Agenda packet, regular meeting — Morro Bay City Council, May 12, 2026

CITY OF MORRO BAY
City Council Regular Meeting Agenda

Tuesday, May 12, 2026, 5:30 p.m.

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

Alternatively, members of the public may watch the meeting and speak during general Public Comment or on a specific agenda item by logging into the Zoom webinar using the information provided below. Please use the "raise hand" feature to indicate your desire to provide public comment.
•
• 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 Emergency Medical Services Week Proclamation

4.b National Boating Safety Week Proclamation

4.c National Police Week and National Peace Officers Memorial Day Proclamation

4.d Public Works Week Proclamation

4.e Presentation Recognizing Morro Bay Police Department Volunteers for their support of Grizzly Youth Academy Family Day

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.i as submitted.

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

1. April 28, 2026 - Regular Council Meeting 6

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

1. Proclamation declaring the week of May 17-23, 2026 as "Emergency Medical Services Week"
11 2. Proclamation declaring the week of May 16-22, 2026 as "National Safe Boating Week"
12 3. Proclamation acknowledging "National Police Week" and declaring May 15, 2026 as "National Peace Officers Memorial Day"
13 4. Proclamation declaring the week of May 17-23, 2026 as "National Public Works Week"
14 5. Proclamation proclaiming May as "National Foster Care Month" 15

6.c Third Quarter Investment Report (period ending March 31, 2026) for Fiscal Year (FY) 2025-26
16 (Finance Director)
Recommended Action
Receive the attached Third Quarter Investment Report (period ending March 31, 2026) for FY 2025-26.

6.d Adopt a Resolution of Intention to Annex Lots 1 through 5 of Tract 2859 (APN 065-386-015) into the Cloisters Landscaping and Lighting Maintenance Assessment District (LLMAD)
20 (Public Works Department)
Recommended Action
Adopt Resolution No. 21-26 declaring the intent to annex Lots 1 through 5 of Tract 2859 (APN 065-386-015) into the Cloisters Landscaping and Lighting Maintenance Assessment District (LLMAD).

6.e Adoption of Resolution No. 22-26 Approving the Engineer's Report and Declaring the Intent to Levy the Annual Assessment for the Cloisters Landscaping and Lighting Maintenance Assessment District (LLMAD) 30 (Public Works Department)
Recommended Action
Adopt Resolution No. 22-26 declaring the intent to levy the annual assessment for the maintenance of the Cloisters Park and Open Space for Fiscal Year (FY) 2026-27 and approving the Engineer’s Report.

6.f Adoption of Resolution No. 23-26 Approving the Engineer's Report and 58

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Declaring the Intent to Levy the Annual Assessment for the North Point Natural Area Landscaping and Lighting Maintenance Assessment District (Public Works Department)
Recommended Action
Adopt Resolution No. 23-26 approving the Engineer’s Report and declaring the intent to levy the annual assessment for maintenance of the North Point Natural Area for Fiscal Year (FY) 2026-27.

6.g Quarterly Update on the Status of City Council 2025-2027 Goals 73 (City Manager Update)
Recommended Action
Receive an update from staff on the City’s progress on City goals established in March 2025.

6.h Memorandum of Understanding (MOU) between the City of Morro Bay and the Morro Bay Commercial Fishermen's Organization (MBCFO)
80 (Harbor Department)
Recommended Action
Adopt Resolution No. 24-26, approving the Memorandum of Understanding (“MOU”) between the City and MBCFO for the Harbor Commercial Fishing Dock Repair Project. The MOU will establish the requirement by MBCFO for the use of $800,000 toward the Harbor Commercial Fishing Dock Repair Project and by the City to dedicate the lease site solely to commercial fishing industry use for a period of thirty (30) years.

6.i Review and Authorize the Mayor to sign a letter response to the California Department of Fish and Wildlife Regarding proposed changes to the State Marine Protected Areas (MPAs)
90 (Mayor/Harbor Department)
Recommended Action
Review and comment on a draft letter response to the California Department of Fish and Wildlife regarding proposed changes to the State Marine Protected Areas (MPAs).

7. PUBLIC HEARING ITEMS
None.

8. BUSINESS ITEMS

8.a Approve a Professional Services Agreement with Cannon Corporation for Design of Phase 1 and Environmental Permitting for all Phases of the North Morro Bay Water Improvements Project
98 (Public Works Department)
Recommended Action
Approve and authorize the City Manager to execute a professional services agreement with Cannon Corporation to provide design and engineering services during construction for Phase 1 of the North Morro Bay Water Improvements Project (Project), and environmental review and permitting for

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all phases of the Project, in an amount not-to-exceed $525,492.00, and authorize the City Manager to execute amendments if necessary not to exceed $52,549.00 for contingencies.

8.b Review of Current Council Sub-committees, Scope of Work, and Consider Discontinuing Subcommittees that have Achieved their Intended purposes 125
(City Manager)
Recommended Action
Review the list of Council Sub-Committees, scope of work (purpose, parameters and duration), and either confirm the current scope of work, update the scope of work or discontinue Sub-Committees that have achieved their intended purpose. Recommended to review each Sub-Committee and take action as desired to continue, update or disband.

9. COUNCIL DECLARATION OF FUTURE AGENDA ITEMS

10. ADJOURNMENT
The next Regular Meeting will be held on May 26, 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.

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1 MINUTES - MORRO BAY CITY COUNCIL

REGULAR MEETING
April 28, 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
Community Development Director Airlin Singewald
Police Chief Amy Watkins
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 had not met in closed session since the last regular meeting.

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

3.c City Manager Reports, Announcements and Presentations City Manager Craig announced Item 8.b will be moved to the May 12th meeting due to staff illness.

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

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2 5. Shared Fire Services

4. RECOGNITION AND PRESENTATIONS
None.

5. PUBLIC COMMENT
 Arby Kitzman, Morro Bay, offered to pay for black top mix if the City would provide the manpower to pave a portion of Little Morro Creek Road past the bike park.
 Linda Winters, Morro Bay, provided an update regarding Monday Night Dinners and services offered on Mondays at the library parking lot.  Barry Branin, Morro Bay, urged the City to list and actively work to sell excess properties to fund investments in other City properties.  Nicole Dorfman, Morro Bay, spoke in remembrance of community member and volunteer, Jean Johnson.
 Margaret Carman, Morro Bay, shared the experience of a resident on Monterey near Pacific Street who was being negatively impacted by the recently installed Tesla charging stations.
 Janice Peters, Morro Bay, announced By the Sea Productions' upcoming performance of the Neil Simon comedy, California Suite.  Judy Setting, Morro Bay, hoped Public Works would contact Mr. Kitzman regarding his paving offer.
 Betty Winholtz, Morro Bay, reminded community members to wait until after the end of June before trimming or cutting down trees.

End of public comment.

Mayor Wixom opened public comment on the Consent Agenda; seeing none, the public comment period was closed.

Motion by Council Member Luffee
Seconded by Council Member Landrum
Approve Consent Agenda Items 6.a through 6.e as submitted.

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

6.a Approval of Minutes

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3 Approve as submitted.

1. April 14, 2026 - Regular Council Meeting

6.b Approval of Proclamations
Approve as submitted.

1. Proclamation Declaring May 2026 as "Bike Month"

6.c Reappointment of Hemant Patel to the Visit SLO CAL Board of Directors Reappoint Hemant Patel as the City’s representative on the Visit SLO CAL Board of Directors (Board) for a 3-year term ending June 2029.

6.d Ordinance No. 679, amending Chapter 14.75 of Title 14 (Buildings and Construction) of the MBMC to incorporate the provisions of Senate Bill 1383, which updated the California Green Building Standards Code, or CALGreen
Adopt Ordinance No. 679: “An Ordinance of the City Council of the City of Morro Bay, California, amending Chapter 14.75 of Title 14 (Buildings and Construction) of the Morro Bay Municipal Code (MBMC) to incorporate the provisions of Senate Bill 1383, which updated the California Green Building Standards Code (CALGreen).”

6.e Equipment donation from the Friends of the Morro Bay Fire Department Accept the donated equipment from the Friends of the Morro Bay Fire Department and authorize the City Manager to execute the Donation Agreement.

7. PUBLIC HEARING ITEMS
None.

8. BUSINESS ITEMS
The Council took a brief recess at 6:03 p.m. and reconvened at 6:14 p.m. with all members present.

8.a Offshore Wind Operations and Maintenance Infrastructure Study - Morro Bay
While not directly related to this item, City Manager Craig announced the Federal Government canceled one of the leases for offshore wind off the coast of Morro Bay.

Community Development Director Singewald kicked off the item then introduced Charlie Poole, Mott MacDonald and Derek Lerma, Rincon Consultants, to present the Offshore Wind Operations and Maintenance Infrastructure Study.

They, along with Mark LaRue, San Luis Obispo County Deputy Director of Planning and Building, responded to Council inquiries.

Mayor Wixom opened public comment for Item 8.a.
 Katie Franklin, Los Osos, shared that she enjoys watching otters and is not in favor of industrialization in this bird and marine sanctuary.

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4  Dr. Gene Nelson, Californians for Green Nuclear Power, spoke in opposition to offshore wind development.
 Andrea Lueker, REACT Alliance, commented on the legal principals of the public trust doctrine and City's responsibility to safeguard these public trust lands by saying no to offshore wind.
 Sheri Hafer commented on constraints that would prevent large support vessels to enter the Morro Bay harbor and negative impacts on the estuary and local businesses.
 David Yohe, Morro Bay, appreciated the Council taking a stand against offshore wind and protecting the Morro Bay community.
 Judy Setting, Morro Bay, appreciated the report and asked Council firmly and clearly excuse Morro Bay from consideration as an O&M port.  Rachel Wilson, Cayucos, agreed with the previous speaker and urged the city to decline future grants and studies related to offshore wind.  Joe Silano, Morro Bay, raised various environmental concerns and opposed O&M infrastructure in Morro Bay.
 Nicole Dorfman, Morro Bay resident and Board Member of REACT Alliance, appreciated the report does not recommend Morro Bay as an O&M infrastructure port and looked forward to economic development opportunities that don't involve industrialization.
 Tricia Boaz, REACT Alliance Co-President, expressed concerns about perceived efforts to divide and conquer the central coast communities.  Steve Schleiblauer commented on the report from a harbor master perspective, noting such development will change the look of the waterfront and maintaining the required entrance depth would be difficult.  Sal Garcia commented on the importance of emergency response and readiness if there's some type of a disaster.
 Mandy Davis, REACT Alliance Co-President, commented on the environmental constraints and opposition to these small harbors being considered to become industrial ports.

End of public comment.

The Mayor and City Council appreciated the report and provided individual comments. No action was taken by the City Council.

Receive and file the attached Offshore Wind Operations and Maintenance (O&M) Infrastructure Study.

8.b Approve a Professional Services Agreement with Cannon Corporation for Design of Phase 1 and Environmental Permitting for all Phases of the North Morro Bay Water Improvements Project
This item was continued to the May 12, 2026 Regular Meeting.

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5 9. COUNCIL DECLARATION OF FUTURE AGENDA ITEMS
Council Member Landrum requested consideration of a prohibition on data storage centers, similar to the current pause on BESS projects. There was majority support to review and discuss expanding the prohibition on BESS projects to include data centers when the permanent BESS ordinance is brought back later this year.

Council Member Landrum inquired about the City's ability to require companies pursuing industrial projects to reimburse the cost of staff time. Staff responded reimbursement agreements can be required once an application is submitted. No further action was discussed.

Council Member Landrum requested and received the Mayor's support for an update on increased staff capacity resulting from the transfer of transit services to RTA and programs approved by Council for the Clerk's office.

10. ADJOURNMENT
The meeting adjourned at 8:05 p.m.

Respectfully submitted,
/s/ Dana Swanson, City Clerk

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A PROCLAMATION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY
DECLARING THE WEEK OF MAY 17-23, 2026 AS
“EMERGENCY MEDICAL SERVICES WEEK”

CITY COUNCIL
City of Morro Bay, California
WHEREAS, emergency medical services are a vital public service; and WHEREAS, the members of emergency medical services teams are ready to provide lifesaving care to those in need 24 hours a day, seven days a week; and WHEREAS, access to quality emergency care dramatically improves the survival and recovery rate of those who experience sudden illness or injury; and WHEREAS, emergency medical services fill healthcare gaps by providing important, out of hospital care, including preventative medicine, follow-up care, and access to telemedicine; and WHEREAS, the emergency medical services system consists of first responders, emergency medical technicians, paramedics, emergency medical dispatchers, firefighters, police officers, educators, administrators, pre-hospital nurses, emergency nurses, emergency physicians, trained members of the public, and other out of hospital medical care providers; and WHEREAS, the members of emergency medical services teams, whether career or volunteer, engage in thousands of hours of specialized training and continuing education to enhance their lifesaving skills; and
WHEREAS, it is appropriate to recognize the value and the accomplishments of emergency medical services providers by designating the Emergency Medical Services Week.

NOW THEREFORE, BE IT RESOLVED, that the Morro Bay City Council does hereby proclaim the week of May 17-23, 2026, as “Emergency Medical Services Week”. The 52 nd
Anniversary of EMS Week theme is EMS WEEK: “Improving Outcomes Together”.

IN WITNESS WHEREOF I have hereunto
set my hand and caused the seal of the
City of Morro Bay to be affixed this 12
th day
of May 2026
________________________________
Carla Wixom, MAYOR
City of Morro Bay, California

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A PROCLAMATION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY

DECLARING NATIONAL SAFE BOATING WEEK
MAY 16 THROUGH MAY 22, 2026

CITY COUNCIL
City of Morro Bay, California
WHEREAS, for over 100 million Americans, boating continues to be a popular recreational activity. From coast to coast, and everywhere in between, people are taking to the water and enjoying time together boating, sailing, paddling and fishing; and WHEREAS, during National Safe Boating Week, the U.S. Coast Guard and the National Safe Boating Council, along with federal, state, and local safe boating partners, encourage all boaters to explore and enjoy America’s beautiful waters responsibly; and WHEREAS, safe boating begins with preparation, and the Coast Guard estimates that human error accounts for most boating accidents and that life jackets could prevent nearly 75 percent of boating fatalities; and through basic boating safety procedures – including carrying lifesaving emergency distress and communications equipment, wearing life jackets, attending safe boating courses, participating in free boat safety checks, and staying sober when navigating – helps ensure boaters on America’s coastal, inland, and offshore waters stay safe throughout the season; and
WHEREAS, National Safe Boating Week is observed to bring attention to important lifesaving tips for recreational boaters so that they can have a safer, more fun experience out on the water throughout the year; and
WHEREAS, on average, 650 people die each year in boating-related accidents in the United States, and 75 percent of these are fatalities caused by drowning; and WHEREAS, the vast majority of these accidents are caused by human error or poor judgment and not by the boat, equipment or environmental factors; and WHEREAS, a significant number of boaters who lose their lives by drowning each year would be alive today had they worn their life jackets.

NOW, THEREFORE, BE IT PROCLAIMED, that the City Council of the City of Morro Bay does hereby supports the goals of the Safe Boating Campaign and proclaim May 16-22, 2026 as National Safe Boating Week, encourage the start of the year-round effort to promote safe boating.

IN WITNESS WHEREOF I have hereunto
set my hand and caused the seal of the City
of Morro Bay to be affixed this 12th day of
May 2026
_______________________________

CARLA WIXOM, MAYOR
City of Morro Bay, California

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A PROCLAMATION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY
ACKNOWLEDGING “NATIONAL POLICE WEEK”
AND DECLARING MAY 15, 2026 AS
“NATIONAL PEACE OFFICERS MEMORIAL DAY”

CITY COUNCIL
City of Morro Bay, California
WHEREAS, in 1962, President Kennedy established “National Police Week;” and WHEREAS, we are honored to observe “National Police Week” from May 11-16, 2026 and May 15, 2026 as “National Peace Officers Memorial Day;” and WHEREAS, for generations, brave Peace Officers have answered the call to serve and protect our communities and our Nation, often in dangerous and unpredictable circumstances, embodying courage, honor, and pride and representing the best of the law enforcement profession; and
WHEREAS, today we recognize and honor the sacrifice of our fallen Heroes, Peace Officers in California and Nationally who bravely and unselfishly gave their lives in the line of duty in the protection and service of others; and
WHEREAS, the City of Morro Bay expresses our respect and appreciation for the bravery, service and professionalism of the Morro Bay Peace Officers and Peace Officers throughout the San Luis Obispo County and Nationwide, as they serve and protect us.

NOW, THEREFORE, BE IT RESOLVED, that the Morro Bay City Council does hereby call upon all Morro Bay community members to observe and acknowledge this day, Friday, May 15, 2026, as “Peace Officers Memorial Day,” and the week of May 11-16, 2026 as “National Police Week” in honor of fallen Peace Officers who, through their courageous deeds, have made the ultimate sacrifice in the service of their communities. We recognize and pay respect to these Heroes and their families.

IN WITNESS WHEREOF I have hereunto
set my hand and caused the seal of the City
of Morro Bay to be affixed this 12
th day of
May 2026

CARLA WIXOM, MAYOR
City of Morro Bay, California

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A PROCLAMATION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY

DECLARING NATIONAL PUBLIC WORKS WEEK
MAY 17-23, 2026
“ROOTED IN SERVICE, POWERED BY COMMUNITY”

THE CITY COUNCIL
City of Morro Bay, California
WHEREAS, public works professionals focus on infrastructure, facilities, emergency management, and services that are of vital importance to sustainable and resilient communities and the public health, high quality of life, and well-being of the people of the City of Morro Bay; and
WHEREAS, these infrastructures, facilities, and services could not be provided without the dedicated efforts of public works professionals, who are federally mandated first responders, and the engineers, managers, utility workers, maintenance workers, leads, analysts, operators, and support staff at all levels of government and our private sector partners, who are responsible for rebuilding, maintaining, improving, and protecting our nation’s transportation, water supply, water treatment and solid waste systems, wastewater systems, public buildings, parks, streets, sidewalks, storm drains, bikeways, street trees and other structures and facilities essential for our citizens; and
WHEREAS, it is in the public interest for the citizens, civic leaders, and children in the City of Morro Bay to gain knowledge and maintain ongoing interest and understanding of the importance of public works first responders and public works programs in their respective communities; and
WHEREAS, the year 2026 marks the 66th annual National Public Works Week sponsored by the American Public Works Association; and
WHEREAS, the women and men comprising the Public Works Department in the City of Morro Bay are dedicated to building, maintaining, and beautifying our critical infrastructure in the service of improvements in quality of life for Morro Bay residents and visitors through projects such as the Water Reclamation Facility program, which will provide long-term water supply resiliency, Coleman Park, which will provide for recreation and a public restroom to support harborfront vitality, the Morro Creek Watershed Management Plan for evaluating and developing strategies to improve drainage and reduce flooding, the Morro Creek Bank Stabilization project, which responded to an imminent threat to public infrastructure from further creek bank erosion, and the annual pavement management projects, which will provide for safe driving surfaces and extend the life of City streets infrastructure.

NOW, THEREFORE, BE IT RESOLVED, that the Morro Bay City Council does hereby designate the week May 17-23, 2026, as National Public Works Week; urge all citizens to join with representatives of the American Public Works Association and government agencies in activities, events, and ceremonies designed to pay tribute to our public works professionals, engineers, managers, and employees and to recognize the substantial contributions they make to protecting our national health, safety, and advancing quality of life for all.

IN WITNESS WHEREOF: I have hereunto
set my hand and caused the seal of the City
of Morro Bay to be affixed this 12th day of
May, 2026.
___________________________________

CARLA WIXOM, MAYOR
City of Morro Bay, California

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A PROCLAMATION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY

PROCLAIMING MAY AS
“NATIONAL FOSTER CARE MONTH”

THE CITY COUNCIL
City of Morro Bay, California
WHEREAS, the City of Morro Bay is committed to ensuring all children have safe, stable and loving homes when they cannot remain with their biological families; and WHEREAS, more than 420,000 children nationwide, including over 28,000 in California, are currently in the foster care system; and
WHEREAS, over 250 children and youth in the County of San Luis Obispo are in foster care; and
WHEREAS, the Department of Social Services continues to actively recruit more resource families to ensure children have nurturing homes in which they can heal, grow, and thrive; and WHEREAS, National Foster Care Month recognizes the critical role of resource families in providing nurturing, stable homes and highlights the ongoing need for more families to support local children; and
WHEREAS, this month-long effort which is mirrored across all 50 states and the District of Columbia, celebrates resource families and encourages more individuals to positively impact a child’s life through foster care.

NOW, THEREFORE, BE IT RESOLVED, that the City Council for the City of Morro Bay hereby proclaims May as “National Foster Care Month” in the City of Morro Bay and encourages all residents to join in raising awareness and supporting foster care and resource families in our community.

IN WITNESS WHEREOF: I have hereunto
set my hand and caused the seal of the
City of Morro Bay to be affixed this 12th
day of May 2026
___________________________________

CARLA WIXOM, MAYOR
City of Morro Bay, California

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Prepared By: EC Dept Review: EC
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and Councilmembers DATE: April 28, 2026 FROM: Emily Conrad, Finance Director
SUBJECT: Third Quarter Investment Report (period ending March 31, 2026) for Fiscal Year (FY) 2025-26

RECOMMENDED ACTION
Receive the attached Third Quarter Investment Report (period ending March 31, 2026) for FY 2025-26.

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

DISCUSSION
The Third Quarter Investment Report for FY 2025-26 is summarized below:
(1) Par Value is the face value of investments.
(2) Market Value is the amount in which investments could be sold. (3) WAM is the Weighted Average Maturity, the average time (days) a security will mature.

The City’s total portfolio averaged an interest rate of 3.39%, 0.6% lower than LAIF, during the period of January 2026 through March 2026. Over this quarter, the Mechanics Bank interest rate remained stable while the LAIF interest rate decreased from 4.20% to 3.98%.

The City’s investments earned interest of $797,506 during the quarter, a decrease of $50,182 over prior quarter earnings of $847,688. For comparison, the same period in 2025 saw interest earnings of $871,236. The decrease in earnings is a continuation of the trend we have seen over AGENDA NO: 6.c
MEETING DATE: May 12, 2026
Cash and Pooled Investment Portfolio at March 31, 2026
Institution Par Value¹ Market Value² WAM³
Mechanics Bank (interest earning accounts) 39,006,948 39,006,948 0 Local Agency Investment Fund (LAIF) 41,036,825 41,036,038 0 Zions Bancorporation (CDs and Treasury Notes) 11,934,000 11,979,551 79 Subtotal Pooled Investment Portfolio 91,977,773 92,022,537 Mechanics Bank (operating/non-interest earning) 4,037,098 4,037,098 0 TOTAL IN TREASURY 96,014,871 96,059,635

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the past 18 months: the City’s investment interest rates peaked in September 2024 and since then have declined for each of the prior six consecutive quarters.

During this quarter, one certificate of deposit (CD) matured (Farmers Insurance Group). This was a two-year, $249,000 investment with a 4.60% yield. The matured asset was replaced by investing $245,000 in a two-year CD (Goldman Sachs Bank USA) with a 3.70% yield, which was the highest rate of return available at the time of investment.

At the end of the third quarter, the cash balance of over $96 million represents many different inflows of resources recorded across 47 different funds with varying restrictions. Of that cash balance, 13%, or $12.5 million is in the to the General Fund Group (collective General Fund, General Fund Emergency Reserve, Unfunded Compensable Leave, General Government Vehicle Replacement, General Fund Facility Maintenance, and Capital Accumulation funds).

Approximately 67% of the City’s cash holdings belonged to the enterprise funds (Harbor, Transit, Water, and Sewer funds), resources that are not available for use for general government operations. The remainder was in special revenue funds, each with restricted use and unavailable for use for general government operations.

Staff continue to monitor cash flows and interest rates closely to maximize earnings.

CONCLUSION
Staff recommends that the City Council receive the Third Quarter Investment Report (period ending March 31, 2026) for Fiscal Year 2025-26.

