CITY OF MORRO BAY
City Council Regular Meeting Agenda
Tuesday, August 25, 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. Morro Elementary School
4. RECOGNITION AND PRESENTATIONS
4.a Hunger Action Month Proclamation
5. PUBLIC COMMENT
Members of the audience wishing to address the Council on City business matters not on the agenda may do so at this time. For those desiring to speak on items on the agenda, but unable to stay for the item, may also address the Council at this time.
Public comment is an opportunity for members of the public to provide input to the governing body. To increase the effectiveness of the Public Comment Period, the City respectfully requests the following guidelines and expectations be followed:
•
Those desiring to speak are asked to complete a speaker slip, which are located at the entrance, and submit it to the City Clerk. However, speaker slips are not required to provide public comment.
•
When recognized by the Mayor, please come forward to the podium to speak.
Though not required, it is helpful if you state your name, city of residence and whether you represent a business or group. Unless otherwise established by the Mayor, comments are to be limited to three minutes. •
All remarks should be addressed to Council, as a whole, and not to any individual member thereof.
•
The Council respectfully requests that you refrain from making slanderous, profane or personal remarks against any elected official, commission and/or staff.
•
Please refrain from public displays or outbursts such as unsolicited applause, comments or cheering.
•
Any disruptive activities that substantially interfere with the ability of the City Council to carry out its meeting will not be permitted and offenders will be requested to leave the meeting.
•
Your participation in City Council meetings is welcome and your courtesy will be appreciated.
•
The Council in turn agrees to abide by its best practices of civility and civil discourse according to Resolution No. 07-19.
•
6. CONSENT AGENDA
Unless an item is pulled for separate action by the City Council, the following actions are approved without discussion. The public will also be provided an opportunity to comment on consent agenda items.
Recommended Action
Approve Consent Agenda Items 6.a through 6.f as submitted.
6.a Approval of Proclamations
(City Clerk)
Recommended Action
Approve as submitted.
1. Proclamation declaring September 2026 to be "Hunger Action Month" 5
6.b Water Reclamation Facility Project WRF Quarterly Report 6 (Public Works Department)
Recommended Action
Receive and file the Fiscal Year (FY) 2026 Quarterly Report for April – June for the Water Reclamation Facility Program (WRF Program).
6.c Designation of Voting Delegate and Alternate at League of California Cities 2026 Annual Conference Business Meeting and provide direction as necessary
13 (City Clerk)
Recommended Action
Select the voting delegate and up to two alternate voting delegates for the upcoming business meeting to be held at the League of California Cities Annual Conference from City attendees Mayor Wixom, Council Member Landrum, and City Manager Craig; and
1. Authorize the City Clerk to complete the League of California Cities’ online submission form attesting that council action was taken and affirming the selection of the voting delegate(s).
2. 6.d Quarterly Update on the Status on City Council 2025-2027 Goals 45 (City Manager)
Recommended Action
Receive an update from staff on the City’s progress on City goals established in March 2025.
6.e Easement Agreement and Deed Between Morro Bay Power Company LLC and the City of Morro Bay for the Recycled Water Facilities Infrastructure 52 (City Attorney)
Recommended Action
Approve the easement agreement and deed (Agreement) between Morro Bay Power Company LLC and the City of Morro Bay
necessary for the implementation of the Recycled Water Project, in substantially the form attached, subject to review and approval by the City Attorney as to form and legal effect.
1. Authorize the City Manager to execute the Agreement and related documents and make any non-substantive amendments consistent with the terms approved by Council, subject to review and approval by the City Attorney as to form and legal effect.
2. 6.f GSI Extraction Well Project Agreement Amendment No. 1 109 (Public Works Department)
Recommended Action
Authorize the City Manager to execute Amendment No. 1 with GSI Water Solutions (GSI) to extend the term of the agreement and increase contract budget in the amount of $53,188.00 for additional hydrogeologic support services on the Morro Basin Wellfield Rehabilitation Project.
7. PUBLIC HEARING ITEMS
None.
8. BUSINESS ITEMS
8.a Acceptance of the Morro Elementary School Site Due Diligence Report; Determination Regarding the City's Intent to Purchase the Property; and Direction to Staff Regarding Close of Escrow
117
(City Manager)
Recommended Action
Receive and accept the Morro Elementary School Site Due Diligence Report; and
1. Make a determination, pursuant to Section 1.5 of the Purchase and Sale Agreement, whether to find the Property suitable for City purposes and confirm the City’s intent to purchase the Property and proceed through the due diligence period; and
2. 3. Based on the determination, provide direction to staff on next steps.
Proceed to close of escrow and return to the City Council in October with the final terms of the purchase, including the potential for seller financing, or
a.
Inform the School District that the Council has determined that the site is not suitable for its purposes.
b.
9. COUNCIL DECLARATION OF FUTURE AGENDA ITEMS
10. ADJOURNMENT
The next Regular Meeting will be held on September 8, 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.
A PROCLAMATION OF THE CITY COUNCIL
OF THE CITY OF MORRO BAY
DECLARING SEPTEMBER 2026 TO BE
“HUNGER ACTION MONTH”
CITY COUNCIL
City of Morro Bay, California
WHEREAS, each September, the nationwide Hunger Action Month campaign unites millions of people across the country to raise awareness and provide nutritious food to neighbors facing hunger; and
WHEREAS, the region’s high cost of living frequently forces many of our neighbors in San Luis Obispo County to make impossible choices between paying for essential needs, such as rent, and buying groceries; and
WHEREAS, the SLO Food Bank provides food to 50,000 neighbors every month—a 58% increase in individuals served over the past five years; and WHEREAS, the SLO Food Bank’s Hunger Relief Network reaches more than 1 in 6 county residents, including over 3,700 neighbors each month along the North Coast; and WHEREAS, this work is made possible by a collaborative network of 70 nonprofit partners who distribute food directly within their own neighborhoods, including Estero Bay Kindness Coalition, Coastlands Vineyard Church, Morro Bay Lions Foundation, and Rock Harbor Fellowship in Morro Bay; and
WHEREAS, the SLO Food Bank’s mission is made possible by the profound generosity of our community, with more than 70% of the organization’s funding coming directly from local individuals, businesses, and nonprofits; and WHEREAS, the expansive reach and daily operations of the SLO Food Bank are sustained by the dedication of over 1,300 active volunteers who generously give their time to nourish their community; and
WHEREAS, Hunger Action Month serves as a countywide call to action, inviting all residents to learn, raise awareness, and contribute their time and resources to help feed SLO County together.
NOW, THEREFORE, BE IT RESOLVED that the Morro Bay City Council does hereby proclaim September 2026 as “Hunger Action Month” in Morro Bay.
IN WITNESS WHEREOF I have hereunto
set my hand and caused the seal of the
City of Morro Bay to be affixed this 25th day
of August, 2026
_______________________________
CARLA WIXOM, MAYOR
City of Morro Bay, California
Prepared By: DH Dept Review:
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council
FROM: Damaris Hanson, Utilities Division Manager
SUBJECT: Water Reclamation Facility Project WRF Quarterly Report
RECOMMENDED ACTION
Receive and file the Fiscal Year (FY) 2026 Quarterly Report for April – June for the Water Reclamation Facility Program (WRF Program).
FISCAL IMPACT
None.
DISCUSSION
Fiscal year 2026 quarterly report Q4 (April 1 – June 30, 2026) The purpose of the WRF Quarterly report is to provide project status updates on schedule, budget, key activities, and critical path items as they relate to the WRF program. While the report is intended to focus on the Recycled Water project, it also contains historical information regarding budget and funding for the overall WRF Program. The FY 26 Q4 Quarterly Report includes information on project activities between April 1, 2026 and June 30, 2026. (Attachment 1).
ATTACHMENT(S)
1. FY 26 Q4 (April - June 2026) Report for WRF Program
AGENDA NO: 6.b
MEETING DATE: August 25, 2026
MAY 6, 2026 1
City of Morro Bay
Water Reclamation Facility Program
QUARTERLY REPORT
APRIL 1, 2026 THROUGH JUNE 30, 2026
INTRODUCTION
The Recycled Water Facilities (RWF) project is a portion of the larger Water Reclamation Facility (WRF) Program. The RWF project is anticipated to be complete by early 2028. This quarterly report includes updates on project status, schedule, program funding, and program budget. The current program budget is $159.84 million and $147.57 million has been spent to date.
RECYCLED WATER PROJECT STATUS
The RWF project is currently in the design phase, and the following activities were completed during this quarter:
Recycled Water Project Status Update (April 1, 2026 – June 30, 2026) • Environmental/Permitting
o Ongoing activities and upcoming timelines
▪ On June 29, 2026 the City submitted a letter to Environmental Protection Agency (EPA) and State Historic Perseveration Office (SHPO). The letter included the Phase 3 Report Addendum, which includes details on the negative results from the additional archeological testing completed in August 2025 for the proposed recycled water pipeline. The letter also included mitigation measures for the anticipated adverse affects associated with monitoring well construction. The City is coordinating with the EPA and SHPO on the proposed mitigation approach of additional data recovery.
• Recycled Water Permitting
o Activities completed
▪ On April 20, 2026, the Project Team met with the Division of Drinking Water (DDW) to discuss the NDMA/scavenging demand and operator certification requirements. ▪ During this quarter, the City continued to coordinate with the Regional Water Quality Control Board (RWCQB) and DDW on the Aquifer Storage and Recovery (ASR) Permit, Groundwater Replenishment Reuse Project (GRRP) Permit, and Engineering Report.
o Ongoing activities and upcoming timelines
▪ On May 11, 2026, the City met with the California Coastal Commission (CCC) to discuss the City’s Agricultural Mitigation requirements for the WRF Project and the potential to fulfil those requirements through the Chorro Levee Project. Following
QUARTERLY REPORT | WATER RECLAMATION FACILITY PROGRAM | CITY OF MORRO BAY MAY 6, 2026 2
this meeting, the City requested that CCC provide a minimum dollar amount that the City would be required to contribute toward a project to satisfy its agricultural mitigation requirements. CCC determined the City must provide between $200,000 - $250,000 towards a project to satisfy the requirement. The City is coordinating with the Coastal San Luis Resource Conservation District (RCD) on next steps. ▪ During this quarter, the project hydrogeologist submitted the ASR permit application for the Interim Injection Test planned for the next phase of injection wells. The RWCQB provided feedback and requested additional information. The project hydrogeologist is preparing the additional information requested. • Hydrogeologic Analysis and Engineering Design
o Ongoing activities and upcoming timelines
▪ During this quarter, the City continued to work towards obtaining the modified easements for the additional two or three injection wells and monitoring wells to be included in the initial implementation phase of the project. In April 2026, the Project Team finalized the appraisal documentation for the easement swap and provided the property owner (Vistra) an offer. This offer was accepted in April 2026, and the City is currently in the process of negotiating terms of the agreement/deed. ▪ On May 1, 2026, the bid packages (including bid docs, front ends, specs, and plans) for the drilling of the monitoring and injection wells were circulated for internal review by the Project Team. The Project Team continued to finalize the bid docs throughout the quarter and are anticipating release of the monitoring well bid docs in August 2026 and the injection well drilling bid docs in September 2026. • Funding/Financing
o Ongoing activities and upcoming timelines
▪ City Staff and the Recycled Water Program Team are coordinating with the funding financing agencies to provide quarterly reports, disbursement packages, environmental documentation, and other required materials. ▪ The City continued to prepare grant funding match and disbursement packages for the Title XVI grant.
MAY 6, 2026 3
RECYCLED WATER PROJECT SCHEDULE
Figure 1. Recycled Water Summary Schedule
MAY 6, 2026 4
PROGRAM BUDGET
Table 1 lists actual expenditures for each program component and the percent of the budget expended. The WRC and Conveyance Facilities components of the project were closed out in 2024.
Table 1. WRF Program Expenditures
Program
Component
Previous
Total
Expenditures
Jan-Mar 2026
Expenditures (1)
Total Expenditures
To Date
FY 25/26 Budget
(2)
Percent
Budget
Expended
RWF $3,550,888 $61,617 $3,612,505 $9,424,174 38%
General Project $25,070,830 $75,502 $25,146,332 $30,968,609 81% WRC Plant $77,895,236 $0 $77,895,236 $79,123,216 98%
Conveyance $40,918,622 $0 $40,918,622 $40,324,350 101%
Total $147,435,576 $137,119 $147,572,695 $159,840,349 92% (1) April-June 2026 total expenditures as tallied on the Accounts Payable Report run on July 6, 2026, including all invoices accrued through June 30, 2026.
(2) See page 352 of the FY 24/25 budget adopted by Council. No additional funds for this project were added with the approval of the FY 25/26 budget.
QUARTERLY REPORT | WATER RECLAMATION FACILITY PROGRAM | CITY OF MORRO BAY MAY 6, 2026 5
PROGRAM FUNDING
Table 2. WRF Program Funding Sources
Funding
Agency/
Program(1)
Funding Type Funding
Awarded
Spent to
Date(2)
Funding
Available Notes
SWRCB
CWSRF/WRFP
CWSRF
Construction Loan $61,604,638 $59,910,849 $1,693,789 Terms: 0.9%, 30 years WRFP Water
Recycling Grant $5M $5M $0
SWRCB
CWSRF
Construction Loan
Amendment $21,172,000 $0 $21,172,000 Terms: 0.9%, 30 years SWRCB
CWSRF Planning Loan $10,300,000 $10,300,000 $0 Terms: 0.9%, 30 years EPA WIFIA Loan $61,700,336 $46,259,157 $15,441,179 Terms: 0.83%, 35 years SWRCB WRFP Recycled Water
Planning Grant $75,000 $75,000 $0 Costs reimbursed upon request USBR Title XVI Grant $9,310,095 $0 $9,310,095
Executed Agreement.
Grant amount is
subject to a 75% cost
share match.
DWR IRWM Grant $1,200,000 $0 $1,200,000
Executed Agreement.
Grant amount is
subject to a $3.74M
non-State cost share
and a $1.78M cost
share from any source.
City of Morro
Bay Water/Sewer Fund $26,027,687 $26,027,687 $0
May be eligible for loan
reimbursement within
program deadlines.
All Sources Total $196,389,756 $147,572,693 $48,817,063 (1) Abbreviations: SWRCB – State Water Resources Control Board; WRFP – Water Recycling Funding Program; WIFIA – Water Infrastructure and Finance Innovation Act; DWR – Department of Water Resources; CWSRF – Clean Water State Revolving Fund; EPA – Environmental Protection Agency; WIFIA – Water Infrastructure Finance & Innovation Act; USBR – United States Bureau of Reclamation; IRWM – Integrated Regional Water Management.
(2) Updated through March 31, 2026.
OTHER PROGRAM UPDATES
WWTP Decommissioning
• Although the WWTP Decommissioning is part of the WRF Project, it is funded separately from
QUARTERLY REPORT | WATER RECLAMATION FACILITY PROGRAM | CITY OF MORRO BAY MAY 6, 2026 6
the other phases of the project and is not included in the budget and expenditures listed in the tables above.
• The City intended to complete the Phase 4 (WWTP Decommissioning) archeological investigations in August 2025 at the same time as the Phase 3 (Recycled Water Facilities) investigations to save on mobilization costs. However, the City was not able to conduct the Phase 4 investigations at this time because consent from Cayucos Sanitary District was required on the jointly-owned property and permission was not granted as other aspects of dissolution of the Joint Powers Authority Agreement were still ongoing.
• The City has negotiated with Cayucos Sanitary District, co-owner of the facilities and property, to buy out their share of the property. Escrow ended on July 2, 2026. The purchase of the property allows the City to move forward with archeological investigations and other demolition activities.
The Phase 4 archeological investigations were completed in early July 2026 with negative results for archeological resources.
Extraction Well Siting
• The Extraction Well Project is funded through the Water Fund and is separate from the WRF Project. The project is not included in the budget and expenditures listed in the tables above. • The property owner of the preferred extraction well site is exercising their right to complete their own appraisal for the proposed easement. The City is waiting for completion of this appraisal prior to negotiations.
Historical information on the WRF Program and previous quarterly reports are available on the program website: https://morrobaywrf.com/.
Prepared By: DS Dept Review: DS
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council
FROM: Dana Swanson, City Clerk
SUBJECT: Designation of Voting Delegate and Alternate at League of California Cities 2026 Annual Conference Business Meeting and provide direction as necessary
RECOMMENDED ACTION
1. Select the voting delegate and up to two alternate voting delegates for the upcoming business meeting to be held at the League of California Cities Annual Conference from City attendees Mayor Wixom, Council Member Landrum, and City Manager Craig; and
2. Authorize the City Clerk to complete the League of California Cities’ online submission form attesting that council action was taken and affirming the selection of the voting delegate(s).
ALTERNATIVE(S)
The Council may choose not to select any delegates; however, the City would not have voting rights at the annual business meeting.
BACKGROUND
In order to conduct the annual League of California Cities’ business meeting, held in conjunction with the League of California Cities Annual Conference, every represented city must have its city council designate a voting representative who will be registered at the conference and present at the annual business meeting (the General Assembly). Each member city may also appoint up to two alternates, one of whom may vote in the event the designated voting delegate is unable to serve in that capacity.
Conference attendance provides an exceptional opportunity for elected officials to hear from leading experts, expand their knowledge regarding municipal government, and view innovative resources that could benefit the delivery of services, enhance resources, and strengthen the City.
DISCUSSION
The League of California Cities 2026 Annual Conference and Expo is being held September 23 - 25, 2026, in Anaheim, California. The Opening General Session is tentatively scheduled for 1:30 p.m. on Wednesday, September 23, with educational sessions Wednesday afternoon through noon Friday. The League’s Annual Business Meeting and General Assembly is scheduled for AGENDA NO: 6.c
MEETING DATE: August 25, 2026
2 8:30 a.m. on Friday, September 25.
The delegates in attendance at the General Assembly are asked to vote on resolution(s) submitted by member agencies and developed for the Assembly’s consideration. If adopted, then the resolutions are used to set League policy or to provide direction for the League’s work efforts in the coming year.
This year one resolution is being offered for membership consideration, the details of the proposed resolution are provided in Attachment 1 (beginning on page 8).
1. A RESOLUTION OF THE GENERAL ASSEMBLY OF THE LEAGUE OF CALIFORNIA
CITIES CALLING FOR A WORKING GROUP TO CONSIDER A STATE CONSTITUTIONAL
AMENDMENT OR OTHER FORM OF INITIATIVE TO ENSURE FINAL LOCAL AUTHORITY
OVER HOUSING AND LAND USE DECISIONS
Source: City of Murrieta
Concurrence of five or more cities/city officials Cities/city officials: City of Banning; City of Calimesa; City of Canyon Lake; City of Moreno Valley; City of Norco; City of Torrance; Crystal Ruiz, Mayor, City of San Jacinto; Jessica Alexander, Mayor, City of Temecula Referred to: Housing, Community, and Economic Development Policy Committee In order to vote at the League of California Cities 2026 Annual Conference Business Meeting, the City Council must select a voting delegate. In the event the designated voting delegate is unable to serve in this capacity, the City Council may appoint up to two alternate voting delegates. The voting delegate must be registered to attend the conference; however, they may register for Friday only. Currently, Mayor Wixom, Council Member Landrum and City Manager Craig are registered to attend the League of California Cities Annual Conference.
CONCLUSION
Staff recommend the City Council select the voting delegate and up to two alternate voting delegates for the upcoming business meeting to be held at the League of California Cities Annual Conference from City attendees Mayor Wixom, Council Member Landrum, and City Manager Craig.
ATTACHMENT(S)
1. 2026 League of California Cities Resolution Packet
2025-2026
CAL CITIES OFFICERS
President
Gabe Quinto
Mayor
El Cerrito
First Vice President
Teresa Acosta
Council Member
Carlsbad
Second Vice President
David Cohen
Council Member
San Jose
Immediate Past President
Lynne B. Kennedy
Mayor Pro Tem,
Rancho Cucamonga
Executive Director
and CEO
Carolyn M. Coleman
1400 K Street, Suite 400, Sacramento, CA 95814 • 916.658.8200 • calcities.org August 10, 2026
TO: Cal Cities Members
RE: Cal Cities 2026 Resolution Packet
Sixty days before the Cal Cities Annual Conference and Expo, Cal Cities members may submit resolutions on issues of importance to cities. This year, Cal Cities received one resolution by the July 25 deadline.
The attached packet contains the proposed resolution, background information, supporting letters from cities and city officials, and an analysis of the resolution by Cal Cities. The packet includes detailed information on the resolution process and the next steps for the resolution.
We encourage each city council to consider the resolution and determine a position so your voting delegate can represent your city’s position on the resolution.
Voting Delegates: City councils must appoint a voting delegate to vote during the General Assembly. Each city may also appoint up to two alternate delegates. If your city has not already done so, please appoint your voting delegate by Tuesday, Sept. 1, 2026. The voting delegate packet contains more information.
