said Tideland Trust lease sites, adopted on December 9, 1974, by the CITY Council of Morro Bay, San Luis Obispo County, California. A copy of one (1) sheet is attached hereto as Exhibit A and made a part hereof by reference.

Article 1 FIXED TERM
Section 1.01 Term.

The term of this Lease is a month-to-month agreement commencing April 1, 2026 (the "Commencement Date"). The term of this Lease will terminate by either CITY or TENANT on a 30-day written notice.

Section 1.02 Replacement.

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

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Article 2 RENT
Section 2.01 Monthly Rent.

TENANT agrees to pay to CITY a fixed monthly rent for the use and occupancy of the Premises, in an initial amount of $1500.00 per month (the "Monthly Rent"). Monthly Rent must be paid no later than the tenth day of each applicable month. All Rent must be paid in lawful money of the United States of America, without offset or deduction and must be paid to CITY at the Harbor Office located at 1275 Embarcadero, Morro Bay, California, or at such other place or places CITY may from time to time designate by written notice delivered to TENANT.

Section 2.02 Reimbursements.

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

Section 2.03 Penalty and Interest.
(1) If any Rent is not received within ten days following the date on which the Rent first became due, then TENANT must pay a late penalty of ten percent of the amount of the Rent in addition to the Rent.
(2) In addition to the penalty, TENANT must pay interest at the rate of one percent per month or fraction thereof or the maximum amount permitted by law as of the date this Lease is signed, whichever is greater (the "Default Rate"), on the amount of the Rent, exclusive of the penalty, from the date on which Rent first became delinquent until paid. The term "Rent" includes any sums advanced by the CITY and any unpaid amounts due from TENANT to the CITY.

Article 3 USE OF PREMISES
Section 3.01 Permitted Uses.

The Premises must, during the term of this Lease, be used for the purpose of operating and conducting thereon and therein visitor serving retail uses.

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Section 3.02 Unauthorized Use.

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

Section 3.03 Operation of Business - Hours of Operation.

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

Section 3.04 Competition.

During the term of this Lease, TENANT must not directly nor indirectly acquire or establish any similar or competing business within a radius of five miles from the location of the Premises; provided, however, that TENANT may, with prior written approval from CITY, own or operate more than one business, whether or not competing and similar, along the Embarcadero upon one or more CITY lease sites. The purpose of this section is to prevent and prohibit TENANT from reducing revenue to CITY by diverting business from the operation at the Premises to another

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similar business owned by TENANT within the CITY, but not upon a CITY lease site from which CITY is paid rent based on Gross Sales.

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

CITY has the right (but not the obligation) to inspect the Premises, to take such remedial action on the Premises, as CITY may deem appropriate, and to join and participate, as a party, in any legal proceedings or actions affecting the Premises initiated in connection with any environmental, health or safety law.
(4) If any Hazardous Material is released, discharged or disposed of by TENANT or its employees, agents or contractors, on or about the Premises in violation of the foregoing provisions,

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

Section 3.06 Tidelands Trust.

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

Section 3.07 Compliance with Law.

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

Section 3.08 Waste or Nuisance.

TENANT must not commit or permit the commission by others of any waste on the Premises; TENANT must not maintain, commit, or permit the maintenance or commission of any

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nuisance as defined by law on the Premises; and TENANT must not use or permit the use of the Premises for any unlawful purpose.

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

Article 4 CONSTRUCTION, ALTERATION AND REPAIRS
Section 4.01 Construction Approval.
(1) TENANT must not make or permit any other person to make any alterations or structural additions or structural modifications to the Premises or to any structure thereon or facility appurtenant thereto if the cost thereof exceeds Ten Thousand Dollars ($10,000), without the prior written consent of CITY. The consent to be obtained pursuant to this Section 4.01(1) must be requested from the Harbor Director, or the City’s designee, for CITY. If the Harbor Director or any future successor to the duties of the City’s Harbor Director, or the City’s designee, gives such consent to proceed, then it is understood such consent is given by CITY only in its capacity as the landlord under this Lease and not as the permit-issuing authority. TENANT remains obligated to obtain any needed building permits and comply with all applicable land use entitlement processes.
(2) Where required by the Morro Bay Municipal Code, California Coastal Act, Corps of Engineers or any other state or federal agency having authority over the proposed project, then all Conditional Use Permits, Concept Plans, Precise Plans, Coastal Development Plans, and any other required plans or permits must be applied for and approved prior to any construction, alteration or repairs.

Section 4.02 Construction Bond.
(1) Prior to the commencement of any construction the cost of which is greater than the amount of One Hundred Thousand Dollars ($100,000), TENANT must file, with CITY’S City Clerk, a final detailed Civil Engineer's, Registered Architect's or Licensed and Bonded General Contractor's estimate of the cost of construction and installation of improvements on the Premises.

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Said estimate must be submitted to CITY’S City Engineer for approval. TENANT must file with the City Clerk a faithful performance bond, in a form and issued by a corporate surety company satisfactory to CITY, in an amount satisfactory to CITY, but not in excess of 100% of the final detailed cost estimate, securing the faithful performance of TENANT or its contractor in the completion of said construction.
(2) TENANT must also file with the City Clerk a labor and materials bond, in a form and issued by a corporate surety company satisfactory to CITY, in an amount satisfactory to CITY, but not in excess of 100% of the final detailed cost estimate, securing the payment of all claims for the performance of labor or services on, or the furnishing of materials for, the performance of said construction.
(3) In lieu of the above referenced bonds, TENANT may post cash deposits or may make other mutually satisfactory arrangements to guarantee the completion of construction projects. In the event the contractor bonds the project, CITY may be named as additional indemnitee to comply with these requirements.

Section 4.03 Mechanics' Liens.

At all times during the term of this Lease, TENANT must keep the Premises and all buildings, installations and other improvements now or hereafter located on the Premises free and clear of all liens and claims of liens for labor, services, materials, supplies, or equipment performed on or furnished to the Premises. TENANT further agrees to, at all times, save CITY free and harmless and indemnify and defend CITY against all claims for labor or materials in connection with any improvement, repairs, or alterations on the Premises, and the cost of defending against such claims, including reasonable attorneys' fees. If TENANT fails to pay and discharge or cause the Premises to be released from such liens or claim of liens within 10 days after the filing of such lien or levy, then TENANT must, upon written notification, immediately deposit with CITY a bond conditioned for payment in full of all claims on which said lien or levy has been filed. Such bond must be acknowledged by TENANT as principal and by a company or corporation, licensed by the Insurance Commissioner of the State of California to transact the business of a fidelity and surety insurance company as surety. The beneficiary of any security instrument, which instrument is on record with CITY, must have the right to file a claim for payment from such a bond on behalf of TENANT. CITY has the right to post and keep posted on the Premises notices of nonresponsibility and any other notices that may be provided by law or which CITY may deem proper for the protection of CITY and Premises from such liens. TENANT must give CITY notice at least 20 days prior to commencement of any work on the Premises to afford CITY the opportunity to post such notices.

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Article 5 REPAIRS, MAINTENANCE AND RESTORATION
Section 5.01 Maintenance by TENANT.

At all times during the term of this Lease, TENANT must, at TENANT'S own cost and expense, keep and maintain, in good order and repair and in a safe and “broom clean” condition, all improvements now or hereafter on the Premises, including any public spaces, common areas, rights-of-way, sidewalks and other areas or spaces, even if not on the Premises but utilized as part of TENANT’S business operations, excepting normal wear and tear. Furthermore, TENANT must, at TENANT'S own cost and expense, maintain at all times during the term of this Lease the whole of the Premises and other areas utilized for TENANT’S business operations as described above in a clean, sanitary, neat and orderly “broom clean” condition. CITY may, at the sole option of CITY, but not obligation,, clean, clear, maintain or repair the Premises, any improvements thereon or areas used by TENANT, as described above, at TENANT'S cost and expense, excepting normal wear and tear, in the event TENANT fails to clean, clear maintain or make repairs, in accordance with this Section to the satisfaction of CITY, after 15-days' written notice to TENANT from CITY of CITY'S intent to exercise this option.
(B) In addition to, and not exclusive of, any other remedies available to CITY under law or equity, the parties agree that in the event TENANT fails to comply with any terms of maintenance or repair requirements under this Section 5.01 or Section 5.04, CITY’s damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties’ inability to predict impacts to environment, CITY sales tax or Rent revenues, health or safety matters, and other relevant factors. Within the (15) days following written notice as described in this section, TENANT will either correct the deficiencies or have a schedule for repairs approved by the Habor Director in writing. It is therefore agreed that the TENANT may be required by CITY to pay to the CITY, in accordance with the following schedule for each and every calendar day of delay beyond fifteen (15) days following written notice from CITY or exceedance of the schedule for repair of such maintenance or repair deficiencies, the following sums due for each day’s delay:
 The sum of one hundred dollars ($100.00) per day for the first sixty (60) days.  The sum of two hundred dollars ($200.00) per day for the following sixty (60) days.  The sum of three hundred dollars ($300.00) per day for the following sixty (60) days.

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

Section 5.02 Legal Requirements.

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

Section 5.03 Failure to Repair.

In the event failure to repair results in a hazardous or unsafe condition, CITY has the right and option, but not the obligation, to close and prohibit access to the unsafe portion of the Premises until such repairs are completed and accomplished and the Premises rendered safe for public use.

In addition, if TENANT fails to repair any hazardous or unsafe condition within ten days after written notice thereof from CITY, then CITY has the right, but not the obligation, to perform such repair at TENANT'S expense. TENANT must reimburse CITY for any such repair undertaken by CITY, promptly upon CITY'S demand, as additional Rent. Failure by CITY to enforce any of the provisions of this Article does not constitute a waiver of these provisions and CITY may, at any time, enforce all of the provisions of this Article, requiring all necessary repairs, rebuilding or replacement.

Section 5.04 Inspection by CITY.

CITY or CITY'S agents, representatives, or employees may enter the Premises at all reasonable times for the purpose of inspecting the Premises to determine whether TENANT is complying with the terms of this Lease and for the purpose of doing other lawful acts that may be

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necessary to protect CITY'S interest in the Premises under this Lease or to perform CITY'S duties under this Lease or in its governmental capacity.

Section 5.05 Destruction Due to Risk Not Covered by Insurance.

TENANT has the right to terminate this Lease, at any time, if the improvements on the Premises are damaged or destroyed by a casualty for which TENANT is not required under this Lease to carry insurance and the cost to repair or restore such improvements exceeds $1,000.

Article 6 INDEMNITY AND INSURANCE
Section 6.01 Indemnity Agreement.
(1) TENANT hereby agrees to indemnify, defend and hold harmless CITY, and the property of CITY (including the Premises and any improvements now or hereafter on the Premises), and CITY'S officers, officials, employees and volunteers from any and all liability, claims, loss, damages, and expenses, including reasonable attorney’s fees and litigation expenses, resulting from TENANT'S occupation and use of the Premises or any negligent act or omission of the TENANT or any of its officers, subtenants, employees, contractors, invitees or anyone for whom TENANT may be liable, specifically including, without limitation, any liability, claim, loss, damage, or expense arising by reason of:
(a) The death or injury of any person, including TENANT or any person who is an officer, employee, contractor, subtenant, invitee or agent of TENANT, or by reason of the damage to or destruction of any property, including property owned by TENANT or by any person who is an employee or agent of TENANT, from any cause whatever while such person or property is in or on the Premises or in any way connected with the Premises or with any of the improvements or personal property on the Premises;
(b) The death or injury of any person, including TENANT or any person who is an officer, employee, contractor, subtenant, invitee or agent of TENANT, or by reason of the damage to or destruction of any property, including property owned by TENANT or any person who is an officer, employee, contractor, subtenant, invitee or agent of TENANT, caused or allegedly caused by either (i) the condition of the Premises or any improvement placed on the Premises by TENANT, or (ii) any act or omission on the Premises by TENANT or any person in, on, or about the Premises with or without the permission and consent of TENANT; (c) Any work performed on the Premises or materials furnished to the Premises at the insistence or request of TENANT or any person or entity acting for or on behalf of TENANT;

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(d) TENANT'S failure to perform any provision of this Lease or to comply with any Legal Requirement imposed on TENANT or the Premises. (2) TENANT'S obligations pursuant to this Section to indemnify and hold harmless do not extend to any liability, claim, loss, damage or expense arising from CITY'S active negligence or willful misconduct.

Section 6.02 Liability Insurance.

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

Section 6.03 Worker's Compensation.

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

Section 6.04 Additional Coverage.

TENANT must also maintain, at its sole expense, the insurance described in this Section 7.05.
(1) If TENANT has (or is required by any Legal Requirement to have) a liquor license and is selling or distributing alcoholic beverages on the Premises, then TENANT must maintain liquor

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liability coverage in appropriate amounts. TENANT must require any subtenant who has (or is required by any Legal Requirement to have) a liquor license and who is selling or distributing alcoholic beverages on the Premises, to maintain such coverage. (2) TENANT must maintain "all risk" (excluding earthquake) property damage insurance covering TENANT's personal property located at the Premises, in amounts not less than the full replacement value of such personal property. CITY has no interest in the proceeds of such insurance.
(3) TENANT must obtain and maintain any additional insurance coverages CITY may reasonably require. As illustration only and not as a limitation, in appropriate circumstances such additional insurance may include increased general liability limits, business interruption coverage, business automobile liability, boiler and machinery insurance or builder's risk insurance.

TENANT, however, is not required to maintain additional coverages that are in excess of those typically maintained by similarly situated tenants in the Morro Bay area.

Section 6.05 General Requirements.

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

At the option of CITY, either: (i) the insurer must reduce or eliminate such deductibles or selfinsured retentions as respects CITY, its officers, officials, employees and volunteers or (ii) TENANT must provide a financial guarantee satisfactory to CITY guaranteeing payment of losses and related investigations, claim administration and defense expenses.

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

Section 6.06 No Subrogation.

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

Section 6.07 TENANT'S Waiver.

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

Section 6.08 Insurance Not a Limit.

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

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Article 7 TAXES AND FEES
Section 7.01 TENANT to Pay Taxes.

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

Section 7.02 TENANT to Pay License and Permit Fees.

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

Section 7.03 Utilities.

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

Article 8 CONDEMNATION
Section 8.01 Total Condemnation.

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

Section 8.02 Condemnation Award.

Any compensation or damages awarded or payable because of the permanent taking of all or any portion of the Premises by eminent domain will be allocated between CITY and TENANT as follows:
(1) All compensation or damages awarded or payable for the taking by eminent domain of any land that is part of the Premises will be paid to and be the sole property of CITY free and clear

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

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Article 9 ASSIGNMENT AND SUBLEASING
Section 9.01 No Assignment
TENANT must not assign or otherwise transfer this Lease, any right or interest in this Lease, or any right or interest in the Premises or any of the improvements.

Section 9.02 No Sublease.

TENANT must not sublease the whole nor any part of the Premises, or license, permit, or otherwise allow any other person
Article 10 DEFAULT AND TERMINATION
Section 10.01 Abandonment by TENANT.

If TENANT breaches this Lease and abandon all or any part of the Premises prior to the scheduled expiration of the term of this Lease, then CITY may continue this Lease in effect by not terminating TENANT'S right to possession of the Premises, in which event CITY may, at its option, enforce all CITY'S rights and remedies under this Lease including the right to recover the Rent specified in this Lease as it becomes due under this Lease.

Section 10.02 Termination for Breach by TENANT.

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

Section 10.03 Termination for Failure to Pay Rent.

If any payment of Rent is not made as herein provided and such failure to pay is not cured within three days after written notice thereof is served on the TENANT, then CITY will have the option to immediately terminate this Lease; and in the event of such termination, TENANT will

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have no further right or claim thereto and CITY will immediately thereupon have the right to reenter and take possession of the Premises, subject only to appropriate legal process.

Section 10.04 Lender May Cure Default.

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

Section 10.05 Damages for Breach.

If TENANT defaultsin the performance of any covenant, condition or agreement contained in this Lease and the default be incurable or not be cured within the time period set forth hereinabove, then CITY may terminate this Lease and:
(1) Bring an action to recover from TENANT:
(a) The worth at the time of award of the unpaid Rent which had been earned at the time of termination of the Lease;
(b) The worth at the time of award of the amount by which the unpaid Rent, which would have been earned after termination of the Lease until the time of award exceeds the amount of rental loss that TENANT proves could have been reasonably avoided; (c) The worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of rental loss that TENANT proves could be reasonably avoided; and
(d) Any other amount necessary to compensate CITY for all detriment proximately caused by TENANT'S failure to perform its obligations under this Lease; and (2) Bring an action, in addition to or in lieu of the action described in subparagraph (1) of this Section, to re-enter and regain possession of the Premises in the manner provided by the laws of unlawful detainer of the State of California then in effect.

Section 10.06 Cumulative Remedies.

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

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Section 10.07 Waiver of Breach.

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

Section 10.08 Surrender of Premises.

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

Article 11 MISCELLANEOUS
Section 11.01 Notices.

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

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

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

Ree’s Re-Sail & Curiosities
Marie and Randolph Rollings
1549 5th Street
Los Osos, CA 93402
Such addresses may be changed by written notice by either Party to the other Party.

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Section 11.02 Governing Law and Jurisdiction.

This Lease, and all matters relating to this Lease, are governed by the laws of the State of California in force at the time any need for interpretation of this Lease or any decision concerning this Lease arises. CITY and TENANT consent to exclusive personal and subject matter jurisdiction in the Superior Court of the State of California in and for the county where the Premises are located, and each Party waives any claim such court is not a convenient forum. Each Party hereby specifically waives the provisions of California Code of Civil Procedure Section 394, and any successor statute thereto.

Section 11.03 Binding on Successors.

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

Section 11.04 Partial Invalidity.

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

Section 11.05 Sole and Only Agreement.

Subject to the provisions of the second paragraph of Section 1.04 (used only if second paragraph of that section is used), (i) this Lease, including all exhibits incorporated by reference, constitutes the sole and only agreement between CITY and TENANT respecting the Premises and the leasing of the Premises to TENANT and (ii) any other agreements or representations respecting the Premises and their leasing to TENANT by CITY, which are not expressly set forth in this Lease, are null and void. The lease terms herein specified correctly set forth the obligations of CITY and TENANT as of the date of this Lease.[NOTE: See 12.07] Section 11.06 Modification.

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

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

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

Section 11.07 Time of Essence.

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

Section 11.08 Memorandum of Lease for Recording.

