Agenda packet — Ontario City Council, February 21, 2023 (part 1 of 7)

CITY OF ONTARIO
Regular City Council/Housing Authority
Meeting
FEBRUARY 21, 2023
City Hall
303 East B Street, Ontario, CA 91764

MAYOR PAUL S. LEON • MAYOR PRO TEM DEBRA DORST-PORADA
COUNCIL MEMBERS ALAN D. WAPNER, JIM W. BOWMAN AND RUBEN VALENCIA CITY CLERK SHEILA MAUTZ • TREASURER JAMES R. MILHISER
CITY MANAGER SCOTT OCHOA • CITY ATTORNEY RUBEN DURAN

WELCOME TO A MEETING OF THE ONTARIO CITY COUNCIL

All documents for public review are on ﬁle with the Records Management/City Clerk's Department located at 303 East B Street, Ontario, CA 91764.

Anyone wishing to speak in person during public comment or on a particular item will be required to ﬁll out a blue slip. Blue slips must be turned in prior to public comment beginning or before an agenda item is taken up. The Clerk will not accept blue slips after that time. To comment by email, submit your comments no later than 4:00 p.m. on the day of the meeting by emailing your name, agenda item you are commenting on and your comments to
[email protected].

All
comments received by the deadline will be forwarded to the City Council for consideration before action is taken on the matter and will be entered into the record.

Comments will be limited to 3 minutes. Speakers will be alerted when they have 1 minute remaining and when their time is up. Speakers are then to return to their seats and no further comments will be permitted.

In accordance with State Law, remarks during public comment are to be limited to subjects within Council's jurisdiction. Remarks on other agenda items will be limited to those items.

Remarks from those seated or standing in the back of the chamber will not permitted. All those wishing to speak including Council and Staff need to be recognized by the Chair before speaking.

CITY OF ONTARIO Regular City Council/Housing Authority Meeting CITY HALL 303 EAST B STREET, ONTARIO CA 91764 • www.OntarioCA.gov 1

ACCOMODATIONS

If you need special assistance or accommodations to participate in this meeting, please contact the City Clerk's oﬃce at 909-395-2009. Notiﬁcation of 48 hours prior to the meeting will help the City make reasonable arrangements. Equipment for the hearing impaired is available in the Records Management Office.

ORDER OF BUSINESS

The regular City Council and Housing Authority meeting begins with Public Comment at 6:30 p.m. immediately followed by the Regular Meeting and Public Hearings. No agenda item will be introduced for consideration after 10:00 p.m. except by majority vote of the City Council.

CLOSED SESSION PUBLIC COMMENT
The Closed Session Public Comment portion of the Council/Housing Authority meeting is limited to a maximum of 3 minutes for each speaker and comments will be limited to matters appearing on the Closed Session. Additional opportunities for further Public Comment will be given during and at the end of the meeting.

CLOSED SESSION
GC 54956.8, CONFERENCE WITH REAL PROPERTY NEGOTIATORS Property: APN: 2102-04-17; City/Authority negotiator: Scott Ochoa or his designee; Negotiating parties: San Juan Owners LLC; Under negotiation: Price and terms of payment.

GC 54956.8, CONFERENCE WITH REAL PROPERTY NEGOTIATORS Property: APN: 1048-56-607; City/Authority negotiator: Scott Ochoa or his designee; Negotiating parties: Overland Direct LLC; Wascher INC; Under negotiation: Price and terms of payment.

PLEDGE OF ALLEGIANCE
Mayor pro Tem Dorst-Porada

INVOCATION
Pastor (Dr.) Francesca Fajinmi Dios International Missionary Church

REPORT ON CLOSED SESSION
City Attorney
PUBLIC COMMENTS 6:30 P.M.

CITY OF ONTARIO Regular City Council/Housing Authority Meeting CITY HALL 303 EAST B STREET, ONTARIO CA 91764 • www.OntarioCA.gov 2

1. APPROVAL OF MINUTES

ATTACHMENT:

20230117 Special Minutes (Not Official Until Approved)

ATTACHMENT:

20230117 Minutes (Not Official Until Approved)

ATTACHMENT:

20230119 Special Minutes (Not Official Until Approved)
The Public Comment portion of the Council/Housing Authority meeting is limited to 30 minutes with each speaker given a maximum of 3 minutes. An opportunity for further Public Comment may be given at the end of the meeting. Under provisions of the Brown Act, Council is prohibited from taking action on oral requests.

To comment by email, submit your comments by email no later than 4:00 p.m. on the day of the meeting by emailing your name, agenda item you are commenting on and your comment to [email protected]
. All Comments received by the deadline will be forwarded to the City Council for consideration before action is taken on the matter and entered into the record. As previously noted -- if you wish to address the Council, fill out one of the blue slips at the rear of the chambers and give it to the City Clerk.

AGENDA REVIEW/ANNOUNCEMENTS

The City Manager will go over all updated materials and correspondence received after the Agenda was distributed to ensure Council Members have received them. He will also make any necessary recommendations regarding Agenda modiﬁcations or announcements regarding Agenda items to be considered.

