National City City Council
August 15, 2023

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings a. In the event an item is brought to the attention of the City Manager that requires immediate City Council attention a fter the agenda setting meeting and before the agenda is distributed, the City Manager will determine the need for the item to be added to the agenda.

2. Agenda Review Meeting: Prior to release and posting of a final City Council agenda, an agenda review meeting shall be held by the City Manager with the City Attorney and the Mayor, or another member of the City Council designated by the Mayor, to serve in their absence. The proposed agenda shall be reviewed at this meeting.

3. Agenda Preparation: Not later than the Thursday prior to the City Council meeting, the City Manager is responsible for preparing the agenda packet, which shall include the agenda plus all its corresponding duplicated agenda items. No item shall be considered if not included in the packet, except that a correction or supplement to an item already included in the packet may be considered in accordance with the Ralph M. Brown Act.

4. Agenda Distribution and Posting: Not later than the Thursday prior to the City Council meeting, the City Manager is responsible for distributing the agenda packet to each member of the City Council. Staff shall post each agenda at least 72-hours in advance of the meeting and shall post each agenda of a special meeting at least 24- hours in advance of the meeting on the official bulletin boards at City Hall and on the City's website.

5. Non-Agenda Items Requiring Immediate Action: Matters requiring City Council action must be placed onto a Council Agenda in a timely manner in order for Council to consider the matter. In accordance with the Ralph M. Brown Act, off-agenda items requiring City Council approval will not be considered by the City Council except under the following two circumstances:

a. An emergency situation exists, as defined in the Government Code; or,

b. The City Council determines by a two-thirds (2/3) vote, or by a unanimous vote if less than two-thirds of the Council is present, that:

• There is a need for immediate action, and
• The need to take action on the item arose after the posting of the agenda.

If the City Council finds that the need to take action arose subsequent to the agenda posting, pursuant to the criteria above, it shall make those findings

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings by separate motion, including the factual reasons supporting the findings.

The findings shall be reflected in the City Council minutes.

IX. VOTING

A. Obtaining the Floor: Any Councilmember wishing to speak must first obtain the floor by being recognized by the Presiding Officer. The Presiding Officer must recognize any Councilmember who seeks the floor when appropriately entitled to do so.

B. Voting Procedure: Any vote of the City Council, including a roll call vote, may be registered by the members by answering "Yes" or “Aye” for an affirmative vote, "Abstain" for an abstention, or "No" or “Nay” for a negative vote upon the member's name being called by the City Clerk; or an electronic vote may be registered by pressing the Councilmember button for an affirmative vote, an abstention, or a negative vote, upon a vote being called for by the Presiding Officer.

Following the vote, the City Clerk shall audibly announce the results of the vote by name indicating whether the item carried or was defeated. The same shall be recorded in the minutes as the vote. The Presiding Officer in his or her discretion may publicly explain the effect of a vote for the audience, or may direct a member of the staff to do so before proceeding to the next item of business.

C. Disqualification for Conflict of Interest: Any Councilmember who is disqualified from voting on a particular matter by reason of a conflict of interest shall publicly state or have the Presiding Officer state, the nature of such disqualification in open meeting.

Where no clearly disqualifying conflict of interest appears, the matter of disqualification may, at the request of the Councilmember affected, be decided by the other Councilmembers. A Councilmember who is disqualified by reason of a conflict of interest in any matter shall not remain in his or her seat during the debate and vote on such matter, but shall request and be given the permission by the Presiding Officer to step down from the Council dais. A Councilmember stating such disqualification shall not be counted as a part of a quorum and shall be considered absent for the purpose of determining the outcome of any vote on such matter.

D. Failure to Vote: Every Councilmember should vote unless disqualified by reason of a conflict. The vote of a Councilmember who abstains absent a disqualifying conflict of interest shall be counted with the majority vote of the quorum on the question voted upon.

E. Tie Vote: Any proposed measure that receives a tie vote from the members of the City

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings Council shall be considered lost and may be reconsidered.

F. Changing Vote: A Councilmember may change his or her vote only if the Councilmember makes a timely request to do so immediately following the announcement of the vote by the City Clerk and prior to the time that the next item in the order of business is taken up.

G. Reconsideration: A motion to reconsider the vote on any action taken by the City Council at either this meeting or a previous meeting may be made only by one of the Councilmembers who voted with the prevailing side.

H. Point of Order: An interruption of a meeting to question whether rules or bylaws are being broken, such as the speaker has strayed from the motion currently under consideration.

I. Continuance of Discussion or Hearings: Any item being discussed or any public hearing at a City Council meeting may, by order, notice, or motion, be continued or tabled to any subsequent meeting.

J. Rosenberg's Rules of Order: Rosenberg's Rules of Order have been adopted by the City Council and shall apply in all cases.

K. Disclosure of Ex Parte Contacts: An "ex parte" contact or communication occurs when, prior to considering a matter on a public meeting agenda, a member or members of the City Council receives information, oral, written, or otherwise, pertaining to that matter outside the public meeting. (Reference City Council Policy No. 116 - Procedure for Disclosure of Ex Parte Contacts)

X. MOTIONS

Motions are the vehicles for decision making by a body. It is normally best to have a motion before the body prior to commencing discussion of an agenda item. There are three motions that are the most common and recur often at meetings:

1. The basic motion. The basic motion is the one that puts forward a decision for the body's consideration.

2. The motion to amend. If a Councilmember wants to change a basic motion that is before the body, they would move to amend it.

3. The substitute motion. If a Councilmember wants to completely do away with

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings the basic motion that is before the body, and put a new motion before the body, they would move a substitute motion.

Motions may be made by any member of the City Council, including the Chair. Any member of the City Council may second a motion. (Reference Rosenberg's Rules of Order for a more detailed discussion on motions in general and sample motions.)

A. Procedure for Motions: The following is the general procedure for making motions:

1. The item is presented by staff or others followed by questions and discussion by Councilmembers.

2. A Councilmember who wishes to make a motion shall first obtain the floor.

3. A Councilmember who wishes to second a motion shall do so through a request to the Chair.

4. Before a motion can be discussed, it shall be seconded.

5. Once a motion has been properly made and seconded, the Chair shall open the matter for further discussion offering the first opportunity to the moving party and, thereafter, to any Councilmember properly recognized by the Presiding Officer.

6. Once the matter has been fully debated and the Presiding Officer calls for a vote, no further debate will be allowed, provided, however, any Councilmember may be allowed to explain his or her vote prior to the vote being cast.

B. Amendments to Motions: As previously discussed, when a motion is on the floor and an amendment is offered, the amendment shall be acted upon prior to acting on the main motion. No motion of a subject other than the agenda item under consideration shall be admitted as an amendment. A motion to amend an amendment shall be in order, but one to amend an amendment to an amendment shall not be in order. Action shall be taken on the amended amendment prior to any other action to further amend the original motion.

XI. PUBLIC HEARINGS/ORDINANCES & RESOLUTIONS

A. Except as provided otherwise by law, public hearings shall generally be conducted as follows:

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings

1. Scheduled public hearings shall commence at 6:00 p.m. or as soon thereafter as possible.

2. Speakers are encouraged to complete a Speaker Request Slip; however, a Speaker Slip is not required in order to speak.

3. At the beginning of each public hearing item, the Presiding Officer shall announce the item for the public hearing, request that staff present the staff report and any other relevant evidence, and open the public hearing. The presentation of the staff report prior to the formal opening of the public hearing shall not prevent its consideration as evidence. Any such evidence shall be made a part of the record of the public hearing.

4. Following the staff report and opening of the public hearing, the Presiding Officer shall thereupon call upon the proponent (if other than staff) to present his or her presentation. Thereafter, the Presiding Officer shall inquire as to whether there are any persons present who desire to address the City Council on the matter. Any person desiring to speak or present evidence shall then make their presence known to the Presiding Officer and, upon being recognized by the Presiding Officer, may speak or present evidence relevant to the subject matter being heard.

5. The applicant/appellant, and/or their representative shall speak first and shall have a sufficient amount of time to do so, any portion of which may be reserved and used for rebuttal.

6. Each member of the public wishing to address the City Council, other than the applicant/appellant, shall then be allowed to address the City Council and shall have three (3) minutes to speak. Prior to declaring the public hearing open, however, when necessary because of the number of possible speakers, the Presiding Officer may establish a time limit for the entire public hearing, or establish time limits for the presentation of each individual speaker. All persons interested in the matter being heard by the City Council shall be entitled to submit written e vidence or remarks, as well as other graphic evidence. All such evidence presented shall be retained by the City Clerk as part of the record.

7. Councilmembers who wish to ask questions of the speakers, staff or each other, during the public hearing portion, may do so only after being recognized by the Presiding Officer in the manner set out in this policy.

8. Councilmembers should be mindful that the purpose of the public hearing is to obtain testimony, and not to debate the merits of the item under consideration.

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings Councilmembers should avoid debate and expressions of personal opinion until after the close of the public hearing.

9. Following the conclusion of such questions, the Presiding Officer shall allow the applicant/appellant the opportunity for rebuttal.

10. Following the rebuttal, the Presiding Officer shall close the public hearing and then allow each Councilmember to state his or her opinion on the item before asking for a motion to decide the matter.

11. Upon closing the public hearing by the Presi ding Officer, no additional public testimony shall be solicited or received by the City Council without reopening the public hearing through the Presiding Officer with consensus of the City Council.

12. The Presiding Officer at all times shall conduct the public hearing in such a manner as to afford due process to all affected persons.

XII. MEETING DECORUM & CONDUCT

Meetings of the City Council shall be conducted in an open and orderly manner and in an environment safe for all persons in attendance to ensure that the public has a full opportunity to be heard and that the deliberative process of the Council is retained at all times. The Presiding Officer shall be responsible for maintaining the order and decorum of meetings.

This policy is not intended to deprive any person of his or her right to freedom of expression, but only to maintain, to the extent possible and reasonable, a safe and conducive place to conduct public business.

A. Conduct:

1. Members of the audience shall not engage in disorderly or boisterous conduct, including the utterance of obscene, lewd, loud, threatening, repeatedly irrelevant or repetitious, or abusive language, including clapping, whistling, yelling, stamping of the feet, or other acts which disturb, disrupt, impede, or otherwise render the orderly conduct of the City Council meeting infeasible. A member of the audience engaging in any such conduct may, after warning by the Presiding Officer, at the discretion of the Presiding Officer or a majority of the City Council, be subject to removal from the meeting.

2. Persons in the audience will refrain from creating, provoking, or participating in any type of disturbance involving unwelcome physical contact.

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings

3. Noise emanating from the lobby outside the Council Chambers which is audible within the Chambers shall not be permitted. The Sergeant-at-Arms is authorized to enforce this rule by requesting those in the lobby to remain silent or to leave the area.

B. Authorized & Designated Areas:

1. No person shall stand or sit in the aisles. No person shall block any doorways or exits.

2. No person except City officials shall be permitted within the platform area in front of the City Council dais without the prior consent of the Presiding Officer or City Manager.

C. Signs, Objects, or Symbolic Material:

1. Placards, signs, and posters may be brought into the Council Chambers unless such objects disturb, disrupt, impede or otherwise render the orderly conduct of the Council meeting infeasible, or block the view of any other person in attendance, in which case such placard, sign, or poster shall, at the discretion of the Presiding Officer or a majority of the Council, be moved to a different location or removed from the Chamber.

2. Packages, bundles, suitcases, or other large or potentially dangerous objects shall not, without the prior authorization of the Presiding Officer or City Manager, be brought into the City Council Chamber and are subject to search to determine that they do not pose a threat or as otherwise requested by the Sergeant-at- Arms.

D. Service Animals: Except as otherwise allowed by the City Council, no animals except for service animals shall be brought into the Council Chambers.

E. Photography/Videography: Photographs, audiotapes, and videotapes may be taken from the rear of the Council Chambers or from any seat within the Chambers, as long as such activity does not disrupt or disturb the audience, public speakers, Councilmembers or others on the dais, and interfere with the orderly conduct of the meeting. When a filming area has been designated by the Fire Marshal or Sergeant- at-Arms, filming shall occur in that area only. The Fire Marshal or Sergeant-at-Arms may designate an area for credentialed media only.

F. Cellular & Electronic Devices: Persons in the audience will refrain from using cellular

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings phones and/or pagers while the City Council meeting is in session.

XIII. ENFORCEMENT

A. Sergeant-at-Arms: The Chief of Police or designee shall be the ex-officio Sergeant-at- Arms of the City Council. The Sergeant-of-Arms shall carry out all orders and instructions given by the Presiding Officer for the purpose of maintaining order and decorum in the Council Chambers. Any Councilmember may move to require the Presiding Officer to enforce the rules upon affirmative vote of a majority of the Council.

B. Violations: Upon a violation of the Rules of Procedure and Order established herein, the procedure to enforce the rules are as follows:

1. Warning: The Presiding Officer shall first request that a person who is violating the rules cease such conduct. If, after receiving a request from the Presiding Officer, the person persists in violating the rules, the Presiding Officer shall order a recess.

The Sergeant-at-Arms is authorized to warn the person that their conduct is violating the rules and that they are requested to cease such conduct. If upon resumption of the meeting the violation persists, the Presiding Officer may order another recess whereupon the Sergeant-at-Arms shall have the authority to order the person removed from the meeting and/or citied in violation of Penal Code Section 403.

2. Motion to Enforce: Any Councilmember may call a Point of Order should the City Council fail to abide by the provisions of this policy, whereupon the City Council shall immediately act upon the Point of Order by roll call vote. If the Presiding Officer fails to enforce the Rules of Procedure and Order set forth herein, any member of the City Council may move to require the Presiding Officer to do so, and an affirmative vote of a majority of the City Council shall require the Presiding Officer to do so. If the Presiding Officer fails to carry out the will of the majority of the City Council, the majority may designate another member of the City Council to act as Presiding Officer for the remainder of the meeting, for the limited purpose of enforcing the rules established herein.

3. Clearing the Room: Pursuant to Government Code section 54957.9, in the event that any meeting is willfully interrupted by a group of persons so as to render the orderly conduct of such meeting unfeasible and order cannot be restored by the removal of the individuals who are willfully interrupting the meeting, the Presiding

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings Officer may order the room cleared and the meeting shall continue in session.

Only matters appearing on the agenda may be considered in such a session.

Credentialed representatives of the press or other news media, except those participating in the disturbance, shall be allowed to attend any session held pursuant to Section 54957.9.

4. Violation of California State Law: A person or persons who willfully and intentionally impair or impede the conduct of a City Council meeting by violating these Rules of Procedure and Order may be prosecuted under California Penal Code section 403, California Elections Code section 18340, or any other applicable State law for disturbing a public meeting.

XIV. PROCEDURAL MATTERS

A. City Council Seating Arrangement: The seating arrangement of Councilmembers on the dais is at the prerogative of the Mayor. ·

B. Signing of Meeting Documents: The Presiding Officer shall sign all ordinances, resolutions, contracts, and other documents necessitating official signature which were adopted in their presence, unless unavailable, in which case the signature of the Vice-Mayor may be used.

C. Copy of Recordings: The public may obtain from the City Clerk a copy, at cost, of an existing recording made by the legislative body of its public sessions.

D. Ceremonial Matters: There are several different types of action the City Council may take to provide recognition or express appreciation:

1. Certifications of Appreciation or Recognition: Commendations are typically issued to acknowledge the activities of a person or organization.

2. Proclamations: Public announcements directing attention to a person, organization, event, or cause. Proclamations will be issued subject to the policy described below.

E. Proclamations: It is the policy of the City Council to issue proclamations for certain individuals, organizations, events , or causes, when such a proclamation positively impacts the community and conveys an affirmative message to residents.

1. Discretion should be used in determining whether or not to issue a proclamation.

Proclamations that are political in nature, are controversial, or that likely would not

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings enjoy a high level of community interest and support, are discouraged.

2. It is the policy of the City Council to process requests for proclamations in the following manner:

a. Requests for proclamations will be made through the Mayor's Office;

b. If the Mayor determines that the proclamation request is consistent with the policy stated above, the Mayor will direct his or her staff member to prepare the proclamation and the proclamation will be issued.

c. Upon receipt of the draft proclamatio n language, the Mayor will direct the City Manager to place the item on a meeting agenda depending on the nature and time-sensitive nature of the request.

c.d. Mayor and City Councilmembers will sign all Proclamations. The Mayor’s Office will have an electronic file of each Councilmember on record to be used in the event that a City Councilmember is unable or unavailable to sign the Proclamation,

XV. SOCIAL MEDIA

With the ever-growing use of social media, the City Council and City staff should be aware that comments, statements, opinions, etc. are still subject to the same restrictions identified in the California Government Code, including but not limited to (the Brown Act and the Public Records Act). While the City of National City strives to maintain community involvement and transparency in its government functions, certain State and local laws must be considered and kept in mind while using social media platforms. Social media platforms such as Facebook, Twitter, and· others can be viewed by other people including other Councilmembers.

Councilmembers are encouraged to check the information they provide for accuracy.

Multiple Councilmembers cannot comment on the same conversation, as that can create a "serial meeting" of the City Council and is a direct violation of the Brown Act. If Councilmembers communicate on social media about "City business", as defined in City Administrative Policy No. 02.06, any such communication may be released to the public upon request.

Councilmembers should refrain from stating personal opinions on matters being brought before the City Council including, but not limited to: personal opinions on topics, declarations on how an official intends to vote for an item, debating with citizens on items, or presentation of the Councilmember's argument in support or opposition of an item , as those could be

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings considered violations of the Brown Act, which can result in criminal and civil liabilities for the official.

Councilmembers should always maintain professionalism and common courtesy in posts and comments when commenting in their official capacity and should remain neutral in postings to prevent the interpretation that a decision has already been made outside of an open meeting, in violation of the Brown Act. Councilmembers should also be aware that there is inherent personal civil liability risk on all comments they make outside of official meetings.

For example, if a Councilmember "blocks" a social media user, or deletes a comment from a social media user, the Councilmember risks violating the social media user's First Amendment rights.

Councilmembers should not use their official positions to make negative posts, voice personal opinions, etc. against any individual, business, entity, etc., as that could create negative feedback for the official and City and could potentially subject the official to personal civil liability for slander, defamation of character, or other civil remedies that could be determined by a court. Councilmembers should also refrain from using aliases or having fake profiles on social networking sites.

City Councilmembers and staff shall not use any official City media site, including but not limited to the City's Facebook page, the City's Twitter accounts, or to any other City media outlet for personal reasons or personal gain.

IV. POLICY INTERPRETATION & APPLICABILITY

The Policy and Rules of Procedure and Order set forth herein shall be liberally construed to effectuate their purpose and no ordinance, resolution, proceeding or other action of the City Council shall be invalidated, nor the legality thereof otherwise affected, by the failure or omission of the City Council to technically comply with, observe, or otherwise follow such rules. Any provision of these rules not already governed by City ordinance or State law may be suspended by a majority vote of the City Council.

The rules set forth herein shall apply to all meetings of the City Council subject to the Brown Act and shall apply to the Council Chamber or any other location where a meeting subject to these rules takes place. In the event of any inconsistency between these rules and State law or regulation, State law or regulation shall apply.

IV. DEFINITIONS

Abstain To publicly refrain from voting usually because of a conflict interest.

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings

Adjourn A privileged motion to officially close a meeting. A second is required and a majority vote is required to adopt it.

Call to Order An announcement by the Presiding Officer to convene a meeting.

Consent Calendar The routine parts of the agenda which are approved without discussion or dissent.

Decorum To conduct oneself in a proper manner.

Dire Emergency When a majority of the legislative body determines that a dire emergency exists, it may call an emergency meeting (Government Code Section 54956.5 (a)(2)). A dire emergency, is defined as a crippling disaster, mass destruction, terrorist act, or threatened terrorist activity that poses peril so immediate and significant that requiring a legislative body to provide one -hour notice before holding an emergency meeting may endanger the public health, safety, or both, as determined by a majority of the members of the legislative body.

Emergency Meeting When a majority of the legislative body determines that an emergency situation exists, it may call an emergency meeting (Government Code Section 54956.5). An emergency is defined as work stoppage, crippling activity, or other activity that severely impairs public health, safety, or both, as determined by a majority of the members of the legislative body.

Legislative Body City Councilmembers are legislators. Together, the members of the City Council constitute a legislative body that is given authority by the State constitution and State law to make local law.

Meeting Includes any congregation of a majority of the members of a legislative body at the same time and location, including teleconference location as permitted by Section 54953, to hear, discuss, r deliberate, or take action on any item that is within the subject matter jurisdiction of the legislative body. (Government Code § 54952.2(a).)

Minutes The official record of what is done at a meeting.

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings

Motion The vehicles for decision-making by a body used with a vote to indicate approval, denial, adoption, or direction.

Ordinance A City law that generally requires two separate meetings and typically becomes effective thirty days after adoption.

Parliamentarian One who advises the Officers, Committees, and Council Members on matters regarding parliamentary procedure.

Policy The opinions, philosophy, or practices that are adopted by an organization.

Public Hearing Items that are publicly noticed for a specific City Council meeting date, as generally required by law, and are designed to receive separate public input on a specific matter.

Point of Order An interruption of a meeting to question whether rules or bylaws are being broken.

Presiding Officer The officer conducting the meeting; Chair or Chairman.

Public Hearing A noticed public session to receive original evidence or testimony on applications regulated by this title. Scheduled public hearings shall be commenced at 6:00 p.m. or as soon thereafter as possible.

Quorum The minimum number of members who must be present at a meeting to transact business legally.

Ralph M. Brown Act The Ralph M. Brown Act, commonly known as the "Brown Act," governs meetings conducted by local legislative bodies, such as Boards of Supervisors, City Councils and School Boards. The Act represents the Legislature's determination of how the balance should be struck between public access to meetings of multi­member public bodies on the one hand and the need for confidential candor, debate, and information-gathering on the other. The purpose of the Brown Act is to facilitate public participation in local government decisions and to curb misuse of the democratic process by secret legislation by public bodies.

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings Recess A period of time longer than twenty (20) days without a regular or special meeting of the Council.

Resolution A legislative or other type of action providing for the disposition of a particular item of business. Resolutions take effect upon passage by a majority vote of the City Council unless other law imposes a later effective date.

Rosenberg's Rules of Order Written rules of parliamentary procedure which govern a meeting.

Sergeant-at-Arms The Chief of Police or his or her designee shall be the ex-officio Sergeant-at-Arms of the City Council.

Special Meeting In contrast with a regular meeting, a meeting called for a particular purpose that is stated when the meeting is called.