ATTACHMENT(S)

1. Third Quarter Investment Report for FY 2025-26 (period ending March 31, 2026)

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LIQUID INSTRUMENTS

INVESTMENT

OR CUSIP PAR PURCHASE MARKET ACCRUED MARKET W/ INTEREST MATURITY DAYS TO NUMBER INSTITUTION VALUE PRICE VALUE INCOME ACCRUED INC. RATE DATE MATURITY LAIF LOCAL AGENCY INVESTMENT FUND 41,036,825 41,036,825 41,036,038 402,144 41,438,182 3.98% DAILY 1 POOLED MONEY INVESTMENT ACCOUNT:
41,036,825 41,036,825 41,036,038 402,144 41,438,182
MM MECHANICS BANK - MONEY MARKET 30,208,052 30,208,052 30,208,052 - 30,208,052 3.74% DAILY 1 SWEEP MECHANICS BANK - SWEEP 8,798,896 8,798,896 8,798,896 - 8,798,896 0.01% DAILY 1 MECHANICS BANK - PUBLIC CHECKING 4,037,098 4,037,098 4,037,098 4,037,098 0.00% MONEY MARKET ACCOUNT: 43,044,046 43,044,046 43,044,046 - 43,044,046 SUBTOTAL LIQUID INSTRUMENTS: 84,080,871 84,080,871 84,080,084 402,144 84,482,228

NON-LIQUID INSTRUMENTS

INVESTMENT

OR CUSIP PAR PURCHASE MARKET ACCRUED MARKET W/ INTEREST MATURITY DAYS TO NUMBER INSTITUTION VALUE PRICE VALUE INCOME ACCRUED INC. RATE DATE MATURITY 90352RDA0 Zions Bank-US Alliance FCU Rye NY 249,000 249,000 249,287 160 249,448 4.70% 5/26/2026 56 39573LEC8 Zions Bank-Greenstate Credit Unions 248,000 248,000 248,397 999 249,395 4.90% 6/1/2026 62 254673Q33 Zions Bank-Discover Bank Greenwood 245,000 245,000 244,505 975 245,479 3.35% 8/17/2026 139 22282XAF7 Zions Bank-Covantage Cr Un Antigo WI 247,000 247,000 247,352 1,011 248,363 4.15% 8/24/2026 146 130162AX8 Zions Bank-California Cr Un Glendale 243,000 243,000 244,277 1,072 245,348 5.15% 8/28/2026 150 444425AC6 Zions Bank-Hughes Fed Cr Un Tuscon Az 248,000 248,000 249,316 70 249,386 5.15% 8/31/2026 153 065427BG0 Zions Bank-Bank Utah Ogden Utah 244,000 244,000 244,433 1,754 246,187 4.10% 1/26/2027 301 856285G21 Zions Bank-State Bank of India NY 250,000 250,000 245,535 599 246,134 1.75% 2/9/2027 315 25844MBN7 Zions Bank-Dort Finl Cr Un Grand Blanc 246,000 246,000 248,474 3,041 251,514 5.00% 2/26/2027 332 41138NAB4 Zions Bank-Hapo Comnty Cr Un Richland 248,000 248,000 250,410 1,019 251,430 5.00% 2/26/2027 332 02589ABQ4 Zions Bank-American Express Natl 247,000 247,000 242,668 298 242,966 2.00% 3/9/2027 343 14042TFJ1 Zions Bank-Capital One 246,000 246,000 243,039 3,075 246,115 2.70% 4/13/2027 378 16863LAG0 Zions Bank-Chief Finl Fed Cred Un 249,000 249,000 249,021 506 249,526 3.90% 7/12/2027 468 38151PGG0 Zions Bank-Goldman Sachs Bk USA 245,000 245,000 244,137 1,565 245,702 3.70% 1/27/2028 667 19058RAE1 Zions Bank-Coastal1 Cr Un Pawtucket RI 249,000 249,000 250,128 - 250,128 4.15% 1/31/2028 671 05580A4P6 Zions Bank-BMW Bk North Amer Utah 244,000 244,000 249,849 4,426 254,275 4.90% 11/17/2028 962 61690D5J3 Zions Bank-Morgan Stanley Bk NA 244,000 244,000 246,150 3,495 249,645 4.25% 5/29/2029 1,155 61776NSR5 Zions Bank-Morgan Stanley Private Bk 244,000 244,000 246,150 3,495 249,645 4.25% 5/29/2029 1,155 8824ITWN6 Zions Bank-Texas Exchange Bk Crowley 249,000 249,000 247,303 230 247,533 3.75% 8/28/2029 1,246 45780PDC6 Zions Bank-Institution for Svgs Newbury 249,000 249,000 245,868 151 246,020 3.70% 8/26/2030 1,609

CERTIFICATES OF DEPOSIT
4,934,000 4,934,000 4,936,300 27,940 4,964,239
3133EP5S0 Zions Bank-Federal Farm Cr Bks 3,000,000 2,988,009 3,022,175 3,561 3,025,737 4.25% 3/20/2028 720 3133EP3B9 Zions Bank-Federal Farm Cr Bks 2,000,000 1,989,780 2,014,826 10,831 2,025,657 4.13% 2/13/2029 1,050

FEDERAL FARM CREDIT
5,000,000 4,977,789 5,037,001 14,392 5,051,394
91282CKA8 Zions Bank-US Treasury Note 2,000,000 1,984,850 2,006,250 10,028 2,016,278 4.13% 2/15/2027 321 U.S. TREASURY NOTES & BONDS
2,000,000 1,984,850 2,006,250 10,028 2,016,278
SUBTOTAL NON-LIQUID INSTRUMENTS: 11,934,000 11,896,639 11,979,551 52,360 12,031,911 96,014,871 95,977,510 96,059,635 454,504 96,514,139
3/31/2026 3/31/2026
462,548 2,529,676 87.605% 3.390% 79

QUARTERLY

ACCRUED

INTEREST AS
OF

CITY OF MORRO BAY

QUARTERLY PORTFOLIO PERFORMANCE

WEIGHTED

AVERAGE

DAYS TO

MATURITY

WEIGHTED

AVERAGE

RATE OF

EARNINGS
3/31/2026
YTD

RECORDED

INTEREST AS
OF
% OF LIQUID

PORTFOLIO

HOLDINGS
TOTAL LIQUID AND NON-LIQUID INVESTMENTS:

Page 18 of 128 ends

CITY OF MORRO BAY

QUARTERLY PORTFOLIO PERFORMANCE
3/31/2026

QUARTERLY PERFORMANCE COMPARISON - PORTFOLIO VS LAIF
3/31/2025 6/30/2025 9/30/2025 12/31/2025 3/31/2026
Portfolio - weighted average rate of earnings 4.298% 4.153% 3.936% 3.655% 3.390% LAIF - quarterly earnings rate 4.480% 4.400% 4.340% 4.200% 3.980% Portfolio over -(under) LAIF -0.182% -0.247% -0.404% -0.545% -0.590%

PUBLIC AGENCY RETIREMENT SERVICES (PARS) - LEAGALLY RESTRICTED INVESTMENTS EXCLUDED FROM WEIGHTED PORTFOLIO PARS OPEB Public Agency Retirement Services 3,061,429 2.35 DAILY DAILY 1 PARS Pension Trust Public Agency Retirement Services 3,458,295 2.09 DAILY DAILY 1 6,519,723

CHANGES FROM PRIOR QUARTERLY REPORT

MATURED INSTRUMENTS PAR PURCHASE INTEREST PURCHASE MATURITY

CERTIFICATES OF DEPOSIT VALUE PRICE RATE DATE DATE
Farmers Imsurance Group 249,000 249,000 4.600% 1/26/2024 1/26/2026 U.S. OBLIGATIONS
TOTAL MATURED VALUE 249,000 None

NEW INSTRUMENTS PURCHASE INTEREST PURCHASE MATURITY

CERTIFICATES OF DEPOSIT PRICE RATE DATE DATE
Goldman Sachs Bank USA 245,000 3.700% 1/27/2026 1/27/2028 U.S. OBLIGATIONS
TOTAL NEW INSTRUMENTS 245,000 None
Portfolio holdings as of the quarter ended 3/31/2026, are in compliance with the current Investment Policy. With 87.605% of the portfolio held in liquid instruments, allowing the City to meet cash flow needs for at least six months, in compliance with the investment policy approved by the City Council in June 2025. The investment policy will be updated annually as required by state law.

Page 19 of 128 ends

Prepared By: NLS Dept Review: GK
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council DATE: May 7, 2025
FROM: Nate Stong, PE – City Engineer
SUBJECT: Adopt a Resolution of Intention to Annex Lots 1 through 5 of Tract 2859 (APN 065-386-015) into the Cloisters Landscaping and Lighting Maintenance Assessment District (LLMAD)

RECOMMENDED ACTION
Adopt Resolution No. 21-26 declaring the intent to annex Lots 1 through 5 of Tract 2859 (APN 065- 386-015) into the Cloisters Landscaping and Lighting Maintenance Assessment District (LLMAD).

BACKGROUND/DISCUSSION
Tract 1996, known as the Cloisters development, is a 124-lot subdivision bounded by State Highway One at the east, Morro Strand State Beach at the west, Morro Bay High School at the south, and Azure, Coral, and San Jacinto Streets at the north.

On September 23, 1996, the City Council passed Resolution No. 69-96, which accepted the final map for Tract 1996 known as the Cloisters Subdivision, consisting of 124 lots. Lots 1 through 120 were for single-family residential purposes, Lots 121, 122 (APN 065-386-005 & 016 on attached Assessor’s Map) were for the 27.75-acre park and open space, Lot 124 was dedicated for a fire station and Lot 123 was offered to the State. Lots 121, 122, 123, and 124 are not currently part of the assessment district.

The assessment district formation proceedings began in August 1996, with the owners of the real property within the proposed district petitioning the City and consenting in writing to the formation of the district pursuant to the Landscape and Lighting Act of 1972. The assessment district formation proceedings concluded with the final public hearing for formation on September 23, 1996, which levied the annual assessment totaling $148,944 ($1,241.20 per parcel x 120 residential parcels) for the maintenance of the 27.75 acres of park and open space required as a condition of approval for Tract 1996.

Lot 124 was declared as surplus by the city and sold in 2021. The new owner has since subdivided the property into five residential lots, recorded as Tract 2859 in December 2025. The owner has consented to annex these new lots into the Cloisters LLMAD, provided as Attachment 2, which would satisfy applicable conditions of approval regarding the new residential lots contributing to the common maintenance of Tract 1996’s park and open space consistent with existing residential lots. The AGENDA NO: 6.d
MEETING DATE: May 12, 2026

Page 20 of 128 ends

additional five lots would bring the total number of assessed properties in the district to 125. In addition to the consent form, a ballot was mailed to the owner to satisfy Proposition 218 requirements (Attachment 3).

On April 14, 2026, City Council adopted Resolution No. 18-26, which initiated the proceedings to levy the annual assessment to fund the maintenance of the Cloisters Park and Open Space. As ordered by the Council and required by law, an Engineer’s Report has been prepared detailing the estimated annual assessment for the parcel owners for Fiscal Year (FY) 2026-27 and expenditures for the district. Staff intends to continue to perform most maintenance tasks with City Maintenance staff and directly allocate their time spent maintaining the site to the assessment district. Upon adoption of Resolution No. 21-26, the next and final step in the annual levy of assessment process is the public hearing after which the City Council orders the levy of assessment.

As part of the annual assessment process, staff is required to provide an Engineer’s Report, which is an estimate of costs for maintenance of the Cloisters LLMAD. The cost estimates are based on the maintenance standards currently adhered to in existing parks within Morro Bay and included in the Flat Rate Manual for Parks Maintenance, as well as maintenance costs from the current fiscal year.

Personnel costs, as well as supplies and services, have risen significantly in the last several years.

FISCAL IMPACT
The assessment for providing maintenance of the Cloisters LLMAD is $1,241.20 per parcel for FY 2026-27 for a total annual assessment of $148,944 assuming only the original 120 lots are assessed, or $155,150 if the additional five lots from Tract 2859 are included for a total of 125 assessed parcels.

The increase in the cost of goods and services precludes a fund surplus for carryover to be set aside for capital projects. Once remaining surplus funds are exhausted as discussed further below, the City would propose capital improvements through the normal budget process with the use of General Funds, Measure Q & E Funds, or other sources such as grant funding.

The Engineer’s Report estimates the annual costs of maintaining the Cloisters Park and Open Space for the upcoming year to be in excess of $148,944, which is the total assessment amount as established by Resolution 68-96 in the year 1996 when the district was formed. The true costs of maintaining Cloisters Park, Open Space, trails, as well as the medians and parkways within the district also exceed the proposed assessment revenue of $155,150 after annexation of the 5 new residential lots. All maintenance costs in excess of the district’s available revenues will be subsidized by the General Fund per City Council direction as stated above.

Page 21 of 128 ends

Association (GFOA) recommendations to simplify budgeting and budget presentations to the public, and to reduce duplicate budgeting associated with interfund transfers, the Cloisters Accumulation Fund was consolidated with the Cloisters Assessment District Fund (570) at the end of FY 2021-22.

This is also consistent with Council direction on April 26, 2022, to eliminate enterprise accumulation funds.

CONCLUSION
The process for the annexation of additional parcels into the Cloisters Landscaping and Lighting Maintenance Assessment District requires the City Council to adopt a Resolution of Intention. The Resolution of Intention gives notice of the time, date, and place for a public hearing by the City Council on the issue of the levy of assessment.

The public hearing has been set for a regular City Council meeting on June 23, 2026, at or about 5:30 p.m. to be held at the Morro Bay Veterans Hall. A summary of the Resolution of Intention shall be published in the newspaper as legal notice of a public hearing, to which all interested parties are afforded the opportunity to be heard either through written or oral communication. Upon completion of the public hearing, the City Council may adopt a resolution ordering the levy of the annual assessment.

ATTACHMENT(S)

1. Resolution No. 21-26

2. Petition to annex Tract 2859 into the Cloisters Landscaping and Lighting Maintenance Assessment District

3. Assessment Ballot mailed on April 30, 2026

Page 22 of 128 ends

RESOLUTION NO. 21-26

RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA,
DECLARING THE CITY’S INTENTION TO ANNEX LOTS 1 THROUGH 5 OF TRACT 2859

INTO THE CLOISTERS LANDSCAPING AND LIGHTING MAINTENANCE ASSESSMENT

DISTRICT

T H E C I T Y C O U N C I L
City of Morro Bay, California
WHEREAS, the City Council of the City of Morro Bay, California has previously conducted proceedings to establish the Cloisters Landscaping and Lighting Maintenance Assessment District (LLMAD) pursuant to the terms and provisions of the Landscaping and Lighting Act of 1972 (Streets and Highways Code sections 22500 et. seq.) (the "Act"), to fund the maintenance of the Cloisters Park and Open Space; and
WHEREAS, Lot 124 of the original Cloisters subdivision (Tract 1996) was originally dedicated to the City of Morro Bay for future use as a fire station and excluded from the LLMAD; and
WHEREAS, Lot 124 has subsequently been sold by the City to a private developer and subdivided into five residential lots, recorded as Tract 2859 in December 2025; and WHEREAS, the City Council has received a petition from the landowner requesting that it annex into the LLMAD, and the City Council now desires to commence proceedings to annex territory into the LLMAD as described herein; and
WHEREAS, under the Act, this City Council, as the legislative body for the Cloisters LLMAD, is empowered with the authority to annex territory into the LLMAD.

NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Morro Bay, Section 1. Recitals. The above recitals are true and correct.

Section 2. Public Convenience and Necessity. This City Council hereby determines that the public convenience and necessity requires that territory by annexed into the Cloisters Landscaping and Lighting Maintenance Assessment District in order to pay the costs and expenses for the required and authorized public services.

Section 3. Boundaries. A general description of the territory included in the existing Cloisters LLMAD is hereinafter described as follows: Lots 1 through 120 of Tract 1996, recorded in Book 17 of Maps, at Page 83, and as more particularly described in the Covenants, Conditions and Restrictions for Tract 1996 recorded as Document Number 1996050337 at the Office of the Recorder of San Luis Obispo County.

A description of the boundaries and territory proposed to be annexed is as follows: Lots 1 through 5 of Tract 2859, recorded in Book 44 of Maps, at Page 25 at the Office of the Recorder of San Luis Obispo County.

Page 23 of 128 ends

Section 4. Services. The improvements to be maintained are the Cloisters Park and Open Space areas, more particularly described in Resolution 68-96 of the City Council, dated September 9, 1996.

Section 5. Public Hearing. Notice is given that on Tuesday, June 23, 2026, at 5:30 p.m. or as soon thereafter as the matter may be heard, in the regular meeting place of this City Council at the Veterans Hall, 209 Surf Street in the City of Morro Bay, and the same are hereby appointed and fixed as the time and place when and where this City Council, as legislative body for the Cloisters LLMAD, will conduct a public hearing on the annexation of territory to the Cloisters LLMAD, and consider and finally determine whether the public interest, convenience and necessity require said annexation of territory to the Cloisters LLMAD and the levy of said special assessment therein.

Section 6. Notice. The City Clerk is hereby directed to cause notice of said public hearing to be given by publication one time in a newspaper of general circulation in the area of the Cloisters LLMAD, including the area to be annexed to the LLMAD. The publication of notice shall be completed at least seven days before the date herein set for said hearing. The City Clerk may also cause a copy of such notice to be mailed to the registered voters and landowners within the territory proposed to be annexed, which shall be mailed at least fifteen days before the date of said hearing.

PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting held on this 12
th day of May, 2026, by the following roll call vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSE:
_______________________________
CARLA WIXOM, Mayor
ATTEST:
__________________________________
DANA SWANSON, City Clerk

Page 24 of 128 ends

CONSENT TO ANNEXATION

OF PROPERTIES INTO CITY OF MORRO BAY

CLOISTERS LANDSCAPING AND LIGHTING MAINTENANCE ASSESSMENT DISTRICT WHEREAS, the undersigned constitute(s) 100 percent 0wnership [or has legal signature authority representing 100 percent ownership] of Lots 1 through 5 of Tract No. 2859, in the City of Morro Bay, County of San Luis Obispo, State of California, according to map recorded on December 23, 2025 in Book 44, Page 25 of Maps (Property); and
WHEREAS, the Property is proposed to be deveioped for residential purposes and will receive special benefit from the Cloisters Landscaping and Lighting Maintenance Assessment District (Cloisters LLMAD) maintained public park, bicycle pathway, right of way landscaping, coastal accessways, environmentally sensitive restoration areas and other tract improvements required under the approvals for the original Cloisters subdivision; and WHEREAS, annexation into the Cloisters LLMAD and imposition of assessments in an amount consistent with the assessment currently imposed for properties in the Cloisters LLMAD will satisfy applicable conditions of approval and deed restrictions for the recent subdivision ofthe Property; and
WHEREAS, pursuant to California Streets and Highways Code Section 22608, the undersigned owner(s) do hereby consent to annexation into the Cloisters LLMAD and expressly waive notice of such proceedings, to file written protest with respect thereto, and to otherwise object to such proceedings; and
WHEREAS, the undersigned owner(s) consent to assessments levied for the aforementioned special benefits to the Property in accordance with the provisions of the Landscaping and Lighting Act of 1972 (California Streets and Highway Code, Section 22400, etseq.).

PURSUANT to Sections 22586 et seq. of the California Streets and Highways Code, these properties will be included within the required Engineer's Report (Report). The signing of this consent to annexation precludes any and all notice and hearing requirements for the first year's Report. Notwithstanding the foregoing, a ballot regarding the special assessment will be sent to the undersigned owner(s) in accordance with Government Code Section 53753.

EXECUTED ON April lo14a ,2026
at $‘I‘ock‘I‘m , California
l
Morro Bay Ventures, LLC., a California Limited Liability Company By: Grupe Huber Company, a California Corporation its mana er Iitdtn I'Iukef/PrggmlewlProperty Owner (printed name/title) Property Owner (signature)

Page 25 of 128 ends

OFFICIAL ASSESSMENT BALLOT
Assessment for Fiscal Year 2026-2027 for
Cloisters Lighting and Landscaping Maintenance Assessment District City of Morro Bay
This Ballot is for the property designated as APN 065-386-015 Kevin Huber, President/CEO
Grupe Huber Company
1203 N. Grant Street
Stockton, CA 95202
This is your official property owner assessment ballot regarding the proposed assessment for the below properties proposed to be annexed to the Cloisters Lighting and Landscape Maintenance Assessment District (LLMAD) to fund special benefit expenses associated with the maintenance of local landscape improvements as outlined in the accompanying Notice and described more fully in the Engineer’s Report, which is on file with the City Clerk.

To complete your ballot, mark an (X) in the voting square next to the word “YES” or next to the word “NO” below, sign and date the ballot, and return the entire ballot to the City Clerk. If you wrongly mark, tear, or deface this ballot, return it to the City Clerk with a request for a replacement ballot. All completed ballots must be received by the City Clerk of the City of Morro Bay no later than the close of testimony at the public hearing scheduled for June 23, 2026.

Assessor’s Parcel Number: 065-386-015
Parcel 1 – 201 Verdon Court: $1,241.20
Parcel 2 – 202 Verdon Court: $1,241.20
Parcel 3 – 205 Verdon Court: $1,241.20
Parcel 4 – 206 Verdon Court: $1,241.20
Parcel 5 – 210 Verdon Court: $1,241.20
Your Parcel’s Balloted Assessment Amount: $6,206.00
BALLOT
This is an annual assessment that is collected as part of your San Luis Obispo County property tax bill. The amount assessed each fiscal year shall be based on the net budgeted expenses to be assessed, but the assessments may not exceed the Proposed Maximum Assessment Rate shown above without the approval of the property owners. 

YES - IN FAVOR OF THE ASSESSMENT
proposed for Cloisters LLMAD and the assessment for my property shown above. *06232600*


NO - OPPOSED TO THE ASSESSMENT
proposed for Cloisters LLMAD and the assessment for my property shown above. *06232601*
I hereby declare, under penalty of perjury, that I am the record owner of the property (Assessor’s Parcel Number) identified on this ballot or I am the authorized representative of that record owner.

Signed
Date ________________
Please see the back of this sheet for information about your assessment ballot and instructions for completion and delivery of the assessment ballot.

Page 26 of 128 ends

INFORMATION ABOUT YOUR ASSESSMENT BALLOT AND INSTRUCTIONS FOR

COMPLETION AND DELIVERY OF ASSESSMENT BALLOT FOR PROPERTIES

PROPOSED TO BE ANNEXED TO THE CLOISTERS LIGHTING AND LANDSCAPING

MAINTENANCE ASSESSMENT DISTRICT

CITY OF MORRO BAY
To Cast Your Ballot: Prior to the public hearing, completed ballots may be personally delivered to the City Clerk located at 595 Harbor Street, Morro Bay, California; or mailed to the City Clerk at the address indicated below. A return envelope has been provided for your convenience that is addressed to the City Clerk. You may also personally present completed ballots to the City Clerk at the public hearing on June 23, 2026. If you return your ballot by mail, please be sure to allow time for mail delivery.

The City Clerk must receive all completed valid ballots no later than the end of the public testimony portion of the public hearing on June 23, 2026. If you damage or misplace your ballot, a replacement ballot may be obtained by contacting the City Clerks Office at (805) 772-6205.

All submitted ballots must be clearly marked to indicate either “Yes - In Favor of the assessment” or “No - Opposed to the assessment” and signed; otherwise, the ballot will be rejected and not counted. To ensure the privacy of your ballot prior to the tabulation, please return your ballot in the envelope provided, or in a sealed envelope that indicates that a ballot is enclosed by noting on the front of the envelope “Assessment Ballot, Do Not Open”.

A ballot previously submitted may be withdrawn at any time prior to the close of the public hearing by request to the City Clerk, by the person(s) that previously signed the submitted ballot. An assessment ballot may be changed at any time prior to the end of the public hearing by requesting a withdrawal of the previous ballot and requesting a replacement ballot. Only the person(s) signing the ballot may make such a request. The replacement ballot provided must be received by the City Clerk prior to the deadline set forth herein.

What your vote means: A YES vote means you are in favor of the annual assessment that funds maintenance of the thirtyfour (34) acres of public resource lands including open space and natural lands, wetland area and pond used for drainage mitigation for homes constructed in Cloisters, median landscaping, trees, a neighborhood park and recreation area, fencing and other public improvements.

A NO vote means you are opposed to the annual assessment that funds maintenance of the thirty-four (34) acres of public resource lands including open space and natural lands, wetland area and pond used for drainage mitigation for homes constructed in Cloisters, median landscaping, trees, a neighborhood park and recreation area, fencing and other public improvements.

If you have questions: Should you have any questions prior to the public hearing, you may call the Public Works department at (805) 772-6569 during regular business hours.

Return Ballot to:

City of Morro Bay
City Clerk
595 Harbor Street
Morro Bay, CA 93442
Completed ballots MUST be received by the City Clerk no later than the close of the public testimony portion of the public hearing, which is scheduled to begin on Tuesday, June 23, 2026, at 5:30 p.m., in the Veterans Memorial Building, located at 209 Surf Street, Morro Bay, California.

How to cast your ballot:

1. 
Check
Yes or No

2. 
Sign and
date it

3. 
Return to the City Clerk on or before the Public Hearing on June 23, 2026, in accordance with the deadlines referenced above.

Page 27 of 128 ends

NOTICE OF PUBLIC HEARING AND ASSESSMENT BALLOT PROCEDURES

CLOISTERS LIGHTING AND LANDSCAPING MAINTENANCE ASSESSMENT DISTRICT

CITY OF MORRO BAY
Purpose of this Notice
The purpose of this notice, that includes both this document and the accompanying Assessment Ballot which also includes Instructions for Completion and Delivery of Assessment Ballot, is:
• to provide information to the record owners of property proposed to be annexed into Cloisters LLMAD of the City of Morro Bay (“City”), regarding proceedings being undertaken by the City to levy the annual assessment on such properties within Cloisters LLMAD commencing in fiscal year 2026/2027; • to transmit an Assessment Ballot to the owners of property proposed to be annexed into Cloisters LLMAD, to enable such owner or owners to express support or opposition to the levy of the proposed assessment on such property, by completing and returning the Assessment Ballot; and
• to identify the time and place of the scheduled public hearing on these matters and to provide instructions to the owner or owners to assist in completing the Assessment Ballot and returning it to the City.

Reason for the Proposed Assessment
The proposed assessment on properties within Cloisters LLMAD will provide a stable revenue source to fund ongoing special benefit expenses associated with the servicing and maintenance of local landscape improvements including but not limited to the maintenance of the thirty-four (34) acres of public resource lands including open space and natural lands, wetland area and pond used for drainage mitigation for homes constructed in Cloisters, median landscaping, trees, a neighborhood park and recreation area, fencing and other public improvements. These improvements are considered a particular and distinct special benefit to properties in Cloisters LLMAD.

Basis upon which the assessment is Calculated
Each year the City determines the estimated cost to maintain and service the improvements within Cloisters LLMAD to appropriately allocate those costs to only the benefiting properties. The cost of providing the improvements determined to be of special benefit are allocated to parcels within Cloisters LLMAD based on a benefit formula that equitably distributes those costs based on the proportional special benefits to each parcel. The total eligible special benefit expenses for Cloisters LLMAD are divided by the total of all parcels within Cloisters LLMAD. The result of this calculation establishes the annual assessment rate per parcel within Cloisters LLMAD.

A more detailed description of the improvements and basis upon which increased assessments have been calculated is described in the Engineer’s Report, which is on file with the City.

The Total Annual Assessment Proposed to be Charged
The total annual amount of the assessment being balloted to properties proposed to be annexed to the Cloisters LLMAD is $6,206.00. This total amount balloted divided by the total number of parcels proposed to be annexed to the Cloisters LLMAD results in an annual assessment rate of $1,241.20 per parcel.

Duration of the Assessment
If approved, the proposed assessment indicated on the accompanying ballot will be assessed and appear on your 2026/2027 property tax bill from the County. At the City Council’s discretion, a lesser amount may be assessed. Because the proposed assessment will provide annual funding for the ongoing maintenance and operation of the improvements, there is no sunset on the assessments (no end date), but the annual budget and assessments shall be presented at a public hearing each fiscal year, which is open to the public for comment and testimony. The assessments may not exceed the Proposed Maximum Assessment Rate shown on the attached ballot without majority property owner approval of a new assessment ballot identifying a new increased maximum assessment rate.

Public Hearing
Notice is hereby given that a public hearing regarding the proposed levy of an assessment for properties proposed to be annexed to the Cloisters LLMAD, will be held during a regular meeting of the Morro Bay City Council, in the Veterans Memorial Building, located at 209 Surf Street, Morro Bay, California, on Tuesday, June 23, 2026, starting at 5:30 P.M.

The City Council shall consider all objections and protests, if any, to the proposed assessment on properties proposed to be annexed to the Cloisters LLMAD which has been deemed necessary for the operation and maintenance of Cloisters LLMAD landscaping maintenance and improvements. Any interested person shall be permitted to present written and oral testimony regarding these proceedings. The City Council may impose reasonable time limits on both the length of the entire public hearing and the length of each interested person’s oral testimony. The City Council may also continue the public hearing from time to time.

Page 28 of 128 ends

Protest Provisions
Pursuant to California Constitution Article XIIID, Section 4 (e), at the Public Hearing, the City Council shall consider all protests against the proposed assessment from property owners of the properties proposed to be annexed to the Cloisters LLMAD. In addition to the property owner assessment ballots, written protests to the proposed assessment from owners of properties proposed to be annexed to the Cloisters LLMAD may be filed with the City Clerk prior to or during the Public Hearing. The City shall not impose an assessment for properties proposed to be annexed Cloisters LLMAD if there is a majority protest, as calculated set forth below.

Assessment Ballot
The amount of the assessment identified on the accompanying Assessment Ballot as “Your Parcel’s Balloted Assessment Amount” represents your parcel’s proportional special benefit of the total amount being balloted at the maximum assessment rate. Any time before the end of the Public Hearing, you may submit the Assessment Ballot to the City Clerk. To do so: mark the Ballot either “YES - IN FAVOR OF THE ASSESSMENT” or “NO - OPPOSED TO THE ASSESSMENT”, sign the Ballot, seal the Ballot in the enclosed return envelope, and mail or deliver it to the City Clerk. If you do not use the envelope provided, the return envelope should have the words “ASSESSMENT BALLOT, DO NOT OPEN” printed on the outside to ensure it is not opened in advance of the Public Hearing. The Ballot may be submitted, changed or withdrawn at any time before the end of the Public Hearing. If you need a replacement Ballot, call the Office of the City Clerk at (805) 772-6205.

Only ballots issued by the City are considered valid ballots (copies or facsimiles are not valid ballots). Any Ballot returned unmarked, unsigned, or not received by the City Clerk before the end of the public hearing will be rejected and not counted.