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

Section 11.09 Force Majeure.

If either Party hereto is delayed or hindered in or prevented from the performance of any act required hereunder by reason of a strike, lock-out, labor trouble, inability to procure materials, failure of power, governmental moratorium, riot, insurrection, war, pandemic or other reason of a like nature not the fault of the Party delaying in performing work or doing any act required under the terms of this Lease, then performance and doing of such act will be excused for the period of such delay. The Parties understand and agree, the foregoing will not extend any period of time for the payment of Rent or other sums payable by either Party or any period of time for the written exercise of an option or right by either Party.

Article 12 SPECIAL PROVISIONS PECULIAR TO THIS LEASE SITE The following provisions apply to this Lease site only:

Section 12.01 [reserved]

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EXECUTED on ________________, 20___, at________________________ County, California.

CITY OF MORRO BAY TENANT
_________________________________
, MAYOR
By: ________________________________

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

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EXHIBIT A

COPY OF PARCEL MAP

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BUILDING L E A S E
by and between
the CITY OF MORRO BAY
("CITY")
and
Ree’s Re-Sail & Curiosities
("TENANT")

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Article 1 FIXED TERM.............................................................................................................2 Section 1.01 Term..............................................................................................2 Section 1.02 Replacement..................................................................................2 Article 2 RENT..........................................................................................................................3 Section 2.01 Monthly Rent. ...............................................................................3 Section 2.02 Reimbursements............................................................................3 Section 2.03 Penalty and Interest.......................................................................3 Article 3 USE OF PREMISES...................................................................................................3 Section 3.01 Permitted Uses. .............................................................................3 Section 3.02 Unauthorized Use..........................................................................4 Section 3.03 Operation of Business - Hours of Operation.................................4 Section 3.04 Competition...................................................................................4 Section 3.05 Environmental Considerations and Hazardous Materials.............5 Section 3.06 Tidelands Trust. ............................................................................6 Section 3.07 Compliance with Law...................................................................6 Section 3.08 Waste or Nuisance. .......................................................................6 Section 3.09 Use by CITY.................................................................................7 Article 4 CONSTRUCTION, ALTERATION AND REPAIRS ...............................................7 Section 4.01 Construction Approval..................................................................7 Section 4.02 Construction Bond. .......................................................................7 Section 4.03 Mechanics' Liens...........................................................................8 Article 5 REPAIRS, MAINTENANCE AND RESTORATION ..............................................9 Section 5.01 Maintenance by TENANT............................................................9 Section 5.02 Legal Requirements. ...................................................................10 Section 5.03 Failure to Repair. ........................................................................10

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01181.0024/656492.1 JWP -iiSection 5.04 Inspection by CITY.....................................................................10 Section 5.05 Destruction Due to Risk Not Covered by Insurance...................11 Article 6 INDEMNITY AND INSURANCE ..........................................................................11 Section 6.01 Indemnity Agreement. ................................................................11 Section 6.02 Liability Insurance. .....................................................................12 Section 6.03 Worker's Compensation..............................................................12 Section 6.04 Additional Coverage. ..................................................................12 Section 6.05 General Requirements.................................................................13 Section 6.06 No Subrogation. ..........................................................................14 Section 6.07 TENANT'S Waiver.....................................................................14 Section 6.08 Insurance Not a Limit. ................................................................14 Article 7 TAXES AND FEES..................................................................................................15 Section 7.01 TENANT to Pay Taxes...............................................................15 Section 7.02 TENANT to Pay License and Permit Fees. ................................15 Section 7.03 Utilities........................................................................................15 Article 8 CONDEMNATION..................................................................................................15 Section 8.01 Total Condemnation....................................................................15 Section 8.02 Condemnation Award. ................................................................15 Article 9 ASSIGNMENT AND SUBLEASING .....................................................................17 Section 9.01 No Assignment............................................................................17 TENANT must not assign or otherwise transfer this Lease, any right or interest in this Lease, or any right or interest in the Premises or any of the improvements. ..17 Section 9.02 No Sublease. ...............................................................................17 Article 10 DEFAULT AND TERMINATION..........................................................................17 Section 10.01 Abandonment by TENANT........................................................17 Section 10.02 Termination for Breach by TENANT.........................................17 Section 10.03 Termination for Failure to Pay Rent. ..........................................17

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01181.0024/656492.1 JWP -iiiSection 10.04 Lender May Cure Default. ..........................................................18 Section 10.05 Damages for Breach....................................................................18 Section 10.06 Cumulative Remedies. ................................................................18 Section 10.07 Waiver of Breach. .......................................................................19 Section 10.08 Surrender of Premises. ................................................................19 Article 11 MISCELLANEOUS .................................................................................................19 Section 11.01 Notices. .......................................................................................19 Section 11.02 Governing Law and Jurisdiction.................................................20 Section 11.03 Binding on Successors. ...............................................................20 Section 11.04 Partial Invalidity..........................................................................20 Section 11.05 Sole and Only Agreement...........................................................20 Section 11.06 Modification................................................................................20 Section 11.07 Time of Essence..........................................................................21 Section 11.08 Memorandum of Lease for Recording........................................21 Section 11.09 Force Majeure. ............................................................................21 Article 12 SPECIAL PROVISIONS PECULIAR TO THIS LEASE SITE.................................21 Section 12.01 [reserved] ....................................................................................21

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Prepared By: ________ Dept Review: ___ ___
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council DATE: March 16, 2026 FROM: John Craig, City Manager
Michael Wambolt, Executive Director, Visit Morro Bay CEO SUBJECT: Resolution Declaring Results of Majority Protest Proceedings to Renew the Morro Bay Tourism Business Improvement District

RECOMMENDED ACTION
Conduct the Public Hearing, declaring results of majority protest proceedings, and adopt Resolution No. 16-26 renewing the Morro Bay Tourism Business Improvement District for a 10-year Term.

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 AGENDA NO: 7.a
MEETING DATE: March 24, 2026

tourism specific to Morro Bay.

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. Once per year beginning on the anniversary of MBTBID renewal, there is a thirty (30) day period in which business owners paying fifty percent (50%) or more of the assessment may protest and begin proceedings to terminate the MBTBID.

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 (COMPLETED)
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.

Staff will bring forward an Agreement for Contractor Services between the City and Visit Morro Bay covering the 10-year term beginning July 1, 2026 at a future meeting.

ATTACHMENT(S)

1. Morro Bay TBID Management District Plan

2. Resolution No. 16-26 Renewing the MBTBID

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.

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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.

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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, commercespecific 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

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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.

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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.

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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

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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

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there are contingency funds collected, they may be held in a reserve fund or utilized for other program, administration or renewal costs at the discretion of VMB. Policies relating to contributions to the reserve fund, the target amount of the reserve fund, and expenditure of monies from the reserve fund shall be set by VMB. Contingency/reserve funds may be spent on MBTBID programs or administrative and renewal costs in such proportions as determined by VMB. The reserve fund may be used for the costs of renewing the MBTBID.

B. Annual Budget
The total ten (10) year assessment budget is projected at approximately $1,200,000 annually, or $12,000,000 through the ten (10) year term of the MBTBID. A similar budget is expected to apply to subsequent years, but this budget is expected to fluctuate as room sales do, and as businesses open and close.

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

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

1. Specific Benefit
Proposition 26 requires that assessment funds be expended on, “a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.”2 The services in this Plan are designed to provide targeted benefits directly to assessed businesses, and are intended only to provide benefits and services directly to those businesses paying the assessment. These services are tailored not to serve the general public, businesses in general, or parcels of land, but rather to serve the specific businesses within the MBTBID. The activities described in this Plan are specifically targeted to increase demand for room night sales for assessed businesses within the boundaries of the MBTBID and are narrowly tailored. MBTBID funds will be used exclusively to provide the specific benefit of increased demand for room night sales directly to the assessees. Assessment funds shall not be used to feature non-assessed businesses in MBTBID programs, or to directly generate sales for non-assessed businesses. The activities paid for from assessment revenues are business services constituting and providing specific benefits to the assessed businesses. Nothing in this Plan limits the ability of the Owners’ Association to enter into private contracts with non-assessed businesses for the provision of services to those businesses.

The assessment imposed by this MBTBID is for a specific benefit conferred directly to the payors that is not provided to those not charged. The specific benefit conferred directly to the payors is an increase in demand for room night sales. The specific benefit of an increase in demand for room night sales for assessed businesses will be provided only to businesses paying the district assessment, with Sales, Marketing, Communications, and Destination Development programs promoting businesses paying the MBTBID assessment. The marketing, sales, communications, and destination development programs will be designed to increase room night sales at each assessed business. 1 Jarvis v. the City of San Diego 72 Cal App. 4th 230
2 Cal. Const. art XIII C § 1(e)(1)

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Because they are necessary to provide the marketing, sales, communications, and destination development programs that specifically benefit the assessed businesses, the administration and contingency services also provide the specific benefit of increased demand for room night sales to the assessed businesses.

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

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

3. Reasonable Cost
MBTBID services will be implemented carefully to ensure they do not exceed the reasonable cost of such services. The full amount assessed will be used to provide the services described herein. Funds will be managed by VMB, and reports submitted on an annual basis to the City. Only assessed businesses will be featured in marketing materials, receive sales leads generated from MBTBID-funded activities, be featured in advertising campaigns, and benefit from other MBTBID-funded services. The assessed business list was compiled from records provided by the jurisdiction and complies with the requirements of the 94 Law. Pursuant to Streets and Highways Code Section 36615, the City Council’s determination of ownership is final and conclusive, with no obligation to obtain other information.

Non-assessed businesses will not receive these, nor any other, MBTBID-funded services and benefits.

The MBTBID-funded programs are targeted directly to benefit assessed businesses. It is, however, possible that there will be a spill over benefit to non-assessed businesses. If non-assessed businesses receive incremental room nights, that portion of the promotion or program generating those room nights shall be paid with non-MBTBID funds. MBTBID funds shall only be spent to benefit the assessed businesses, and shall not be spent on that portion of any program which directly generates incidental room nights for non-assessed businesses.

D. Assessment
The annual assessment rate is 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. 3 Government Code § 53758(a)
4 Cal. Const. art XIII C § 1(e)(2)
5 Government Code § 53758(b)
6 Government Code § 53758(b)

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

The term “gross short-term sleeping room rental revenue” as used herein means: the consideration charged on the room rate for the occupancy of space in a lodging business or vacation rental business valued in money, not including other charges such as reservation fees, forfeited deposits, cancelation fees, attrition fees, no-show fees, parking fees, internet fees, roll-a-way beds fees, early and/or late checkout fees, or any other charges or fees (existing or in the future).

Gross sleeping room rental revenue shall not include, and therefore the assessment shall not be charged upon, any federal, state or local taxes collected, including but not limited to transient occupancy taxes.

The assessment is levied upon and a direct obligation of the assessed business. However, the assessed business may, at its discretion, pass the assessment on to transients. The amount of assessment, if passed on to each transient, shall be disclosed in advance and separately stated from the amount of rent charged and any other applicable taxes, and each transient shall receive a receipt for payment from the business. If the MBTBID assessment is identified separately it shall be disclosed as the “MBTBID Assessment.” As an alternative, the disclosure may include the amount of the MBTBID assessment and the amount of the assessment imposed pursuant to the California Tourism Marketing Act, Government Code §13995 et seq. and shall be disclosed as the “Tourism Assessment.” The assessment is imposed solely upon, and is the sole obligation of the assessed business even if it is passed on to transients. The assessment shall not be considered revenue for calculation of transient occupancy taxes.

Bonds shall not be issued.

E. Interest and Overdue Charges
The MBTBID shall reimburse the City for any costs and fees (including, but not limited to, both City staff time as reasonably calculated by the City, as well as any attorney’s fees) associated with collecting unpaid assessments. If sums in excess of the delinquent MBTBID assessment are sought to be recovered in the same collection action by the City, the MBTBID shall bear its pro rata share of such collection costs. Assessed businesses which are delinquent in paying the assessment shall be responsible for paying:

1. Original Delinquency. Any owner who fails to remit any assessment imposed by this Plan within the time required shall pay an overdue charge of ten percent (10%) of the amount of the assessment in addition to the amount of the assessment.

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

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3. Fraud. If the City determines in its sole reasonable discretion that the nonpayment of any remittance due under this chapter is due to fraud and/or intent to mislead the City, a overdue charge of twenty-five percent (25%) of the amount of the assessment shall be added thereto in addition to the overdue charges stated in subsections 1 and 2 of this section.

4. Interest. In addition to the overdue charges imposed, any owner who fails to remit any assessment imposed by this Plan shall pay interest at the rate of one-half of one percent (0.05%) per month or fraction thereof on the amount of the assessment, exclusive of overdue charges, from the date on which the remittance first became delinquent until paid.

5. Overdue Charges Merged with Assessment. Every overdue charge imposed and such interest as accrues under the provisions of this section shall become a part of the assessment herein required to be paid.

F. Time and Manner for Collecting Assessments
The MBTBID assessment will be implemented 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 take all reasonable efforts to collect the assessments from each assessed business. The City shall forward the assessments collected to the VMB.

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VI. GOVERNANCE
A. Owners’ Association
The City Council, through adoption of this Plan, has the right, pursuant to Streets and Highways Code §36651, to identify the body that shall implement the proposed program, which shall be the Owners’ Association of the MBTBID as defined in Streets and Highways Code §36612. The City Council has determined that VMB will continue to serve as the Owners’ Association for the MBTBID. The City reserves the right to conduct regular financial and/or operational audits, as reasonably determined to be appropriate by City in City’s sole discretion, of the Owners’ Association. Any such City audits will receive the full and unqualified cooperation and assistance of the Owners’ Association, and upon request by City will be paid for in whole or part with MBTBID funds. Consistent with law, and for good cause as reasonably demonstrated to the satisfaction of the City Council, the City Council at a noticed public hearing may designate a different qualified private nonprofit entity as the Owners’ Association of the MBTBID, to replace either Visit Morro Bay, or any subsequent designated Owners’ Association.

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

Accordingly, the Owners’ Association shall publicly report any action taken and the vote or abstention on that action of each member present for the action. The Owners’ Association is also subject to the record keeping and disclosure requirements of the California Public Records Act.

C. Annual Report
The VMB shall present an annual report at the end of each year of operation to the City Council pursuant to Streets and Highways Code §36650 (see Appendix 1). The annual report shall include:
• Any proposed changes in the boundaries of the improvement district or in any benefit zones or classification of businesses within the district.
• The improvements and activities to be provided for that fiscal year. • An estimate of the cost of providing the improvements and the activities for that fiscal year. • The method and basis of levying the assessment in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for that fiscal year.
• The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year.
• The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part.

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APPENDIX 1 – LAW
CURRENT THROUGH ALL LEGISLATION OF THE 2024 REGULAR AND SPECIAL SESSIONS

STREETS AND HIGHWAYS CODE
DIVISION 18. PARKING
PART 7. PROPERTY AND BUSINESS IMPROVEMENT DISTRICT LAW OF 1994 CHAPTER 1. General Provisions
ARTICLE 1. Declarations
36600. Citation of part

This part shall be known and may be cited as the “Property and Business Improvement District Law of 1994.” 36601. Legislative findings and declarations; Legislative guidance

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

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benefits, the incidental or collateral effects of those special benefits are inherently part of those special benefits. The mere fact that special benefits produce incidental or collateral effects that benefit property or persons not assessed does not convert any portion of those special benefits or their incidental or collateral effects into general benefits. (3) It is of the utmost importance that property-based districts created under this act have clarity regarding restrictions on assessments they may levy and the proper determination of special benefits. Legislative clarity with regard to this act will provide districts with clear instructions and courts with legislative intent regarding restrictions on property-based assessments, and the manner in which special benefits should be determined.
36602. Purpose of part

The purpose of this part is to supplement previously enacted provisions of law that authorize cities to levy assessments within property and business improvement districts, to ensure that those assessments conform to all constitutional requirements and are determined and assessed in accordance with the guidance set forth in this act.

This part does not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or the raising of revenue for these purposes. 36603. Preemption of authority or charter city to adopt ordinances levying assessments

Nothing in this part is intended to preempt the authority of a charter city to adopt ordinances providing for a different method of levying assessments for similar or additional purposes from those set forth in this part. A property and business improvement district created pursuant to this part is expressly exempt from the provisions of the Special Assessment Investigation, Limitation and Majority Protest Act of 1931 (Division 4 (commencing with Section 2800)).
36603.5. Part prevails over conflicting provisions

Any provision of this part that conflicts with any other provision of law shall prevail over the other provision of law, as to districts created under this part.
36604. Severability

This part is intended to be construed liberally and, if any provision is held invalid, the remaining provisions shall remain in full force and effect. Assessments levied under this part are not special taxes.