SECTION XVIII. RELATED POLICY REFERENCES

Related Policy References
• National City Municipal Code, Chapter 2.04
• National City Municipal Code, Title 16
• Ralph M. Brown Act
• Rosenberg's Rules of Order
• City Council Policy No. 102 - City Council Meeting Times • City Council Policy No. 103 - Special Council Meetings • City Council Policy No. 105 - Off Agenda Items and Placing Non-Agenda Items on the Agenda • City Council Policy No. 106 - Preparation of City Council Meeting Minutes • City Council Policy No. 113 - Unauthorized Disclosure of Information Revealed in Closed Sessions
• City Council Policy No. 116 - Procedure for Disclosure of Ex Parte Contacts • Administrative Policy No. 02.06- Public Records Act Affecting Personal Electronic Devices & Accounts of City Users

Prior Policy Amendments

June 11, 2013 (Revised – removed Robert’s Rules of Order and replaced with Rosenberg’s Rules of Order) Per meeting minutes
October 8, 2013 (Resolution No. 2013-147)
April 2, 2019 (Resolution No. 2019 -37)
August 18, 2020 (Resolution No. 2020 -152)

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

AMENDED: October 5, 2021
August 15, 2023
ADOPTED: December 13, 1983
POLICY #104
TITLE: Rules of Procedure and Order for City Council Meetings

OPTION 2
RESOLUTION NO. 2023 -

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY , CALIFORNIA, APPROVING AN AMENDMENT TO CITY COUNCIL POLICY MANUAL POLICY 104: RULES OF PROCEDUR E AND ORDER FOR CITY COUNCIL MEETINGS – XIV PROCEDURAL MATTERS, SECTION E. PROCLAMATIONS

WHEREAS, City of National City (City) City Council Policy requires as needed a review of the City Council Policy Manual; and
WHEREAS, pursuant to a City Council Policy 105 request, a review of Section XIV Procedural Matters E, Proclamations has been completed; and WHEREAS, the City Council has determined that a majority of the current seated Council agrees to amend this policy to add to Section E (2) as follows:

(a) Requests for proclamations can be made by any Council Members’ Office.

(b) The Mayor and Councilmember filing the request will determine the language used in the proclamation, the Mayor will then direct his or her staff member to prepare the proclamation and the proclamation will be issued with all of the Council Member signatures.

(c) Upon receipt of the draft proclamation language, the Mayor and Councilmember filing the request will direct the City Manager to place the item on a meeting agenda depending on the nature and time-sensitive nature of the request;

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF NATIONAL CITY, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE, AND ORDER AS FOLLOWS:

Section 1: That the City Council hereby authorizes the amendment of City Council Policy 104, XIV Procedural Matters, Section E Proclamations by adding Section E(2) as set forth in Exhibit B to the Agenda Report.

Section 2: That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions.

PASSED and ADOPTED this 15th day of August, 2023.

Ron Morrison, Mayor
ATTEST:

Shelley Chapel, MMC, City Clerk
APPROVED AS TO FORM:

Barry J. Schultz, City Attorney

Option 3
RESOLUTION NO. 2023 -

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY , CALIFORNIA, APPROVING AN AMENDMENT TO CITY COUNCIL POLICY MANUAL POLICY 104: RULES OF PROCEDUR E AND ORDER FOR CITY COUNCIL MEETINGS – XIV PROCEDURAL MATTERS, SECTION E. PROCLAMATIONS

WHEREAS, City of National City (City) City Council Policy requires as needed a review of the City Council Policy Manual; and
WHEREAS, pursuant to a City Council Policy 105 request, a review of Section XIV Procedural Matters E, Proclamations has been completed; and WHEREAS, the City Council has determined that a majority of the current seated Council agrees to amend this policy to add to Section E (2)(d) as follows:
d. Mayor and City Councilmembers will sign all Proclamations. T he Mayor’s Office will have an electronic signature file of each Councilmember on record to be used in the event that a City Councilmember is unable or unavailable to sign the Proclamation.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF NATIONAL CITY, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE, AND ORDER AS FOLLOWS:

Section 1: That the City Council hereby authorizes the amendment of City Council Policy 104, XIV Procedural Matters, Section E Proclamations by adding Section E(2)(d) as set forth in Exhibit B to the Agenda Report.

Section 2: That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions.

PASSED and ADOPTED this 15th day of August, 2023.

Ron Morrison, Mayor

ATTEST:

Shelley Chapel, MMC, City Clerk

APPROVED AS TO FORM:

Barry J. Schultz, City Attorney

AGENDA REPORT

Department: Housing Authority
Prepared by: Carlos Aguirre, Interim Deputy City Manager Meeting Date: Tuesday, August 15, 2023
Approved by: Ben Martinez, Interim City Manager

SUBJECT:

Amendment to City Council Policy No. 901, to Require that the City Conduct a Feasibility Analysis for Homeownership on City-Owned Property Zoned for Residential Use.

RECOMMENDATION:

Adopt the Resolution Entitled "Resolution of the City Council of the City of National City, California, Amending City Council Policy No. 901, Entitled ‘Management of Real Property ’, to Require that the City Conduct a Feasibility Analysis to Evaluate Building Residential Units for Homeownership, Identify Supportable Land Values, Determine the Need for Gap Financing, and Assess the Use of Various Development Models, Such as Community Land Trusts, to Create Sustainable and Affordable Homeownership on Any City-Owned Property Zoned for Residential Use.”

BOARD/COMMISSION/COMMITTEE PRIOR ACTION:

Not Applicable.

EXPLANATION:

Background
A City Council Policy #105 request was presented by Councilmember Jose Rodriguez on the Agenda for the Regular City Council Meeting on February 7, 2023. The request was to review and discuss City Council Policy # 901 Management of Real Property (Sale, Lease, Rental, Surplus) at the next re gularly scheduled City Council meeting with the intent to expand homeownership opportunities within City-owned Properties. On February 22, 2023, staff provided a presentation on historic and present homeownership programs and projects in National City, market data and trends affecting the feasibility of homeownership development, and potential policies that can prior itize and promote the development of homeownership projec ts on City - owned property. Staff received direction from City Council to bring back a policy that would prioritize homeownership development in National City on City-owned property.

According to the 2020 Census count estimates, 32.7% of housing units in National City are owner- occupied. In contrast, 55% of housing units in California are owner -occupied. Homeownership can help families purchase property that is likely to steadily incre ase in value over time and that can be passed down to the next generation. The passing of wealth through generations gives future generations a financial step up and creates upward economic mobility. Ideally, this generational cycling of wealth will give the future family the financial means to purchase their own home, invest in businesses, or use it to attend college.

Historically, t he majority of City -owned property used for housing in National City has been allocated to meet the need for affordable rent al housing. Although the City has created some homeownership opportunities recently through the First -Time Homebuyer Program and infill development using HOME Investment Partnership funds from the U.S. Department of H ousing and Urban Development (HUD) , the number of homebuyer units could be further increased by conducting a financial feasibility study on the development of homeownership units on City-owned property.

The Community Development Commission -Housing Authority of the City of National City (“Housing Authority”) approved a 5 -year Housing Strategic Plan in August 2021. The Housing Strategic Plan also establishes guidance for the Housing Authority to utilize City-owned real estate and its financial assets for housing purposes to stimulate housing programs, including first-time homebuyer opportunities. The Housing Strategic Plan identifies six City -owned properties to consider for housing development by 2025 and recommends homeownership projects for the majority of the City’s properties being considered for future development. The Strategic Plan can be found on the Housing Authority’s Plans, Projects, and Programs webpage:
https://www.nationalcityca.gov/government/national-city-housing-authority/plans-projects-and- programs.

Staff has drafted an amendment to City Council Policy No. 901. The amendment to the policy states that when a City property is zoned for residential use and is considered for disposition by the City or Housing Authority, a feasibility analysis must be cond ucted for homeownership development on the subject parcel. The findings and considerations from the analysis must be presented to City Council for review. City Council may direct staff to issue a request for proposals for homeownership on the subject parcel.

The feasibility analysis will evaluate the disposition of City property for homeownership, identify supportable land values, determine the need for gap financing, and assess the use of various development models on any City -owned property zoned for re sidential use. The use models include but are not limited to community land trusts, deed restrictions, condominiums, limited - equity cooperatives, rent -to-own, or a combination thereof. The analysis could include both market rate and affordable homeownershi p units. The ratio of market rate to affordable homeownership units could depend on the number of units developed, funding available to subsidize affordable homeownership, and the overall financing model used.

FINANCIAL STATEMENT:

The City may need to assist the homeownership project by deferring the receipt of payment for the value of the land to make it financially feasible to build homeownership units. The City may consider providing loans to make the homes affordable to lower income first-time homebuyers through the equity created through the development. If the City or Housing Authority assists the homebuyer through a loan secured by the homebuyer’s housing unit, the City’s subsidy will be recaptured when the property is sold or transferred.

RELATED CITY COUNCIL 2020-2025 STRATEGIC PLAN GOAL:

Housing and Community Development

ENVIRONMENTAL REVIEW:

This is not a project under CEQA and is therefore not subject to environmental review. CCR15378; PRC 21065.

PUBLIC NOTIFICATION:

Agenda Report posted within 72 hours of meeting date and time in accordance with Brown Act.

ORDINANCE:

Not Applicable

EXHIBITS:

Exhibit A - Current City Council Policy No. 901 Redlined Exhibit B - Proposed City Council Policy No. 901
Exhibit C - PowerPoint
Exhibit D - Resolution and Exhibit – City Council Policy No. 901

Exhibit “A”

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15,
2023January 22, 2019

Background:

The City of National City is owner of substantial real property which is used f or various municipal purposes. As public service needs change, the requirements for these properties may be revised and, on occasion, certain parcels may be in excess of the City's current need. This requires that each individual site be reviewed in terms of its potential for future public use, as well as its potential economic benefit to the City.

The proceeds from the sale and lease of City -owned lands and the revenues generated from leases are normally utilized for General Fund purposes unless the property sold or leased belonged to a restricted program.

Purpose:

It is the purpose of this policy 1) to establish a procedure by which unused and marginally used City -owned real estate is review ed for its potential public use, and for designating unneeded parcels for lease or sale; 2) to provide methodology for the sale or exchange of City- owned real estate and 3) to establish policies for the leasing of City - owned real property.

Policy:

It is the City's policy to manage its real estate assets so that municipal needs which rely on these assets may be properly implemented. It is not the City's policy to speculate in real estate. The City Council will review City -owned real estate not used for muni cipal purposes and determine the appropriate use of the property. Those properties not needed for either City or public use within the foreseeable future, may be made available for lease or sale.

The City shall optimize the sale price or lease rent from C ity-owned real estate based on relevant factors, including 1) an appraisal reflecting current market value when either a transaction or authorization to sell or lease is presented to the City Council, 2) prevailing economic conditions and market trends, and 3) any special benefits to accrue from the sale or lease.

The City shall seek market value for its properties . Discounts will not be negotiated unless an extraordinary need or circumstance is recognized by Council Resolution setting

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15,
2023January 22, 2019

Exhibit “A” Page 2 of 13
forth the amount of the discount from appraised value and the public purpose served in justification of the discount.

City staff under the direction of City Manager shall prepare and present to the City Council a comprehensive Property Management Plan with periodic reviews a s needed, and updates to the City Council. The Property Management Plan shall include an overall review of the City's real estate portfolio (or inventory), an operating plan for corporate property, a disposition plan for surplus property, market research t o support anticipated transactions and a request for authority to act within defined parameters (as described in this policy).

The major elements of the property management plan are to include:
• Property evaluation and characterization of real estate assets • Strategy for City occupied real estate
• Investment Portfolio Plan (leases to for-profit tenants) • Review of not-for-profit leases
• Disposition Plan for surplus assets
• Business Case development review to support proposed transactions • Legal document development and review

Procedure for sale of City owned Real Estate:

A. Real Estate Review
As part of an overall property management plan for the City's real estate assets, staff will review the City's property inventory to determine which properties are no longe r needed for public facilities or to support the elements of the General Plan and whose disposition will provide a greater public benefit.

When a City property is zoned for residential use and is considered for disposition by the City or Housing Authorit y, a feasibility analysis must be conducted for homeownership development on the subject parcel. The findings and considerations from the analysis must be presented to City Council for review. City Council may direct staff to issue a request for proposals for homeownership on the subject parcel.

The feasibility analysis will evaluate the disposition of City property for homeownership, identify supportable land values, determine the need for gap financing, and assess the use of various development models on any City -owned property zoned for residential use. The use models include but are not limited to community land trusts, deed restrictions, condominiums, limited- equity cooperatives, rent-to-own, or a combination thereof. The analysis could include both m arket rate and affordable homeownership units. The ratio of market rate to affordable homeownership units could depend on the number of units developed, funding

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15,
2023January 22, 2019

Exhibit “A” Page 3 of 13
available to subsidize affordable homeownership, and the overall financing model used.

A City-owned property may become available for sale if:
• The property is not currently used by the City or does not support a municipal function; and.
• The property is vacant and has no foreseeable use by the City; and • The property is a non -performing or under-performing asset and greater value can be generated by its sale; and
• Significant economic development opportunities can be generated by selling the property..
•

Factors to be considered in determining whether a property should be sold include:
• Will the City be relieved of potential liabilities and/or cost of maintaining property that does not generate income or provide public benefit? • Property tax increment that will be created by returning the properties to the tax rolls.
• Stimulation of the economy by p roviding opportunities for private sector investment.
• Generation of revenue.
• The sale of the property will generate greater economic value than a ground lease, if a ground lease is a feasible option.

B. Governmental Clearance Process
Government Code Section 54222 requires that a local agency proposing to dispose of surplus property must first notify all governmental agencies operating within the City as to the availability of the property. The agencies are given 60 days to respond with an intent to acquire, if not, the property may be deemed cleared for public sale.

Regarding the list of properties for sale:
• Governmental agencies are regularly contacted as the surplus list is updated. • City departments are individually contacted as the surplus list is updated. • Council members are given a preliminary review and opportunity to comment on foreseeable uses for the property.

C. Approval Process
• City-owned properties that have been identified by the City Manager as candidates for sale will be presented to the Cit y Council for approval to be sold. If a property is of a type and location that would make a ground lease

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15,
2023January 22, 2019

Exhibit “A” Page 4 of 13
feasible, an economic analysis of the benefits of lease vs. sale will be conducted.
• If City Council determines that the property may be sold, it shall authorize City Manager to sell the property for a price equal to or greater than a minimum price established by a current (less than six month s old) appraisal.

The authorization to sell the property will be valid for twelve months from the date of City Council action.
• The City Manager or designee may enter into purchase and sale agreements, close escrows and execute and deliver grant deeds to the purchasers of the properties at prices equal to or greater than the minimum price approved by City Council on terms and conditions deemed reasonable, and in the City's best interests.
• City Manager or designee will provide a report to the City Council, regarding the price, terms, and conditions of all transactions.
• Properties that cannot be sold at a price equal to or greater than the minimum price approved by Council will be returned to Council for further consideration prior to disposition. Council approval will be required to sell a property at a price less than the minimum price previously approved by the City Council.

D. Method of Sale
Properties may be sold by any method allowed by City Council Policy. This includes direct negotiation, request for proposal, listing with a broker, sealed bid, auction or other appropriate method as determined by the City Council. Possible method of sale for all properties will be included in the enabling resolution authorizing their sales.

E. Marketing
Properties offered for sale shall receive the widest possible exposure to the open market place. This may be accomplished through direct marketing techniques, such as requests for proposals (RFP), advertising, exposure through the real estate media, posting the property on the multiple listing service or any other appropriate method.

When appropriate, properties may be listed for sale with qualified real estate brokers.

The authorization to utilize the services of a real estate broker will be contained in the enabling resolution.

F. Real Estate Brokers
Real estate brokers may be used to represent the City in the sale of its prop erties.

Brokers will be selected for individual assignments through Requests for Proposals (RFP) or Requests for Qualifications (RFQ) and a subsequent bid or other methods that result in the City receiving the services of a qualified broker at the best value to the City. The maximum approved commission rate will be contained in the enabling resolution for the property's sale. If the property is listed with a broker, the City reserves the right to exclude from the listing agreement potential buyers whose

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15,
2023January 22, 2019

Exhibit “A” Page 5 of 13
interest in purchasing a subject property has been made a part of the record prior to the execution of such agreement.

G. Exclusively Negotiated Sales
It will be the City's policy to insure the highest price for its real estate by pursuing open market transa ctions. However, on certain occasions, an exclusively negotiated sale may be justified as applicable and may be approved under one of the following conditions:

1. When a parcel is landlocked.

2. When the sale is to a contiguous owner.

3. When a fee interest in a pipeline or other right -of-way is no longer required, it may be sold to a contiguous owner. A restrictive pipeline easement of adequate width or other required easements will be reserved from said sale.

4. When other governmental, public and quasi -public agencies submit acquisition proposals a sale may be consummated. These agencies shall include but not be limited to: Federal, State, and County agencies; school districts, special districts, and regulated utility companies.

5. When qualified non-profit institutional organizations offer to purchase City -owned land, a negotiated sale may be consummated at fair market value providing there is: 1) a development commitment, and 2) a right to repurchase or a reversion upon a condition subsequent. I nstitutional organizations such as places of public assembly, hospitals, extended care facilities, private schools and community service organizations are required to develop under the City's conditional use permit procedure.

6. When a property has been of fered by public auction and no acceptable bids were received, it may be sold on a negotiated basis to any applicant submitting an acceptable offer within six months following the date of auction.

7. Real property exchanges may be consummated by direct negotiation . However, exchanges will be considered only with other governmental agencies or when there is an advantage to the City.

H. Rezoning
Prior to completion of the sales transaction, City land shall be considered for rezoning in accordance with the Gen eral Plan, existing community plans or other City Council direction if a higher sale price will result. Also, all unnecessary easements affecting title to the property shall be removed if this will result in a commensurate increase in value.

I. Easements
The City will receive current fair market value for the removal of restrictive easements or access rights previously paid for by the City or other governmental agency or reserved in a sale of City property.

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15,
2023January 22, 2019

Exhibit “A” Page 6 of 13

J. Priority Handling
Since time is of essence in land transactions, all such actions by the City Council and staff shall be given the highest priority and special handling.

K. Public Utilities Installed by Private Entities
The applicant for the use of unimproved City land for public purposes, such as streets, sewers, and other public utilities, shall compensate the City for the fair market value of the rights to be granted by the City. The amount of compensation shall be established by appraisal.

Procedure for leasing City-owned Real Property
The Ci ty of National City has a very diverse real estate portfolio. While the policies herein are to act as the standard that governs most leases, the City acknowledges that parts of its leasing portfolio have specialized needs or restrictions. In these cases, t his policy will act as a framework for a sub -policy that will govern a specific area. Should a conflict arise between the framework policy and the sub -policy, the sub- policy will govern.

A. Criteria for Leasing
City property shall be considered for leasin g when one or more of the following criteria apply:

1. The property is not required for current municipal use, but is to be held for possible future use and can be leased as an interim measure.

2. The property can only be leased because of legal restrain ts. For example, property held under Tideland trust grants or as dedicated parks.

3. The City requires substantial control over development, use and reuse of the property.

4. The property has the immediate potential of a high return to the City because of its high demand and type of use, such as commercial and industrial land.

5. The property can be efficiently utilized by a provider of services needed by the City.

6. The property can be leased to promote a substantial economic development opportunity.

B. Property Management Plan
The City Council may approve the execution of lease transactions that meet the terms of the City's asset strategy for a particular property previously approved by City Council in an overall Property Management Plan . Negotiated tra nsactions that fall outside of the parameters of an approved Property Management Plan either will be submitted individually for City Council approval, or deferred until the next periodic update and approval of the plan.

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15,
2023January 22, 2019

Exhibit “A” Page 7 of 13
C. Lessee Selection for New Leases
Competitive offers for lease of City property shall be solicited from the open market place. This may be accomplished through a number of marketing techniques, such as Request for Proposals (RFPs), a marketing subscription system, direct advertising, use of a Multiple Listing Service (MLS), listing with a broker, posting the property and any other appropriate means.

In certain limited situations, the City may exclusively consider a single proposal for lease of City property. Potential lessees wishing to ex clusively negotiate with the City must submit for City staff review a business case with sufficient justification as to how it is capable of optimizing the use of the property and return to the City, thereby negating the need for a competitive process . This information will be included when the lease transaction is presented for City Council approval.

Leasehold proposals shall be evaluated in terms of:

1. The degree to which the proposed use is in compliance with the City's strategic plan for the property.

2. In terms of the amount of consideration offered in the form of rent.

3. In terms of the financial feasibility of the proposal.

4. The capability, expertise and experience of the potential lessee with respect to the proposed leasehold development and operation.

5. If new development is proposed, a development plan that includes a description of the development team and its qualifications.

6. The details of each person or entity that will have an interest in the proposed lease

7. Special public benefits to be derived (if any).

D. Rate of Return
The City shall obtain fair market rents for its leases commensurate with the highest and best use of the property. The fair market rent shall be based on an appraisal that complies with the definition of Market Re nt found in the Uniform Standards of Professional Appraisal Practice (USPAP) published by the Appraisal Foundation. The appraisal shall be no more than six months old at the time the lease transaction is presented for City Council approval. If the cost of an appraisal is not justified by the anticipated rents, the City may choose an alternative method to establish rent. City leases shall contain terms and conditions which will sustain a fair rate of return throughout the duration of the lease.

E. Rental Terms
Rental terms may be negotiated on the basis of fixed rates (flat rent leases) or percentages of the lessee's gross income derived from business conducted on the property, with a provision for a minimum rent on percentage leases.

F. Percentage Leases

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15,
2023January 22, 2019

Exhibit “A” Page 8 of 13
Minimum Rent
The minimum rent component for a new percentage lease shall be set at no less than eighty percent (80%) of the fair market rent as defined above. In certain cases, a portion of the minimum rent may be abated for new construction or redevelopment on the leasehold. The minimum rent shall be adjusted upward throughout the duration of the lease at intervals of not more than every five (5) years to reflect no less than eighty percent (80%) of the average annual rent actually paid or accrued during the three (3) years preceding the adjustment. In no event shall the adjusted minimum rent be less than the minimum rent in existence immediately preceding the adjustment.

Percentage Rates
Percentage leases shall provide for adjustments of percentages rates every five (5) years to current fair market rates as established by appraisals of prevailing market percentage rates primarily within the Southern California area.

G. Flat Rate Leases

Market Rate Adjustments
Flat rate leases shall provide for upward adj ustment of rent every five (5) years to current fair market rent.

Consumer Price Index Adjustments
Flat rate leases shall provide for upward adjustment of rent in the interval term between market rate adjustments by changes in the consumer price index. T he index used for consumer price index adjustments will be the All Urban Consumers index for Los Angeles - Riverside - Orange County, California with a base year of 1982- 84. If the U.S. Department of Labor indices are no longer published, another substitut e index generally recognized as authoritative will be used. Flat rate leases may include pre -determined periodic increases to rent instead of consumer price index adjustments. These periodic increases would occur at least every five (5) years.