The proposed assessment will not be imposed for properties proposed to be annexed to the Cloisters LLMAD if the Ballots submitted in opposition to the assessment exceed the Ballots submitted in favor of the assessment.

Only valid ballots received by the City Clerk before the end of the public hearing shall be counted. Please ensure that your Assessor’s Parcel Number (APN) listed on the accompanying Assessment Ballot is included on any written protest or correspondence so that your property can be correctly identified for the record.

Contact Information
For more information, please contact the City’s Public Works Department at (805) 772-6569.

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Prepared By: CC Dept Review: GK
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council DATE: May 7, 2025
FROM: Nate Stong, PE – City Engineer
SUBJECT: Adoption of Resolution No. 22-26 Approving the Engineer’s Report and Declaring the Intent to Levy the Annual Assessment for the Cloisters Landscaping and Lighting Maintenance Assessment District (LLMAD)

RECOMMENDED ACTION
Adopt Resolution No. 22-26 declaring the intent to levy the annual assessment for the maintenance of the Cloisters Park and Open Space for Fiscal Year (FY) 2026-27 and approving the Engineer’s Report.

FISCAL IMPACT
The Engineer’s Report estimates the annual costs of maintaining the Cloisters Park and Open Space for the upcoming year to be in excess of $148,944, which is the total assessment amount as established by Resolution 68-96 in the year 1996 when the district was formed. The true costs of maintaining Cloisters Park, Open Space, trails, as well as the medians and parkways within the district, exceed the assessment revenue received. All maintenance costs in excess of the district’s available revenues will be subsidized by the General Fund per City Council direction on May 24, 2004.

The district will have an estimated fund balance of $205,647 at the end of FY 2025-26, pending audited actuals from this year. The fund balance is to be used for deferred maintenance and onetime expenses, permits, and savings for future capital projects. Since the assessment collected will no longer have a surplus to be added for further accumulation of this fund, the fund will be exhausted once remaining funds are used for upcoming capital project needs. The fund balance and its use is not part of the content of the Engineer’s Report. In alignment with Government Finance Officers Association (GFOA) recommendations to simplify budgeting and budget presentations to the public, and to reduce duplicate budgeting associated with interfund transfers, the Cloisters Accumulation Fund was consolidated with the Cloisters Assessment District Fund (570) at the end of FY 2021-22.

This is also consistent with Council direction on April 26, 2022, to eliminate enterprise accumulation funds.

SUMMARY
On April 14, 2026, City Council adopted Resolution No. 18-26, which initiated the proceedings to levy the annual assessment to fund the maintenance of the Cloisters Park and Open Space. As ordered AGENDA NO: 6.e
MEETING DATE: May 12, 2026

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by the Council and required by law, an Engineer’s Report has been prepared detailing the estimated annual assessment for the parcel owners for FY 2026-27 and expenditures for the district. Staff intends to continue to perform most maintenance tasks with City Maintenance staff and directly allocate their time spent maintaining the site to the assessment district. Upon adoption of Resolution No. 22-26, the next and final step in the annual levy of assessment process is the public hearing after which the City Council orders the levy of assessment.

It was well known that any development at the Cloisters would require a balance between continuation of lateral and vertical access within and through the property, while at the same time conserving the sensitive plant and wildlife resources present. Zoning on most of the Cloisters site is Planned Development, Single-Family Residential with the sand dunes and wetlands zoned Environmentally Sensitive Habitat Area (ESHA). The purpose of the Planned Development (PD) overlay zone is to provide for detailed and substantial analysis of development on parcels, which because of location, size or public ownership, warrant special review. That overlay zone was also intended to allow for the modification of, or exemption from, the development standards of the primary zone, which would otherwise apply if such action would result in better design or other public benefit.

The findings and conditions of approval for the project were numerous. For example, City Council made findings that the Cloisters project could cause significant environmental impacts relating to land use, visual/aesthetics, affordable housing, traffic generation, air quality noise, geology, drainage and water quality, ecological resources, and public services; but those impacts were mitigated by the recommended conditions. In addition, City Council made further findings the Cloisters project was in compliance with the specific policies of the General Plan/Land Use Plan (GP/LUP) and Zoning Ordinance with respect to protection of views, environmentally sensitive resources, public access, circulation, hazards and other requirements so long as the environmental impacts were mitigated.

Finally, City Council made findings that the Cloisters project complies with the Morro Bay Municipal Code (MBMC) with respect to optional subdivision design and related improvements, and the optional design is justified in order to contribute to a better community environment through the dedication of extensive public areas, restoration of the ESHA area, provision of scenic easements, provision of larger than usual lots adjacent to such areas, and maintenance of a consistent lot layout pattern adjacent to existing development on the north side of Azure Street.

In order to mitigate the environmental impacts of the project, and to provide a greater than normal public benefit (upon modification of otherwise applicable standards) as required in a PD overlay zone, the conditions of approval for the project required the applicant to form an assessment district for the maintenance of the public park, bicycle pathway, right-of-way landscaping, coastal access ways, ESHA restoration areas and any other improved common areas to be privately held or dedicated to the City. The public park area, as well as all open space improvements and the assessment district, were part of many detailed discussions during City and Coastal Commission hearings.

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the district pursuant to the Landscape and Lighting Act of 1972. The assessment district formation proceedings concluded with the final public hearing for formation on September 23, 1996, which levied the annual assessment of $148,944 for the maintenance of the 27.75 acres of park and open space.

In preparing the various purchase and sale documents for each individual lot, including the Conditions, Covenants, and Restrictions, the developer was especially careful to call out the existence of the assessment district and to make certain the existence of the assessment district would not come as a surprise to anyone who purchased one of the lots. The Developer assured the City, “there will be no surprises to prospective owners about the assessments or their amounts.” In drafting all the project documents, the City and the developer reinforced the special benefits for the residents of the Cloisters Project with the public amenities and easements. Each Cloister’s lot directly benefits from the public park, bicycle pathway, right-of-way landscaping, coastal access ways, ESHA restoration areas and coastal access ways. There was also created and reserved in favor of each owner in the Cloisters Development, Conservation Space in parcels 065-386-005 & 0065-386-016, and a Scenic Conservation Easement in parcel 065-386-020 for view, open space, scenic, passive recreation and coastal access, none of which will be developed with any improvements or structures, unless necessary and proper for the restoration and maintenance of the Environmentally Sensitive Habitat Area.

Lot 124 was declared as surplus by the city and sold in 2021. The new owner has since subdivided the property into five residential lots, recorded as Tract 2859 in December 2025. The owner has petitioned to annex these new lots into the Cloisters LLMAD, presented for consideration on a separate item on the agenda for the May 12, 2026 Council meeting. The additional five lots would bring the total number of assessed properties in the district to 125.

Personnel costs, as well as supplies and services, have risen significantly in the last several years.

The true cost of maintaining the assessment district exceeds the revenue received from the district and is estimated to be 25-30% higher than assessment revenues collected. However, all maintenance costs in excess of the district’s available revenues will be subsidized by the General Fund per City Council direction on May 24, 2004. The assessment for providing maintenance of the Cloisters LLMAD is $1,241.20 per parcel for fiscal year 2026/27 for a total annual assessment of $148,944 assuming only the original 120 lots are assessed, or $155,150 if the additional five lots from Tract 2859 are included for a total of 125 assessed parcels. The maintenance costs also exceed this higher total assessment amount as discussed above. The increase in the cost of goods and services now

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precludes a fund surplus for carryover to be set aside for capital projects. Once the remaining surplus funds are exhausted, the City will propose capital improvements through the normal budget process with the use of General Funds, Measure Q/E Funds, or other sources such as grant funding.

CONCLUSION
The process for the annual levy of assessment for the Cloisters Landscaping and Lighting Maintenance Assessment District requires the City Council to receive the Engineer’s Report, approve and/or modify the report and adopt a Resolution of Intention. The Resolution of Intention gives notice of the time, date, and place for a public hearing by the City Council on the issue of the levy of assessment.

ATTACHMENT(S)

1. Resolution No. 22-26

2. Cloisters Landscaping and Lighting Maintenance Assessment District 2026/27 Engineer’s Annual Levy Report

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RESOLUTION NO. 22-26

RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA,
DECLARING THE CITY’S INTENTION TO LEVY THE ANNUAL ASSESSMENT FOR

CLOISTERS LANDSCAPING AND LIGHTING MAINTENANCE ASSESSMENT DISTRICT PURSUANT TO THE “LANDSCAPING AND LIGHTING ACT OF 1972” (STREETS AND HIGHWAYS SECTIONS 22500 ET.SEQ.) FOR FISCAL YEAR 2026/27

T H E C I T Y C O U N C I L
City of Morro Bay, California
WHEREAS, all property owners of the original Cloisters subdivision requested the City of Morro Bay form a maintenance assessment district to fund the maintenance of the Cloisters Park and Open Space; and
WHEREAS, the Landscaping and Lighting Act of 1972 (Streets and Highways Code sections 22500 et. seq.) (the "Act") enables the City to form assessment districts for the purpose of maintaining public improvements; and
WHEREAS, pursuant to Section 22623 of the Act, the City Engineer has filed in the Office of the City Clerk, and submitted for review to the City Council, a report entitled "CLOISTERS LANDSCAPING AND LIGHTING MAINTENANCE ASSESSMENT DISTRICT 2026/27 ENGINEER’S ANNUAL LEVY REPORT," dated May 7, 2026, prepared in accordance with Article 4 of the Act, commencing with Section 22565; and
WHEREAS, pursuant to Section 22608.2 of the Act, the subdivider was required by City Ordinance to install improvements for which an assessment district was required to assure continued and uninterrupted maintenance of the Cloisters Park and Open Space; and WHEREAS, pursuant to the intent of Article XIII, Section 4, of the California Constitution, the property owners have elected to form the Cloisters Landscaping and Lighting Maintenance Assessment District.

NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Morro Bay, Section 1. The City Council approves the Engineer’s Report.

Section 2. It is the intent of the Council to order the annual levy and collection of assessments for the Cloisters Landscaping and Lighting Maintenance Assessment District at a public hearing to be held at the Regular City Council Meeting on June 23, 2026, at or about 5:30 p.m., at the Veterans Hall in Morro Bay.

Section 3. The improvements to be maintained at the Cloisters Park and Open Space are specified in the Engineer's Report dated May 7, 2025, which is hereby approved.

Section 4. The assessment upon assessable lots within the district is proposed to total $155,150 or $1,241.20 per assessable parcel for Fiscal Year 2026/27.

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Section 5. Staff is directed to continue the Major Maintenance/Capital Improvement Program that will address items requiring significant expenditures in future budget cycles with available capital fund balance until it is exhausted. Any projects identified with input from the community shall utilize surplus fund balance and shall be approved through the budget or budget amendment process by the City Council prior to implementation.

PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting held on this 12
th day of May, 2026, by the following roll call vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSE:
_______________________________
CARLA WIXOM, Mayor
ATTEST:
__________________________________
DANA SWANSON, City Clerk

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CITY OF MORRO BAY

CLOISTERS

LANDSCAPING AND LIGHTING

MAINTENANCE ASSESSMENT DISTRICT
2026/27 ENGINEER’S ANNUAL LEVY REPORT
May 7, 2026

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AFFIDAVIT FOR 2026/27 ENGINEER’S ANNUAL LEVY REPORT

CITY OF MORRO BAY

CLOISTERS

LANDSCAPING AND LIGHTING

MAINTENANCE ASSESSMENT DISTRICT
This report describes the proposed maintenance, improvements, budgets, zone of benefit and assessments to be levied on parcels of land within the Cloisters Landscaping and Lighting Maintenance Assessment District for the fiscal year 2026/27, as the same existed at the time of the passage of the Resolution of Intention. Reference is hereby made to the San Luis Obispo County Assessor’s maps for a detailed description of the lines and dimensions of parcels within the District. The undersigned respectfully submits the enclosed Report as directed by the City Council and, to the best of my knowledge, information, belief, the report, the assessments and diagrams have been prepared and computed in pursuant to the Landscaping and Lighting Act of 1972.

Dated this 7th day of May, 2026
________________________
Jonathan “Nate” Stong, PE
City Engineer

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CITY OF MORRO BAY

CLOISTERS

LANDSCAPING AND LIGHTING

MAINTENANCE ASSESSMENT DISTRICT
ENGINEER’S REPORT
Table of Contents
Page
I. Overview ............................................................................................................................... 1 A. Introduction ..................................................................................................................... 1 B. Assessment History and Current Legislation .................................................................. 2 II. Description of the District ..................................................................................................... 4 A. Improvements Authorized by the 1972 Act .................................................................... 4 B. Maintenance Items .......................................................................................................... 4 III. Method of Apportionment ..................................................................................................... 6 A. General ............................................................................................................................ 6 B. Benefit Analysis .............................................................................................................. 6 C. Maintenance Tasks .......................................................................................................... 7 D. Maintenance Costs .......................................................................................................... 7 E. Apportionment of Assessment ........................................................................................ 8 Detailed Maintenance Tasks………………………………………………………... Attachment A District Budget - Fiscal Year 2026/27……………………………………………. Attachment B Parcel/Assessment Table……………………………………………………………. Attachment C District Boundary Diagram…………………………………………………………. Attachment D

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I. Overview
A. Introduction
The City Council of the City of Morro Bay (hereafter referred to as “City”), County of San Luis Obispo, State of California, previously formed and has levied and collected annual assessments for the District designated as:

CLOISTERS LANDSCAPING AND LIGHTING

MAINTENANCE ASSESSMENT DISTRICT
(hereafter referred to as “District”) pursuant to the provisions of the Landscaping and Lighting Act of 1972, being Part 2 of Division 15 of the California Streets and Highways Code, commencing with Section 22500 (hereafter referred to as the “1972 Act”), and in compliance with the provisions of the California State Constitution Articles XIIIC and XIIID (hereafter referred to as the “Constitution” or “Proposition 218”).

This Report has been prepared in accordance with Chapter 1, Article 4 (commencing with Section 22565) of the 1972 Act and describes the District and changes to the District including: territories annexed; modifications to the improvements or organization; and the proposed budgets and assessments applicable for fiscal year 2026/27.

History
Tract 1996, known as the Cloisters development, is a 124-lot subdivision bounded by State Highway One at the east, Atascadero State Beach at the west, Morro Bay High School at the south, and Azure, Coral, and San Jacinto Streets at the north (the “Cloisters”).

The Cloisters, prior to development, was a privately owned 80-plus acre expanse of open land.

The property was historically used for lateral and vertical access and contained a large area of sensitive sand dunes abutting the eastern edge of Atascadero State Beach. Over the years, it was the subject of various land development proposals including an RV park, a 390-unit condominium development, a 466-unit single family residential development, a 455-unit mixed residential development, and a 213-unit residential development. None of these development proposals were approved by the City.

It was well known that any development at the Cloisters was going to require a balance between continuation of lateral and vertical access within and through the property, while at the same time conserving the sensitive plant and wildlife resources present. In addition, the negative impacts of development on the site would have to be sufficiently offset by public resources and public amenities from the site.

Zoning on most of the Cloisters site is Planned Development, Single-Family Residential with the sand dunes and wetlands zoned Environmentally Sensitive Habitat Area (ESHA). The purpose of the Planned Development (PD) overlay zone is to provide for detailed and substantial analysis of

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development on parcels, which because of location, size or public ownership, warrant special review. This overlay zone is also intended to allow for the modification of, or exemption from, the development standards of the primary zone which would otherwise apply if such action would result in better design or other public benefit.

On September 23, 1996, the City Council passed Resolution No. 69-96, which accepted the final map for Tract 1996, known as the Cloisters Subdivision, consisting of 124 lots. Lots 1 through 120 were for single-family residential purposes; Lots 121 and 122 were offered to the City subject to the completion of the public park improvements, Lot 124 was offered to the City for a future fire station, and Lot 123 was offered to the State. Lot 124 has since been sold and was subdivided into five single-family residential lots, recorded as Tract 2859 in December 2025. The owner of the subdivision has consented to annexation of new lots into the LLMAD.

The findings and conditions of approval for the project were numerous. For example, the City Council made findings that the Cloisters project could cause significant environmental impacts relating to land use, visual/aesthetics, affordable housing, traffic generation, air quality, noise, geology, drainage and water quality, ecological resources, and public services; but that these impacts could be mitigated by the recommended conditions. In addition, the City Council made further findings that the Cloisters project was in compliance with the specific policies of the General Plan/Local Coastal Plan (GP/LCP) and zoning ordinance with respect to protection of views, environmentally sensitive resources, public access, circulation, hazards and other requirements so long as the environmental impacts were mitigated. Finally, the City Council made further findings that the Cloisters project complied with MBMC with respect to optional subdivision design and related improvements, and that the optional design was justified in order to contribute to a better community environment through the dedication of extensive public areas, restoration of the ESH area, provision of scenic easements, and provision of larger than usual lots adjacent to such areas, and maintenance of a consistent lot layout pattern adjacent to existing development on the north side of Azure Street.

In order to mitigate the environmental impacts of the project and to provide a greater public benefit as required in a PD overlay zone, the conditions of approval for the project required the applicant to form an assessment district for the maintenance of the public park, bicycle pathway, right of way landscaping, coastal access ways, ESHA restoration areas and any other improved common areas to be privately held or dedicated to the City. The public park area, as well as all open space improvements, and the assessment district were part of many detailed discussions during each City and Coastal Commission hearing. Without this Condition of Approval and the creation of the assessment district, the project would not have been approved and there would not be a Cloisters Development.

B. Assessment History and Current Legislation
In November 1996, California voters approved Proposition 218 that established specific requirements for the ongoing imposition of taxes, assessments and fees. The provisions of the Proposition are now contained in the California Constitutional Articles XIIIC and XIIID. All

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assessments described in this Report and approved by the City Council are prepared in accordance with the 1972 Act and in compliance with these provisions of the Constitution.

Pursuant to the Article XIIID Section 5 of the Constitution, certain existing assessments were exempt from the substantive and procedural requirements of the Article XIIID Section 4, and property owner balloting is not required until such time that a new or increased assessment is proposed. Specifically, the City determined that the annual assessments originally established for the Cloisters were imposed in accordance with a consent and waiver as part of the original development approval for the properties within these areas. As such, pursuant to Article XIIID Section 5b, all the property owners approved the existing District assessments at the time the assessments were created (originally imposed pursuant to a 100% landowner petition). Therefore, the pre-existing assessments (the maximum assessment rates adopted prior to the passage of Proposition 218) for this district is exempt from the procedural requirements Article XIIID Section

4. However, any new or increased assessment for the Cloisters shall comply with both the substantive and procedural requirements of Article XIIID Section 4 before such assessments are imposed.

The assessment district formation proceedings began in August 1996 and concluded with the final public hearing on September 23, 1996, for formation of the District pursuant to the 1972 Act. This formation led to the annual assessment levy of $148,944 (the “Assessment”) for the maintenance of the thirty-four (34) acres of public resource lands including open space and natural lands, wetland area and pond used for drainage mitigation for homes constructed in Cloisters, median landscaping, trees, a neighborhood park and recreation area, fencing and other public improvements. The maximum assessment rates that existed and were adopted in fiscal year 1996/1997 did not include the assessment range formulae (inflationary adjustment) for their maximum assessment rates and therefore will remain static unless those being assessed vote to increase the assessments. Refer to section III D – “Maintenance Costs” for an analysis of the decision to not include an inflationary adjustment in the formulae.

The addition of the five lots from Tract 2859 at the same assessment rate will bring the total annual assessment levy to $155,150.

In preparing the various purchase and sale documents for each individual lot, including the Conditions, Covenants, and Restrictions, the owners and developer called out the existence of the assessment district and to make certain that the existence of assessment district was disclosed to anyone who purchased one of these lots. In drafting all the project documents, the City and the developer reinforced the special benefits for the residents of the Cloisters Project from the public amenities and easements maintained by the assessment.

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II. Description of the District
A. Improvements Authorized by the 1972 Act
As applicable or may be applicable to this proposed District, the 1972 Act defines improvements to mean one or any combination of the following:
• The installation or planting of landscaping;
• The installation or construction of statuary, fountains, and other ornamental structures and facilities;
• The installation or construction of public lighting facilities; • The installation or construction of any facilities which are appurtenant to any of the foregoing or which are necessary or convenient for the maintenance or servicing thereof, including, but not limited to, grading, clearing, removal of debris, the installation or construction of curbs, gutters, walls, sidewalks, or paving, or water, irrigation, drainage, or electrical facilities;
• The maintenance or servicing, or both, of any of the foregoing; and • The acquisition of any existing improvement otherwise authorized pursuant to this section.

Incidental expenses associated with the improvements including, but not limited to:
• The cost of preparation of the report, including plans, specifications, estimates, diagram, and assessment;
• The costs of printing, advertising, and the publishing, posting and mailing of notices; • Compensation payable to the County for collection of assessments; • Compensation of any engineer or attorney employed to render services; • Any other expenses incidental to the construction, installation, or maintenance and servicing of the improvements;
• Any expenses incidental to the issuance of bonds or notes pursuant to Section 22662.51; and
• Costs associated with any elections held for the approval of a new or increased assessment.

The 1972 Act defines "Maintain" or "maintenance" to mean furnishing of services and materials for the ordinary and usual maintenance, operation, and servicing of any improvement, including:
• Repair, removal, or replacement of all or any part of any improvement; • Providing for the life, growth, health, and beauty of landscaping, including cultivation, irrigation, trimming, spraying, fertilizing, or treating for disease or injury; • The removal of trimmings, rubbish, debris, and other solid waste; and • The cleaning, sandblasting, and painting of walls and other improvements to remove or cover graffiti.

B. Maintenance Items
The ongoing maintenance for the District, and the costs thereof, paid from the levy of the annual 1 There is no existing bond debt nor is any anticipated at this time.

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assessments, are generally described below.

Replacement, maintenance and servicing of improvements include, but are not limited to, turf, ground cover, shrubs, trees, other landscaping, irrigation systems, fencing, signage, trails, walkways, recreation facilities, lighting, restroom facilities, parking and all necessary appurtenances, and labor, materials, supplies, utilities and equipment. The public resources maintained by the assessments from the District are further summarized as follows:
• Parkland: 4 Acres
• Open space meadow and natural land : 18.15 Acres
• Wetland: 5.5 Acres
• Medians and parkways within the public rights-of-way: 1.6 Acres The levy of assessments contributes to the maintenance of the following items:

1. Landscaping
a. Turf
b. Planted medians
c. Planter beds (formerly demonstration
garden)
d. Drainage systems, including gabion
channels
e. Irrigation system (spray and drip)
f. Scrub/meadow plantings
g. Trees & shrubs along the sound wall
h. Willows
i. Wetland area plantings and pond

2. Hardscaping
a. Asphalt path system
b. Concrete walkways
c. Parking lot
d. Decomposed granite paths
e. Play area surfacing
f. Bridge on City owned property

3. Facilities and miscellaneous
a. Barbeques
b. Bike rack
c. Benches
d. Directional signs
e. Drinking fountains
f. Fences:
i. 6' and 3' solid – Bike Path and
Fire Access Fencing
ii. Habitat Area (ESHA) fencing
and keep out signs
g. Interpretive panels
h. Light bollards
i. Monuments with lights
j. Observation pier at pond
k. Picnic tables
l. Play equipment and sand lot
m. Restroom
n. Sound wall
o. Trash cans

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III. Method of Apportionment
A. General
This section of the Engineer's Report includes an explanation of the special benefits to be derived from the installation, maintenance and servicing of the improvements and the methodology used to apportion the total assessment to properties within the District.

The 1972 Act permits the establishment of assessment districts by agencies for the purpose of providing certain public improvements which include the construction, maintenance and servicing of public lights, landscaping and appurtenant facilities. The 1972 Act further requires that the cost of these improvements be levied according to benefit rather than assessed value:
“The net amount to be assessed upon lands within an assessment district may be apportioned by any formula or method which fairly distributes the net amount among all assessable lots or parcels in proportion to the estimated benefits to be received by each such lot or parcel from the improvements.” The proceeds from the District are used to fund the maintenance and upkeep of public resources within the Cloisters development project for the special benefit of the properties located within the project. The continued maintenance and upkeep of these important items is a distinct and special benefit to properties within the District.

Easements were created and reserved in favor of each owner in the Cloisters Development for view, open space, scenic, passive recreation and coastal access across the entirety of Lots 121, 122 and 123; these lots shall not be developed with any improvements or structures unless necessary and proper for the restoration and maintenance of the ESHA. This is another distinct and special benefit conferred on property within the District.

B. Benefit Analysis
Each of the proposed improvements, the associated costs and assessments have been carefully reviewed, identified and allocated based on special benefit pursuant to the provisions of the Constitution and 1972 Act. The improvements associated with the District have been identified as necessary, required and/or desired for the orderly development of the properties within the District to their full potential, consistent with the proposed development plans and applicable portions of the City GP/LCP as identified previously in this report. As such, these improvements would be necessary and required of individual property owners for the development of such properties, and the ongoing operation, servicing and maintenance of these improvements would be the financial obligation of those properties. Therefore, the improvements and the annual costs of ensuring the maintenance and operation of the improvements are of direct and special benefit to the properties.

The method of apportionment (method of assessment) is based on the premise that each assessed parcel within the District receives special benefit from various improvements provided by the

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District. The desirability and security of properties is enhanced by the presence of local improvements in close proximity to those properties. The special benefits associated with landscaped improvements are specifically:
• Enhanced desirability of properties through association with the improvements; • Improved aesthetic appeal of properties providing a positive representation of the area; and • Enhanced adaptation of the urban environment within the natural environment from adequate green space and landscaping.

C. Maintenance Tasks
A list of typical maintenance tasks required to maintain the District in acceptable condition for public use was originally developed based on maintenance standards established for existing parks within the City and is included in this report as Attachment A. Larger maintenance items that are not routine, deferred maintenance, and capital projects are not included in this attachment.

D. Maintenance Costs
The estimated annual cost of maintaining the District was originally developed by the former Recreation and Parks Department based on the tasks required at the time and the City’s Flat Rate Manual for Parks Maintenance. District cost calculations included all labor, utilities, insurance, engineering services and depreciation/reserves. The total costs at that time totaled $148,944. The actual cost of maintenance for the 2026 fiscal year is estimated to be $156,237.

The original formation of the assessment district in 1996 set the fixed assessment of $148,944 (or $1,241.20 per assessed parcel) for the entire Cloisters Landscape Lighting Maintenance Assessment District. In 1996, the Consumer Price Index (CPI) was 157 and today (March 2026) the CPI is at 330. This has resulted in a substantial drop in the purchasing power of the assessment district funds, but due to increased efficiency in the service delivery along with some reductions in service originally provided in district, the City has been able to maintain the facilities and accrue an accumulation over time with subsidy from the General Fund. Accumulation of funds ended with the FY 21/22 Engineer’s Report and is not projected to continue due to the shortfall of funding and the maintenance burden to the City versus what is collected in the assessment.

The cost estimate, included in this report as Attachment B, shows the estimated allocation of funds collected for the purposes of maintenance of the district. The true costs of maintaining Cloisters Park, as well as the medians and parkways within the Cloisters Assessment District, exceeds the revenue received from the District. The true cost of maintenance is estimated to be 25-30% higher than revenues collected. However, all maintenance costs in excess of the District’s available revenues will be subsidized by the General Fund per City Council direction on May 24, 2004.