The 2026 General Assembly will be held Friday, Sept. 25, at 8:30 a.m. in the Anaheim Convention Center during the Annual Conference and Expo.
For questions about resolutions, voting delegates, or the General Assembly, please contact Zach Seals.
2026
Resolution
Packet
2026 Resolution Packet
Information on 2026 Resolutions Process
Consideration by Policy Committee (pre-conference)
Per the Cal Cities bylaws, Cal Cities President Gabe Quinto has referred the submitted resolution to the Housing, Community, and Economic Development Committee. The committee will meet on Thursday, Sept. 17, at 10 a.m. via Zoom to review the resolution and make a recommendation that will be sent to the Resolutions Committee. A public comment period will be held during the meeting. Register for the meeting here.
A list of recommendations the policy committee may make during its meeting is on page two of this packet.
Consideration by Resolutions Committee (during conference) On Thursday, Sept. 24, at 1:00 p.m. the Resolutions Committee will meet to review the resolution and the recommendation of the policy committee.
The Resolutions Committee consist of one representative from each of Cal Cities caucuses, departments, divisions, and policy committees, as well as up to ten additional appointments made by the Cal Cities President. A public comment period will be held during the meeting. Refer to the onsite conference program for the location.
A list of recommendations the Resolutions Committee may make during its meeting is on page two of this packet.
Consideration by the General Assembly (during conference) The General Assembly will convene on Friday, Sept. 25, at 8:30 a.m. to consider any resolutions the Resolutions Committee has forwarded. To vote during the General Assembly, voting delegates must have checked in at the voting delegate booth.
Conference attendees will receive materials for the General Assembly on the evening of Thursday, Sept. 24. For more information on voting and discussion procedures during the General Assembly, see page three of this packet.
Petitioned Resolutions (during conference)
The petitioned resolution is an alternate method to introduce policy proposals during the annual conference. To initiate a petitioned resolution, voting delegates from 10% of member cities must sign the petition. The resolution and signatures are due at least 24 hours before the beginning of the General Assembly. Voting delegates who have checked in at the voting delegate booth can receive more information on petitioned resolutions at the booth onsite.
1 2026 Resolution Packet
Policy Committee and Resolutions Committee Actions
The submitted resolution will be heard by the policy committee to which it was assigned, and the Resolutions Committee. The table below shows what recommendations these bodies may make on the resolution.
Policy Committee Actions Resolutions Committee Actions
Approve Approve
Disapprove* Disapprove*
No Action No Action
Amend and approve Amend and approve
Refer to appropriate policy committee
for further study*
Approve as amended
Refer as amended to appropriate
policy committee for further study*
Refer to appropriate policy committee
for further study*
Refer as amended to appropriate
policy committee for further study*
Approve with additional
amendment(s)
Additional amendments and refer to
appropriate policy committee for
further study*
*If a resolution is disapproved or referred for further study by all policy committees to which it is assigned and the Resolutions Committee, it will not proceed to the General Assembly.
2 2026 Resolution Packet
General Assembly Voting and Discussion Procedures
Discussion Procedures:
Discussion procedures during the General Assembly are guided by two calendars:
the Consent Calendar and the Regular Calendar. As seen below, resolutions are calendared by the recommendations they receive from policy committees and the Resolutions Committee.
For General Resolutions:
Policy Committee
Recommendation
Resolutions Committee
Recommendation Calendar
Approve Approve Consent Calendar
Approve Disapprove or refer Regular Calendar
Disapprove or refer Approve Regular Calendar
Disapprove or refer Disapprove or refer Does not proceed to General Assembly
For Petitioned Resolutions:
Policy Committee
Recommendation Resolutions Committee Action Calendar
N/A
Approve Regular Calendar
Disapprove or Refer Regular Calendar
Disqualified Does not proceed to General
Assembly
Items on the Consent Calendar will be presented as one motion during the General Assembly from the Resolutions Committee chair. Unless an item on the Consent Calendar is set aside by the majority of the General Assembly, a vote will be taken on the whole calendar. If an item is set aside, it will be opened for discussion, followed by a vote.
Items on the Regular Calendar will be presented individually by the Resolutions Committee chair. After a recommendation is presented by the Resolutions Committee chair, the resolution will be opened for discussion by the General Assembly. A vote will take place following discussion.
Voting Procedures:
Per Cal Cities Bylaws Article XII, Sec. 2, all votes will be conducted by voice vote first. If the presiding official cannot determine the outcome, a vote will be taken by an alternative method, typically a raise of voting cards by voting delegates. A roll call vote may be called for by delegates of ten percent or more of the General Assembly.
3 2026 Resolution Packet
2026 Resolution
1. Resolution No. 1 submitted by City of Murrieta
• Letters of concurrence submitted by:
i. City of Banning;
ii. City of Calimesa;
iii. City of Canyon Lake;
iv. City of Moreno Valley;
v. City of Norco;
vi. City of Torrance;
vii. Crystal Ruiz, Mayor, City of San Jacinto;
viii. Jessica Alexander, Mayor, City of Temecula
• Referred to Housing, Community, and Economic Development Committee
• Policy Committee Recommendation:
• Resolutions Committee Recommendation:
4 2026 Resolution Packet
Resolution No. 1
Submitted by City of Murietta
5 2026 Resolution Packet
1. A RESOLUTION OF THE GENERAL ASSEMBLY OF THE LEAGUE OF CALIFORNIA CITIES
CALLING FOR A WORKING GROUP TO CONSIDER A STATE CONSTITUTIONAL
AMENDMENT OR OTHER FORM OF INITIATIVE TO ENSURE FINAL LOCAL AUTHORITY OVER
HOUSING AND LAND USE DECISIONS
Source: City of Murrieta
Concurrence of five or more cities/city officials
Cities/city officials: City of Banning; City of Calimesa; City of Canyon Lake; City of Moreno Valley; City of Norco; City of Torrance; Crystal Ruiz, Mayor, City of San Jacinto; Jessica Alexander, Mayor, City of Temecula
Referred to: Housing, Community, and Economic Development Policy Committee WHEREAS, California cities have historically been responsible for adopting general plans and zoning regulations, reviewing housing development proposals, and providing or coordinating the streets, water, wastewater, public safety, parks, transportation, and other infrastructure and services necessary to support responsible, environmentally sound, and well-planned residential growth; and
WHEREAS, the League of California Cities is dedicated to protecting and expanding local control for municipalities across the state to ensure their orderly growth and development; and
WHEREAS, the League of California Cities recognizes that local zoning is a primary function of cities and an essential component of home rule, and that a city’s general plan should guide its land use planning and strategic decision-making free from pre-emption by the state; and
WHEREAS, increasingly prescriptive statewide housing mandates and development approval requirements can override locally adopted plans, zoning standards, and public review procedures without adequately accounting for differences that exist in each unique jurisdiction in infrastructure capacity, water availability, wildfire and evacuation risks, environmental constraints, fiscal impacts, public service needs, and community priorities; and
WHEREAS, California’s housing goals can be more effectively advanced through state funding, streamlined environmental requirements, and voluntary partnerships that support housing production while preserving the authority of locally elected officials to determine how and where housing is best planned and approved; NOW, THEREFORE, BE IT RESOLVED, by the General Assembly of the League of California Cities, assembled during the Annual Conference in Anaheim, California, on September 25, 2026, that the League of California Cities support the development and advancement of a state constitutional amendment or other legislative, policy, or ballotbased strategies that restore and strengthen local authority over housing and land use matters within municipal boundaries, including general plans, housing elements, zoning, density, design and development standards, project siting, and the approval or denial of housing development applications; and
6 2026 Resolution Packet
BE IT FURTHER RESOLVED, that any constitutional amendment or alternative strategy should preserve the State’s authority to establish broad statewide housing goals and enforce constitutional and civil rights, fair housing requirements, building and life-safety standards, and generally applicable environmental protections, while protecting cities from state actions that compel, through funding conditions or state law, the approval of housing developments that are inconsistent with locally adopted requirements; override local zoning or density standards; or invalidate locally adopted housing or land use decisions when a city has planned in good faith to accommodate its regional housing needs allocation and maintains adequate capacity for housing at all income levels; and BE IT FURTHER RESOLVED, that the League of California Cities consider establishing a statewide working group or other appropriate committee(s) to evaluate and develop a proposed constitutional amendment or other legislative, policy, or ballot-based strategies to restore and strengthen local authority over housing and land use matters including but limited to: conducting appropriate legal, fiscal, and policy analyses; engaging cities and other stakeholders; and building a statewide coalition of proponent supporters in preparation for; the November 2030 General Election, or within another reasonable time frame as determined by the working group.
7 2026 Resolution Packet
Resolution No. 1: Background
Information
8 2026 Resolution Packet
Background Information for Resolution
Source: City of Murrieta
Background:
California cities are responsible for planning residential growth, adopting general plans and zoning regulations, reviewing development proposals, and providing or coordinating the infrastructure and public services necessary to support new housing. Since 2010, the State has enacted more than 500 housing-related laws that have increasingly shifted housing and land use authority away from local governments. These laws have expanded by-right development, limited locally adopted standards and review processes, and established enforcement mechanisms, including the builder’s remedy, that may override local plans and zoning. Although these measures are frequently presented as solutions to housing affordability, many increase development capacity or restrict local review without delivering the meaningful production of housing needed to address the housing crisis.
At the same time, the State has continued to prioritize increased development capacity without adequately accounting for the infrastructure, public services, economic realities, and safety measures necessary to support housing growth.
State mandates often fail to reflect local conditions, including roadway and utility capacity, water availability, wildfire exposure, environmental limitations, fiscal impacts, and the availability of essential services. Cities are consequently required to accommodate additional housing while receiving no funding or assistance to address the resulting infrastructure and service demands.
Local elected officials are directly accountable to the residents who experience the effects of development decisions and are responsible for balancing housing production with infrastructure capacity, public safety, environmental protection, fiscal sustainability, and community needs. Cities of all types in California have been grappling with this dynamic, ranging from urban to rural, coastal to inland, small to large, northern to southern, voicing concerns to legislative representatives with minimal responsiveness. This is an issue of statewide concern that needs the strength and diversity of the League of California Cities to pursue a long-term solution.
The proposed resolution directs the League of California Cities to establish a statewide working group to evaluate a constitutional amendment or other legislative, policy, or ballot-based strategies to restore and strengthen local authority over housing and land use decisions. The working group would be tasked with developing a more balanced framework that preserves the State’s role in establishing broad housing goals and enforcing constitutional, civil rights, fair housing, building, life-safety, and environmental requirements, while restoring meaningful local authority to allow cities to determine how statewide housing
9 2026 Resolution Packet
objectives should be implemented in a manner that reflects local conditions and community priorities while continuing to support responsible housing production.
As the primary statewide organization representing California cities, the League is uniquely positioned to lead this effort. Its established policy, legal, legislative, communications, and advocacy networks enable it to convene municipalities, evaluate potential strategies, conduct legal and fiscal analyses, build consensus, engage stakeholders, and coordinate with statewide decision-makers. League leadership would help ensure that any recommendation reflects the collective interests of California municipalities and would provide the credibility, organizational capacity, and statewide reach necessary to advance a viable strategy.
10 2026 Resolution Packet
Resolution No. 1: Letters of
Concurrence
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13 July 23, 2026
President Gabe Quinto
League of California Cities
1400 K Street, Suite 400
Sacramento, CA 95814
Subject: Support for a Resolution Establishing a Working Group to Evaluate a State Constitutional Amendment or Other Initiative to Restore Local Housing and Land Use Authority Dear President Quinto,
The City of Murrieta is sponsoring a resolution for consideration by the General Assembly of the League of California Cities to establish a statewide working group to evaluate a constitutional amendment or other legislative, policy, or ballot-based strategies to restore and strengthen local authority over housing and land use decisions.
The proposed resolution, together with the required background materials, will be submitted to Cal Cities for consideration at the 2026 Annual Conference in Orange County on September 24 and
25. The resolution would direct the League to convene a working group to evaluate potential approaches for addressing the increasingly broad and prescriptive state mandates affecting local housing, zoning, development standards, and project approval authority.
On behalf of the City of Canyon Lake, this letter confirms our support for the City of Murrieta’s submission of the proposed resolution and its consideration by the League of California Cities General Assembly at the 2026 Annual Conference.
Sincerely,
Arron Brown
City Manager
City of Canyon Lake
14 July 23, 2026
President Gabe Quinto
League of California Cities
1400 K Street, Suite 400
Sacramento, CA 95814
Subject: Support for a Resolution Establishing a Working Group to Evaluate a State Constitutional Amendment or Other Initiative to Restore Local Housing and Land Use Authority Dear President Quinto,
The City of Murrieta is sponsoring a resolution for consideration by the General Assembly of the League of California Cities to establish a statewide working group to evaluate a constitutional amendment or other legislative, policy, or ballot-based strategies to restore and strengthen local authority over housing and land use decisions.
The proposed resolution, together with the required background materials, will be submitted to Cal Cities for consideration at the 2026 Annual Conference in Orange County on September 24 and 25. The resolution would direct the League to convene a working group to evaluate potential approaches to address increasingly broad and prescriptive state mandates affecting local housing, zoning, development standards, and project approval authority.
On behalf of the City of Moreno Valley, this letter confirms our support for the City of Murrieta’s submission of the proposed resolution and its consideration by the League of California Cities General Assembly at the 2026 Annual Conference.
Sincerely,
Brian Mohan
City Manager
City of Moreno Valley
15 July 22, 2026
President Gabe Quinto
League of California Cities
1400 K Street, Suite 400
Sacramento, CA 95814
Subject: Support for a Resolution Establishing a Working Group to Evaluate a State Constitutional Amendment or Other Initiative to Restore Local Housing and Land Use Authority
Dear President Quinto,
The City of Murrieta is sponsoring a resolution for consideration by the General Assembly of the League of California Cities to establish a statewide working group to evaluate a constitutional amendment or other legislative, policy, or ballot-based strategies to restore and strengthen local authority over housing and land use decisions.
The proposed resolution, together with the required background materials, will be submitted to Cal Cities for consideration at the 2026 Annual Conference in Orange County on September 24 and 25. The resolution would direct the League to convene a working group to evaluate potential approaches for addressing the increasingly broad and prescriptive state mandates affecting local housing, zoning, development standards, and project approval authority.
On behalf of the City of the Norco, this letter confirms our support for the City of Murrieta’s submission of the proposed resolution and its consideration by the League of California Cities General Assembly at the 2026 Annual Conference.
Sincerely,
Kevin Bash
City Council Member
(951) 768-8981
16
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18
19
20 July 23, 2026
Mr. Gabe Quinto, President
League of California Cities
1400 K Street, Suite 400
Sacramento, CA 95814
Subject: Support for the City of Murrieta's Resolution Establishing a Working Group to Evaluate a State Constitutional Amendment or Other Initiative to Restore Local Housing and Land Use Authority Dear President Quinto:
I am writing in my individual capacity as Mayor of the City of Temecula to express my strong support for the City of Murrieta's proposed resolution for consideration by the General Assembly of the League of California Cities at the 2026 Annual Conference.
The proposed resolution presents an important opportunity to thoughtfully evaluate the appropriate balance between California's statewide housing objectives and the constitutional principle of local governance. Establishing a statewide working group to examine a potential constitutional amendment, legislative reforms, or other policy initiatives will provide a meaningful forum to assess how local authority over housing and land use decisions can be strengthened while continuing to address the State's housing challenges.
Cities are uniquely positioned to understand the needs, opportunities, and constraints of their communities. Local elected officials are accountable to the residents they serve and are best equipped to make land use decisions that reflect a community's character, infrastructure capacity, economic development goals, environmental stewardship, and long-term vision. Equally important, local governments bear the primary responsibility for protecting public safety. Decisions regarding housing density, transportation, emergency access, wildfire preparedness, evacuation routes, police and fire service capacity, water availability, and critical infrastructure are inherently local matters that require the knowledge and judgment of those who serve their communities every day.
While the State has an important role in addressing California's housing needs, a collaborative approach that respects local expertise and preserves meaningful local discretion will produce stronger, safer, and more sustainable communities. The proposed working group offers an opportunity to evaluate policies that achieve these shared objectives while restoring an appropriate balance between state direction and local authority.
21 Mr. Gabe Quinto, President
League of California Cities
July 23, 2026
Although this letter reflects my personal position and is not an official action or policy of the City of Temecula or the Temecula City Council, I respectfully endorse the City of Murrieta's submission of this resolution and encourage its favorable consideration by the League of California Cities General Assembly.
Thank you for your leadership and your thoughtful consideration of this important issue.
Respectfully,
Jessica Alexander
Mayor, City of Temecula
Signing in her individual capacity
and not on behalf of the City of Temecula
or the Temecula City Council.
22 2026 Resolution Packet
Resolution No. 1: Staff Analysis
23 League of California Cities Staff Analysis on Resolution No. 1 Staff: Brady Guertin, Legislative Advocate
Committee: Housing, Community, and Economic Development Summary:
Resolution No.1 states that the League of California Cities (Cal Cities) will:
1. Support the development and advancement of a state constitutional amendment or legislative, policy, or ballot-based strategy that restores and strengthens local authority over housing and land use matters, including general plans, housing elements, zoning, density, design and development standards, project siting, and the approval or denial of housing development applications.
Pursuant to the resolution, the strategy should preserve the state’s authority to set broad, statewide housing goals and enforce civil rights, fair housing, building safety, and environmental standards while protecting local control by preventing the state from compelling the approval of developments that conflict with local requirements, override local zoning or density standards, or overturn local land use decisions where a city has planned for and maintained sufficient capacity to meet its housing obligations.
2. Consider establishing a statewide working group or other appropriate committee(s) to evaluate and develop a proposed constitutional amendment or other legislative, policy, or ballot-based strategies to restore and strengthen local authority over housing and land use matters.
The resolution states: “conducting legal, fiscal, and policy analyses; engaging cities and other stakeholders; and building a statewide coalition of proponent supporters in preparation for the November 2030 General Election, or within another reasonable time period.” Background:
As provided in the background information, the city of Murrieta is sponsoring this resolution in response to concerns over state laws that have increasingly reduced city discretion over housing and land use decisions, including legislation that requires ministerial or by-right approvals for housing projects, limits the application of local development standards, and strengthens state enforcement mechanisms against local governments.
Additionally, the city of Murrieta, in its background information, maintains that these legislative efforts have not resulted in sufficient housing production to address California's housing shortage and have not adequately accounted for
24 local infrastructure, public service needs, public safety, market, and fiscal considerations.
The resolution states that California’s housing goals are better advanced through state funding, streamlined environmental requirements, and voluntary partnerships, while preserving local authority over how and where housing is best planned and approved.
Consideration of the resolution may be informed by a brief examination of how the California Constitution allocates authority between the state and cities with respect to land use decisions.
The constitution grants cities the power to adopt local laws to protect the public’s health, safety, and welfare. This grant is called the “police power,” which is the basis for local land use regulation. The constitution grants charter cities the additional power to adopt local laws affecting “municipal affairs.” This power, commonly referred to as “home rule,” is based on the principle that a city, rather than the state, is in the best position to identify and satisfy the needs of the local community.
The constitution’s broad grant of police power contains a significant limitation.
Local law adopted under the police power is not valid if it “conflicts” with state law. A local law “conflicts” with state law when it regulates the same “field” in which the Legislature has stated its intent to occupy. In that case, state law is said to “preempt” the local law and it cannot be enforced.
An ordinance adopted by a charter city under the municipal affairs power cannot be enforced if it affects a “matter of statewide concern.” The subjects that have been identified as “matters of statewide concern” have changed over the years due to economic, social, and political circumstances.
Since the 1960s, the state has enacted numerous laws that limit or preempt aspects of local land use and zoning authority. These laws include the Fair Employment and Housing Act, Housing Element Law, Housing Accountability Act, Density Bonus Law, Permit Streamlining Act, accessory dwelling unit laws, California Environmental Quality Act, and others. In recent years, the state has enacted several laws that Cal Cities was the leading opposition force against, as many of the proposals pre-empted local land use authority, limited public review, and constrained local flexibility. In support of its housing and land use legislation, the Legislature has cited a statewide housing crisis and the need for increased housing production at all income levels while asserting that a uniform approach to local land use decision-making is required.
25 Discussion:
The resolution does not prescribe a specific policy mechanism. The eight letters in support recommend creating a working group or committee to evaluate potential approaches, including legislative proposals, constitutional amendments, or ballot initiatives to strengthen local authority over housing and land use matters.
A discussion of a strategy to restore and strengthen local authority over housing and land use matters will need to consider the California Constitution’s framework for both preemption of police power enactments and municipal affairs, discussed above. It will also need to determine whether changes to the California Constitution will be proposed, and whether they constitute an amendment or a revision, which require different processes.
A constitutional revision is a multistep process blending legislative consensus, voter support, and on occasion, a constitutional convention. It requires significant public engagement.