H. Rent Arbitration
Leases can provide for binding arbitration when the City and lessee cannot agree on the new rent for a rental period under review . The City and lessee shall each select a professional independent real estate appraiser who in turn will select a third independent real estate appraiser to determine the fair market rent. If the two selected appraisers fail to mutually select a third appraiser, then the third appraiser will be appointed in accordance with the rules of the American Arbitration Associatio n. The City and lessee shall pay the cost of its own selected appraiser and equally share the cost of the third appraiser.

I. Appraisal Assumptions

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15,
2023January 22, 2019

Exhibit “A” Page 9 of 13
City leases shall include a definition of the fair market value to be used to adjust rent and an identific ation of the premise for that value. In establishing the fair market value of leased property, any appraisal shall consider the property as a fee simple absolute estate and as vacant and available for lease or sale for the authorized purposes of the lease at the commencement of the rental period under review. Rates established for purposes of periodic percentage rental adjustments shall not consider any abatement as may be appropriate in a "new" development of vacant land. It shall also be assumed that all required regulatory approvals to permit the use authorized in the lease have been obtained.

J. Lease Term

Short-Term Lease
The City Manager, at all times, shall have power, without advertising, notice, or competitive bidding, to lease any City property for a term of three (3) years or less (short-term lease). The City Council will be notified of a short-term lease not later than fifteen (15) days following its execution. A short -term lease may not be renewed without approval of the City Council. The City Manager, or designee may also execute rental agreements covering up to eighteen (18) months for tenant occupancy of City-owned residential housing.

Long-Term Lease
A lease in excess of three (3) years requires a resolution passed by a majority vote of all members of the City Council. The length of lease term shall be based on the level of capital improvements to be made by the lessee and the economic life expectancy of the development. These factors can be determined utilizing cost estimating and economic life expectancy resources such as tables provided by Marshall Valuation Service. The City may consider other relevant information in determining if a longer lease term is warranted, such as if the proposed leasehold development is expected to generate abo ve average returns to the City or significantly improve the quality of the property . A lease shall not exceed 55 years unless the conditions set forth in Government Code section 37380(b) are met,

K. Lease Amendments
Amendments to long-term leases require City Council approval. The City's agreement to an amendment may be contingent upon updating sections of the lease to incorporate current City standard lease provisions and an adjustment to fair market rent.

L. Subleases
A lessee may sublease all or part o f the leased property to a qualified sub -lessee subject to approval by the City. No sublease shall be approved which would be detrimental to the City's rights under the master lease or for a use that is not consistent with uses allowed by

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15,
2023January 22, 2019

Exhibit “A” Page 10 of 13
the master lease. The City Manager may authorize subleases which meet these conditions and which do not require amendment of the master lease. Unless special circumstances exist. Leases shall provide for the City to receive a minimum of fifty percent (50%) of the incremental gross rental revenues due to the lessee from subleases.

M. Leasehold Financing
The City will not subordinate its fee interest to encumbrances placed against any leasehold by a lessee. The City Council may approve appropriate financial encumbrances of the leasehold interest, which provide that all loan proceeds are used for authorized improvement of the property until the leasehold is fully developed in accordance with the lease. City staff shall take appropriate steps to review the proposed financing and insure that loan proceeds go into the leasehold. Maximum loan proceeds shall not be in excess of seventy -five percent (75%) loan- to-value, where "value " refers to the leasehold improvements, as determined by a lender's appraisal which has been reviewed and approved by City staff. The loan term shall not exceed the term of the lease.

Loans or refinancing in the form of encumbrances against the lease for the purpose of reducing equity or financing the sale of leasehold interest will not be allowed until the property is fully developed for uses authorized in the lease. After the property is developed, such financing may be permitted so long as there is also substantial benefit to be gained by the City. This may take the form of either a percentage share of the loan proceeds or an upward adjustment to the rent. Either of which shall be based on commercially reasonable comparables found in the market.

N. Leasehold Improvements
Leasehold improvements installed by lessees shall be removed at the lease terminat ion without cost to the City, or will revert to the City, at the City's option. All leasehold improvements and alterations require prior written approval of the City Council.

O. Maintenance and Utilities Responsibility
City leases shall require the lessee to maintain all improvements on the property at its own expense and be responsible for the cost of all utilities. Leases for multi -tenanted space shall include specific requirements delineating appropriate responsibilities.

P. Lease Audits
All percentage leases may be audited by the City’s Finance Department in the first year of operation to establish proper reporting procedures and at least once every three (3) years thereafter. More frequent audits may be made if appropriate. The City shall reserve the right to audit all other leases and agreements subject to this Council Policy, if determined to be warranted by the City’s Finance Department.

Q. Leasehold Assignments

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15,
2023January 22, 2019

Exhibit “A” Page 11 of 13
Requests for assignment of leasehold interest shall be evaluated on the same basis as t he criteria used in evaluating a leasehold proposal. The City Manager may authorize assignments which do not require amendment of the master lease. Consent may be contingent on the payment of additional consideration to the City, either as a percentage share of the purchase price of the leasehold interest or an upward adjustment to the rent.

Either of which shall be based on commercially reasonable comparables found in the market. If new financing is involved in the sale, the requirements of 'Leasehold Financing' shall apply.

R. Lease Extensions & Renewals
Requests from existing lessees for lease extensions or renewals may be considered if such proposals promote capital investment and redevelopment of City property. Whenever an existing lessee is seeking r enewal of an expiring long- term lease that is not contemplated in a previously approved property management plan, the City Manager will bring the issue before the applicable City Council Committee with an appropriate recommendation.

In addition to the crit eria used to assess new lease proposals, City staff also will review the lessee's history with respect to: maintenance of the property; compliance with existing lease terms; prompt rent payments; and a rental return consistent with maximizing the property's full potential.

The lessee must propose capital investment that: will increase the value or the useful life of the leasehold improvements by an amount more than can be reasonably amortized over the remaining lease term; is not recurring in nature; and i s at least ten percent (10%) or more of the value of the existing improvements . It specifically should exclude expenditures to correct deferred maintenance and expenditures for repairs to keep the existing improvements in good condition. The length of any extended lease term shall be calculated by the same method used for calculating the length of new leases.

S. City's Interest in Leasehold Improvements
City lease agreements provide the City the right to assume ownership of the leasehold improvements at th e end of the lease. The value of the City's interest in the leasehold improvements can be appraised using widely accepted appraisal methods. In the event the City grants a lessee a lease extension, the City shall be compensated by an amount equal to the change in present value attributable to the deferral of its interest in the leasehold improvements. This amount either can be paid as an upfront payment at the beginning of the extended term or amortized over time with appropriate interest applied. The City shall offset from the value of its interest in the leasehold improvements any increased economic benefit derived from an extended lease. The City shall not receive any compensation for its interest in the leasehold improvements on leases extended prior to the last twenty percent (20%) of the existing term.

T. Leasing to Non- Profit Organizations

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15,
2023January 22, 2019

Exhibit “A” Page 12 of 13
It shall be the policy of the City Council to allow direct negotiation with nonprofit organizations for the use of City- owned lands for the purpose of providing the community with cultural, recreational, educational enrichment, and other public services to the citizens and visitors of National City. Relative to this policy the following will apply:

1. Available City property shall be leased at fair market value to non profit organizations when it is deemed by Council that appropriate public benefit will be derived.

2. The only discount in the land rental rate which will be considered is that which will be a direct offset to City expenditures. An example would be where the non - profit organization is constructing and operating a facility to provide a service that would otherwise be a recognized obligation of the City to provide.

3. Council approval of a prospective nonprofit organization’s use of City- owned land shall be obtained prior to commencement of lease negotiations.

4. No lease will become effective until firm financial commitments have been obtained under an appropriate lease option arrangement.

5. Lessees will be required to construct, operate, and maintain the premises at th eir sole cost.

6. Lessees shall be incorporated nonprofit organizations under the laws of the State of California.

7. Development on parklands shall be in conformance with City park development plans, and construction shall comply with City park design criteria.

8. Lessees shall provide desired services and facilities to the general public without discrimination as to race, color, creed, sex, age, or national origin.

9. When leases permit revenue producing activities, some measure of rental compensation shall be paid t o the City. However, this provision will not apply to occasional fund raising events provided the funds are used exclusively for the specified purpose(s) of the lease.

10. Properties with significant potential for commercial, industrial, or scientific research uses shall not be available for nonprofit use.

11. Subleases will be considered on their individual merits by the City and consistency with conditions placed upon the City. Fees generated from subleasing will belong to the City and be deposited with the City upon receipt by the Agency.

U. Security Deposits
The standard security deposit for a new lease agreement shall be equivalent to two (2 ) month's rent. The security deposit may take the form of cash, an instrument of credit or a faithful performance bond. For a lessee making a substantial investment in improvements, the security deposit will be refunded upon completion of the improvements.

Related Policy References

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15,
2023January 22, 2019

Exhibit “A” Page 13 of 13
Government Codes: 37350 and 37380
Government Codes: 54200-54232, 54235-54237

Prior Policy Amendments
August 14, 1990
January 22, 2019

CITY COUNCIL POLICY

CITY OF NATIONAL CITY
TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)
ADOPTED: June 19, 1984 AMENDED: August 15, 2023
Background:

The City of National City is ow ner of substantial real property which is used f or various municipal purposes. As public service needs change, the requirements for these properties may be revised and, on occasion, certain parcels may be in excess of the City's curren
t need. This require s that eac h individual site be reviewed in terms of its potential for future public use, as well as its potential economic benefit to the City.

The proceeds from the sale and lease of City -owned lands and the revenues generated from leases ar
e normally uti lized for General Fund purposes unless the property sold or leased belonged to a restricted program.

Purpose:

It is the purpose of this policy 1) to establish a procedure by w hich unused and marginally used City-owned real estate is reviewed f or its potential public use, and for designat
ing unneeded parcels for lease or sale; 2) to provide methodology for the sale or exchange of Cit
y-owned real estate and 3) to establish polici es for the leasing of City- owned real property.

Policy:

It is the City's policy to manage its real estate asset s so t hat municipal needs which rely on these assets may be properly implemented. It is not the City's policy to speculate in real estate. The City Council will review C ity-owne d real estate not used for municipal purpos
es and determine the appropri ate use of the property. Those propertie s not needed for either City or public us e w ithin the fo reseeable future, ma y be made a vailable for lease or sale.

The City shall optimize the sale price or lease rent from City -owned rea l estate based on relevant factors, including 1) an appraisal reflecting current market value when either a transaction or authorization to sell or lease is presented to the City Council, 2) prevailing economic
conditions and market trends, and 3) any specia l benefits to accrue from the sale or lease.

The City shall seek market value for its properties . Discounts will not be negotiated unless an extraordinary need or circumstance is recognized by Council Resolution setting forth the amount of the discount from appraised value and the public purpose served in justification of the discount.

Exhibit “B”

City sta
ff under the direction of City Manager shall prepare and present to the City Council a comprehensive Property Management Plan with periodic reviews as needed, and updates to the City Council. The Property Management Plan shall include an overall review of the City's real estate portfolio (or inventory), an operating plan for corporate property, a disposition plan for surplus property, market research to support antic ipated transactions and a request for authority to act within defined parameters (as described in this policy).

The major
elements of the property management plan are to include:
• Property evaluation and characterization of real estate assets • Strategy for City occupied real estate
• Investment Portfolio Plan (leases to for-profit tenants) • Review of not-for-profit leases
• Disposition Plan for surplus assets
• Business Case development review to support proposed transactions • Legal document development and review
Procedure for sale of City owned Real Estate:

A. Real Est
ate Review
As part of an overall property management plan for the City's real estate assets, staff will review the City's property inventory to determine which properties are no longer needed for public facilities or to support the elements of the General Plan and whose disposition will provide a greater public benefit.

When a Cit
y property is zoned for residential use and is considered for disposition by the City or Housing Authority, a feasibilit y analysis must be conducted for homeownership development on the subject parcel. The findings and considerations from the analysis must be presented to City Council for review. City Council may direct staff to issue a request for proposals for homeownership on the subject parcel.

The feas
ibility analysis will evaluate the disposition of City property for homeownership, identify supportable land values, determine the need for gap financing, and assess the use of various development models on any City-owned property zoned for residential use. The use models include but are not limited to community land trusts, deed restrictions, condominiums, limited- equity cooperatives, rent-to-own, or a combination thereof. The analysis could include both market rate and a ffordable homeownership units. The ratio of market rate to affordable homeownership units could depend on the number of units developed, funding available to subsidize affordable homeownership, and the overall financing model used.

A City-owned pr
operty may become available for sale if:
• The property is not currently used by the City or does not support a municipal function; and
• The property is vacant and has no foreseeable use by the City; and • The property is a non -performing or under-performing asset and greater value can be generated by its sale; and
• Significant economic development opportunities can be generated by selling the property.
•
Factors
to be considered in determining whether a property should be sold include:
• Will the City be relieved of potential liabilities and/or cost of maintaining property that does not generate income or provide public benefit? • Property tax increment that will be created by returning the properties to the tax rolls.
• Stimulation of the economy by providing opportuni ties for private sector investment.
• Generation of revenue.
• The sale of the property will generate greater economic value than a ground lease, if a ground lease is a feasible option.

B. Governmental Clearance Process
Government Code Section 54222 requires t hat a local agency proposing to dispose of surplus property must first notify all governmental agencies operating within the City as to the availability of the property. The agencies are given 60 days to respond with an intent to acquire, if not, the property may be deemed cleared for public sale.

Regardin
g the list of properties for sale:
• Governmental agencies are regularly contacted as the surplus list is updated. • City departments are individually contacted as the surplus list is updated. • Council members are given a preliminary review and opportunity to comment on foreseeable uses for the property.

C. Approval Process
• City-owned properties that have been identified by the City Manager as candidates for sale will be presented to the City Council for appr oval to be sold. If a property is of a type and location that would make a ground lease feasible, an economic analysis of the benefits of lease vs. sale will be conducted.
• If City Council determines that the property may be sold, it shall authorize City Ma nager to sell the property for a price equal to or greater than a minimum price established by a current (less than six month s old) appraisal.

The authorization to sell the property will be valid for twelve months from the date of City Council action.

• The City Man
ager or designee may enter into purchase and sale agreements, close escrows and execute and deliver grant deeds to the purchasers of the properties at prices equal to or greater than the minimum price approved by City Council on terms and condit ions deemed reasonable, and in the City's best interests.
• City Manager or designee will provide a report to the City Council, regarding the price, terms, and conditions of all transactions.
• Properties that cannot be sold at a price equal to or greater tha n the minimum price approved by Council will be returned to Council for further consideration prior to disposition. Council approval will be required to sell a property at a price less t han the minimum price previously approved by the City Council.

D. Method of Sale
Properties may be sold by any method allowed by City Council Policy. This includes direct negotiation, request for proposal, listing with a broker, sealed bid, auction or other appropriate method as determined by the City Council. Possible method of sale for all properties will be included in the enabling resolution authorizing their sales.

E. Marketing
Properties offered for sale shall receive the widest possible exposure to the open market place. This may be accomplished through direct marketing techniques, such as requests for proposals (RFP), advertising, exposure through the real estate media, posting the property on the multiple listing service or any other appropriate method.

When appropriate, properties may be listed for sale with qualifi ed real estate brokers.

The authorization to utilize the services of a real estate broker will be contained in the enabling resolution.

F. Real Estate Brokers
Real estate brokers may be used to represent the City in the sale of its properties.

Brokers will be selected for individual assignments through Requests for Proposals (RFP) or Requests for Qualifications (RFQ) and a subsequent bid or other methods that result in the City receiving the services of a qualified broker at the best value to the City. The maximum approved commission rate will be contained in the enabling resolution for the property's sale. If the property is listed with a broker, the City reserves the right to exclude from the listing agreement potential buyers whose interest in purchasin g a subject property has been made a part of the record prior to the execution of such agreement.

G. Exclusively Negotiated Sales
It will be the City's policy to insure the highest price for its real estate by pursuing open market transactions. However, on certain occasions, an exclusively negotiated sale may be justified as applicable and may be approved under one of the following conditions:

1. When a parcel
is landlocked.

2. When the sale is to a contiguous owner.

3. When a fee interest in a pipeline o r other right-of-way is no longer required, it may be sold to a contiguous owner. A restrictive pipeline easement of adequate width or other required easements will be reserved from said sale.

4. When other governmental, public and quasi -public agencies su bmit acquisition proposals a sale may be consummated. These agencies shall include but not be limited to: Federal, State, and County agencies; school districts, special districts, and regulated utility companies.

5. When qualified non-profit institutional organizations offer to purchase City -owned land, a negotiated sale may be consummated at fair market value providing there is: 1) a development commitment, and 2) a right to repurchase or a reversion upon a condition subsequent. Institutional organi zations such as places of public assembly, hospitals, extended care facilities, private schools and community service organizations are required to develop under the City's conditional use permit procedure.

6. When a property has been offered by public auc tion and no acceptable bids were received, it may be sold on a negotiated basis to any applicant submitting an acceptable offer within six months following the date of auction.

7. Real property exchanges may be consummated by direct negotiation. However, exchanges will be considered only with other governmental agencies or when there is an advantage to the City.

H. Rezoning
Prior to completion of the sales transaction, City land shall be considered for rezoning in accordance with the General Plan, existin g community plans or other City Council direction if a higher sale price will result. Also, all unnecessary easements affecting title to the property shall be removed if this will result in a commensurate increase in value.

I. Easements
The City will rece ive current fair market value for the removal of restrictive easements or access rights previously paid for by the City or other governmental agency or reserved in a sale of City property.

J. Priority Handling
Since time is of essence in land transactions, all such actions by the City Council and staff shall be given the highest priority and special handling.

K. Public Utilities Installed by Private Entities
The applicant for the use of unimproved City land for public purposes, such as streets, sewers, and other public utilities, shall compensate the City for the fair market value

of the ri
ghts to be granted by the City. The amount of compensation shall be established by appraisal.

Procedure for leasing City-owned Real Property
The City of National City has a very diverse real estate portfolio. While the policies herein are to act as the standard that governs most leases, the City acknowledges that parts of its leasing portfolio have specialized needs or restrictions. In these cases, this policy will act as a framework for a sub -policy that will govern a specific area. Should a conflict arise between the framework policy and the sub -policy, the sub- policy will govern.

A. Criteria for Leasing
City property shall be considered for leasing when one or more of the following criteria apply:

1. The property is not required for current municipal use, but is to be held for possible future use and can be leased as an interim measure.

2. The property can only be leased because of legal restraints. For example, p roperty held under Tideland trust grants or as dedicated parks.

3. The City requires substantial control over development, use and reuse of the property.

4. The property has the immediate potential of a high return to the City because of its high demand and type of use, such as commercial and industrial land.

5. The property can be efficiently utilized by a provider of services needed by the City.

6. The property can be leased to promote a substantial economic development opportunity.

B. Property Management Plan
The City Council may approve the execution of lease transactions that meet the terms of the City's asset strategy for a particular property previously approved by City Council in an overall Property Management Plan . Negotiated transactions that fal l outside of the parameters of an approved Property Management Plan either will be submitted individually for City Council approval, or deferred until the next periodic update and approval of the plan.

C. Lessee Selection for New Leases
Competitive offers for lease of City property shall be solicited from the open market place. This may be accomplished through a number of marketing techniques, such as Request for Proposals (RFPs), a marketing subscription system, direct advertising, use of a Multiple Listing Service (MLS) , listing with a broker, posting the property and any other appropriate means.

In certain
limited situations, the City may exclusively consider a single proposal for lease of City property. Potential lessees wishing to exclusively negotiate with the City must

submit for
City staff review a business case with sufficient justification as to how it is capable of optimizing the use of the property and return to the City, thereby negating the need for a competitive process . This information will be included when the lease transaction is presented for City Council approval.

Leasehold p
roposals shall be evaluated in terms of:

1. The degree to which the proposed use is in compliance with the City's strategic plan for the property.

2. In terms of the amount of consideration offered in the form of rent.

3. In terms of the financial feasibility of the proposal.

4. The capability, expertise and experience of the potential lessee with respect to the proposed leasehold development and operation.

5. If new development is proposed, a development plan that includes a description of the development team and its qualifications.

6. The details of each person or entity that will have an interest in the proposed lease

7. Special public benefits to be derived (if any).

D. Rate of Return
The City shall obtain fair market rents for its leases commensurate with the highest and best use of the property. The fair market rent shall be based on an appraisal that complies with the definition of Market Rent found in the Uni form Standards of Professional Appraisal Practice (USPAP) published by the Appraisal Foundation. The appraisal shall be no more than six months old at the time the lease transaction is presented for City Council approval. If the cost of an appraisal is not justified by the anticipated rents, the City may choose an alternative method to establish rent. City leases shall contain terms and conditions which will sustain a fair rate of return throughout the duration of the lease.

E. Rental Terms
Rental terms may be negotiated on the basis of fixed rates (flat rent leases) or percentages of the lessee's gross income derived from business conducted on the property, with a provision for a minimum rent on percentage leases.

F. Percentage Leases
Minimum Rent
The minimum rent component for a new percentage lease shall be set at no less than eighty percent (80%) of the fair market rent as defined above. In certain cases, a portion of the minimum rent may be abated for new construction or redevelopment on the leasehol d. The minimum rent shall be adjusted upward throughout the duration of the lease at intervals of not more than every five (5) years to reflect no less than eighty percent (80%) of the average annual rent actually paid or accrued during the three (3) years preceding the adjustment. In no event shall the adjusted minimum rent be less than the minimum rent in existence immediately preceding the adjustment.

Percentage Rates
Percentage leases shall provide for adjustments of percentages rates every five (5) years to current fair market rates as established by appraisals of prevailing market percentage rates primarily within the Southern California area.

G. Flat Rate Leases
Market Rate Adjustments
Flat rate leases shall provide for upward adjustment of rent ev ery five (5) years to current fair market rent.

Consumer Price Index Adjustments
Flat rate leases shall provide for upward adjustment of rent in the interval term between market rate adjustments by changes in the consumer price index. The index used for c onsumer price index adjustments will be the All Urban Consumers index for Los Angeles - Riverside - Orange County, California with a base year of 1982- 84. If the U.S. Department of Labor indices are no longer published, another substitute index generally r ecognized as authoritative will be used. Flat rate leases may include pre -determined periodic increases to rent instead of consumer price index adjustments. These periodic increases would occur at least every five (5) years.