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- 8 -
E. Apportionment of Assessment
The total assessment for the District is apportioned equally to each of the 120 residential lots. Lots 121 and 122 (Parcel 1) are Cloisters Park and dedicated Open Space. Lot 123 offered to the State are not assessed. Lot 124 was originally dedicated for a future fire station, but it was declared as surplus by the City and sold. Lot 124 was subdivided into five single-family residential lots and recorded as Tract 2859 in December 2025. The subdivision was conditioned to be annexed to the Cloisters LLMAD, and the owners have submitted written consent to the annexation on April 10, 2026. The additional five lots would be assessed at the same amount of $1,241.20, bringing the total annual assessment to $155,150. Individual assessments are listed in the table shown in Attachment C.

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A-1
Attachment A

CLOISTERS

LANDSCAPING AND LIGHTING

MAINTENANCE ASSESSMENT DISTRICT

TYPICAL MAINTENANCE TASKS
Task Weekly Twice
Weekly
Monthly Twice
Annually
Annually As
Needed
I Turf Maintenance
Mow XX
Edge/Trim XX
Fertilize XX XX
Aerate/Seed XX XX
II Other Landscape Maint.

Prune plants/shrubbery XX XX
Maintain weed free XX
Maintain bark mulch XX
Rake/distribute gravel/sand XX XX
Fertilize XX
III Tree Maintenance
Prune trees XX
Maintain tree supports XX
Remove dead trees XX
IV Irrigation
Maintain/repair irrigation
system
XX
Program/check controllers XX XX
Hand water as required XX
Monitor water usage XX
V Weed control
Mow open areas XX XX
Remove noxious weeds XX
Weed identified areas XX XX
VI Wetlands
Coordinate maint. with city XX
VII Paths, walkways, parking
lot maintenance
Conduct general safety
inspection
XX XX
Remove foreign objects XX
Trim/spray pathways XX

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A-2

CLOISTERS

LANDSCAPING AND LIGHTING

MAINTENANCE ASSESSMENT DISTRICT
TYPICAL MAINTENANCE TASKS (cont.)
Task Weekly Twice
Weekly
Monthly Twice
Annually
Annually As
Needed
VII Paths, walkways, parking
lot maintenance (cont.)
Inspect hardscape for
damage
XX XX
Remove dog litter XX
VIII Pest/Disease Control
Control pests/rodents and
plant diseases
XX
IX Litter/trash control
Litter pick up throughout XX
Remove trash from
garbage cans
XX
Empty ashes from bbq’s XX
X Restroom
Clean/sanitize/service Daily
M-F

Maintain roof XX
Maintain plumbing XX
Paint structure XX

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B-3
Attachment B

CLOISTERS

LANDSCAPING AND LIGHTING

MAINTENANCE ASSESSMENT DISTRICT
DISTRICT BUDGET - FISCAL YEAR 2026/27
NAME: Cloisters Landscaping and Lighting Maintenance Assessment District DIAGRAM: Attached, as Attachment D
PLANS AND SPECIFICATIONS: On file in the Office of the City Engineer.

ESTIMATED COST OF MAINTENANCE: The table on the following page outlines the estimated budget for the maintenance of the District for fiscal year 2026/27. It also provides a look back at the previous fiscal year including the current fiscal year with expenses as of March 2026.

CONTRACT SERVICES
Includes non-routine maintenance and repair costs, as needed.

PERSONNEL SERVICES
Includes all daily and routine tasks as well as non-routine maintenance and repair costs.

INTERFUND TRANSFERS
Is the accounting practice that calculates and spreads the proportionate share of agency-wide indirect cost to departments and funds that receive a service from other departments (e.g., Payroll, Administration).

SUPPLIES
Includes all supplies used in daily tasks as well as non-routine repair and maintenance.

SERVICES
Includes utilities, outside engineering, insurance and contract services.

CAPITAL/DEFERRED MAINTENANCE RESERVE (ACCUMULATION)
Accumulated funds to be directed towards future use on capital projects, permits, and other onetime expenses.

CURRENT CAPITAL ALLOCATION OF FUND BALANCE $143,048
ESTIMATED CAPITAL BALANCE END FY 2026/27 $145,281
TOTAL ASSESSMENT: $155,150.00
PER PARCEL YEARLY ASSESSMENT ($155,150/125 parcels) $1,241.20

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B-4
Detailed Financial Summary
Fund Name Description ACCOUNT# Account Type
FY25
Actual
FY26
Projected
FY27 Proposed
Cloisters Park
Maint AD Regular Pay XXX-XXXX-4110 Personnel Services $45,777 $45,253 $50261 Cloisters Park
Maint AD Overtime Pay XXX-XXXX-4120 Personnel Services $555 $100 $700 Cloisters Park
Maint AD Standby Pay XXX-XXXX-4515 Personnel Services $2,341 $2,367 $2,367 Cloisters Park
Maint AD Other Pay XXX-XXXX-4599 Personnel Services $1,755 $3,360 $1,650 Cloisters Park
Maint AD Employer Paid Benefits XXX-XXXX-4910 Personnel Services $18,725 $22,304 $25,883 Cloisters Park
Maint AD Pension Normal Cost XXX-XXXX-4911 Personnel Services $6,921 $7,200 $7,574 Cloisters Park
Maint AD
PERS Unfunded Accrued
Liability XXX-XXXX-4912 Personnel Services $4,168 $10,079 $10,880 Cloisters Park
Maint AD Workers Compensation XXX-XXXX-4914 Personnel Services $1,309 $1,991 $707 Cloisters Park
Maint AD Uniforms/Safety Equipment XXX-XXXX-5109 Supplies $0 $0 $0 Cloisters Park
Maint AD Grounds Maintenance Supplies XXX-XXXX-5501 Supplies $1,878 $1,980 $15,000 Cloisters Park
Maint AD Building Maint. Supplies XXX-XXXX-5502 Supplies $0 $0 $0 Cloisters Park
Maint AD Small Tools XXX-XXXX-5530 Supplies $0 $0 $0
Cloisters Park
Maint AD Contractual Services XXX-XXXX-6106 Services $0 $0 $0 Cloisters Park
Maint AD Other Professional Services XXX-XXXX-6199 Services $0 $0 $0 Cloisters Park
Maint AD Electricity XXX-XXXX-6301 Services $956 $1225 $1,050 Cloisters Park
Maint AD Water XXX-XXXX-6303 Services $29,886 $29,900 $32,000 Cloisters Park
Maint AD Disposal XXX-XXXX-6305 Services $5,093 $5,174 $5,250 Cloisters Park
Maint AD Transfers Out XXX-XXXX-8501 Interfund Transfers $5,762 $5,762 $0 Cloisters Park
Maint AD Transfer to General Fund XXX-XXXX-8510 Interfund Transfers $19542 $19,542 $23,560 Total: $144,668 $156,237 $176,882

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C-1
Attachment C

CLOISTERS

LANDSCAPING AND LIGHTING

MAINTENANCE ASSESSMENT DISTRICT

PARCEL/ASSESSMENT TABLE
Lot Number
County Assessor’s
Parcel Number Annual Assessment
1 065-387-001 $1,241.20
2 065-387-002 $1,241.20
3 065-387-003 $1,241.20
4 065-387-004 $1,241.20
5 065-387-005 $1,241.20
6 065-387-006 $1,241.20
7 065-387-007 $1,241.20
8 065-387-008 $1,241.20
9 065-387-009 $1,241.20
10 065-387-010 $1,241.20
11 065-387-011 $1,241.20
12 065-387-012 $1,241.20
13 065-387-013 $1,241.20
14 065-387-014 $1,241.20
15 065-387-015 $1,241.20
16 065-387-016 $1,241.20
17 065-387-017 $1,241.20
18 065-387-018 $1,241.20
19 065-387-019 $1,241.20

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C-2
Lot Number
County Assessor’s
Parcel Number Annual Assessment
20 065-387-053 $1,241.20
21 065-387-054 $1,241.20
22 065-387-055 $1,241.20
23 065-387-023 $1,241.20
24 065-387-024 $1,241.20
25 065-387-025 $1,241.20
26 065-387-026 $1,241.20
27 065-387-027 $1,241.20
28 065-387-028 $1,241.20
29 065-387-029 $1,241.20
30 065-387-030 $1,241.20
31 065-387-031 $1,241.20
32 065-387-032 $1,241.20
33 065-387-033 $1,241.20
34 065-387-034 $1,241.20
35 065-387-035 $1,241.20
36 065-387-036 $1,241.20
37 065-387-037 $1,241.20
38 065-387-038 $1,241.20
39 065-387-039 $1,241.20
40 065-387-040 $1,241.20
41 065-387-041 $1,241.20
42 065-387-042 $1,241.20
43 065-387-043 $1,241.20

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C-3
Lot Number
County Assessor’s
Parcel Number Annual Assessment
44 065-387-044 $1,241.20
45 065-387-045 $1,241.20
46 065-388-001 $1,241.20
47 065-388-002 $1,241.20
48 065-388-003 $1,241.20
49 065-388-004 $1,241.20
50 065-388-005 $1,241.20
51 065-388-006 $1,241.20
52 065-388-007 $1,241.20
53 065-388-008 $1,241.20
54 065-388-009 $1,241.20
55 065-388-010 $1,241.20
56 065-388-011 $1,241.20
57 065-388-012 $1,241.20
58 065-388-013 $1,241.20
59 065-388-014 $1,241.20
60 065-388-015 $1,241.20
61 065-388-016 $1,241.20
62 065-388-017 $1,241.20
63 065-388-018 $1,241.20
64 065-388-019 $1,241.20
65 065-388-020 $1,241.20
66 065-388-021 $1,241.20
67 065-388-022 $1,241.20

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C-4
Lot Number
County Assessor’s
Parcel Number Annual Assessment
68 065-388-023 $1,241.20
69 065-388-024 $1,241.20
70 065-388-025 $1,241.20
71 065-388-026 $1,241.20
72 065-388-027 $1,241.20
73 065-388-028 $1,241.20
74 065-388-029 $1,241.20
75 065-388-030 $1,241.20
76 065-388-031 $1,241.20
77 065-388-032 $1,241.20
78 065-388-033 $1,241.20
79 065-388-034 $1,241.20
80 065-388-035 $1,241.20
81 065-388-036 $1,241.20
82 065-388-037 $1,241.20
83 065-388-038 $1,241.20
84 065-388-039 $1,241.20
85 065-388-040 $1,241.20
86 065-388-041 $1,241.20
87 065-388-042 $1,241.20
88 065-388-043 $1,241.20
89 065-388-044 $1,241.20
90 065-388-045 $1,241.20
91 065-388-046 $1,241.20

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C-5
Lot Number
County Assessor’s
Parcel Number Annual Assessment
92 065-388-047 $1,241.20
93 065-388-048 $1,241.20
94 065-388-049 $1,241.20
95 065-388-050 $1,241.20
96 065-388-051 $1,241.20
97 065-388-052 $1,241.20
98 065-388-053 $1,241.20
99 065-388-054 $1,241.20
100 065-388-055 $1,241.20
101 065-388-056 $1,241.20
102 065-388-057 $1,241.20
103 065-388-058 $1,241.20
104 065-388-059 $1,241.20
105 065-388-060 $1,241.20
106 065-388-061 $1,241.20
107 065-388-062 $1,241.20
108 065-388-063 $1,241.20
109 065-388-064 $1,241.20
110 065-388-065 $1,241.20
111 065-388-066 $1,241.20
112 065-388-067 $1,241.20
113 065-388-068 $1,241.20
114 065-388-069 $1,241.20
115 065-388-070 $1,241.20

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C-6
Lot Number
County Assessor’s
Parcel Number Annual Assessment
116 065-388-071 $1,241.20
117 065-388-072 $1,241.20
118 065-388-073 $1,241.20
119 065-388-074 $1,241.20
120 065-388-075 $1,241.20
121 065-386-005 0
122 (Parcel 1) 065-386-016 0
123 (Parcel 2) 065-386-017
065-386-018
065-386-019
065-386-012
065-386-013
065-386-014
065-386-010
0 124 (Lot 1) 065-386-015 $1,241.20
124 (Lot 2) 065-386-015 $1,241.20
124 (Lot 3) 065-386-015 $1,241.20
124 (Lot 4) 065-386-015 $1,241.20
124-5 065-386-015 $1,241.20

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D-1
Attachment D

CLOISTERS

LANDSCAPING AND LIGHTING

MAINTENANCE ASSESSMENT DISTRICT

DISTRICT BOUNDARY DIAGRAM
The boundary diagram for the District has previously been submitted to the City Clerk in the format required under the 1972 Act and, by reference, are hereby made part of this Report. The boundary diagram and Tract Map are available for inspection at the office of the City Clerk or the City Engineer during normal business hours. The following diagram provides an overview of the District and the lots that are part of the District.

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AGENDA NO: 6.f
MEETING DATE: May 12, 2026
Prepared By: NLS Dept. Review: GK
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council DATE: May 7, 2025
FROM: Nate Stong, PE – City Engineer
SUBJECT: Adoption of Resolution No. 23-26 Approving the Engineer’s Report and Declaring the Intent to Levy the Annual Assessment for the North Point Natural Area Landscaping and Lighting Maintenance Assessment District

RECOMMENDED ACTION
Adopt Resolution No. 23-26 approving the Engineer’s Report and declaring the intent to levy the annual assessment for maintenance of the North Point Natural Area for Fiscal Year (FY) 2026-

27. FISCAL IMPACT
Based on the Engineer’s Report, which estimates the annual costs of maintaining the North Point Natural Area for the upcoming fiscal year, the fiscal impact is estimated at $5,645. Those costs will be offset by the collection of an assessment for the same amount from the parcel owners in the North Point Subdivision.

The original formation of the assessment district in 1996 set the fixed assessment of $564.50 per parcel or $5,645 for the entire North Point Landscape Lighting Maintenance Assessment District.

In 1997, the Consumer Price Index (CPI) was 160 and in March 2026 the CPI was 330, which has resulted in a drop in the purchasing power of the assessment district funds. Even after increased efficiency and a reduction in the service originally provided in the district, the City has had to supplement the shortfall from the General Fund.

SUMMARY
On April 14, 2026, the City Council adopted Resolution No. 19-26, which initiated the proceedings to levy the annual assessment to fund the maintenance of the North Point Natural Area.

Additionally, staff was directed to have an Engineer’s Report prepared, detailing the estimated annual assessment for the parcel owners for FY 2026-27. Upon adoption of Resolution No. 23- 26, the next and final step in the annual levy of assessment process is the public hearing after which the City Council orders the levy of assessment.

BACKGROUND/DISCUSSION
As part of the annual assessment process, staff is required to provide an Engineer’s Report, which is an estimate of costs for maintenance of the North Point Natural Area. The cost estimates are based on the maintenance standards currently adhered to in existing parks within Morro Bay and included in the Flat Rate Manual for Parks Maintenance, as well as maintenance costs from the current fiscal year. Personnel costs, as well as supplies and services, have risen significantly in the last several years.

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01181.0001/252023.1
The true costs of maintaining the assessment district exceed the revenue received from the district. The true cost of maintenance is estimated to be 25-30% higher than assessment revenues collected. However, all maintenance costs in excess of the district’s available revenues will be subsidized by the General Fund per City Council direction on May 24, 2004. The assessment for providing maintenance of the North Point Natural Area is $564.50 per parcel for FY 2026-27 for a total annual assessment of $5,645. Due to the increase in the cost of goods and services over time there is no excess funding to accumulate to save funding for any capital maintenance projects at the North Point Natural Area. As such, the City must utilize the General Funds, Measure Q/E Funds, or pursue grant funding should any capital needs arise.

CONCLUSION
The process for the annual levy of assessment for the North Point Natural Area Landscaping and Lighting Maintenance Assessment District requires the City Council to receive the Engineer’s Report, approve and/or modify the report and adopt a Resolution of Intention. The Resolution of Intention gives notice of the time, date and place for a public hearing by the City Council on the issue of the levy of assessment.

The public hearing has been set for the regular City Council meeting on June 23, 2026, at or about 5:30 p.m. to be held at the Morro Bay Veterans Hall. A summary of the Resolution of Intention shall be published in the newspaper as legal notice of a public hearing, to which all interested parties are afforded the opportunity to be heard either through written or oral communication. Upon completion of the public hearing, the City Council may adopt a resolution ordering the levy of the annual assessment.

ATTACHMENT(S)

1. Resolution No. 23-26

2. North Point Natural Area Landscaping and Lighting Maintenance Assessment District 2026-27 Engineer’s Annual Levy Report

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01181.0001/252025.1
RESOLUTION NO. 23-26

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA,
APPROVING THE ENGINEER’S REPORT AND DECLARING

THE CITY'S INTENTION TO LEVY THE ANNUAL ASSESSMENT FOR THE

MAINTENANCE OF THE NORTH POINT NATURAL AREA LANDSCAPING AND LIGHTING MAINTENANCE ASSESSMENT DISTRICT PURSUANT TO THE “LANDSCAPING AND LIGHTING ACT OF 1972” (STREETS AND HIGHWAYS SECTIONS 22500 ET SEQ.) FOR THE 2026/27 FISCAL YEAR

T H E C I T Y C O U N C I L
City of Morro Bay, California
WHEREAS, all property owners of the original North Point subdivision requested the City of Morro Bay form a maintenance assessment district to fund the maintenance of the North Point Natural Area; and
WHEREAS, the Landscaping and Lighting Act of 1972, commencing with Streets and Highways Code section 22500 (the "Act") enables the City to form assessment districts for the purpose of maintaining public improvements; and
WHEREAS, pursuant to Section 22623 of the Act, the City Engineer has filed in the Office of the City Clerk, and submitted for review to the City Council, a report entitled "Engineers Report North Point Natural Area Landscaping and Lighting Maintenance Assessment," dated May 13, 2025, prepared in accordance with Article 4 of the Act, commencing with Section 22565 (the “Engineer’s Report”); and
WHEREAS, pursuant to Section 22608.2 of the Act, the subdivider was required by City ordinance to install improvements for which an assessment district was required to assure continued and uninterrupted maintenance of the North Point Natural Area; and WHEREAS, pursuant to the intent of Article XIII, Section 4, of the California Constitution, the property owners have elected to form the North Point Natural Area Landscaping and Lighting Maintenance Assessment District.

NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Morro Bay, Section 1. The City Council approves the Engineer’s Report.

Section 2. It is the intent of the Council to order the annual levy and collection of assessments for the North Point Natural Area Landscaping and Lighting Maintenance Assessment District generally located as shown in Exhibit "A" attached hereto at a public hearing to be held at the Regular City Council meeting on June 23, 2026 at or about 5:30 p.m., at the Morro Bay Veterans Hall.

Section 3. The improvements to be maintained at the North Point Natural Area are specified in the Engineer's Report dated May 7, 2026 which is hereby approved.

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Section 4. The assessment upon assessable lots within the district is proposed to total $5,645 or $564.50 per assessable parcel for fiscal year 2026/27.

PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting thereof held this 12
th of May 2026 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSE:
_______________________________
CARLA WIXOM, Mayor
ATTEST:
________________________________
DANA SWANSON, City Clerk

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CITY OF MORRO BAY

NORTH POINT NATURAL AREA

LANDSCAPING AND LIGHTING

MAINTENANCE ASSESSMENT DISTRICT
2026/27 ENGINEER’S ANNUAL LEVY REPORT
May 7, 2026

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ii
AFFIDAVIT FOR 2026/27 ENGINEER’S ANNUAL LEVY REPORT

CITY OF MORRO BAY

NORTH POINT NATURAL AREA

LANDSCAPING AND LIGHTING

MAINTENANCE ASSESSMENT DISTRICT
This report describes the proposed maintenance, improvements, budgets, zone of benefit and assessments to be levied on parcels of land within the North Point Natural Area Landscaping and Lighting Maintenance Assessment District for the fiscal year 2026/27, as the same existed at the time of the passage of the Resolution of Intention. Reference is hereby made to the San Luis Obispo County Assessor’s maps for a detailed description of the lines and dimensions of parcels within the District. The undersigned respectfully submits the enclosed Report as directed by the City Council and, to the best of my knowledge, information, belief, the report, the assessments and diagrams have been prepared and computed pursuant to the Landscaping and Lighting Act of 1972.

Dated this 7th day of May, 2026
_____________________________
Jonathan “Nate” Stong, PE
City Engineer

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iii

CITY OF MORRO BAY

NORTH POINT NATURAL AREA

LANDSCAPING AND LIGHTING

MAINTENANCE ASSESSMENT DISTRICT
ENGINEER’S REPORT
Table of Contents
Page
I. Overview…………………………………………………………………………………...1
A. Introduction…………………………………………………………………………….1
B. Assessment History and Current Legislation…………………………………………..1 II. Description of the District………………………………………………………………….2 A Improvements Authorized by the 1972 Act…………………………………………...2 B Maintenance Items…………………………………………………………………….2
III. Method of Apportionment………………………………………………………………….3 A. General…………………………………………………………………………………3
B. Benefit Analysis………………………………………………………………………..3
C. Maintenance Tasks……………………………………………………………………..4
D. Maintenance Costs……………………………………………………………………..4
E. Apportionment of Assessment…………………………………………………………4
Detailed Maintenance Task List……………………………………………..Attachment A District Budget – Fiscal Year 2026/27………………………………………Attachment B Parcel/Assessment Table…………………………………………………….Attachment C District Boundary Diagram………………………………………………….Attachment D

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1 I. Overview
A Introduction
The City Council of the City of Morro Bay (hereafter referred to as “City”), County of San Luis Obispo, State of California, previously formed and has levied and collected annual assessments for the District designated as:

NORTH POINT NATURAL AREA LANDSCAPING AND LIGHTING

History
As a condition of approval for Tract No. 2110, the North Point subdivision, the developers were required to offer to the City for dedication Lot 11 of the subdivision for park purposes, and to construct improvements on Lot 11 including a paved parking area, a stairway providing access to the beach, benches, landscaping and irrigation, lighting, and other improvements. The subdivision was also conditioned to provide maintenance of the park by establishing an assessment district.

Lot 11 of Tract No. 2110 is identified as the North Point Natural Area.

B Assessment History and Current Legislation
In November 1996, California voters approved Proposition 218 that established specific requirements for the ongoing imposition of taxes, assessments and fees. The provisions of the Proposition are now contained in the California Constitutional Articles XIIIC and XIIID. All assessments described in this Report and approved by the City Council are prepared in accordance with the 1972 Act and in compliance with these provisions of the Constitution.

Pursuant to the Article XIIID Section 5 of the Constitution, certain existing assessments were exempt from the substantive and procedural requirements of the Article XIIID Section 4, and property owner balloting is not required until such time that a new or increased assessment is proposed. Specifically, the City determined that the annual assessments originally established for the North Point were imposed in accordance with a consent and waiver as part of the original development approval for the properties within these areas. As such, pursuant to Article XIIID Section 5b, all the property owners approved the existing District assessments at the time the assessments were created (originally imposed pursuant to a 100% landowner petition). Therefore, the pre-existing assessments (the maximum assessment rates adopted prior to the passage of Proposition 218) for this District is exempt from the procedural requirements Article XIIID Section

4. However, any new or increased assessment for the North Point Natural Area shall comply with

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2 both the substantive and procedural requirements of Article XIIID Section 4 before such assessments are imposed.

II. Description of the District
A. Improvements Authorized by the 1972 Act
As applicable or may be applicable to this proposed District, the 1972 Act defines improvements to mean one or any combination of the following:
• The installation or planting of landscaping;
• The installation or construction of statuary, fountains, and other ornamental structures and facilities;
• The installation or construction of public lighting facilities; • The installation or construction of any facilities which are appurtenant to any of the foregoing or which are necessary or convenient for the maintenance or servicing thereof, including, but not limited to, grading, clearing, removal of debris, the installation or construction of curbs, gutters, walls, sidewalks, or paving, or water, irrigation, drainage, or electrical facilities;
• The maintenance or servicing, or both, of any of the foregoing; and • The acquisition of any existing improvement otherwise authorized pursuant to this section.

B. Maintenance Items
A list of maintenance tasks required to maintain the North Point Natural Area in acceptable condition for public use was developed by the City based upon established maintenance standards, 1 There is no existing bond debt nor is any anticipated at this time.

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3 at the time the assessment was initiated, for existing parks within the City and is described in Section III-C.

III. Method of Apportionment
A General
This section of the Engineer's Report includes an explanation of the special benefits to be derived from the installation, maintenance and servicing of the improvements and the methodology used to apportion the total assessment to properties within the District.

The 1972 Act permits the establishment of assessment districts by agencies for the purpose of providing certain public improvements which include the construction, maintenance and servicing of public lights, landscaping and appurtenant facilities. The 1972 Act further requires that the cost of these improvements be levied according to benefit rather than assessed value:
“The net amount to be assessed upon lands within an assessment district may be apportioned by any formula or method which fairly distributes the net amount among all assessable lots or parcels in proportion to the estimated benefits to be received by each such lot or parcel from the improvements.”
The proceeds from the District are used to fund the maintenance and upkeep of public resources within the North Point development project for the special benefit of the properties located within the project. The continued maintenance and upkeep of these important items is a distinct and special benefit to properties within the District.

B. Benefit Analysis
Each of the proposed improvements, the associated costs and assessments were carefully reviewed, identified and allocated based on special benefit pursuant to the provisions of the Constitution and 1972 Act. The improvements associated with the District have been identified as necessary, required and/or desired for the orderly development of the properties within the District to their full potential, consistent with the proposed development plans and applicable portions of the City General Plan and Local Coastal Plan as identified previously in this report. As such, these improvements would be necessary and required of individual property owners for the development of such properties, and the ongoing operation, servicing and maintenance of these improvements would be the financial obligation of those properties. Therefore, the improvements and the annual costs of ensuring the maintenance and operation of the improvements are of direct and special benefit to the properties. The method of apportionment (method of assessment) is based on the premise that each assessed parcel within the District receives special benefit from various improvements provided by the District. The desirability and security of properties is enhanced by the presence of local improvements in close proximity to those properties. The special benefits associated with landscape improvements are specifically:
• Enhanced desirability of properties through association with the improvements; • Improved aesthetic appeal of properties providing a positive representation of the area; and • Enhanced adaptation of the urban environment within the natural environment from adequate green space and landscaping.

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4 C. Maintenance Tasks
A list of maintenance tasks required to maintain the North Point Natural Area in acceptable condition for public use was developed by the Public Works Department based on maintenance standards established for existing parks within the City and is included in this report as Attachment A.

D. Maintenance Costs
The estimated annual cost of maintaining the North Point Natural Area was originally developed by the former Recreation and Parks Department based on the tasks required and the City’s Flat Rate Manual for Parks Maintenance. Annual maintenance is currently provided through contract services and is supplemented by staff in the Public Works Department. Assessment district costs include labor, utilities, insurance, engineering services and depreciation/reserves. The annual cost of maintenance, including any reserves, for the 2025/26 fiscal year is estimated to exceed the assessment amount of $5,645.

The original formation of the assessment district in 1996 set the fixed assessment of $564.50 per parcel or $5,645 for the entire North Point Landscape Lighting Maintenance Assessment District.

In 1997, the Consumer Price Index (CPI) was 160 and today (March 2026) the CPI is at 330. This has resulted in a substantial drop in the purchasing power of the District funds, but due to increased efficiency along with a decreased level in the service originally provided in District, the City has been able to maintain the facilities at a minimal level.