A constitutional amendment would require a ballot initiative, which includes gathering enough valid signatures to qualify for the ballot, building large coalitions to support election efforts, and campaigning to voters to support the initiative. This process can involve significant costs. In the last major election for ballot initiatives in 2024, proponents spent $8-$18 million to qualify for the ballot and spent nearly $700 million for the full election cycle, averaging out to about $100 million per ballot initiative.
Cal Cities has been engaged in ballot advocacy for over 20 years. In the early 2000s, Cal Cities developed a ballot advocacy infrastructure that included forming an issue political action committee, fundraising, establishing a network of regional managers, and building a coalition with other organizations to ultimately advocate on a ballot measure. Ballot advocacy requires the approval of the Board of Directors with a supermajority vote.
In the Legislature, Cal Cities plays an active and influential role to ensure that local flexibility and autonomy in the land use and housing space is maintained by engaging on dozens of bills every legislative session to ensure that cities' voices are heard at the state Capitol. Below, you will find Cal Cities “Existing Policy” on local control, housing, and land use policies.
Fiscal Impact
The resolution itself would not have a significant direct fiscal impact. However, depending on what actions follow, the fiscal costs could be significant.
26 Existing Cal Cities Policy
Vision
To be recognized and respected as the leading advocate for the common interests of California's cities.
Mission Statement
To expand and protect local control for cities through education and advocacy to enhance the quality of life for all Californians.
We Believe
• Local self-governance is the cornerstone of democracy. • Our strength lies in the unity of our diverse communities of interest. • In the involvement of all stakeholders in establishing goals and in solving problems.
• In conducting the business of government with transparency, openness, respect, and civility.
• The spirit of honest public service is what builds communities. • Open decision-making that is of the highest ethical standards honors the public trust.
• Cities are vital to the strength of the California economy. • The vitality of cities is dependent upon their fiscal stability and local autonomy.
• The active participation of all city officials increases the League's effectiveness.
• Partnerships and collaborations are essential elements of focused advocacy and lobbying.
• Ethical and well-informed city officials are essential for responsive, visionary leadership and effective and efficient city operations.
Zoning
Cal Cities believes local zoning is a primary function of cities and is an essential component of home rule. The process of adoption, implementation and enforcement of zoning ordinances should be open and fair to the public and enhance the responsiveness of local decision-makers. State policy should leave local siting and use decisions to the city and not interfere with local prerogative beyond providing a constitutionally valid procedure for adopting local regulations. State agency siting of facilities, including campuses and office buildings, should be subject to local notice and hearing requirements in order to meet concerns of the local community. Cal Cities opposes legislation that seeks to limit local authority over parking requirements.
Housing Element
Housing issues should be addressed in the general plan as other planning issues are. The housing element should be prepared for the benefit of local
27 governments and should have equal status with the other elements of the general plan.
Encourage Full Community Participation
Foster an open and inclusive community dialogue and promote alliances and partnerships to meet community needs.
Well-Planned New Growth
Recognize and preserve open space, watersheds, environmental habitats, and agricultural lands, while accommodating new growth in compact forms, in a manner that:
• De-emphasizes automobile dependency;
• Integrates the new growth into existing communities;
• Creates a diversity of affordable housing near employment centers; • Provides job opportunities for people of all ages and income levels.
Support:
The following letters of concurrence were received:
City of Banning
City of Calimesa
City of Canyon Lake
City of Moreno Valley
City of Norco
City of Torrance
Crystal Ruiz, Mayor, City of San Jacinto
Jessica Alexander, Mayor, City of Temecula
28 AGENDA NO: 6.d
MEETING DATE: August 25, 2026
Prepared By: JC Dept Review:
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council
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
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(S)
1. City Goals, Goal Statements & Objectives Status Update Worksheet
2025/2027 Goals, Goal Statements and Objectives
Status Update – August 25, 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 and expected in the first quarter of FY 2027
6. CFAC formed a sub-committee 2/17/26 to review the revenue policy. Work continues with the subcommittee.
2025/2027 Goals, Goal Statements and Objectives
Status Update – August 25, 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
2025/2027 Goals, Goal Statements and Objectives
Status Update – August 25, 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. City staff plans to provide an updated one-year capital plan in the 2 nd quarter
of FY 2026-27 regarding currently funded and approved projects 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. With the new Public Works director position filled, the plan is to review the work order system and report findings in the 3
rd 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.
Grant funded originally removed from the Federal Budget in FY 2027 has been restored
2. Revetment assessment/repairs – in progress and confirmation has been received that the Army Corps of Engineers is the responsible party for revetment assessment and repairs. The actual language from the U.S. House Transportation & Infrastructure Committee: In carrying out operations and maintenance activities for the project for harbor development, Morro Bay, California, authorized by section 2 of the Act of March 2,1945 (chapter 19, 59 Stat. 21), the Secretary shall carry out any necessary repair or maintenance activities on a breakwater, revetment, or seawall constructed as part of the
2025/2027 Goals, Goal Statements and Objectives
Status Update – August 25, 2026
4 project in such a manner as to ensure each such activity is sufficient to meet the authorized purpose of the project.
3. FEMA claim on revetments and seawalls – in progress
4. Drafted plans for Phase 1 of Boat Launch Ramp rehabilitation. Public Works staff is moving forward with construction during the 2nd quarter of FY 2027
5. Assessing feasibility and options for State Park Marina dredge project.
Consultant has completed their draft report on the dredge project and will present the report to the Council during the 2nd quarter of FY 2027
6. Updating mooring specifications and inspection guidelines 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 SLCUSD
8. Recruited a project manager to perform due diligence
9. Due diligence is complete and will be presented to Council in August 2026
10.Site purchase is on track to be closed by October 31, 2026
2025/2027 Goals, Goal Statements and Objectives
Status Update – August 25, 2026
5 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 were held during due diligence period
5. Community members offered that they were very pleased with the process of purchase and due diligence
6. Second community meeting was held in June of this year
7. Site tours for community members have been and continue to be held 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 2
nd quarter 2027
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
Prepared By: BS Dept Review:
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council
FROM: Brian Stack, City Attorney
SUBJECT: Easement Agreement and Deed Between Morro Bay Power Company LLC and the City of Morro Bay for the Recycled Water Facilities Infrastructure
RECOMMENDED ACTION
1. Approve the easement agreement and deed (Agreement) between Morro Bay Power Company LLC and the City of Morro Bay necessary for the implementation of the Recycled Water Project, in substantially the form attached, subject to review and approval by the City Attorney as to form and legal effect.
2. Authorize the City Manager to execute the Agreement and related documents and make any non-substantive amendments consistent with the terms approved by Council, subject to review and approval by the City Attorney as to form and legal effect.
ALTERNATIVES
There are no recommended alternatives.
FISCAL IMPACT
The cost of the easement is $42,300 to be paid for from the Water Reclamation Facility (WRF) project.
No budget amendment is required for this easement.
BACKGROUND
The Recycled Water Project is part of the larger Water Reclamation Facility (WRF) Project. The Recycled Water Project includes construction of the Recycled Water Facilities (monitoring wells, injection wells, injection well equipping, and recycled water pipelines) to provide recycled water to offset use of potable water and to recharge the Morro Groundwater Basin with advanced purified water to create a barrier against seawater intrusion, increase groundwater supplies, and reduce nitrate contamination. The City has completed construction of the Water Resource Center (which includes both the primary/secondary wastewater treatment and the Advanced Water Treatment Plant) and the wastewater conveyance facilities. The City is in the design and permitting phase for the Recycled Water Facilities. The City is anticipating releasing bid documents in late August or early September 2026 for the construction of the monitoring wells. The City intends on releasing the bid documents for the drilling of the initial phase injection wells in September or October 2026.
In June 2024, the City completed hydrogeological investigations to aid in well siting. The most hydrogeologically favorable injection well sites are located on the Morro Bay Power Company LLC (Company) property. The City has continued communications with the Company while preparing a design that includes injection wells on the Company’s property.
In June 2021, the City acquired an easement (see Figure 1 below) from the Company for Recycled Water Facilities among other easements needed for the WRF. Currently, the only project related AGENDA NO: 6.e
MEETING DATE: August 25, 2026
infrastructure on the recycled water easement is IW-1. A large portion of the existing easement is located in areas identified as having riparian habitat. Due to the constraints of the WRF Program Environmental Impact Report (EIR), the City is required to avoid construction impacts to riparian habitat and thus making it difficult to construct recycled water facilities in large portions of the existing easement. With progression of the Recycled Water Facilities design, the City identified additional injection well locations within the Fisherman’s Storage Area, which fall slightly outside of this original easement. There is no riparian habitat within the Fisherman’s Storage Area as it is already developed and thus a more feasible location for the additional injection wells. The proposed easement swap relinquishes the unusable portions of the original easement in exchange for a more suitable easement.
Additionally, the proposed easement agreement (Attachment 1) includes easements for monitoring wells. Monitoring wells are required by the Division of Drinking Water (DDW) to monitor travel time and quality of injected advanced purified water as it moves through the basin towards the City’s extraction wellfield. DDW requirements for monitoring wells to be within a certain travel time distance from the extraction wells limit the potential sites for these monitoring wells to mostly within Company property.
PROPOSED EASEMENT AGREEMENT
The City has been coordinating with the Company to prepare a modified easement that includes the area identified for injection wells, the monitoring wells, and relinquishes the unusable portions of the existing easement.
Injection Well/Pipeline Easement
The original easements is 3.82 acres (Figure 1). The new easement is 3.09 acres (Figure 2). The difference is 0.73 acres. The City is swapping less desirable (undeveloped) land for more desirable (developed) land with this agreement (Figure 3).
Figure 1. Existing Easement
Figure 2. Proposed Easement
Figure 3. Overlap of Existing and Proposed Easements
Monitoring Well Easement
In addition to modifying the City’s injection well/pipeline easement, the proposed agreement obtains an easement for monitoring wells. This easement agreement ensures the City maintains access rights to the existing monitoring wells. This agreement also grants an easement for the anticipated locations of future monitoring wells required to be installed by DDW (see Figure 4 below).
Easement Agreement
The City hired a right of way consulting firm, Hamner, Jewel, & Associates, to assist in completing an appraisal, preparing the easement agreement, and preparing the deed. In late 2025, Hamner, Jewel, & Associates contracted with a firm, Central California Appraisals, to complete an appraisal.
The appraisal report was finalized in February 2026 by a licensed Certified General Real Estate Appraiser experienced in valuing easements and who holds the highest MAI appraisal designation.
The appraised value factors in the portions of easement to be relinquished, the values of the different types of land, temporary construction easements, permanent access easements or rights, and permanent infrastructure easements. The appraised value for the easement modification is $42,300.
The City negotiated with the Company, proposing a zero-cost agreement or half the appraised value, but the Company did not accept either offer. The Company accepted the offer of the full appraised value. The appraised value took into consideration the offset of the area that is being released in exchange for the currently needed easement. The easement agreement in Attachment 1 reflects the full appraised value deemed by the appraiser to be fair market value for the easement rights needed for the project.
CONCLUSION
Obtaining this easement is critical to completion of the Recycled Water Facilities, and obtaining this easement in a timely manner is critical for avoiding additional project schedule delays. The City is anticipating releasing bid documents in late August or early September 2026 for the construction of the monitoring wells. The City intends on releasing the bid documents for the drilling of the initial phase injection wells in September or October 2026.
Staff recommends Council approve the easement agreement and deed (Agreement) in substantially the form attached and authorize the City Manager to execute the Agreement and related documents, and make any non-substantive amendments consistent with the terms approved by Council, subject to review and approval by the City Attorney as to form and legal effect
ATTACHMENT(S)
1. Easement Agreement
2. Deed Between Morro Bay Power Company LLC and the City of Morro Bay for the Recycled Water Facilities Infrastructure
________________________________________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Morro Bay Power Company/Right of Way Agreement 2026-08-18
ASSESSOR PARCEL NO.: 066-331-046
PROJECT: City of Morro Bay – Recycled Water Facilities
OWNER: Morro Bay Power Company LLC
EASEMENT CONVEYANCE AGREEMENT
(WITH ESCROW INSTRUCTIONS)
THIS AGREEMENT is made and entered into on this ________ day of August, 2026 (the “Effective Date”), by and between
MORRO BAY POWER COMPANY LLC, a Delaware limited liability company, formerly known as Dynegy Morro Bay, LLC, a Delaware limited liability company, successor by merger to LSP Morro Bay, LLC, a Delaware limited liability company, successor by merger to Duke Energy Morro Bay, LLC, a Delaware limited liability company (hereinafter called “Grantor”), and
THE CITY OF MORRO BAY, a municipal corporation and a charter city in the County of San Luis Obispo, State of California, its successors and assigns (hereinafter called “City”).
An instrument in the form of an Easement Deed (“Deed”) covering the property rights particularly described therein (the “Easements”) and attached hereto as Exhibit 1, has been executed concurrently with this Agreement and delivered to City representatives.
In consideration of which, and other considerations hereinafter set forth, it is mutually agreed as follows:
1. The parties have herein set forth the whole of their agreement. The performance of this Agreement constitutes the entire consideration for said document and shall relieve the City of all further obligation or claims on this account, or on account of the location, grade or construction of the proposed public improvement.
2. The City shall:
A. PAYMENT - Pay to the order of the Grantor the sum of Forty-Two Thousand Three Hundred Dollars ($42,300) (“Purchase Price”) as consideration in full for the Easements, for the loss, replacement and moving of any improvements, and for entering into this Agreement. Said sum shall be paid when title to the Easements has vested to City in accordance with the provisions of this Agreement.
B. RECORDATION OF INSTRUMENT - Accept the Deed and cause the same to be recorded in the office of the San Luis Obispo County Recorder at such time as when clear title can be conveyed.
C. MISCELLANEOUS COSTS - Pay any escrow, title insurance, and recording fees incurred in this transaction.
D. CLEARANCE OF BONDS, ASSESSMENTS, OR DELINQUENT TAXES - Have the authority to deduct and pay from the amount shown in Paragraph 2.A. above any amount necessary to satisfy any bond demands and delinquent taxes due in any year except the year in which the Deed records, together with penalties and interest thereon, and/or delinquent and unpaid non-delinquent assessments which have become a lien as of the date of recordation of the Deed.
________________________________________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Morro Bay Power Company/Right of Way Agreement 2026-08-18
3. The Grantor:
A. PAYMENT ON MORTGAGE OR DEED OF TRUST - Agrees that any or all monies payable under this Agreement up to and including the total amount of the unpaid principal and interest on the note(s) secured by mortgage(s) or deed(s) of trust, if any, and all other amounts due and payable in accordance with the terms and conditions of said mortgage(s) or deed(s) of trust, shall upon demand(s) be made payable to the mortgagee(s) or beneficiary(s) entitled thereunder. Grantor shall cooperate with the Escrow Officer in obtaining lien clearance documents from any and all creditors holding liens against the Property.
B. PERMISSION TO ENTER - Hereby grants to the City, its agents and contractors, permission to access, upon 24-hours prior notice to Grantor, the Easements prior to the Deed recordation for the purposes of preparation for the construction of the City’s facilities, subject to all applicable terms and conditions contained in this Agreement and the associated Deed.
C. TITLE INDEMNITY AND WARRANTY - Grantor indemnifies and holds the City harmless from any and all claims that other parties may make or assert on the title to Grantor’s property and the rights granted to City by Grantor in the Deed. Grantor’s obligation to indemnify the City shall not exceed the amount paid to the Grantor under this Agreement. Grantor hereby represents and warrants that they are the sole vested owners of the property on which the Easements is granted, holding all ownership and possessory rights, and that this Agreement is executed by signatories authorized to bind Grantor and to grant the rights referenced in this Agreement and the associated Deed, without conflict or claims from other parties.
D. HAZARDOUS SUBSTANCES - Represents and warrants, to the best of Grantor’s knowledge, and after reasonable inquiry, the following:
During Grantor’s ownership, Grantor knows of no disposal, releases, or threatened releases of hazardous substances on, from, or under the Easement areas described in the Deed or Grantor’s remaining adjacent property.
To Grantor’s actual knowledge, there is no pending claim, lawsuit, agency proceeding, or any administrative challenge concerning the presence or use of hazardous substances on or within the areas that will be encumbered by the Easements.
4. The Parties agree:
A. DEED RECORDATION AND TITLE INSURANCE. In conjunction with recording of Deed from Grantor, City shall request and attain, at its own cost and expense, a Standard Coverage Policy of Title Insurance in the amount of $51,315 issued by First American Title Company showing that title to the Easement is vested in City, subject only to the following exceptions, and the printed exceptions and stipulations in said policy:
1) Real Property Taxes for the fiscal year in which escrow closes; 2) Public utility easements and public rights of way;
3) Item Nos. 3-17 of the preliminary title report issued by First American Title Company, dated October 9, 2025, referenced as Order No. 4001-7330465; and 4) Other items that may be approved in writing by City in advance of the close of escrow.
________________________________________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Morro Bay Power Company/Right of Way Agreement 2026-08-18
The fee for the title policy will be borne by City, at no cost to Grantor. Deed recordation is specifically subject to and contingent upon receipt of confirmation from First American Title Company that said title policy can and will be issued in accordance with the terms of this provision.
B. ARTICLE HEADINGS - Article headings in this Agreement are for convenience only and are not intended to be used in interpreting or construing the terms, covenants and conditions of this Agreement.
C. COMPLETE UNDERSTANDING - This Agreement constitutes the entire understanding between the parties with respect to the subject matter hereof, superseding all negotiations, prior discussions, and preliminary agreements or understandings, written or oral. This Agreement may not be amended except in writing by the parties hereto or their successors or assigns.
D. COUNCIL/BOARD APPROVAL - This Agreement is subject to and conditioned upon approval by the City Council. This Agreement is not binding upon the City until executed by the appropriate City official(s) acting in their authorized capacity.
E. COUNTERPARTS - This Agreement may be executed in counterparts, each of which so executed shall irrespective of the date of its execution and delivery be deemed an original, and all such counterparts together shall constitute one and the same document.
F. ELECTRONIC AND FACSIMILE SIGNATURES – In the event that the parties hereto utilize electronic or facsimile documents which include signatures, such documents shall be accepted as fully binding and as full force and effect the same as if they bore original signatures. Documents for recordation by the Clerk Recorder must contain original signatures.
No Obligation Other Than Those Set Forth Herein Will Be Recognized.
GRANTOR:
MORRO BAY POWER COMPANY LLC, a Delaware limited liability company, formerly known as Dynegy Morro Bay, LLC, a Delaware limited liability company, successor by merger to LSP Morro Bay, LLC, a Delaware limited liability company, successor by merger to Duke Energy Morro Bay, LLC, a Delaware limited liability company
By: ________________________________ Date: ____________________________ Name:
Title:
GRANTOR’S MAILING ADDRESS:
Morro Bay Power Company LLC
Attn: Real Estate
P.O. Box 681
Fairfield, TX 75840 Signatures continue next page…
________________________________________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Morro Bay Power Company/Right of Way Agreement 2026-08-18
THE CITY:
CITY OF MORRO BAY
By: _________________________________ Date: ____________________________ Name:
Title:
MAILING ADDRESS OF CITY:
City of Morro Bay
Public Works Department
955 Shasta Avenue
Morro Bay, CA 93422
______________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Dynegy/Deed Easement 1 Recording requested by:
Hamner, Jewell & Associates
Government Real Estate Services
When recorded, mail to:
City of Morro Bay
Utilities Division
555 South Bay Boulevard
Morro Bay, CA 93442
Exempt from the $75 Building and Jobs Act Fee per Gov’t Code § 27388.1(2)(D) Public Agency No fee pursuant to Government Code § 6103
No Documentary Transfer Tax per R&T Code § 11922
No Recording Fee per Government Code § 27383
APN: 066-331-046 (a portion)
EASEMENT DEED - GRANT OF EASEMENTS
(Wells, Pipelines, and Associated Access and Facilities) FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, MORRO BAY POWER COMPANY LLC, a Delaware limited liability company, formerly known as Dynegy Morro Bay, LLC, a Delaware limited liability company, successor by merger to LSP Morro Bay, LLC, a Delaware limited liability company, successor by merger to Duke Energy Morro Bay, LLC, a Delaware limited liability company (hereinafter collectively referred to as “Grantor”), hereby GRANTS to
The City of Morro Bay, a municipal corporation and a charter city in the County of San Luis Obispo, State of California, its successors and assigns (hereinafter referred to as “City”),
the following permanent and temporary easement interests described in this Deed as of this _____ day of __________, 2026 (the “Effective Date”). These easements are all located within Grantor’s “Real Property” that is located in the City of Morro Bay, County of San Luis Obispo, described in Exhibit “A”, attached hereto and incorporated by reference herein, which is the servient tenement. This Grant of Easements shall be effective upon recordation in the Official Records of San Luis Obispo County (“Official Records”)
City’s use of the following described easements shall be solely in conjunction with the construction, operation and maintenance of its public water systems, including the installation of new injection, monitoring, and extraction wells, pipelines and associated appurtenant infrastructure (the “Project”).