H. Rent Arbitration
Leases can provide for binding arbitration when the City and lessee cannot agree on the new rent for a rental period under review . The City and lessee shall each select a professional independent real estate appraiser who in turn will select a third independent real estate appraiser to determine the fair market rent. If the two selected appraisers fail to mutually select a third appraiser, then the third appraiser will be appointed in accordance with the rules of the American Arbitration Association . The City and lessee shall pay the cost of its own selected appraiser and equally share the cost of the third appraiser.

I. Appraisal Assumptions
City leases shall include a definition of the fair market value to be used to adjust rent and an identification of the premis e for that value. In establishing the fair market value of leased property, any appraisal shall consider the property as a fee simple absolute estate and as vacant and available for lease or sale for the authorized purposes of the lease at the commencement of the rental period under review. Rates established for purposes of periodic percentage rental adjustments shall not consider any abatement as may be appropriate in a "new" development of vacant land. It shall also be assumed that all required regulato ry approvals to permit the use authorized in the lease have been obtained.

J. Lease Term

Short-Term Lease
The City Manager, at all times, shall have power, without advertising, notice, or competitive bidding, to lease any City property for a term of three (3) years or less (short-term lease). The City Council will be notified of a short-term lease not later than fifteen (15) days following its execution. A short -term lease may not be renewed without approval of the City Council. The City Manager , or desig nee may also execute rental agreements covering up to eighteen (18) months for tenant occupancy of City-owned residential housing.

Long-Term Lease
A lease in excess of three (3) years requires a resolution passed by a majority vote of all members of the City Council. The length of lease term shall be based on the level of capital improvements to be made by the lessee and the economic life expectancy of the development. These factors can be determined utilizing cost estimating and economic life expectancy r esources such as tables provided by Marshall Valuation Service. The City may consider other relevant information in determining if a longer lease term is warranted, such as if the proposed leasehold development is expected to generate above average returns to the City or significantly improve the quality of the property . A lease shall not exceed 55 years unless the conditions set forth in Government Code section 37380(b) are met,
K. Lease Amendments
Amendments to long-term leases require City Council appro val. The City's agreement to an amendment may be contingent upon updating sections of the lease to incorporate current City standard lease provisions and an adjustment to fair market rent.

L. Subleases
A lessee may sublease all or part of the leased proper ty to a qualified sub- lessee subject to approval by the City. No sublease shall be approved which would be detrimental to the City's rights under the master lease or for a use that is not consistent with uses allowed by the master lease. The City Manager may authorize subleases which meet these conditions and which do not require amendment of the master lease. Unless special circumstances exist. Leases shall provide for the City to receive a minimum of fifty percent (50%) of the incremental gross rental revenues due to the lessee from subleases.

M. Leasehold Financing
The City will not subordinate its fee interest to encumbrances placed against any leasehold by a lessee. The City Council may approve appropriate financial encumbrances of the leasehold int erest, which provide that all loan proceeds are used for authorized improvement of the property until the leasehold is fully developed in accordance with the lease. City staff shall take appropriate steps to review the proposed financing and insure that loan proceeds go into the leasehold. Maximum loan proceeds shall not be in excess

of seventy -f
ive percent (75%) loan- to-value, where "value " refers to the leasehold improvements, as determined by a lender's appraisal which has been reviewed and approved by City staff. The loan term shall not exceed the term of the lease.

Loans or re
financing in the form of encumbrances against the lease for the purpose of reducing equity or financing the sale of leasehold interest will not be allowed until the property is fu lly developed for uses authorized in the lease. After the property is developed, such financing may be permitted so long as there is also substantial benefit to be gained by the City. This may take the form of either a percentage share of the loan proceeds or an upward adjustment to the rent. Either of which shall be based on commercially reasonable comparables found in the market.

N. Leasehold Improvements
Leasehold improvements installed by lessees shall be removed at the lease termination without cost t o the City, or will revert to the City, at the City's option. All leasehold improvements and alterations require prior written approval of the City Council.

O. Maintenance and Utilities Responsibility
City leases shall require the lessee to maintain all im provements on the property at its own expense and be responsible for the cost of all utilities. Leases for multi -tenanted space shall include specific requirements delineating appropriate responsibilities.

P. Lease Audits
All percentage leases may be audited by the City’s Finance Department in the first year of operation to establish proper reporting procedures and at least once every three (3) years thereafter. More frequent audits may be made if appropriate. The City shall reserve the right to audit all other leases and agreements subject to this Council Policy, if determined to be warranted by the City’s Finance Department.

Q. Leasehold Assignments
Requests for assignment of leasehold interest shall be evaluated on the same basis as the criteria used i n evaluating a leasehold proposal. The City Manager may authorize assignments which do not require amendment of the master lease. Consent may be contingent on the payment of additional consideration to the City, either as a percentage share of the purchase price of the leasehold interest or an upward adjustment to the rent.

Either of which shall be based on commercially reasonable comparables found in the market. If new financing is involved in the sale, the requirements of 'Leasehold Financing' shall apply.

R. Lease Extensions & Renewals
Requests from existing lessees for lease extensions or renewals may be considered if such proposals promote capital investment and redevelopment of City property. Whenever an existing lessee is seeking renewal of an expir ing long-term lease that is not contemplated in a previously approved property management plan, the City Manager will bring the

issue bef
ore the applicable City Council Committee with an appropriate recommendation.

In addition to the criteria used to asses s new lease proposals, City staff also will review the lessee's history with respect to: maintenance of the property; compliance with existing lease terms; prompt rent payments; and a rental return consistent with maximizing the property's full potential.

The less
ee must propose capital investment that: will increase the value or the useful life of the leasehold improvements by an amount more than can be reasonably amortized over the remaining lease term; is not recurring in nature; and is at least ten per cent (10%) or more of the value of the existing improvements . It specifically should exclude expenditures to correct deferred maintenance and expenditures for repairs to keep the existing improvements in good condition. The length of any extended lease ter m shall be calculated by the same method used for calculating the length of new leases.

S. City's Interest in Leasehold Improvements
City lease agreements provide the City the right to assume ownership of the leasehold improvements at the end of the lease . The value of the City's interest in the leasehold improvements can be appraised using widely accepted appraisal methods. In the event the City grants a lessee a lease extension, the City shall be compensated by an amount equal to the change in present va lue attributable to the deferral of its interest in the leasehold improvements. This amount either can be paid as an upfront payment at the beginning of the extended term or amortized over time with appropriate interest applied. The City shall offset from t he value of its interest in the leasehold improvements any increased economic benefit derived from an extended lease. The City shall not receive any compensation for its interest in the leasehold improvements on leases extended prior to the last twenty percent (20%) of the existing term.

T. Leasing to Non- Profit Organizations
It shall be the policy of the City Council to allow direct negotiation with nonprofit organizations for the use of City- owned lands for the purpose of providing the community with c ultural, recreational, educational enrichment, and other public services to the citizens and visitors of National City. Relative to this policy the following will apply:

1. Availabl
e City property shall be leased at fair market value to nonprofit organizations when it is deemed by Council that appropriate public benefit will be derived.

2. The only discount in the land rental rate which will be considered is that which will be a direct offset to City expenditures. An example would be where the non - profit organization is constructing and operating a facility to provide a service that would otherwise be a recognized obligation of the City to provide.

3. Council approval of a prospective nonprofit organization’s use of City-owned land shall be obtained prior to commencement of lease negotiations.

4. No lease
will become effective until firm financial commitments have been obtained under an appropriate lease option arrangement.

5. Lessees will be required to construct, operate, and maintain the premises at their sole cost.

6. Lessees shall be incorporated nonprofit organizations under the laws of the State of California.

7. Development on parklands shall be in conformance with City park development plans, and construction shall comply with City park design criteria.

8. Lessees shall pro vide desired services and facilities to the general public without discrimination as to race, color, creed, sex, age, or national origin.

9. When leases permit revenue producing activities, some measure of rental compensation shall be paid to the City. Howeve r, this provision will not apply to occasional fund raising events provided the funds are used exclusively for the specified purpose(s) of the lease.

10. Properties with significant potential for commercial, industrial, or scientific research uses shall not be available for nonprofit use.

11. Subleases will be considered on their individual merits by the City and consistency with conditions placed upon the City. Fees generated from subleasing will belong to the City and be deposited with the City upon receipt by the Agency.

U. Security Deposits
The standard security deposit for a new lease agreement shall be equivalent to two (2 ) month's rent. The security deposit may take the form of cash, an instrument of credit or a faithful performance bond. For a lessee makin g a substantial investment in improvements, the security deposit will be refunded upon completion of the improvements.

Related Policy References
Government Codes: 37350 and 37380
Government Codes: 54200-54232, 54235-54237
Prior Policy Amendments
August 14, 1990
January 22, 2019

City Council Policy #901:

Amendment to Expand Homeownership
AUGUST 15, 2023
CARLOS AGUIRRE, INTERIM DEPUTY CITY MANAGERPage 505 of 556 Background
• Policy #105* request was submitted by Councilmember Rodriguez to re
view and discuss Policy #901 Management of Real Property (Sale, Lease, Rental, Surplus)
• Intent of the request was to consider a policy that expands h
omeownership opportunities on City-owned properties
• Policy# 901 purpose:
(1
) procedures for disposition of surplus property;
(2) provides a methodology for the sale and exchange of City-owned real estate; and
(3) policies for leasing City-owned property
*Request by a member of the City Council to place an item on a City Council agenda. 2 August 15, 2023 Policy #901 Amendment to Expand Homeownership

Housing Strategic Plan
2021-2025
• Approved by the Commissioners of the National City Housing Authority in
August 2021.
• Plan provides an inventory of all City- owned properties zoned for h
ousing and identifies housing priority sites.
• Under Objective #3 of the Plan, special consideration is provided to h
omeownership opportunities on all but one of the housing priority sites identified in the plan.
3 August 15, 2023 Policy #901 Amendment to Expand Homeownership

Feasibility Analysis
Including, but not limited:

August 15, 2023 Policy #901 Amendment to Expand Homeownership4 • Evaluate the disposition of City property for homeownership • Identify supportable land values
• Determine the need for gap financing
• Assess the use of various development models on any City-owned propert
y zoned for residential use

Use Models
Include but are not limited to:

August 15, 2023 Policy #901 Amendment to Expand Homeownership5 • Community land trusts, deed restrictions, condominiums, limited- equity cooperatives, rent-to-own, or a combination thereof. • Could include both market rate and affordable homeownership unit
s.
• Ratio of market rate to affordable homeownership units could depend
on the number of units developed, funding available to
subsidize af
fordable homeownership, and the overall financing
m
odel used.

PROPOSED AMENDMENT TO
CITY COUNCIL POLICY #901

QUESTIONS & COMMENTS
6 August 15, 2023 Policy #901 Amendment to Expand Homeownership Page 510 of 556 RESOLUTION NO. 2023 -

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY, CALIFORNIA, AMENDING CITY COUNCIL POLICY NO. 901, ENTITLED ‘MANAGEMENT OF REAL PROPERTY,’ TO REQUIRE THAT THE CITY CONDUCT A FINANCIAL FEASIBILITY

ANALYSIS TO EVALUATE BUILDING RESIDENTIAL UNITS FOR HOMEOWNERSHIP,

IDENTIFY SUPPORTABLE LAND VALUES, DETERMINE THE NEED FOR GAP FINANCING,

AND ASSESS THE USE OF VARIOUS DEVELOPMENT MODELS, SUCH AS COMMUNITY

LAND TRUSTS, TO CREATE SUSTAINABLE AND AFFORDABLE HOMEOWNERSHIP ON ANY CITY-OWNED PROPERTY ZONED FOR RESIDENTIAL USE.

WHEREAS, the City of National City is the owner of substantial real property that is used for various municipal purposes; and

WHEREAS, as public service needs change, the requirements for these propertie s may be revised and, on occasion, certain parcels may be in excess of the City's current need, which requires that each individual site be reviewed in terms of its potential for future public use, as well as its potential economic benefit to the City; and

WHEREAS, the purpose of Policy No. 901 entitled "Management of Real Property" is to 1) establish a procedure by which unused and marginally used City-owned real estate is reviewed for its potential public use, and for designating unneeded parcels for l ease or sale; 2) provide a methodology for the sale or exchange of City-owned real estate; and 3) establish policies for the leasing and rental of City-owned real property; and

WHEREAS, on February 21, 2023, the City Council of City of National City (“City Council”) provided direction to City staff to create a policy that would prioritize homeownership development in National City on City-owned property.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF NATIONAL CITY, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE, AND ORDER AS FOLLOWS:

Section 1: That the City Council hereby approves the amendment of City Council Policy No. 901, entitled ‘Management of Real Property,’ attached hereto.

Section 2: The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolution.

PASSED and ADOPTED this 15th day of August, 2023.

Ron Morrison, Mayor
ATTEST:

Shelley Chapel, MMC, City Clerk

APPROVED AS TO FORM:

Barry J. Schultz, City Attorney

CITY COUNCIL POLICY

CITY OF NATIONAL CITY

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15, 2023

Background:

The City of National City is ow ner of substantial real property which is used f or various municipal purposes. As public service needs change, the requirements for these properties may be revised and, on occasion, certain parcels may be in excess of the City's current need. This require s that each individual site be reviewed in terms of its potential for future public use, as well as its potential economic benefit to the City.

The proceeds from the sale and lease of City -owned lands and the revenues generated from leases are normally ut ilized for General Fund purposes unless the property sold or leased belonged to a restricted program.

Purpose:

It is the purpose of this policy 1) to establish a procedure by which unused and marginally used City -owned real estate is reviewed for its pote ntial public use, and for designating unneeded parcels for lease or sale; 2) to provide methodology for the sale or exchange of City -owned real estate and 3) to establish policies for the leasing of City - owned real property.

Policy:

It is the City's polic y to manage its real estate assets so that municipal needs which rely on these assets may be properly implemented. It is not the City's policy to speculate in real estate. The City Council will review City -owned real estate not used for municipal purposes and determine the appropriate use of the property. Those properties not needed for either City or public use within the foreseeable future, may be made available for lease or sale.

The City shall optimize the sale price or lease rent from City -owned real estate based on relevant factors, including 1) an appraisal reflecting current market value when either a transaction or authorization to sell or lease is presented to the City Council, 2) prevailing economic conditions and market trends, and 3) any specia l benefits to accrue from the sale or lease.

The City shall seek market value for its properties . Discounts will not be negotiated unless an extraordinary need or circumstance is recognized by Council Resolution setting forth the amount of the discount fr om appraised value and the public purpose served in justification of the discount.

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15, 2023

City staff under the direction of City Manager shall prepare and present to the City Council a comprehensive Property Management Plan with periodic reviews as needed, and updates to the City Council. The Property Management Plan shall include an overall review of the City's real estate portfolio (or inventory) , an operating plan for corporate property, a disposition plan for surplus property, market research to support antic ipated transactions and a request for authority to act within defined parameters (as described in this policy).

The major elements of the property management plan are to include:
• Property evaluation and characterization of real estate assets • Strategy for City occupied real estate
• Investment Portfolio Plan (leases to for-profit tenants) • Review of not-for-profit leases
• Disposition Plan for surplus assets
• Business Case development review to support proposed transactions • Legal document development and review

Procedure for sale of City owned Real Estate:

A. Real Estate Review
As part of an overall property management plan for the City's real estate assets, staff will review the City's property inventory to determine which properties are no longer needed for public facilities or to support the elements of the General Plan and whose disposition will provide a greater public benefit.

When a City property is zoned for residential use and is considered for disposition by the City or Housing Authority, a feasibilit y analysis must be conducted for homeownership development on the subject parcel. The findings and considerations from the analysis must be presented to City Council for review. City Council may direct staff to issue a request for proposals for homeownership on the subject parcel.

The feasibility analysis will evaluate the disposition of City property for homeownership, identify supportable land values, determine the need for gap financing, and assess the use of various development models on any City -owned property zoned for residential use. The use models include but are not limited to community land trusts, deed restrictions, condominiums, limited -equity cooperatives, rent-to-own, or a combination thereof. The analysis could include both market rate and affordable homeownership units. The ratio of market rate to affordable homeownership units could depend on the number of units developed, funding available to subsidize affordable homeownership, and the overall financing model used.

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15, 2023

A City-owned property may become available for sale if:
• The property is not currently used by the City or does not support a municipal function; and
• The property is vacant and has no foreseeable use by the City; and • The property is a non -performing or under-performing asset and greater value can be generated by its sale; and
• Significant economic development opportunities can be generated by selling the property.
•

Factors to be considered in determining whether a property should be sold include:
• Will the City be relieved o f potential liabilities and/or cost of maintaining property that does not generate income or provide public benefit? • Property tax increment that will be created by returning the properties to the tax rolls.
• Stimulation of the economy by providing opportuni ties for private sector investment.
• Generation of revenue.
• The sale of the property will generate greater economic value than a ground lease, if a ground lease is a feasible option.

B. Governmental Clearance Process
Government Code Section 54222 requires that a local agency proposing to dispose of surplus property must first notify all governmental agencies operating within the City as to the availability of the property. The agencies are given 60 days to respond with an intent to acquire, if not, the property may be deemed cleared for public sale.

Regarding the list of properties for sale:
• Governmental agencies are regularly contacted as the surplus list is updated. • City departments are individually contacted as the surplus list is updated. • Council members are given a preliminary review and opportunity to comment on foreseeable uses for the property.

C. Approval Process
• City-owned properties that have been identified by the City Manager as candidates for sale will be presented to the City Council for appr oval to be sold. If a property is of a type and location that would make a ground lease feasible, an economic analysis of the benefits of lease vs. sale will be conducted.
• If City Council determines that the property may be sold, it shall authorize City Ma nager to sell the property for a price equal to or greater than a minimum price established by a current (less than six month s old) appraisal.

The authorization to sell the property will be valid for twelve months from the date of City Council action.

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15, 2023

• The City Manager or designee may enter into purchase and sale agreements, close escrows and execute and deliver grant deeds to the purchasers of the properties at prices equal to or greater than the minimum price approved by City Council on terms and conditions deemed reasonable, and in the City's best interests.
• City Manager or designee will provide a report to the City Council, regarding the price, terms, and conditions of all transactions.
• Properties that cannot be sold at a price equal to or greater tha n the minimum price approved by Council will be returned to Council for further consideration prior to disposition. Council approval will be required to sell a property at a price less than the minimum price previously approved by the City Council.

D. Method of Sale
Properties may be sold by any method allowed by City Council Policy. This includes direct negotiation, request for proposal, listing with a broker, sealed bid, auction or other appropriate method as determined by the City Council. Possible meth od of sale for all properties will be included in the enabling resolution authorizing their sales.

E. Marketing
Properties offered for sale shall receive the widest possible exposure to the open market place. This may be accomplished through direct marketing techniques, such as requests for proposals (RFP), advertising, exposure through the real estate media, posting the property on the multiple listing service or any other appropriate method .

When appropriate, properties may be listed for sale with qualif ied real estate brokers.

The authorization to utilize the services of a real estate broker will be contained in the enabling resolution.

F. Real Estate Brokers
Real estate brokers may be used to represent the City in the sale of its properties.

Brokers will be selected for individual assignments through Requests for Proposals (RFP) or Requests for Qualifications (RFQ) and a subsequent bid or other methods that result in the City receiving the services of a qualified broker at the best value to the City. The maximum approved commission rate will be contained in the enabling resolution for the property's sale. If the property is listed with a broker, the City reserves the right to exclude from the listing agreement potential buyers whose interest in purchasin g a subject property has been made a part of the record prior to the execution of such agreement.

G. Exclusively Negotiated Sales
It will be the City's policy to insure the highest price for its real estate by pursuing open market transactions. However, o n certain occasions, an exclusively negotiated sale may be justified as applicable and may be approved under one of the following conditions:

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15, 2023

1. When a parcel is landlocked.

2. When the sale is to a contiguous owner.

3. When a fee interest in a pipeline o r other right-of-way is no longer required, it may be sold to a contiguous owner. A restrictive pipeline easement of adequate width or other required easements will be reserved from said sale.

4. When other governmental, public and quasi -public agencies su bmit acquisition proposals a sale may be consummated. These agencies shall include but not be limited to: Federal, State, and County agencies; school districts, special districts, and regulated utility companies.

5. When qualified non-profit institutional organizations offer to purchase City -owned land, a negotiated sale may be consummated at fair market value providing there is: 1) a development commitment, and 2) a right to repurchase or a reversion upon a condition subsequent. Institutional organ izations such as places of public assembly, hospitals, extended care facilities, private schools and community service organizations are required to develop under the City's conditional use permit procedure.

6. When a property has been offered by public au ction and no acceptable bids were received, it may be sold on a negotiated basis to any applicant submitting an acceptable offer within six months following the date of auction.

7. Real property exchanges may be consummated by direct negotiation . However, exchanges will be considered only with other governmental agencies or when there is an advantage to the City.

H. Rezoning
Prior to completion of the sales transaction, City land shall be considered for rezoning in accordance with the General Plan, existin g community plans or other City Council direction if a higher sale price will result. Also, all unnecessary easements affecting title to the property shall be removed if this will result in a commensurate increase in value.

I. Easements
The City will rece ive current fair market value for the removal of restrictive easements or access rights previously paid for by the City or other governmental agency or reserved in a sale of City property.

J. Priority Handling
Since time is of essence in land transactions , all such actions by the City Council and staff shall be given the highest priority and special handling.

K. Public Utilities Installed by Private Entities
The applicant for the use of unimproved City land for public purposes, such as streets, sewers, and other public utilities, shall compensate the City for the fair market value

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15, 2023

of the rights to be granted by the City. The amount of compensation shall be established by appraisal.

Procedure for leasing City-owned Real Property
The City of National Cit y has a very diverse real estate portfolio. While the policies herein are to act as the standard that governs most leases, the City acknowledges that parts of its leasing portfolio have specialized needs or restrictions. In these cases, this policy will act as a framework for a sub -policy that will govern a specific area. Should a conflict arise between the framework policy and the sub -policy, the sub -policy will govern.

A. Criteria for Leasing
City property shall be considered for leasing when one or more of the following criteria apply:

1. The property is not required for current municipal use, but is to be held for possible future use and can be leased as an interim measure.

2. The property can only be leased because of legal restraints. For example, p roperty held under Tideland trust grants or as dedicated parks.

3. The City requires substantial control over development, use and reuse of the property.

4. The property has the immediate potential of a high return to the City because of its high demand and type of use, such as commercial and industrial land.

5. The property can be efficiently utilized by a provider of services needed by the City.

6. The property can be leased to promote a substantial economic development opportunity.

B. Property Management Plan
The City Council may approve the execution of lease transactions that meet the terms of the City's asset strategy for a particular property previously approved by City Council in an overall Property Management Plan . Negotiated transactions that fal l outside of the parameters of an approved Property Management Plan either will be submitted individually for City Council approval, or deferred until the next periodic update and approval of the plan.