The cost estimate, included in this report as Attachment B, shows the estimated allocation of funds collected for the purposes of maintenance of the District. The true costs of maintaining the assessment District, exceed the revenue received from the District assessment. The true cost of maintenance is estimated to be 25-30% higher than the revenues collected. However, all maintenance costs in excess of the District’s available revenues will be subsidized by the General Fund per City Council direction on May 24, 2004.

E. Apportionment of Assessment
The total assessment for the District is apportioned to each of the ten residential lots equally. Lot 11, the North Point Natural Area; Lot 12, a private street; and Lot 13, an open space parcel granted to the State of California; are not assessed. Individual assessments are listed in Attachment C.

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5 Attachment A

NORTH POINT NATURAL AREA LANDSCAPING AND LIGHTING

MAINTENANCE ASSESSMENT DISTRICT

MAINTENANCE TASKS
Routine Maintenance Tasks
• Review for vandalism/repair
• Pick-up – paper, trash, cigarette butts, etc
• Empty - trash receptacle(s)
• Clean - benches
• Inspect and maintain as necessary:
o beach access stairway
o bike rack
o lights
o natural area plantings
Weekly or as needed
• Blow paths, parking lot
• Monthly or as needed
• Check trees
• Check/repair sprinkler system
• Trim trees and bushes as needed
• Critical parts inspections
Annually or as needed
• Paint beach access stairway, public access signage
• New plantings (replacement)
• General safety inspection
• Annual tree pruning
• Remove graffiti
• Mow open space
• Pest/gopher control
• Trim and spray paths
• Repair public access signage
Operational Expenses
• Street Lighting
• Irrigation
• Refuse Service

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6 Attachment B

NORTH POINT NATURAL AREA LANDSCAPING AND LIGHTING

MAINTENANCE ASSESSMENT DISTRICT
NAME: North Point Natural Area Landscaping and Lighting Maintenance Assessment District DIAGRAM: Attached
PLANS AND SPECIFICATIONS: For a detailed description of the improvements, refer to the plans and specifications for Tract 2110 on file in the office of the City Engineer. No bonds or notes will be issued for this Maintenance Assessment District.

ESTIMATED COST OF MAINTENANCE: The following outlines the estimated budget for the maintenance of the North Point Natural Area for fiscal year 2025/26. As noted in last year’s report, there is no longer an accumulation fund for this district. All funds necessary for maintenance in excess of the assessment are borne by the City’s General Fund.

TOTAL ASSESSMENT: $5,645.00
PER PARCEL YEARLY ASSESSMENT (10 parcels) $564.50
Detailed Financial Summary
ACCOUNT ID Description Fund Name Account Type
FY25
Actual
FY26
Projected
FY27
Proposed
XXX-XXXX-4110 Regular Pay NP Assessment Personnel Svcs $0 $0 $0 XXX-XXXX-4120 Overtime Pay NP Assessment Personnel Svcs $0 $0 $0 XXX-XXXX-4310 Part-Time Pay NP Assessment Personnel Svcs $0 $0 $0 XXX-XXXX-4515 Standby Pay NP Assessment Personnel Svcs $0 $0 $0 XXX-XXXX-4599 Other Pay NP Assessment Personnel Svcs $0 $0 $0 XXX-XXXX-4910 Employer Paid Benefits NP Assessment Personnel Svcs $0 $0 $0 XXX-XXXX-4911 Pension Normal Cost NP Assessment Personnel Svcs $0 $0 $0 XXX-XXXX-4912
PERS Unfunded Accrued
Liability NP Assessment Personnel Svcs $0 $0 $0
XXX-XXXX-4999 Labor Costs Applied NP Assessment Personnel Svcs $0 $0 $0 XXX-XXXX-5501 Grounds Maint. Supplies NP Assessment Supplies $0 $0 $0 XXX-XXXX-5502 Building Maint. Supplies NP Assessment Supplies $0 $0 $0 XXX-XXXX-6106 Contractual Services NP Assessment Services $0 $0 $0 XXX-XXXX-6301 Electricity NP Assessment Services $0 $0 $0 XXX-XXXX-6303 Water NP Assessment Services $532 $538 $538 XXX-XXXX-6305 Disposal NP Assessment Services $4,114 $4,180 $4,250 XXX-XXXX-8501 Transfers Out NP Assessment
Interfund
Transfer $956 $846 $768
Total Total: $5,602 $5,564 $5,645

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7 Attachment C

PARCEL/ASSESSMENT TABLE
Lot Number
County Assessor’s
Parcel Number Annual Assessment
1 065-082-10 $564.50
2 065-082-11 $564.50
3 065-082-12 $564.50
4 065-082-13 $564.50
5 065-082-14 $564.50
6 065-082-15 $564.50
7 065-082-16 $564.50
8 065-082-17 $564.50
9 065-082-18 $564.50
10 065-082-19 $564.50
11 065-082-20 $ 0.00
12 065-082-21 $ 0.00
13 065-082-22 $ 0.00

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8 Attachment D

DISTRICT BOUNDARY DIAGRAM
The boundary diagram, tract map for the District have previously been submitted to the City Clerk in the format required under the Act and, by reference are hereby made part of this Report.

The boundary diagram is available for inspection at the office of the City Clerk or the City Engineer during normal business hours. The following diagram provides an overview of the District.

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AGENDA NO: 6.g
MEETING DATE: May 12, 2026
Prepared By: JC Dept Review:

City Manager Review: JC City Attorney Review:

Staff Report
TO: Honorable Mayor and City Council DATE: May 7, 2026
FROM: John Craig, City Manager
SUBJECT: Quarterly Update on the Status of City Council 2025-2027 Goals

RECOMMENDED ACTION
Receive an update from staff on the City’s progress on City goals established in March 2025.

ALTERNATIVES
None

FISCAL IMPACT
There is no fiscal impact related to the recommendation

BACKGROUND
The City Council held a Special Meeting on March 25, 2025 as a Goal Setting process, facilitated by consultant Michael Codron. The Goal setting process provided extensive public engagement opportunities including an online community survey, discussions with Advisory Bodies, a community forum and virtual participation through emails. Additionally, live polling and real time survey analysis were utilized as interactive public engagement tools at the community forum.

At the conclusion of the process, the Morro Bay City council decided on three City Goals for the two fiscal years.

1. Economic Vitality and Fiscal Health
Goal Statement: A vibrant and active business community supported by coordinated strategies for economic vitality and fiscal health that create the conditions for individual business success and the long-term fiscal health of the City.
 Downtown Revitalization
Using existing plans, identify and implement programs for beautification and incentivizing private property improvements, including facade rehabilitation.  General Fund Reserve Analysis
Perform a risk-based analysis of the City's Reserve Policy to identify appropriate reserve levels for long-term financial planning.
 Revenue Enhancement
Perform outreach and engagement with customers of the City's planning and building permit

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services to identify changes to improve satisfaction and increase economic activity in the City associated with building permits.

2. Infrastructure Resiliency
Goal Statement: An infrastructure program that includes regular maintenance to prolong the life of existing infra-structure (streets, buildings, structures, equipment) while implementing a Capital Improvement Plan that prioritizes new projects in alignment with available resources (funding and staff).
 5-Year CIP
Create a 5-Year Capital Improvement Plan (CIP) that prioritizes infrastructure projects in consideration of available resources (funding and staff).  Infrastructure Maintenance
Increase the City's efficiency and awareness of infrastructure maintenance requirements by improving the City's asset management and work order system, including the functionality of the public-facing Service Request form.
 Harbor Infrastructure
Utilize the recently completed study of the harbor revetments to prioritize projects and identify maintenance responsibilities. Develop a funding strategy informed by research on grant opportunities.

3. Morro Elementary School
Goal Statement: Work with the San Luis Coastal Unified School District to acquire or partner on the Morro Elementary School site or assist in development for the purpose of preserving community access, historic preservation, and/or housing development consistent with the City's General Plan.
 Acquisition Plan
Identify partners, such as market-rate and affordable housing developers, to work on a plan to fund the acquisition of the Morro Elementary School site.  Community Engagement
Continue to engage with the community regarding uses of the school site that take into consideration the current land use designation for the property and cost of acquisition.  Grants
Identify potential grant opportunities for historic preservation, public access, and other beneficial uses of the property that could be supported by one or more grants.

DISCUSSION
Each of the three City Goals included a Goal Statement and Objectives. Staff have attached a chart that includes these items as well as a very brief description of the progress to date on the objectives.

ATTACHMENT

1. City Goals, Goal Statements & Objectives Status Update Worksheet

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2025/2027 Goals, Goal Statements and Objectives
Status Update – May 12, 2026
1 Goal - Economic Vitality and Fiscal Health – A vibrant and active business community supported by coordinated strategies for economic vitality and fiscal health that create the conditions for individual business success and the long-term fiscal health of the City
Objective - Downtown Revitalization
Using existing plans, identify and
implement programs for beautification,
wayfinding signage and incentivizing
private property improvements, including
façade rehabilitation
Status – Actions to date

1. Waterfront Master Plan Process – in progress

2. Economic Development Program discussion – to City Council 5/26/26 as part of the FY 2026-27 budget

3. Reduced sign fees to promote compliance with the City’s sign regulations Objective – General Fund Reserve
Analysis
Perform a risk-based analysis of the City’s
Reserve Policy to identify appropriate
reserve levels for long-term financial
planning.

Status – Actions to date

1. Review of the Reserve Policy identified as a Future Agenda Item, as part of the 2026/27 budget process

2. The plan of management is to review the Reserve Policy and make recommendations to Council in the 1st quarter of FY 2027 Objective – Revenue Enhancement
Develop a comprehensive strategy for
increasing revenues over time to support
the provision of core services.

Status – Actions to date

1. Joint CFAC/Council hearing to discuss revenue options held 10/21/25

2. Economic Development Program recommendation – to City Council 11/12/25

3. Conducted user fee study and updated fees to phase in cost recovery for City services that provide a direct benefit to individuals

4. Conducted a nexus study to evaluate the City’s development impact fees and recommend fee adjustments for development to pay its fair share cost of new public facilities - scheduled for Council review 6/23/26.

5. Developing license program for tidelands areas – in progress

6. CFAC formed a sub-committee 2/17/26 to review the revenue policy

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2025/2027 Goals, Goal Statements and Objectives
Status Update – May 12, 2026
2 Objective – Planning and Building
Services
Perform outreach and engagement with
customers of the City’s Planning and
Building permit services to identify changes
to improve satisfaction and increase
economic activity in the City associated
with building permits.

Status – Actions to date

1. Fire Dept performs business inspections for license renewals and STR licenses. FD Completing approximately 40 business license inspections per month

2. Held stakeholder meetings with the building industry to review development impact fees

3. Community Development staff continue to improve outreach to individual customers and have received numerous compliments on performance

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2025/2027 Goals, Goal Statements and Objectives
Status Update – May 12, 2026
3 Goal – Infrastructure Resiliency – An infrastructure program that includes regular maintenance to prolong the life of existing buildings infrastructure (streets, buildings, structures, equipment) while implementing a Capital Improvement Program that prioritizes new projects in alignment with available resources (funding and staff).

Objective - 5-Year CIP
Create a 5-Year Capital Improvement Plan
(CIP) that prioritizes infrastructure projects
in consideration of available resources
(funding and staff).

Status – Actions to date

1. Hired new City Engineer 9/29/25, review of current capital projects has begun.

2. The plan of management is to provide an updated one-year capital plan for the FY 2026-27 budget and develop a long-range CIP for presentation and discussion with Council in the 2nd quarter of FY 2027
Objective – Infrastructure Maintenance
Increase the City’s efficiency and
awareness of infrastructure maintenance
requirements by improving the City’s asset
management and work order system,
include the functionality of the public facing
Service Request form.

Status – Actions to date

1. Internal review of asset management system and work order system has begun

2. Once the upcoming vacancy of the Public Works director position is filled, the plan is to review the work order system and report findings in the 2nd quarter of FY 2027
Objective – Harbor Infrastructure
Utilize the recently completed study of the
harbor revetments to prioritize projects and
identify maintenance responsibilities.

Develop a funding strategy informed by
research on grant opportunities.

Status – Actions to date

1. Continued discussions with City regional/federal lobbyist to identify grants – ongoing

2. Revetment assessment/repairs – in progress

3. FEMA claim on revetments and seawalls – in progress

4. Seeking USACE assistance on revetment/seawall repairs – in progress

5. Drafted plans for Phase 1 of Boat Launch Ramp rehabilitation

6. Assessing feasibility and options for State Park Marina dredge project

7. Updating mooring specifications and inspection guidelines

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2025/2027 Goals, Goal Statements and Objectives
Status Update – May 12, 2026
4 Goal – El Morro Elementary School – Work with San Luis Coastal Unified School District to acquire the Morro Elementary School site or assist in development for the purposes of preserving community access, historic preservation, and /or housing development consistent with the City’s General Plan.

Objective - Acquisition Plan
Identify partners, such as market-rate and
affordable housing developers, to work on
a plan to fund the acquisition of the Morro
Elementary School site.

Status – Actions to date

1. Commissioned an independent City cost estimate appraisal for the property

2. Ordered a preliminary title report for the property

3. Formed Morro Elementary Subcommittee

4. Pending MOU for exclusive right to negotiate between CMB/SLCUSD – 10/28/25

5. Update financial forecast and evaluate potential financing options for acquisition (ongoing)

6. Re-engaged the School District in negotiations

7. Successfully agreed to a tentative deal with School Board staff

8. Recruited a project manager to perform due diligence

9. Due diligence continues and has been very successful to date with an estimated due diligence end of August 2026
Objective – Community Engagement
Continue to engage with the community
regarding uses of the school site that take
into consideration the current land use
designation for the property and cost of
acquisition.

Status – Actions to date

1. Local Historic Preservation Ordinance discussion – 12/9/2025

2. Conducted a public information session regarding City zoning and land use for Morro Elementary – 1/30/25 and TBD pending negotiations with School District

3. City staff have engaged with Friends of Morro Elementary, a non-profit, to understand community concerns and priorities for the property

4. Two community meetings tentatively scheduled during due diligence period

5. First community meeting was held in April 2026 and was successful.

Community members were very pleased with the process of purchase and due diligence.

6. Second community meeting is scheduled for June of this year

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2025/2027 Goals, Goal Statements and Objectives
Status Update – May 12, 2026
5 Objective – Grants
Identify potential grant opportunities for
historic preservation, public access and
other beneficial uses of the property that
could be supported by one or more grants.

Status – Actions to date

1. Pending negotiations with School District

2. Added potential grant opportunities to the Project Manager consultant work to be completed by the end of summer

3. Once a development plan is considered by the Council upon the completion of the school purchase and grants plan will be developed and executed

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Prepared By: CM Dept Review: LT
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council DATE: May 5, 2026
FROM: Chris Munson, Harbor Director
SUBJECT: Memorandum of Understanding (MOU) between the City of Morro Bay and the Morro Bay Commercial Fishermen’s Organization (MBCFO)

RECOMMENDATION
Adopt Resolution No. 24-26, approving the Memorandum of Understanding (“MOU”) between the City and MBCFO for the Harbor Commercial Fishing Dock Repair Project. The MOU will establish the requirement by MBCFO for the use of $800,000 toward the Harbor Commercial Fishing Dock Repair Project and by the City to dedicate the lease site solely to commercial fishing industry use for a period of thirty (30) years.

FISCAL IMPACT
The City will not directly receive the grant funding but will indirectly benefit from a lease site in good repair, an improved asset, and sustained commercial fishing.

BACKGROUND
The Harbor Commercial Fishing Dock is the main offloading area for wholesale fish in Morro Bay. In March 2026, the City entered a twenty-year lease agreement with Morro Bay Seafood Company (MBSC) to operate the facility. The prior tenant, Morro Bay Fish Company (Santa Monica Seafood) had partially completed repairs to the pier structure below the lease site.

Prior to negotiations, the City asked Central Coast Joint Cable/Fisheries Liaison Committee (JCFLC) to obtain a survey of the damage to identify the remaining damage and any additional damage in the hope that JCFLC would help fund the repairs. The damage was much more extensive than originally discovered, estimated at $817,700 to repair.

In 2025, JCFLC and Morro Bay Community Quota Fund granted $400,000 and $150,000 respectively for MBCFO to address the highest priority repairs. A condition for the funding was that the City would agree to dedicate the lease site solely to commercial fishing industry use for a period of twenty (20) years.

Since the funding would still be inadequate to complete the full repairs, JCFLC is proposing to allocate another $250,000 toward the project in 2026. They are requesting the dedication period to be extended to thirty (30) years.

AGENDA NO: 6.h
MEETING DATE: May 12, 2026

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DISCUSSION
The Harbor commercial fishing dock is in dire need of repair. It’s continued existence and operation are vital to continued commercial fishing in Morro Bay. The cost of the project makes the repairs infeasible for the leaseholder to complete without assistance.

JCFLC has been a key ally to both the City of Morro Bay and MBCFO. They have donated over $175,000 directly to the City which includes $40,000 for the Harbor Patrol Vessel Replacement and sending a delegation to Washington DC for over 20 years. They have also donated over $840,000 towards the Morro Bay Ice Facility. They continue to support MBCFO and Central Coast Women for Fisheries. Morro Bay Community Quota Fund is graciously using some of their revenue to support the effort as well.

Since the Commercial Fishing Dock is in Measure D, allowable uses are already limited. Dedicating the lease site solely to commercial fishing industry use for a period of thirty (30) years is consistent with Measure D and is a reasonable concession for funding and ensuring the continued structural integrity of the facility. The increase to thirty (30) years does not increase or influence the twenty (20) year lease agreement with MBSC. While unlikely, the MOU includes a condition that thirty-year use restriction shall remain in effect unless a voter-approved measure to modify Measure D to exclude commercial fishing as an allowable use in the area which includes the lease site.

CONCLUSION
Staff recommends the City Council adopt Resolution No. 24-26, approving the Memorandum of Understanding between the City and MBCFO for the Harbor Commercial Fishing Dock Repair Project. The MOU will approve MBCFO’s use of $800,000 in grant funds toward the Harbor Commercial Fishing Dock Repair Project and in exchange the City agrees to restrict the lease site solely to commercial fishing industry use for a period of thirty (30) years.

ATTACHMENT(S)

1. Resolution No. 24-26

2. MOU

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RESOLUTION NO. 24-26

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF MORRO BAY, CALIFORNIA,

AUTHORIZING A MEMORANDUM OF UNDERSTANDING
BETWEEN MORRO BAY COMMERCIAL FISHERMEN’S ORGANIZATION

AND THE CITY OF MORRO BAY

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 has authority over State tidelands within its jurisdictional boundaries, including, but not limited to, the commercial fishing slip; and WHEREAS, the Harbor Commercial Fishing Dock at Lease Site 129W-131W, 1231 Embarcadero, needs repairs and is critical to the commercial fishing industry; and WHEREAS, the Central Coast Joint Cable/Fisheries Liaison Committee will grant $650,000 and Morro Bay Community Quota Fund will grant $150,000 to the Morro Bay Commercial Fishermen’s Organization to undertake the project; and WHEREAS, the Morro Bay Commercial Fishermen’s Organization has agreed to use the $800,000 in these grant funds exclusively to perform repairs to the Harbor Commercial Fishing Dock.

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

1. The City is hereby authorizes a Memorandum of Understanding (“MOU”) between the Morro Bay Commercial Fishermen’s Organization (“MBCFO”) and the City of Morro Bay which approves MBCFO’s use of $800,000 in grant funds toward the Harbor Commercial Fishing Dock Repair Project and in exchange the City agrees to restricts the lease site solely to commercial fishing industry use for a period of thirty (30) years.

2. The City Manager, or their designee, is hereby authorized to act as the City’s agent in regard to all aspects of the MOU.

PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting thereof held on the 12th day of May 2026 on the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

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

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May 7, 2026
Meghan Hertel, Director
California Department of Fish and Wildlife
1416 Ninth Street, 12th Floor
Sacramento, California 95814
Eric Sklar, President
California Fish and Game Commission
1416 Ninth Street
Sacramento, California 95814
Re: City of Morro Bay Request for Inclusion in MPA Petition Process — Petitions 2023- 19MPA, 2023-20MPA, 2023-28MPA-AM, 2023-33MPA, and 2023-34MPA Dear Director Hertel and President Sklar,
On behalf of the Morro Bay City Council, we write to respectfully express our concern regarding the ongoing Marine Protected Area (MPA) petition process, specifically petitions 2023-19MPA, 2023-20MPA, 2023-28MPA-AM, 2023-33MPA, and 2023-34MPA to formally request that the City of Morro Bay be included as a recognized stakeholder in all future proceedings related to these petitions.

The City of Morro Bay is home to one of the Central Coast's most active commercial and recreational fishing communities. Our harbor, our local economy, and the livelihoods of our residents are deeply intertwined with the health and management of the marine areas immediately adjacent to our coastline. The petitions identified above propose significant changes to marine protected areas within or directly proximate to Morro Bay waters, including the proposed designation of the "Chitqawi SMCA" near Morro Rock (2023-19MPA), modifications to the Point Buchon SMCA and State Marine Reserve (2023-20MPA & 2023-34MPA ), new MPA at Point Sal (2023-28MPA-AM ), and the expansion of Point Conception SMR (2023- 33MPA) — areas that fall within the daily fishing grounds, harbor access routes, and recreational use areas of our community.

The City of Morro Bay fully supports meaningful engagement with California Native American tribes in the stewardship of coastal resources, and we recognize the deep cultural and historical ties the Chumash peoples have to these waters. However, we are concerned that the current process has not included adequate outreach to or consultation with local municipalities whose constituents will be directly and materially affected by any regulatory changes that result from these petitions. To our knowledge, the City of Morro Bay was not notified, consulted, or invited

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California Dept of Fish and Wildlife

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May 7, 2026
to participate in the petition review proceedings conducted to date, including the Tribal Committee meetings of August 2025 and April 2026, or the Fish and Game Commission meetings of April 21, May 5-6, and May 19, 2026.

We respectfully request the following:

1. That the City of Morro Bay be formally recognized as an affected local stakeholder in the review of petitions 2023-19MPA, 2023-20MPA, 2023-28MPA-AM, 2023-33MPA, and 2023-34MPA, and that we be added to all future notification and outreach lists related to these and any subsequent MPA petition proceedings that may impact our local waters.

2. That the California Department of Fish and Wildlife and the Fish and Game Commission provide the City with advance notice of, and an opportunity to provide public testimony at, all future Commission meetings, Tribal Committee meetings, and Marine Resources Committee meetings at which these petitions are discussed or acted upon.

3. That CDFW schedule a dedicated briefing with City Council representatives and local harbor stakeholders to explain the current status, proposed regulatory changes, and potential impacts of petitions2023-19MPA, 2023-20MPA, 2023-28MPA-AM, 2023- 33MPA, and 2023-34MPA on Morro Bay's harbor operations, commercial fishing fleet, and coastal access.

4. That the City be afforded a meaningful opportunity to submit written comment and participate in any environmental or economic review process conducted prior to a final decision on any of these petitions.

Morro Bay understands the importance of science-based adaptive management of California's MPA network and the value of collaborative, inclusive governance. We believe that the communities living and working along the coast, including our commercial fishermen, recreational users, and harbor businesses, bring essential local knowledge and a legitimate stake in these decisions. A process that excludes local municipalities risks overlooking real-world impacts and undermining the public trust that is essential to successful, long-term marine stewardship.

We look forward to your response and to engaging constructively in this important process.

Please direct correspondence to the Office of City Manager John Craig at the address above, or by email at [email protected]. We are available at your earliest convenience to schedule a call or meeting.

Respectfully submitted,

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California Dept of Fish and Wildlife

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May 7, 2026
Carla Wixom
Mayor, City of Morro Bay
cc: Morro Bay City Council
California Ocean Protection Council
San Luis Obispo County Board of Supervisors
Morro Bay Harbor Department

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1 California Fish and Game Commission
Status of Marine Protected Area Petitions for Regulation Change Index Revised May 1, 2026
This index provides streamlined access to the 20 Marine Protected Area (MPA) petitions submitted to CFGC in November 2023, including those amended in January or March 2025. It also includes public comments received by CFGC regarding the active petitions. These petitions propose amendments to regulations governing California’s MPAs and/or changes to the MPA management program.

Status Note: In December 2024, CFGC acted on five of the MPA petitions following evaluation and recommendation from the California Department of Fish and Wildlife (CDFW), at the request of CFGC. For each of these five petitions, the proposed actions were either granted or denied, except for certain actions that were withdrawn by petitioners. A ”granted” petition action indicates that CFGC has approved it for consideration in a future rulemaking process. The remaining 15 petitions and their proposed actions were referred to CDFW for evaluation. On March 20, 2026, the Department released its evaluations and recommendations for 10 of the 15 petitions — those not led or co-led by tribes or tribal communities. The petitions which are led or co-led by tribes or tribal communities are still under CDFW review, and some of those petitions have incorporated additional changes to original proposals based on requests from tribal leads or co-leads discussed at the April 14, 2026 Tribal Committee meeting.

Index Table: The first column of the index table lists the “MPA Petition Tracking Number (No.)”, which links to the full petition and related materials. Petitions that have been amended are marked with “AM1” or “AM2” at the end of the tracking number. The last column of the table provides a link to a compilation of “Comments Received” since each petition was submitted to CFGC. This column contains either “N/A” or a range of dates: “N/A” indicates the petition was one of five considered by the Commission in 2024. Date ranges reflect the period for which public comments were received for the 15 petitions currently under CDFW review. Each date range entry in this column links to a PDF file containing comments compiled in chronological order. These files are updated following each CFGC meeting.

Select acronyms: CFGC = California Fish and Game Commission; MPA = marine protected area; SMR = state marine reserve; SMCA = state marine conservation area MPA Petition
Tracking No.

Date Received by
CFGC Office Subject of Request Description Status CFGC
Meeting
Comments
Received
2023-34MPA 11/30/2023 MPAs:

Amend Point Buchon
SMCA, Farnsworth Onshore
SMCA and Farnsworth
Offshore SMCA

1. Request to reclassify Point Buchon SMCA as SMR

2. Request to modify take at Farnsworth Onshore SMCA and at Farnsworth Offshore SMCA to allow only recreational
spearfishing
Referred 2/2024 November 2023 -
12 p.m. on April 17,
2026

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Status of Marine Protected Area Petitions for Regulation Change Index, Updated May 1, 2026 MPA Petition
Tracking No.