Exhibit 1 to Agreement, page 1 of 24
Exhibit 1 to Agreement
______________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Dynegy/Deed Easement 2 A. INJECTION WELLS AND PERMANENT PIPELINE EASEMENT
A Permanent Easement for Pipelines and Injection Wells to construct, install, operate, access, maintain, monitor, and replace, water injection wells, pipelines, and related facilities within that portion of Grantor’s Real Property described in Exhibit B and depicted in Exhibit C, attached hereto and incorporated herein. This Permanent Easement includes the right for City to perform construction activities for the installation of pipelines and wells, including trench work, laying pipes, installing well equipment, and other construction work related to the installation of said wells and pipelines, to be performed in accordance with City’s existing plans and specifications for said facilities. City shall have the right to remove trees that will impact the construction of the pipelines and wells.
B. PERMANENT EASEMENT FOR MONITORING WELLS
A Permanent Easement for Monitoring Wells to construct, install, operate, access, maintain, monitor, replace, and retrieve data from ground water monitoring wells and related facilities. These related facilities may include, but are not limited to, markers, concrete collar and well cover, monitoring devices, data logging devices, and all related incidents, fixtures, and appurtenances necessary for the use of the groundwater monitoring well including equipment to service such Facilities. The markers, concrete collar and well cover, and other related facilities may be located upon the ground surface, flush with the ground surface elevation. This Permanent Easement for monitoring wells shall be in, over, on, through, within, under, and across that portion of the Real Property described in Exhibit D and depicted in Exhibit E, attached hereto and incorporated by reference herein.
The Permanent Easements herein described shall be SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:
1. The facilities and improvements installed in the Easement Areas described herein collectively are referred to herein as “City Facilities.” Plans for City Facilities as they exist from time to time shall be maintained at the City’s principal offices and provided to Grantor prior to commencement of improvements. City shall give Grantor prior written notice of any material changes or material amendments to the plans and specifications for the Project within 30 days after City’s decision to make the material change or material amendment. All permits required for the construction or activities to be conducted in the Easements which are required by law, including permits that must be obtained from any local, state or federal agency and permitting authorities other than City shall be obtained and copies of the same provided to Grantor prior to the commencement of the activity subject to the permit. Notices shall be in writing and or sent prepaid, first-class mail to Morro Bay Power Company, LLC c/o Vistra Corp., Attn: Real Estate, P. O. Box 681, Fairfield, TX 75840.
2. City shall have the right of ingress and egress for personnel, vehicles, and construction equipment to and from the Easement Areas that are described in Exhibits B and D. This shall include the right to use lanes, drives, rights-of-way, paths and roadways within the Real Property which now exist or which hereinafter may be constructed, as shall be convenient and necessary for the purpose of exercising the rights herein set forth; provided, however, that nothing herein shall prevent or limit Grantor’s rights to close such lanes, drives, roadways, paths or rights-ofExhibit 1 to Agreement, page 2 of 24 Page 62 of 121 ______________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Dynegy/Deed Easement 3 way, and to provide City with comparable alternative access to the Easement Areas, at Grantor’s sole discretion and following consultation with the City.
3. These easements are subject to all existing fencing, drainage and utility easements, public roads, electrical transmission facilities, and communication lines existing on the date this document is signed by Grantor, and all future uses which do not directly or indirectly interfere with or endanger City’s exercise of the rights described herein, including the right to use the Easement Areas for surface uses such as parks, playing fields, parking lots and landscaping, provided, however, that no permanent structures be placed on the surface of the Permanent Easement areas granted herein, and City shall have the right to construct, maintain, and repair commercially reasonable protective fencing around the injection wells and ancillary equipment to restrict access and protect such City Facilities. City shall replace in kind any fencing removed from Grantor’s Real Property during construction of City Facilities and shall be liable for any damages to Grantor incurred as a result of City’s failure to properly secure the Real Property during any construction, and for the duration of the existence of the Permanent Easements granted herein. City shall have the right to clear and keep clear from the Easement Areas all explosives, buildings, structures, walls, and other facilities of a permanent nature, and any earth cover or stockpile of material placed without the City’s written consent, which interfere with City’s use of the Easement Areas. Grantor shall not construct, nor permit others to construct, such permanent facilities which conflict with City’s ability to use the Easement Areas for the rights granted herein. In addition to any other legal and equitable remedies for violations of this paragraph, City shall have the right to do all things necessary and proper to remove any such vegetation, explosives, improvements, and materials, provided however, that Grantor may maintain perimeter fencing around the Real Property or portions thereof, so long as gate access is provided to City as needed to maintain unobstructed ingress and egress to the City Facilities.
C. TEMPORARY CONSTRUCTION EASEMENTS
1. Exclusive Temporary Easements for temporary construction purposes, for all uses necessary in conjunction with the construction and installation of the City Facilities and electrical service associated therewith, upon that portion of the Real Property described as Parcel 1, Parcel 2, and Parcel 3 in Exhibit F, identified as “Temporary Construction Easements”, and depicted as same in Exhibit G (3 pages), each attached hereto and incorporated herein.
2. The Temporary Construction Easements shall commence fifteen (15) days after issuance by City to Grantor of a written advance Notice of Construction Commencement and shall terminate upon completion of City’s construction of City Facilities, or one (1) year after commencement, whichever occurs first. City shall have the unilateral right to extend each Temporary Construction Easement on a monthly basis if needed to complete the work within said Easement at the following monthly rates: $700.00 per month for monthly extensions on Parcel 1, and $175 per month for monthly extensions on Parcels 2 and 3 collectively. In any event, the maximum extension duration shall be limited to an additional maximum one year (12 months) term. City shall have the exclusive right to use the Temporary Construction Easement areas during the term of this Temporary Construction Easement, and any extensions in accordance with the provisions herein, from commencement through completion of City Facilities, and to restrict access thereto by Grantor and others. Upon completion of City’s Exhibit 1 to Agreement, page 3 of 24 Page 63 of 121
______________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Dynegy/Deed Easement 4 construction, City shall restore the Temporary Construction Easement areas to a comparable condition as that which existed prior to City’s access and use, at no expense to Grantor, to the extent reasonably practical.
Upon the expiration of the Temporary Construction Easement and completion of all restoration of the Easement Area, all of the rights and benefits of the City in, to and under this Easement shall automatically terminate and be of no further force and effect.
D. MISCELLANEOUS
1. Subsequent to the grant of these Easements, Grantor shall not grant any easements of any kind whatsoever to others in, over, on, through, within, under or across the Easement Areas herein described without the prior written approval of the City, which approval shall not be unreasonably conditioned, delayed, nor withheld.
2. Prior to commencing operations under this Easement Agreement, the City agrees to procure and cause any City subcontractors or other parties to maintain in force during the term of this Easement (1) statutory Workers’ Compensation insurance covering all personnel engaged in furnishing services related to City’s operations on the Easement Area, including employer’s liability coverage with minimum limits of at least Five Million Dollars ($5,000,000.00) per accident and Five Million Dollars ($5,000,000.00) per occurrence; (2) general liability coverage with a minimum Five Million Dollars ($5,000,000.00) per occurrence for bodily injury, personal injury, property damage and products and completed operations liability; (3) comprehensive automobile liability coverage for Five Million Dollars ($5,000,000) per occurrence for vehicles owned or utilized by the City’s personnel of its contractor’s personnel; and (4) excess liability limits of Five Million Dollars ($5,000,000.00) per occurrence (excess of underlying general liability, auto liability and Workers’ Compensation).
3. THE CITY SHALL INDEMNIFY, DEFEND, SAVE, PROTECT AND HOLD
GRANTOR AND ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
REPRESENTATIVES, AFFILIATES, SUBSIDIARIES, SUCCESSORS AND ASSIGNS,
HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LIABILITIES, LOSSES,
DAMAGES, DEMANDS, LAWSUITS, AND CAUSES OF ACTION (INCLUDING
REASONABLE ATTORNEY'S FEES AND COSTS OF LITIGATION) ARISING OUT OF, RESULTING FROM, CAUSED BY, OR IN ANY WAY RELATED TO THE CITY’S
EXERCISE OF THE RIGHTS GRANTED HEREUNDER, INCLUDING BUT NOT LIMITED
TO GRANTEE'S CONSTRUCTION OF THE CITY FACILITIES, INCLUDING BUT NOT LIMITED TO CLAIMS FOR:
ALL INJURIES TO, DEATHS, OR ILLNESSES OF ANY PERSON, INCLUDING
OFFICERS, AGENTS, OR EMPLOYEES OF THE CITY OR GRANTOR, OR AGENTS, ASSIGNS, OR SUBCONTRACTORS OF THE CITY OR GRANTOR;
ALL DAMAGES TO OR LOSSES OF PROPERTY OF THE CITY, GRANTOR OR
ANY THIRD-PARTY, OR EMPLOYEES, AGENTS, ASSIGNS, OR SUBCONTRACTORS
OF THE CITY OR GRANTOR, EXCEPT FOR ANY DAMAGE TO OR LOSS OF GRANTOR’S REAL PROPERTY CAUSED BY HAZARDOUS SUBSTANCE CONDITIONS Exhibit 1 to Agreement, page 4 of 24 Page 64 of 121
______________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Dynegy/Deed Easement 5 EXISTING ON GRANTOR’S REAL PROPERTY PRIOR TO THE DATE OF THIS GRANT
OF EASEMENTS AND ARE NOT CAUSED OR EXCABERATED BY THE ACTS OR OMISSIONS OF GRANTEE;
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THE
FOREGOING INDEMNITY SHALL NOT APPLY TO ANY CAUSES OF ACTION,
DAMAGES, LIABILITIES, DEMANDS, SUITS, OBLIGATIONS, LOSSES, PENALTIES, AND COSTS AND EXPENSES CAUSED BY GRANTOR’S GROSSLY NEGLIGENT ACTS
OR OMISSIONS OR THE GROSSLY NEGLIGENT ACTS OR OMISSIONS OF GRANTOR’S EMPLOYEES, AGENTS, REPRESENTATIVES, SUCCESSORS OR ASSIGNS.
4. The parties to this Easement acknowledge and agree that the easements and other rights conferred by this Easement are intended to, and do, constitute covenants that run with the land and shall inure to the benefit of and be binding upon the parties and their respective grantees, heirs, successors and assigns.
5. The rights of the City hereunder shall not be assigned or transferred without the express written consent of Grantor, which consent shall not be unreasonably withheld.
6. This instrument contains the entire agreement of the parties with respect to this Easement.
7. This instrument and the covenants and agreements herein contained shall inure to the benefit of and be binding and obligatory upon the successors and assigns of the parties hereto.
8. This instrument must be executed by both parties to be a valid and binding agreement.
9. The Easements described herein are intended to supersede, nullify and replace that certain easement previously identified specifically as “Parcel Two” legally described in Exhibit B-2 and depicted in Exhibit C-2 in that GRANT OF PERMANENT EASEMENTS document currently encumbering the Real Property as Document No. 2021071670 recorded on October 22, 2021 in the Official Records of San Luis Obispo County Recorder’s Office. All other easements and terms and conditions of said prior recorded document shall remain in full force and effect, unchanged by this document. [Signatures to follow]
Exhibit 1 to Agreement, page 5 of 24 Page 65 of 121
______________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Dynegy/Deed Easement 6 GRANTOR:
MORRO BAY POWER COMPANY LLC, a Delaware limited liability company, formerly known as Dynegy Morro Bay, LLC, a Delaware limited liability company, successor by merger to LSP Morro Bay, LLC, a Delaware limited liability company, successor by merger to Duke Energy Morro Bay, LLC, a Delaware limited liability company By: __________________________________________ ___________________ Name: Matthew A. Goering Date
Title: Senior Vice President
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of TEXAS
County of DALLAS
On ______________________ before me, ________________________________________, Notary Public, personally appeared Matthew A. Goering, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of Texas that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature __________________________ (Seal)
Exhibit 1 to Agreement, page 6 of 24
COPY
COPY
COPY
______________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Dynegy/Deed Easement 7 CERTIFICATE OF ACCEPTANCE
This is to certify that the City of Morro Bay hereby accepts for public purposes the real property, or interest therein, described in that deed dated ________________________, from MORRO BAY POWER COMPANY LLC, a Delaware limited liability company, formerly known as Dynegy Morro Bay, LLC, a Delaware limited liability company, successor by merger to LSP Morro Bay, LLC, a Delaware limited liability company, successor by merger to Duke Energy Morro Bay, LLC, a Delaware limited liability company, collectively Grantor therein, to the City of Morro Bay, Grantee therein, and consents to the recordation thereof.
In Witness Whereof, I have hereunto set my hand this _____ day of ________________, 2026.
CITY OF MORRO BAY
By: ______________________________________
Carla Wixom
Mayor
ATTEST:
By _________________________________
Dana Swanson
City Clerk
Exhibit 1 to Agreement, page 7 of 24
COPY
COPY
LEGAL DESCRIPTION
Real property in the City of Morro Bay, County of San Luis Obispo, State of California, described as follows:
That portion of Lot 1 of Lot Line Adjustment Case No. LL 01-97, (MBAL 97-239) in the City of Morro Bay, County of San Luis Obispo recorded February 26, 1998 as Document No. 1998-010270, records of San Luis Obispo County, California described as follows;
All that certain real property situated in Section 25, Township 29 South, Range 10 east, Mount Diablo Base and Meridian, in the City of Morro Bay, County of San Luis obispo, State of California, described as follows:
Commencing at a point of intersection of the Northerly right-of-way line of the Surf Street (formerly known as Ninth Street) with the centerline of Scott Street (formerly known as "S" Street) , as said streets are delineated and so designated on the map of ATASCADERO BEACH, recorded July 2, 1917 in Book 2,
Beginning of the 48.7 acre parcel of land set forth in the quitclaim deed from the County of San Luis Obispo to The Pacific Gas and Electric Company, a corporation (P.G.&E.), recorded September 25, 1951, in the Office of the County Recorder of said County in Book 628 of Official Records at Page 342; thence along the centerline of Scott Street North 8° 07' 26" West 126.01 feet to the Northeasterly corner of that certain parcel of land described in the deed from P.G.&E. to the County of San Luis Obispo Recorded July 28, 1953, in the Office of the County Recorder of said County, in Volume 720 of Official Records at Page 67, said point also being the true Point of Beginning; thence leaving said centerline of Scott Street, along the Northerly line of the land described in last said deed South 88° 19' 28" West 269.38 feet to a point on the centerline of Mesa Drive as said drive is delineated on said map of ATASCADERO BEACH, said point also being the Northwesterly corner of the lands described in last said deed, and being a point on the boundary line of said 48.7 acre parcel; thence along said boundary line South 87° 15' 33" West 182.67 feet; thence South 20° 48' 10" East 122.10 feet to a point on the Northerly right-of-way line of said surf street and the Southerly boundary line of said 48.7 acre parcel; thence along said Northerly right-of- way line and said Southerly boundary line South 89° 11' 34" West 362.73 feet to the Southeasterly terminus of that certain course in the Southwesterly boundary line of said 48.7 acre parcel, said course showing a bearing and distance of "North 53° 45' West 884.13 feet" (North 53° 52' 05" West 884.13 feet for the purposes of this description), said point also being the most Easterly corner of the parcel of Land described in the deed from the County of San Luis Obispo to P.G. & E., recorded January 26, 1956 in the Office of the County Recorder of said County, in Volume 833 of Official Records at Page 525; thence at right angles to last said course South 36° 07' 55" West 190.66 feet to a point on the Southwesterly boundary line of tide lands survey no. 14, recorded in Book 4 at Page 11 of Record of Surveys in the Office of the San Luis Obispo County Recorders office; thence along said Southwesterly boundary North 59° 39' 45" West 201.03 feet; thence leaving said Southwesterly boundary North 36° 07' 55" East 210.96 feet to a point on the Southwesterly boundary line of said 48.7 acre parcel, said point being distant North 53° 52' 05" West 200.00 feet along said boundary line from said Southeasterly terminus of the Southwesterly boundary line of the 48.7 acre parcel; thence along the Southwesterly boundary of said
48.7 acre parcel North 53° 52' 05" West 684.13 feet; thence at right Angles South 36° 07' 55" West 369.55 feet to a point on the Southwesterly boundary line of the parcel of Land quitclaimed to the County of San Luis Obispo by deed recorded August 1, 1949, in Book 530 at Page 214 of Official Records of said County; thence along last said Southwesterly boundary North 75° 37' 05" West 215.33 feet; thence North 36° 07' 55" East 449.34 feet; thence North 53° 52' 05" West 286.04 feet; thence North 30° 58' 19" West 175.66 feet; thence North 21° 19' 19" West 543.47 feet to a point on the centerline of 79th Street, as said 79th Street is shown on said map of ATASCADERO BEACH; thence leaving the boundary of said 48.7 acre parcel, along the centerline of said 79th Street South 81° 03' 50" West 42.89 feet to a point of intersection with the centerline of "C" Street, as said centerline is so delineated on said map; thence along the centerline of said "C" Street North 8° 56' 10" West 1379.64 feet to a point of intersection with EXHIBIT "A"
Exhibit 1 to Agreement, page 8 of 24 Page 68 of 121
the centerline of 70th Street, said 70th Street being so delineated on said map; thence along the centerline of said 70th Street North 81° 03' 50" East 736.36 feet to the Southwesterly corner of Lot 27 of Block 28D of said map, thence along the Westerly line of said lot 27 and Lot 20 of said Block 28D North 8° 56' 10" West 149.96 feet to a point on the centerline of 69th Street, said 69th Street being so delineated on said map, said point also being the Northwesterly corner of said Lot 20; thence along said centerline of 69th Street North 81° 03' 50" East 175.26 feet to a point of intersection with the centerline of "J" Street, said "J" Street being so delineated on said map; thence along said centerline of "J" Street South 8° 56' 10" East 10.00 feet to a point of intersection with the Westerly prolongation of the Northerly line of Lot 6 of Block 27 of said map; thence along said Westerly prolongation and the Northerly line of Lot 6 and the Easterly prolongation thereof North 81° 03' 50" East 750.88 feet to the Northwesterly corner of the parcel of Land described in the deed from P. G. & E. to the State of California recorded October 7, 1960 in the Office of the County Recorder of said County in Volume 1087 of Official Records at
State highway 1 as shown on the California Department of Transportation right-of-way map sheets designated as postmile 29.6 and postmile 30.1 (sheets 27 and 28 of 33) on file in the Office of the California Department of Transportation District 5 Right-of-Way Engineering Department in the City of San Luis Obispo, State of California; thence along said Westerly right-of-way line South 20° 06' 36" East 550.31 feet; thence continuing along said Westerly right-of-way line South 23° 32' 35" East 307.51 feet to the beginning of a non-tangent curve concave Easterly having a radius of 4080.00 feet, to which a radial line bears South 67° 54' 00" West; thence continuing along said Westerly right-of-way line Southeasterly along said curve through a central angle of 7° 10' 01" an arc distance of 510.35 feet; thence continuing along said Westerly right-of-way line South 27° 12' 08" East 628.32 feet; thence continuing along said Westerly right-of-way line South 44° 10' 05" East 44.29 feet to a point of intersection with the Easterly boundary line of the parcel of Land described in the deed from the State of California to P. G. & E. recorded October 7, 1960, in the Office of the County Recorder of said County, in Volume 1087 of Official Records at Page 273; thence leaving said Westerly right-of-way line of highway 1 along last said Easterly boundary line South 17° 19' 03" East 136.90 feet; thence continuing along said Easterly boundary line South 45° 31' 03" East 508.65 feet; thence South 34° 07' 03" East 181.13 feet to the most Easterly corner of Lot 39 of Block 31 of said map of ATASCADERO BEACH; thence along the Southeasterly line of said Lot 39, last said line also being the Northeasterly prolongation of the centerline of Scott Street, South 55° 57' 03" West 289.42 feet to the beginning of a tangent curve concave Southeasterly having a radius of 175.72 feet; thence continuing along said centerline of Scott Street Southwesterly along said curve through a central angle of 39° 18' 10" an arc distance of 120.54 feet; thence continuing along said centerline South 16° 38' 53" West 0.26 feet to the beginning of a tangent curve concave Northwesterly having a radius of 404.66 feet; thence continuing along said centerline Southwesterly along said curve through a central angle of 43° 16' 54" an arc distance of 305.68 feet; thence continuing along said centerline South 59° 55' 47" West 15.07 feet to the beginning of a tangent curve concave Southeasterly having a radius of 95.71 feet; thence continuing along said centerline Southwesterly and Southerly along said curve through a central angle of 68° 03' 13" an arc distance of 113.68 feet to the true Point of Beginning.