ARTICLE 2. Definitions
36606. “Activities”

“Activities” means, but is not limited to, all of the following that benefit businesses or real property in the district:
(a) Promotion of public events.
(b) Furnishing of music in any public place.
(c) Promotion of tourism within the district.
(d) Marketing and economic development, including retail retention and recruitment. (e) Providing security, sanitation, graffiti removal, street and sidewalk cleaning, and other municipal services supplemental to those normally provided by the municipality. (f) Other services provided for the purpose of conferring special benefit upon assessed real property or specific benefits upon assessed businesses located in the district. 36606.5. “Assessment”

“Assessment” means a levy for the purpose of acquiring, constructing, installing, or maintaining improvements and providing activities that will provide certain benefits to properties or businesses located within a property and business improvement district.
36607. “Business”

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“Business” means all types of businesses and includes financial institutions and professions. 36608. “City”

“City” means a city, county, city and county, or an agency or entity created pursuant to Article 1 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code, the public member agencies of which includes only cities, counties, or a city and county, or the State of California. 36609. “City council”

“City council” means the city council of a city or the board of supervisors of a county, or the agency, commission, or board created pursuant to a joint powers agreement and which is a city within the meaning of this part. 36609.4. “Clerk”

“Clerk” means the clerk of the legislative body.
36609.5. “General benefit”

“General benefit” means, for purposes of a property-based district, any benefit that is not a “special benefit” as defined in Section 36615.5.
36610. “Improvement”

“Improvement” means the acquisition, construction, installation, or maintenance of any tangible property with an estimated useful life of five years or more including, but not limited to, the following:
(a) Parking facilities.
(b) Benches, booths, kiosks, display cases, pedestrian shelters and signs. (c) Trash receptacles and public restrooms.
(d) Lighting and heating facilities.
(e) Decorations.
(f) Parks.
(g) Fountains.
(h) Planting areas.
(i) Closing, opening, widening, or narrowing of existing streets. (j) Facilities or equipment, or both, to enhance security of persons and property within the district. (k) Ramps, sidewalks, plazas, and pedestrian malls.
(l) Rehabilitation or removal of existing structures.
36611. “Management district plan”; “Plan”

“Management district plan” or “plan” means a proposal as defined in Section 36622. 36612. “Owners’ association”

“Owners’ association” means a private nonprofit entity that is under contract with a city to administer or implement improvements, maintenance, and activities specified in the management district plan. An owners’ association may be an existing nonprofit entity or a newly formed nonprofit entity. An owners’ association is a private entity and may not be considered a public entity for any purpose, nor may its board members or staff be considered to be public officials for any purpose. Notwithstanding this section, an owners’ association shall comply with the Ralph M. Brown Act (Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5 of the Government Code), at all times when matters within the subject matter of the district are heard, discussed, or deliberated, and with the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code), for all records relating to activities of the district. 36614. “Property”

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“Property” means real property situated within a district. 36614.5. “Property and business improvement district”; “District”

“Property and business improvement district,” or “district,” means a property and business improvement district established pursuant to this part.
36614.6. “Property-based assessment”

“Property-based assessment” means any assessment made pursuant to this part upon real property. 36614.7. “Property-based district”

“Property-based district” means any district in which a city levies a property-based assessment. 36615. “Property owner”; “Business owner”; “Owner”

“Property owner” means any person shown as the owner of land on the last equalized assessment roll or otherwise known to be the owner of land by the city council. “Business owner” means any person recognized by the city as the owner of the business. “Owner” means either a business owner or a property owner. The city council has no obligation to obtain other information as to the ownership of land or businesses, and its determination of ownership shall be final and conclusive for the purposes of this part. Wherever this part requires the signature of the property owner, the signature of the authorized agent of the property owner shall be sufficient. Wherever this part requires the signature of the business owner, the signature of the authorized agent of the business owner shall be sufficient. 36615.5. “Special benefit”

(a) “Special benefit” means, for purposes of a property-based district, a particular and distinct benefit over and above general benefits conferred on real property located in a district or to the public at large. Special benefit includes incidental or collateral effects that arise from the improvements, maintenance, or activities of property-based districts even if those incidental or collateral effects benefit property or persons not assessed. Special benefit excludes general enhancement of property value. (b) “Special benefit” also includes, for purposes of a property-based district, a particular and distinct benefit provided directly to each assessed parcel within the district. Merely because parcels throughout an assessment district share the same special benefits does not make the benefits general. 36616. “Tenant”

“Tenant” means an occupant pursuant to a lease of commercial space or a dwelling unit, other than an owner.

ARTICLE 3. Prior Law
36617. Alternate method of financing certain improvements and activities; Effect on other provisions

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

CHAPTER 2. Establishment
36620. Establishment of property and business improvement district

A property and business improvement district may be established as provided in this chapter.

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36620.5. Requirement of consent of city council

A county may not form a district within the territorial jurisdiction of a city without the consent of the city council of that city. A city may not form a district within the unincorporated territory of a county without the consent of the board of supervisors of that county. A city may not form a district within the territorial jurisdiction of another city without the consent of the city council of the other city. 36621. Initiation of proceedings; Petition of property or business owners in proposed district

(a) Upon the submission of a written petition, signed by the property or business owners in the proposed district who will pay more than 50 percent of the assessments proposed to be levied, the city council may initiate proceedings to form a district by the adoption of a resolution expressing its intention to form a district. The amount of assessment attributable to property or a business owned by the same property or business owner that is in excess of 40 percent of the amount of all assessments proposed to be levied, shall not be included in determining whether the petition is signed by property or business owners who will pay more than 50 percent of the total amount of assessments proposed to be levied. (b) The petition of property or business owners required under subdivision (a) shall include a summary of the management district plan. That summary shall include all of the following:
(1) A map showing the boundaries of the district.
(2) Information specifying where the complete management district plan can be obtained. (3) Information specifying that the complete management district plan shall be furnished upon request.
(c) The resolution of intention described in subdivision (a) shall contain all of the following:
(1) A brief description of the proposed improvements, maintenance, and activities, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property or businesses within the district, a statement as to whether bonds will be issued, and a description of the exterior boundaries of the proposed district, which may be made by reference to any plan or map that is on file with the clerk. The descriptions and statements do not need to be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements, maintenance, and activities, and the location and extent of the proposed district. (2) A time and place for a public hearing on the establishment of the property and business improvement district and the levy of assessments, which shall be consistent with the requirements of Section 36623.
36622. Contents of management district plan

The management district plan shall include, but is not limited to, all of the following:
(a) If the assessment will be levied on property, a map of the district in sufficient detail to locate each parcel of property and, if businesses are to be assessed, each business within the district. If the assessment will be levied on businesses, a map that identifies the district boundaries in sufficient detail to allow a business owner to reasonably determine whether a business is located within the district boundaries. If the assessment will be levied on property and businesses, a map of the district in sufficient detail to locate each parcel of property and to allow a business owner to reasonably determine whether a business is located within the district boundaries.
(b) The name of the proposed district.
(c) A description of the boundaries of the district, including the boundaries of benefit zones, proposed for establishment or extension in a manner sufficient to identify the affected property and businesses included, which may be made by reference to any plan or map that is on file with the clerk. The boundaries of a proposed property assessment district shall not overlap with the boundaries of another existing property assessment district created pursuant to this part. This part does not prohibit the boundaries of a district created pursuant to this part to overlap with other assessment districts established pursuant to other provisions of law, including, but not limited to, the Parking and Business Improvement Area Law of 1989 (Part 6 (commencing with Section 36500)). This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with another business assessment district created pursuant to this part. This part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap with a property assessment district created pursuant to this part.

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(d) The improvements, maintenance, and activities proposed for each year of operation of the district and the estimated cost thereof. If the improvements, maintenance, and activities proposed for each year of operation are the same, a description of the first year’s proposed improvements, maintenance, and activities and a statement that the same improvements, maintenance, and activities are proposed for subsequent years shall satisfy the requirements of this subdivision.
(e) The total annual amount proposed to be expended for improvements, maintenance, or activities, and debt service in each year of operation of the district. If the assessment is levied on businesses, this amount may be estimated based upon the assessment rate. If the total annual amount proposed to be expended in each year of operation of the district is not significantly different, the amount proposed to be expended in the initial year and a statement that a similar amount applies to subsequent years shall satisfy the requirements of this subdivision.
(f) The proposed source or sources of financing, including the proposed method and basis of levying the assessment in sufficient detail to allow each property or business owner to calculate the amount of the assessment to be levied against their property or business. The plan also shall state whether bonds will be issued to finance improvements.
(g) The time and manner of collecting the assessments.
(h) The specific number of years in which assessments will be levied. In a new district, the maximum number of years shall be five. Upon renewal, a district shall have a term not to exceed 10 years.

Notwithstanding these limitations, a district created pursuant to this part to finance capital improvements with bonds may levy assessments until the maximum maturity of the bonds. The management district plan may set forth specific increases in assessments for each year of operation of the district. (i) The proposed time for implementation and completion of the management district plan. (j) Any proposed rules and regulations to be applicable to the district. (k)
(1) A list of the properties or businesses to be assessed, including the assessor’s parcel numbers for properties to be assessed, and a statement of the method or methods by which the expenses of a district will be imposed upon benefited real property or businesses, in proportion to the benefit received by the property or business, to defray the cost thereof. (2) In a property-based district, the proportionate special benefit derived by each identified parcel shall be determined exclusively in relationship to the entirety of the capital cost of a public improvement, the maintenance and operation expenses of a public improvement, or the cost of the activities. An assessment shall not be imposed on any parcel that exceeds the reasonable cost of the proportional special benefit conferred on that parcel. Only special benefits are assessable, and a property-based district shall separate the general benefits, if any, from the special benefits conferred on a parcel. Parcels within a property-based district that are owned or used by any city, public agency, the State of California, or the United States shall not be exempt from assessment unless the governmental entity can demonstrate by clear and convincing evidence that those publicly owned parcels in fact receive no special benefit. The value of any incidental, secondary, or collateral effects that arise from the improvements, maintenance, or activities of a propertybased district and that benefit property or persons not assessed shall not be deducted from the entirety of the cost of any special benefit or affect the proportionate special benefit derived by each identified parcel.
(3) In a property-based district, properties throughout the district may share the same special benefits. In a district with boundaries that define which parcels are to receive improvements, maintenance, or activities over and above those services provided by the city, the improvements, maintenance, or activities themselves may constitute a special benefit. The city may impose assessments that are less than the proportional special benefit conferred, but shall not impose assessments that exceed the reasonable costs of the proportional special benefit conferred. Because one or more parcels pay less than the special benefit conferred does not necessarily mean that other parcels are assessed more than the reasonable cost of their special benefit. (l) In a property-based district, a detailed engineer’s report prepared by a registered professional engineer certified by the State of California supporting all assessments contemplated by the management district plan.
(m) Any other item or matter required to be incorporated therein by the city council. 36623. Procedure to levy assessment

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(a) If a city council proposes to levy a new or increased property assessment, the notice and protest and hearing procedure shall comply with Section 53753 of the Government Code. (b) If a city council proposes to levy a new or increased business assessment, the notice and protest and hearing procedure shall comply with Section 54954.6 of the Government Code, except that notice shall be mailed to the owners of the businesses proposed to be assessed. A protest may be made orally or in writing by any interested person. Every written protest shall be filed with the clerk at or before the time fixed for the public hearing. The city council may waive any irregularity in the form or content of any written protest. A written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Each written protest shall contain a description of the business in which the person subscribing the protest is interested sufficient to identify the business and, if a person subscribing is not shown on the official records of the city as the owner of the business, the protest shall contain or be accompanied by written evidence that the person subscribing is the owner of the business or the authorized representative. A written protest that does not comply with this section shall not be counted in determining a majority protest.

If written protests are received from the owners or authorized representatives of businesses in the proposed district that will pay 50 percent or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than 50 percent, no further proceedings to levy the proposed assessment against such businesses, as contained in the resolution of intention, shall be taken for a period of one year from the date of the finding of a majority protest by the city council. (c) If a city council proposes to conduct a single proceeding to levy both a new or increased property assessment and a new or increased business assessment, the notice and protest and hearing procedure for the property assessment shall comply with subdivision (a), and the notice and protest and hearing procedure for the business assessment shall comply with subdivision (b). If a majority protest is received from either the property or business owners, that respective portion of the assessment shall not be levied. The remaining portion of the assessment may be levied unless the improvement or other special benefit was proposed to be funded by assessing both property and business owners. 36624. Changes to proposed assessments

At the conclusion of the public hearing to establish the district, the city council may adopt, revise, change, reduce, or modify the proposed assessment or the type or types of improvements, maintenance, and activities to be funded with the revenues from the assessments. Proposed assessments may only be revised by reducing any or all of them. At the public hearing, the city council may only make changes in, to, or from the boundaries of the proposed property and business improvement district that will exclude territory that will not benefit from the proposed improvements, maintenance, and activities. Any modifications, revisions, reductions, or changes to the proposed assessment district shall be reflected in the notice and map recorded pursuant to Section 36627. 36625. Resolution of formation

(a) If the city council, following the public hearing, decides to establish a proposed property and business improvement district, the city council shall adopt a resolution of formation that shall include, but is not limited to, all of the following:
(1) A brief description of the proposed improvements, maintenance, and activities, the amount of the proposed assessment, a statement as to whether the assessment will be levied on property, businesses, or both within the district, a statement on whether bonds will be issued, and a description of the exterior boundaries of the proposed district, which may be made by reference to any plan or map that is on file with the clerk. The descriptions and statements need not be detailed and shall be sufficient if they enable an owner to generally identify the nature and extent of the improvements, maintenance, and activities and the location and extent of the proposed district. (2) The number, date of adoption, and title of the resolution of intention. (3) The time and place where the public hearing was held concerning the establishment of the district.
(4) A determination regarding any protests received. The city shall not establish the district or levy assessments if a majority protest was received.
(5) A statement that the properties, businesses, or properties and businesses in the district established by the resolution shall be subject to any amendments to this part. (6) A statement that the improvements, maintenance, and activities to be conferred on businesses and properties in the district will be funded by the levy of the assessments. The revenue from the

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levy of assessments within a district shall not be used to provide improvements, maintenance, or activities outside the district or for any purpose other than the purposes specified in the resolution of intention, as modified by the city council at the hearing concerning establishment of the district.

Notwithstanding the foregoing, improvements and activities that must be provided outside the district boundaries to create a special or specific benefit to the assessed parcels or businesses may be provided, but shall be limited to marketing or signage pointing to the district. (7) A finding that the property or businesses within the area of the property and business improvement district will be benefited by the improvements, maintenance, and activities funded by the proposed assessments, and, for a property-based district, that property within the district will receive a special benefit.
(8) In a property-based district, the total amount of all special benefits to be conferred on the properties within the property-based district.
(b) The adoption of the resolution of formation and, if required, recordation of the notice and map pursuant to Section 36627 shall constitute the levy of an assessment in each of the fiscal years referred to in the management district plan.
36627. Notice and assessment diagram

Following adoption of the resolution establishing district assessments on properties pursuant to Section 36625, the clerk shall record a notice and an assessment diagram pursuant to Section 3114. No other provision of Division 4.5 (commencing with Section 3100) applies to an assessment district created pursuant to this part. 36628. Establishment of separate benefit zones within district; Categories of businesses

The city council may establish one or more separate benefit zones within the district based upon the degree of benefit derived from the improvements or activities to be provided within the benefit zone and may impose a different assessment within each benefit zone. If the assessment is to be levied on businesses, the city council may also define categories of businesses based upon the degree of benefit that each will derive from the improvements or activities to be provided within the district and may impose a different assessment or rate of assessment on each category of business, or on each category of business within each zone. 36628.5. Assessments on businesses or property owners

The city council may levy assessments on businesses or on property owners, or a combination of the two, pursuant to this part. The city council shall structure the assessments in whatever manner it determines corresponds with the distribution of benefits from the proposed improvements, maintenance, and activities, provided that any propertybased assessment conforms with the requirements set forth in paragraph (2) of subdivision (k) of Section 36622. 36629. Provisions and procedures applicable to benefit zones and business categories

All provisions of this part applicable to the establishment, modification, or disestablishment of a property and business improvement district apply to the establishment, modification, or disestablishment of benefit zones or categories of business. The city council shall, to establish, modify, or disestablish a benefit zone or category of business, follow the procedure to establish, modify, or disestablish a property and business improvement district. 36630. Expiration of district; Creation of new district

If a property and business improvement district expires due to the time limit set pursuant to subdivision (h) of Section 36622, a new management district plan may be created and the district may be renewed pursuant to this part.

CHAPTER 3. Assessments
36631. Time and manner of collection of assessments; Delinquent payments

The collection of the assessments levied pursuant to this part shall be made at the time and in the manner set forth by the city council in the resolution levying the assessment. Assessments levied on real property may be collected at the

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same time and in the same manner as for the ad valorem property tax, and may provide for the same lien priority and penalties for delinquent payment. All delinquent payments for assessments levied pursuant to this part may be charged interest and penalties.
36632. Assessments to be based on estimated benefit; Classification of real property and businesses; Exclusion of residential and agricultural property

(a) The assessments levied on real property pursuant to this part shall be levied on the basis of the estimated benefit to the real property within the property and business improvement district. The city council may classify properties for purposes of determining the benefit to property of the improvements and activities provided pursuant to this part.
(b) Assessments levied on businesses pursuant to this part shall be levied on the basis of the estimated benefit to the businesses within the property and business improvement district. The city council may classify businesses for purposes of determining the benefit to the businesses of the improvements and activities provided pursuant to this part.
(c) Properties zoned solely for residential use, or that are zoned for agricultural use, are conclusively presumed not to benefit from the improvements and service funded through these assessments, and shall not be subject to any assessment pursuant to this part. 36633. Time for contesting validity of assessment

The validity of an assessment levied under this part shall not be contested in an action or proceeding unless the action or proceeding is commenced within 30 days after the resolution levying the assessment is adopted pursuant to Section 36625. An appeal from a final judgment in an action or proceeding shall be perfected within 30 days after the entry of judgment.
36634. Service contracts authorized to establish levels of city services

The city council may execute baseline service contracts that would establish levels of city services that would continue after a property and business improvement district has been formed. 36635. Request to modify management district plan

The owners’ association may, at any time, request that the city council modify the management district plan. Any modification of the management district plan shall be made pursuant to this chapter. 36636. Modification of plan by resolution after public hearing; Adoption of resolution of intention

(a) Upon the written request of the owners’ association, the city council may modify the management district plan after conducting one public hearing on the proposed modifications. The city council may modify the improvements and activities to be funded with the revenue derived from the levy of the assessments by adopting a resolution determining to make the modifications after holding a public hearing on the proposed modifications. If the modification includes the levy of a new or increased assessment, the city council shall comply with Section 36623. Notice of all other public hearings pursuant to this section shall comply with both of the following:
(1) The resolution of intention shall be published in a newspaper of general circulation in the city once at least seven days before the public hearing.
(2) A complete copy of the resolution of intention shall be mailed by first class mail, at least 10 days before the public hearing, to each business owner or property owner affected by the proposed modification.
(b) The city council shall adopt a resolution of intention which states the proposed modification prior to the public hearing required by this section. The public hearing shall be held not more than 90 days after the adoption of the resolution of intention.
36637. Reflection of modification in notices recorded and maps

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Any subsequent modification of the resolution shall be reflected in subsequent notices and maps recorded pursuant to Division 4.5 (commencing with Section 3100), in a manner consistent with the provisions of Section 36627. 36638. Assessment as government imposed fee on Civ C § 1770 transaction [Operative July 1, 2024]

(a) A business assessment pursuant to this part is a fee imposed by a government on the transaction for purposes of paragraph (29) of subdivision (a) of Section 1770 of the Civil Code. (b) This section shall become operative on July 1, 2024.

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

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

CHAPTER 4. Governance
36650. Report by owners’ association; Approval or modification by city council

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

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(c) The city council may approve the report as filed by the owners’ association or may modify any particular contained in the report and approve it as modified. Any modification shall be made pursuant to Sections 36635 and 36636.