C. Lessee Selection for New Leases
Competitive offers for lease of City property shall be solicited from the open market place. This may be accomplished through a number of marketing techniques, such as Request for Proposals (RFPs), a marketing subscription system, direct advertising, use of a Multiple Listi ng Service (MLS) , listing with a broker, posting the property and any other appropriate means.

In certain limited situations, the City may exclusively consider a single proposal for lease of City property. Potential lessees wishing to exclusively negotiat e with the City must

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15, 2023

submit for City staff review a business case with sufficient justification as to how it is capable of optimizing the use of the property and return to the City, thereby negating the need for a competitive process . This information will be included when the lease transaction is presented for City Council approval.

Leasehold proposals shall be evaluated in terms of:

1. The degree to which the proposed use is in compliance with the City's strategic plan for the property.

2. In terms of the amount of consideration offered in the form of rent.

3. In terms of the financial feasibility of the proposal.

4. The capability, expertise and experience of the potential lessee with respect to the proposed leasehold development and operation.

5. If new development is proposed, a development plan that includes a description of the development team and its qualifications.

6. The details of each person or entity that will have an interest in the proposed lease

7. Special public benefits to be derived (if any).

D. Rate of Return
The City shall obtain fair market rents for its leases commensurate with the highest and best use of the property. The fair market rent shall be based on an appraisal that complies with the definition of Market Rent found in the Un iform Standards of Professional Appraisal Practice (USPAP) published by the Appraisal Foundation. The appraisal shall be no more than six months old at the time the lease transaction is presented for City Council approval. If the cost of an appraisal is no t justified by the anticipated rents, the City may choose an alternative method to establish rent. City leases shall contain terms and conditions which will sustain a fair rate of return throughout the duration of the lease.

E. Rental Terms
Rental terms may be negotiated on the basis of fixed rates (flat rent leases) or percentages of the lessee's gross income derived from business conducted on the property, with a provision for a minimum rent on percentage leases.

F. Percentage Leases

Minimum Rent
The minimum rent component for a new percentage lease shall be set at no less than eighty percent (80%) of the fair market rent as defined above. In certain cases, a portion of the minimum rent may be abated for new construction or redevelopment on the leasehol d. The minimum rent shall be adjusted upward throughout the duration of the lease at intervals of not more than every five (5) years to reflect no less than eighty percent (80%) of the average annual rent actually paid or accrued during the three (3) years preceding the adjustment. In no event shall the adjusted minimum rent be less than the minimum rent in existence immediately preceding the adjustment.

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15, 2023

Percentage Rates
Percentage leases shall provide for adjustments of percentages rates every five (5) years to current fair market rates as established by appraisals of prevailing market percentage rates primarily within the Southern California area.

G. Flat Rate Leases

Market Rate Adjustments
Flat rate leases shall provide for upward adjustment of rent ev ery five (5) years to current fair market rent.

Consumer Price Index Adjustments
Flat rate leases shall provide for upward adjustment of rent in the interval term between market rate adjustments by changes in the consumer price index. The index used for consumer price index adjustments will be the All Urban Consumers index for Los Angeles - Riverside - Orange County, California with a base year of 1982 -84. If the U.S. Department of Labor indices are no longer published, another substitute index generally recognized as authoritative will be used. Flat rate leases may include pre -determined periodic increases to rent instead of consumer price index adjustments. These periodic increases would occur at least every five (5) years.

H. Rent Arbitration
Leases can provide for binding arbitration when the City and lessee cannot agree on the new rent for a rental period under review . The City and lessee shall each select a professional independent real estate appraiser who in turn will select a third independent real estate appraiser to determine the fair market rent. If the two selected appraisers fail to mutually select a third appraiser, then the third appraiser will be appointed in accordance with the rules of the American Arbitration Association . The City and lessee shall pay the cost of its own selected appraiser and equally share the cost of the third appraiser.

I. Appraisal Assumptions
City leases shall include a definition of the fair market value to be used to adjust rent and an identification of the premi se for that value. In establishing the fair market value of leased property, any appraisal shall consider the property as a fee simple absolute estate and as vacant and available for lease or sale for the authorized purposes of the lease at the commencement of the rental period under review. Rates established for purposes of periodic percentage rental adjustments shall not consider any abatement as may be appropriate in a "new" development of vacant land. It shall also be assumed that all required regulato ry approvals to permit the use authorized in the lease have been obtained.

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15, 2023

J. Lease Term

Short-Term Lease
The City Manager, at all times, shall have power, without advertising, notice, or competitive bidding, to lease any City property for a term of three (3) years or less (short-term lease). The City Council will be notified of a short-term lease not later than fifteen (15) days following its execution. A short -term lease may not be renewed without approval of the City Council. The City Manager , or desig nee may also execute rental agreements covering up to eighteen (18) months for tenant occupancy of City-owned residential housing.

Long-Term Lease
A lease in excess of three (3) years requires a resolution passed by a majority vote of all members of the City Council. The length of lease term shall be based on the level of capital improvements to be made by the lessee and the economic life expectancy of the development. These factors can be determined utilizing cost estimating and economic life expectancy r esources such as tables provided by Marshall Valuation Service. The City may consider other relevant information in determining if a longer lease term is warranted, such as if the proposed leasehold development is expected to generate above average returns to the City or significantly improve the quality of the property . A lease shall not exceed 55 years unless the conditions set forth in Government Code section 37380(b) are met,

K. Lease Amendments
Amendments to long-term leases require City Council appro val. The City's agreement to an amendment may be contingent upon updating sections of the lease to incorporate current City standard lease provisions and an adjustment to fair market rent.

L. Subleases
A lessee may sublease all or part of the leased prope rty to a qualified sub -lessee subject to approval by the City. No sublease shall be approved which would be detrimental to the City's rights under the master lease or for a use that is not consistent with uses allowed by the master lease. The City Manager may authorize subleases which meet these conditions and which do not require amendment of the master lease. Unless special circumstances exist. Leases shall provide for the City to receive a minimum of fifty percent (50%) of the incremental gross rental revenues due to the lessee from subleases.

M. Leasehold Financing
The City will not subordinate its fee interest to encumbrances placed against any leasehold by a lessee. The City Council may approve appropriate financial encumbrances of the leasehold int erest, which provide that all loan proceeds are used for authorized improvement of the property until the leasehold is fully developed in accordance with the lease. City staff shall take appropriate steps to review the proposed financing and insure

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15, 2023

that loan proceeds go into the leasehold. Maximum loan proceeds shall not be in excess of seventy -five percent (75%) loan -to-value, where "value " refers to the leasehold improvements, as determined by a lender's appraisal which has been reviewed and approved by City staff. The loan term shall not exceed the term of the lease.

Loans or refinancing in the form of encumbrances against the lease for the purpose of reducing equity or financing the sale of leasehold interest will not be allowed until the property is fu lly developed for uses authorized in the lease. After the property is developed, such financing may be permitted so long as there is also substantial benefit to be gained by the City. This may take the form of either a percentage share of the loan proceeds or an upward adjustment to the rent. Either of which shall be based on commercially reasonable comparables found in the market.

N. Leasehold Improvements
Leasehold improvements installed by lessees shall be removed at the lease termination without cost t o the City, or will revert to the City, at the City's option. All leasehold improvements and alterations require prior written approval of the City Council.

O. Maintenance and Utilities Responsibility
City leases shall require the lessee to maintain all i mprovements on the property at its own expense and be responsible for the cost of all utilities. Leases for multi -tenanted space shall include specific requirements delineating appropriate responsibilities.

P. Lease Audits
All percentage leases may be audited by the City’s Finance Department in the first year of operation to establish proper reporting procedures and at least once every three (3) years thereafter. More frequent audits may be made if appropriate. The City shall reserve the right to audit all other leases and agreements subject to this Council Policy, if determined to be warranted by the City’s Finance Department.

Q. Leasehold Assignments
Requests for assignment of leasehold interest shall be evaluated on the same basis as the criteria used i n evaluating a leasehold proposal. The City Manager may authorize assignments which do not require amendment of the master lease. Consent may be contingent on the payment of additional consideration to the City, either as a percentage share of the purchase price of the leasehold interest or an upward adjustment to the rent.

Either of which shall be based on commercially reasonable comparables found in the market. If new financing is involved in the sale, the requirements of 'Leasehold Financing' shall apply.

R. Lease Extensions & Renewals
Requests from existing lessees for lease extensions or renewals may be considered if such proposals promote capital investment and redevelopment of City property. Whenever an existing lessee is seeking renewal of an expir ing long-term lease that is not contemplated

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15, 2023

in a previously approved property management plan, the City Manager will bring the issue before the applicable City Council Committee with an appropriate recommendation.

In addition to the criteria used to asses s new lease proposals, City staff also will review the lessee's history with respect to: maintenance of the property; compliance with existing lease terms; prompt rent payments; and a rental return consistent with maximizing the property's full potential.

The lessee must propose capital investment that: will increase the value or the useful life of the leasehold improvements by an amount more than can be reasonably amortized over the remaining lease term; is not recurring in nature; and is at least ten per cent (10%) or more of the value of the existing improvements . It specifically should exclude expenditures to correct deferred maintenance and expenditures for repairs to keep the existing improvements in good condition. The length of any extended lease ter m shall be calculated by the same method used for calculating the length of new leases.

S. City's Interest in Leasehold Improvements
City lease agreements provide the City the right to assume ownership of the leasehold improvements at the end of the lease . The value of the City's interest in the leasehold improvements can be appraised using widely accepted appraisal methods. In the event the City grants a lessee a lease extension, the City shall be compensated by an amount equal to the change in present va lue attributable to the deferral of its interest in the leasehold improvements. This amount either can be paid as an upfront payment at the beginning of the extended term or amortized over time with appropriate interest applied. The City shall offset from the value of its interest in the leasehold improvements any increased economic benefit derived from an extended lease. The City shall not receive any compensation for its interest in the leasehold improvements on leases extended prior to the last twenty percent (20%) of the existing term.

T. Leasing to Non- Profit Organizations
It shall be the policy of the City Council to allow direct negotiation with nonprofit organizations for the use of City -owned lands for the purpose of providing the community with cultural, recreational, educational enrichment, and other public services to the citizens and visitors of National City. Relative to this policy the following will apply:

1. Available City property shall be leased at fair market value to nonprofit organizations when it is deemed by Council that appropriate public benefit will be derived.

2. The only discount in the land rental rate which will be considered is that which will be a direct offset to City expenditures. An example would be where the non - profit organization is constructing and operating a facility to provide a service that would otherwise be a recognized obligation of the City to provide.

3. Council approval of a prospective nonprofit organization’s use of City -owned land shall be obtained prior to commencement of lease negotiations.

TITLE: Management of Real Property POLICY # 901 (Sale, Lease, Rental, Surplus)

ADOPTED: June 19, 1984 AMENDED: August 15, 2023

4. No lease will become effective until firm financial commitments have been obtained under an appropriate lease option arrangement.

5. Lessees will be required to construct, operate, and maintain the premises at their sole cost.

6. Lessees shall be incorporated nonprofit organizations under the laws of the State of California.

7. Development on parklands shall be in conformance with City park development plans, and construction shall comply with City park design criteria.

8. Lessees shall provide desired services and facilities to the general public without discrimination as to race, color, creed, sex, age, or national origin.

9. When leases permit revenue producing activities, some measure of rental compensation shall be paid to the City. Howeve r, this provision will not apply to occasional fund raising events provided the funds are used exclusively for the specified purpose(s) of the lease.

10. Properties with significant potential for commercial, industrial, or scientific research uses shall not be available for nonprofit use.

11. Subleases will be considered on their individual merits by the City and consistency with conditions placed upon the City. Fees generated from subleasing will belong to the City and be deposited with the City upon receipt by the Agency.

U. Security Deposits
The standard security deposit for a new lease agreement shall be equivalent to two (2 ) month's rent. The security deposit may take the form of cash, an instrument of credit or a faithful performance bond . For a lessee makin g a substantial investment in improvements, the security deposit will be refunded upon completion of the improvements.

Related Policy References
Government Codes: 37350 and 37380
Government Codes: 54200-54232, 54235-54237

Prior Policy Amendments
August 14, 1990
January 22, 2019

AGENDA REPORT

Department: Finance
Prepared by: Rachelle Barrera, Finance Manager
Meeting Date: Tuesday, August 15, 2023
Approved by: Ben Martinez, Interim City Manager

SUBJECT:

Property Tax Rate for Library General Obligation Bond Property Tax Rate 2024

RECOMMENDATION:

Adopt a Resolution Entitled, "Resolution of the City Council of the City of National City, California, setting the Property Tax Rate for the Library General Obligation Bond for fiscal year 2024 at .518 cent per $100 of assessed valuation.”

BOARD/COMMISSION/COMMITTEE PRIOR ACTION:

Not Applicable.

EXPLANATION:

In the Special Municipal Election held on March 5, 2002, more than two -thirds of National City's eligible voters approved the issuance of general obligation bonds to fund the construction of the new National City Library. In April 2003, the City issued the general obligation bonds in the aggregate principal amount of $6 million. Those bonds mature on August 1st of each of the years 2004 through 2028. In 2012, the City refinanced the bonds to lower the interest rate on the bonds and to decrease the tax burden required for repayment. The amount of principal and interest to be paid each year is generated through the proceeds of property taxes received from the County of San Diego. Each year, the City must establish the property tax rate that is needed to raise the revenue required to service its annual bonded indebtedness. For fiscal year 2024, the calculated property tax rate is 0.518 cent per $100 of assessed value. This is a reduction of $0.054 cent per $100 of assessed value over the prior year’s tax rate.

FINANCIAL STATEMENT:

A FY24 property tax rate of $0.518 is estimated to generate around $272,000 in revenue.

RELATED CITY COUNCIL 2020-2025 STRATEGIC PLAN GOAL:

Not Applicable

ENVIRONMENTAL REVIEW:

This is not a project under CEQA and is therefore not subject to environmental review.CCR15378; PRC 21065.

PUBLIC NOTIFICATION:

Agenda Report posted within 72 hours of meeting date and time in accordance with Brown Act.

ORDINANCE:

Not Applicable

EXHIBITS:

Exhibit A - Library General Obligation Bond Rate Calculation – 2023-2024 Tax Roll Exhibit B - Resolution

General Obligation Bond Debt Service (Fund 259)
Tax Rate Computation for Fiscal Year 2024
National City AVR Report Fund No. 6065-50

Rate per
$100 Assessed Valuation
FY23/24
Est. Revenue PY Rate Change: 9.4406%
Secured Valuation 0.0051800 5,035,855,559 260,857 Unsecured Valuation 0.0057200 268,086,027 15,335 276,192
HO Exemption 26,949,239

1 Net Secured Valuation 5,035,855,559 11 Amount to be raised 271,979 3 Less Delinquency Allowance - 12 Unsecured HOPTR - 4 Net after Delinqency 5,035,855,559 14 Unsecured Delinquency 15,028 5 Plus HOPTR
26,949,239
15 Less Unsecured
Redevelopment
Impact -
6 Prelim Adj Secured Valuation
5,062,804,798
16 Amount to be
raised by Secured
Taxes
256,951
7 Less Redevelopment Impact
-
8 Adj Sec Valuation Less
Redevelopment Impact 5,062,804,798 9 Anticipated Roll Corrections
18a Tax rate times #4 255,821
10 Adj Sec Val for Rate
Computation 5,062,804,798 18b Tax rate times
HOPTR 1,369
19 Secured Proof 257,190
16 Computed Rate (per $100)

0.00508000
20 Raised by 1/100th
mil 5,063
17 Plus .0001 0.00518000 21,23 Taxes Raised 277,281 I CERTIFY THAT THE ABOVE COMPUTED RATE + 1/100TH MIL IS A REASONABLE TAX RATE FOR THIS FUND 7/25/2023
Rachelle Barrera Date
Finance Manager
\\Ncfs.natcity.local\dept\FINANCE\GO Bond Property Tax Rate for Indebtedness\FY 2024 GO Library Bond Tax Rate\GO Bond Rate Calculation - 2023-2024 Tax Roll.xlsx DRAFT to MB7.27.2023.xlsx Tab: Attachment FY24 Calc Tab

RESOLUTION NO. 2023 -

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY, CALIFORNIA,

SETTING THE PROPERTY TAX RATE FOR THE LIBRARY GENERAL OBLIGATION BOND FOR FISCAL YEAR 2024 AT 0.518 CENT PER $100 OF ASSESSED VALUATION

WHEREAS, in the special municipal election held on March 5, 2002, more than two- thirds of National City's eligible voters approved the issuance of General Obligation Bonds to fund the construction of the new National City Public Library; and WHEREAS, in April, 2003, the City issued the Library General Obligation Bonds in the aggregate principal amount of $6 million which mature August 1st of each of the years from 2004 through 2028; and
WHEREAS, in 2012, the City refinanced the bonds to lower the interest rate on the bonds and to decrease the tax burden required for repayment; and WHEREAS, the amount of principal and interest to be paid each year is generated through the proceeds of property taxes received from the County of San Diego; and

WHEREAS, each year the City must establish the property tax rate that is needed to raise the revenue required to service its annual bonded indebtedness; and WHEREAS, for Fiscal Year 2024, the calculated property tax rate is 0.518 cent per $100 of assessed value.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF NATIONAL CITY, CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE, AND ORDER AS FOLLOWS:

Section 1: That the City Council hereby authorizes the property tax rate for bonded indebtedness for Fiscal Year 2024 to be reflected as 0.518 cent per $100 (0.00518%) of assessed valuation.

Section 2: The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions.

PASSED and ADOPTED this 15th day of August, 2023.

Ron Morrison, Mayor
ATTEST:
_________________________
Shelley Chapel, MMC, City Clerk

APPROVED AS TO FORM:

Barry J. Schultz, City Attorney

AGENDA REPORT

Department: City Manager's Office
Prepared by: Carlos Aguirre, Interim Deputy City Manager Meeting Date: Tuesday, August 15, 2023
Approved by: Ben Martinez, Interim City Manager

SUBJECT:

Responses from the City of National City to the findings and recommendations of a 2022/2023 County of San Diego Grand Jury Report filed on June 7, 2023 and titled “Governance of San Diego Bay and Its Tidal Lands and Regions.”

RECOMMENDATION:

Review and approve the proposed responses to the County Grand Jury Report and authorize the Mayor to transmit the responses to the Grand Jury via the Superior Court Presiding Judge.

BOARD/COMMISSION/COMMITTEE PRIOR ACTION:

Not Applicable.

EXPLANATION:

The Grand Jury Report is the product of an investigation by the County of San Diego Grand Jury of the San Diego Unified Port District (the “Port District”), the County of San Diego, and the five (5) Port District member cities of Chula Vista, Imperial Beach, Coronado, San Diego, and National City. The goal of the investigation was to assess how the subject organizations interact around the governance of San Diego Bay tidal lands and resources (Exhibit “A”).

Per the Grand Jury Report, “[t]his assessment was undertaken in response to a perception that the Port of San Diego and its unelected seven -member Board of Commissioners is not accountable to either the elected officials or the electorate of its five member cities or the County of San Diego, especially in the planning, development and implementation of projects in those cities.” In the Grand Jury Report, the Grand Jury reviews previous Grand Jury reports on the Port District, reviews the Port District’s creation, governance, relation to State agencies, and funding.

The Grand Jury Report also describes conflicts and issues surrounding the Port District’s operations in regard to the equitable representation of residents of the five Port cities and their governing bodies, as well as the County of San Diego and its residents. Lastly, the Grand Jury Report discusses the Port District’s planning process and how its proposed projects have affected its member cities and the County of San Diego.

California Penal Code §933(c) and 933.05 re quire that any public agency which the Grand Jury has reviewed, and about which it has issued a final report, provide comment to the Presiding Judge of the Superior Court on the findings and recommendations pertaining to matters under the control of the ag ency. Such comment shall be made no later than 90 days after the Grand Jury publishes its report (filed with the Clerk of the Court). The Grand Jury Report was filed on June 7, 2023.

Staff has carefully reviewed the Grand Jury Report and prepare d a response letter (Exhibit “B”) to the honorable Michael T. Smyth, Presiding Judge of the San Diego County Superior Court, addressing the applicable findings and recommendations of the Grand Jury Report.

For each Grand Jury finding, the responding entity must indicate that it 1) agrees with the finding, or that it 2) disagrees wholly or partially with the finding, in which case the response must specify the portion of the finding that is disputed and include an explanation for their disagreement with the finding.

For each Grand Jury recommendation, the responding entity must indicate that 1) the entity has implemented the recommendation; 2) the entity has not yet implemented the recommendation, but will do so in the future, with a time frame for implementation; 3) the recommendation requires further analysis, with a time frame for completing such analysis, not to exceed 6 months from the date of the publication of the Grand Jury report; or 4) the recommendation will not be implemented because it is not warranted or is not reasonable, with an explanation.

FINANCIAL STATEMENT:

There is no fiscal impact associated from the City of National City responding to the Grand Jury report.

RELATED CITY COUNCIL 2020-2025 STRATEGIC PLAN GOAL:

Not Applicable

ENVIRONMENTAL REVIEW:

This is not a project under CEQA and is therefore not subject to environmental review.CCR15378; PRC 21065.

PUBLIC NOTIFICATION:

Agenda Report posted within 72 hours of meeting date and time in accordance with Brown Act.

ORDINANCE:

Not Applicable

EXHIBITS:

Exhibit A - Grand Jury Report
Exhibit B - Draft Response Letter

Todd Gloria, Mayor
City of San Diego
202 C Street, 11th Floor
San Diego, CA 92101
San Diego City Council
City of San Diego
202 C Street, 10th Floor
San Diego, CA 92101

GRAND TRY
Countyof San Diego
550 Corporate Center
550 W. C Street, Suite 860
San Diego, CA 92101- 3513
619- 236-2020 FAX 619- 338- 8127
httr):// www. sdcounly. ce,gov/ qrandiu[ y
Ed Lopatin, Foreperson
June 1, 2023
Unified Port District Commission Board
Unified Port District
3165 PacificHighway
San Diego, CA 92101
See attachedmailinglist for additionalrespondents.

Re: Grand Jury Report— Governance of San Diego Bay and Its Tidal Lands andRegions Dear Ladies and Gentlemen,
The2022/2023SanDiegoCountyGrandJuryherewithprovidesthereferencedreportfor your review and commentto the PresidingJudge of the SuperiorCourt in compliancewith the Penal Code of California § 933( c). This report was prepared pursuant to §925 and §925aof the Penal Code.

InaccordancewithPenalCode §933.05(f), acopyofthisreportisbeingprovidedtoaffected agenciesatleasttwoworkingdayspriortoitspublic -releaseandafter -beingapprovedbythePresiding Judge of the Superior Court.