EXCEPTING THEREFROM that portion described as follows:
Commencing at the most Easterly corner of Lot 39 of Block 31 of said map of ATASCADERO BEACH, said corner also being a point on the Easterly boundary line of said deed recorded October 7, 1960; thence along said Easterly boundary line North 34° 07' 03" West 181.13 feet; thence continuing along said Easterly boundary line North 45° 31' 03" West 300.40 feet to the true Point of Beginning; thence leaving said Easterly boundary line North 82° 25' 56" West 51.99 feet; thence North 80° 32' 04" West 49.03 feet; thence North 72° 44' 42" West 35.29 feet; thence South 89° 09' 33" West 47.97 feet; thence South 78° 00' 52" West 65.65 feet; thence South 56° 11' 46" West 49.82 feet; thence at right angles to that certain course in said Southwesterly boundary line of said 48.7 acre parcel, said course showing a bearing and distance of "North 53° 45' West 884.13 feet" (North 53° 52' 05" West 884.13 feet for the purposes of this description), South 36° 07' 55" West 473.15 feet; thence at right Angles North 53° 52' 05" West 148.76 Exhibit 1 to Agreement, page 9 of 24 Page 69 of 121
First American Title
feet; thence at right Angles North 36° 07' 55" East 75.05 feet; thence at right Angles North 53° 52' 05" West 837.90 feet; thence at Right Angles South 36° 07' 55" West 97.53 feet; thence at right Angles North 53° 52' 05" West 176.60 feet; thence North 19° 35' 23" East 254.47 feet; thence North 8° 25' 31" East 80.98 feet; thence North 19° 47' 04" East 209.64 feet; thence at right angles to said Southwesterly boundary line North 36° 07' 55" East 159.02 feet; thence North 75° 19' 23" East 421.36 feet; thence South 85° 42' 10" East 271.06 feet to the beginning of a non-tangent curve concave Northeasterly having a radius of 4080.00 feet, to which a radial line bears South 62° 51' 50" West, said beginning point also being on said Westerly right-of-way line of said California State highway 1; thence continuing along said Westerly right-of-way line Southeasterly along said curve through a central angle of 2° 07' 51" an arc distance of 151.74 feet; thence continuing along said Westerly right-of-way line South 27° 12' 08" East 628.32 feet; thence continuing along said Westerly right-of-way line South 44° 10' 05" East 44.29 feet to a point of intersection with the Easterly boundary line of the parcel of Land described in said deed dated October 7, 1960; thence leaving said Westerly right-of-way line of highway 1 along last said Easterly boundary line South 17° 19' 03" East 136.90 feet; thence continuing along said Easterly boundary line South 45° 31' 03" East 208.25 feet to the true Point of Beginning.
ALSO EXCEPTING THEREFROM that portion conveyed to the City of Morro Bay, a Municipal corporation of the State of California by deed recorded May 3, 2007 as Document No. 2007-030485 and corrected by deed recorded July 29, 2008 as Document No. 2008-039089 of Official Records.
ALSO EXCEPTING THEREFROM that portion conveyed to the City of Morrow Bay, a Municipal corporation of the State of California by deed recorded May 6, 2015 as Document No. 2015-021548 of Official Records.
ALSO EXCEPTING THEREFROM all minerals and oil, in, under, or upon that portion formerly described as Lot 15 in Block 29 of ATASCADERO BEACH, in the City of Morro Bay County of San Luis Obispo, State of California, according to map recorded July 2, 1917 in Book 2, Page 15 of Maps.
ALSO EXCEPTING THEREFROM all interests and facilities as reserved by P.G. & E in Grant Deed dated June 30, 1998, recorded July 2, 1998 as Document No. 1998-040835 of Official Records, in the Office of the County Recorder of said County.
APN: 066-331-046
Exhibit 1 to Agreement, page 10 of 24 Page 70 of 121
EXHIBIT “B”
INJECTION PIPELINE AND WELL EASEMENT
LEGAL DESCRIPTION
BEING A VARIALBE WIDTH STRIP OF LAND ACROSS PORTIONS OF LOT 1, PER LOT LINE ADJUSTMENT 01-97, CASE MBAL 97-239, IN THE CITY OF MORRO BAY, COUNTY OF SAN LUIS
OBISPO, STATE OF CALIFORNIA, AS DESCRIBED IN THE CERTIFICATE OF COMPLIANCE RECORDED FEBRUARY 26, 1998 AS DOCUMENT NUMBER 1998-010271 OF OFFICIAL RECORDS OF SAID COUNTY, AND AS SHOWN ON THE MAP FILED IN BOOK 77, PAGE 26 OF RECORD OF
SURVEYS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EASTERLY TERMINATION OF COURSE 53 AS SHOWN ON SAID LOT LINE ADJUSTMENT, ALSO BEING A POINT ON THE WESTERLY LINE OF STATE HIGHWAY 1 AS SHOWN ON SAID RECORD OF SURVEY;
THENCE NORTH 85°42’10” WEST, 81.78 FEET ALONG THE SOUTHERLY LINE OF SAID LOT 1 TO THE SOUTHWESTERLY CORNER OF PARCEL ONE AS DESCRIBED IN EXHIBIT B-2 OF THAT CERTAIN
GRANT OF EASEMENT FROM MORRO BAY POWER COMPANY LLC TO THE CITY OF MORO BAY FILED FOR RECORD OCTOBER 22, 2021 AS DOCUMENT NUMBER 2021-071670 IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, AND THE POINT OF BEGINNING; THENCE CONTINUING ALONG THE SOUTHERLY LINE OF SAID LOT 1, NORTH 85°42’10” WEST, 189.28 FEET;
THENCE CONTINUING ALONG SAID SOUTHERLY LINE, SOUTH 75°19’23” WEST, 354.43 FEET; THENCE LEAVING SAID SOUTHERLY LINE, NORTH 62°58’42” WEST, 254.79 FEET; THENCE NORTH 53°14’55” WEST, 90.58 FEET;
THENCE NORTH 63°31’46” WEST, 190.32 FEET;
THENCE NORTH 87°18’21” WEST, 51.87 FEET;
THENCE SOUTH 78°49’17” WEST, 206.54 FEET TO A POINT HEREINAFTER REFERRED TO AS POINT “A”;
THENCE SOUTH 17°29’44” EAST, 15.66 FEET;
THENCE SOUTH 73°54’58” WEST, 47.94 FEET;
THENCE NORTH 16°05’02” WEST, 24.06 FEET;
THENCE SOUTH 73°54’58” WEST, 200.09 FEET;
THENCE SOUTH 29°22’34” WEST, 22.48 FEET;
Exhibit 1 to Agreement, page 11 of 24 Page 71 of 121
THENCE SOUTH 73°54’58” WEST, 43.81 FEET;
THENCE NORTH 60°37’26” WEST, 22.12 FEET;
THENCE SOUTH 73°54’58” WEST, 79.17 FEET;
THENCE ON A TANGENT CURVE TO THE LEFT WITH A RADIUS OF 195.00 FEET, THROUGH A CENTRAL ANGLE OF 05°57’00” FOR AN ARC DISTANCE OF 20.25 FEET; THENCE SOUTH 67°57’59” WEST, 101.05 FEET;
THENCE ON A TANGENT CURVE TO THE RIGHT HAVING A RADIUS OF 205.00 FEET, THROUGH A CENTRAL ANGLE OF 03°05’36” FOR AN ARC DISTANCE OF 11.07 FEET; THENCE SOUTH 71°03’35” WEST, 117.69 FEET TO A POINT IN THE WESTERLY LINE OF SAID LOT 1; THENCE NORTHWESTERLY ALONG SAID WESTERLY LINE, NORTH 08°56’07” WEST, 53.37 FEET; THENCE LEAVING SAID WESTERLY LINE, NORTH 69°36’44” EAST, 168.19 FEET; THENCE NORTH 73°34’28” EAST, 321.25 FEET;
THENCE NORTH 76°23’30” EAST, 374.40 FEET;
THENCE SOUTH 87°18’21” EAST, 71.80 FEET;
THENCE SOUTH 63°31’46” EAST, 208.35 FEET;
THENCE SOUTH 53°14’55” EAST, 90.87 FEET;
THENCE SOUTH 62°58’42” EAST, 137.70 FEET;
THENCE NORTH 87°10’54” EAST, 94.04 FEET;
THENCE NORTH 75°19’27” EAST, 322.82 FEET;
THENCE SOUTH 85°42’06” EAST, 148.14 FEET TO A POINT ON THE EASTERLY LINE OF SAID PARCEL 1;
THENCE SOUTHERLY ALONG SAID EASTERLY LINE SOUTH 25°44’55” EAST, 115.49 FEET TO THE POINT OF BEGINNING.
Exhibit 1 to Agreement, page 12 of 24 Page 72 of 121
CONTAINING 3.09 ACRES, MORE OR LESS.
AS SHOWN ON EXHIBIT “C” ATTACHED HEREWITH AND MADE PART HEREOF.
THIS DESCRIPTION WAS PREPARED BY ME OR UNDER MY DIRECT SUPERVISION.
END DESCRIPTION
PREPARED BY: ________________________________
BURL STEUDE, PLS 9103
DATE: 12-31-2025
Exhibit 1 to Agreement, page 13 of 24 Page 73 of 121
• •
LICENSEDLANDSURVEYOR
STATE OF CALIFORNIA
BURL V.
STEUDE
No. 9103
Exhibit 1 to Agreement, page 14 of 24
• •
LICENSEDLANDSURVEYOR
STATE OF CALIFORNIA
BURL V.
STEUDE
No. 9103
Exhibit 1 to Agreement, page 15 of 24
EXHIBIT “D”
MONITORING WELLS EASEMENT
LEGAL DESCRIPTION
THOSE PORTIONS OF LOT 1, PER LOT LINE ADJUSTMENT 01-97, CASE MBAL 97-239, IN THE CITY
OF MORRO BAY, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, AS DESCRIBED IN THE CERTIFICATE OF COMPLIANCE RECORDED FEBRUARY 26, 1998 AS DOCUMENT NUMBER 1998- 010270 OF OFFICIAL RECORDS OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
A PARCEL OF LAND BEING A CIRCLE HAVING A RADIUS OF 4.50 FEET, THE CENTER OF WHICH BEARS SOUTH 45°18’03” WEST FROM THE MOST NORTHERLY CORNER OF SAID LOT 1.
ADDING THERETO A PARCEL OF LAND BEING A CIRCLE HAVING A RADIUS OF 4.50 FEET, THE CENTER OF WHICH BEARS SOUTH 32°53’47” WEST, 451.76 FEET FROM THE MOST NORTHERLY CORNER OF SAID LOT 1;
ADDING THERETO A PARCEL OF LAND BEING A CIRCLE HAVING A RADIUS OF 4.50 FEET, THE CENTER OF WHICH BEARS SOUTH 06°37’11” EAST, 653.29 FEET FROM THE MOST NORTHERLY CORNER OF SAID LOT 1;
ADDING THERETO A PARCEL OF LAND BEING A CIRCLE HAVING A RADIUS OF 4.50 FEET, THE CENTER OF WHICH BEARS SOUTH 07°21’40” EAST, 776.42 FEET FROM THE MOST NORTHERLY CORNER OF SAID LOT 1;
BEARINGS BASED ON THE NORTHERLY LINE OF SAID LOT 1 PER DOCUMENT NUMBER 1998- 010270 OF OFFICIAL RECORDS OF SAID COUNTY, HAVING A BEARING OF NORTH 81°03’50” EAST.
CONTAINING 254 SQUARE FEET, MORE OR LESS.
AS SHOWN ON EXHIBIT “E” ATTACHED HEREWITH AND MADE PART HEREOF.
THIS DESCRIPTION WAS PREPARED BY ME OR UNDER MY DIRECT SUPERVISION.
END DESCRIPTION
PREPARED BY: ________________________________
BURL STEUDE, PLS 9103
DATE: 12-31-2025
Exhibit 1 to Agreement, page 16 of 24 Page 76 of 121
• •
LICENSEDLANDSURVEYOR
STATE OF CALIFORNIA
BURL V.
STEUDE
No. 9103
Exhibit 1 to Agreement, page 17 of 24
• •
LICENSEDLANDSURVEYOR
STATE OF CALIFORNIA
BURL V.
STEUDE
No. 9103
Exhibit 1 to Agreement, page 18 of 24
EXHIBIT “F”
TEMPORARY CONSTRUCTION EASEMENTS
LEGAL DESCRIPTION
THOSE PORTIONS OF LOT 1, PER LOT LINE ADJUSTMENT 01-97, CASE MBAL 97-239, IN THE CITY
OF MORRO BAY, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, AS DESCRIBED IN THE CERTIFICATE OF COMPLIANCE RECORDED FEBRUARY 26, 1998 AS DOCUMENT NUMBER 1998- 010270 OF OFFICIAL RECORDS OF SAID COUNTY, AND AS SHOWN ON THE MAP FILED IN BOOK 77, PAGE 26 OF RECORD OF SURVEYS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
PARCEL 1
COMMENCING AT THE NORTHERLY CORNER OF SAID LOT 1, ALSO BEING A POINT ON THE WESTERLY LINE OF STATE HIGHWAY 1 AS SHOWN ON SAID RECORD OF SURVEY; THENCE SOUTH 81°04’36” WEST, 71.35 FEET ALONG THE NORTHERLY LINE OF SAID LOT 1 TO THE NORTHWESTERLY CORNER OF PARCEL ONE AS DESCRIBED IN EXHIBIT B-2 OF THAT
CERTAIN GRANT OF EASEMENT FROM MORRO BAY POWER COMPANY LLC TO THE CITY OF MORO BAY FILED FOR RECORD OCTOBER 22, 2021 AS DOCUMENT NUMBER 2021-071670 IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY;
THENCE LEAVING SAID NORTHERLY LINE, SOUTHEASTERLY ALONG THE WESTERLY LINE OF SAID PARCEL ONE, SOUTH 20°06’16” EAST, 334.91 FEET TO THE POINT OF BEGINNING; THENCE LEAVING SAID WESTERLY LINE, SOUTH 77°17’43” WEST, 296.39 FEET; THENCE SOUTH 32°17’43” WEST, 21.21 FEET;
THENCE SOUTH 77°17’43” WEST, 28.43 FEET;
THENCE ON A NON-TANGENT CURVE CONCAVE TO THE NORTHWEST, HAVING A RADIAL BEARING OF NORTH 52°14’59” WEST, A RADIUS OF 295.00 FEET, THROUGH A CENTRAL ANGLE OF 60°47’16”, FOR AN ARC DISTANCE OF 312.98 FEET;
THENCE NORTH 08°32’18” EAST, 25.00 FEET;
THENCE ON A NON-TANGET CURVE CONCAVE TO THE NORTHWEST, HAVING A RADIAL BEARING OF NORTH 08°32’18” EAST, A RADIUS OF 270.00 FEET, THROUGH A CENTRAL ANGLE OF 64°14’16”, FOR AN ARC DISTANCE OF 302.71 FEET;
THENCE NORTH 77°17’43” EAST, 341.57 FEET TO A POINT IN THE SAID WESTERLY LINE OF PARCEL ONE;
THENCE SOUTHEASTERLY ALONG SAID WESTERLY LINE, SOUTH 20°06’16” EAST, 15.13 FEET TO THE POINT OF BEGINNING.
Exhibit 1 to Agreement, page 19 of 24 Page 79 of 121
CONTAINING AN AREA OF 13,372 SQUARE FEET, MORE OR LESS.
PARCEL 2
BEGINNING AT POINT “A” HEREINABOVE DESCRIBED IN EXHIBIT “B” OF THIS DOCUMENT; THENCE NORTHEASTERLY ALONG THE SOUTHEASTERLY LINE OF SAID EXHIBIT “B”, NORTH 78°49’17” EAST, 9.48 FEET;
THENCE LEAVING SAID SOUTHEASTERLY LINE, SOUTH 16°05’02” EAST, 27.84 FEET; THENCE SOUTH 73°54’58” WEST, 100.00 FEET;
THENCE NORTH 16°05’02” WEST, 37.06 FEET TO A POINT ON SAID SOUTHEASTERLY LINE AND HEREINAFTER REFERRED TO AS POINT “B”;
THENCE ALONG SAID SOUTHEASTERLY LINE THE FOLLOWING FOUR COURSES, NORTH 73°54’58” EAST, 43.00 FEET;
THENCE SOUTH 16°05’02” EAST, 24.06 FEET;
THENCE NORTH 73°54’58” EAST, 47.94 FEET;
THENCE NORTH 17°29’44” WEST, 15.66 FEET TO THE POINT OF BEGINNING.
CONTAINING AN AREA OF 2,476 SQUARE FEET, MORE OR LESS.
PARCEL 3
COMMENCING AT POINT “B” AND SOUTHEASTERLY LINE OF EXHIBIT “B” HEREINABOVE DESCRIBED, THENCE SOUTH 73°54’58” WEST, 137.19 FEET TO THE POINT OF BEGINNING; THENCE SOUTH 16°05’02” EAST, 37.00 FEET;
THENCE SOUTH 73°54’58” WEST, 100.00 FEET;
THENCE NORTH 16°05’02” WEST, 37.00 FEET TO A POINT ON SAID SOUTHEASTERLY LINE; THENCE ALONG SAID SOUTHEASTERLY LINE THE FOLLOWING FIVE COURSES, NORTH 73°54’58” EAST, 4.75 FEET;
THENCE SOUTH 60°37’26” EAST, 22.12 FEET;
THENCE NORTH 73°54’58” WEST, 43.81 FEET;
THENCE NORTH 29°22’34” EAST, 22.48 FEET;
Exhibit 1 to Agreement, page 20 of 24 Page 80 of 121
THENCE NORTH 73°54’58” WEST, 19.90 FEET TO THE POINT OF BEGINNING.
CONTAINING AN AREA OF 2,761 SQUARE FEET, MORE OR LESS.
AS SHOWN ON EXHIBIT “G” ATTACHED HEREWITH AND MADE PART HEREOF.
THIS DESCRIPTION WAS PREPARED BY ME OR UNDER MY DIRECT SUPERVISION.
END DESCRIPTION
PREPARED BY: ________________________________
BURL STEUDE, PLS 9103
DATE: 12-31-2025
Exhibit 1 to Agreement, page 21 of 24 Page 81 of 121
• •
LICENSEDLANDSURVEYOR
STATE OF CALIFORNIA
BURL V.
STEUDE
No. 9103
Exhibit 1 to Agreement, page 22 of 24
• •
LICENSEDLANDSURVEYOR
STATE OF CALIFORNIA
BURL V.
STEUDE
No. 9103
Exhibit 1 to Agreement, page 23 of 24
• •
LICENSEDLANDSURVEYOR
STATE OF CALIFORNIA
BURL V.
STEUDE
No. 9103
Exhibit 1 to Agreement, page 24 of 24
______________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Dynegy/Deed Easement 1 Recording requested by:
Hamner, Jewell & Associates
Government Real Estate Services
When recorded, mail to:
City of Morro Bay
Utilities Division
555 South Bay Boulevard
Morro Bay, CA 93442
Exempt from the $75 Building and Jobs Act Fee per Gov’t Code § 27388.1(2)(D) Public Agency No fee pursuant to Government Code § 6103
No Documentary Transfer Tax per R&T Code § 11922
No Recording Fee per Government Code § 27383
APN: 066-331-046 (a portion)
EASEMENT DEED - GRANT OF EASEMENTS
(Wells, Pipelines, and Associated Access and Facilities) FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, MORRO BAY POWER COMPANY LLC, a Delaware limited liability company, formerly known as Dynegy Morro Bay, LLC, a Delaware limited liability company, successor by merger to LSP Morro Bay, LLC, a Delaware limited liability company, successor by merger to Duke Energy Morro Bay, LLC, a Delaware limited liability company (hereinafter collectively referred to as “Grantor”), hereby GRANTS to
The City of Morro Bay, a municipal corporation and a charter city in the County of San Luis Obispo, State of California, its successors and assigns (hereinafter referred to as “City”),
the following permanent and temporary easement interests described in this Deed as of this _____ day of __________, 2026 (the “Effective Date”). These easements are all located within Grantor’s “Real Property” that is located in the City of Morro Bay, County of San Luis Obispo, described in Exhibit “A”, attached hereto and incorporated by reference herein, which is the servient tenement. This Grant of Easements shall be effective upon recordation in the Official Records of San Luis Obispo County (“Official Records”)
City’s use of the following described easements shall be solely in conjunction with the construction, operation and maintenance of its public water systems, including the installation of new injection, monitoring, and extraction wells, pipelines and associated appurtenant infrastructure (the “Project”).
______________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Dynegy/Deed Easement 2 A. INJECTION WELLS AND PERMANENT PIPELINE EASEMENT
A Permanent Easement for Pipelines and Injection Wells to construct, install, operate, access, maintain, monitor, and replace, water injection wells, pipelines, and related facilities within that portion of Grantor’s Real Property described in Exhibit B and depicted in Exhibit C, attached hereto and incorporated herein. This Permanent Easement includes the right for City to perform construction activities for the installation of pipelines and wells, including trench work, laying pipes, installing well equipment, and other construction work related to the installation of said wells and pipelines, to be performed in accordance with City’s existing plans and specifications for said facilities. City shall have the right to remove trees that will impact the construction of the pipelines and wells.