The city council shall not approve a change in the basis and method of levying assessments that would impair an authorized or executed contract to be paid from the revenues derived from the levy of assessments, including any commitment to pay principal and interest on any bonds issued on behalf of the district.
36651. Designation of owners’ association to provide improvements, maintenance, and activities

The management district plan may, but is not required to, state that an owners’ association will provide the improvements, maintenance, and activities described in the management district plan. If the management district plan designates an owners’ association, the city shall contract with the designated nonprofit corporation to provide services.

CHAPTER 5. Renewal
36660. Renewal of district; Transfer or refund of remaining revenues; District term limit

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

CHAPTER 6. Disestablishment
36670. Circumstances permitting disestablishment of district; Procedure

(a) Any district established or extended pursuant to the provisions of this part, where there is no indebtedness, outstanding and unpaid, incurred to accomplish any of the purposes of the district, may be disestablished by resolution by the city council in either of the following circumstances:
(1) If the city council finds there has been misappropriation of funds, malfeasance, or a violation of law in connection with the management of the district, it shall notice a hearing on disestablishment.
(2) During the operation of the district, there shall be a 30-day period each year in which assessees may request disestablishment of the district. The first such period shall begin one year after the date of establishment of the district and shall continue for 30 days. The next such 30-day period shall begin two years after the date of the establishment of the district. Each successive year of operation of the district shall have such a 30-day period. Upon the written petition of the owners or authorized representatives of real property or the owners or authorized representatives of businesses in the district who pay 50 percent or more of the assessments levied, the city council shall pass a resolution of intention to disestablish the district. The city council shall notice a hearing on disestablishment.
(b) The city council shall adopt a resolution of intention to disestablish the district prior to the public hearing required by this section. The resolution shall state the reason for the disestablishment, shall state the time and place of the public hearing, and shall contain a proposal to dispose of any assets acquired with the revenues of the assessments levied within the property and business improvement district. The notice of the hearing on disestablishment required by this section shall be given by mail to the property owner of each parcel or to the owner of each business subject to assessment in the district, as appropriate. The city shall conduct the public hearing not less than 30 days after mailing the notice to the property or business

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owners. The public hearing shall be held not more than 60 days after the adoption of the resolution of intention.
36671. Refund of remaining revenues upon disestablishment or expiration without renewal of district; Calculation of refund; Use of outstanding revenue collected after disestablishment of district

(a) Upon the disestablishment or expiration without renewal of a district, any remaining revenues, after all outstanding debts are paid, derived from the levy of assessments, or derived from the sale of assets acquired with the revenues, or from bond reserve or construction funds, shall be refunded to the owners of the property or businesses then located and operating within the district in which assessments were levied by applying the same method and basis that was used to calculate the assessments levied in the fiscal year in which the district is disestablished or expires. All outstanding assessment revenue collected after disestablishment shall be spent on improvements and activities specified in the management district plan. (b) If the disestablishment occurs before an assessment is levied for the fiscal year, the method and basis that was used to calculate the assessments levied in the immediate prior fiscal year shall be used to calculate the amount of any refund.

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APPENDIX 2 – ASSESSED BUSINESSES
Hotel Name Hotel Address City, State, Zip
Harbor Front Suites 593 Embarcadero Morro Bay, CA 93442 La Roche 575 Embarcadero Rd Morro Bay, CA 93442
Salty Sister - Suites at Morro Rock 1170 Front St Morro Bay, CA 93442 Morro Shores Inn & Suites 290 Atascadero Rd Morro Bay, CA 93442 Gray's Inn and Gallery 561 Embarcadero Rd Morro Bay, CA 93442 Motel 6 Morro Bay 298 Atascadero Rd Morro Bay, CA 93442 The Inn at Morro Bay 60 State Park Rd Morro Bay, CA 93442 Marina Street Inn B & B 305 Marina St Morro Bay, CA 93442 Masterpiece Hotel 1206 Main St Morro Bay, CA 93442
Bayview Inn 225 Harbor St Morro Bay, CA 93442
Ascot Suites 260 Morro Bay Blvd Morro Bay, CA 93442
Best Western Tradewinds Motel 225 Beach St Morro Bay, CA 93442 Morro Crest Inn 670 Main St Morro Bay, CA 93442
Morro Bay Sandpiper Inn 540 Main St Morro Bay, CA 93442 Morro Bluff Inn 213 Dunes St Morro Bay, CA 93442
Rhapsody In View Boutique Hotel 2790 Main St Morro Bay, CA 93442 Coastal Breeze Inn 1098 Main St Morro Bay, CA 93442
Harborwalk Inn 833 Embarcadero Morro Bay, CA 93442
Beach Bungalow Inn & Suites 1050 Morro Ave Morro Bay, CA 93442 Sea Air Inn 845 Morro Ave Morro Bay, CA 93442
The Landing at Morro Bay 780 Market Ave Morro Bay, CA 93442 La Serena Inn 990 Morro Ave Morro Bay, CA 93442
Best Western San Marcos Inn 250 Pacific St Morro Bay, CA 93442 Pleasant Inn 235 Harbor St Morro Bay, CA 93442
Estero Inn LLC 501 Embarcadero Morro Bay, CA 93442
Holland Inn And Suites 2630 Main St Morro Bay, CA 93442 Harbor House Inn 1095 Main St Morro Bay, CA 93442
Pacific Cottage Motel 2830 Alder Ave Morro Bay, CA 93442 Front Street Inn & Spa 1140 Front St Morro Bay, CA 93442 Pacific Shores Inn 890 Morro Ave Morro Bay, CA 93442
Hotel Avisa 590 Morro Ave Morro Bay, CA 93442
Inn At Rose's Landing 725 Embarcadero Rd Morro Bay, CA 93442 Fireside Inn 730 Morro Ave Morro Bay, CA 93442
Embarcadero Inn & Suites 456 Embarcadero Rd Morro Bay, CA 93442 Hampton Inn 295 Atascadero Rd Morro Bay, CA 93442
Bayfront Inn 1150 Embarcadero Morro Bay, CA 93442
Blue Sail Inn 851 Market Ave Morro Bay, CA 93442
Anderson Inn 897 Embarcadero Rd Morro Bay, CA 93442
Morro Bay Beach Inn 1100 Main St Morro Bay, CA 93442
Sundown Inn Of Morro Bay Inc. 640 Main St Morro Bay, CA 93442 Rockview Inn & Suites 1080 Market Ave Morro Bay, CA 93442

MBTBID Management District Plan 29
November 18, 2025
Blufftop Inn & Suites 220 Beach St Morro Bay, CA 93442
Harbor View Suites 205 Harbor St Morro Bay, CA 93442
Short-Term Rental Address City, State, Zip
110 Java St Morro Bay, CA 93442
115 Easter St Morro Bay, CA 93442
115 Hatteras St Morro Bay, CA 93442
1174 Main St Morro Bay, CA 93442
1177 Main St Morro Bay, CA 93442
1184 Main St Morro Bay, CA 93442
120 Java St Morro Bay, CA 93442
120 Mindoro St Morro Bay, CA 93442
121 Bradley Ave Morro Bay, CA 93442
121 Easter St Morro Bay, CA 93442
1210 Bolton Drive Morro Bay, CA 93442
1215 Main St Morro Bay, CA 93442
1271 Hillcrest Dr Morro Bay, CA 93442
1275 Morro Ave Morro Bay, CA 93442
1363 Prescott Dr Morro Bay, CA 93442
1364 Clarabelle Dr Morro Bay, CA 93442
1365 Prescott Dr Morro Bay, CA 93442
150 Formosa St Morro Bay, CA 93442
150 Verdon St Morro Bay, CA 93442
155 Formosa St Morro Bay, CA 93442
157 Verdon St Morro Bay, CA 93442
165 Panay St Morro Bay, CA 93442
166 Vashon St Morro Bay, CA 93442
176 Panay St Morro Bay, CA 93442
180 Andros St Morro Bay, CA 93442
180 Bali St Morro Bay, CA 93442
180 Gilbert St Morro Bay, CA 93442
180 Verdon St Morro Bay, CA 93442
184 Tahiti St Morro Bay, CA 93442
1851 Ironwood Ave Morro Bay, CA 93442
1887 Ironwood Ave Morro Bay, CA 93442
1890 Hill St Morro Bay, CA 93442
195 Capri St Morro Bay, CA 93442
195 Orcas St Morro Bay, CA 93442
199 Main St Morro Bay, CA 93442
199 Sienna St Morro Bay, CA 93442
2060 Seaview Ave Morro Bay, CA 93442
2083 Seaview Ave Morro Bay, CA 93442
210 Dunes St Morro Bay, CA 93442
216 Surf St Morro Bay, CA 93442
217 Main St Morro Bay, CA 93442

MBTBID Management District Plan 30
November 18, 2025
218 Pacifica St Morro Bay, CA 93442
220 Dunes St Morro Bay, CA 93442
221 Dunes St Morro Bay, CA 93442
221 Piney Way Morro Bay, CA 93442
2250 Hemlock Ave Morro Bay, CA 93442
226 1/2 Pacific St Morro Bay, CA 93442
226 Pacific St Morro Bay, CA 93442
229 Piney Way Morro Bay, CA 93442
234 Beach St Morro Bay, CA 93442
234 Pacific St Morro Bay, CA 93442
238 Pacific Morro Bay, CA 93442
2398 Laurel Ave Morro Bay, CA 93442
240 Bali St Morro Bay, CA 93442
2400 Ironwood Morro Bay, CA 93442
245 Driftwood St Morro Bay, CA 93442
245 Gilbert St Morro Bay, CA 93442
2470 Hemlock Ave Morro Bay, CA 93442
2545 Elm Ave Morro Bay, CA 93442
2575 Greenwood Ave Morro Bay, CA 93442
2585 Ironwood Ave Morro Bay, CA 93442
261 Shasta Ave Morro Bay, CA 93442
2615 Maple Ave Morro Bay, CA 93442
2615 Nutmeg Ave Morro Bay, CA 93442
2629 Koa Ave Morro Bay, CA 93442
263 Main St Morro Bay, CA 93442
263 Main St Cottage A Morro Bay, CA 93442
2630 Greenwood Ave Morro Bay, CA 93442
2640 Maple Ave Morro Bay, CA 93442
2697 Laurel Ave Morro Bay, CA 93442
2700 Greenwood Ave Morro Bay, CA 93442
271 Pacific St Morro Bay, CA 93442
2746 Main St Morro Bay, CA 93442
2799 Elm Ave Morro Bay, CA 93442
2811 Ironwood Ave Morro Bay, CA 93442
2870 Fir Ave Morro Bay, CA 93442
2870 Hemlock Ave Morro Bay, CA 93442
2889 Hemlock Ave Morro Bay, CA 93442
290 Terra St Morro Bay, CA 93442
2910 Fir Ave Morro Bay, CA 93442
2950 Beachcomber Dr Morro Bay, CA 93442
2958 Cedar Ave Morro Bay, CA 93442
2960 Beachcomber Dr Morro Bay, CA 93442
2975 Beachcomber Dr Morro Bay, CA 93442
300 Kings Ave Morro Bay, CA 93442

MBTBID Management District Plan 31
November 18, 2025
301 Trinidad St Morro Bay, CA 93442
3015 Beachcomber Dr Morro Bay, CA 93442
3030 Beachcomber Dr Morro Bay, CA 93442
3033 Beachcomber Dr Morro Bay, CA 93442
310 Bernardo Ave Morro Bay, CA 93442
311 Piney Way Morro Bay, CA 93442
3128 Beachcomber Dr Morro Bay, CA 93442
3130 Beachcomber Dr Morro Bay, CA 93442
3175 Orcas Way Morro Bay, CA 93442
3200 Beachcomber Dr Morro Bay, CA 93442
324 Shasta Ave Morro Bay, CA 93442
325 Shasta Ave Morro Bay, CA 93442
3273 Tide Morro Bay, CA 93442
3350 Beachcomber Dr Morro Bay, CA 93442
337 Bernardo Ave Morro Bay, CA 93442
3370 Beachcomber Dr Morro Bay, CA 93442
3464 Toro Ln Morro Bay, CA 93442
3476 Toro Ln Morro Bay, CA 93442
3480 Toro Ln Morro Bay, CA 93442
356 Shasta Ave Morro Bay, CA 93442
361 Dunes St Morro Bay, CA 93442
370 Vashon St Morro Bay, CA 93442
371 La Jolla Morro Bay, CA 93442
381 Panay St Morro Bay, CA 93442
390 Luzon St Morro Bay, CA 93442
391 Luzon St Morro Bay, CA 93442
395 Avalon St Morro Bay, CA 93442
400 Pico St Morro Bay, CA 93442
401 San Joaquin St Morro Bay, CA 93442
410 Mindoro St Morro Bay, CA 93442
424 Morro Ave Morro Bay, CA 93442
425 Bernardo Ave Morro Bay, CA 93442
431 Panay St Morro Bay, CA 93442
431 Whidbey St Morro Bay, CA 93442
441 Luzon St Morro Bay, CA 93442
449 Panay St Morro Bay, CA 93442
450 Napa Ave Morro Bay, CA 93442
450 Tahiti Morro Bay, CA 93442
452 Sicily St Morro Bay, CA 93442
457 Oahu St Morro Bay, CA 93442
465 Whidbey St Morro Bay, CA 93442
467 La Jolla St Morro Bay, CA 93442
476 Hill St Morro Bay, CA 93442
481 Jamaica Morro Bay, CA 93442

MBTBID Management District Plan 32
November 18, 2025
491 Orcas St Morro Bay, CA 93442
499 La Jolla St Morro Bay, CA 93442
508 Shasta Ave Morro Bay, CA 93442
510 Yerba Buena St Morro Bay, CA 93442
530 Monterey Ave 1 Morro Bay, CA 93442
535 Dunes St Morro Bay, CA 93442
540 Downing St Morro Bay, CA 93442
550 Main St Morro Bay, CA 93442
564 Morro Ave Morro Bay, CA 93442
565 Monterey Ave #A Morro Bay, CA 93442
601 San Jacinto Morro Bay, CA 93442
623 Kern Ave Morro Bay, CA 93442
625 Monterey Ave Morro Bay, CA 93442
630 Embarcadero #C Morro Bay, CA 93442
630 Embarcadero #D Morro Bay, CA 93442
636 Bay Ave Morro Bay, CA 93442
645 Monterey Ave Unit B Morro Bay, CA 93442
647 Estero Ave Morro Bay, CA 93442
650 Avalon St Morro Bay, CA 93442
659 Kern Ave Morro Bay, CA 93442
671 Estero Ave Morro Bay, CA 93442
675 La Loma Ave Morro Bay, CA 93442
700 Sierra Ct Morro Bay, CA 93442
701 San Joaquin St Morro Bay, CA 93442
880 Main St Morro Bay, CA 93442
881 Ridgeway St Morro Bay, CA 93442
895 Monterey Ave Morro Bay, CA 93442
897 Monterey Ave Morro Bay, CA 93442
921 Mesa St Morro Bay, CA 93442
938 Marina St Morro Bay, CA 93442
948 Marina St Morro Bay, CA 93442
958 Pecho St Morro Bay, CA 93442
998 Carmel St Morro Bay, CA 93442
Jurisdiction list as of November 16, 2025

1 RESOLUTION NO. 16-26

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA

DECLARING RESULTS OF MAJORITY PROTEST PROCEEDINGS AND

RENEWING THE MORRO BAY TOURISM BUSINESS IMPROVEMENT

DISTRICT (MBTBID)

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) created the MBTBID on June 8, 2021 by Resolution No. 28-21; and
WHEREAS, the MBTBID was created for a five (5) year term which ends on June 30, 2026; and
WHEREAS, the Property and Business Improvement District Law of 1994, Streets and Highways Code § 36600 et seq., authorizes the City to renew business improvement districts upon petition by a weighted majority of the business owners located within the boundaries of the district; and
WHEREAS, lodging and vacation rental business owners who will pay more than fifty percent (50%) of the proposed assessment, as weighted according to the amount of the assessment to be paid by the petitioner, within the boundaries of the MBTBID have petitioned the City Council of the City of Morro Bay (Council) to renew the MBTBID; and WHEREAS, included with the petitions was a Management District Plan (Plan) summary that describes the proposed assessment to be levied on all lodging and vacation rental businesses, (assessed businesses), existing and in the future, within the MBTBID to pay for Sales, Marketing, Communications, and Destination Development programs, and other improvements and activities set forth in the Plan; and
WHEREAS, the assessed businesses within the MBTBID will receive a specific benefit from the activities and improvements set forth in the Plan; and WHEREAS, on January 27, 2026 at 5:30 PM at the Veterans Memorial Building located at 209 Surf Street, Morro Bay, CA 93442, the Council adopted a Resolution of Intention, Resolution No. 03-26; and
WHEREAS, the public meeting and public hearing to consider the renewal of the MBTBID have been properly noticed in accordance with Streets and Highways Code §36623; and WHEREAS, on February 24, 2026 at 5:30 PM at the Veterans Memorial Building located at 209 Surf Street, Morro Bay, CA 93442, the Council held a public meeting regarding the renewal of the MBTBID, and the Council heard and received objections and protests, if any, to the renewal of the MBTBID and the levy of the proposed assessment; and WHEREAS, on March 24, 2026 at 5:30 PM at the Veterans Memorial Building located at 209 Surf Street, Morro Bay, CA 93442, the Council held a public hearing regarding the renewal

2 of the MBTBID, and the City Council heard and received all objections and protests, if any, to the renewal of the MBTBID and the levy of the proposed assessment; and WHEREAS, the City Clerk has determined that there was no majority protest. A majority protest is defined as written protests received from owners of businesses in the renewed MBTBID which would pay fifty percent (50%) or more of the assessments proposed to be levied. Protests are weighted based on the assessment proposed to be levied on each assessed business; and WHEREAS, the City bears the burden of proving by a preponderance of the evidence that an assessment imposed for a specific benefit or specific government service is not a tax, that the amount is no more than necessary to cover the costs to the City in providing the specific benefit or specific government service, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the specific benefits or specific government services received by the payor.

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

1. The recitals set forth herein are adopted by the City Council as findings and they are true and correct.

2. The MBTBID is hereby renewed for a ten (10) year term, beginning July 1, 2026, or as soon as possible thereafter, and ending ten (10) years from its start date, unless renewed pursuant to Streets and Highways Code § 36660.