Pleasenotethat §933.05(f) specifiesthatnoofficer, agency, department, orgoverningbody of a public agencyshall disclose anycontentsof the reportprior to its public release. Thisreportwill befiledwiththe Clerkofthe Courtandreleasedto the publiconJune 7, 2023.

Ed Lopatin, Foreperson
2022/2023 SAN DIEGO COUNTY GRAND JURY
EL: ar
enc.

Attached Mailing List John McCann, Mayor Carolina Chavez, Councilmember Governance of SanDiego Rayand City of Chula Vista City of Chula Vista s Tidal Lands and Regions Report 276 Fourth Ave 276 Fourth Ave Chula Vista, CA 91910 ` Chula Vista, CA 91910
Jose Preciado, Councilmember
City of Chula Vista
276. -.Fourth Ave
Chula Vista, CA 91910
Paloma Aguirre, Mayor
City of Imperial Beach
825 Imperial Beach Blvd
Imperial Beach, CA 91932
Matthew Leyba- Gonzalez,
Councilmember
City of Imperial Beach
825 Imperial Beach Blvd
Imperial Beach, CA 91932
Mike Donovan, Councilmember
City of Coronado

1.825 Strand Way
Coronado, CA 92118
Casey Tanaka, Councilmember
City of Coronado
1825 Strand Way
Coronado, CA 92118
Marcus Bush, Councilmember
City of National City
1234 National City Blvd
National City, CA91950
Nora Vargas, Chairperson
San Diego County Board of Supervisors
1600 PacificHighway, Room335
San Diego, CA92101
Jim Desmond, Supervisor - District 5
San DiegoCounty Boardof Supervisors
1600 PacificHighway, Room335
San Diego, CA 92101
Alonso Gonzalez, Councilmember
City of Chula Vista
276 Fourth Ave
Chula Vista, CA 91910
Carol Seabury, Councilmember
City of Imperial Beach
825 Imperial Beach Blvd
Imperial Beach, CA 91932
Mitch McKay, Councilmember
City of Imperial Beach
825 Imperial Beach Blvd
Imperial Beach, CA 91932
Carrie Downey, Councilmember
City of Coronado
1825 Strand Way
Coronado, CA 92118
Ron Morrison, Mayor
City of National City
1234 National City Blvd
National City, CA91950
Jose Rodriguez, Councilmember
City of National City
1234 National City Blvd
National City, CA91950
Joel Anderson, Supervisor - District 2
San Diego County Board of Supervisors
1600 PacificHighway, Room335
San Diego, CA 92101
Andrea Cardenas, Councilmember
City of Chula Vista
276 Fourth Ave
Chula Vista, CA 91910
Jack Fisher, Councilmember
City of Imperial Beach
825 Imperial Beach Blvd
Imperial Beach, CA 91932
Richard Bailey,.Mayor
City of Coronado
1825 Strand. Way.

Coronado, CA 92118
John Duncan, Councilmember
City of Coronado.
1825 Strand Way..

Coronado, CA92118
Luz Molina, Councilmember
City of National City
1234 National City Blvd
National City, CA91950
Ditas Yamane, Councilmember
City of National City
1234 National City Blvd
National City, CA91950
Terra Lawson- Remer, Supervisor Dist. 3
San Diogo County Board of Supervisors
1600 PacificHighway, Room335
San Diego, CA 92101

Governance of San Diego Bay and Its
Tidal Lands and Regions
A Report by the
2022/2023 San Diego County Grand Jury
Filed June 7, 2023

GOVERNANCE OF SAN DIEGO BAY AND ITS TIDAL LANDS

AND REGIONS

SUMMARY
The2022/2023GrandJury (GrandJury) undertookaninvestigationof the SanDiego Unified Port District (PortDistrict), the Countyof SanDiegoandthe five Port Citiesof ChulaVista, Imperial Beach, Coronado, SanDiegoandNationalCity to assesshow theseorganizationsinteractaroundthe governanceof SanDiego Bay tidal landsandresources. This assessmentwas undertakenin response to a perception that the Port of San Diego and its unelected seven -member Board of Commissioners is not accountableto eitherthe electedofficials or theelectorateof its five membercitiesor the County of SanDiego, especiallyin theplanning, developmentandimplementationof projectsin thosecities.

ThePortDistrictis anindependentgovernmentalagencycreatedbytheStateof Californiaand approvedby votersin Chula Vista, Coronado,' ImperialBeach, NationalCity andSanDiegoin 1962 to managethe tidelandsandsubmergedlandsof SanDiego Bay.

Thisreportwill briefly reviewpreviousGrandJuryreportsonthePortDistrict andlook atits creation, governance, relationto Stateagencies, andfunding. The GrandJury will alsoinvestigateconflicts and issuessurroundingthe PortDistrict' s operationsin regardto the equitablerepresentationof residents ofthefivePortCitiesandtheirgoverningbodies, aswell astheresidentsoftheCountyof SanDiego anditsresidents. Finally, theGrandJurywill alsodiscussthePortDistrict'splanningprocessandhow itsproposedprojectshaveaffectedthefivePortCities, theCountyof SanDiegoandresidentsoftheseregions.

Thereport'srecommendationsincludeincreasingthePortDistrict' spublic participationand transparencyby:

Schedulingregularupdatesandpresentationsatpubliclynoticedopenmeetingsof thecity councils of its member cities;
Simplificationof thePortMasterPlansaroundthePortDistrictPlanningDistrictsfallingwithin eachof thePortCity'sjurisdictionalboundariesandthreeof theCounty's supervisorialdistricts; SubmittingthePortMasterPlan, andall futureupdatesandamendments, to therelevantcity council and County Supervisor for discussion and ratification; LobbyingtheCaliforniaStateLegislatureto introducelegislationenablingtheCountyof San Diego to assume oversight of the activities of the SanDiego Unified Port District and decisions of theBoardof PortCommissioners, andsharein thePortDist -riot'sdutyasguardianof the. public, trustin thetidal andsubmergedlandsof SanDiegoBay;
Dependingontheoutcomeof thelegislationrecommendedabove, exploringanalternateform of governancefor thePortDistrict, with participationfromthe CountyBoardof Supervisorsand elected officials of the five member cities;
Encourage a limit of two four- year terms that a Port Commissioner can serve; Includestafffrom eachof thefive citiesoneachof thePortDistrict's advisorycommittees; and Postmeetingminutesandagendasof eachof thePortDistrict's advisorycommitteeson-line. 1Whilethe 1962voteto approvecreationof thePortinvolvedtallyingthecombinedvotesof thefiveportcities, votersin the City of Coronadovoted against Proposition D by a marginof 3 to 1. 2022/ 2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

INTRODUCTION
We can do whatever we want, right?" 2The words were spoken — and repeated several times-- by a commissionerof theSailDiegoUnifiedPoit Districtduringapublicweetingof theBoardof Poit Commissioners. A Commissioner went on to describe what was believed to be "the absolute sovereigntyof thisboardto makeanydecisionthatwewantfromthisdaisatanytime." s The commentwasmadeduringadiscussionof thechangesproposedforthePortDistrict'spolicyon Capital Improvement Projects, and while made in this specific context, seemed intended to characterizethe broad authority andperceivednatureof this organization — led by a seven -member unelectedboardof commissioners, largelyautonomous, self-governing, self-fundedandindependent of oversight by local electedofficials.

The2022-23 SanDiegoCountyGrandJury (GrandJury) is notalonein its concernoverthelackof oversight, transparencyandaccountability of an organizationwith suchfar reachingpower and jurisdiction. Overthelastseveraldecades, twoseparateSanDiegoCountyGrandJurieshavereached similar conclusions, the earliestbeingthe 1986-87GrandJury andmorerecentlythe 1997-98Grand Jury.

The 1986-87 GrandJury Reportconcluded, "An enterprise of the scope and importance of the Port Districtmustincludeastrongconcernfor communityrelations, publicinputandaccountability ... yet, inthepublic'smind, it conductsitselfasdoesaprivatecompany, responsibleonlyto itsstockholders.

Thefactisthatit is apubliccorporation, guardingapublictrustandspendingpublicmoney."4 Similarly, the synopsisof the 1997-98 GrandJuryreportconcludedthatthe sevencommissionersof thePortDistrict "areviewedasoperatingwith almostunlimiteddiscretionregardinghowtheyspend money with minimal accountability.

Commissionersarenot requiredto gainapprovalfor their actionsfrom the voting public or evenfrom thecitycouncilswhichappointthem." 5Inpractice, thePortDistrictrequiresafiduciaryoathofits commissioners to act in the best interests of the Port District, and in its role as guardian of the public trust, to the benefit of the residents of California. As appointees of one of five Port District cities, each commissioner must also represent the perspectives of the city appointing them ascommissioner.

Inrepresentingtheinterestsof thePortDistrictbutonlytheperspectivesof theportcitiesappointing them, a dichotomyis created. Thedichotomyallowsportcommissionersto managethevaluable resourcesof SanDiego Bay in a unified, comprehensivemannerbut limits electedgovernmentsof the PortCitiesandtheirconstituentsin makingtheirviewsknownorin determiningtheactionsthatarein theirbestinterests. As aresult, this dichotomyleadsnotonlyto voterdisenfranchisement, butto a disconnection between elected municipal governments andtheir constituents, who must subordinate and subject their interests to the interpretations of the unelected Board of Port Commissioners. zSanDiegoUnifiedPortDistrictPortCommissionersMeeting, September13, 2022, videorecording@1:14:25. Boardof Port Commissioners on 2022- 09- 13 1:00 PM ( granicus. com) aSanDiegoUnifiedPortDistrictPortCommissionersMeeting, September13, 2022, videorecording@1:15:50. Boardof Port Commissioners on 2022- 09- 13 1:00 PM ( granicus. com) 41986-87SanDiegoCountyGrandJury, TheCountyofSanDiegoandTheSanDiegoUnifiedPortDistrictReportNo, 15, June 30, 1987, page 5- 6.
51997-98 SanDiegoCountyGrandJury, TheSanDiegoUnifiedPortDistrict: It'sTimefor TaxpayersandCitizensto Havea Direct Say, Final Report, June 30, 1998, page 103.
2 2022/ 2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

Severeastheseassessmentsare, they arerootedin the SanDiegoUnified PortDistrict Act (PortAct)', enactedby the California Legislaturein 1962, through which the Stateof California delegatesthe powerandresponsibilityfor managementofthetidelandsandsubmergedlandsof SanDiegoBay. The Port Act delegates these powers to the Port District from the California State Lands Commission SLC) as guardian of these tidelands and submerged lands through the public trust doctrine. This doctrine " provides that tide and submerged lands and the beds of lakes, streams and other navigable waterwaysareto beheldin trustby the Statefor thebenefitof thepeopleof California." 7ThePort District acts in this capacity asanindependentgovernmentalspecial district without direct oversight of its sevencommissionersby otherlocalcity or countyagencies. Theunsalariedcommissionersare appointedto four-yeartermsbycity councilsof eachof thefive citiesthatborderSanDiegoBay, (San Diego, ChulaVista, Coronado, ImperialBeach, andNationalCity). Whilethecommissionersmust residein the city thatappointedthem, theycanserveanunlimitednumberof four-yearterms, except in theCityof Coronadowhichlimitsitsportcommissionersto twoterms. Portcommissionersmaybe recalledby majority vote of the city councilwhich appointedthem. Otherthantheselimitations, no oversightby localgovernmentalbodiesis authorizedby thePortAct, anddecisionsby theBoardof PortCommissionersarenot subjectto approval, vetoor appealby city councilsor votersof thefive Port Cities or the county. 8, 9
Democratictheory equatesresponsiblegovernmentwith popularparticipation in and control over policy formulation, political equalityfor theindividual, decidingdivisionsof opinionby majorityrule withcompletefreedomof discussion, andperiodicallyholdingfreeandmeaningfulelections.10Yetby virtue of the legislation that created the San Diego Unified Port District, values such as these that citizenshavecometo expectin our governmentallegislative, regulatoryandjudicial institutionshave not been embraced.

METHODOLOGY
TheGrandJuryconductedinterviewsandrequestedinformationfrommunicipalandcounty governmentalorganizations affectedby the Port Act.

The Grand Jury researchedandreviewed thesedocuments:

California Harbors and Navigation Code, Appendix I, also known asthe San Diego Unified Port District Act ( Port Act)
The 1986-1987 Grand Jury report: " The County of SanDiego andthe SanDiego Unified Port District, Report No. 15" and responses
The 1997-1998 Grand Jury report: "The San Diego Unified Port District: It' s Time for Taxpayers andCitizensto Havea Direct Say" andresponsesfrom the citiesof SanDiego, ChulaVista, Coronado, ImperialBeach, andNationalCity
Meeting Minutes and Agendasfrom the cities of SanDiego, Chula Vista, Coronado, Imperial Beach, andNational City aswell asthe SanDiego Unified PortDistrict Historical recordsandarticlesrelating to formation of the Port District (per footnotes) GrandJuryReportson Portsin otherCalifornia Counties
6CaliforniaHarborsandNavigationCode, Appendix1, SanDiegoPortDistrictAct, Documentno. 70987, filed March3, 2020, Office of the District Clerk. '
https:// www. slc. ca. gov/ public- engagement/
sCalifornia Harbors and Navigation Code, Appendix 1, SanDiego Port District Act eTheCityof Coronadolimitsthe numberof termsservedbyPortCommissionersto two terms 10Bachrach, Peter, TheTheoryof DemocraticElitism (Chicago, 1962), p. 94. 2022/ 2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

SanDiegoUnified PortDistrict Website: www.portofsandiego_org Detailed electronicmaps showing specificboundariesandareaswithin the SanDiego Unified Port District

DISCUSSION
Creation of the San Diego Unified Port District
When California became a state in 1850, it acquired title to navigable waterways astrustee for the protection of public lands, streams, lakes, marshlands, and tidelands. This is referred to as common law public trust doctrine. Per the State of California State Lands Commission ( SLC), " The public' s right to useCalifornia' swaterwaysfor navigation, fishing, boating, naturalhabitatprotectionand otherwater -orientedactivitiesis protectedby the CommonLaw doctrineof thePublicTrust." Historically, thePublic Trust hasreferredto thebasicright of the public to useits waterwaysto engage in " commerce, navigation, and fisheries." The SLC further states that the " Public Trust provides that tide and submerged lands and the beds of lakes, streams and other navigable waterways areto beheldin trustbytheStateforthebenefitof thepeopleof California."I1 SanDiego Unified Port District: UniqueAmong California Ports TheSanDiegoUnifiedPortDistrictis uniqueamongCalifornia's12portsin its establishmentby state law. Accordingto thePortAct, this wasnecessarybecauseof thegeographyandotherspecial characteristics of the locale:

It isherebydeclaredto bethepolicy of theStateof Californiato developtheharborsandports of this Statefor multiple purposeusefor the benefitof thepeople. A necessityexistswithin SanDiego County for suchdevelopment. Becauseof the severalseparatecities and unincorporatedpopulatedareasin the areahereinafterdescribed, only aspeciallycreated district canoperateeffectively in developingtheharborsandport facilities. Becauseof the unique problems presentedby this area, andthe facts and circumstancerelative to the development of harbor and port facilities, the adoption of a special act and the creation of a special district is required. 12
With passageof the enabling Proposition D in November 1962, the SLC granted regulation and control of thetidelands and submergedlandsof SanDiego Bay to the newly createdPort District.

Following passageof SanDiego County's PropositionD, the cities of SanDiego, Chula Vista, Coronado, ImperialBeach, andNationalCity wereto transferthemanagementof statetidal and submergedlandsin SanDiegoBayto thejurisdiction of anewly formedSanDiegoUnified Port District,
Proposition D Controversy
Passageof PropositionD wasnotobtainedwithoutcontroversy. Priorto theelection, thecitycouncils of Coronado, Imperial Beach and Chula Vista opposed formation of the Port District. Supporters of the propositionfocusedontheeconomicbenefitsmadepossibleby thecombinedeffortsof PortCitieson suchprojectsasconstructionof SouthBay channelandtheresultingjob growth from expansionof industrialdevelopmentandmaritimeactivities. Opponentsofthepropositionfocusedprimarilyonthe potentialcontrolwieldedby anunelectedboardof port commissionerswho would havethepowerto ii https:// www. slc. ca. gov/ public- engagement/
szCalifornia Harborsand NavigationCode, Appendix 1, SanDiegoPort District Act, §2, pg 7. https:// Pantheonstorage. blob.core.windows net/ administration/ San-Diego-Unified- Port-District- Act pdf March 3, 2020. 4 2022/ 2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

issuebonds, levy taxesanddeveloplocal tidelandresourceswithout input from individual PortCities.

Another concern was the unequal number of commissioners allocated to each of the Port Cities; the City of SanDiegowouldgetthreecommissionerswhileeachof theremainingfour PortCitieswould get one commissioner each, potentially allowing SanDiego to exert dominanceover Port Commission resources and priorities. 13
A studycommissionedby the CoronadoChamberof Commercethreemonthsprior to the 1962 electionsuggestedthatinsteadof the simplemajorityrequiredby thePortAct to constituteaquorum for Commissioners to conduct business, the act be amendedto require a quorum of at least two commissionersfromthefourPortCitiesof Coronado, ImperialBeach, ChulaVistaandNationalCity.

An additionalchangein themake-upof theportcommissionwasalsosuggestedto includeonlytwo SanDiegoCommissioners, onecommissionerfromSanDiegoCounty, andoneeachfromthefour otherPortCities, allowingappointmentof acommissionerrepresentinginterestsof unincorporated bayfront areasof the county.14
While PropositionD wasapprovedby amajority of votersin the citiesof SanDiego, ChulaVista, ImperialBeachandNationalCity, thepropositionwasdefeatedin Coronadobya 3to 1margin. An unsuccessfullawsuit filed by Coronado, Imperial BeachandChula Vista attemptedto make acceptanceof membershipin thePort District optional, resultingin atemporarydelay, but formation of thePortDistrict wascompletedonDecember18, 1963, following certificationof thevotescastfor Proposition D in the November 6, 1962 election. 15
Port District Funding of Operations
PortDistrict operationsarefinancedprimarily throughleasesandfeesgeneratedthroughits realestate operations, parking, harbor police and other servicesor feesprovided to public or commercial customers of the Port District. As a landlord, the Port District generates most of its revenue from tenantsand subtenantswho pay rent or feesto conductbusinesson tidelands. The list includes hotels, restaurants, retail shops, marinas, landings, yacht clubs, shipyards, cargo operators, aerospace firms andcruise ships. While allowed by the Port Act to do so, the Port District doesnot collect taxes..

Various provisions of the Port Act also allow the Port District to issue general obligation, revenue bondsor levy propertyor otherformsof taxation.

In the Fiscal Year ending June30, 2022, over $90 million, or 55% of the Port District' s operating revenueweregeneratedby leasesandotherRealEstaterevenue, while parking, maritimeandother feesprovidedanother $77million in operatingrevenue, orapproximately45% of operating revenues.

Like commercial business entities that are dependent on revenue streams to remain viable, economic activities that support the Port District' s operations have also represented a significant source of economicrisk. Recently, impactsoftheCOVID-19pandemiconPortDistrictoperationsseverely limitedmostrevenuegeneratingPortDistrictactivities, resultingin a $19.3million lossin thefiscal yearending June2021 andprompting onePort Commissionerto considerthe needto "analyzeand 13SanDiegoCountyRegistrarofVoters, ArgumentsforandAgainstPropositionD, SanDiegoCountyGeneralElection, November 7, 1962.
14TheWyattReport: Here'sTextof AdvisoryonUnitedPort, SanDiegoEveningTribune, August22, 1962, A14 -A15. 1sIbid.
2022/ 2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

understandoptionsfor potentialtaxation. ,16However, thePortDistrict qualifiedfor $29million in stimulusfundassistancein thefollowingyear, leadingtothegenerationof a $68.3million incomein thefiscalyearendingJune2022.17
While thesetidelands -associatedrevenuestreamsallow the Port District to operatefree of budget constraints typical of other state or local government agencies, the need to generatesuch revenue can leadto a significantsourceof biasin thedeliberationsof PortCommissionersandobscuremotivesand objectivesof staffatall levelsof theorganization. In arecentbriefingbythePortDistrict, asizeable, expected return on investment from a proposed project was praised as ajustification for the large public investment of tax dollars neededto fund the project, with lessemphasisplacedon the project' s other characteristics.

Balanced Interests?
TheGrandJuryinvestigationrevealedmanyconcernsbythePortDistrict'sstakeholders. SmallerPort Cities reported a lack of follow through or investment in their cities proportional to the revenue generatedfor thePortDistrict by tidelandsactivitiesoccurringin their municipalboundaries. Others citealackof prioritizationforprojectsnotassociatedwithlucrativeleasingcontractsorother significantrevenuesources. TheGrandJuryacknowledgessuchviews, andseesthedilemmafacedby thePortDistrictin balancingthemanydiverseandpotentiallycompetingmunicipal, stateandpublic interestsit mustmanageasbothnuancedandcomplexin wayslessunderstoodbythepublicin general, andin somecasesby the city andcountygovernmentsit serves.

How doesa port commissioner balance or prioritize the needsor interests of separatecommunities, neighborhoods or municipalities against one another or against the interests of the Port District itself? Astheadagegoes, actionsspeaklouderthanwords; perhapsrecentactivitiesbythePortDistrictand votesby theBoardof PortCommissionerscanhelpto answersuchquestions.

Chula Vista Hotel and Convention Center
The key piece of the ChulaVista Bayfront MasterPlan is the Gaylord Pacific Resortand Convention Center, a $1.1billion project that broke groundin 2022 for a 1,600 -room hotel alongside a 275,000 squarefootconventioncenterona36.5 -acresite. In 2012, afteralmostadecadeofplanning, theCity of Chula Vista and the Port District received approval from the California Coastal Commission for this projectallowing for theconversionof 535acresof vacantandindustrialpropertyinto a ResortHotel andConventionCenter, RV Park, andparkingstructure. An existingmotel, alsopartof theprojectsits on land adjacent to Port District boundaries.

Theproject is important becauseboththe City of ChulaVista andthe PortDistrict collaboratedonthe MasterPlan andwereinvolved in seekingits approval, andbothpartiesconsiderthe development project a great success. The Grand Jury investigationrevealedanalignment of interestsof both parties centered on the regional economic benefits from development of these underused and undervalued tidelandassets. Both partieswerefully engaged, fully committedandenjoyedthe supportof the community duringall phasesof theproject, from the initial masterplan approvalto selectionof the JenniferVanGrove, SanDiego's BayfrontisControlledbya Little -understoodAgencyWith PowerThatWill BeTestedin TheNewYear, February5, 2021, page13; SanDiego's bayfrontiscontrolledby a little -understoodagencywith power that will be tested in new vear - The San Diego Union -Tribune ( sandiegouniontribune com) 17SanDiegoUnifiedPortDistrict, AnnualComprehensiveFinancialReport, FiscalYearsEndedJune302022and2021.