Date Received by
CFGC Office Subject of Request Description Status CFGC
Meeting
Comments
Received
2023-33MPA-AM1 3/14/2025
(original received
11/30/2023)
MPAs:

Amend 5 SMRs and 1
SMCA;
Designate new MPA near
Santa Cruz
(Proposed as Pleasure
Point SMCA)

1. Request to expand boundaries of Natural Bridges SMR, Point Conception SMR, South Point SMR, Gull Island SMR; and
Cabrillo SMR Expand Point Dume SMCA and allow recreational take from shore by hook and line and spearfishing

2. Request to designate new MPA at Pleasure Point in Santa Cruz and allow recreational take from shore by hook and line or spearfishing
Referred 4/2025 November 2023-
12 p.m. on April 17,
2026
2023-32MPA 11/30/2023 MPAs:

Amend Duxbury Reef
SMCA
Change Duxbury Reef SMCA as an SMR, extend the southern boundary further south, and extend the northern boundary to the Double Point Special Closure
Referred 2/2024 November 2023-
12 p.m. on April 10,
2026
2023-31MPA 11/30/2023 MPAs:

Combine MPAs at Drakes
Estero and Estero de
Limantour into one SMR
Merge Drakes Estero SMCA and Estero de Limantour SMR into a single SMR
Granted 12/2024 N/A
2023-30MPA 11/30/2023 MPAs:

Modify recreational crab
take regulations at Big River
SMCA
Change recreational crab trap gear restrictions in Big River SMCA to only allow Type A (collapsable) hoop nets, eliminate hoop net Type B (rigid frame) allowance from general provisions, reduce number of set traps from 10 to 5, and reduce crab bag and possession limit from 10 to 5
Denied 12/2024 N/A
2023-29MPA-AM1 Amended 3/26/25
(original received
11/30/2023)
MPAs:

Designate new MPA near
Carpentaria, Santa Barbara
County (Proposed
“Mishopshno SMCA”) for
California Chumash comanagement
Amended request: Designate a new MPA near Carpinteria as “Mishopshno SMCA” (with amended boundaries in a portion of the original boundaries, modified to reduce size in all dimensions covering 9.05 sq miles) that allows recreational take of finfish by hook and line from shore, and includes a tribal take exemption for the Santa Ynez Band of Chumash Indians
Referred 4/2025 November 2023 -
12 p.m. on April 17,
2026
2023-28MPA-AM2 Amended (AM2)
11/24/2025
1 st Amended
3/14/2025
MPAs:

Designate new SMCA near
Point Sal for comanagement with Northern
Chumash Tribal Council and
Amended request: Designate a new SMCA near Point Sal — using boundaries modified in November 2025 to cover 9.18 square miles — that allows recreational take of finfish by hook and line from shore and take during mission-critical operations at Vandenberg Space Referred 4/2025 November 2023 -
12 p.m. on April 17,
2026

Page 94 of 128 ends

Status of Marine Protected Area Petitions for Regulation Change Index, Updated May 1, 2026 MPA Petition
Tracking No.

Date Received by
CFGC Office Subject of Request Description Status CFGC
Meeting
Comments
Received
(original received
11/30/2023)
other Chumash tribes;
consult with tribes for tribal
name
Force Base, and to consult with tribes to identify a tribal name for the SMCA.
2023-27MPA-AM1 Amended 1/7/2025
(original received
11/30/2023)
MPAs:

Amend take and access at
Anacapa Island SMCA
Amended request: Amend Anacapa Island SMCA to protects
eelgrass meadows, considering 3 options:

1. Disallow commercial lobster fishing year-round;

2. Disallow hard bottomed fishing gear (including anchoring if applicable) near eelgrass; or

3. Extend the existing lobster trap closure within [Anacapa Island Special Closure] from less than 20 ft deep to apply out to within 30 meters from shore.

Referred 2/2025 November 2023 -
12 p.m. on April 17,
2026
2023-26MPA 11/30/2023 MPAs:

Boundaries at Swami’s
SMCA; modify three
estuarine no-take SMCAs in
San Diego County

1. Request to shift Swami’s SMCA south to the State/Solana Beach line to cover tidepools

2. Change color of three estuarine no-take SMCAs from blue to red

1. Withdrawn

2. Granted
12/2024 N/A
2023-25MPA 11/30/2023 MPAs:

Shift boundaries of Long
Point SMR; remove feeding
of fish at two Catalina Island
MPAs; adjust two no-take
SMCAs

1. Request to expand Long Point SMR

2. Remove feeding of fish allowance at Lover’s Cove and Casino Point SMCAs;

3. Change color of Blue Cavern Onshore and Casino Point no-take SMCAs from blue to red

1. Denied

2. Denied

3. Granted
12/2024 N/A
2023-24MPA-AM1 Amended
3/14/2025 (original
received
11/29/2023)
MPAs:

Expand Laguna Beach notake SMCA into Dana Point
SMCA
Amended request: Expand southern boundary of Laguna Beach notake SMCA to subsume a portion of Dana Point SMCA to due west of the southern border of City of Laguna Beach, shifting northern boundary of Dana Point SMCA southward.

Referred 4/2025 November 2023-
February 2026

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Status of Marine Protected Area Petitions for Regulation Change Index, Updated May 1, 2026 MPA Petition
Tracking No.

Date Received by
CFGC Office Subject of Request Description Status CFGC
Meeting
Comments
Received
2023-23MPA-AM1 Amended
1/13/2025
(original received
12/28/2023)
MPAs:

Modify classification and/or
uses at four MPAs near
Monterey, and designate
new MPA (Proposed
“Tanker’s Reef SMR”)
Amended request: Proposes 28 individual actions to support and promote proposed kelp restoration activities at Edward F. Ricketts, Pacific Grove Marine Gardens, and Carmel Bay SMCAs and Point Lobos SMR and one proposed new SMR in Monterey, including reclassification, unlimited recreational urchin take, establishing new kelp restoration permits, exempting from scientific collecting permit to outplant kelp, prune kelp canopy, disperse kelp spores, limit fishing when kelp restoration is underway, and more. Also, create regulatory pathway to place artificial reef structures and sunken ships for recreational diving.

Referred 2/2025 November 2023-
12 p.m. on April 10,
2026
2023-22MPA 11/29/2023 MPAs:

Modify language for tidepool
take and research/
restoration for Orange
County MPAs; adjust notake MPAs

1. Request to modify definition of tidepools

2. Refine tidepool take prohibitions language

3. Add language regarding research, monitoring, restoration and education to Orange County MPAs, with the exception of Upper Newport Bay SMCA

4. Change color of no-take SMCAs to red on outreach maps

1. Grant in
concept

2. Grant in
concept

3. Deny

4. Grant
12/2024 N/A
2023-21MPA 11/29/2023 MPAs:

Amend Pyramid Point
SMCA to no-take with tribal
take exemption, and correct
boundary
Request to modify take allowances in Pyramid SMCA to no-take with tribal take exemption for the Tolowa Dee-ni’ Nation; and change northern boundary to align with California/Oregon state line Referred 2/2024 November 2023-
12 p.m. on April 10,
2026
2023-20MPA 11/29/2023
(note: changes
requested by tribal
lead on 4/14/2026
not reflected in
petition)
MPAs:

Amend Point Buchon SMCA
and SMR and establish comanagement
Request to expand a boundary at Point Buchon SMR; rename Point Buchon SMCA as the “Chumash Co-Managed SMCA”, and add a tribal take exemption for the Santa Ynez Band of Chumash Indians (revised from 11/29/23 posted request that also added recreational finfish, and invertebrates by hand except rock scallops and mussels)
Referred 2/2024 November 2023 -
12 p.m. on April 17,
2026
2023-19MPA 11/29/2023
(note: changes
requested by tribal
lead on 4/14/2026
MPAs:

Designate new MPA near
Morro Bay (Proposed
“Chitqawi SMCA”) and
Request to designate a new MPA near Morro Bay as “Chitqawi SMCA” that only includes a tribal take exemption for the Santa Ynez Band of Chumash Indians (revised from the 11/29/23 posted request that also added recreational finfish and invertebrates by Referred 2/2024 November 2023 -
12 p.m. on April 17,
2026

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Status of Marine Protected Area Petitions for Regulation Change Index, Updated May 1, 2026 MPA Petition
Tracking No.

Date Received by
CFGC Office Subject of Request Description Status CFGC
Meeting
Comments
Received
not reflected in
petition)
establish co-management hand except rock scallops and mussels). 2023-18MPA 11/28/2023 MPAs:

Amend four MPAs and 2
special closures in Santa
Barbara Channel
Request to redesignate the shoreline of Vandenberg SMR as SMCA for shore fishing; amend Point Conception SMR, Kashtayit SMCA, and Campus Point SMCA; consider modifying or removing San Miguel Island Special Closure and Anacapa Island Special Closure) related to take regulations and vessel landing access
Referred 2/2024 November 2023 -
12 p.m. on April 17,
2026
2023-16MPA 11/22/2023 MPAs:

Reclassify Stewarts Point
and Bodega Head SMRs to
allow take
Request to reclassify Stewarts Point and Bodega Head SMRs as SMCAs to allow commercial take of salmon by trolling
Referred 2/2024 November 2023-
12 p.m. on April 10
2026
2023-15MPA-AM2 Amended
3/14/2025;
(original received
11/22/2023)
MPAs:

Reclassify three SMRs in
Santa Barabara Channel as
SMCAs to allow take
Amended request: Reclassify Footprint SMR, Gull Island SMR, and Santa Barbara Island SMR partially or fully to SMCAs to allow (1) take of highly migratory species (HMS), (2) possession of coastal pelagic species (CPS), and/or (3) take of pelagic finfish; proposing six options with various gear combinations.

Referred 4/2025 November 2023 -
12 p.m. on April 17,
2026
2023-14MPA 11/13/2023 MPA’s:

Allow commercial take of
urchins in nine SMCAs
Allow commercial take of urchins in nine SMCAs: Sea Lion Cove, Stewart’s Point, Salt Point, Double Cone Rock, Naples, Anacapa Island, Point Dume, Point Vicente no-take, and Swami’s.

Referred 2/2024 November 2023-
12 p.m. on April 17,
2026

Page 97 of 128 ends

Prepared By: ME/NS Dept Review: GK
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council DATE: April 22, 2026 FROM: Greg Kwolek, Public Works Director
SUBJECT: Approve a Professional Services Agreement with Cannon Corporation for Design of Phase 1 and Environmental Permitting for all Phases of the North Morro Bay Water Improvements Project

RECOMMENDED ACTION
Approve and authorize the City Manager to execute a professional services agreement with Cannon Corporation to provide design and engineering services during construction for Phase 1 of the North Morro Bay Water Improvements Project (Project), and environmental review and permitting for all phases of the Project, in an amount not-to-exceed $525,492.00, and authorize the City Manager to execute amendments if necessary not to exceed $52,549.00 for contingencies.

ALTERNATIVES
The City Council may:

1. Choose not to approve the professional services agreement with Cannon Corporation; or

2. Provide other direction to staff.

PROJECT SUMMARY
In 2017, the City initiated the OneWater Morro Bay Plan to comprehensively evaluate water, wastewater, and stormwater systems and identify long-term infrastructure needs. Hydraulic modeling and fire flow analysis identified the following water system concerns related to the Nutmeg and Upper Kings Pressure Zones:
 Deficient water pressures and fire flow capacity
 A concentration of underperforming hydrants in North Morro Bay  System-wide deficiencies related to storage, conveyance, and pressure management To address these concerns, the OneWater Plan recommended a series of improvements including:
 Replacement of the Nutmeg tank with a new larger pre-stressed concrete tank  Removal of the Elena tanks
 Booster pump upgrades
 Pipeline improvements to eliminate reliance on the Vashon Booster Pump Station By 2022, City staff prepared a high-level estimate indicating that the Nutmeg project, inclusive of the abovementioned improvements, could cost over $19 million. Additionally, a tank replacement project presented constructability constraints. Access to the project site is constrained by steep terrain. Also, the site is in close proximity to residential development, and construction would involve challenges with staging and traffic. Further, the City does not have property control of the site because it is privately owned and leased to the City.

AGENDA NO: 8.a
MEETING DATE: May 12, 2026

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In light of this, City staff engaged Cannon to develop project alternatives that would address water system deficiencies while saving costs and avoiding a tank replacement at the Nutmeg Tank site. In response to the cost and constructability challenges associated with replacing the Nutmeg tank, the City completed an alternatives analysis in 2024 to identify more cost-effective and implementable solutions. The analysis determined that the original project objectives of improving water pressure and fire flow could be achieved through a combination of several discreet individual system-wide improvements, including:
 Strategic pipeline upsizing and interconnections
 Pressure zone modifications and PRV installations
 Optimization of existing storage within the Kings tank system  Several urgent system improvements and upgrades
These improvements are being implemented as a phased program now called the North Morro Bay Water Improvements Project (Project), since the project no longer involves replacement of the Nutmeg tank. This approach achieves the same functional goals as a new storage tank (adequate fire flow, system reliability, and pressure stability) but avoids the significant challenges associated with constructing a tank at the Nutmeg site.

This first phase of the Project, estimated to begin construction in 2027, addresses immediate concerns with existing infrastructure and lays the foundation for future phases of improvements. Due to the broad scope of these improvements across north Morro Bay, a phased construction approach is suggested as listed below:

1.1 Close off and demo Elena Tanks

1.2 Design and install skid mounted booster to Nutmeg Zone, including future fire pump

1.3 Replace pump at Vashon Booster Station

1.4 Increase hydraulic grade line (HGL) at Errol pressure reducing valve (PRV), Sunset PRV, and Desal PRV to 220’ HGL

1.5 Increase the Errol PRV to 8”

1.6 Replace the Errol Street pipeline with 8” pipe, upstream of PRV

1.7 Connect Elena and Blanca zones at Sequoia and Main Streets for fire flow

1.8 Install check valve (PRV) from Blanca to Elena (set higher)

1.9 Install check valve (PRV) from Elena to Blanca (set lower)

1.10 Provide SCADA controls/signal for all improvements

1.11 Install 25’ of new 12” pipe at Elena and Alder Streets

1.12 Investigate rehabilitation of existing Nutmeg Tank in service

1.13 Install new 6” water main on Laurel Ave from Cuesta Ave to Laurel northern dead end Subsequent phases 2-4 consist of pipeline, pump and tank upgrades to improve system flow and pressure. Staff plans to bring later phases of the project to the Public Works Advisory Board for review and input.

DISCUSSION
On December 16, 2025, City staff published a Request for Proposals for design and engineering services during construction specific to the first phase of improvements, and environmental review for all phases of the Project. Two responsive proposals were received, one from Cannon Corporation and one from MNS Engineers. Each proposal was evaluated and scored by a Staff panel, then each team presented in-person interviews with Staff. Evaluation categories included:
 Understanding of work
 Similar project experience
 Quality of project team
 Compliance with RFP
 Proposed timeline

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Cannon Corporation was found to be the most qualified and was selected by staff. Their cost proposal was then opened and proposal terms were negotiated to meet the project goals and available budget.

Only the cost proposal of the selected consultant was evaluated by staff following requirements of the Qualifications-Based Selection process outlined in California Government Code Section 4526.

FISCAL IMPACT
No new funding is requested for this agreement. Funding for design of Phase 1 of the North Morro Bay Water Improvements Project is already included in the City’s adopted capital improvement budget, with the specific account for the Project currently holding a fund balance of $5,043,000.

The Project was incorporated into the City’s water rate structure and capital planning efforts over two rate cycles, including the 2015 rate increases and subsequent rate adjustments, which anticipated funding for major water system improvements, including the Nutmeg Tank replacement and related infrastructure improvements.

ATTACHMENT

1. Professional Services Agreement with Cannon Corporation

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1 AGREEMENT FOR SERVICES

BETWEEN CITY OF MORRO BAY AND

CANNON CORPORATION
THIS AGREEMENT FOR SERVICES (“Agreement”) is made and entered into this 29th day of April, 2026 by and between CITY OF MORRO BAY, a California municipal corporation (“City”) and CANNON CORPORATION, a California Corporation (“Consultant”). City and Consultant may be referred to individually as “Party” or collectively as “Parties.” In consideration of the mutual promises and covenants made by the Parties and contained herein and other consideration, the value and adequacy of which are hereby acknowledged, the Parties agree as follows:

ARTICLE 1. SERVICES OF CONSULTANT

1.1 Scope of Services. In compliance with all terms and conditions of this Agreement, Consultant shall provide those services specified in the “Scope of Services” attached hereto as Exhibit A and incorporated herein by this reference, which may be referred to herein as the “services” or “work” hereunder. As a material inducement to City entering into this Agreement, Consultant represents and warrants: a) all services set forth in the Scope of Services will be performed in a competent and satisfactory manner; b) all materials used for services will be both of good quality as well as fit for the purpose intended; and, c) Consultant shall follow the highest professional standards and practices in performing the services required hereunder.

1.2 Consultant’s Proposal. The Scope of Services shall include the scope of services or work included in Consultant’s proposal or bid, which shall be incorporated herein by this reference as though fully set forth herein. In the event of any inconsistency between the terms of such proposal or bid, and this Agreement, the terms of this Agreement shall govern. No other terms and conditions from Consultant’s proposal or bid, other than description of scope of services or work, shall apply to this Agreement, unless specifically agreed to by City in writing.

1.3 Compliance with Law. All services rendered hereunder shall be provided in accordance with all ordinances, resolutions, statutes, rules and regulations of City and any federal, State or local governmental agency having jurisdiction in effect at the time services are rendered.

City, and its officers, employees and agents, shall not be liable at law or in equity for failure of Consultant to comply with this Section.

1.4 Licenses, Permits, Fees and Assessments. Consultant shall obtain at its sole cost and expense such licenses, permits and approvals as may be required by law for the performance of the services required by this Agreement. Consultant shall have the sole obligation to pay for any fees, assessments and taxes, plus applicable penalties and interest, which may be imposed by law and arise from or are necessary for Consultant’s performance of the services required by this Agreement, and shall indemnify, defend and hold harmless City against any such fees, assessments, taxes, penalties or interest levied, assessed or imposed against City hereunder.

1.5 Additional Services and Compensation. City shall have the right at any time during the performance of the services, without invalidating this Agreement, to order extra work beyond that specified in the Scope of Services or make changes to the work by altering, adding to

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2 or deducting from said work. No such extra work may be undertaken unless a written order, consistent with both Section 9.4 as well as Morro Bay Municipal Code (“MBMC”) section

3.08.060 (and as amended), is first given by City to Consultant, incorporating therein any adjustment in the Contract Sum for the actual costs of the extra work and/or the time to perform this Agreement, which said adjustments are subject to the written approval of Consultant. It is expressly understood by Consultant that the provisions of this Section shall not apply to services specifically set forth in the Scope of Services or reasonably contemplated therein. Consultant hereby acknowledges that it accepts the risk that the services to be provided pursuant to the Scope of Services may be more costly or time consuming than Consultant anticipates and that Consultant shall not be entitled to additional compensation therefor. City may in its sole and absolute discretion have similar work done by other consultants.

1.6 Familiarity with Work. By executing this Agreement, Consultant represents and warrants Consultant: a) has thoroughly investigated and considered services to be performed, b) has carefully considered how services should be performed, and c) fully understands the facilities, difficulties and restrictions attending performance of services under this Agreement.

1.7 Software and Computer Services. If the Scope of Services includes the provision and/or installation of any software, computer system, or other computer technology, Consultant represents and warrants that it is familiar with and/or has inspected City’s current infrastructure, equipment, computer system and software and that the software, computer system, or other computer technology provided and/or installed by Consultant under this Agreement is compatible, and shall be fully functional, with such infrastructure, equipment, computer system and software of City. Consultant acknowledges that City is relying on this representation by Consultant as a material consideration in entering into this Agreement.

1.8 Prevailing Wages. If services include any “public work” or “maintenance work,” as those terms are defined in California Labor Code section 1720 et seq. and California Code of Regulations, Title 8, section 16000 et seq., and if the total compensation is $1,000 or more, Consultant shall pay prevailing wages for such work and comply with the requirements in California Labor Code section 1770 et seq. and 1810 et seq., and all other applicable laws.

1.9 Special Requirements. Additional terms and conditions of this Agreement, if any, which are made a part hereof are set forth in the “Special Requirements” attached hereto as Exhibit B and incorporated herein by this reference. In the event of a conflict between the provisions of Exhibit B and any other provisions of this Agreement, the provisions of Exhibit B shall govern.

ARTICLE 2. COMPENSATION AND METHOD OF PAYMENT

2.1 Contract Sum. Subject to any limitations set forth in this Agreement, City agrees to pay Consultant the amounts specified in the “Schedule of Compensation” attached hereto as Exhibit C and incorporated herein by this reference. The total compensation, including reimbursement for actual expenses, shall not exceed Five Hundred Twenty-Five Thousand Four Hundred and Ninety-Two Dollars ($525,492.00) (“Contract Sum”), unless additional compensation is approved pursuant to Section 1.5. Compensation may include reimbursement, for actual and necessary expenditures, if both specified in the Schedule of Compensation, as well as approved by City in advance. The Contract Sum shall include the attendance of Consultant at all

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3 project meetings reasonably deemed necessary by City. Consultant agrees that if Consultant becomes aware of any facts, circumstances, techniques, or events that may or will materially increase or decrease the cost of the work or services, Consultant shall promptly notify the Contract Officer of said fact, circumstance, technique or event and the estimated increased or decreased cost related thereto.

2.2 Invoices. Unless some other method of payment is specified in Exhibit C, Schedule of Compensation, in any month in which Consultant wishes to receive payment, no later than the first business day of such month, Consultant shall submit to City, in a form approved by City’s Finance Director, an invoice for services rendered prior to the date of the invoice. By submitting an invoice for payment under this Agreement, Consultant is certifying compliance with all provisions of this Agreement. Except as provided in Sections 7.3, 7.4 and 7.5, City shall pay Consultant for all expenses stated thereon which are approved by City pursuant to this Agreement generally within thirty (30) days, and City will use its best efforts to make payment no later than forty-five (45) days, from the submission of an invoice in an approved form. In the event any charges or expenses are disputed by City, the original invoice shall be returned by City to Consultant for correction and resubmission. Review and payment by City for any invoice provided by Consultant shall not constitute a waiver of any rights or remedies provided herein or any applicable law. Each invoice is to include (unless otherwise specified by City): 1) line items for all personnel describing the work performed, the number of hours worked, and the hourly rate; 2) line items for all materials and equipment properly charged to the Services; 3) line items for all other approved reimbursable expenses claimed, with supporting documentation; and 4) line items for all approved subcontractor labor, supplies, equipment, materials, and travel properly charged to the Services.

ARTICLE 3. PERFORMANCE SCHEDULE

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

3.2 Term. Unless earlier terminated in accordance with Article 7 of this Agreement, this Agreement shall continue in full force and effect until completion of the services, which shall be no later than December 31, 2027.

3.3 Schedule of Performance. Consultant shall commence the services pursuant to this Agreement upon receipt of a written notice to proceed and shall perform all services within the time period(s) established in the “Schedule of Performance” attached hereto as Exhibit D and incorporated herein by this reference.

3.4 Force Majeure. The time period(s) specified in the Schedule of Performance for performance of the services rendered pursuant to this Agreement shall be extended because of any delays due to unforeseeable causes beyond the control and without the fault or negligence of Consultant, including, but not restricted to, acts of God or of the public enemy, unusually severe weather, fires, earthquakes, floods, epidemics, quarantine restrictions, riots, strikes, freight embargoes, wars, litigation, and/or acts of any governmental agency, including City, if Consultant shall within ten (10) days of the commencement of such delay notify City in writing of the causes of the delay. City shall ascertain the facts and the extent of delay, and extend the time for performing the services for the period of the enforced delay when and if in the judgment of City

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4 such delay is justified. City’s determination shall be final and conclusive upon the Parties to this Agreement. In no event shall Consultant be entitled to recover damages against City for any delay in the performance of this Agreement, however caused, Consultant’s sole remedy being extension of this Agreement pursuant to this Section.

ARTICLE 4. COORDINATION OF WORK

4.1 Representative of Consultant. The representative of Consultant is Larry Kraemer, who is authorized to act on Consultant’s behalf with respect to the work or services specified herein and to make all decisions in connection therewith. It is expressly understood that the experience, knowledge, capability and reputation of the representative was a substantial inducement for City to enter into this Agreement. Therefore, the representative shall be responsible during the term of this Agreement for directing all activities of Consultant and devoting sufficient time to personally supervise the services hereunder. For purposes of this Agreement, the representative may not be replaced nor may their responsibilities be substantially reduced by Consultant without the express written approval of City.

4.2 Contract Officer for City. The Contract Officer for City is Nate Stong (or such person as may be designated by the City Manager). The Contract Officer shall be the primary person on behalf of City responsible for the administration of the Agreement. It shall be Consultant’s responsibility to assure that the Contract Officer is kept informed of both the progress of the performance of the services as well as any decisions which must be made by City.

4.3 Approvals from City. City approvals or actions, pursuant to the authority of this Agreement, are to be made (unless otherwise specified) either by the City Manager or by their delegate as provided for in writing.

4.4 Independent Contractor. Neither City, nor any of its officers, employees or agents, shall have any control over the manner or means by which Consultant, or its officers, employees, agents or subcontractors, perform the services required herein, except as otherwise set forth herein. Consultant shall perform all services required herein as an independent contractor of City and shall remain under only such obligations as are consistent with that role. Consultant shall not at any time or in any manner represent that it, or any of its officers, employees, agents or subcontractors, are officers, employees or agents of City. City shall not in any way or for any purpose become or be deemed to be a partner of Consultant in its business or otherwise or a joint venturer or a member of any joint enterprise with Consultant. Consultant shall not incur or have the power to incur any debt, obligation or liability whatever against City, or bind City in any manner. Consultant represents and warrants that the personnel used to provide services to City pursuant to this Agreement shall at all times be under Consultant’s exclusive control and direction.

No City employee benefits shall be available to Consultant, its officers, employees, agents or subcontractors, in connection with the performance of this Agreement. City shall not be liable for compensation or indemnification to Consultant, its officers, employees, agents or subcontractors, for injury or sickness arising out of performing services hereunder. In the event that Consultant or any officer, employee, agent, or subcontractor of Consultant providing services under this Agreement claims or is determined by a federal or state agency, a court of competent jurisdiction, or the California Public Employees’ Retirement System, to be classified as other than an independent contractor for City, then Consultant shall indemnify, defend, and hold harmless City

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5 for the payment of any and all assessed fines, penalties, judgments, employee and/or employer contributions, and any other damages and costs assessed to City as a consequence of, or in any way attributable to, the assertion that Consultant, or any officer, employee, agent, or subcontractor Consultant used to provide services under this Agreement, is/are employees of City.

4.5 Subcontracting or Assignment. The experience, knowledge, capability and reputation of Consultant, its principals and employees were a substantial inducement for City to enter into this Agreement. Therefore, without express written approval of City, Consultant shall not contract with any other entity to perform in whole or in part services required hereunder without express written approval of City, and neither this Agreement nor any interest herein may be transferred or assigned. No approved transfer shall release Consultant, or any surety or insured of Consultant, of any liability hereunder without express written consent of City.

ARTICLE 5. INSURANCE AND INDEMNIFICATION

5.1 Insurance Coverages. Prior to commencement of any services under this Agreement, and without limiting Consultant’s indemnification obligation to City, Consultant shall procure and maintain, at its sole cost and expense, in a form and content satisfactory to City, for the duration of the Agreement, primary policies of insurance of the type and amounts below, issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance or is on the List of Approved Surplus Line Insurers in the State of California, with an assigned policyholders’ Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best’s Key Rating Guide, unless otherwise approved by City, which shall cover all elected and appointed officers, employees and agents of City. City reserves the right at any time during the term of the Agreement to change the amounts and types of insurance required by giving Consultant ninety (90) days advance written notice of such change.