3. The Plan dated November 18, 2025 is hereby adopted and approved.

4. The activities to be provided to benefit businesses in the MBTBID will be funded by the levy of the assessment. The revenue from the assessment levy shall not be used: to provide activities that directly benefit businesses outside the MBTBID; to provide activities or improvements outside the MBTBID; or for any purpose other than the purposes specified in this Resolution, the Resolution of Intention, and the Plan. Notwithstanding the foregoing, improvements and activities that must be provided outside the MBTBID boundaries to create a specific benefit to the assessed businesses may be provided, but shall be limited to marketing or signage pointing to the MBTBID.

5. The Council finds as follows:
a) The activities funded by the assessment will provide a specific benefit to assessed businesses within the MBTBID that is not provided to those not paying the assessment. b) The assessment is a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.
c) The assessment is a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.

3 d) Assessments imposed pursuant to the MBTBID are levied solely upon the assessed business, and the business owner is solely responsible for payment of the assessment when due. If the owner chooses to collect any portion of the assessment from a transient, that portion shall be specifically called out and identified for the transient in any and all communications from the business owner as the “MBTBID Assessment” or “Tourism Assessment” as specified in the Plan.

6. The assessments levied for the MBTBID shall be applied to Sales, Marketing, Communications, and Destination Development programs to market assessed businesses as tourist, meeting and event destinations, and other improvements and activities as set forth in the Plan.

7. Assessments levied on assessed businesses pursuant to this Resolution shall be levied on the basis of benefit. Because the services provided are intended to increase demand for overnight tourism, an assessment based on gross short-term sleeping room rental revenue is the best measure of benefit.

8. 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.

9. The assessments for the entire MBTBID will total approximately $1,200,000 in year one (1).

10. Bonds shall not be issued to fund the MBTBID.

11. The MBTBID shall include all lodging and vacation rental businesses, existing and in the future, available for public occupancy located within the boundaries of the City. A boundary map is attached hereto and incorporated herein by reference.

12. The assessments shall be used for the purposes set forth above and any funds remaining at the end of any year may be used in subsequent years in which the MBTBID assessment is levied as long as they are used consistent with the requirements set forth herein.

13. The assessments to fund the activities and improvements for the MBTBID will be collected by the City on a monthly basis, and in accordance with Streets and Highways Code §36631.

14. The Council, through adoption of this Resolution and the Plan, has the right pursuant to Streets and Highways Code §36651, to identify the body that shall implement the proposed program, which shall be the Owners’ Association of the MBTBID as defined in Streets and Highways Code §36612. The Council has determined that Visit Morro Bay (VMB) shall be the MBTBID Owners’ Association.

15. VMB, pursuant to Streets and Highways Code §36650, shall cause to be prepared a report for each fiscal year, except the first year, for which assessments are to be levied and collected to pay the costs of the improvements and activities described in the report. The first report shall be due after the first year of operation of the MBTBID.

4 16. The MBTBID renewed pursuant to this Resolution will be subject to any amendments to the Property and Business Improvement District Law of 1994 (California Streets and Highways Code §36600 et. seq.).

17. The City Clerk, or his or her designee, is directed to take all necessary actions to complete the renewal of the MBTBID and to levy the assessments.

18. This Resolution shall take effect immediately upon its adoption by the Council.

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

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSE:
_____________________________
CARLA WIXOM, Mayor
ATTEST:

DANA SWANSON, City Clerk

5 Boundary Map

Prepared By: JB Department Review: GK
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Public Works Advisory Board DATE: March 10, 2026
FROM Janeen Burlingame, Management Analyst
SUBJECT: Adoption of the Morro Bay Transit 2025 Short Range Transit Plan

STAFF AND PUBLIC WORKS ADVISORY BOARD RECOMMENDED ACTION Staff and the Public Works Advisory Board (PWAB) recommend the City Council adopt the Morro Bay Transit Short Range Transit Plan (SRTP).

BACKGROUND
On January 14, 2025, the City and San Luis Obispo Regional Transit Authority (RTA) entered into an agreement for RTA to take over the administration, project management, budget development and oversight, grant writing, maintenance, and operations of the City’s local transit system, effective June 1, 2025. Per the executed agreement with RTA, the City retains the authority to adjust bus schedules, bus routes, and fare structure. Generally, adjustments to schedules, routes, and fares are made following adoption of a draft Short Range Transit Plan (SRTP), which analyzes and recommends changes to the transit system.

The SRTP is prepared by RTA but is under the purview of the City Council. It is intended to provide a general business plan to guide improvements to Morro Bay Transit (MBT) over the plan period and is important to qualify for State and Federal transportation funding. The SRTP is updated approximately every five years. The current plan was adopted in late February 2020.

RTA already had LSC Transportation Consultants, Inc., (LCS) on contract to work on the RTA STRP, and RTA added the MBT SRTP into LCS’s scope LCS. Work commenced on the MBT SRTP in March 2025. City staff has had the opportunity to review the draft STRP as it has progressed and has already made several comments that are reflected in the document.

FISCAL IMPACT
There is no fiscal impact to the City. The fiscal impact of the two recommended service enhancements on the MBT budget, that RTA develops and oversees, is summarized in the table below.

Service Enhancement Revenue Cost Net Difference
Two Loop Route $700 ($7,100) ($7,800)
Non-Summer Weekend Service $3,100 $67,000 $63,900
Total Cost $56,100
Funding for MBT operations identified in the Draft SRTP, including the two recommended service enhancements, comes from the Transportation Development Act Local Transit Fund (TDA LTF), State Transit Assistance (STA), passenger fares, and newly accessible Federal Transit Administration (FTA) Section 5311 funds*. As a result of receiving this new funding source to offset AGENDA NO: 8.a
MEETING DATE: March 24, 2026

the net operating cost increase for the service enhancements, the amount of increased TDA LTF needed for the two recommended improvements would be $20,100. * This funding is eligible due to the RTA contract
No fare changes are recommended to cover the $20,100 impact as the SRTP identifies adequate revenues estimated over the next five years from the funding sources previously noted above.

DRAFT SHORT RANGE TRANSIT PLAN RECOMMENDATIONS
Transit Operations
The two operational elements included in the Draft SRTP that would represent changes for the MBT system are below:

1. Fixed Route/Call-A-Ride Two Loop: This is a realignment to the current Fixed Route service that would reduce wait time for roughly 20% of riders by making connections with RTA Route 12 at City Park. It would break the current Fixed Route into two loops (North and South) that begin and end at Morro Bay City Park to form a figure 8. Other benefits include:
 Improved connections with RTA Routes 12 and 15
 Reduced transfer times between MBT and RTA Route 12 southbound to SLO  Current wait time for MBT passengers transferring to Route 12 is 39 minutes  Slightly reduced vehicle service miles with shortened South loop  No increased vehicles hours (hourly headway does not change)  Decreased net estimated annual operating cost by $7,100  Increased ridership by an estimated 700 additional passenger trips annually

2. Non-Summer Season Weekend Fixed Route/Call-A-Ride Service: This change would add weekend Fixed Route/Call-A-Ride service during non-Trolley season. Currently, there is no weekend local transit service when the Trolley is not in season, which is roughly between October to June. Implementation of this new service is recommended as a pilot over a twoyear period with performance monitoring to determine if it will meet full ridership potential.

The proposed service impacts to local transit coverage as follows:
 Addition of Saturday and Sunday service operating between 10:00 a.m. and 5:00 p.m.  Addition of weekend connections to RTA service at City Park during non-Trolley season
 Estimated net increase in annual operating costs of $67,000 for the additional 68 days  Estimated increased ridership by 3,100 passenger trips annually Capital Needs
The SRTP process reviewed system capital needs and noted there would be no vehicle replacements over the next 5 years. Capital projects identified include the following, some of which have been in development for several fiscal years and are now ready for implementation:
 Install opportunity chargers at the transfer point at City Park to be used for MBT as well as RTA Routes 12 and 15 as part of the RTA’s electrification program to comply with the State’s Innovative Clean Transit regulations for conversion of the MBT and RTA fleets to Zero Emission Buses.
 Install LED “Next Bus” sign at the City Park bus stop to provide timely information to riders when buses are scheduled to arrive as well as be consistent with other transfer points in the RTA system.
 Implement contactless fare payment technology. This new payment technology would

provide for an additional fare payment option by riders and will not replace the option for riders to pay fares with cash.

Capital revenue to fund the opportunity chargers and contactless fare payment technology improvements come from SB 125 monies allocated by the San Luis Obispo Council of Governments (SLOCOG) to the RTA. SB 125 funds are a combination of funds derived from a population and revenue based formula that are allocated to regional transportation planning agencies (SLOCOG) through the Transit and Intercity Rail Capital Program and Zero-Emission Transit Capital Program.

SLOCOG has the flexibility to use the money to fund transit operations, capital improvements, and zero-emission transit equipment and operations.

The revenue and expenditure for these projects were included in the approved MBT FY2025/2026 budget. The LED “Next Bus” sign is an RTF funded project that is part of its larger bus stop improvement project that would not rely on MBT funding.

PUBLIC WORKS ADVISORY BOARD REVIEW AND RECOMMENDATION
The Public Works Advisory Board (PWAB) received a presentation on the service alternatives analysis at its November 25, 2025, meeting and reviewed the SRTP draft plan at its February 18, 2026, meeting. Based on review and deliberation of both presentations, the PWAB recommended the City Council adopt the draft STRP as is.

ATTACHMENT(S)

1. Morro Bay Transit 2025 Short Range Transit Plan

2025
Morro Bay
Short Range
Transit Plan
Draft Plan LSC Transportation Consultants, Inc.

February 10, 2026
The City of Morro Bay &
San Luis Obispo Regional Transit Authority

2025 Morro Bay
Short Range Transit Plan
Draft Plan
Prepared for
City of Morro Bay
595 Harbor Street
Morro Bay, CA 93442
&
San Luis Obispo Regional Transit Authority
235 Elks Lane
San Luis Obispo CA 93401
Prepared by
LSC Transportation Consultants, Inc.
2690 Lake Forest Road, Ste. C
Tahoe City, CA 96145
(530) 583-4053
February 10, 2026

This page intentionally blank.

2025 Morro Bay SRTP - Draft Plan LSC Transportation Consultants, Inc.

San Luis Obispo RTA Page i

TABLE OF CONTENTS

CHAPTER PAGE
Chapter 1: Introduction...................................................................................................................................... 1 Chapter 2: Study Area Characteristics .......................................................................................................... 3 Study Area ................................................................................................................................................ 3 Population ................................................................................................................................................ 4 Employment and Economy......................................................................................................................... 11 Activity Centers........................................................................................................................................... 13 Recent Planning Documents....................................................................................................................... 13 Chapter 3: Overview of Current Transit Services...................................................................................15 Introduction .............................................................................................................................................. 15 History, Governance, and Organizational Structure................................................................................... 15 Management Structure .............................................................................................................................. 15 MBT Services Summary............................................................................................................................... 16 Morro Bay Trolley ....................................................................................................................................... 18 MBT Fare Structure .................................................................................................................................... 18 Other Providers........................................................................................................................................... 21 Ridership Trends......................................................................................................................................... 23 Vehicle Service Miles and Hours................................................................................................................. 29 MBT Facilities and Capital Equipment ........................................................................................................ 31 Passenger Amenities................................................................................................................................... 32 Chapter 4: System Performance Analysis..................................................................................................35 MBT Financial Review ................................................................................................................................. 35 MBT Cost Model ......................................................................................................................................... 36 MBT Performance Measures...................................................................................................................... 37 MBT Route Performance ............................................................................................................................ 41 Chapter 5: Public and Stakeholder Outreach ...........................................................................................43 Introduction .............................................................................................................................................. 43 Onboard Passenger Survey ......................................................................................................................... 43 Online Community Survey (113 Responses)............................................................................................... 45 Chapter 6: Service Alternatives .....................................................................................................................47 Introduction .............................................................................................................................................. 47 Alternatives Analysis................................................................................................................................... 48 Alternatives Performance Analysis............................................................................................................. 55 Service Alternatives Summary .................................................................................................................... 55 Future Development................................................................................................................................... 58 Fare Alternatives......................................................................................................................................... 58

2025 Morro Bay SRTP - Draft Plan LSC Transportation Consultants, Inc.

San Luis Obispo RTA Page ii
Chapter 7: Capital Alternatives......................................................................................................................61 Introduction .............................................................................................................................................. 61 Transit Vehicles........................................................................................................................................... 61 Transit Facilities .......................................................................................................................................... 62 Chapter 8: Morro Bay Transit Plan Recommendations .......................................................................63 Plan Assumptions........................................................................................................................................ 63 Service Plan .............................................................................................................................................. 63 Other Considerations.................................................................................................................................. 66 Capital Improvements................................................................................................................................. 67 Financial Plan .............................................................................................................................................. 67 Appendix A – Demographic Maps
Appendix B – Recent Planning Documents
Appendix C – Outreach Summary
Appendix D – Boarding and Alighting Maps

TABLES PAGE
Table 1: Historic and Current Population ..................................................................................................... 4 Table 2: Morro Bay Population Projections by Age Category....................................................................... 5 Table 3: City of Morro Bay Demographic Characteristics............................................................................. 6 Table 4: City of Morro Bay Transit Needs Index ........................................................................................... 9 Table 5: Morro Bay Current and Annual Employment ............................................................................... 11 Table 6: Morro Bay Local and Regional Commute Patterns - 2021............................................................ 12 Table 7: Summary of Morro Bay Transit Services and Frequency .............................................................. 16 Table 8: Transit Fares.................................................................................................................................. 21 Table 9: Morro Bay Transit and RTA Routes Passenger Trips by Year........................................................ 23 Table 10: Morro Bay Transit Passenger Trips by Route by Month (FY 2023-24)........................................ 24 Table 11: Fixed-Route/Call-A-Ride Riders by Fare (FY 2023-24)................................................................. 28 Table 12: Trolley Riders by Fare (FY 2023-24) ............................................................................................ 29 Table 13: Morro Bay Transit Vehicle Fleet.................................................................................................. 31 Table 14: Morro Bay Transit Operating Expenses ...................................................................................... 35 Table 15: Morro Bay Transit Revenues....................................................................................................... 36 Table 16: Morro Bay Transit - FY 2023-24 Cost Model............................................................................... 37 Table 17: Morro Bay Transit - FY 2023-24 Service Parameters and Performance ..................................... 38 Table 18: Morro Bay Transit and Trolley Alternatives Analysis.................................................................. 50 Table 19: Morro Bay Transit Service Alternatives Performance Analysis................................................... 56 Table 20: Morro Bay Transit Short Range Transit Development Plan Operating Costs ............................. 63 Table 21: Morro Bay Transit SRTP Estimated Annual Ridership................................................................. 64 Table 22: Morro Bay Transit SRTP Estimated Annual Farebox Revenues................................................... 64 Table 23: Morro Bay Transit Short Range Transit Development Plan Financial Plan ................................. 68

FIGURES PAGE
Figure 1: Site and Location............................................................................................................................ 3 Figure 2: Population Density......................................................................................................................... 7

2025 Morro Bay SRTP - Draft Plan LSC Transportation Consultants, Inc.

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Figure 3: Transit Needs Index ..................................................................................................................... 10 Figure 4: Morro Bay Activity Centers.......................................................................................................... 14 Figure 5: Morro Bay Transit Routes............................................................................................................ 17 Figure 6: Morro Bay Transit Trolley - North Route ..................................................................................... 19 Figure 7: Morro Bay Transit Trolley - Downtown Route............................................................................. 20 Figure 8: MBT Historical Ridership.............................................................................................................. 24 Figure 9: MBT Ridership by Route by Month (FY 2023-24) ........................................................................ 25 Figure 10: MBT Average Boardings by Day of Week .................................................................................. 25 Figure 11: Average MBT Boardings per Hour ............................................................................................. 26 Figure 12: Average Trolley Boardings per Hour - By Route ........................................................................ 27 Figure 13: Annual MBT Fixed-Route/Call-A-Ride Service Quantities.......................................................... 30 Figure 14: Annual MBT Trolley Service Quantities ..................................................................................... 30 Figure 15: MBT Passenger-Trips per Service Hour (FY 2023-24) ................................................................ 38 Figure 16: MBT Passenger-Trips per Service Mile (FY 2023-24) ................................................................. 39 Figure 17: MBT Total Operating Cost per Passenger-Trip (FY 2023-24) ..................................................... 39 Figure 18: MBT Total Operating Subsidy per Passenger Trip (FY 2023-24) ................................................ 40 Figure 19: MBT Operating Cost per Service Hour (FY 2023-24) .................................................................. 40 Figure 20: MBT Farebox Recovery Ratio (FY 2023-24) ............................................................................... 41 Figure 21: Fixed-Route/Call-A-Ride Two Loop Service Alternative............................................................. 51 Figure 22: Morro Bay Service Alternatives - Impact on Ridership.............................................................. 57 Figure 23: Morro Bay Service Alternatives - Impact on Passenger-Trips per Vehicle Hour ....................... 57 Figure 24: Morro Bay Service Alternatives - Impact on Marginal Operating Cost per Trip........................ 57 Figure 25: Morro Bay Transit Plan .............................................................................................................. 65

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Chapter 1

INTRODUCTION

INTRODUCTION
Public transportation plays a crucial role in Morro Bay, offering essential mobility for residents to access important medical, recreational, social, educational, and economic services and opportunities. Public transit improves quality of life for residents through supporting access to educational programs, medical providers, employers, and social service initiatives throughout the region. Additionally, public transit contributes to the local tourism industry by enabling visitors to easily reach various businesses and attractions.

LSC Transportation Consultants, Inc. was retained by the City of Morro Bay and the San Luis Obispo Regional Transportation Authority (RTA) to conduct a Short Range Transit Plan (SRTP) to assess public transit and related transportation issues in the City of Morro Bay and provide a “road map” for improvements to the public transit program over the upcoming five years. The intent of this study is to evaluate the specific needs for transit services, as well as to develop plans for improvements and service revisions to Morro Bay Transit (MBT). This will be accomplished through the review of existing transit conditions and evaluation of operations, as well as through public outreach via onboard surveys, an online community survey, and community-based focus group meetings.

This SRTP evaluated a wide range of alternatives, taking special consideration of MBT’s recent administrative and operational transition to RTA. Additionally, an important element of this study will be to identify stable funding sources for operations and capital improvements of transit services. The ultimate goal of the study is to provide a comprehensive strategy of short-range service, capital, and institutional improvements, with a supporting financial and implementation plan.