6 2022/2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED NNE 7, 2023)

operatoranddeveloper, aswell astheformationof multiplefinancingagreements. Bothpartiesareto sharein the public infrastructure costs expected to approach $370 million, but also retain sharesof excess revenues.

Dole Fruit CompanyContract
First signed in 2002, this agreement leased portions of San Diego' s 10a' Avenue terminal to Dole Fruit Companyforimportsof fruit intotheU.S. westcoastmarket. Primaryoperationscenteredonlong- haultruckingoperationsdeliveringfruit to manysitesin theSouthernCaliforniaregion, aswell as short=haultruckingoperationsto sitesin SanDiegoCounty. Theshort -haullocaloperationsinvolved many more trips by smaller -sizedtrucks andwere perceivedto createa more significant sourceof air pollution than long-haul operationswhich involved larger loads andfewer trips on semi -trailer trucks.

Following negotiation for a 25 -year leaseextensionthrough 2036, terms were not releaseduntil three daysprior to theproposal'sapprovalby theBoardof Port CommissionersonAugust14, 2012. The agreementnot only extendedDole'slease, but alsomovedits short -haultruckingoperationoutof San Diego'sBarrioLoganneighborhood. Thismovewasperceivedtoreducepollutionin anareaalready affectedbysignificantpollutionfromthenearbyfreewayandindustrialmaritimeandmanufacturing activities. However, the short -haultrucking operationwasonly relocatedto a locationin the neighboringcity of National City, therebyincreasingpollution thatpotentiallyaffectedthehealthand well-beingof nearbyresidentsof thatcity. Relocationof Dole'sshort -haultruckingoperationsalso requiredthedisruption, delayandreroutingof theNationalCitylegoftheBayshoreBikewayproject andtheTidelandsAvenuerelocationplanningefforts, twokeycomponentsoftheNationalCityBalanced Plan.

Theactionstakenby the Port District in approvingtheDoleFruit Companylease, reducedpotential health hazardsfor residents of SanDiego' s Barrio Logan neighborhood at the expenseof the health of NationalCityresidents, while creatingsignificantdelaysanddisruptionsin theMasterPlanbenefitting National City residents.

Mitsubishi CementFactory
ThePort District recentlyconsideredanapplicationby Mitsubishi CementCorporation (Mitsubishi) for a Coastal Development Permit ( CDP) that would allow Mitsubishi to construct and operate a cementimport, storage, loadinganddistributionfacility within theTenthAvenueMarineTerminal." Beginningin 2015, Mitsubishihadbeennegotiatingwith thePortDistrictto shipcement -making materials to the Port -operated Tenth Avenue Marine Terminal warehouse for storage and shipment to SouthernCaliforniaconstructionsites. Nearbyresidentsperceivedtheprojectwould haveintroduceda new significant sourceof pollution to surroundingneighborhoodsalready experiencingpollution from maritime and industrial activities and freeways in the area.

While thePortDistricthasapprovedaMaritimeCleanAir Strategy (MCAS) to replacedieselfuel burningtruckswith electricvehiclesby 2030, thetechnologysupportingzeroemissionelectricpower for vehicles the size of cementtrucks was not yet available, and the Port District announcedin a press SanDiegoUnified Port District, Ordinance2936, February25, 2019, https:// pantheonstorage. blob. core. windows. net/ administration/ Ordinance- No- 2936. pdf 7 2022/ 2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

releasethatnegotiationswith Mitsubishi "werenotmovingforward," but expressed a willingness to re - consider the proposal, " shouldthedaycomewhentheywantto re -opennegotiations."'9 WhilethedecisiontodiscontinueMitsubishi'scementwarehousefacilitywasultimatelymadein the public interest, the discussion to proceed or terminate the project occurred not in a public forum, but behind closed doors and was announced in a press release.

Theprocessfor evaluationof suchprojectsby thePortDistrict is well establishedandlogical in its progressionfrom theproposal, preliminaryapproval, planning, development, environmentaland coastalcommissionreviewphases. Yet considerationof theprojectby alocal electedgovernmental entitymight havegivengreaterpriority to thehealthconcernsof communitymembersandresultedin a more equitable balance between economic and health concerns earlier in the project' s evaluation process.

Coronado Cottages at the Cays
Recentdecisionsby thePortDistrictsurroundingtheproposedCottagesattheCaysProjecton Coronado'sNorth GrandCaribeIsleexemplifythedisconnectionanddisenfranchisementof the voting public and electedgovernmentalbodiesresulting from the Port District' s independencefrom local governmental oversight. The Port District had considered a development application from a lesseeof propertyonCoronado'sNorthGrandCaribeIslandto build 41two-bedroomshortstayunits limited to six guests per unit. In a letter addressed to the Board of Port Commissioners dated December23, 2022, the Mayor of Coronadoexpressedstrongoppositionto theproject, stating, "this projectdoesnotreflectthewill of thecommunityor theCoronadoCity Council." Specific objections to the project cited in the letter included: 20
A unanimousvote by the CoronadoCity Councilin oppositionto theproposedproject.

Oppositionfrom communitygroupssuchasthe CoronadoCaysHomeowner'sAssociation and community memberswho provided petitions in opposition.

Reversal of the Port District policy refined in the 2021 Port Master Plan Update (PMPU) to expresslydisallow the developmentof more hotel rooms andto convert the land use designation to Recreational Open Space, which preserves the area for environmental preservation and complete public access."
Theprojectwouldcreate "preferentialaccessto thosethatcanaffordwhatwill mostlikely be costly room ratessimilar to otherhotel ratesin the area." The project contravenes the PMPU commitment for the " protection and management of naturalresourcesthatbestreflect environmentalstewardshipfor presentandfuture generations", on property expectedto be highly vulnerableto sealevel rise in the decades to come.

Theprojectwould "createahotelusewhich is not compatiblewith the surrounding residential area...," posingsignificanttraffic impactsandsafetyconcernson the communityof approximately1,200homeswhich canonly be accessedthrough a single entrance.
19SanDiegoUnified Port District, Port of SanDiegoIssuesStatementon Mitsubishi CementProposal, GeneralPress Release, February 1, 2023, https:// www. portofsandiego. org/ press-releases/ general- press- releases/ port- san-diego- issues- statement- mitsubishi- cement- proposal
20MayorRichardBailey, Letterof Oppositionto Cottagesat the CaysDevelopmentProjectProposal, December23, 2022, 2022/ 2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

Dueto policiesgoverningthe rightsof lessees, ThePortDistrict wasobligatedto presentthis developmentproposalfor avoteto theBoardof PortCommissioners. In addition, the PortDistrict viewed theland usedesignation of RecreationalOpen Spacefor the parcel reflected in the 2021 Port MasterPlanUpdateasbeingunbindingandpreliminary, pendingapprovalbytheCaliforniaCoastal Commission: Had it been approved, this land use would have representeda land use inconsistent with the CoronadoCaysdevelopmentproposalwhich requireda CommercialOpenSpacedesignation currentlyin placefor theproperty. OnFebruary14, 2023, theBoardof PortCommissionersapproved theCottagesattheCaysProjectby avoteof 4-3in favorof initiatingaCaliforniaEnvironmental QualityAct (CEQA) review, followedby considerationof aPortMasterPlanAmendmentto addthe projectto thePortMasterPlan, prior to applicationby the developerfor a coastaldevelopmentpermit.

Who Watchesthe Watchers? California Coastal Commission and State Lands Commission InresponsetotheGrandJury'sconcernthatthePortDistrictislargelyautonomous, self-governing, self-fundedandindependentof oversightby local electedofficials, thePortDistrict viewsthe oversightof its decisionsandactivitiesprovidedby the California StateLandsCommission (SLC) and the California Coastal Commission as more than adequate.

The SLC oversight is to ensurePort District activities are consistentwith the public trust doctrine. In this role the Port District consults with the SLC on an asneededbasis, to seekclarification, advice and guidancein mattersaffectingthePortDistrict'sroleasguardianofthepublictrustfor SanDiegoBay.

If determinedtobeinconsistentwiththisdoctrine, theSLCcoulddirectthePortDistricttostop, discussandresolvethe issuescausingsuchconcern.

In addition to the StateLands Commission and California Coastal Commission approvals, the CEQA requiresthat "stateandlocalagenciesconsiderenvironmentalprotectioninregulatingpublicand privateactivitiesandshouldnotapproveprojectsfor whichthereexistfeasibleandenvironmentallysuperior mitigation in or alternatives." In the absenceof any documentedexemptionsprovided for in the act, CEQA requires the publication of detailed Environmental Impact Reports for projects approvedby the Port District for public review andcomment.21 Requirements of the California Coastal Commission and CEQA also affect Port District activities relating to the approval of the Port Master Plan, Master Plan Updates or Amendments. In addition, Port District approvedprojects often require a coastaldevelopmentpermit from the California Coastal Commission.

Whilemembersof portcity councilsor SanDiegoCountySupervisorshavenodirectoversightofPort District activities or ability to appealdecisionsof theBoardof Port Commissioners, thePortDistrict indicatedthe existenceof multiple venuesto maketheir views known, andcommissionersasa whole placea very high value on the desiresof membercities. In addition, the public hasaccessto most of the public meetings of the SLC, California Coastal Commission and also to regular meetings of the Board of Port Commissioners, aswell asaccessto thepublic websitesof theseorganizations. Also, decisionsof thethree-member California CoastalCommissioncanbe appealedwith the agreementof two of three commissioners to first hear the appeal and then vote to reverse their decision. ziCaliforniaEnvironmentalQualityAct, Chapter1: Policy (archive.org) 9 2022/2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

Public Participation and the Port District of SanDiego
The GrandJury notedmeetingsof the Board of Commissionersarepostedon the Port District' s websiteandthat public participation is allowed. Meeting agendasareposted, andminutes aremade available. In addition, the Board of Port Commissioner meetings are recorded, and recordings are availablefor publicviewing. ThePortDistrict'spolicyregardingpublicparticipationis spelledoutin Boardof PortCommissionersPolicy060whichwasadoptedJune10, 2008.22 TheBoardof PortCommissionersalsoformedseveralsubcommittees, forums, orworkinggroupsto solicit public input in the Board's decision-makingprocess. "In setting policies for our dynamic waterfront, the Port District of San Diego seeks to make decisions that are in the public interest. To thatend, theBoardof PortCommissionershasformedvariouscommittees, forumsandworking groupsto discusscurrentissues. Thesemeetingsareanimportanttool for gatheringinformation, exploringideas, andobtainingfeedbackfor usein decisionmakingbytheBoard."23 Thesegroupsinclude the Accessibility Advisory Committee; Arts, Culture, andDesign Committee; Audit Oversight Committee; Bayfront Cultural and Design Committee Chula Vista; Chula Vista BayfrontFacilitiesFinancingAuthority; EnvironmentalAdvisoryCommittee; Maritime Forum; San DiegoHarborSafetyCommittee; Wildlife AdvisoryGroup; andWorldTradeCenterSanDiego.

ResearchinginformationavailableonthePortDistrict'swebsite, theGrandJurynotesthatagendas andmeetingminutesfor somebut not all the advisorycommitteesareavailable. The screenshotbelow documentingtheinformationconcerningthePort'sEnvironmentalAdvisory zzBPC-Policy-No-060-Public-Participation-in-Board-of-Port-Commissioners-Board-Meetings.pdf. https:// pantheonstorage. blob. core. windows. net/ administration/ zshttps:// www. portofsandlego. org/ people/ other- public- meetings 10 2022/ 2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

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The GrandJury notesthat only four of the eight meetingshad "accessible" agendas, while noneof the meetingshadminutespostedonline. Accordingto the lastpostedagendafor theEnvironmental Advisory Committee, the agendaincludedadiscussionwith respectto theNational City Balanced Planportion of theproposedupdatedMasterPlan. However, in reviewingthepostedmembershipof theEnvironmentalAdvisoryCommitteetherearenostaffmemberslistedfromNationalCity (not any of the other Port Cities), This points to a lack of transparencywith regardsto the coordinationof the Port District with the member cities.

Master Plan Documents and Updates
Under Section 19 of the Port Act, the Port District was to " draft a master plan for harbor and port improvement and for the use of all of the tidelands and submerged lands which shall be conveyed to the district pursuant to the provisions of this act." This Port MasterPlanwas approvedby the Board of PortCommissionersin 1980andlatercertifiedbytheCaliforniaCoastalCommissiononJanuary21, 1981.25SubsequentlythePortDistrictapproved41amendmentstothe1980MasterPlan.

In 2019, SB507 §5.7 wasincorporatedinto thePortAct requiringPortDistrict to "submitto theState Lands Commission a trust lands use plan for. trust lands .. , describinganyproposeddevelopment, preservation, or other use of the trust lands," Section 5.7 goes on to state that the " State Lands zahttps:// portofsandiego. legistar. com/ Calendar. aspx zsCalifornia Harbors and Navigation Code, Appendix 1, SanDiego Port District Act §19, San Diego Unified Port District, Document 70987, March 3, 2020, page 15.
11 2022/ 2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

Commission, in its solediscretion, mayconsiderwhetherthesubmissionof thePortMaster Plan ... meets the requirements of ... a trust lands use plan." 16 1'he fort District' sresponsehas beento publish the "SanDiego Unified Port District, DRAF 1' Port MasterPlanUpdate" datedNovember2021. As of thewriting of thisreporttheMasterPlanUpdate hasnot beensubmittedto the California CoastalCommissionor to the StateLandsCommission.27 ParticularconfusionexistsamongPortCitiesleadersandresidentsregardingtheprovisionsPort MasterPlanthatis periodicallyupdatedby thePortDistrict. Much of the confusionis associatedwith the sizeand complexity of the Master Plan documentitself— the most recent but -still - unapproved - update (2021) is well over400pagesin lengthwhenincludingappendices, whilethepubliccomments alonecompriseanother800pages. As anindicatorof thecomplexityof informationcontainedin the Plan commentsalone, the format for the commentsreceivedfor the 2021 MasterPlan Updadewas an electronicPDFflat file format comprisingcommentsfrom 10agencies, 19organizations, 10 businessesorPortTenantsandindividualsfromall 10planningdistricts. Questionedabouthowthe Port District respondedto comments, how the comments were used or actedupon, the Port Gaveno clear answers in response.

Theplanis categorizedinto 10geographicalPortplanningdistricts. Despitethefactthatthese planningdistrictscouldbeorganizedaroundeachofthePortCitieswithinwhichthesmallerplanning districts exist, this approachhas not beenused in the past. However, such an approach could foster greaterunderstandingof theseplansby residentsandleadersalike while greatlysimplifying the review andapprovalprocessfor eachPort city' s MasterPlan.

While the Port Act identifies requirements for development of Port Master Plans and Trust Use Plans, theGrandJuryconcludedthatthePortAct doesnot precludethePortCitiesortheCountyof San Diegofrom requiringratificationby PortCitiesor thecountyof suchplansprior to submissionto the appropriatestateagencyfor approval. Further, suchratificationby eachPortCity Councilorthe County Board of Supervisorswould allow elected officials to ensurethat theseplans are in the best interest of their constituents and aligned with plans and objectives of these government bodies.

Tothatend, theGrandJurywill recommendthatPortCitiesandCountySupervisorsof supervisorial districtsfronting SanDiegoBayberequiredto ratify all portmasterplans, masterplanupdates, master plan amendmentsor trust useplansfor PortDistrict activitiesoccurringwithin their boundaries; further, thatsuchratificationberequiredpriorto PortDistrictproceedingwith EnvironmentalImpact Reviewsrequiredby CEQA, submissionof suchplansfor approvalby theCaliforniaCoastal Commission, StateLandsCommissionorapprovalofcoastaldevelopmentpermits. Finally, once ratifiedby aPortCity or Countyagency, eachPortCity'smasterplanupdatewouldbecomethe currentPortMasterPlanfor projectplanningpurposes.

Options: Wheretogofrom here? PortCommissionerStatusReportstoCityCouncils Therecommendationsof the 1997-1998GrandJuryreportweredirectedto thecity councilsof the five citiesaffectedbythePortDistrictandtotheCountyBoardof Supervisors. Recommendation98 - California Harbors and Navigation Code, Appendix 1, San Diego Port District Act §19, SanDiego Unified Port District, Document 70987, March 3, 2020, page 10.

Z' https:// pantheonstorage.blob.core.windows. net/ waterfront- development/ Port-Master-Plan-Update-Draft-November- 2021. pdf
12 2022/2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

50to thefive city councilswereto "createandimplementformalpoliciesrequiringtheirport commissionerrepresentativesto report regularly to their respectivecity councils in aformal manner." TheCity crCSariDiegorespoluledto tlirtialec:curutitlida(iollssayirg Uiatpolioiatiwttloalraadyill pla.c:e governingqualificationsfor portcommissionersaswell asformalreportingto thecitycouncil. The cities of Coronado and Imperial Beach reported that briefings from their Port Commissioners concerningPortDistrict activitieswerescheduledaspartof eachregularlyscheduledcity council meeting. TheCity of ChulaVistareportedthecity councilmeetswith theirportcommissioner quarterly, or as often as needed," while NationalCity reportedreceiving, periodicreportsfrom their Port Commissioner on an informal basis.

ThecurrentGrandJuryinvestigatedthecurrentpracticesof thePortCitiesin pursuingregularupdates in regularlyscheduledpublicforumssuchasCity Councilmeetings. Communicationwith Port Commissionerswas reportedto occur regularly on aninformal basis, but confirmation of such informalmeetingsprovedimpractical. As aresult, theGrandJuryreviewedreadilyavailablepublic meetingagendasandminutesof thePortCity councilsduring2022. Wediscoveredthefollowing:

SanDiego: TheGrandJurycouldnotfindanyminutesoragendaitemsrecognizingthatanyofits Port CommissionersmadepresentationsregardingPortDistrict activitiesin public meetings. This includedareview of City Council agendasfor 2022, noneof which includedagendaitemsof briefings orpresentationsby the city' sPortCommissioners.

ChulaVista: TheGrandJurycouldnotfindanyminutesoragendaitemsrecognizingthatits Port CommissionermadepresentationsregardingPortDistrict activitiesin public.

Coronado: Accordingtoreviewedminutesandagendaitems, asingleupdatefromthecity's commissioner occurred on April 19, 2022.

ImperialBeach: Accordingto reviewedminutesandagendaitems, onlyoneupdatetookplaceon January19, 2022.28
NationalCity: An agendaitemfor reportsfromtheircommissioneris createdfor eachCity Council meeting. The GrandJury wasunableto learnif that wasthe result of a publishedcouncil policy.

In view of theinformationprovidedthroughtestimonyandsurveysof publicrecordsregardingPort Commissionerreportsandbriefingsto their city councilsonthe activitiesof thePortDistrict, the GrandJuryconcludedthatsuchreportingin publiclyaccessiblevenuessuchascity councilmeetings doesnot take place on a frequent or regular basis. Combined with a preferencefor informal channels of communication with their appointed representatives, these tendencies call into question whether Port CommissionersandPortCity Councilsmaintainopenandtransparentrelationships.

Re-engagementof Port Citiesand Countyof SaltDiego
TheGrandJuryhasconcludedthatbecauseofthePortDistrict'sindependenceandautonomyfrom local governmentalreview or approval of its decisions, voters andelectedrepresentativesin the Port Cities andCounty of SanDiegohavebecomedisenfranchised. Electedrepresentativescannotprevent or appealPortDistrict decisionsthat adverselyaffecttheir constituents, andasaresult, voterscannot dependon their electedrepresentativesto actin their bestinterests. As a result of suchshortcomings, accountability of representatives to their constituents is limited when the normal expected prerogatives of electedoffice holdershavebeensupplantedinsteadby anunelectedentity suchasthePortDistrict. zs
Cityof ImperialBeach, CityCouncil, RegularMeetingMinutes, January19, 2022, 6:00p.m,, VirtualMeeting 13 2022/ 2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

Balancing the rights and interestsof diverse coastalcities, communities andneighborhoodsthroughout lieSafiDiegoCuuu[y tegiuuisa5igttilicattlaltalleuge, eveulooanelectedgovetuiugbodyuol motivatedby economicincentives. Attemptingthistaskthroughalargelyindependentand autonomous organization such as the Port District that is dependent on revenue from development projectsandleasingactivity maybetoomuchto askof theorganization, especiallywithoutthe guidanceof deliberativeelectedcity councils, countysupervisorsor otherelectedgovernmentbodies.

The GrandJuryconcludesthat only with there-engagementof the electedgovernmentbodiesaffected by Port District activities and landswithin their jurisdictional boundariescanthe interestsof residents beequitablybalancedwith competingPortDistrict goalsandobjectives.

FACTS AND FINDINGS
Duties, Responsibilities and Powers
Fact: The public trust doctrine provides that tidal and submerged lands, beds of lakes, streamsand othernavigablewaterwaysareto beheld in trustby the Statefor thebenefit of the peopleof California.

Fact: ThePortDistrict Act delegatesthepowerandresponsibilityfor managementof thetidelands andsubmergedlandsof SanDiego Bay from the Stateof California to the SanDiego Unified Port District.

Fact: Many electedofficials of Port Cities believe Port Commissioners areto act in the best interest of the cities appointing them.

Fact: The Port Act limits the ability of electedofficials to representthe interestsof the voterswho elect them.

Fact: It is the duty of eachPort Commissionerto act asa guardianof thepublic trust for tidal and submergedlandsof SanDiego Bay in the interestsof all California residents.

Fact: Port Commissionerstakeafiduciary oathto actin thebestinterestsof the Port District, Finding 01: PortCommissionersareonly requiredto representtheperspectives, not the interestsof the Port City appointing them to the Board of Port Commissioners.

Finding 02: The Port District acts as an independent special district without direct oversight from local city or countygovernments.

Fact: The oversightprovided by the StateLandsCommissionandCalifornia CoastalCommissionof PortDistrict activities is viewed by the Port District asmorethan sufficient.

Fact: PortCommissionersmustlive in thePortCity appointingthem.

Fact: PortCommissionersmayberecalledbyamajorityvoteofthecity councilappointingthem.

Fact: PortCommissionerscanserveanunlimitednumberof four-yearterms, exceptin theCityof Coronado in which Commissioners can serve a maximum of two terms. 14 2022/ 2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

Finding03: Becausetheinterestsof residentsof PortCitiesandtheCountyof SanDiego aresubject to theinterpretationsof theunelectedDoardof PoitCommissioners, theirinterestsmaynotbeheard, prioritized or represented accurately.

Finding 04: BriefingsbyPortCommissionersto PortCity Councilsin noticedpublicmeetings regarding issuesaffecting their jurisdictions, will increasethe level of public participation and knowledgeregardingPortDistrict activities, PortMasterPlans, MasterPlanUpdates, PortMasterPlan amendments or additions.