If such change results in substantial additional cost to Consultant, City and Consultant may renegotiate Consultant’s compensation.
(a) Commercial General Liability Insurance. A policy of commercial general liability insurance, with coverage at least as broad as Insurance Services Office (“ISO”) form CG 00 01, written on a per occurrence basis for bodily injury, personal injury and property damage. Defense costs must be paid in addition to limits. Coverage for an additional insured shall not be limited to its vicarious liability. The policy must include contractual liability that has not been amended. Any endorsement restricting standard ISO “insured contract” language will not be accepted. Limits shall be no less than $1,000,000 per occurrence for all covered losses and no less than $2,000,000 general aggregate.
(b) Worker’s Compensation Insurance. A policy of worker’s compensation insurance in such amount as will fully comply with the laws of the State of California and which shall indemnify, insure and provide legal defense for Consultant against any loss, claim or damage arising from any injuries or occupational diseases occurring to any worker employed by or any persons retained by Consultant in the course of carrying out the work or services contemplated in this Agreement.
(c) Automobile Liability. A policy of comprehensive automobile liability insurance, at least as broad as ISO form CA 00 01, written on a per occurrence basis covering

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6 bodily injury and property damage in an amount not less than $1,000,000 combined single limit for each accident. Said policy shall include coverage for owned, non-owned, leased, hired cars and any automobile.
(d) Professional Liability. Professional liability insurance appropriate to Consultant’s profession. This coverage may be written on a “claims made” basis and must include coverage for contractual liability. Any policy inception date, continuity date, or retroactive date must be before the effective date of this Agreement. The professional liability insurance required by this Agreement must be endorsed to be applicable to claims based upon, arising out of, or related to services performed under this Agreement. The insurance must be maintained for at least five (5) consecutive years following the completion of Consultant’s services or the termination of this Agreement. During this additional 5-year period, Consultant shall annually and upon request of City submit written evidence of this continuous coverage. Limits shall be no less than $1,000,000 per claim and no less than $1,000,000 general aggregate. (e) Cyber Liability. Cyber liability insurance appropriate to Consultant’s profession and the services hereunder, written on a per occurrence basis, with limits not less than $1,000,000 per occurrence/loss, and $2,000,000 in the aggregate. Coverage shall be sufficiently broad to respond to the duties and obligations undertaken by Consultant pursuant to this Agreement and shall include, but not be limited to, claims involving: infringement of intellectual property; copyright; trademark; invasion of privacy violations; data breach; electronic information theft, loss, damage, destruction, alteration or misuse; release of private information; extortion; and, network security. The policy shall provide coverage for breach response costs, regulatory fines and penalties, and credit monitoring expenses, with limits sufficient to respond to these obligations.
(f) Excess Liability Insurance. Excess liability insurance may be used to satisfy the obligations herein. If excess liability insurance is used then the policy shall meet all the requirements herein and be at least as broad as the primary coverages set forth herein. Such policy shall: 1) include a drop down feature requiring the policy to respond if primary insurance that would otherwise have applied proves to be uncollectible in whole or in part for any reason; 2) be payable on behalf of wording as opposed to reimbursement; 3) have concurrency of effective dates with primary policies; 4) “follow form” to the underlying primary policies; and, 5) provide insureds, under primary policies required herein, shall be insureds under the excess liability policy. (g) Subcontractors. In the event Consultant subcontracts any portion of the work in compliance with Section 4.5 of this Agreement, Consultant shall either: 1) include each subcontractor as insureds under its policies of insurance required herein; or, 2) Consultant shall furnish to City all documentation, required in Article 5 for Consultant, for each subcontractor. All coverages for subcontractors shall include all of the requirements stated herein.

5.2 General Insurance Requirements.
(a) Proof of Insurance, Enforcement and Notice. No work or services under this Agreement shall commence until both Consultant has provided City with insurance certificates, endorsement forms and appropriate insurance binders evidencing the above insurance coverages, as well as said documentation is approved by City. City reserves the right to inspect

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7 complete, certified copies of, and endorsements to, all required insurance policies, at any time.

Any failure to comply with the reporting or other provisions of the policies including breaches or warranties shall not affect coverage provided to City. In the event any insurance policy required under this Agreement is cancelled or amended (and the insurance policy is not replaced pursuant to subsection (b) below), or does not comply with Article 5, then: 1) City has the right but not the duty to obtain insurance required herein and any premium paid by City will be promptly reimbursed by Consultant or City will withhold amounts sufficient to pay premium from Consultant payments; or, 2) City, notwithstanding any other provisions of this Agreement, may immediately terminate this Agreement. Consultant shall give City prompt and timely notice of claims made or suits instituted that arise out of or result from Consultant’s performance under this Agreement, and that involve or may involve coverage under any of the required insurance policies. (b) Cancellation/Amendment. All of herein required policies of insurance shall provide the insurance may not be amended or cancelled by insurer or any Party hereto without providing thirty (30) calendar days prior written notice (with exception of ten (10) calendar days prior written notice for nonpayment) to City. In the event any of said policies of insurance are amended or cancelled, Consultant shall, five (5) business days prior to the cancellation date, submit new evidence of insurance in conformance with this Agreement to City. (c) Additional Insureds. The commercial general liability policy provided for in Section 5.1(a) and the automobile liability policy provided for in Section 5.1(c) both shall name City and its elected and appointed officers, employees and agents (“City Parties”) as additional insureds and such coverage shall contain no special limitations on the scope of protection afforded to City and City Parties. A severability of interests provision must apply for all additional insureds ensuring that Consultant’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability, and policies of insurance shall not contain any cross-liability exclusions. (d) Primary, Subrogation, Contribution and Coverage. All of the above policies of insurance shall be primary insurance. The insurers for above policies, Consultant and any subcontractors are all deemed hereof to waive all rights of subrogation and contribution they may have against City or City Parties, and their respective insurers, and all insurance policies required herein shall be endorsed to waive such rights. Any insurance maintained by City or City Parties will apply in excess of, and not contribute with, Consultant’s insurance. If Consultant maintains broader coverage and/or higher limits than the minimum amounts provided herein, City requires and shall be entitled to the broader coverage and/or higher limits maintained by Consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to City and City Parties. None of the coverages required herein will be in compliance with this Agreement if they include any limiting endorsement of any kind that has not been first submitted to City and approved of in writing. Requirements of specific coverage features or limits contained herein are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue and is not intended by any Party or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type.
(e) Limitations, Self- Insured Retention and Deductibles. Consultant agrees

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8 that requirements of Article 5 shall not be construed as limiting in any way the extent to which Consultant may be held responsible for the payment of damages to any persons or property resulting from Consultant’s activities or the activities of any person or persons for which Consultant is otherwise responsible nor shall it limit Consultant’s indemnification liabilities as provided in Section 5.3. All insurance policies must specify that where the primary insured does not satisfy any self-insured retention, any additional insured may satisfy the self-insured retention.

Any deductibles or self-insured retentions must be declared to and approved by City. At City’s option, either the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects City and City Parties, or Consultant shall procure a bond guaranteeing payment of losses and related investigations, claim administration, attorney’s fees, defense expenses and claims.

5.3 Indemnification.
(a) General Obligations. Consultant agrees, to the full extent permitted by law, to indemnify, defend and hold harmless City and its elected and appointed officers, employees and agents (each an “Indemnitee” and collectively, “Indemnitees”) against, and will hold and save them and each of them harmless from, whether actual or threatened, any and all actions, either judicial, administrative, arbitration or regulatory claims, damages to persons or property, losses, costs, penalties, obligations, errors, omissions or liabilities (herein “Claims or Liabilities”) that may be asserted or claimed by any person, firm or entity arising out of or in connection with the negligent performance of the work, operations or activities provided herein of Consultant, its officers, employees, agents, subcontractors, or invitees, or any individual or entity for which Consultant is legally liable (each an “Indemnitor” and collectively, “Indemnitors”), or arising from Indemnitors’ reckless or willful misconduct, or arising from Indemnitors’ negligent performance of or failure to perform any term, provision, covenant or condition of this Agreement, and in connection therewith: 1) Consultant will defend any action or actions filed or threatened in connection with any such Claims or Liabilities, or at option of Indemnitee(s) will reimburse and pay for all costs and expenses, including legal costs and attorneys’ fees, incurred by Indemnitee(s) in connection therewith; and, 2) Consultant will promptly pay any judgment rendered against Indemnitee(s) for any such Claims or Liabilities, and will save and hold Indemnitee(s) harmless therefrom.
(b) Further Provisions. The indemnity obligation herein shall be binding on successors, assigns and heirs of Consultant and shall survive termination of this Agreement.

Consultant shall incorporate similar indemnity agreements as provided herein with its subcontractors, and if Consultant fails to do so Consultant shall be fully responsible to indemnify City hereunder therefor. Failure of City and/or City Parties (collectively “City” for solely this Section 5.3(b)) to monitor compliance with any of the indemnification provisions herein shall not be a waiver hereof. The indemnification provisions herein do not apply to claims or liabilities occurring as a result of City’s sole negligence or willful misconduct, but, to the fullest extent permitted by law, shall apply to claims and liabilities resulting in part from City’s negligence, except that design professionals’ indemnity hereunder shall be limited to claims and liabilities arising out of the negligence, recklessness or willful misconduct of the design professional. The indemnification provided herein includes Claims or Liabilities arising from any negligent or wrongful act, error or omission, or reckless or willful misconduct of Indemnitors in the performance of professional services hereunder. Payment of invoices by City is not a condition precedent to enforcement of the indemnity obligation herein. In the event of any dispute between

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9 Consultant and City, as to whether liability arises from the sole negligence or willful misconduct of City, Consultant will be obligated to pay for City’s defense until such time as a final judgment has been entered adjudicating City as solely negligent or responsible for willful misconduct.

Consultant will not be entitled in the absence of such a determination to any reimbursement of defense costs including but not limited to attorney’s fees, expert fees and costs of litigation. (c) Professional Liability. When the law establishes a professional standard of care for Consultant’s services, to the fullest extent permitted by law, Consultant shall indemnify, defend and hold harmless Indemnitees against, and will hold and save them and each of them harmless from, whether actual or threatened, any and all Claims and Liabilities, consistent with all obligations provided for in this Section 5.3, to the extent same are caused in whole or in part by any negligent or wrongful act, error or omission, or reckless or willful misconduct of Indemnitors in the performance of professional services under this Agreement.

ARTICLE 6. RECORDS, REPORTS AND RELEASE OF INFORMATION

6.1 Records. Consultant shall keep, and require subcontractors to keep, such ledgers, books of accounts, invoices, vouchers, canceled checks, reports, studies or other documents relating to the disbursements charged to City and services performed hereunder (“books and records”) as shall be necessary to perform the services required by this Agreement and enable City to evaluate the performance of such services. Any and all such books and records shall be maintained in accordance with generally accepted accounting principles, shall be complete and detailed, and shall be readily accessible. City shall have full and free access to such books and records at all times during normal business hours of City, including the right to inspect, copy, audit and make records and transcripts. Such books and records shall be maintained for a period of three (3) years following completion of the services hereunder. City shall have access to such books and records in the event any audit is required. Consultant shall fully cooperate with City in providing access to any and all Consultant records and documents if a public records request is made and disclosure is required by law including but not limited to the California Public Records Act.

6.2 Ownership of Documents. All drawings, specifications, maps, designs, photographs, studies, surveys, data, notes, computer files, reports, records, documents and other materials (“documents and materials”) prepared by Consultant, its officers, employees, agents and subcontractors in the performance of this Agreement shall be the property of City and shall be delivered to City upon request of City and/or upon the termination of this Agreement, and Consultant shall have no claim for further employment or additional compensation as a result of the exercise by City of its full rights of ownership, use, reuse, or assignment of the documents and materials hereunder. Consultant may retain copies of such documents and materials for its own use. Consultant shall have the right to use the concepts embodied therein. All subcontractors shall provide for assignment to City of any documents and materials prepared by them, and in the event Consultant fails to secure such assignment, Consultant shall indemnify City for all damages resulting therefrom. Moreover, with respect to any Consultant documents and materials that may qualify as “works made for hire” as defined in 17 U.S.C. § 101, such documents and materials are hereby deemed “works made for hire” for City.

6.3 Confidentiality and Release of Information. All information gained or work product produced by Consultant in its performance of this Agreement shall be considered

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10 confidential, unless such information is in the public domain or already known to Consultant.

Consultant shall not release or disclose any such information or work product to persons or entities other than City without prior written authorization from City. Consultant, its officers, employees, agents or subcontractors, shall not, without prior written authorization from City or unless requested by the City Attorney, voluntarily provide documents, declarations, letters of support, testimony at depositions, response to interrogatories or other information concerning the work performed under this Agreement. Response to a subpoena or court order shall not be considered “voluntary” provided Consultant immediately gives City notice of such court order or subpoena.

If Consultant, or any officer, employee, agent or subcontractor of Consultant, provides any information or work product in violation of this Agreement, then City shall have the right to reimbursement and indemnity from Consultant for any damages, costs and fees, including attorney’s fees, caused by or incurred as a result of Consultant’s conduct. As concerning, regarding or related to, in any way, this Agreement and the work performed thereunder: a) Consultant shall immediately notify City should Consultant, its officers, employees, agents or subcontractors be served with any summons, complaint, subpoena, notice of deposition, request for documents, interrogatories, request for admissions or other discovery request, court order or subpoena from any party; b) City retains the right, but has no obligation, to represent Consultant or be present at any deposition, hearing or similar proceeding; and, c) Consultant agrees to cooperate fully with City and to provide City with the opportunity to review any response to discovery requests provided by Consultant, however, this right to review any such response does not imply or mean the right by City to control, direct, or rewrite said response.

ARTICLE 7. ENFORCEMENT OF AGREEMENT AND TERMINATION

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

District Court, venue shall lie exclusively in the Central District of California, in the County of San Luis Obispo, State of California.

7.2 Suspension, or Termination, Prior to Expiration of Term. This Section shall govern any termination of this Agreement except as specifically provided in Section 7.4 for termination for cause. City reserves the right to terminate or suspend this Agreement, or any portion hereof, at any time, for any reason, with or without cause, upon ten (10) days’ notice to Consultant, except that where termination or suspension is due to the fault of Consultant, the period of notice may be such shorter time as determined by City. Upon receipt of any notice of termination or suspension, Consultant shall immediately cease all services hereunder, unless the notice provides otherwise, or except such as specifically approved by City. Upon submittal of an invoice consistent with Section 2.2, Consultant shall be entitled to compensation for all services rendered prior to the effective date of the notice of termination or suspension and for any services authorized by City thereafter in accordance with the Schedule of Compensation, or such as may be approved

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11 by City, except as provided in Section 7.5. In event of termination, or suspension, without cause pursuant to this Section, there is no need to provide opportunity to cure pursuant to Section 7.3.

7.3 Default of Consultant and Opportunity to Cure. In the event that Consultant is in default under the terms of this Agreement, City shall not have any obligation or duty to continue compensating Consultant for any work performed after the date of default. Instead, City may give notice to Consultant of the default and the reasons for the default. The notice shall include the timeframe in which Consultant may cure the default. This timeframe is presumptively ten (10) days, but may be extended, or reduced, if circumstances warrant, as determined by City. During the period of time that Consultant is in default, City shall hold all invoices and shall, when the default is cured, proceed with payment on the invoices, without liability for interest. In the alternative, City may, in its sole discretion, elect to pay some or all of the outstanding invoices during the period of default. If Consultant does not cure the default by conclusion of noticed timeframe, City may immediately both terminate this Agreement with notice to Consultant as well as pursue the remedy in Section 7.4, without prejudice to any other remedy to which City may be entitled at law, in equity or under this Agreement. Any failure on the part of City to give notice of Consultant’s default shall not be deemed to result in a waiver of City’s legal rights or any rights arising out of any provision of this Agreement.

7.4 Termination for Default of Consultant. If termination is due to the failure of Consultant to fulfill its obligations under this Agreement, City may, after compliance with the provisions of Section 7.3, take over the work and prosecute the same to completion by contract or otherwise, and Consultant shall be liable to the extent that the total cost for completion of the services required hereunder exceeds the compensation herein stipulated (provided that City shall use reasonable efforts to mitigate such damages), and City may withhold any payments to Consultant for the purpose of set-off or partial payment of the amounts owed City therefor.

7.5 Retention of Funds. Consultant hereby authorizes City to deduct from any amount payable to Consultant (whether or not arising out of this Agreement) (i) any amounts the payment of which may be in dispute hereunder or which are necessary to compensate City for any losses, costs, liabilities, or damages suffered by City, and (ii) all amounts for which City may be liable to third parties, by reason of Consultant’s acts or omissions in performing or failing to perform Consultant’s obligation under this Agreement. In the event that any claim is made by a third party, the amount or validity of which is disputed by Consultant, or any indebtedness shall exist which shall appear to be the basis for a claim of lien, City may withhold from any payment due, without liability for interest because of such withholding, an amount sufficient to cover such claim. The failure of City to exercise such right to deduct or to withhold shall not, however, affect the obligations of Consultant to insure, indemnify, and protect City as elsewhere provided herein.

7.6 Waiver. Waiver by any Party to this Agreement of any term, condition, or covenant of this Agreement shall not constitute a waiver of any other term, condition, or covenant. Waiver by any Party of any breach of the provisions of this Agreement shall not constitute a waiver of any other provision or a waiver of any subsequent breach or violation of any provision of this Agreement. Acceptance by City of any work or services by Consultant shall not constitute a waiver of any of the provisions of this Agreement. No delay or omission in the exercise of any right or remedy by a non-defaulting Party on any default shall impair such right or remedy or be construed as a waiver. Any waiver by either Party of any default must be in writing and shall not be a waiver

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12 of any other default concerning the same or any other provision of this Agreement. Consultant acknowledges and agrees that any actual or alleged failure on the part of City to inform Consultant of non-compliance with any requirement of this Agreement imposes no additional obligations on City nor does it waive any rights hereunder. Payment to Consultant for work performed pursuant to this Agreement shall not be deemed to waive any defects in work performed by Consultant.

7.7 Rights and Remedies are Cumulative. Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the Parties are cumulative and the exercise by either Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party.

7.8 Legal Action. In addition to any other rights or remedies, either Party may take legal action, in law or in equity, to cure, correct or remedy any default, to recover damages for any default, to compel specific performance of this Agreement, to obtain declaratory or injunctive relief, or to obtain any other remedy consistent with the purposes of this Agreement.

Notwithstanding any contrary provision herein, Consultant shall file a statutory claim pursuant to Government Code sections 905 et seq. and 910 et seq., in order to pursue a legal action under this Agreement.

7.9 Attorneys’ Fees. If either Party to this Agreement is required to initiate or defend or made a party to any action or proceeding in any way connected with this Agreement, the prevailing party in such action or proceeding, in addition to any other relief which may be granted, whether legal or equitable, shall be entitled to reasonable attorneys’ fees. Attorneys’ fees shall include attorneys’ fees on any appeal, and a Party entitled to attorneys’ fees shall be entitled to all other reasonable costs for investigating such action, consultants’ fees, taking depositions and discovery and all other necessary costs the court allows which are incurred in such litigation. Such fees and costs shall be enforceable whether or not such action is prosecuted to judgment.

ARTICLE 8. INDIVIDUAL LIABILITY, CONFLICTS AND NON-DISCRIMINATION

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

8.2 Conflict of Interest. Consultant covenants that neither it, nor any officer or principal of its firm, has or shall acquire any interest, directly or indirectly, which would conflict in any manner with the interests of City or which would in any way hinder Consultant’s performance of services under this Agreement. Consultant further covenants that in the performance of this Agreement, no person having any such interest shall be employed by it as an officer, employee, agent or subcontractor without the express written consent of City. Consultant agrees to at all times avoid conflicts of interest or the appearance of any conflicts of interest with the interests of City in the performance of this Agreement. City, in its sole discretion, shall determine the existence of a conflict of interest and may terminate this Agreement in the event such a conflict of interest exists upon sending Consultant written notice describing the conflict.

No officer or employee of City shall have any financial interest, direct or indirect, in this

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13 Agreement nor shall any such officer or employee participate in any decision relating to this Agreement which affects their financial interest or the financial interest of any corporation, partnership or association in which they are, directly or indirectly, interested, in violation of any State statute or regulation. Consultant warrants that it has not paid or given and will not pay or give any third party any money or other consideration for obtaining this Agreement.

8.3 Covenant Against Discrimination. Consultant covenants that, by and for itself, its heirs, executors, assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, gender, sexual orientation, marital status, national origin, ancestry or other protected class in the performance of this Agreement. Consultant shall take affirmative action to insure that applicants are employed and that employees are treated during employment without regard to their race, color, creed, religion, sex, gender, sexual orientation, marital status, national origin, ancestry or other protected class.

ARTICLE 9. MISCELLANEOUS PROVISIONS

9.1 Notices. Any notice or other communication either Party desires or is required to give to the other Party or any other person in regards to this Agreement must be in writing and may be given either by (i) personal service, (ii) delivery by a reputable document delivery service, such as but not limited to, Federal Express, which provides a receipt showing date and time of delivery, or (iii) mailing in the United States Mail, certified mail, postage prepaid, return receipt requested, in the case of City addressed to City Clerk at City of Morro Bay, 595 Harbor Street, Morro Bay, CA 93442, and in the case of Consultant, to the person(s) at the address designated on the execution page of this Agreement. Either Party may change its address by notifying the other Party of the change of address in writing. Notice shall be deemed communicated at the time personally delivered or in seventy-two (72) hours from the time of mailing if mailed as provided in this Section.

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

9.3 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and such counterparts shall constitute one and the same instrument.

9.4 Integration; Amendment. This Agreement including the attachments hereto is the entire, complete and exclusive expression of the understanding of the Parties as to the Agreement.

It is understood that there are no oral agreements between the Parties hereto affecting this Agreement, and this Agreement supersedes and cancels any and all prior and contemporaneous negotiations, arrangements, agreements and understandings, if any, between the Parties, concerning this Agreement, and none shall be used to interpret this Agreement. No amendment to or modification of this Agreement shall be valid unless made in writing and approved by Consultant and (consistent with, as amended, Chapter 3.08 of the MBMC) by City.

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14 9.5 Severability. Should a portion of this Agreement be declared invalid or unenforceable by a judgment or decree of a court of competent jurisdiction, such invalidity or unenforceability shall not affect any of the remaining portions of this Agreement which are hereby declared as severable and shall be interpreted to carry out the intent of the Parties unless the invalid provision is so material that its invalidity deprives either Party of the basic benefit of their bargain or renders this Agreement meaningless.

9.6 No Undue Influence. Consultant declares and warrants that no undue influence or pressure was used against or in concert with any officer or employee of City in connection with the award, terms or implementation of this Agreement, including any method of coercion, confidential financial arrangement, or financial inducement. No officer or employee of City has or will receive compensation, directly or indirectly, from Consultant, or from any officer, employee or agent of Consultant, in connection with the award of this Agreement or any work to be conducted as a result of this Agreement. Violation of this Section shall be a material breach of this Agreement entitling City to remedies in Section 7.4 and any and all remedies at law or equity.

9.7 Corporate Authority. The persons executing this Agreement on behalf of the Parties hereto warrant that (i) such Party is duly organized and existing, (ii) they are duly authorized to execute and deliver this Agreement on behalf of said Party, (iii) by so executing this Agreement, such Party is formally bound to the provisions of this Agreement, and (iv) entering into this Agreement does not violate any provision of any other agreement to which said Party is bound. This Agreement shall be binding upon the heirs, executors, administrators, successors and assigns of the Parties.
[SIGNATURES ON FOLLOWING PAGE]

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15 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date and year first-above written.

CITY:

CITY OF MORRO BAY, a California municipal
corporation
John Craig
City Manager
ATTEST:

Dana Swanson, City Clerk
APPROVED AS TO FORM:

Brian J. Stack, City Attorney
CONSULTANT:

Cannon Corporation, a California Corporation
By:

Michael Francis Cannon
President, Chief Executive Officer
By:

Lawrence P. Kraemer
Vice President and Secretary
1050 Southwood Dr.

San Luis Obispo, CA 93401
Two corporate officer signatures required when Consultant is a corporation, with one signature required from each of the following groups: 1) Chairperson of the Board, President or any Vice President; and 2) Secretary, any Assistant Secretary, Chief Financial Officer or any Assistant Treasurer. (Cal. Corp. Code § 313.)

APPROPRIATE ATTESTATIONS SHALL BE INCLUDED AS MAY BE REQUIRED BY THE BYLAWS,

ARTICLES OF INCORPORATION, OR OTHER RULES OR REGULATIONS APPLICABLE TO CONSULTANT’S BUSINESS ENTITY.

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01181.0001/813182.1 A-1

EXHIBIT A

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

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

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Elena-Blanca Pressure Zone Consolidation Design and Engineering Services Cannon 33 Scope of Work F
Scope of Services
The following scope of work is based on our understanding of the City’s Phase 1 Northern Pressure Zone Conversion Project, as documented in the 2025 consolidation analysis and supporting hydraulic evaluations. This understanding reflects the identified deficiencies within the Elena, Blanca, and Nutmeg Zones; the use of approximately 1.03 MG
of surplus storage in the Kings Tanks to meet emergency and fire flow demands; the determination that full
consolidation of the Elena and Blanca Zones is not feasible due to water quality considerations; the planned increase of the Elena Zone HGL to approximately 220 feet; required PRV modifications; booster station upgrades; targeted
pipeline improvements; and removal of the deteriorated
Elena Tanks from service.

Our approach is informed by direct involvement in the
preliminary investigations and hydraulic modeling that
established the foundation for this strategy, including evaluation of storage deficits, fire flow limitations, booster station constraints, and the feasibility of relying on surplus Kings Tank storage in lieu of constructing the previously proposed upsized Nutmeg. The professional services
described below are sequenced to establish the hydraulic and operational framework necessary to implement Phase
1 improvements while maintaining system stability and fire flow reliability.

TASK 1: PROJECT MANAGEMENT
Task 1.1 Kickoff Meeting
We will prepare for and participate in a Project Kickoff Meeting with City staff and supporting consultants. This meeting will establish communication protocols, confirm goals, and align the project approach and technical tasks with the City’s expectations for Phase 1 implementation.

Task 1.2 Project Team Meetings
Throughout the project, we will participate in up to twelve Project Team meetings to maintain alignment with the
City. These meetings will include schedule coordination, preparation of agendas and materials, facilitation of
discussions, and documentation of action items and
follow-up needs
Task 1.3 External Agency/Stakeholder Meetings
We will also support up to five external meetings
with agencies, utilities, or other stakeholders as
needed. These meetings will focus on securing design
coordination information, confirming permitting or review requirements, and addressing constraints that affect Phase 1 improvements.

Task 1.4 Project Schedule
A comprehensive project schedule will be developed
to reflect all Phase 1 components, including major
deliverables, review periods, permitting timelines, and critical path tasks. The schedule will be maintained and updated throughout the design process.

Task 1.5 Quality Assurance
A quality assurance plan—or documentation of our
internal QA/QC policies—will be submitted with the
proposal. Throughout the project, all deliverables will undergo thorough internal review by key senior staff to confirm they are accurate, complete, and consistent with City standards before submittal.

Task 1.6 Project Management
Project management for Phase 1 will include coordinating all project activities, maintaining the overall schedule, and serving as the primary point of contact for the
City throughout the duration of the work. We will lead
regular project team meetings as necessary, manage
communication among all project disciplines and
subconsultants, and confirm that critical decisions,
sequencing needs, and design milestones remain aligned
with the City’s objectives. The project schedule will be actively maintained and updated as needed to reflect
design progress, permitting requirements, and review
periods. All deliverables will be subject to internal QA/ QC review to confirm technical accuracy, consistency, and constructability. Throughout the project, we will provide proactive guidance to keep the work on track, resolve
issues quickly, and confirm smooth coordination from
kickoff through final bid-ready documents.

TASK 2: DATA COLLECTION AND

BASIS OF DESIGN
Task 2.1 Data Collection
We will compile available design records, as-built drawings, previous reports, easements, and mapping information
relevant to Phase 1 facilities. Field reviews will be
conducted to observe existing conditions, confirm utility locations, identify surface features, and evaluate potential constructability challenges. Physical, access, alignment, or infrastructure constraints will be documented and
incorporated into the design.