Chapter 2 reviews existing demographic conditions and transportation services operating within Morro Bay. It provides an overview of historic, current, and projected demographic data. Chapter 3 summarizes the operating history of Morro Bay Transit (MBT) and provides a brief overview of connecting services to other areas within San Luis Obispo County. Chapter 4 concludes with current performance metrics and a cost analysis. Chapter 5 provides a summary of outreach results. Chapters 6 and 7 offer an alternatives analysis followed by the recommended Plan elements.

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Chapter 2

STUDY AREA CHARACTERISTICS

STUDY AREA
The City of Morro Bay (Morro Bay) is an incorporated city of San Luis Obispo County located within California’s central coastal region. Morro Bay is neighbored by the coastal unincorporated communities of Cayucos to the north and Los Osos to the south. Morro Bay is about 14 miles west of the City of San Luis Obispo (Figure 1).

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The area is known for its geographically unique landscapes, California State Parks, and oceanic wildlife.

For these reasons, the region typically attracts nearly 800,000 tourists annually1 . Morro Bay is primarily
served by State Route (SR) 1 (running north and south) and SR 41 (terminating at SR 1 and traversing to the northeast).

POPULATION
Historic and Current Population
The most recent estimate of Morro Bay's population is from the US Census Bureau’s American Community Survey, which regularly updates population numbers for cities and counties. In 2023, the City of Morro Bay's population was 10,717. Table 1 presents the historic population in Morro Bay, as well as annual population growth. For growth comparison, data is shown for San Luis Obispo County and the State of California as well. As shown, annual growth rates have been between 0.2 percent and 0.4 percent for Morro Bay. This is compared to recent negative annual growth for the County and the State.

Population Projections by Age
Table 2 shows the projected population for Morro Bay derived from the California Department of Finance (CA DOF). As shown, the total City population is projected to increase to 11,083 by 2040 (an increase of 4.6 percent over 2020). Highlights of projected changes expected between 2020 and 2040 include:
• Morro Bay’s population will increase by 4.6 percent in 2040. • The number of children under the age of 19 will decrease slightly (-2 percent for children 4 years old and under and -7 percent for ages 5 to 19).
• The number of college-aged adults (18 to 24) is expected to decrease by 11 percent. • The number of traditional working-age adults (25 to 64) is expected to decrease by 4 percent. • The young retiree population is expected to decrease (-21 percent). • The number of mature retirees (75-84) is expected to increase by 43 percent. 1 Morro Bay Destination Tourism Strategy, SMG Consulting, 2019 Table 1: Historic and Current Population
Population
% Annual
Growth Population
% Annual
Growth Population
% Annual
Growth Population
% Annual
Growth
Morro Bay 10,255 -- 10,471 0.4% 10,592 0.2% 10,717 0.4% Balance of the County 255,322 -- 266,046 0.8% 271,925 0.4% 270,769 -0.1% San Luis Obispo County (Total) 265,577 -- 276,517 0.8% 282,517 0.4% 281,486 -0.1% State of California 36,637,290 -- 38,421,464 1.0% 39,346,023 0.5% 39,242,785 -0.1% Source: American Community Survey 5-Year Estimates
2010 2015 2020 2023

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• The older senior population (85 and older) will experience significant growth, with an expected increase of 133 percent. This age group will be the most likely to become transit-dependent over the next 20 years.

Overall, the population forecast for Morro Bay reveals how the population will age in the coming years.

The significant increase in those 85 and older is likely to result in increased demand for public transit.

Transit-Dependent Population
Table 3 presents key demographic data for Morro Bay at the US Census block group level. Some block groups are outside of Morro Bay’s city boundaries, so the block group totals shown in Table 3 are slightly higher than the actual city population (also shown). A review of block group data indicates the following:
• The most populous block group is Census Tract 105.05, Block Group 1 in North Morro Bay. This is depicted in Table 3 and Figure 2.
• Youth (persons aged 10 to 17) total 1,804, or 13 percent of the total population (compared with 18 percent in San Luis Obispo County and 22 percent statewide). Census Tract 105.06, Block Group 1 (where 15 percent of the youth population lives) and Census Tract 105.05, Block Group 2 (where 14 percent of the youth population lives) have the highest portion of the youth population.

Table 2: Morro Bay Population Projections by Age Category Year
Total
(All Ages)
Preschool
(0-4 years)
School Age
to Young
Adult
(5-19 years)
College Age
(20-24
years)
Working
Age
(25-64
years)
Young
Retirees
(65-74
years)
Mature
Retirees
(75-84
years)
Older
Seniors
(85 or
older)
2010 10,255 338 923 615 5,271 1,404 1,046 676
2020 10,592 365 1,070 851 5,115 1,787 1,104 300
2030 10,664 355 996 836 4,874 1,707 1,897 379
2040 11,083 357 997 754 4,923 1,418 1,577 698
2010 to 2020 Change
Number 337 27 147 236 -156 383 58 -376
Percent 3.3% 8.0% 15.9% 38.4% -3.0% 27.3% 5.5% -55.6%
2020 to 2030 Change
Number 72 -10 -74 -15 -241 -80 793 79
Percent 0.7% -2.7% -6.9% -1.7% -4.7% -4.5% 71.8% 26.4%
2030 to 2040 Change
Number 419 2 1 -82 49 -289 -320 318
Percent 3.9% 0.5% 0.1% -9.8% 1.0% -16.9% -16.9% 83.9%
Sources: State of California, Department of Finance, Race/Ethnic Population with Age and Sex Detail, 2000–2010. Sacramento, California, September 2012;
California Department of Finance. Report P-2B: Population Projections by Individual Year of Age, 2020-2060, California Counties and Total Population Only By Age and Race/Hispanics, and Gender: 2000-2010; American Community Survey 5-Year Estimates for 2010 and 2020.

Note: 2030 and 2040 projections were available for San Luis Obispo County, but not for the City of Morro Bay, so to calculate the projected population changes, the county change percentage was applied to the city population numbers.

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Table 3: City of Morro Bay Demographic Characteristics
Area Description # % # % # % # % # %
105.05* 1 NE Morro Bay, E of SR 1, Between Elena St and SR 41 0.2 2,019 43 2% 579 13% 346 34% 135 17% 798 21 15% 105.05* 2 NE Morro Bay, E of SR 1, Between SR 41 and Island St 1.0 1,309 251 14% 483 11% 47 5% 67 9% 657 18 12% 105.06 1 NE Morro Bay, East of SR 1 0.7 1,224 267 15% 362 8% 32 3% 68 9% 630 4 2% 105.06 2 NW Morro Bay, Coast to W of SR 1 0.7 1,005 163 9% 196 4% 20 2% 54 7% 439 2 2% 106.02* 1 S. Morro Bay on Coast, Morro Bay Blvd to State Park Rd 0.7 1,084 189 10% 351 8% 17 2% 54 7% 536 16 11% 106.02* 2 S Morro Bay, Between SR 1 and Piney Way 1.1 1,420 84 5% 629 14% 124 12% 52 7% 684 20 14% 106.02* 3 S. Morro Bay, Between Morro Bay Blvd and Pecho St 0.2 1,494 187 10% 367 8% 214 21% 144 18% 731 21 15% 106.03* 1 Central Morro Bay, Between SR 41 and Morro Bay Blvd 4.1 1,469 128 7% 412 9% 102 10% 83 11% 626 41 28% 107.07* 1 N. of Morro Dunes Natural Reserve 1.97 753 196 11% 248 5% 62 6% 18 2% 269 2 2% 130* 1 N Morro Bay, East of SR 1 73.8 1,673 226 13% 566 13% 15 1% 74 9% 623 0 0% 130* 2 N Morro Bay, East of SR 1 179.7 795 70 4% 334 7% 34 3% 38 5% 348 0 0% Total 14,245 1,804 13% 4,527 32% 1,013 7% 787 6% 6,341 145 2% 10,717 1,248 12% 3,309 31% 884 8% 618 6% 4,989 143 3%
281,486 49,564 18% 60,708 22% 14,851 5% 22,073 8% 108,897 4,366 4% State of California 39,242,785 8,729,012 22% 5,994,486 15% 2,006,651 5% 2,495,904 6% 13,434,847 939,021 7% Source: US Census Bureau American Community Survey 2023 5-Year Estimates. X% = (bolded) tracts with the highest percentage of population type.

City of Morro Bay (Census Designated Place)
San Luis Obispo County
Block
Group
Census
Tract
Square
Miles
Total
Persons
Total
Households
Zero-Vehicle
Households
Youth
(Under 18 Years) Seniors (65+)
Persons with a
Disability
Persons Below
Poverty Level

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• Seniors age 65 and older total 4,527 or 32 percent of the total City population. This is significantly higher than the County (22 percent) or statewide (15 percent). Census Tract 106.02, Block Group 2 near the east side of Morro Bay State Park, has a particularly high concentration of the senior population (14 percent), as well as Census Tract 105.05, Block Group 1 at 13 percent, and Census Tract 130, Block Group 1 at 13 percent. • Persons with a disability totaled 1,013, or 7 percent, of the population. This is slightly higher than San Luis Obispo County (where 5 percent of the total population has a disability) and the State of California (also 5 percent). Census Tract 105.05, Block Group 1 has the highest portion of the population of persons with a disability (34 percent), followed by Census Tract 106.02, Block Group 3 (21 percent).
• Persons living below the federal poverty level totaled 787, accounting for 6 percent of the Morro Bay population. This is less than San Luis Obispo County (8 percent) and about equal to the State of California. Census Tract 105.05, Block Group 1 (17 percent) and Census Tract 106.02, Block Group 3 (18 percent) have the highest concentration of persons living below the federal poverty level in Morro Bay.
• One of the stronger indicators of transit dependence is households without vehicles available. In Morro Bay, 145 households (2 percent) have no access to a vehicle, a lower rate compared to both San Luis Obispo County (4 percent) and the State of California (7 percent). This is depicted in Table 3. The greatest concentration is found in Census Tract 106.03, Block Group 1, which accounts for 28 percent of all zero-vehicle households in Morro Bay.

Transit Needs Index
It is helpful to consider all five of the potentially transit-dependent groups simultaneously to paint a better picture of what areas of Morro Bay have the greatest relative transit needs. To better compare the transit needs of different block groups in the City, LSC developed a Transit Needs Index (TNI) (Table 4) for Morro Bay using the demographic data presented in Table 3.

The first step in developing the TNI is to calculate the density of each specific transit-dependent group within each block group (for example, there are 961 youth per square mile in Census Tract 106.02, Block Group 3). Then, the ranges of densities for each subpopulation were divided into quintiles. Population densities in the highest quintile were assigned a score of 5 to represent the high density and resulting high transit need, while the lowest population densities were assigned a score of 1 to represent the lower need for transit.

The scores for each subgroup were then summed to yield an overall transit needs index rank for each block group (Table 4 and Figure 3). Ultimately, the TNI measures the relative need for transit services from the population living in the block groups, with possible values ranging from a low of 5 to a high of

25. A score of 25 indicates the greatest relative need for transit services, considering all five transitdependent subgroups. As shown in Figure 3, Census Tract 106.02, Block Group 3 (TNI score of 23), and Census Tract 105.05, Block Group 1 (TNI score of 19) have the highest overall transit need.

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Table 4: City of Morro Bay Transit Needs Index
Legend
1 2
3 4
5 Census
Tract
Block
Group Area Description
Total
sq mil
Youth
(Under 18
Years)
Senior
Adults
(65+)
Persons
with a
Disability
Persons
Below
Poverty
Level
ZeroVehicle
Households
105.05* 1 NE Morro Bay, E of SR 1, Between Elena St and SR 41 0.2 1 5 5 4 4 19 105.05* 2 NE Morro Bay, E of SR 1, Between SR 41 and Island St 1.0 2 2 1 1 1 7 105.06 1 NE Morro Bay, East of SR 1 0.7 2 2 1 1 1 7
105.06 2 NW Morro Bay, Coast to W of SR 1 0.7 2 1 1 1 1 6 106.02* 1 S. Morro Bay on Coast, Morro Bay Blvd to State Park Rd 0.7 2 2 1 1 1 7 106.02* 2 S Morro Bay, Between SR 1 and Piney Way 1.1 1 2 1 1 1 6 106.02* 3 S. Morro Bay, Between Morro Bay Blvd and Pecho St 0.2 5 4 4 5 5 23 106.03* 1 Central Morro Bay, Between SR 41 and Morro Bay Blvd 4.1 1 1 1 1 1 5 107.07* 1 N. of Morro Dunes Natural Reserve 2.0 1 1 1 1 1 5 130* 1 N Morro Bay, East of SR 1 73.8 1 1 1 1 1 5
130* 2 N Morro Bay, East of SR 1 179.7 1 1 1 1 1 5
*= Census Tract is partially outside of the City of Morro Bay Source: LSC Transportation Consultants, Inc.

Rank
Very Low Rank
Low Rank
Medium Rank
High Rank
Very High Rank
Overall Transit
Needs Index
Rank (All
Categories
Summed)

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EMPLOYMENT AND ECONOMY
Some of the most regular transit riders are those who rely on the bus for commuting to and from work.

This section reviews the Morro Bay economic characteristics influencing transit demand for the purpose of commuting.

Employment and Unemployment Statistics
Table 5 shows the current and historical labor force, including the unemployment rate. Like many areas, Morro Bay experienced a higher unemployment rate during the COVID-19 pandemic in 2020 (14.5 percent) and 2021 (10.1 percent), higher than the overall state average of 10.1 percent in 2020 and 7.3 percent in 2021, compared to 2019 a statewide unemployment rate of 4.1 percent in 2022, with a statewide unemployment rate of 4.3 percent. Monthly unemployment rates during 2024 ranged from

8.2 percent in January to 5.7 percent in May. Employment data is a key indicator for transit planning, as it helps identify commuting patterns, peak travel times, and the potential demand for transit services.

Understanding labor force trends also supports decisions about service frequency, route design, and connectivity to major employment centers. In addition, unemployed individuals are more likely to experience difficulty affording the operating costs of a personal vehicle and may rely on public transit as a more affordable means of transportation.

Table 5: Morro Bay Current and Annual Employment
Month (2024) Labor Force
Total
Employed
Total
Unemployed
Unemployment
Rate
January 5,200 4,700 400 8.2%
February 5,200 4,800 400 8.3%
March 5,200 4,800 400 7.6%
April 5,100 4,800 400 6.9%
May 5,100 4,800 300 5.7%
June 5,200 4,800 400 7.6%
July 5,200 4,800 400 8.1%
August 5,200 4,700 400 8.5%
September 5,100 4,700 400 7.7%
October 5,100 4,800 400 7.7%
November 5,100 4,800 400 7.5%
December 5,100 4,700 400 7.2%
Year Labor Force
Total
Employed
Total
Unemployed
Unemployment
Rate
2023 5,200 4,800 300 6.7%
2022 5,100 4,800 300 6.0%
2021 5,200 4,700 500 10.1%
2020 5,300 4,500 800 14.5%
2019 5,300 5,000 300 5.6%
Source: California Employment Development Department, Unemployment Rates

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Travel Behavior and Patterns
Major employers can be significant transit trip generators due to the many employees who need to get to and from work. Morro Bay is a tourist destination, and the economy is heavily reliant on tourism. As such, many of Morro Bay’s residents commute to another area for work, and many Morro Bay workers commute from another area where they live. Table 6 shows where employees who work in Morro Bay live and where residents of Morro Bay commute for work.

As shown in Table 6, 19.9 percent of jobs employing Morro Bay residents were located within Morro Bay. A fifth of jobs require Morro Bay residents to commute to the City of San Luis Obispo (20.7 percent or 953 people). Nearly three-quarters (69.2 percent) of all jobs held by Morro Bay residents are in San Luis Obispo County. Of those with jobs in Morro Bay, 25.4 percent live in Morro Bay, and 76.1 percent live in San Luis Obispo County.
2021
Counties # of Jobs % of Total Cities/Towns # of Jobs % of Total San Luis Obispo County 3,182 69.2% San Luis Obispo 953 20.7% Los Angeles County 312 6.8% Morro Bay 916 19.9%
Santa Barbara County 268 5.8% Atascadero 193 4.2%
Kern County 104 2.3% Los Angeles 151 3.3%
Orange County 100 2.2% Los Osos 144 3.1%
Fresno County 80 1.7% Santa Maria 102 2.2%
Monterey County 63 1.4% Paso Robles 96 2.1%
Santa Clara County 60 1.3% Avila Beach 95 2.1%
Ventura County 51 1.1% Cambria 95 2.1%
San Diego County 41 0.9% Cayucos 83 1.8%
All Other Locations 338 7% All Other Locations 1,771 38.5% Total Number of Jobs 4,599 Total Number of Jobs 4,599
Counties # of Jobs % of Total Cities/Towns # of Jobs % of Total San Luis Obispo County 2,749 76.1% Morro Bay 916 25.4%
Santa Barbara County 220 6.1% Los Osos 509 14.1%
Los Angeles County 109 3.0% San Luis Obispo 303 8.4%
Fresno County 43 1.2% Atascadero 249 6.9%
Monterey County 39 1.1% Paso Robles 123 3.4%
Tuolumne County 39 1.1% Cayucos 96 2.7%
Kern County 36 1.0% Santa Maria 92 2.5%
Orange County 27 0.7% Arroyo Grande 55 1.5%
Ventura County 26 0.7% Los Angeles 43 1.2%
Contra Costa County, CA 23 0.6% Templeton 43 1.2%
All Other Locations 300 8.3% All Other Locations 1,182 32.7% Total Number of Jobs 3,611 Total Number of Jobs 3,611
Source: US Census Bureau LEHD Database, 2022
Note: Bold text indicates locations within San Luis Obispo County.

Table 6: Morro Bay Local and Regional Commute Patterns
Where Employees In Morro Bay Commute From
Where Morro Bay Residents Work and Commute to

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This dataset does not indicate whether a job is held by a remote worker. Despite the data not clarifying who works in-person or remotely, most of this information can be logically assumed. For instance, most Morro Bay residents holding jobs that are technically located in Los Angeles County are likely working remotely. Even with these caveats, the Census Longitudinal Employer-Household Dynamics (LEHD) data still provides useful information about popular commute patterns that could potentially be served by transit.

Private vehicles are the primary form of commute transportation for Morro Bay residents, as 81 percent of Morro Bay workers either drive alone or carpool to get to their place of work. In comparison, less than 1 percent (0.3 percent) use public transit to complete their commute2 .