B. PERMANENT EASEMENT FOR MONITORING WELLS
A Permanent Easement for Monitoring Wells to construct, install, operate, access, maintain, monitor, replace, and retrieve data from ground water monitoring wells and related facilities. These related facilities may include, but are not limited to, markers, concrete collar and well cover, monitoring devices, data logging devices, and all related incidents, fixtures, and appurtenances necessary for the use of the groundwater monitoring well including equipment to service such Facilities. The markers, concrete collar and well cover, and other related facilities may be located upon the ground surface, flush with the ground surface elevation. This Permanent Easement for monitoring wells shall be in, over, on, through, within, under, and across that portion of the Real Property described in Exhibit D and depicted in Exhibit E, attached hereto and incorporated by reference herein.
The Permanent Easements herein described shall be SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:
1. The facilities and improvements installed in the Easement Areas described herein collectively are referred to herein as “City Facilities.” Plans for City Facilities as they exist from time to time shall be maintained at the City’s principal offices and provided to Grantor prior to commencement of improvements. City shall give Grantor prior written notice of any material changes or material amendments to the plans and specifications for the Project within 30 days after City’s decision to make the material change or material amendment. All permits required for the construction or activities to be conducted in the Easements which are required by law, including permits that must be obtained from any local, state or federal agency and permitting authorities other than City shall be obtained and copies of the same provided to Grantor prior to the commencement of the activity subject to the permit. Notices shall be in writing and or sent prepaid, first-class mail to Morro Bay Power Company, LLC c/o Vistra Corp., Attn: Real Estate, P. O. Box 681, Fairfield, TX 75840.
2. City shall have the right of ingress and egress for personnel, vehicles, and construction equipment to and from the Easement Areas that are described in Exhibits B and D. This shall include the right to use lanes, drives, rights-of-way, paths and roadways within the Real Property which now exist or which hereinafter may be constructed, as shall be convenient and necessary for the purpose of exercising the rights herein set forth; provided, however, that nothing herein shall prevent or limit Grantor’s rights to close such lanes, drives, roadways, paths or rights-ofPage 86 of 121 ______________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Dynegy/Deed Easement 3 way, and to provide City with comparable alternative access to the Easement Areas, at Grantor’s sole discretion and following consultation with the City.
3. These easements are subject to all existing fencing, drainage and utility easements, public roads, electrical transmission facilities, and communication lines existing on the date this document is signed by Grantor, and all future uses which do not directly or indirectly interfere with or endanger City’s exercise of the rights described herein, including the right to use the Easement Areas for surface uses such as parks, playing fields, parking lots and landscaping, provided, however, that no permanent structures be placed on the surface of the Permanent Easement areas granted herein, and City shall have the right to construct, maintain, and repair commercially reasonable protective fencing around the injection wells and ancillary equipment to restrict access and protect such City Facilities. City shall replace in kind any fencing removed from Grantor’s Real Property during construction of City Facilities and shall be liable for any damages to Grantor incurred as a result of City’s failure to properly secure the Real Property during any construction, and for the duration of the existence of the Permanent Easements granted herein. City shall have the right to clear and keep clear from the Easement Areas all explosives, buildings, structures, walls, and other facilities of a permanent nature, and any earth cover or stockpile of material placed without the City’s written consent, which interfere with City’s use of the Easement Areas. Grantor shall not construct, nor permit others to construct, such permanent facilities which conflict with City’s ability to use the Easement Areas for the rights granted herein. In addition to any other legal and equitable remedies for violations of this paragraph, City shall have the right to do all things necessary and proper to remove any such vegetation, explosives, improvements, and materials, provided however, that Grantor may maintain perimeter fencing around the Real Property or portions thereof, so long as gate access is provided to City as needed to maintain unobstructed ingress and egress to the City Facilities.
C. TEMPORARY CONSTRUCTION EASEMENTS
1. Exclusive Temporary Easements for temporary construction purposes, for all uses necessary in conjunction with the construction and installation of the City Facilities and electrical service associated therewith, upon that portion of the Real Property described as Parcel 1, Parcel 2, and Parcel 3 in Exhibit F, identified as “Temporary Construction Easements”, and depicted as same in Exhibit G (3 pages), each attached hereto and incorporated herein.
2. The Temporary Construction Easements shall commence fifteen (15) days after issuance by City to Grantor of a written advance Notice of Construction Commencement and shall terminate upon completion of City’s construction of City Facilities, or one (1) year after commencement, whichever occurs first. City shall have the unilateral right to extend each Temporary Construction Easement on a monthly basis if needed to complete the work within said Easement at the following monthly rates: $700.00 per month for monthly extensions on Parcel 1, and $175 per month for monthly extensions on Parcels 2 and 3 collectively. In any event, the maximum extension duration shall be limited to an additional maximum one year (12 months) term. City shall have the exclusive right to use the Temporary Construction Easement areas during the term of this Temporary Construction Easement, and any extensions in accordance with the provisions herein, from commencement through completion of City Facilities, and to restrict access thereto by Grantor and others. Upon completion of City’s
______________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Dynegy/Deed Easement 4 construction, City shall restore the Temporary Construction Easement areas to a comparable condition as that which existed prior to City’s access and use, at no expense to Grantor, to the extent reasonably practical.
Upon the expiration of the Temporary Construction Easement and completion of all restoration of the Easement Area, all of the rights and benefits of the City in, to and under this Easement shall automatically terminate and be of no further force and effect.
D. MISCELLANEOUS
1. Subsequent to the grant of these Easements, Grantor shall not grant any easements of any kind whatsoever to others in, over, on, through, within, under or across the Easement Areas herein described without the prior written approval of the City, which approval shall not be unreasonably conditioned, delayed, nor withheld.
2. Prior to commencing operations under this Easement Agreement, the City agrees to procure and cause any City subcontractors or other parties to maintain in force during the term of this Easement (1) statutory Workers’ Compensation insurance covering all personnel engaged in furnishing services related to City’s operations on the Easement Area, including employer’s liability coverage with minimum limits of at least Five Million Dollars ($5,000,000.00) per accident and Five Million Dollars ($5,000,000.00) per occurrence; (2) general liability coverage with a minimum Five Million Dollars ($5,000,000.00) per occurrence for bodily injury, personal injury, property damage and products and completed operations liability; (3) comprehensive automobile liability coverage for Five Million Dollars ($5,000,000) per occurrence for vehicles owned or utilized by the City’s personnel of its contractor’s personnel; and (4) excess liability limits of Five Million Dollars ($5,000,000.00) per occurrence (excess of underlying general liability, auto liability and Workers’ Compensation).
3. THE CITY SHALL INDEMNIFY, DEFEND, SAVE, PROTECT AND HOLD
GRANTOR AND ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
REPRESENTATIVES, AFFILIATES, SUBSIDIARIES, SUCCESSORS AND ASSIGNS,
HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LIABILITIES, LOSSES,
DAMAGES, DEMANDS, LAWSUITS, AND CAUSES OF ACTION (INCLUDING
REASONABLE ATTORNEY'S FEES AND COSTS OF LITIGATION) ARISING OUT OF, RESULTING FROM, CAUSED BY, OR IN ANY WAY RELATED TO THE CITY’S
EXERCISE OF THE RIGHTS GRANTED HEREUNDER, INCLUDING BUT NOT LIMITED
TO GRANTEE'S CONSTRUCTION OF THE CITY FACILITIES, INCLUDING BUT NOT LIMITED TO CLAIMS FOR:
ALL INJURIES TO, DEATHS, OR ILLNESSES OF ANY PERSON, INCLUDING
OFFICERS, AGENTS, OR EMPLOYEES OF THE CITY OR GRANTOR, OR AGENTS, ASSIGNS, OR SUBCONTRACTORS OF THE CITY OR GRANTOR;
ALL DAMAGES TO OR LOSSES OF PROPERTY OF THE CITY, GRANTOR OR
ANY THIRD-PARTY, OR EMPLOYEES, AGENTS, ASSIGNS, OR SUBCONTRACTORS
OF THE CITY OR GRANTOR, EXCEPT FOR ANY DAMAGE TO OR LOSS OF GRANTOR’S REAL PROPERTY CAUSED BY HAZARDOUS SUBSTANCE CONDITIONS
______________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Dynegy/Deed Easement 5 EXISTING ON GRANTOR’S REAL PROPERTY PRIOR TO THE DATE OF THIS GRANT
OF EASEMENTS AND ARE NOT CAUSED OR EXCABERATED BY THE ACTS OR OMISSIONS OF GRANTEE;
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THE
FOREGOING INDEMNITY SHALL NOT APPLY TO ANY CAUSES OF ACTION,
DAMAGES, LIABILITIES, DEMANDS, SUITS, OBLIGATIONS, LOSSES, PENALTIES, AND COSTS AND EXPENSES CAUSED BY GRANTOR’S GROSSLY NEGLIGENT ACTS
OR OMISSIONS OR THE GROSSLY NEGLIGENT ACTS OR OMISSIONS OF GRANTOR’S EMPLOYEES, AGENTS, REPRESENTATIVES, SUCCESSORS OR ASSIGNS.
4. The parties to this Easement acknowledge and agree that the easements and other rights conferred by this Easement are intended to, and do, constitute covenants that run with the land and shall inure to the benefit of and be binding upon the parties and their respective grantees, heirs, successors and assigns.
5. The rights of the City hereunder shall not be assigned or transferred without the express written consent of Grantor, which consent shall not be unreasonably withheld.
6. This instrument contains the entire agreement of the parties with respect to this Easement.
7. This instrument and the covenants and agreements herein contained shall inure to the benefit of and be binding and obligatory upon the successors and assigns of the parties hereto.
8. This instrument must be executed by both parties to be a valid and binding agreement.
9. The Easements described herein are intended to supersede, nullify and replace that certain easement previously identified specifically as “Parcel Two” legally described in Exhibit B-2 and depicted in Exhibit C-2 in that GRANT OF PERMANENT EASEMENTS document currently encumbering the Real Property as Document No. 2021071670 recorded on October 22, 2021 in the Official Records of San Luis Obispo County Recorder’s Office. All other easements and terms and conditions of said prior recorded document shall remain in full force and effect, unchanged by this document. [Signatures to follow]
______________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Dynegy/Deed Easement 6 GRANTOR:
MORRO BAY POWER COMPANY LLC, a Delaware limited liability company, formerly known as Dynegy Morro Bay, LLC, a Delaware limited liability company, successor by merger to LSP Morro Bay, LLC, a Delaware limited liability company, successor by merger to Duke Energy Morro Bay, LLC, a Delaware limited liability company By: __________________________________________ ___________________ Name: Matthew A. Goering Date
Title: Senior Vice President
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of TEXAS
County of DALLAS
On ______________________ before me, ________________________________________, Notary Public, personally appeared Matthew A. Goering, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of Texas that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature __________________________ (Seal)
______________________________________________________________________________ APN: 066-331-046 City of Morro Bay/Recycled Water Facilities/Dynegy/Deed Easement 7 CERTIFICATE OF ACCEPTANCE
This is to certify that the City of Morro Bay hereby accepts for public purposes the real property, or interest therein, described in that deed dated ________________________, from MORRO BAY POWER COMPANY LLC, a Delaware limited liability company, formerly known as Dynegy Morro Bay, LLC, a Delaware limited liability company, successor by merger to LSP Morro Bay, LLC, a Delaware limited liability company, successor by merger to Duke Energy Morro Bay, LLC, a Delaware limited liability company, collectively Grantor therein, to the City of Morro Bay, Grantee therein, and consents to the recordation thereof.
In Witness Whereof, I have hereunto set my hand this _____ day of ________________, 2026.
CITY OF MORRO BAY
By: ______________________________________
Carla Wixom
Mayor
ATTEST:
By _________________________________
Dana Swanson
City Clerk
LEGAL DESCRIPTION
Real property in the City of Morro Bay, County of San Luis Obispo, State of California, described as follows:
That portion of Lot 1 of Lot Line Adjustment Case No. LL 01-97, (MBAL 97-239) in the City of Morro Bay, County of San Luis Obispo recorded February 26, 1998 as Document No. 1998-010270, records of San Luis Obispo County, California described as follows;
All that certain real property situated in Section 25, Township 29 South, Range 10 east, Mount Diablo Base and Meridian, in the City of Morro Bay, County of San Luis obispo, State of California, described as follows:
Commencing at a point of intersection of the Northerly right-of-way line of the Surf Street (formerly known as Ninth Street) with the centerline of Scott Street (formerly known as "S" Street) , as said streets are delineated and so designated on the map of ATASCADERO BEACH, recorded July 2, 1917 in Book 2,
Beginning of the 48.7 acre parcel of land set forth in the quitclaim deed from the County of San Luis Obispo to The Pacific Gas and Electric Company, a corporation (P.G.&E.), recorded September 25, 1951, in the Office of the County Recorder of said County in Book 628 of Official Records at Page 342; thence along the centerline of Scott Street North 8° 07' 26" West 126.01 feet to the Northeasterly corner of that certain parcel of land described in the deed from P.G.&E. to the County of San Luis Obispo Recorded July 28, 1953, in the Office of the County Recorder of said County, in Volume 720 of Official Records at Page 67, said point also being the true Point of Beginning; thence leaving said centerline of Scott Street, along the Northerly line of the land described in last said deed South 88° 19' 28" West 269.38 feet to a point on the centerline of Mesa Drive as said drive is delineated on said map of ATASCADERO BEACH, said point also being the Northwesterly corner of the lands described in last said deed, and being a point on the boundary line of said 48.7 acre parcel; thence along said boundary line South 87° 15' 33" West 182.67 feet; thence South 20° 48' 10" East 122.10 feet to a point on the Northerly right-of-way line of said surf street and the Southerly boundary line of said 48.7 acre parcel; thence along said Northerly right-of- way line and said Southerly boundary line South 89° 11' 34" West 362.73 feet to the Southeasterly terminus of that certain course in the Southwesterly boundary line of said 48.7 acre parcel, said course showing a bearing and distance of "North 53° 45' West 884.13 feet" (North 53° 52' 05" West 884.13 feet for the purposes of this description), said point also being the most Easterly corner of the parcel of Land described in the deed from the County of San Luis Obispo to P.G. & E., recorded January 26, 1956 in the Office of the County Recorder of said County, in Volume 833 of Official Records at Page 525; thence at right angles to last said course South 36° 07' 55" West 190.66 feet to a point on the Southwesterly boundary line of tide lands survey no. 14, recorded in Book 4 at Page 11 of Record of Surveys in the Office of the San Luis Obispo County Recorders office; thence along said Southwesterly boundary North 59° 39' 45" West 201.03 feet; thence leaving said Southwesterly boundary North 36° 07' 55" East 210.96 feet to a point on the Southwesterly boundary line of said 48.7 acre parcel, said point being distant North 53° 52' 05" West 200.00 feet along said boundary line from said Southeasterly terminus of the Southwesterly boundary line of the 48.7 acre parcel; thence along the Southwesterly boundary of said
48.7 acre parcel North 53° 52' 05" West 684.13 feet; thence at right Angles South 36° 07' 55" West 369.55 feet to a point on the Southwesterly boundary line of the parcel of Land quitclaimed to the County of San Luis Obispo by deed recorded August 1, 1949, in Book 530 at Page 214 of Official Records of said County; thence along last said Southwesterly boundary North 75° 37' 05" West 215.33 feet; thence North 36° 07' 55" East 449.34 feet; thence North 53° 52' 05" West 286.04 feet; thence North 30° 58' 19" West 175.66 feet; thence North 21° 19' 19" West 543.47 feet to a point on the centerline of 79th Street, as said 79th Street is shown on said map of ATASCADERO BEACH; thence leaving the boundary of said 48.7 acre parcel, along the centerline of said 79th Street South 81° 03' 50" West 42.89 feet to a point of intersection with the centerline of "C" Street, as said centerline is so delineated on said map; thence along the centerline of said "C" Street North 8° 56' 10" West 1379.64 feet to a point of intersection with EXHIBIT "A"
the centerline of 70th Street, said 70th Street being so delineated on said map; thence along the centerline of said 70th Street North 81° 03' 50" East 736.36 feet to the Southwesterly corner of Lot 27 of Block 28D of said map, thence along the Westerly line of said lot 27 and Lot 20 of said Block 28D North 8° 56' 10" West 149.96 feet to a point on the centerline of 69th Street, said 69th Street being so delineated on said map, said point also being the Northwesterly corner of said Lot 20; thence along said centerline of 69th Street North 81° 03' 50" East 175.26 feet to a point of intersection with the centerline of "J" Street, said "J" Street being so delineated on said map; thence along said centerline of "J" Street South 8° 56' 10" East 10.00 feet to a point of intersection with the Westerly prolongation of the Northerly line of Lot 6 of Block 27 of said map; thence along said Westerly prolongation and the Northerly line of Lot 6 and the Easterly prolongation thereof North 81° 03' 50" East 750.88 feet to the Northwesterly corner of the parcel of Land described in the deed from P. G. & E. to the State of California recorded October 7, 1960 in the Office of the County Recorder of said County in Volume 1087 of Official Records at
State highway 1 as shown on the California Department of Transportation right-of-way map sheets designated as postmile 29.6 and postmile 30.1 (sheets 27 and 28 of 33) on file in the Office of the California Department of Transportation District 5 Right-of-Way Engineering Department in the City of San Luis Obispo, State of California; thence along said Westerly right-of-way line South 20° 06' 36" East 550.31 feet; thence continuing along said Westerly right-of-way line South 23° 32' 35" East 307.51 feet to the beginning of a non-tangent curve concave Easterly having a radius of 4080.00 feet, to which a radial line bears South 67° 54' 00" West; thence continuing along said Westerly right-of-way line Southeasterly along said curve through a central angle of 7° 10' 01" an arc distance of 510.35 feet; thence continuing along said Westerly right-of-way line South 27° 12' 08" East 628.32 feet; thence continuing along said Westerly right-of-way line South 44° 10' 05" East 44.29 feet to a point of intersection with the Easterly boundary line of the parcel of Land described in the deed from the State of California to P. G. & E. recorded October 7, 1960, in the Office of the County Recorder of said County, in Volume 1087 of Official Records at Page 273; thence leaving said Westerly right-of-way line of highway 1 along last said Easterly boundary line South 17° 19' 03" East 136.90 feet; thence continuing along said Easterly boundary line South 45° 31' 03" East 508.65 feet; thence South 34° 07' 03" East 181.13 feet to the most Easterly corner of Lot 39 of Block 31 of said map of ATASCADERO BEACH; thence along the Southeasterly line of said Lot 39, last said line also being the Northeasterly prolongation of the centerline of Scott Street, South 55° 57' 03" West 289.42 feet to the beginning of a tangent curve concave Southeasterly having a radius of 175.72 feet; thence continuing along said centerline of Scott Street Southwesterly along said curve through a central angle of 39° 18' 10" an arc distance of 120.54 feet; thence continuing along said centerline South 16° 38' 53" West 0.26 feet to the beginning of a tangent curve concave Northwesterly having a radius of 404.66 feet; thence continuing along said centerline Southwesterly along said curve through a central angle of 43° 16' 54" an arc distance of 305.68 feet; thence continuing along said centerline South 59° 55' 47" West 15.07 feet to the beginning of a tangent curve concave Southeasterly having a radius of 95.71 feet; thence continuing along said centerline Southwesterly and Southerly along said curve through a central angle of 68° 03' 13" an arc distance of 113.68 feet to the true Point of Beginning.
EXCEPTING THEREFROM that portion described as follows:
Commencing at the most Easterly corner of Lot 39 of Block 31 of said map of ATASCADERO BEACH, said corner also being a point on the Easterly boundary line of said deed recorded October 7, 1960; thence along said Easterly boundary line North 34° 07' 03" West 181.13 feet; thence continuing along said Easterly boundary line North 45° 31' 03" West 300.40 feet to the true Point of Beginning; thence leaving said Easterly boundary line North 82° 25' 56" West 51.99 feet; thence North 80° 32' 04" West 49.03 feet; thence North 72° 44' 42" West 35.29 feet; thence South 89° 09' 33" West 47.97 feet; thence South 78° 00' 52" West 65.65 feet; thence South 56° 11' 46" West 49.82 feet; thence at right angles to that certain course in said Southwesterly boundary line of said 48.7 acre parcel, said course showing a bearing and distance of "North 53° 45' West 884.13 feet" (North 53° 52' 05" West 884.13 feet for the purposes of this description), South 36° 07' 55" West 473.15 feet; thence at right Angles North 53° 52' 05" West 148.76
First American Title
feet; thence at right Angles North 36° 07' 55" East 75.05 feet; thence at right Angles North 53° 52' 05" West 837.90 feet; thence at Right Angles South 36° 07' 55" West 97.53 feet; thence at right Angles North 53° 52' 05" West 176.60 feet; thence North 19° 35' 23" East 254.47 feet; thence North 8° 25' 31" East 80.98 feet; thence North 19° 47' 04" East 209.64 feet; thence at right angles to said Southwesterly boundary line North 36° 07' 55" East 159.02 feet; thence North 75° 19' 23" East 421.36 feet; thence South 85° 42' 10" East 271.06 feet to the beginning of a non-tangent curve concave Northeasterly having a radius of 4080.00 feet, to which a radial line bears South 62° 51' 50" West, said beginning point also being on said Westerly right-of-way line of said California State highway 1; thence continuing along said Westerly right-of-way line Southeasterly along said curve through a central angle of 2° 07' 51" an arc distance of 151.74 feet; thence continuing along said Westerly right-of-way line South 27° 12' 08" East 628.32 feet; thence continuing along said Westerly right-of-way line South 44° 10' 05" East 44.29 feet to a point of intersection with the Easterly boundary line of the parcel of Land described in said deed dated October 7, 1960; thence leaving said Westerly right-of-way line of highway 1 along last said Easterly boundary line South 17° 19' 03" East 136.90 feet; thence continuing along said Easterly boundary line South 45° 31' 03" East 208.25 feet to the true Point of Beginning.