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Elena-Blanca Pressure Zone Consolidation Design and Engineering Services Cannon 34 Task 2.2 Tank Dive Inspection
During the preliminary design, our team will commission an updated condition assessment of the Nutmeg Tank
by retaining MCS Inspection to perform an in service
dive inspection. Because the most recent available
inspection report is from 2020, the purpose of this
work is to document current interior and exterior tank
conditions and identify any coating deterioration,
corrosion, structural concerns, or safety issues that may have developed since the previous assessment. MCS
Inspection will complete a full dive inspection and provide supporting documentation, including photographs, video, and field notes describing all observed conditions. The information gathered during this inspection will then be used to prepare a summary outlining the recommended
rehabilitation actions, recoating needs, and any priority repairs required to maintain the tank’s long term
serviceability.

Task 2.3 Basis of Design
All applicable plans, reports, industry standards, and
regulatory requirements will be reviewed and summarized in a Basis of Design Memorandum. This document will
define key design criteria, hydraulic requirements,
operational needs, equipment sizing assumptions, PRV
settings, and construction constraints. It will serve as the foundational reference for all subsequent design tasks.

TASK 3: SURVEYING AND BASE

MAPPING
Task 3.1 Topographic and Boundary Survey
A detailed topographic survey will be completed
sufficiently to support 100% design for Phase 1 projects.

Survey work will establish control points and benchmarks for use throughout design and construction. Existing
easements will be confirmed and incorporated into the
base mapping, and all relevant above- and below-ground
utilities, crossings, structures, and encroachments will be identified and mapped. Survey data will be provided
in AutoCAD and PDF formats for use in design. Our team
will utilize the previously completed aerial and ground topography survey for areas where data has been
collected and gather field data to fill in the remaining areas needed.

TASK 4: ENVIRONMENTAL AND

GEOTECHNICAL REVIEW
Task 4.1 Environmental Review
We will prepare the environmental technical
documentation needed to support the City’s CEQA
determination, including literature review, biological
survey and assessments, cultural resource evaluations,
and an environmental commitments matrix summarizing
mitigation measures and regulatory requirements. We will coordinate closely with City staff and any environmental consultants to confirm that required environmental
findings are completed and that all mitigation measures, permit conditions, and environmental constraints are
incorporated into the final plans and specifications.

SWCA is prepared to support City staff and other
environmental consultants to complete the required CEQA determination which is expected to be an Initial Study/ Mitigated Negative Declaration (IS/MND), as needed to
inform decision makers and facilitate the public review process. An IS/MND was drafted in 2022 based on the
previous version of the project focused on the proposed “OneWater” Morro Bay Phase 1 Implementation – Water
Distribution System: Nutmeg Pressure Projects. The
draft version of the IS/MND will be revised and updated to address the additional project components in the
Project Description and throughout the impact analysis
sections. In addition to the updated IS/MND, this scope of work includes preparation of responses to comments
received for the IS/MND and assumes up to five substantial comments or comment topics would be received. SWCA
will incorporate any necessary clarifications and edits and prepare a final IS/MND, Mitigation Monitoring and
Reporting Program (MMRP), and Notice of Determination
(NOD) on behalf of the City.

Task 4.2 Geotechnical Review
Our team will review all available geotechnical
data, including previously completed borings, soils
investigations, grading records, and foundation reports relevant to the Phase 1 project locations. Using this
information, we will prepare an updated geotechnical
summary memo that identifies applicable soil
characteristics, excavation considerations, foundation
parameters, and construction recommendations. If
additional borings or laboratory testing are determined to be necessary after evaluating the available information, these can be added at a later date as additional scope of work items.

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Elena-Blanca Pressure Zone Consolidation Design and Engineering Services Cannon 35 TASK 5: DESIGN PHASE: PHASE 1

IMPROVEMENTS
Task 5.1 Project Constraints and Design
Requirements
We will identify key design constraints and requirements based on the findings of Tasks 1–4 and review them
with the City and Project Team. These constraints will
include site access and layout limitations, easements,
phasing requirements, environmental and archaeological
considerations, permitting needs, utility conflicts,
continuity of service requirements, and logistical
considerations needed to keep the existing Elena Booster Station operational until the new station is online.

Task 5.2 30% Plans, Specifications, and
Estimate
We will prepare the 30% PS&E package, including
preliminary civil, mechanical, electrical, instrumentation, and control drawings. Specifications at this stage will focus on construction sequencing concepts, installation criteria, testing requirements, and a preliminary breakdown of
bid items. An initial opinion of probable construction cost will be prepared consistent with a Class 4 AACE estimate.

A 30% design review meeting will be held with City
engineering and utility staff to discuss the documents and gather direction for the next design phase.

Task 5.3 60% Plans, Specifications, and
Estimate
The 60% design package will refine all drawings and
specifications, including profiles, sections, details, and construction requirements. At this stage, mitigation
measures and regulatory agency requirements will be
incorporated into the plans. Specifications will include technical content and front end documents. An updated
Class 2 cost estimate will be provided, and a review
meeting will be conducted with City staff to confirm design direction.

Task 5.4 90% Plans, Specifications, and
Estimate
The 90% package will represent a substantially complete bid package with fully developed plans, technical
specifications, front end documents, construction
requirements, mitigation measures, and coordination
details. A Class 1 cost estimate will be prepared at this stage. A formal 90% review meeting will be held to capture final comments prior to preparing bid-ready documents.

Task 5.5 100% PS&E Bid Documents
We will prepare the final construction bid documents
incorporating all City comments from the 90% review
and all required QA/QC revisions. A final cross-check of drawings, specifications, and cost items will be performed to confirm the package is coordinated, complete, and
compliant with all permitting and funding requirements.

The completed bid documents will be ready for
advertisement.

TASK 6: PERMITTING AND

APPROVALS
Task 6.1 Permitting Support
We will assist the City with identifying all permits and approvals required for construction, including those
from Caltrans, SLO County, RWQCB, Division of Drinking
Water, biological and environmental agencies, and
other regulatory entities as needed. Support will include preparation of application materials, technical exhibits, attendance at meetings, and responses to agency
questions throughout the permitting process.

TASK 7: BID AND AWARD PHASE
Task 7.1 Pre-Bid Conference
We will facilitate the pre-bid conference, present the
project overview to potential bidders, and assist the
City in answering questions regarding project scope and requirements.

Task 7.2 Addenda and Questions
During the bidding period, we will prepare technical
responses to bidder questions and assist in drafting
addenda, including revisions to plans or specifications when needed to confirm clarity and fairness in bidding.

Task 7.3 Bid Review
We will assist the City with evaluating submitted bids for accuracy, responsiveness, and qualification. A bid summary sheet and recommendation for award will be prepared for City consideration.

TASK 8: CONSTRUCTION PHASE
Task 8.1 Engineering Services During
Construction (ESDC)
During construction, we will provide engineering support that includes attending the pre-construction job walk,
reviewing contractor submittals, responding to RFIs,
participating in up to ten construction progress meetings and site visits, and preparing record drawings in PDF and DWG formats at project completion. These services will
help ensure that the contractor’s work aligns with the
approved plans and specifications and that field issues are addressed promptly and effectively.

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01181.0001/813182.1 B-1

EXHIBIT B

SPECIAL REQUIREMENTS
(Superseding Agreement Boilerplate)

NOT APPLICABLE

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01181.0001/813182.1 C-1

EXHIBIT C

SCHEDULE OF COMPENSATION
I. Consultant will be compensated for Services provided under this Agreement in accordance with description in Consultant’s Proposal attached hereto.

II. City will compensate Consultant for the Services performed upon submission of a valid invoice, as described in Section 2.2.

III. The total compensation for the Services shall not exceed the Contract Sum, as provided in Section 2.1 of this Agreement.

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FEE SCHEDULE FOR

ENGINEERING CONSULTING SERVICES

CITY OF MORRO BAY

NORTH MORRO BAY WATER SYSTEM IMPROVEMENTS PROJECT
Environmental
SWCA
Geotech,
Inspection, Aerial
Hrly
Rate: $288 Hrly Rate: $307 Hrly Rate: $276 Hrly Rate: $260 Hrly Rate: $244 Hrly Rate: $220 Hrly Rate: $163 Hrly Rate: $185 Hrly Rate: $162 Hrly Rate: $170 Hrly Rate: $247 Hrly Rate: $138 Hrly Rate: $247 Hrly Rate: $415 LS LS Hrs Amount Hrs Amount Hrs Amount Hrs Amount Hrs Amount Hrs Amount Hrs Amount Hrs Amount Hrs Amount Hrs Amount Hrs Amount Hrs Amount Hrs Amount Hrs Amount Amount Amount Amount Hrs Amount

1.1 Project Kick-off Meeting 4 $1,152 4 $1,228 4 $1,104 4 $880 $250 16 $4,614

1.2 Project Team Meetings 24 $6,912 24 $7,368 24 $5,280 $1,000 72 $20,560

1.3 External Agency/Stakeholder Meetings 10 $2,880 10 $3,070 10 $2,200 $750 30 $8,900

1.4 Project Schedule 2 $576 8 $1,760 10 $2,336

1.5 Quality Assurance 8 $2,304 20 $6,140 8 $2,208 8 $2,080 8 $1,952 8 $1,976 60 $16,660

1.6 24 $6,912 8 $2,208 8 $2,080 8 $1,952 8 $1,104 56 $14,256 72 $20,736 58 $17,806 20 $5,520 16 $4,160 16 $3,904 46 $10,120 8 $1,976 8 $1,104 $2,000 244 $67,326

2.1 4 $1,152 4 $880 4 $652 4 $740 4 $648 4 $680 4 $552 28 $5,304

2.2 $7,150 $7,150

2.3 4 $1,152 8 $1,760 8 $1,304 8 $1,480 8 $1,296 8 $1,360 8 $1,104 52 $9,456 8 $2,304 12 $2,640 12 $1,956 12 $2,220 12 $1,944 12 $2,040 12 $1,656 $7,150 80 $21,910

3.1 36 $8,892 40 $16,600 $4,500 $500 76 $30,492
36 $8,892 40 $16,600 $4,500 $500 76 $30,492

4.1 $42,900 $42,900.00

4.2 $21,494 $21,494
$42,900 $21,494 $64,394.00

5.1 8 $2,304 4 $1,228 4 $1,104 4 $1,040 4 $976 20 $4,400 16 $2,608 8 $1,480 16 $2,592 8 $1,360 16 $2,208 108 $21,3005.2 8 $2,304 8 $2,456 24 $6,624 12 $3,120 12 $2,928 75 $16,500 30 $4,890 24 $4,440 30 $4,860 100 $17,000 20 $2,760 343 $67,8825.3 8 $2,304 8 $2,456 12 $3,312 12 $3,120 18 $4,392 55 $12,100 60 $9,780 24 $4,440 60 $9,720 120 $20,400 20 $2,760 397 $74,7845.4 8 $2,304 8 $2,456 8 $2,208 8 $2,080 8 $1,952 40 $8,800 24 $3,912 16 $2,960 24 $3,888 80 $13,600 20 $2,760 244 $46,9205.5 4 $1,152 8 $2,456 6 $1,656 6 $1,560 6 $1,464 20 $4,400 20 $3,260 8 $1,480 20 $3,240 40 $6,800 20 $2,760 158 $30,228 36 $10,368 36 $11,052 54 $14,904 42 $10,920 48 $11,712 210 $46,200 150 $24,450 80 $14,800 150 $24,300 348 $59,160 96 $13,248 1250 $241,114

6.1 2 $576 24 $5,280 24 $4,080 16 $2,208 66 $12,144
2 $576 24 $5,280 24 $4,080 16 $2,208 66 $12,144

7.1 8 $2,304 8 $2,456 8 $1,760 8 $1,976 32 $8,496

7.2 2 $576 2 $552 2 $520 2 $488 8 $1,760 2 $326 2 $370 2 $324 4 $680 26 $5,596

7.3 4 $1,152 2 $614 2 $552 2 $520 2 $488 2 $440 2 $494 16 $4,260 14 $4,032 10 $3,070 4 $1,104 4 $1,040 4 $976 18 $3,960 2 $326 2 $370 2 $324 4 $680 10 $2,470 74 $18,352

8.1 40 $11,520 10 $3,070 8 $2,208 8 $2,080 8 $1,952 40 $8,800 20 $3,260 20 $3,700 20 $3,240 20 $3,400 80 $19,760 40 $5,520 $1,250 314 $69,760 40 $11,520 10 $3,070 8 $2,208 8 $2,080 8 $1,952 40 $8,800 20 $3,260 20 $3,700 20 $3,240 20 $3,400 80 $19,760 40 $5,520 $1,250 314 $69,760 172 $49,536 114 $34,998 86 $23,736 70 $18,200 76 $18,544 350 $77,000 184 $29,992 114 $21,090 184 $29,808 408 $69,360 98 $24,206 172 $23,736 36 $8,892 40 $16,600 $42,900 $33,144 $3,750 2104 $525,492

1. PRELIMINARY ENGINEERING AND PROJECT COORDINATION
Electrical
Associate
Structural
Associate
Controls
Associate Project Engineer Construction Manager
Description
Project Manager Quality Control Sr. Electrical Engineer Sr. Structural Engineer Sr. Controls Engineer Civil Associate Engineer Reimbursables Engineering Assistant IV Sr Land Surveyor 2-Man Survey Field Crew Cannon Subconsultants
Total

3. Surveying and Base Mapping
Project Management
TASK 2 SUBOTALTASK 1 SUBOTAL
Data CollectionBasis of Design

2. DATA COLLECTION AND BASIS OF DESIGN
Tank Dive InspectionEnvironmental SupportGeotechnical SupportTopographic and Boundary Survey TASK 3 SUBOTAL
60% PS&E

4. ENVIRONMENTAL AND GEOTECHNICAL REVIEW
TASK 4 SUBOTAL
Project Constraints/ Design Requirements90% PS&E100% PS&E Bid Documents

5. DESIGN PHASE- PHASE 1 IMPROVEMENTS
30% Plans, Specifications & EstimateBid Review

8. Construction Phase
TASK 5 SUBOTAL
Engineering Services during Construction (ESDC)

6. Permitting and Approvals
TASK 6 SUBTOTAL

7. Bid and Award Phase
Pre-Bid ConferenceAddenda and Questions
TASK 7 SUBTOTAL
Permitting Support
TASK 8 SUBTOTAL
GRAND TOTAL (ALL Tasks)
4/22/2026

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01181.0001/813182.1 D-1

EXHIBIT D

SCHEDULE OF PERFORMANCE
I. Consultant shall perform all services and deliver all work products timely in accordance with the schedule described in Consultant’s Proposal attached hereto.

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Elena-Blanca Pressure Zone Consolidation Design and Engineering Services Cannon 36 Project Schedule / Work Plan G ID Task Name Duration Start Finish 1 Elena Blanca Pressure Zone Consolidation Project 381 days Mon 3/16/26 Mon 8/30/27 2 Task 1. Project Management 248 days Mon 3/16/26 Wed 2/24/27 3 Notice To Proceed and Contracting 2 wks Tue 3/17/26 Mon 3/30/26 4 Project Kick-off Meeting 1 day Tue 3/31/26 Tue 3/31/26 5 Site Visit 1 day Tue 3/31/26 Tue 3/31/26
6 Task 2. Data Collection and Basis of Design 15 days Wed 4/1/26 Tue 4/21/26 7 Data Collection 2 wks Wed 4/1/26 Tue 4/14/26
8 Tank Dive Inspection 2 wks Wed 4/1/26 Tue 4/14/26
9 Basis of Design 3 wks Wed 4/1/26 Tue 4/21/26
10 Task 3. Surveying 3 wks Wed 4/1/26 Tue 4/21/26
11 Task 4. Environmental and Geotechnical Review 130 days Wed 4/1/26 Tue 9/29/26 12 Biological Rsources Assessment 6 wks Wed 4/1/26 Tue 5/12/26 13 Cultrual Resources Study 4 wks Wed 4/1/26 Tue 4/28/26 14 CEQA Determination 5 mons Wed 5/13/26 Tue 9/29/26
15 Geotechnical Investigation 6 wks Wed 4/15/26 Tue 5/26/26 16 Task 5. Design Phase 120 days Wed 4/22/26 Tue 10/6/26 17 Design Requirements (Preliminary Design Report) 3 wks Wed 4/22/26 Tue 5/12/26 18 30% Plans and Specifications Preparation 4 wks Wed 5/13/26 Tue 6/9/26 19 City Review of 30% Submittal Documents 2 wks Wed 6/10/26 Tue 6/23/26 20 60% Plans and Specifications Preparation 4 wks Wed 6/24/26 Tue 7/21/26 21 City Review of 60% Submittal Documents 2 wks Wed 7/22/26 Tue 8/4/26 22 90% Plans and Specifications Preparation 3 wks Wed 8/5/26 Tue 8/25/26 23 City Review of 90% Submittal Documents 2 wks Wed 8/26/26 Tue 9/8/26 24 100% Plans and Specifications Preparation 2 wks Wed 9/9/26 Tue 9/22/26 25 City Review of 100% Submittal Documents 2 wks Wed 9/23/26 Tue 10/6/26 26 City Approval of Bid Documents 1 wk Wed 9/23/26 Tue 9/29/26 27 Task 6. Permitting and Approvals 80 days Wed 6/10/26 Tue 9/29/26 28 Task 7. Bid and Award Phase 43 days Wed 9/30/26 Fri 11/27/26 29 City Advertise for Bidding 4 wks Wed 9/30/26 Tue 10/27/26 30 Pre-Bid Meeting 1 day Wed 10/14/26 Wed 10/14/26
31 Bidding Support Services (RFIs, Addenda, etc.) 4 wks Wed 9/30/26 Tue 10/27/26 32 Bids Due 1 day Wed 10/28/26 Wed 10/28/26
33 Bid Review 2 days Thu 10/29/26 Fri 10/30/26
34 City Selection of Contractor and Contract Approval 20 days Mon 11/2/26 Fri 11/27/26 35 Task 8. Engineering Support During Construction 196 days Mon 11/30/26 Mon 8/30/27 36 Preconstruction Meeting 1 day Mon 11/30/26 Mon 11/30/26 37 Submittal and RFI Reviews 3 mons Tue 12/1/26 Mon 2/22/27 38 Construction Progress Meetings and Site Visits 9 mons Tue 12/1/26 Mon 8/9/27 39 Record Drawings 3 wks Tue 8/10/27 Mon 8/30/27

B M E B M E B M E B M E B M E B M E B M E B M E B M E B M E B M E B M E B M E B M E B M E B M E B M E B M E B M March April May June July AugustSeptemberOctoberNovemberDecemberJanuaryFebruary March April May June July AugustSeptember Qtr 2, 2026 Qtr 3, 2026 Qtr 4, 2026 Qtr 1, 2027 Qtr 2, 2027 Qtr 3, 2027 Task
Split
Milestone
Summary
Project Summary
External Tasks
External Milestone
Inactive Task
Inactive Milestone
Inactive Summary
Manual Task
Duration-only
Manual Summary Rollup
Manual Summary
Start-only
Finish-only
Progress
Deadline

PROJECT SCHEDULE

CITY OF MORRO BAY

ELENA BLANCA PRESSURE ZONE CONSOLIDATION PROJECT
CANNON
1050 SOUTHWOOD DRIVE
SLO, CA 93401
805.544.7407
Elena Blanca Design Schedule.mpp

Page 124 of 128 ends

Prepared By: JC Dept Review:

City Manager Review: JC City Attorney Review: BS
__
Staff Report
TO: Honorable Mayor and City Council DATE: May 5, 2026
FROM: John Craig, City Manager
SUBJECT: Review of Current Council Sub-Committees, Scope of Work, and Consider Discontinuing Sub-Committees that have Achieved their Intended purposes

RECOMMENDED ACTION
Review the list of Council Sub-Committees, scope of work (purpose, parameters and duration), and either confirm the current scope of work, update the scope of work or discontinue Sub-Committees that have achieved their intended purpose. Recommended to review each Sub-Committee and take action as desired to continue, update or disband.

ALTERNATIVES
This item is brought forward at the direction of the Mayor. No alternatives are recommended.

FISCAL IMPACT
There is no fiscal impact as a result of this action.

BACKGROUND/DISCUSSION
The Council Policies & Procedures Section 3.13 (“Council Sub-Committees”) states:
“From time to time it may be desirable for the City Council to appoint a sub-committee of the whole to address a particular issue. That is especially the case if the issue requires additional work or research. Per the Brown Act, sub-committees must consist of less than a quorum of the body and serve for a limited purpose and time. Therefore, the City Council subcommittees may consist of two members. Sub-committees shall report back to the full Council for discussion before any formal action can be taken on the pertinent issue. Establishing a subcommittee requires the body to define the purpose, parameters, and duration of the subcommittee. The City Clerk will keep the list of sub-committees and defined description as a record with Council liaison assignments for review annually.” Sub-Committee members serve at the direction of the City Council and while they play an important role in working on the designated issue, they do not possess any additional authority as it relates to City policy or administration. For example, staff and Sub-Committee members must bring recommendations on matters related to policy, City positions, contract approvals, and large budgetary actions back to the full Council in open session for discussion and approval.

AGENDA NO: 8.b
MEETING DATE: May 12, 2026

Page 125 of 128 ends

The current list of Council Sub-Committees and other Council assignments is included below for discussion. Some Sub-Committees have achieved their intended purposes and their scope and expected duration should be updated if the Council wants them to continue. Some older SubCommittees don’t have current descriptions and should be updated if they are going to continue.

Council should consider officially discontinuing Sub-Committees that have achieved their intended purposes. The Council may also desire to form a new Sub-Committee to address an issue that may be expected during the next fiscal or calendar year.

LIST OF CURRENT CITY COUNCIL SUB-COMMITTEES (2026)

WATER RECLAMATION FACILITY / JPA SUB-COMMITTEE
Carla Wixom Member
Zara Landrum Member
Staff Note: This Sub-Committee was formed prior to adoption of current Council Policies and Procedures and does not have a current description to define the purpose, parameters, and duration.

The city's new Water Reclamation Facility commenced operations in 2023, and the city is now moving forward with the decommissioning and demolition of the old wastewater treatment plant site. The old wastewater treatment plant was jointly owned by the City of Morro Bay and the Cayucos Sanitary District, with the City responsible for daily operation under a Joint Powers Agreement (JPA) between the two agencies. The subcommittee currently serves as the Council's liaison for monitoring the ongoing implementation, financing, and governance of the WRF project and any remaining matters under the JPA.

MORRO BAY POWER PLANT SUB-COMMITTEE
Jeff Eckles Member
Cyndee Edwards Member
Staff Note: This Sub-Committee was formed prior to adoption of current Council Policies and Procedures and does not have a current description to define the purpose, parameters, and duration.

This Sub-Committee has more recently served as the Council’s liaison for monitoring the City's relationship with Vistra Corp., the Texas-based energy company that owns the site of the former Morro Bay Power Plant. The power plant was closed in 2014, and Vistra subsequently filed an application in December 2020 to build a battery energy storage system (BESS) on an approximately 24-acre portion of the 107-acre power plant site. On April 4, 2025, Vistra sent the City a letter withdrawing its application for city entitlements to construct a BESS facility at the former power plant property in Morro Bay. Despite the withdrawal, the subcommittee remains active because significant questions remain about the future of the 107-acre site. Morro Bay's City Council unanimously adopted an urgency ordinance on January 28, 2025 temporarily prohibiting certain battery energy storage facilities within city limits, in the wake of the Vistra battery-energy plant fire in Moss Landing. The 45- day urgency ordinance, preventing applications, approvals, establishments, relocations, or expansions of grid-scale battery energy storage systems for an initial period of 45 days, was extended by Council action on February 25, 2025 through January 28, 2027. The subcommittee continues to track developments as Vistra has indicated potential intent to seek state-level approval through an alternative permitting process or pursue other potential development opportunities at the site.

OFFSHORE WIND ENERGY SUB-COMMITTEE
Carla Wixom Member
Zara Landrum Member

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Staff Note: This Sub-Committee was formed in 2019 prior to adoption of current Council Policies and Procedures and does not have a current description to define the purpose, parameters, and duration.

The Sub-Committee was formed to monitor state and federal developments related to the proposed Morro Bay Wind Energy Area (WEA) offshore the Central Coast. The Morro Bay subcommittee on Offshore Wind Energy has handled the city's involvement with energy companies since December 2022, when the U.S. Bureau of Offshore Energy Management held a sale for commercial wind farm leases in the Pacific Ocean. The subcommittee's focus is primarily on ensuring the city has a voice at the table. Key concerns include potential port infrastructure upgrades, impacts on the local fishing industry, economic development opportunities, and environmental effects on the estuary and coast.

MORRO ELEMENTARY SCHOOL SUB-COMMITTEE (formed 4/22/25, expires upon Council determination that the purpose has been fulfilled)
The purpose of the Morro Elementary School Subcommittee is to unite the community and City efforts for the accomplishment of the City Council goal to acquire the Morro Elementary School site and/or work with a developer on this project. To this end, two council members are appointed to facilitate communication and cooperation between the citizen’s group, Friends of Morro Elementary, and the Community Development Director regarding applicable State law, potential financial resources, and the San Luis Coastal Unified School District. The City Council as a whole will be kept up to date weekly, if not more frequently, as events unfold. This subcommittee’s work is complete when an agreement is signed between the School District and the City; or it is determined that acquisition is beyond the City’s reach. At either conclusion, the City Council will revisit whether the subcommittee has a related purpose or should be terminated.

Zara Landrum Member
Bill Luffee Member
Staff Note: The current description identifies reaching a signed agreement as one of the expected conclusions. Council may want to update the expected duration in light of the purchase agreement entered into with the School District that provides for a six month due diligence period where the property’s condition and suitability will be investigated.

SHARED FIRE SERVICES SUB-COMMITTEE (formed 11/12/25, expires upon Council determination that the purpose has been fulfilled)
The Shared Fire Services Sub-committee is created for the purpose of determining the scope of a shared services agreement with Los Osos Community Services District (LOCSD).  Parameters: Under the City Council’s collective policy direction, the Sub-committee will collaborate with staff in identifying opportunities and exploring options for shared services for fire and emergency medical responses which may include hiring of personnel, providing emergency response, Fire Marshal services, and Emergency Operations Center coverage.

The sub-committee is expected to research pertinent topics, engage with the community and share information with the Council, staff and the community.  Duration: The Sub-committee will function for the duration necessary to enable the Council to decide on the scope of the response to the letter of Interest received and negotiation of an agreement if both agencies determine the proposal is feasible.

Carla Wixom Member
Jeff Eckles Member
Staff Note: As previously reported, the City has received notice from LOCSD that they have moved

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forward with contracting with CAL FIRE directly and are no longer pursuing a potential shared services agreement with the City. This Sub-Committee should be formally recognized as disbanded absent an update to the scope and expected duration.

CONCLUSION
Review and discuss the current scope of work and accomplishments for each Council Sub-Committee and decide to continue, update or discontinue Sub-Committees that have achieved their intended purpose. Recommended to review each Sub-Committee and take action as desired to continue, update or disband.

ATTACHMENT(S)

1. Link to Council Policies & Procedures

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Morro Bay City CouncilMay 12, 2026

Morro Bay City Council
May 12, 2026