ACTIVITY CENTERS
Activity centers in Morro Bay, which are likely to generate trips (and potentially transit ridership), are shown in Figure 4. As shown, many of these activity centers are clustered in the downtown area (close to the transfer center), and all are served by existing MBT services.

In addition to local activity centers, regional activity centers are also potentially important transit generators. In terms of transit, these activity centers would be accessible through transfers to RTA Routes 12 and 15 at the City Park transit hub.

RECENT PLANNING DOCUMENTS
A summary of recent transportation plans relevant to either MBT or RTA, including both countywide studies as well as agency-specific reports, is available in Appendix B. 2 U.S. Census Bureau. (2023). Sex of Workers by Means of Transportation to Work [B08006 for 2023].

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Chapter 3

OVERVIEW OF CURRENT TRANSIT SERVICES

INTRODUCTION
Several public, private, and non-profit agencies provide transit and transportation services in Morro Bay.

While all these organizations move people around, each program differs in the type of service, availability, and passenger eligibility. This chapter primarily discusses the services of the one public transit provider, MBT, with other services summarized at the end of this chapter.

HISTORY, GOVERNANCE, AND ORGANIZATIONAL STRUCTURE
MBT began operating as a local transit service in 1977. Transportation services were first offered by the City of Morro Bay as a demand-response service. In the summer of 1994, the City introduced a seasonal Trolley service. In 2010, the City of Morro Bay completely restructured MBT services, replacing a 30-year-old general public demand-response service with the currently-operated deviated fixed-route service. This change was a result of reductions in the Transportation Development Act (TDA) funding during the recession. On June 1, 2025, MBT operations were fully assumed by RTA through a contract between the City of Morro Bay and RTA.

MANAGEMENT STRUCTURE
MBT historically has been governed by the Morro Bay City Council as the ultimate policy and decisionmaking body. Operating responsibilities were split between City staff and a third-party transit contractor. MBT was managed by the Public Works Department of the City of Morro Bay, primarily through the Management Analyst and Public Works Director roles.

In the fall of 2024, the Morro Bay City Council authorized staff to take steps to consolidate MBT into RTA, whereby RTA would take over the administration, maintenance, and operation of MBT services. In February 2025, the Morro Bay City Council and RTA Board executed an agreement that transferred MBT administration, operations, and maintenance to RTA. RTA began operating MBT in June 2025, and MBT’s capital assets were transferred to RTA. The Morro Bay City Council still retains control of service levels, fares, and budget for local transit services.

The RTA is a Joint Powers Authority (JPA), established in 1989 to manage San Luis Obispo County’s regional fixed-routes and paratransit services. Prior to 2009, RTA services were provided through contract by private operators. However, since 2009, the RTA has operated all of its services directly.

The RTA Board of Directors consists of representatives from all of the cities in which the RTA operates (Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, Pismo Beach, and San Luis Obispo) and five San Luis Obispo County Supervisors. The RTA Board meets every other month and oversees operational and policy issues.

The Regional Transit Advisory Committee (RTAC) meets quarterly to provide advice to the RTA Board on pertinent issues. The RTAC is comprised of representatives appointed from the County of San Luis Obispo; the Cities of San Luis Obispo, Atascadero, Morro Bay, and Paso Robles; the South County Transit Committee; Cal Poly; Cuesta College; and SLOCOG. The RTA Board also appoints two at-large representatives, one of fixed-route users and one of paratransit users.

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Staffing
The City of Morro Bay’s Transit Division is overseen by Public Works Department staff. The Department is responsible for the review and approval of annual budgets prepared by the RTA, service planning, and review of operating data collected by the RTA. The RTA provides all operating and vehicle maintenance staff, bus operator training, dispatching, marketing, capital procurement, and grants management.

MBT SERVICES SUMMARY
MBT consists of a single, deviated fixed-route available to the general public on weekdays and the Morro Bay Trolley, which operates on Saturdays and Sundays from early June through early October each year. Until June 2025, MBT operations were contracted to a third-party transit operator. Now, MBT is directly managed and operated by the RTA.

MBT Fixed-Route
MBT fixed-route service consists of a single, deviated fixed-route (Table 7). The route operates Monday through Friday from 6:25 AM to 6:45 PM. The deviation feature is referred to as “Call-A-Ride”. To request a deviation of up to 0.75 miles from the designated route, passengers must call dispatch in advance to schedule their pick-up and drop-off location. The Call-A-Ride component of MBT is available to the general public.

The route taken by the MBT fixed-route is shown in Figure 5. It runs as a loop on 60-minute headways, with stops at major local activity centers and tourist attractions. Passengers who need to travel beyond Morro Bay can transfer to RTA Routes 12 and 15 at the City Park.

Table 7: Summary of Morro Bay Transit Services and Frequency Service Days1 Start End Start & End Location
Fixed Route3
Fixed Route Monday-Friday 6:25 AM 6:45 PM Morro Bay Community Center Every 60 Minutes Call-A-Ride4 Monday-Friday 6:25 AM 6:45 PM Curb-to-Curb Service N/A North Route Saturday and Sunday 10:00 AM 5:00 PM Main St @Elena St to Main St @ Errol St Every 15 minutes Downtown Route Saturday and Sunday 10:00 AM 5:00 PM Morro Bay State Park Campground to Morro Bay Blvd @ Monterey Ave
Every 15
minutes
Source: https://www.slorta.org/schedules-fares/morro-bay-transit/ Service
Frequency
(Minutes)
Trolley5
Note 4: Call-A-Ride is a curb-to-curb service that will deviate up to 3/4 mile off the route to pick up or drop off passengers before resuming the regular fixed route. Passengers must call and make an appointment the day before to use this service.

Note 2: Schedule times accurate as of February 2025.

Service Hours2
Note 3: Trolley operates seasonally from early June to early October.

Note 1: No service on New Year's Day, Martin Luther King Jr. Day, President's Day, Memorial Day, Juneteenth, Independence Day.

Note 5: Connection to RTA is possible at Morro Bay City Park to connect to RTA Routes 12 and 15.

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MORRO BAY TROLLEY
MBT operates the Morro Bay Trolley service from early June through the first weekend of October. This service is available on Saturday and Sunday from 10 AM to 5 PM (Table 7). MBT operates two trolley routes, as shown in Figures 6 and 7 and described below.

North Route
This route operates on approximately 15-minute headways and travels north of Morro Bay to the Morro Strand State Beach Campground, south through downtown along Main Street, west on Harbor Street, south on Market Street, west on Pacific Street, north on Embarcadero Road, east on Harbor Street, returning to Main, and north again to the Morro Strand State Beach Campground.

Downtown Route
This route is operated approximately every 15 minutes. Starting at Shasta and Kennedy Way, the bus heads south on Piney Way, west on Morro Bay Boulevard, south on Main Street to Morro Bay State Park, returning north on Main, west on Harbor, south on Market, west on Pacific Street, north on Embarcadero Road, east on Harbor Street, south on Morro Avenue, east on Morro Bay Boulevard and north on Shasta to Kennedy Way.

MBT FARE STRUCTURE
MBT Fares
MBT offers several options for fares (Table 8). General public one-way fares are $1.50 for the fixed-route and $2.50 for Call-A-Ride service. Discounted fares are $0.75 and are available for seniors (aged 65 to 84) and passengers with a disability. Children 5 years of age and under are free with a paying adult.

Seniors older than 85 years of age qualify for a Gold Pass, which allows them to ride for free.

MBT also offers day pass and punch pass products. The day pass costs $4.00 for regular fare and $2.00 for discounted fare. There is also an 11-Ride Punch Pass, which is good for 11 rides on the fixed-route bus and costs $15 for regular fare and $7.50 for the discounted fare. There is also an 11-Ride Punch Pass specifically for the Call-A-Ride service, which is $25. Regional passes are also accepted on MBT (see RTA Fare Passes below).

The fare on the Morro Bay Trolley is $1.00, and up to two children under age 5 ride free with a farepaying rider.

The RTA currently uses a zone-based fare for its intercity fixed-routes, ranging from $1.75 to $3.25. At its May 7, 2025, meeting, the RTA Board of Directors authorized a flat $2.00 regular / $1.00 discount fare per boarding, which will be implemented alongside a countywide contactless fare-capping system in Fall 2025. That contactless system will also be available for riders on the MBT services.

Key Transfer Locations
• Passengers have timed transfers between MBT fixed-route services and RTA Routes 12 and 15 at the Morro Bay City Park transit hub. Riders can also transfer between the two Trolley routes at Dorn’s Breaker Café on Market Street, although the transfers are not timed.

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OTHER PROVIDERS
Regional Transit Authority
The RTA operates fifteen fixed-routes: five long-distance routes, two local Paso Robles routes, four local south county routes, the MBT, and three seasonal trolleys. Generally, RTA service hours are 6:00 AM to 9:45 PM on weekdays, 7:00 AM to 9:00 PM on Saturdays, and 7:30 AM to 7:15 PM on Sundays. In addition, riders who are ADA eligible qualify for San Luis Obispo County’s Runabout paratransit service, that is operated by the RTA.

Table 8: Transit Fares
Morro Bay Transit Fares
Cash Fares Day Pass
Fixed Route $1.50 $4.00 $15.00
Discount Fixed Route1 $0.75 $2.00 $7.50
Call-A-Ride $2.50 N/A $25.00
Gold Pass (Ages 85 and over) Free -- --
Children Ages 5 and Under Free -- --
Trolley $1.00 -- --
RTA Fares
Cash Fares
Regular $1.75 - $3.25 $1.50
Seniors (65 - 79 years old) $0.85 - $1.60 $0.75
Seniors (80+ years old) Free with VIP Card 2 Free with VIP Card 1 ADA Cardholders Free with ADA Card Free with ADA Card
Disabled $0.85 - $1.60 $0.75
Medicare Cardholders $0.85 - $1.60 $0.75
Students (K - 12) $0.85 - $1.60 $1.50
Children (44" and under) Free with adult rider Free with adult rider Pass Products
Regional Day Pass 3 $5.50 $5.50
Day Pass -- $1.50 - $3.00
20-Ride Pass -- $24.00
Stored Value Pass $15.00 $15.00
31-Day Pass - Regular $47.00 $37.00
31-Day Pass - Discounted 4 $23.50 $18.50
Regional 31-Day Pass 3 $68.00 $68.00
Regional 31-Day Pass - Discounted 2,4 $34.00 $34.00
Note 1: MBT offers discounted fare and punch passes to seniors (ages 65 to 84) and disabled individuals. Children under 5 years of age ride free with paying adult.

Source: MBT and SLO RTA
Note 2: Seniors ages 80 and older must fill out a Basic Eligibility Form and be verified by the RTA to receive a VIP Card.

Note 3: Regional Day Pass allows unlimited rides on all SLO RTA, SLO Transit, and Morro Bay Transit routes for the date indicated. The Regional 31-Day Pass allows unlimited rides on the same services for 31 consecutive days.

Note 4: Discounted SLO RTA passes available for senior adults ages 65 to 79, disabled passengers, and students in grades K-12 on the RTA intercity and local Paso Robles Routes.

One-way
Fare Price
Punch Pass - 11
Rides
Intercity Routes
(Routes 9 - 15)5
Local Routes
(Paso Robles Routes A/B,
Routes 21 - 28)5
Note 5: RTA's Board of Directors has authorized a flat rate fare of $2.00 regular fare and $1.00 discount fare. This change will be implemented in the Fall of 2025, alongside a countywide contactless fare-capping system. This will be implemented on MBT services as well.

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RTA Route 12 – San Luis Obispo – Morro Bay
RTA Route 12 operates between San Luis Obispo and Los Osos via Morro Bay, as shown in Figure 5.

Service is available Monday through Friday on an hourly frequency. RTA Route 12 also operates five round-trips each Saturday and three round-trips each Sunday. Key destinations served by RTA Route 12 include the Government Center, the Cal Poly Library, Cuesta College, and Morro Bay City Park.

RTA Route 15 – Morro Bay – San Simeon
RTA Route 15 provides deviated fixed-route service along the north coast of San Luis Obispo County, providing connectivity between Morro Bay, Cayucos, Cambria, and San Simeon (Figure 5). RTA Route 15 completes five roundtrips Monday through Saturday and three roundtrips per Sunday. Notable RTA Route 15 stops include Morro Bay City Park, Morro Bay High School, the Cayucos Pier, the Cambria Pines Lodge, and the Cambria Library. On weekends, RTA Route 15 also serves the Hearst Castle Visitor Center.

Runabout
The Americans with Disabilities Act of 1990 (ADA) requires public transit operators to provide complementary paratransit service for people with disabilities who are unable to access local fixed-route services. The Runabout has been the sole complementary paratransit service for San Luis Obispo County since 2001. Administered and operated by the RTA, the Runabout serves areas within 0.75 miles of every fixed-route service in the county.

Passengers make Runabout reservations in advance by calling RTA’s demand response scheduling line.

Runabout provides origin-destination service; however, riders can request door-to-door service if they have a disability that makes origin-destination service infeasible. Every Runabout vehicle is equipped with a wheelchair lift. Runabout service is limited to only those passengers who are verified by the RTA as meeting ADA eligibility criteria.

RTA Fare Passes
Table 8 shows the fare structure for the RTA services systemwide. For frequent riders, RTA offers daily, weekly, and 31-Day passes. Physical passes are available for purchase at the RTA office and numerous other government offices in the area, including at the Morro Bay Public Works office. Passes can also be purchased online and obtained in a physical format via USPS or electronically through Token Transit.

MBT accepts validated Regional Day and Regional 31-Day Pass products. Those who have met the ADA certification process and are eligible, Runabout passengers ride for free on MBT and all other fixedroutes in the county with their Runabout card. Runabout fare on RTA services is twice the applicable fixed-route fare, with a cap of $11.00 (which is twice the Regional Day Pass price). Reservations must be made the previous day and up to two weeks in advance.

A helpful fare option for passengers occasionally traveling long distances across jurisdictional boundaries is the Regional Day Pass. This includes unlimited rides on all RTA, South County Routes 21, 24, 27, and 28, SLO Transit local fixed-routes, Paso Robles Routes A & B, and MBT for the price of $5.50.

The following multi-day discount pass options are available for riders who use RTA services on a more frequent basis:
• RTA 31-Day Pass (only good on RTA-operated fixed-routes) • RTA 7-Day Pass (only good on RTA-operated fixed-routes)

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• Regional 31-Day Pass (South County, RTA, Paso Robles, MBT, and SLO Transit) Stored value cards are also available for purchase at outlets and online for RTA.

RIDERSHIP TRENDS
Annual Ridership
Table 9 shows ridership trends by service for the past seven fiscal years for the Fixed-Route/Call-A-Ride and Morro Bay Trolley. As shown in Table 9 and Figure 8, systemwide ridership varied from a high of 34,198 passenger-trips in FY 2018-19 to a low of 8,561 in FY 2020-21, during the height of the COVID-19 pandemic. While ridership has been growing consistently over the last several fiscal years, it is still significantly less than pre-pandemic levels.

Morro Bay Fixed-Route/Call-A-Ride ridership had the highest ridership in FY 2018-19 at 19,507 passengers, with ridership plummeting to a low of 7,038 in FY 2020-21 during the height of COVID-19, partially due in part to Saturday service ceasing in July 2020. As of FY 2024-25, the Fixed-Route/Call-ARide served 11,474 passenger trips, resulting in an increase of 13 percent since FY 2020-21.

Morro Bay Trolley ridership also saw the highest ridership in FY 2018-19 at 14,691. In 2020-21, ridership plummeted by 74 percent to only 1,523 during the height of COVID-19. As the campgrounds in the north and south of Morro Bay were closed until August 2020, this significantly impacted ridership that year. In addition, due to the uncertainty of how much tourism the City would experience during COVID, the number of routes was reduced from three to one, focusing on bringing riders from the campgrounds to the Downtown, Embarcadero waterfront area, and beach. Since then, passenger trips have rebounded to 4,143 trips as of FY 2024-25, resulting in a 58 percent increase since the pandemic.

Table 9: Morro Bay Transit and RTA Routes Passenger Trips by Year Routes serving Morro Bay FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 % Change
FY 2018-19 to
FY 2024-25
% Change
FY 2020-21 to
FY 2024-25
Morro Bay Transit
Fixed Route/Call-a-Ride 19,507 13,306 7,038 10,152 10,745 11,485 11,474 -41% 13% Trolley 14,691 9,925 1,523 2,628 3,538 3,774 4,143 -72% 58% MBT Systemwide Total 34,198 23,231 8,561 12,780 14,283 15,259 15,617 -54% 22% RTA Routes
RTA Route 12 175,135 127,300 68,928 91,920 106,963 117,627 120,386 -31% 31% RTA Route 15 24,795 19,066 12,509 11,612 10,420 12,001 12,116 -51% 4%

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Ridership by Month
Table 10 and Figure 9 show monthly ridership for MBT in FY 2023-24. As shown, total ridership for MBT was highest in the summer months, when the Trolley operates. August had the most passenger-trips (2,136), and February had the lowest (818 passenger-trips).

For both Fixed-Route and Call-A-Ride services, ridership was fairly consistent, with Fixed-Route having an overall monthly average of 901 passenger trips per month and Call-A-Ride having an overall monthly average of 35 passenger trips. Call-A-Ride (fixed-route deviations) represented approximately 4 percent of fixed-route ridership. The month with the greatest ridership was August for both Fixed-Route and Call-A-Ride (1,105 trips and 50 trips, respectively).

The months with the lowest number of passenger trips by service type was November (773 trips) for the Fixed-Route and February for Call-A-Ride (25 trips). The Trolley only operated from June to early October. The highest month of ridership for the Trolley in FY 2023-24 was July (1,048 passenger-trips), and the lowest ridership occurred in October (55 passenger-trips).