ALSO EXCEPTING THEREFROM that portion conveyed to the City of Morro Bay, a Municipal corporation of the State of California by deed recorded May 3, 2007 as Document No. 2007-030485 and corrected by deed recorded July 29, 2008 as Document No. 2008-039089 of Official Records.
ALSO EXCEPTING THEREFROM that portion conveyed to the City of Morrow Bay, a Municipal corporation of the State of California by deed recorded May 6, 2015 as Document No. 2015-021548 of Official Records.
ALSO EXCEPTING THEREFROM all minerals and oil, in, under, or upon that portion formerly described as Lot 15 in Block 29 of ATASCADERO BEACH, in the City of Morro Bay County of San Luis Obispo, State of California, according to map recorded July 2, 1917 in Book 2, Page 15 of Maps.
ALSO EXCEPTING THEREFROM all interests and facilities as reserved by P.G. & E in Grant Deed dated June 30, 1998, recorded July 2, 1998 as Document No. 1998-040835 of Official Records, in the Office of the County Recorder of said County.
APN: 066-331-046
EXHIBIT “B”
INJECTION PIPELINE AND WELL EASEMENT
LEGAL DESCRIPTION
BEING A VARIALBE WIDTH STRIP OF LAND ACROSS PORTIONS OF LOT 1, PER LOT LINE ADJUSTMENT 01-97, CASE MBAL 97-239, IN THE CITY OF MORRO BAY, COUNTY OF SAN LUIS
OBISPO, STATE OF CALIFORNIA, AS DESCRIBED IN THE CERTIFICATE OF COMPLIANCE RECORDED FEBRUARY 26, 1998 AS DOCUMENT NUMBER 1998-010271 OF OFFICIAL RECORDS OF SAID COUNTY, AND AS SHOWN ON THE MAP FILED IN BOOK 77, PAGE 26 OF RECORD OF
SURVEYS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE EASTERLY TERMINATION OF COURSE 53 AS SHOWN ON SAID LOT LINE ADJUSTMENT, ALSO BEING A POINT ON THE WESTERLY LINE OF STATE HIGHWAY 1 AS SHOWN ON SAID RECORD OF SURVEY;
THENCE NORTH 85°42’10” WEST, 81.78 FEET ALONG THE SOUTHERLY LINE OF SAID LOT 1 TO THE SOUTHWESTERLY CORNER OF PARCEL ONE AS DESCRIBED IN EXHIBIT B-2 OF THAT CERTAIN
GRANT OF EASEMENT FROM MORRO BAY POWER COMPANY LLC TO THE CITY OF MORO BAY FILED FOR RECORD OCTOBER 22, 2021 AS DOCUMENT NUMBER 2021-071670 IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, AND THE POINT OF BEGINNING; THENCE CONTINUING ALONG THE SOUTHERLY LINE OF SAID LOT 1, NORTH 85°42’10” WEST, 189.28 FEET;
THENCE CONTINUING ALONG SAID SOUTHERLY LINE, SOUTH 75°19’23” WEST, 354.43 FEET; THENCE LEAVING SAID SOUTHERLY LINE, NORTH 62°58’42” WEST, 254.79 FEET; THENCE NORTH 53°14’55” WEST, 90.58 FEET;
THENCE NORTH 63°31’46” WEST, 190.32 FEET;
THENCE NORTH 87°18’21” WEST, 51.87 FEET;
THENCE SOUTH 78°49’17” WEST, 206.54 FEET TO A POINT HEREINAFTER REFERRED TO AS POINT “A”;
THENCE SOUTH 17°29’44” EAST, 15.66 FEET;
THENCE SOUTH 73°54’58” WEST, 47.94 FEET;
THENCE NORTH 16°05’02” WEST, 24.06 FEET;
THENCE SOUTH 73°54’58” WEST, 200.09 FEET;
THENCE SOUTH 29°22’34” WEST, 22.48 FEET;
THENCE SOUTH 73°54’58” WEST, 43.81 FEET;
THENCE NORTH 60°37’26” WEST, 22.12 FEET;
THENCE SOUTH 73°54’58” WEST, 79.17 FEET;
THENCE ON A TANGENT CURVE TO THE LEFT WITH A RADIUS OF 195.00 FEET, THROUGH A CENTRAL ANGLE OF 05°57’00” FOR AN ARC DISTANCE OF 20.25 FEET; THENCE SOUTH 67°57’59” WEST, 101.05 FEET;
THENCE ON A TANGENT CURVE TO THE RIGHT HAVING A RADIUS OF 205.00 FEET, THROUGH A CENTRAL ANGLE OF 03°05’36” FOR AN ARC DISTANCE OF 11.07 FEET; THENCE SOUTH 71°03’35” WEST, 117.69 FEET TO A POINT IN THE WESTERLY LINE OF SAID LOT 1; THENCE NORTHWESTERLY ALONG SAID WESTERLY LINE, NORTH 08°56’07” WEST, 53.37 FEET; THENCE LEAVING SAID WESTERLY LINE, NORTH 69°36’44” EAST, 168.19 FEET; THENCE NORTH 73°34’28” EAST, 321.25 FEET;
THENCE NORTH 76°23’30” EAST, 374.40 FEET;
THENCE SOUTH 87°18’21” EAST, 71.80 FEET;
THENCE SOUTH 63°31’46” EAST, 208.35 FEET;
THENCE SOUTH 53°14’55” EAST, 90.87 FEET;
THENCE SOUTH 62°58’42” EAST, 137.70 FEET;
THENCE NORTH 87°10’54” EAST, 94.04 FEET;
THENCE NORTH 75°19’27” EAST, 322.82 FEET;
THENCE SOUTH 85°42’06” EAST, 148.14 FEET TO A POINT ON THE EASTERLY LINE OF SAID PARCEL 1;
THENCE SOUTHERLY ALONG SAID EASTERLY LINE SOUTH 25°44’55” EAST, 115.49 FEET TO THE POINT OF BEGINNING.
CONTAINING 3.09 ACRES, MORE OR LESS.
AS SHOWN ON EXHIBIT “C” ATTACHED HEREWITH AND MADE PART HEREOF.
THIS DESCRIPTION WAS PREPARED BY ME OR UNDER MY DIRECT SUPERVISION.
END DESCRIPTION
PREPARED BY: ________________________________
BURL STEUDE, PLS 9103
DATE: 12-31-2025
• •
LICENSEDLANDSURVEYOR
STATE OF CALIFORNIA
BURL V.
STEUDE
No. 9103
• •
LICENSEDLANDSURVEYOR
STATE OF CALIFORNIA
BURL V.
STEUDE
No. 9103
EXHIBIT “D”
MONITORING WELLS EASEMENT
LEGAL DESCRIPTION
THOSE PORTIONS OF LOT 1, PER LOT LINE ADJUSTMENT 01-97, CASE MBAL 97-239, IN THE CITY
OF MORRO BAY, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, AS DESCRIBED IN THE CERTIFICATE OF COMPLIANCE RECORDED FEBRUARY 26, 1998 AS DOCUMENT NUMBER 1998- 010270 OF OFFICIAL RECORDS OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
A PARCEL OF LAND BEING A CIRCLE HAVING A RADIUS OF 4.50 FEET, THE CENTER OF WHICH BEARS SOUTH 45°18’03” WEST FROM THE MOST NORTHERLY CORNER OF SAID LOT 1.
ADDING THERETO A PARCEL OF LAND BEING A CIRCLE HAVING A RADIUS OF 4.50 FEET, THE CENTER OF WHICH BEARS SOUTH 32°53’47” WEST, 451.76 FEET FROM THE MOST NORTHERLY CORNER OF SAID LOT 1;
ADDING THERETO A PARCEL OF LAND BEING A CIRCLE HAVING A RADIUS OF 4.50 FEET, THE CENTER OF WHICH BEARS SOUTH 06°37’11” EAST, 653.29 FEET FROM THE MOST NORTHERLY CORNER OF SAID LOT 1;
ADDING THERETO A PARCEL OF LAND BEING A CIRCLE HAVING A RADIUS OF 4.50 FEET, THE CENTER OF WHICH BEARS SOUTH 07°21’40” EAST, 776.42 FEET FROM THE MOST NORTHERLY CORNER OF SAID LOT 1;
BEARINGS BASED ON THE NORTHERLY LINE OF SAID LOT 1 PER DOCUMENT NUMBER 1998- 010270 OF OFFICIAL RECORDS OF SAID COUNTY, HAVING A BEARING OF NORTH 81°03’50” EAST.
CONTAINING 254 SQUARE FEET, MORE OR LESS.
AS SHOWN ON EXHIBIT “E” ATTACHED HEREWITH AND MADE PART HEREOF.
THIS DESCRIPTION WAS PREPARED BY ME OR UNDER MY DIRECT SUPERVISION.
END DESCRIPTION
PREPARED BY: ________________________________
BURL STEUDE, PLS 9103
DATE: 12-31-2025
• •
LICENSEDLANDSURVEYOR
STATE OF CALIFORNIA
BURL V.
STEUDE
No. 9103
• •
LICENSEDLANDSURVEYOR
STATE OF CALIFORNIA
BURL V.
STEUDE
No. 9103
EXHIBIT “F”
TEMPORARY CONSTRUCTION EASEMENTS
LEGAL DESCRIPTION
THOSE PORTIONS OF LOT 1, PER LOT LINE ADJUSTMENT 01-97, CASE MBAL 97-239, IN THE CITY
OF MORRO BAY, COUNTY OF SAN LUIS OBISPO, STATE OF CALIFORNIA, AS DESCRIBED IN THE CERTIFICATE OF COMPLIANCE RECORDED FEBRUARY 26, 1998 AS DOCUMENT NUMBER 1998- 010270 OF OFFICIAL RECORDS OF SAID COUNTY, AND AS SHOWN ON THE MAP FILED IN BOOK 77, PAGE 26 OF RECORD OF SURVEYS IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
PARCEL 1
COMMENCING AT THE NORTHERLY CORNER OF SAID LOT 1, ALSO BEING A POINT ON THE WESTERLY LINE OF STATE HIGHWAY 1 AS SHOWN ON SAID RECORD OF SURVEY; THENCE SOUTH 81°04’36” WEST, 71.35 FEET ALONG THE NORTHERLY LINE OF SAID LOT 1 TO THE NORTHWESTERLY CORNER OF PARCEL ONE AS DESCRIBED IN EXHIBIT B-2 OF THAT
CERTAIN GRANT OF EASEMENT FROM MORRO BAY POWER COMPANY LLC TO THE CITY OF MORO BAY FILED FOR RECORD OCTOBER 22, 2021 AS DOCUMENT NUMBER 2021-071670 IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY;
THENCE LEAVING SAID NORTHERLY LINE, SOUTHEASTERLY ALONG THE WESTERLY LINE OF SAID PARCEL ONE, SOUTH 20°06’16” EAST, 334.91 FEET TO THE POINT OF BEGINNING; THENCE LEAVING SAID WESTERLY LINE, SOUTH 77°17’43” WEST, 296.39 FEET; THENCE SOUTH 32°17’43” WEST, 21.21 FEET;
THENCE SOUTH 77°17’43” WEST, 28.43 FEET;
THENCE ON A NON-TANGENT CURVE CONCAVE TO THE NORTHWEST, HAVING A RADIAL BEARING OF NORTH 52°14’59” WEST, A RADIUS OF 295.00 FEET, THROUGH A CENTRAL ANGLE OF 60°47’16”, FOR AN ARC DISTANCE OF 312.98 FEET;
THENCE NORTH 08°32’18” EAST, 25.00 FEET;
THENCE ON A NON-TANGET CURVE CONCAVE TO THE NORTHWEST, HAVING A RADIAL BEARING OF NORTH 08°32’18” EAST, A RADIUS OF 270.00 FEET, THROUGH A CENTRAL ANGLE OF 64°14’16”, FOR AN ARC DISTANCE OF 302.71 FEET;
THENCE NORTH 77°17’43” EAST, 341.57 FEET TO A POINT IN THE SAID WESTERLY LINE OF PARCEL ONE;
THENCE SOUTHEASTERLY ALONG SAID WESTERLY LINE, SOUTH 20°06’16” EAST, 15.13 FEET TO THE POINT OF BEGINNING.
CONTAINING AN AREA OF 13,372 SQUARE FEET, MORE OR LESS.
PARCEL 2
BEGINNING AT POINT “A” HEREINABOVE DESCRIBED IN EXHIBIT “B” OF THIS DOCUMENT; THENCE NORTHEASTERLY ALONG THE SOUTHEASTERLY LINE OF SAID EXHIBIT “B”, NORTH 78°49’17” EAST, 9.48 FEET;
THENCE LEAVING SAID SOUTHEASTERLY LINE, SOUTH 16°05’02” EAST, 27.84 FEET; THENCE SOUTH 73°54’58” WEST, 100.00 FEET;
THENCE NORTH 16°05’02” WEST, 37.06 FEET TO A POINT ON SAID SOUTHEASTERLY LINE AND HEREINAFTER REFERRED TO AS POINT “B”;
THENCE ALONG SAID SOUTHEASTERLY LINE THE FOLLOWING FOUR COURSES, NORTH 73°54’58” EAST, 43.00 FEET;
THENCE SOUTH 16°05’02” EAST, 24.06 FEET;
THENCE NORTH 73°54’58” EAST, 47.94 FEET;
THENCE NORTH 17°29’44” WEST, 15.66 FEET TO THE POINT OF BEGINNING.
CONTAINING AN AREA OF 2,476 SQUARE FEET, MORE OR LESS.
PARCEL 3
COMMENCING AT POINT “B” AND SOUTHEASTERLY LINE OF EXHIBIT “B” HEREINABOVE DESCRIBED, THENCE SOUTH 73°54’58” WEST, 137.19 FEET TO THE POINT OF BEGINNING; THENCE SOUTH 16°05’02” EAST, 37.00 FEET;
THENCE SOUTH 73°54’58” WEST, 100.00 FEET;
THENCE NORTH 16°05’02” WEST, 37.00 FEET TO A POINT ON SAID SOUTHEASTERLY LINE; THENCE ALONG SAID SOUTHEASTERLY LINE THE FOLLOWING FIVE COURSES, NORTH 73°54’58” EAST, 4.75 FEET;
THENCE SOUTH 60°37’26” EAST, 22.12 FEET;
THENCE NORTH 73°54’58” WEST, 43.81 FEET;
THENCE NORTH 29°22’34” EAST, 22.48 FEET;
THENCE NORTH 73°54’58” WEST, 19.90 FEET TO THE POINT OF BEGINNING.
CONTAINING AN AREA OF 2,761 SQUARE FEET, MORE OR LESS.
AS SHOWN ON EXHIBIT “G” ATTACHED HEREWITH AND MADE PART HEREOF.
THIS DESCRIPTION WAS PREPARED BY ME OR UNDER MY DIRECT SUPERVISION.
END DESCRIPTION
PREPARED BY: ________________________________
BURL STEUDE, PLS 9103
DATE: 12-31-2025
• •
LICENSEDLANDSURVEYOR
STATE OF CALIFORNIA
BURL V.
STEUDE
No. 9103
• •
LICENSEDLANDSURVEYOR
STATE OF CALIFORNIA
BURL V.
STEUDE
No. 9103
• •
LICENSEDLANDSURVEYOR
STATE OF CALIFORNIA
BURL V.
STEUDE
No. 9103
Prepared By: DH / ME Dept Review: DLC
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council
FROM: Matt Evers, Utilities Project Manager
SUBJECT: GSI Extraction Well Project Agreement Amendment No. 1
RECOMMENDED ACTION
Authorize the City Manager to execute Amendment No. 1 with GSI Water Solutions (GSI) to extend the term of the agreement and increase contract budget in the amount of $53,188.00 for additional hydrogeologic support services on the Morro Basin Wellfield Rehabilitation Project.
BACKGROUND
Separate from the Recycled Water Program, the Morro Wellfield Rehabilitation Project includes the drilling of a new extraction well. The Project was approved in the FY 23/24 budget as a Water Fund Capital Improvement Project. The Project will address several potential vulnerabilities of the Morro Wellfield by implementing key infrastructure modifications and additions to increase water production capacity, improve operational efficiency, and provide long-term reliability for the City’s water production infrastructure. Drilling this new extraction well is a key component of the rehabilitation Project to improve the reliability of the Wellfield and overall resiliency of the City’s water supply portfolio. Several of the City’s current wells were installed before incorporation or in the early 1970’s and are experiencing performance issues and water quality problems. While the rehabilitation of existing wells has addressed some of these issues, the new extraction well will provide the City with the needed additional production capacity, improved water quality and enhanced reliability required to maintain the resiliency of its water system.
DISCUSSION
This proposed contract amendment includes budget for out-of-scope work for hydrogeological investigations for the Extraction Well siting. These investigations included Cone-Penetration Test (CPT) coring and sonic coring to gather data on the soil and aquifer characteristics. CPT Coring: The City completed a CPT core at one of the potential Extraction Well sites on October 17, 2025. This method collects data by slowly pushing a sensitive probe through the layers of the soil and measuring how it responds. This data is utilized to characterize the soil.
The probe was unable to penetrate beyond 43 ft due to impenetrable material, likely a large cobble. The City was therefore not able to collect data for a complete profile down to bedrock.
The City had intended to complete an additional CPT coring at another potential site but was unable to core at the second location due to difficulties driving the drill rig to the site. Sonic Coring: Since the City was unable to obtain sufficient data from the CPT coring, the City proceeded with a second round of hydrogeological investigations utilizing a sonic drill rig instead of a CPT rig on December 22, 2025. The sonic rig uses a sonic head that generates resonant high-frequency vibrations. These vibrations reduce friction between the barrel AGENDA NO: 6.f
MEETING DATE: August 25, 2026
around the surrounding material, allowing the barrel to push through the soil with minimal resistance. In addition to avoiding the refusal issues that occurred with the CPT coring, the sonic coring method also allowed for the collection of archeological data at the site. Core samples were recovered and bagged, and the remaining hole was filled.
The amendment was brought to PWAB on August 19, 2026.
AMENDMENT TO PROFESSIONAL SERVICES AGREEMENT
1. GSI Water Solutions Extraction Well Project Contract Amendment No. 1 On August 13, 2024, City Council awarded GSI a contract for hydrogeologic support services for Morro Basin Extraction Well Design and Construction Support Services in an amount not to exceed $184,352.00, which includes a 10% contingency budget and is set to expire on December 31, 2026. Staff have reviewed the proposed costs associated with the amendment and determined that the costs provided by GSI are reasonable for the proposed out-of-scope work, Therefore Staff recommends PWAB consider an amendment of $53,188.00 to GSI’s Extraction Well Contract.
Additional budget will be used to cover the following three expenses:
Project Management and Meetings (Task 1). Meetings and coordination were budgeted through the original anticipated completion date of December 2025. Additional budget requested will cover work from January 2026 through December 2027, the new anticipated completion date. Schedule delays include extended property acquisition negotiations and additional hydrogeologic investigations. Data Collection and Review (Task 2). The City provided direction for GSI to coordinate and oversee two rounds of field investigations that were not included in the original scope of work. These included Cone Penetrometer Testing (CPT) and Sonic Core Drilling at Lila Kaiser Park and the Motel 6 property to confirm adequate saturated sediments to support the extraction well operation. The results of these efforts were used to refine the groundwater basin characterization to support the extraction well project siting. Preliminary Contract and Design Documents (Task 3). The 2024 Scope envisioned a single set of combined preliminary design/bid documents, including the design for Extraction Well and the Injection Wells associated with the separated Water Reclamation Facility Project. Changes regarding details of siting and design associated with the ongoing property owner negotiations have resulted in several revisions to the initial draft plans and separating of these bid docs. In addition, GSI was requested to review preliminary design documents developed by Cannon Engineering, which was not in the original scope and regulatory interactions requested variance associated with the shallow sanitary seal associated with the proposed well design. Future tasks associated with the project are unaffected.