FindingOS: Currently, theBoardofPortCommissionersdoesnothavetermlimits. Consideringterm limitswouldfosterdemocraticprinciplesbyprovidingmoreopportunitiesfor diverseandtalented individualstoserve, preventtheaccumulationof influence, andupholdthepublictrustbykeepingthe Boardrepresentativeresponsiveto its community.

Initial Opposition to Port District Formation
Fact: TheCity Councilsof thecitiesof Coronado, ImperialBeachandChulaVistainitially opposed formation of the Port District in 1962.

Fact: Formation of the Port District in 1962 occurred despite concerns that an unelected board of Port Commissionerswouldhavethepowerto issuebonds, levytaxesanddeveloplocaltidelandresources without input or approval of individual Port Cities.

Fact: Opposition to the formation of the Port District in 1962 involved the unequal number of commissionersallocatedto eachof the Port Cities; the City of SanDiegowould getthree commissioners while each of the remaining four Port Cities would get one commissioner each, potentially allowing SanDiego to exert dominanceover the resources, priorities and decisionsof the Port District.

Finding06: Withthreeof sevenportcommissionersappointedtotheBoardofPortCommissionersby the City of SanDiego, thepotentialexistsfor the City of SanDiegoto exertdominanceoverthe priorities, resources and decisions of the Port District.

Port District Potential Source of Bias
Fact: PortDistrict operationsarefinancedprimarilythroughleasesandfeesgeneratedthroughitsreal estateoperations, parking, harborpoliceandotherfeesprovidedby customersof thePortDistrict.

Finding 07: The Port District is incentivized to maximize revenueto fund its operations, a goal that maycreateconflictsofinterestin thepriorities, allocationof resourcesandotherdecisionsmadebythe Port Commission.

Chula Vista Convention Center and Hotel
Fact: The $ 1.1 billion Chula Vista Hotel and Convention Center broke ground in 2022.

Finding 08: Successin the development of the Chula Vista Hotel andConvention Center hasbeen obtainedbecauseof a close collaboration andalignment of interestsbetweenthe Port District andthe City of Chula Vista.
15 2022/ 2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

Dole Fruit Company Proposal
Fact: A 2012 approval of the Board of Port Commissioners for a lease of warehouse space on the Port District'sTenthAvenueTerminalto DoleFruitCompanyalsomovedastagingareafor short -haul trucking to the National City area.

Finding 09: ThePortCommissionersdecisionto moveshort -haultruck stagingfor local deliveriesof DoleFruitproductsrelocatedasourceof pollutionfromtheBarrioLogancommunityto communities in National City.

Mitsubishi Cement Corporation Proposal
Fact: MitsubishiCementCorporation'sproposalfor storageandshipmentby truckof cementproducts to constructionsitesin theregiongeneratedcontroversyandnegativepublicityamongresidentsof nearbyneighborhoodsaffectedby potential healthrisks.

Fact: Considerationof theMitsubishiCementCorporationprojectwasterminatedby mutual agreement of the Port District and Mitsubishi Cement Corporation.

Fact: In its public statement, the Port District expresseda willingness to re -open negotiations related to this proposal with Mitsubishi Cement Corporation in the future.

Fact: The Mitsubishi Cement Corporation project was terminated due to technical concerns around the availability of zero emission trucks capable of the loads required for cement deliveries.

Finding 10: ThecontroversysurroundingtheMitsubishiCementCorporationProject'spotential healtheffectsontheBarrioLoganneighborhoodandothernearbyresidentsdamagedthePort District' s community relations with thesecommunities and contributed to the decision to discontinue the project.

Finding 11: Oversightof theMitsubishi CementCorporationprojectby the City of SanDiegoor San DiegoCountygovernmentsmighthavegivengreaterpriorityto thehealthconcernsof community members and resulted in a more equitable balance between economic and health concerns earlier in the project' s evaluation process.

Coronado Cottages at the Cays Proposal
Fact: TheCottagesattheCaysdevelopmentproposalmetwith significantoppositionnot only from the Coronadomayor and city council, but alsofrom residentsandmembersof the CoronadoCays Homeowner'sAssociationrepresentingthecommunityof 1,200homes.

Fact: MaintainingfreeaccessbyCaliforniaresidentsto SanDiegoBayfor recreationaluseis often cited asan obligation of the public trust by the Port District.

Fact: Three of seven Port Commissioners voted to oppose the Cottages at the Cays development proposal, includingtheCity of Coronado'sPortCommissioner, theNationalCityPortCommissioner as well as one of three San Diego Port Commissioners.

Fact: TheCottagesattheCaysdevelopmentproposalwasconsistentwiththeproperty'sdesignation in thePortMasterPlanascommercialrecreationspaceasapprovedbytheCaliforniaCoastal Commission.
16 2022/ 2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

Fact: TheCottagesattheCaysdevelopmentproposalwasnotconsistentwiththeproperty's designationasrecreationalopenspacein the more recentCalifornia CoastalCommission -unapproved Port Master Plan Update.

Fact: Without the approval of the California Coastal Commission, the Port District viewed the Coronado Cays Port Master Plan Update land use designation of recreational open space asnon- binding andpreliminary.

Fact: TheCoronadoMayor, CityCouncilmembersandresidentsof Coronadoaffectedbythe CottagesattheCaysdevelopmentproposalreliedonthepropertyusedesignationfor recreationalopen spaceadoptedmostrecentlyin the PortMasterPlanUpdatedocument, believingthis documentshould control useof property proposedfor the Cottagesat the Caysdevelopment.

Finding 12: The Port' s decision to approvethe Cottagesat the Cays developmentproposal could negativelyimpactaccessto SanDiegoBayandapprovingtheplanfavorsthosewillingorabletopay costly hotel ratestypical of the Coronado area.

Public Participation
Fact: PortCommissionerreportsandbriefingsto their city councilsonthe activitiesof thePort District, in publicly accessiblevenuessuchascity councilmeetingsdonot takeplaceonafrequentor regular basis.

Finding13: Givenapreferencefor informalchannelsof communicationby PortCity councilsand mayorswith theirappointedPortDistrictrepresentatives, neitherPortCommissionersnorPortCity Councilsmaintaincompletelyopenandtransparentrelationshipsallowingfor publicinvolvementor awareness of Port District activities.

Master Plan Documents and Updates
Fact: RatificationofPortMasterPlans, MasterPlanUpdatesorMasterPlanAmendmentsbyPort CitiesorCountyof SanDiegofor planningdistrictswiththeirjurisdictionisnotprohibitedbythePortAct.

Finding14: Initscurrentform, thePortMasterPlanandMasterPlanUpdatedocumentspublishedby the Port District areoverly complex, difficult to understandandtoo broad in scopeto foster meaningfulcomprehensionby PortCity residents, electedmunicipalor countyofficials.

Finding 1.5: Ratification of Port Master Plans, Master Plan Updatesor MasterPlan Amendments wouldallow residentsof PortCity PlanningdistrictsandSanDiegoCountyto acknowledgeand confirm their understanding of Port District development plans andprojects within their municipal and countyboundariesandprovide reliabledocumentsfor communitiesto plan for thefuture.

RECOMMENDATIONS
The2022/2023SanDiegoCounty Grand Jury recommendsthat the City Councilsof thecitiesof SanDiego, ChulaVista, Coronado, ImperialBeach, andNationalCity:
17 2022/ 2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

23- 90: Enact ordinancesor policiesplacing a two -term limit on the number of termsthat aPort Commissionercanserve (asalreadyenactedfor theCityof Coronado). 23- 91: Institute ordinancesor formal policiesrequiring the appointed Commissionersfromeachcityberequiredto giveat aminimum, quarterly updatesto the City Councils at officially scheduledcity council meetings open to the public.
23- 92: Institute ordinances or formal policies that require ratification of the Port Master Plans, proposed Port Master Plan Updates or amendments to the Port MasterPlanfor Port District planningdistrictswithin eachcity'sboundaries. 23- 93: In consultation with the SanDiego County Board of Supervisors, explore and implement an alternate form of governance for the Port District allowing for participation in, and oversight of Port District activities and decisionby theSanDiegoCountyBoardof Supervisorsandtheelectedcity councils of the five Port Cities.

The 2022/2023SanDiegoCounty Grand Jury recommendsthat the County of SanDiegoBoard of Supervisors:
23- 94: Institute ordinances or formal policies that require ratification of the Port Master Plans, proposed Port Master Plan Updates or amendments to the Port Master Plan by eachof three county supervisors for Port District planning districts within eachof three county supervisorial district boundaries.
23- 95: Direct the CountyOfficeof IntergovernmentalRelationsto lobby CaliforniaStatelegislatorsto introducelegislationenablingtheCountyof San Diego to assume oversight of the activities of the San Diego Unified Port District or decisions of the Board of Port Commissioners and share in the Port District' s duty as guardian of the public trust in the tidal and submergedlands of SanDiegoBay.
23- 96: Depending on the outcome of Recommendation ( 23AX, above), consider exploring and implementing an alternate form of governancefor the Port District allowing for participation in, andoversightby the SanDiego County Board of Supervisorsand the electedcity councilsof the five port cities.

The 2022/2023SanDiegoCounty Grand Jury recommendsthat SanDiegoUnified Port District Board of Commissioners:
23- 97: Instituteformal policiesor proceduresallowingfor appealof anyaction takenby theBoard of Port Commissioners, includingdecisions, ordinances, or project approvals.
18 2022/2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED NNE 7, 2023)

23- 98: Institute formal policiesto enablePort Citiesand Countyof SanDiegoto ratify the Port Master Plans, proposed Port Master Plan Updates or amendmentsto thePort Master Plan for Port District planning districts within each city' s and county boundaries.
23- 99: DirectlyinformeachofthefiveCityCouncilsat officiallyscheduledCity Council meetings open to the public how the proposed updated Port Master Plan affects areas within their jurisdictional boundaries. 23- 100: To increase the coordination of Port District activities with the Port Cities and their staffs, institute a policy of including staff from eachof the five Port CitiesandCountyof SanDiegoon eachof thePort District'sadvisory committees.
23- 101: Postmeetingminutesandagendasof eachofthePortDistrict'sadvisorycommittees. 23- 102: In consultation with the City Councils of SanDiego, Chula Vista, Coronado, Imperial BeachandNationalCity, considerplacingatwo -term limit on the number of terms that a Port Commissioner can serve ( as already enacted for the City of Coronado).
23- 103: Institute ordinancesor formal policiesrequiring the appointed Commissionersfrom eachcityberequiredto giveataminimum, quarterly updatesto the City Councils at officially scheduledcity council meetings open to the public.
23- 104: In consultation with the SanDiego County Board of Supervisors, explore an alternate form of governancefor the Port District allowing for participationin, andoversightofPort District activitiesanddecisionbythe SanDiegoCountyBoard of Supervisorsandthe electedcity councilsof the five Port Cities.

REQUIREMENTS AND INSTRUCTIONS
TheCaliforniaPenalCode §933(c) requiresanypublicagencywhichtheGrandJuryhasreviewed, andaboutwhichit hasissuedafinal report, to commentto thePresidingJudgeof theSuperiorCourt onthefindingsandrecommendationspertainingtomattersunderthecontroloftheagency. Such commentshallbemadenolaterthan90daysaftertheGrandJurypublishesitsreport (filedwiththeClerk of the Court); exceptthat in the caseof areportcontainingfindingsandrecommendations pertainingtoadepartmentoragencyheadedbyanelectedCountyofficial (e.g. DistrictAttorney,. Sheriff, etc.), suchcommentshallbemadewithin60daystothePresidingJudgewith aninformation copy sent to the Board of Supervisors.

Furthermore, California Penal Code § 933. 05( a), (b), ( c), details, as follows, the manner in which such comment( s) are to be made:
19 2022/2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

a) Asto eachgrandjury finding, therespondingpersonorentityshallindicateoneofthe following:
1) TherespondentagreesMill thefinding
2) Therespondentdisagreeswhollyorpartiallywiththefinding; in whichcase theresponseshallspecifytheportion of the finding that is disputedand shall include an explanation of the reasons therefor.
b) Astoeachgrandjury recommendation, therespondingpersonorentityshallreportoneof the following actions:
1) Therecommendationhasbeenimplemented, withasummaryregardingtheimplemented action. 2) The recommendation has not yet been implemented, but will be implemented in the future, with a time frame for implementation. 3) The recommendationrequires further analysis, with an explanation andthe scope and parameters of an analysis or study, and a time frame for the mattertobepreparedfordiscussionbytheofficerorheadoftheagency ordepartmentbeinginvestigatedorreviewed, includingthegoverning bodyof thepublic agencywhenapplicable. Thistime frameshallnot exceedsixmonthsfrom thedateof publicationof thegrandjury report. 4) The recommendationwill not be implementedbecauseit is not warrantedor is not reasonable, with an explanation therefor.
c) If afindingorrecommendationofthegrandjury addressesbudgetaryorpersonnelmatters of acountyagencyordepartmentheadedby anelectedofficer, boththeagencyor departmentheadandtheBoardof Supervisorsshallrespondif requestedbythegrand jury, buttheresponseoftheBoardof Supervisorsshalladdressonlythosebudgetaryor personnelmattersoverwhichit hassomedecision-makingauthority. Theresponseof the electedagencyor departmentheadshall addressall aspectsof the findings or recommendationsaffectinghis orheragencyor department.

Commentsto thePresidingJudgeof the SuperiorCourtin compliancewith thePenalCode §933.05are required from the:

Responding Agency Recommendations Date
City of SanDiego, City Council 23- 90 through 23- 93 8/ 28/ 2023 City of Chula Vista, City Council 23- 90 through 23- 93 8/ 28/ 2023 City of Imperial Beach, City Council 23- 90 through 23- 93 8/ 28/ 2023 City of Coronado, City Council 23- 90 through 23- 93 8/ 28/ 2023 City of National City, City Council 23- 90 through 23- 93 8/ 28/ 2023 County of San Diego,
Board of Supervisors
San Diego Unified Port District,
Board of Port Commissioners
23- 94 through 23- 96 8/ 28/ 2023
23- 97 through 23- 104 8/ 28/ 2023
20 2022/2023 SAN DIEGO COUNTY GRAND JURY REPORT ( FILED JUNE 7, 2023)

Exhibit B

DRAFT LETTER AND RESPONSES FROM THE CITY OF NATIONAL CITY

Honorable Michael T. Smyth
Presiding Judge
San Diego County Superior Court
1100 Union Street
San Diego, CA 92101

RE: City of National City Response to San Diego County Grand Jury Report: “Governance of San Diego Bay and its Tidal Lands and Regions”

Thank you for the opportunity to respond to the Grand Jury report. National City has struggled historically with the Unified Port of San Diego in regard to the equitable distribution of resources. National City , a historically disadvantaged community, has been disproportionately impacted by Navy and maritime operations. These uses have had significant environmental impacts on local residents and communities .

National City residents have had limited access to the San Diego Bay, not only to the natural environment and recreational facilities, but also to economic access and to a fair share of revenue generated by industries.

In contrast, in more affluent communities the maritime uses have been pushed out to make room for hotel, commercial and recreational activities and the public has significant access to the Bay. These activities have less environmental impact on their su rrounding communities and generate significant resources to those communities. Although the report acknowledges some examples of these concerns by referencing “Balanced Interests,” and the Dole Fruit short-haul trucking and the Mitsubishi Cement Factory examples, it focuses on governance issues which are not the primary issues.

We believe that the current Board of Port Commissioners and National City’s Port Commissioner have made a good effort towards starting to correct this long standing issue of inequity but there is still a lot of work to be done. The real challenge is how to continue to invest in National City while protecting the environment, reducing community impacts, ensuring access to the bay and recreation and social events that are meaningful to National City residents, and generating revenues to National City economy.

The National City Balanced Plan and the $1.1 billion hotel and convention center currently under construction in Chula Vista is an example of what we are talking about. We embrace the process of planning for Port investments and uses, activities, and operations that promote the access, health, and social wellbeing of community members and cleaner industries that yield sustainable economic benefit to National City by creating revenue for the City, and generating jobs and business opportunity for its residents.

Please see the responses from the City of National City to the finding and recommendations of the Report included with this letter as Attachment “A.”

Sincerely,

Ron Morrison
Mayor

Exhibit B
Attachment A:

Pursuant to California Penal Code sections 933 and 933.05, the following specific responses are submitted to you regarding the 2022-2023 Grand Jury Findings and Recommendations pertaining to Governance of San Diego Bay and Its Tidal Lands and Regions.

FINDINGS

Finding 01: Port Commissioners are only required to represent the perspectives, not the interests of the Port City appointing them to the Board of Port Commissioners.

Response: The City of National City agrees with this finding, However although not required to represent the interest of their Community, a successful Commissioner finds ways to both represent the perspective s and the interest of the City they represent and the Port as a whole.

Finding 02: The Port District acts as an independent special district without direct oversight from local city or county governments.

Response: National City agrees with this finding.

Finding 03: Because the interests of residents of Port Cities and the County of San Diego are subject to the interpretations of the unelected Board of Port Commissioners, their interests may not be heard, prioritized or represented accurately.

Response: National City agrees with this finding.

Finding 04: Briefings by Port Commissioners to Port City Councils in noticed public meetings regarding issues affecting their jurisdictions, will increase the level of public participation and knowledge regarding Port District activities, Port Master Plans, Master Plan Updates, Port Master Plan amendments or additions.

Response: National City agrees with this finding.

Finding 05: Currently, the Board of Port Commissioners does not have term limits. Considering term limits would foster democratic principles by providing more opportunities for diverse and talented individuals to serve, prevent the accumulation of influence, and uphold the public trust by keeping the Board representative responsive to its community.

Response: National City disagrees partially with the finding. There is no factual data that indicates term limits would prevent the accumulation of influence , and that term limits uphold the public trust by keeping the Board representative responsive to its community.

Exhibit B
Finding 06: With three of seven port commissioners appointed to the Board of Port Commissioners by the City of S an Diego, the potential exists for the City of San Diego to exert dominance over the priorities, resources and decisions of the Port District.

Response: National City agrees with this finding,

Finding 07: The Port District i s incentivized to maximize revenue to fund its operations, a goal that may create conflicts of interest in the priorities, allocation of resources and other decisions made by the Port Commission.

Response: National City agrees with this finding. However, active participation by the member Cities have resulted in a more “balanced” approach to the overall goals of the Port District.

Finding 08: Success in the development of the Chula Vista Hotel and Convention Center has been obtained because of a close collaboration and alignment of interests between the Port District and the City of Chula Vista.

Response: National City agrees with this finding.

Finding 09: The Port Commissioners decision to move short-haul truck staging for local deliveries of Dole Fruit products relocated a source of pollution from the Barrio Logan community to communities in National City

Response: National City agrees with this finding.

Finding 10: The controversy surrounding the Mitsubishi Cement Corporation Project's potential health effects on the Barrio Logan neighborhood and other nearby residents damaged the Port District's community relations with these communities and contributed to the decision to discontinue the project.

Response: National City agrees with this finding.

Finding 11: Oversight of the Mitsubishi Cement Corporation project by the City of San Diego or San Diego County governments might have given greater priority to the health concerns of community members and resulted in a more equitable balance between economic and health concerns earlier in the project's evaluation process.

Response: National City disagrees partially with the finding. We don’t believe the County of San Diego would have any jurisdiction over this item.

Finding 12: The Port’s decision to approve the Cottages at the Cays development proposal could negatively impact access to San Diego Bay and approving the plan favors those willing or able to pay costly hotel rates typical of the Coronado area.

Exhibit B
Response: National City agrees that what was approved could impact public access, and the Port should always work to ensure that access for all communities is maintained when considering uses that potentially reduce access to the Bay.

Finding 13: Given a preference for informal channels of communication by Port City councils and mayors with their appointed Port District representatives, neither Port Commissioners nor Port City Councils maintain completely open and transparent relationships allowing for public involvement or awareness of Port District activities.

Response: National City strongly disagrees with this finding. Decisions on Port activities are made at duly advertised public meetings of the Port Board of Commissioners and cities have the opportunity to provide feedback on their actions by submitting letters to the Board, attending the Board meeting or providing public comments to their Port Commissioner at public meetings of the City Council.

Likewise, all decisions related to the Port by National City are made at public ly noticed City Council meetings attended by the public.

Finding 14: In its current form, the Port Master Plan and Master Plan Update documents published by the Port District are overly complex, difficult to understand and too broad in scope to foster meaningful comprehension by Port City residents, elected municipal or county· officials.

Response: National City agrees with this finding.

Finding 15: Ratification of Port Master Plans, Master Plan Updates or Master Plan Amendments would allow residents of Port City Planning districts and San Diego County to acknowledge and confirm their understanding of Port District development plans and projects within their municipal and county boundaries and provide reliable documents for communities to plan for the future.

Response: National City disagrees partially with this finding. We don’t agree that the County’s involvement will help in the Port Master Plan review process. This item should be studied in greater detail if it were to move forward.

RECOMMENDATIONS

23-90: Enact ordinance or policies placing a two -term limit on the number of terms that a Port Commissioner can serve.

Response: National City disagrees with the concept of term limits on its Port Commissioner.

The City has recognized the benefit of term limits and has adopted term limits for our elected officials. We believe that the City should determine if they want term limits for their Commissioner and what those limits should be . Unlike elected officials that are hard to remove from office, Port Commissioners can be removed by City Council action therefore the need for term limits is not as imperative.

Exhibit B
23-91: Institute ordinances or formal policies requiring the appointed Commissioners from each city be required to give at a minimum, quarterly updates to the City Councils at officially scheduled city council meetings open to the public.

Response: The recommendation is not warranted. We agree with the necessity of having Port Commissioners keeping the public and City Council informed of what is happening at the Port. We don’t think an ordinance or a formal policy is needed to ensure that this is happening. As a matter of practice our Port Commissioner attends the Council meetings on a more frequent (at least monthly) basis to update the Mayor, City Council and public. 23-92: Institute ordinances of formal policies that require ratification of the Port Master Plans, proposed Port Master Plan Updates or amendments to the Port Master Plan for Port District planning districts within each city’s boundaries.

Response: While National City agrees with the concept , this recommendation requires further analysis on how a ratification process would work and how would the planning process work if ratification was not forth coming.
23-93: In consultation with San Diego County Board of Supervisors, explore and implement an alternate form of governance for the Port District allowing for participation in, and oversight of Port District activities and decision by the San Diego County Board of Supervisors and the elected city councils of the five Port Cities.

Response: National City disagrees with this concept. The Port and its five member Cities work well together. In our opinion, if the Port District brought in another agency with no direct interest in the Port matters , it would only complicate the governance process and reduce the Port’s overall effectiveness.