Table 10: Morro Bay Transit Passenger Trips by Route by Month FY 2023-24
Month Year # % # % # % # %
July 2023 921 8.5% 39 9.2% 1,048 26.5% 2,008 13.2%
August 2023 1,105 10.2% 50 11.8% 981 24.8% 2,136 14.1%
September 2023 996 9.2% 34 8.0% 863 21.8% 1,893 12.5%
October 2023 931 8.6% 31 7.3% 55 1.4% 1,017 6.7%
November 2023 773 7.1% 46 10.8% - - 819 5.4%
December 2023 814 7.5% 35 8.3% - - 849 5.6%
January 2024 878 8.1% 27 6.4% - - 905 6.0%
February 2024 793 7.3% 25 5.9% - - 818 5.4%
March 2024 833 7.7% 27 6.4% - - 860 5.7%
April 2024 944 8.7% 32 7.5% - - 976 6.4%
May 2024 972 9.0% 34 8.0% - - 1,006 6.6%
June 2024 857 7.9% 44 10.4% 1009 25.5% 1,910 12.6%
Total 10,817 424 3,956 15,197
Average Monthly 901 35 791 1,266
Fixed Route Call-A-Ride Trolley Total

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Ridership by Day of Week
Figure 10 shows average boardings by day of week for 2024. • The Fixed-Route/Call-A-Ride services only operate Mondays through Fridays and saw the highest average ridership on Tuesdays (48 average daily boardings) and Thursdays (45 average daily boardings). The lowest average daily ridership occurred on Mondays (39). • The Trolley service only runs on weekends between June and the first weekend in October. As shown, Saturdays saw a higher average ridership (45 daily boardings) than Sundays (32 daily boardings).

Ridership per Hour
Average ridership by hour for all weekdays in 2024 is depicted in Figure 11. Fixed-Route/Call-A-Ride ridership is generally higher in the morning, with a drop between 12:00 PM and 1:00 PM. There is a morning peak between 9:00 and 10:00 AM and another from 11:00 AM and 12:00 PM, both with an

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average hourly ridership of 4.8, and an afternoon peak between 2:00 PM and 3:00 PM, with an average of 6.4 passengers per hour. The lightest ridership occurs in the first and last hour of the day (6:25 AM – 7:00 AM, with 2.2 boardings and 6:00 PM – 6:45 PM, with 1.6 boardings), followed by 12:00 PM – 1:00 PM with 2.4 boardings.

Figure 12 shows average Trolley ridership by hour over the course of the 2024 summer season and the split of hourly ridership between the Downtown Route and the North Route. Average ridership by hour is relatively strong over the course of the operating day. Ridership is highest from 3:00 PM – 4:00 PM, with an average of 8.3 boardings on the Downtown Route and 6.7 boardings on the North Route.

Ridership at the beginning of operating hours from 10:00 AM – 11:00 AM is the lowest overall on average (5.35 average riders). The two trolley routes are split fairly equally, with 49 percent of total daily riders riding the North Route and 51 percent of riders riding the Downtown Route. Hourly ridership on the Downtown Route is fairly steady during the day (7.9 average riders from 11:00 AM – 3:00 PM) with the exception of the first and last hour of the day, where ridership is significantly lower (4.8 average riders from 10:00 AM – 11:00 AM and 6.4 average riders from 4:00 PM – 5:00 PM). On the North Route, ridership in the afternoon, from 2:00 PM – 4:00 PM, is significantly higher, with the hour from 4:00 PM – 5:00 PM having an hourly average of 7 riders.

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Ridership by Fare Type
Table 11 shows annual ridership by fare type for Fixed-Route and Call-A-Ride services. From July 2023 through June 2024, the largest proportion of riders paid a Discount cash fare (5,264 riders or 47 percent), while Regular cash fares were rarely paid, with only 6 recorded. Although shown in Table 3, 32 percent of Morro Bay residents are aged 65 or older or have a disability, it is possible that not all discounted boardings represent riders who are eligible for the discounted fare. The RTA 31-Day Regional Pass was the second most common fare type used, with 4,293 rides or 38 percent of all rides. The RTA 1- Day Regional Pass represents 92 boardings. Gold and Child fare types amounted to 686 and 81 fares, respectively, with a noticeable increase in Gold riders during June 2024. Additional ridership included 129 Youth Ride Free (a free summer program for K-12 school kids), 15 53 Aide rides, and 243 Runabout users.

Use of RTA 31-Day Regional Passes and Discount cash fares remained consistently high throughout the year, with minimal use of regular cash fare options. Call-A-Ride service usage varied slightly month-tomonth but remained fairly steady between 25 to 50 riders. Overall, the data reflects consistent community reliance on discount programs and 31-Day Regional Passes, with only modest fluctuations in total monthly ridership.

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Table 11: Fixed-Route/Call-A-Ride Riders by Fare (FY 2023-24) Regular Discount
Call-ARideRegular
Day Pass
Discount
Day Pass Regular Discount
Call-ARide GoldRTA 1
DAY
RTA 31
DAY Child Youth1 Free ADA Aide Runabout
TOTAL
RIDERS
7/1/2023 0 511 39 0 0 0 0 0 39 3 283 2 64 0 0 0 19 960
8/1/2023 0 621 50 0 0 0 0 0 41 7 361 2 30 0 0 0 43 1,155 9/1/2023 0 606 34 0 0 0 0 0 37 8 308 0 0 0 0 1 36 1,030 10/1/2023 0 455 31 0 0 0 0 0 51 13 386 0 0 0 0 0 26 962 11/1/2023 0 372 46 0 0 0 0 0 32 11 336 6 0 0 0 0 16 819 12/1/2023 1 417 35 0 0 0 0 0 40 3 322 3 0 0 0 0 28 849
1/1/2024 0 373 27 0 0 0 0 0 51 6 390 35 0 0 0 5 18 905
2/1/2024 0 340 25 0 0 0 0 0 62 7 359 17 0 0 0 0 8 818
3/1/2024 3 383 27 0 0 0 0 0 69 9 360 0 0 0 0 9 0 860
4/1/2024 0 442 32 0 0 0 0 0 75 2 410 5 0 0 0 0 10 976
5/1/2024 0 432 34 0 0 0 0 0 79 12 429 5 0 0 0 0 15 1,006 6/1/2024 2 312 25 0 0 2 5 19 110 11 349 6 35 0 0 0 24 900 Subtotal 6 5,264 405 0 0 2 5 19 686 92 4,293 81 129 0 0 15 243 11,240 Source: MBT Monthly Transit Data FY 2023-24
Note 1: The column for Youth shows ridership from the Youth Ride Free summer program.

CASH RIDER DAY PASS RIDER PUNCH PASS RIDER REGIONAL PASSES OTHER RIDER

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Table 12 shows annual Trolley ridership by fare type for FY 2023-24. Between July 2023 and October 2023, and in June 2024, the $1 cash fare was the most widely recorded, accounting for 3,274 rides.

Additionally, there were 497 rides recorded for children aged 5 and under, who ride for free when accompanied by a paying adult. There were no recorded rides under Free Event, $3 All Day Pass, or Lifts.

Additionally, 3 tokens3 were received in June.

VEHICLE SERVICE MILES AND HOURS
Similar to ridership trends, MBT Fixed-Route/Call-A-Ride service levels have fluctuated in recent years due to pandemic-related disruptions and driver shortages. The system experienced its lowest service levels in FY 2022–23, with 2,858 vehicle service hours (VSH) and 27,150 vehicle service miles (VSM) (Figure 13) due to a driver shortage from mid-December 2023 through February 2024. While service hours have since rebounded to 3,092 VSH in FY 2023–24, nearly returning to pre-pandemic levels, it is unlikely that MBT will return to pre-pandemic highs, as Fixed-Route/Call-A-Ride no longer offers Saturday services. VSM also increased to 31,004 in FY 2023–24, up from the previous year but still slightly below the FY 2020–21 baseline, due to increases in Call-A-Ride trips in FY 2022-23. Between FY 2020–21 and FY 2023–24, Fixed-Route/Call-A-Ride VSH increased marginally by 1 percent, while VSM declined overall by 6 percent.
3 Going forward, no new Tokens will be issued since that fare program is being phased out.

Table 12: Trolley Riders by Fare (FY 2023-24)
$1 Child
Free
Event
$3 All
Day Pass
Free
Hotel
Guests
Tokens
Received
Tokens
Sold Lifts Total
7/1/2023 943 105 0 0 0 0 0 0 1,048
8/1/2023 846 135 0 0 0 0 0 0 981
9/1/2023 770 93 0 0 0 0 0 0 863
10/1/2023 46 9 0 0 0 0 0 0 55
6/1/2024 669 155 0 0 0 3 0 0 827
Subtotal 3,274 497 0 0 0 3 0 0 3,774
Note: Trolley service operates seasonally from June to October. In FY 2023-24, the service only operated one day in the month of October.

Source: MBT Monthly Transit Data FY 2023-24

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Figure 14 shows Trolley service levels. Similar to broader system trends, trolley service levels have fluctuated in recent years due to pandemic-related impacts and operational constraints. The system recorded its lowest service levels in FY 2020-21, with just 338 vehicle service hours (VSH) and 2,934 vehicle service miles (VSM). Service levels increased significantly over the next two years, reaching 528 VSH and 6,755 VSM in FY 2022-23—a level that was maintained in FY 2023-24. This represents an overall increase of 56 percent in VSH and 130 percent in VSM between FY 2020-21 and FY 2023-24.

When broken down by mode, fixed-route service consistently accounts for the majority of operational output, with 2,976 VSH and 29,841 VSM in FY 2023-24. The trolley—a seasonal offering—has seen steadily increasing service levels with each passing year from the first year of COVID, growing from 2,934 VSM in FY 2020-21 to 6,755 VSM in FY 2023-24. Overall, MBT’s service recovery since the peak of the COVID-19 pandemic has been strong, though continued monitoring will be needed to assess future yearover-year trends.

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MBT FACILITIES AND CAPITAL EQUIPMENT
Operations Facility
Prior to the consolidation with the RTA, the MBT vehicles were housed at the City’s Maintenance Yard, where they were maintained by a City mechanic. The City used the State’s Voyager fuel card system to fuel vehicles at local gas stations. Up until June 1, 2025, the MV administrative staff were housed at 1001 Kennedy Way in Morro Bay in an office space at the Community Center. Moving forward, under RTA, MBT vehicles will be stored and maintained at the RTA facility located in San Luis Obispo.

The new RTA Bus Maintenance Facility is located at 253 Elks Lane in San Luis Obispo, and is the central location for RTA’s administrative, operations, dispatch, and maintenance functions. The facility’s on-site parking accommodates approximately seventy public transit vehicles and eighty employee and visitor vehicles. The Bus Maintenance Facility has both conventional fueling capacity as well as four fast-charge direct-current (DC) bus recharging stations. The RTA intends to install additional bus charging stations as the agency procures more battery-electric buses (BEBs).

Fleet Inventory
There are seven vehicles in the MBT active fleet, as shown in Table 13. All vehicles are equipped with wheelchair lifts and can accommodate two wheelchair passengers to conform with ADA requirements.

The three buses used on the Deviated Fixed-Route are equipped with two-position bicycle racks, and the trolley vehicles do not have bicycle racks. After consolidation into the RTA, one of the buses and two of the trolleys were transferred to the RTA, with the trolleys having two-position bicycle racks installed.

The two other buses have reached the end of their useful life prior to this SRTP planning period and will be surplused and sold. The other two trolleys were not transferred to the RTA and will be surplused and sold. The RTA ordered one more cutaway bus in March 2025 to replace B2.

Table 13: Morro Bay Transit Vehicle Fleet
Agency ID Make Model Year Mileage Capacity
B1 El Dorado Cutaway 2016 137,660 14 & 2 Wheelchair 2025 B2 El Dorado Cutaway 2019 94,619 14 & 2 Wheelchair 2025 B3* Starcraft Allstar 22 Cutaway 2024 9,953 14 & 2 Wheelchair 2034 T4 Ford F-53 Trolley 2009 67,344 30 & 2 Wheelchair 2025 T5 Ford F-53 Trolley 2010 50,928 30 & 2 Wheelchair 2025 T6* Ford F-53 Trolley 2019 19,566 22 & 2 Wheelchair 2032 T7* Ford F-53 Trolley 2022 6,185 30 & 2 Wheelchair 2035 Source: Morro Bay Transit
Note 1: Information accurate as of April 10, 2025.

Est. Vehicle
Replacement
Date2
Note 2: Estimated retirement dates based off of vehicle model's Federal Transit Administration's Useful Life Benchmark. Assumes a 10-year or 150,000 mile useful life based on FTA useful life recommendations for cutaway vehicles and a 13-year or 150,000 mile useful life for trolley vehicles.

Refurbishment of vehicles will increase their useful life. * Vehicles that will be transferred to RTA when they take over administration, maintenance, and operations of Morro Bay Transit on 6/1/2025.

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PASSENGER AMENITIES
As MBT is a fairly small system, there are minimal passenger amenities. Existing major stops, including the Transit Hub, benches, shelters, and bus stop signage, are discussed in this section.

Bus Stops, Benches, and Shelters
The following is a brief overview of the bus stops evaluated in the previous SRTP. • MBT Transit Hub is located at the City Park and is a transfer point for RTA Routes 12 and 15, and the MBT Fixed-Route/Call-A-Ride service. In 2023, the site was updated, including upgraded shelters, ADA-compliant bench seating, ADA upgrades to sidewalks and curbs, fencing, decorative safety lighting, a bike rack, painted waste bins, and a route map. The two new bus shelters and benches are designed to meet ADA accessibility standards. In the consolidation contract between RTA and the City of Morro Bay, the City is responsible for emptying trash cans and maintaining the decorative lighting in the passenger transfer area, and RTA is responsible for maintenance of the transit shelter and its benches. • During the 2019 SRTP, the Albertson’s stop, which includes two benches, a shelter, and a bus stop sign, was found to be problematic due to access challenges. While the 2019 SRTP recommended exploring the possibility of moving the bus stop to Quintana Rd, this was found to be infeasible due to traffic safety concerns, cost, and property ownership. The estimated construction cost in 2025 would be increased from the 2019 estimate of $50,000 due to inflation.
• At Dorn’s Breaker Café, there are benches, trash receptacles, a bike rack, and a signpost with transit information. The signpost includes a sign for the trolley and one for MBT. Below the bus stop signs are display panels with map routes.

There are a few other bus stop benches in north Morro Bay along Main Street, which were installed by the RTA for the previous route alignment along Main Street, as RTA Route 15 was heading north out of town. These are located at the following locations:
• Main at Bonita (serving MB Transit and North Route Trolley stops) • Main at Elena (serving North Route Trolley stop)
• Main at Jamaica (serving North Route Trolley and Fixed-Route stops) Bus Stop Signs
The MBT Fixed-Route/Call-A-Ride and Trolley brochures identify designated bus stops, many of which do not have a time point. Each designated Fixed-Route/Call-A-Ride stop has a bus stop sign and information kiosk with transit service information, which includes a phone number. After consolidation into the RTA, each of these stops, as well as the trolley stops, had a small sign installed providing a four-digit number to identify the stop. When a rider texts the number to the Transit Tracker phone number listed on the sign, the system will send back a text message with an estimated arrival time for that stop.

In the 2019 SRTP, the capital plan recommended $10,930 for bus stop improvements, including converting high-frequency flag stops to regular stops by adding a bus stop sign. Previously, flag stops were allowed for dropping off passengers, but that service was stopped in 2020 due to safety concerns.

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The following specific stop improvements were identified in the SRTP, but due to the onset of COVID-19, with resources redirected to respond to the pandemic and staffing changes in the Engineering Division, these have not been fully evaluated for their feasibility. • Main at Errol: This stop is near a restaurant and the Silver City West mobile home park. The restaurant is currently closed due to flood damage in January 2023. The sidewalk is not ADAcompliant and also has a power pole, fire hydrant, and mailbox, creating obstacles in the sidewalk for pedestrians and bus passengers. Further evaluation for accessibility is needed. • Main at Tahiti: Last stop before crossing HWY 101. Listed on the schedule but lacks signage.

Signage was recommended and was added at this stop.
• Main at South (Garden House): A sign would improve service visibility in the area. Further evaluation is needed to determine the optimal sign location. • Main at Marina/Pacific: Prior to COVID-19, there was a trolley stop at Main Street and Pacific Avenue. During the pandemic, trolley routes were modified, and this stop was removed. There has never been a fixed-route stop at either of these locations. With flag stops eliminated, further evaluation is needed to determine the most suitable location for new signage along this block. This is a long stretch without a fixed-route stop until reaching Downtown. • Morro Bay Blvd near Bay Theater: Add signage to clarify that Morro Bay Blvd is part of the Trolley route.
• Elena Street Apartments (456 Elena): Active stop with unclear location. Signage would help riders and drivers. Further evaluation is needed to see if there is a good location for signage. • San Jacinto at Birch/Cedar (mid-block): A mid-block stop would serve a mixed-use area; low traffic makes it feasible. Further evaluation is needed to see if there is a good location for signage.

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Chapter 4

SYSTEM PERFORMANCE ANALYSIS

MBT FINANCIAL REVIEW
The long-term sustainability of transit services hinges on a careful balance between operating revenues and expenditures. Striking this balance is essential not only for maintaining current service levels but also for enabling thoughtful growth and responsiveness to community needs. In Chapter 6, the use of RTA’s cost model and FY 2025-26 budgeted revenue and expenses will be used to assess MBT FixedRoute/Call-A-Ride and Trolley route performance and recommend alternative services.

However, this Chapter aims to examine MBT’s actual expenditures for FY 2023-24 as the foundation for understanding the system’s historical financial landscape. The budget figures are then used to build a detailed cost model for that fiscal year, allowing for an analysis of historical transit performance. This aids in identifying where services were operating efficiently and where adjustments may be needed to enhance overall system sustainability.

MBT Operating Expenses and Revenues
The MBT actual expenses for FY 2023-24 are shown in Table 14, broken out between the FixedRoute/Call-A-Ride service and the trolley. As shown, the greatest single cost in FY 2023-24 was MBT’s agreement with MV Transportation for contracted transportation services ($208,845, or 52 percent of their systemwide expense budget).

Table 14: Morro Bay Transit Operating Expenses
MBT Expenses FY 2023-24 Actuals
Fixed Route Transit
Fuel Oil & Lubricants $28,052
Machinery/Equip/Supplies $4,141
Legal Services - General $0
Contractural Services (MV) $208,845
Vehicle Inspections $100
Telephone $442
Vehicle Insurance $1,641
Membership $1,109
Cap Asset Depreciation $14,203.46
Interfund Transfers $76,441
Fixed Route Total $334,975
Trolley
Fuel Oil & Lubricants $3,294
Rolling Stock Supplies $0
Machinery/Equip/Supplies $856
Contractional Services $33,370
Vehicle Inspections $0
Cap Asset Depreciation $23,581
Trolley Total $61,101
Total Combined Expenses $396,076
Source: City of Morro Bay Budget Performance Reports, FY 2023-24 and Midyear FY 24-25