This proposed amendment additionally extends the expiration date to the new anticipated project completion date of December 2027.
ATTACHMENT(S)
1. Amendment No. 1 to GSI Professional Services for Extraction Well Design and Construction Support Services/Extraction Well Project Development
AMENDMENT NO. 1 TO THE AGREEMENT FOR CONSULTANT SERVICES BETWEEN THE CITY OF MORRO BAY AND GSI WATER SOLUTIONS, INC.
This AMENDMENT NO. 1 TO THE AGREEMENT FOR CONSULTANT
SERVICES BETWEEN THE CITY OF MORRO BAY AND GSI WATER SOLUTIONS, INC. (“Amendment No. 1”) is entered on the 25th day August 2026, by and between the City of Morro Bay, a municipal corporation (“City”) and GSI Water Solutions, an Oregon corporation (“Consultant”).
RECITALS
WHEREAS, City and Consultant (collectively, the “Parties”) entered into an agreement as of August 13, 2026, for design and construction support services for the Extraction Well project in the amount of $184,352.00 (the “Agreement”) This sum of $184,352.00 includes a base fee of $167.593.00 and a contingency of $16,759.00; and WHEREAS, City and Consultant now wish to extend the term of the Agreement to December 31, 2027; and
WHEREAS, City now requires additional project management, data collection, and design services and
WHEREAS, Consultant has provided a proposal for the completion of the requested services for an amount not to exceed $53,188.00; and WHEREAS, Public Works Director has reviewed and approved changes for the project that would increase the not to exceed amount for Consultant’s services by $53,188.00; and
WHEREAS, Consultant has specific knowledge and experience to provide technical oversight needed to accomplish necessary tasks required to meet the City’s goals for the project.
NOW THEREFORE, City and Consultant mutually agree to amend the Agreement as follows:
1. The term of the Agreement is extended to December 31, 2027.
2. The Agreement shall remain and continue in effect until all tasks are satisfactorily completed, but in no event later than December 31, 2027, unless sooner terminated pursuant to the provisions of the Agreement.
3. The revised scope of services to be provided by Consultant, pursuant to the Agreement, as hereby amended, shall include Project Management, Data
Collection, and Design, as set forth in Exhibit A, which are incorporated herein by this reference.
4. The compensation to be paid for the services shall be paid on a time and material basis and shall increase the previous not to exceed amount of One Hundred Eighty Four Thousand Three Hundred and Fifty Two Dollars and No Cents ($184,352.00) by Fifty Three Thousand One Hundred Eighty Eight Dollars and No Cents ($53,188.00), for a new revised total not to exceed amount for Consultant’s services of Two Hundred Thirty Seven Thousand Five Hundred Forty Dollars and No Cents ($237,540.00).
5. Except as expressly set forth herein the terms and conditions of the Agreement shall remain in full force and effect.
6. The effective date of this Amendment No. 1 shall be deemed to be August 25, 2026.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives.
CITY OF MORRO BAY GSI WATER SOLUTIONS, INC.
By: ___________________________ By: ____________________________ John Craig Susan Haupt
City Manager President
By: _____________________________
Attest: Liesel Deck
Chief Financial Officer
_______________________________
Dana Swanson, City Clerk
APPROVED AS TO FORM
_______________________________
Brian J. Stack, City Attorney
GSI Water Solutions, Inc. 800 Quintana Road, Suite 2C, Morro Bay, CA 93442 www.gsiws.com August 12, 2026
Damaris Hanson
Utilities Division Manager
City of Morro Bay
[email protected]
RE: Proposal for Amendment to GSI Professional Services for Extraction Well Project Development Dear Ms. Hanson:
GSI Water Solutions (GSI) has prepared this proposal to the City of Morro Bay (City) to amend the Scope of Work for the Extraction Well Project Development effort. The contracted scope for this project was executed in August 2024 and scheduled to be completed by December 2025. Additional work, such as CPT and sonic coring investigations, has been conducted since then in response to City staff requests and continues to be recommended by City staff and staff extension. In addition, the protracted easement negotiations for well placement have extended the meetings and project management activities beyond the December 2025 time frame. We recommend conducting the additional tasks requested by City staff and identified in this amended scope of work to support the successful installation of the new City extraction well.
We look forward to continuing our partnership with you, and to support the City’s goal of improving their water supply system Thank you for your consideration of our proposal.
Sincerely,
GSI Water Solutions
Tim Thompson, PG, CHG Dave O’Rourke, PG, PE
Principal Water Resources Consultant Principal Hydrogeologist
PROPOSAL: AMENDMENT TO GSI PROFESSIONAL SERVICES FOR EXTRACTION WELL PROJECT DEVELOPMENT GSI Water Solutions, Inc. 2
Summary of Work Conducted to Date
As part of the City of Morro Bay’s plan to improve their production capacity, GSI has conducted a series of evaluations to determine the optimum siting and expected production of a new well.
GSI has prepared several technical documents in the past few years, which build upon work done in prior years:
1. GSI has prepared Well Siting Study Technical Memo, delivered to the City in June 2025.
2. GSI has conducted detailed groundwater modeling, including a range of scenarios to support well site selection and project operational analyses.
3. GSI has supported Cannon Engineering and the City in discussions and planning with the Division of Drinking Water (DDW) to discuss potential variances necessary for a shallow well.
4. GSI has supported Cleath-Harris Geologists in their wellfield assessment activities.
5. GSI has provided ongoing support to the City regarding evaluation and cost estimates of future City production wells, technical support for the engineering team, maintenance of continuous hydrogeologic data collection, and participation in bi-weekly evaluation team meetings.
Due to the City’s need for additional extraction capacity, the successful completion of the new extraction well is a City priority. GSI is committed to working with the City and the Project Team to deliver a permitted and productive new extraction well within the extended timeline.
PROPOSAL: AMENDMENT TO GSI PROFESSIONAL SERVICES FOR EXTRACTION WELL PROJECT DEVELOPMENT GSI Water Solutions, Inc. 3
Amended Scope of Work Items
This Amended scope of work provides descriptions of the additional scope items that have been requested by City staff, which include the following tasks. Given the protracted schedule associated with the easement negotiations, GSI has assumed the timeline for the current amendment request will extend to the end of 2027.
All other tasks from the original 2024 scope are either on-going with sufficient budget to complete or have been completed. The following discussion references the original task number designations from the 2024 scope.
1. Project Management and Meetings (Task 1). Budget for this task, including bi-weekly coordination meetings with Cannon Engineering and City staff, were initially budgeted through December 2025. As a result, GSI is currently over budget on this task, representing the effort from January through July 2026.
Additional budget to cover effort through December 2027 is requested.
2. Data Collection and Review (Task 2). While Task 2 Data Collection and Review was included in the original scope, it was not assigned a budget because these services were not anticipated to be needed at the time of preparation of the original scope in 2024. After the project began, the City provided direction for GSI to coordinate and oversee two rounds of field investigation that were not included in the original scope of work. These included Cone Penetrometer Testing (CPT) and Sonic coring in Lila Kaiser Park and the Motel 6 property to confirm adequate saturated sediments to support the extraction well operation.
The results of these efforts refine the groundwater basin characterization to support the extraction well project.
3. Preliminary Contract and Design Documents (Task 3). The 2024 Scope envisioned a single set of combined preliminary design/bid documents, including the design for Extraction Well and the Injection Wells associated with the separated Water Reclamation Facility Project, to be presented at a Draft Plans and Specifications Workshop for coordinated review. Changes regarding details of siting and design associated with the ongoing property owner negotiations have resulted in several revisions to the initial draft plans. As a result, GSI is currently over budget on this task. In addition, GSI was requested to review preliminary design documents developed by Cannon Engineering, which was not in the original scope and regulatory interactions requested variance associated with the shallow sanitary seal associated with the proposed well design. Future tasks associated with the project are unaffected
PROPOSAL: AMENDMENT TO GSI PROFESSIONAL SERVICES FOR EXTRACTION WELL PROJECT DEVELOPMENT GSI Water Solutions, Inc. 4
Budget
The following table present budgets for the required tasks associated with this Extraction Well Amended Scope of Work. We propose to conduct this work on a time-and-materials basis in accordance with the attached GSI 2026 Fee Schedule. We will not exceed this budget without prior approval.
Original Scope
Task Item Status Original Budget
Exceedance
of Budget as
of 07/31/26
Additional
Hours
Needed
(through
12/2027)
Budget Amendment
Request
1: Project
Management
and Meetings
(through
12/2027)
Ongoing $15,500 $9,484 96 Yes. $28,300
2: Data
Collection and
Review
Scope expansion to
perform field
investigations at Lila
Kaiser Park and
Motel 6 property to
support extraction
well siting
$0
$0 (No
budget for
this task)
0 (work
already
completed)
Yes. $17,688
3: Preliminary
Contract and
Design
Documents
Revisions and
ongoing review due to
property owner
negotiations
$10,656 $7,169
0 (work
already
completed)
Yes. $7,200
Original Extraction Well Budget $167,593
Total Budget Amendment Request $53,188
Revised Extraction Well Budget $220,781
Prepared By: Staff Dept Review: AS, EC, JC, BS
City Manager Review: JC City Attorney Review: BS
Staff Report
TO: Honorable Mayor and City Council
FROM: John Craig, City Manager
SUBJECT: Acceptance of the Morro Elementary School Site Due Diligence Report; Determination Regarding the City’s Intent to Purchase the Property; and Direction to Staff Regarding Close of Escrow
RECOMMENDED ACTION
1. Receive and accept the Morro Elementary School Site Due Diligence Report; and
2. Make a determination, pursuant to Section 1.5 of the Purchase and Sale Agreement, whether to find the Property suitable for City purposes and confirm the City’s intent to purchase the Property and proceed through the due diligence period; and
3. Based on the determination, provide direction to staff on next steps. a. Proceed to close of escrow and return to the City Council in October with the final terms of the purchase, including the potential for seller financing, or b. Inform the School District that the Council has determined that the site is not suitable for its purposes.
ALTERNATIVE(S)
The following are alternative actions the City Council may take:
1. Determine the Property is not suitable for the City’s intended use and direct the City Manager to provide written notice of that determination to the District prior to the expiration of the Feasibility Period on August 31, 2026 terminating the agreement (escrow cancelled; deposit refunded to the City).
2. Request specific additional information before finalizing this determination. This alternative is available only within the window bounded by the August 31, 2026 deadline.
FISCAL IMPACT
If City Council determines the site is not suitable for City purposes and chooses to not proceed with closing, the fiscal impact would be limited to the due diligence costs already incurred (approximately $125,000 from the Economic Development Fund).
If City Council determines the site is suitable and directs staff to close escrow, the City will need to find a suitable financial solution to ensure the purchase expenses as well as any future development expenses are funded. Without significant additional financial resources, the City cannot sustain either the purchase price or any estimated development expenses out of general fund balances alone. Short-term acquisition costs include the outlay or financing of the $5,300,000 purchase price as well as additional closing costs. A $500,000 earnest money deposit, applicable to the purchase price, was placed in escrow when the purchase and sale agreement was executed, leaving $4,800,000 due. Long-term project costs to rehabilitate the main building for civic use have been estimated at a rough order of magnitude at approximately AGENDA NO: 8.a
MEETING DATE: August 25, 2026
2 $8,500,000. Because sufficient excess cash is not available, financing costs for some or all of project should be considered; these are estimated at $800,000, based on 5% over three years.
Please note these estimates are based on a series of assumptions detailed in the Morro Elementary School Site Due Diligence Report (Attachment 1) and will change as plans for the property are developed and refined. Ongoing operational costs would include site security, insurance, utilities (including but not limited to electricity, gas, garbage, water, and sewer services), maintenance, and tenant/property management, and would begin once escrow closes.
Staff is preparing funding options and will present those options to City Council prior to closing escrow. Morro Elementary School Site Due Diligence Report (Attachment 1) Chapter 10 includes additional detail on financial feasibility.
BACKGROUND
The San Luis Coastal Unified School District made available for sale the property commonly known as Morro Elementary School, located at 1130 and 1330 Napa Avenue (APNs 066-044- 011 and 066-280-045). On December 17, 2024, the District's Board adopted a resolution declaring the Property "exempt surplus land" under the California Surplus Land Act, and on October 28, 2025, the California Department of Housing and Community Development confirmed that determination.
Consistent with the City's 2025–2027 Goals to acquire or partner with the District on the Morro Elementary School site, the City and District negotiated a conditional Purchase and Sale Agreement (Agreement). On March 10, 2026, the City Council adopted Resolution No. 14-26 approving the Agreement and authorizing the City Manager to execute related escrow documents and undertake due diligence. The District's Governing Board approved the Agreement on March 17, 2026, and the due diligence period commenced upon execution.
The Agreement sets a purchase price of $5,300,000 and an earnest money deposit of $500,000, applicable to the purchase price at closing. The Agreement contains no entitlement or financing contingencies; it does contain a due diligence contingency permitting the City to evaluate the Property's physical, environmental, title, historic, and regulatory condition, and to determine, in its sole discretion, whether the Property is suitable for the City's intended purposes. The due diligence period ends August 31, 2026, and closing is scheduled on or before October 31, 2026.
The City Manager retained EMBC Planning Strategies to coordinate a multi-disciplinary due diligence engagement, drawing on specialists in building condition, structural engineering, mechanical/electrical/plumbing and fire protection systems, historic resources, environmental assessment, land survey and title, and land-use planning. That engagement is documented in the Morro Elementary School Due Diligence Report (Report), which is the basis for the findings summarized below. The Property is developed with seven buildings. The Main Building (1936) and Main Building Addition (1949), with a combined roughly 17,800 square feet, are the buildings evaluated for adaptive reuse for City Hall purposes, which has served as the working scenario for the Due Diligence Report 's analysis. No decision on future use of the buildings has been made, and any such decision is reserved for the City's consideration following acquisition, should the acquisition proceed.
Under Section 1.5 of the Agreement, the City Council is scheduled to make its suitability determination on August 25, 2026 — six days before the due diligence period closes. A determination of suitability with direction to proceed leads to closing on or before October 31, 2026. A termination of the Agreement during the due diligence period returns the $500,000 deposit to the City. A determination of suitability followed by failure to close after August 31 would constitute Buyer Default under Article 6.1 of the Agreement and result in forfeiture of the deposit by the City.
3 Discussion
The Due Diligence Report organizes its findings around six dimensions of suitability: physical, environmental, title and boundary, historic and regulatory, cost, and value.
Physical. The Main Building and Main Building Addition were examined to determine if they can accommodate the working use scenario within their existing footprint, without expansion. Spectra Company and TYLin International independently characterized the buildings as fundamentally sound, with no widespread deterioration and no condition precluding adaptive rehabilitation. The rehabilitation scope is limited instead of comprehensive: Building stabilization, localized structural strengthening, systems-level Mechanical, Electrical, and Plumbing (MEP) modernization including sprinkler installation, accessibility improvements, and tenant improvements. The retained Classroom ("Butterfly") Buildings present no structural concerns and no further analysis was performed on them as accessory buildings.
Environmental. The Phase I Environmental Site Assessment prepared by Earth Systems Pacific identified no recognized environmental conditions. Asbestos-containing materials and lead surface coatings are present, per the Padre Associates survey, and will require standard abatement management during renovation, which is a normal construction cost rather than an environmental suitability concern.
Title and boundary. No title exception, boundary condition, or encumbrance identified through the ALTA survey or Preliminary Title Report review would preclude the working scenario or materially impair the City's use of the Property. A note that a reversion claim was discussed in one of the public meetings and that issue has been resolved against the underlying record: the City Attorney has confirmed the 1936 deed is a straight fee grant with no reversion clause. Standard pre-closing title clearing work continues and presents no issues to close.
Historic and regulatory. The Property appears eligible for the National Register of Historic Places and the California Register of Historical Resources, a finding reached by the Chattel Historic Resource Assessment and concurred with by the City's peer reviewer, LSA Associates. The National Register nomination, sponsored by Friends of Morro Elementary, was not on the State Historical Resources Commission's August 7, 2026 agenda and is anticipated at a subsequent quarterly meeting. Historic status brings both a constraint, namely rehabilitation must be designed to preserve the character-defining features identified in the Chattel assessment, and two benefits:
eligibility for the California Historical Building Code, an alternative compliance pathway which would be conditioned on installation of an automatic fire sprinkler system, and eligibility for the federal Historic Tax Credit, which reimburses 20 percent of qualified rehabilitation costs and can be used by the City to reduce construction cost through partnerships with property developers. A follow-up due diligence memorandum from LSA Associates indicates that through careful design and detailed specifications during development of a future rehabilitation project, both the preservation goal of protecting the school and the civic goal of building an operationally effective City Hall could be achieved.
On the regulatory side, the Property is designated High Density Residential, which does not permit government office use; the current City Hall and annex buildings are designated Public Facility, which does not permit residential use. The working scenario requires paired General Plan amendments and a rezoning of both parcels, together with a Local Coastal Program amendment requiring California Coastal Commission action. No regulatory obstacle identified would preclude the working scenario of using the property for a City Hall.
4 Cost. Total estimated City investment is estimated at approximately $14.7 million: a $5.3 million acquisition cost (below the appraised value under both scenarios evaluated), an $8.5 million Spectra/Net Positive rehabilitation Rough Order of Magnitude (ROM) estimate for the Main Building, and financing cost of 5.0% annually over three years on the acquisition cost. The cost estimate is a pre-design estimate, not a firm cost, and includes a contingency of approximately 30%; this estimate does not include costs that can be easily eliminated, as it includes the anticipated work necessary to lawfully and functionally reoccupy the Main Building under the working scenario. Once again, this estimate excludes rehabilitation of the Classroom (“butterfly”) Buildings, whose future use is reserved for the post-closing community vision process. The estimate also excludes costs the Report anticipates would be borne by a future development partner.
Value. The Due Diligence Report identifies optional revenues to offset the City's expenses, mostly with residential land sale revenue modeled through Residual Land Value methodology across three different scenarios of 100, 150, and 200 total homes developed jointly across the Property and the current City Hall parcels. Under those scenarios, a remaining funding requirement of approximately $2.5 million to $7.8 million persists after offsetting value is applied, which the City would need to address through long-term financing, Historic Tax Credit realization, grant funding, sale of other properties, negotiated land value on-site for residential purposes, and other sources identified in the Report, none of which is assumed as certain.
The Report notes that public testimony received throughout the due diligence period has consistently supported the acquisition, preservation of the historic buildings, retention of a portion of the sports fields as open space, and residential development on the balance of the site, and has repeatedly raised public-private partnership models as the anticipated execution vehicle given the specialized expertise the project requires.
Several items remained unknown at the time of the due diligence report and are not expected to fundamentally alter the findings above: the LSA character-defining features memorandum (subsequently provided), the State Historical Resources Commission's consideration of the National Register nomination, and any remaining Preliminary Title Report items. Each would refine, rather than change, the due diligence report provided to the Council.
CONCLUSION
The suitability determination and the decision whether to proceed past due diligence to closing is a discretionary judgment to be made by the City Council. No single dimension of this report offers certainty to the decision, and nothing in the Due Diligence Report points to a particular decision.
The record before the Council describes a Property that is physically capable of the working scenario, environmentally clean, clear of any title conditions, historically significant in ways that both constrain and support the rehabilitation, and able to succeed through a workable solution, at a total estimated investment of approximately $14.7 million that is significant and only partially offset by identified potential revenues, leaving a remaining funding requirement of approximately $2.5 to $7.8 million depending on the housing scenario ultimately pursued.
Staff recommends the City Council review the findings summarized above and detailed in the full Due Diligence Report, consider the public testimony received throughout the process, and make its suitability determination and direction to staff regarding the Property, consistent with the timeline established under the Purchase and Sale Agreement and the August 31, 2026 expiration of the due diligence period.
5 ATTACHMENT(S)
1. Morro Elementary School Site Due Diligence Report
Appendix A: Purchase and Sale Agreement and Resolution 14-26 Approving Purchase and Sale Agreement
Appendix B: Space Planning Evaluation, Hunter Smith Architecture Appendix C: Structural Assessment, Spectra/TYLin
Appendix D: Rough Order of Magnitude Construction Cost Estimates, Spectra Appendix E: Mechanical, Electrical, Plumbing Study-Rough Order of Magnitude, Net Positive Consulting Engineers
Appendix F: Environmental Site Assessment-Phase I, Earth Systems Pacific Appendix G: Asbestos and Lead Survey, Padre Associates
Appendix H: ALTA / NSPS Land Title Survey, MBS Land Surveys Appendix I: Preliminary Title Report, First American Title Company Appendix J: Historic Resource Assessment, Chattel, Inc
Appendix K: Peer Review-Historic Resource Assessment, LSA and Potential Adaptive Reuse
Appendix L: Appraisal Report, Central California Appraisals Appendix M: SLCUSD Surplus Property Redevelopment Strategy, REACH Deloitte