CONSENT CALENDAR

All matters listed under CONSENT CALENDAR will be enacted by one motion in the form listed below – there will be no separate discussion on these items prior to the time Council votes on them, unless a member of the Council requests a speciﬁc item be removed from the Consent Calendar for a separate vote.

Each member of the public wishing to address the City Council on items listed on the Consent Calendar will be given a total of 3 minutes.

Minutes for the special meetings of the City Council and Housing Authority of January 17, 2023, the regular meetings of the City Council and Housing Authority of January 17, 2023, the special meetings of the City Council and Housing Authority of January 19, 2023, and approving same as on file in the Records Management Department.

CITY OF ONTARIO Regular City Council/Housing Authority Meeting CITY HALL 303 EAST B STREET, ONTARIO CA 91764 • www.OntarioCA.gov 3

2. BILLS & PAYROLL

3. AN AMENDMENT TO THE CONSULTING SERVICES AGREEMENT FOR THE COMPUTER-AIDED

DISPATCH (CAD) REPLACEMENT PROJECT

4. A CONSTRUCTION CONTRACT AND TWO AMENDMENTS FOR AUTOMATED WATER METER

READING WITH ADVANCED METERING INFRASTRUCTURE TECHNOLOGY

ATTACHMENT:

Exhibit A - AMI Attachment.pdf

5. A RESOLUTION APPROVING AN IMPROVEMENT AGREEMENT, IMPROVEMENT SECURITY AND FINAL PARCEL MAP NO. 20339, LOCATED AT THE SOUTHWEST CORNER OF PALM

AVENUE AND TRANSIT STREET
Bills January 20, 2023 through February 9, 2023, and Payroll January 15, 2023 through January 28, 2023, when audited by the Finance Committee.

That the City Council authorize the City Manager to execute an Amendment to the current Agreement (on ﬁle with the Records Management Department) with National Public Safety Group, LLC., of Aberdeen, North Carolina, for consulting services for the selection, procurement, and project management for the computer-aided dispatch (CAD) replacement project for a total not-to-exceed amount of $377,219.

That the City Council take the following actions:

A
.

Approve the plans and speciﬁcations and award Contract No. UT 1053 (on ﬁle in the Records Management Department) to LEED Electric Inc. of Santa Fe Springs, California, for the Automated Water Meter Reading with Advance Metering Infrastructure (AMI) Technology (Phase 1) Project, in the amount of $1,146,700 plus a 15% contingency of $172,005, for a total not-to-exceed amount of $1,318,705, a term of 240 calendar days after issuance of notice to proceed, and authorize the City Manager or designee to execute said contract and ﬁle a notice of completion at the conclusion of all construction activities related to the project.

B
.

Approve and authorize the City Manager, or designee to execute Amendment No. 9 to the Professional Services Agreement (on ﬁle in the Records Management Department) with Wallace and Associates Consulting LLC. of Santa Ana, California, for a total not-to- exceed amount of $220,560 for construction management and inspection services and a term from February 21, 2023, to October 1, 2024.

C
.

Approve and authorize the City Manager, or designee to execute Amendment No. 1 to the Professional Services Agreement (on ﬁle with the Records Management Department) with Hazen and Sawyer Co. of Irvine, California, for a total not-to-exceed amount of $137,500 for construction engineering services and a term from February 21, 2023, to October 1, 2024.

That the City Council adopt a Resolution approving an Improvement Agreement, Improvement Security and Final Parcel Map No. 20339, located at the southwest corner of Palm Avenue and Transit Street.

CITY OF ONTARIO Regular City Council/Housing Authority Meeting CITY HALL 303 EAST B STREET, ONTARIO CA 91764 • www.OntarioCA.gov 4

ATTACHMENT:

Parcel Map 20339^01^Exh^A

ATTACHMENT:

20230221 Parcel Map 20339^2 RESO^RM

6. DOWNTOWN ONTARIO IMPROVEMENT ASSOCIATION ANNUAL REPORT FOR FISCAL YEAR 22-23

ATTACHMENT:

20230221 Downtown Ontario CBD FY22-23^01 RESO^RM

ATTACHMENT:

20230221 DOIA ANNUAL REPORT 2022-2023^02 EXH A

7. AN AMENDMENT TO ON-CALL DESIGN SERVICES AGREEMENT FOR ENGINEERING GRANT

SUPPORT SERVICES

8. AN AMENDMENT TO DESIGN SERVICES AGREEMENT WITH HMC ARCHITECTS FOR ON-CALL

ARCHITECTURAL, SPACE PLANNING AND ENGINEERING SERVICES FOR THE CITY HALL

ANNEX PROJECT

9. A RESOLUTION OF INTENT TO VACATE FERN AVENUE FROM TRANSIT STREET TO EMPORIA STREET

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ONTARIO, CALIFORNIA,

APPROVING AN IMPROVEMENT AGREEMENT, IMPROVEMENT SECURITY AND FINAL PARCEL MAP NO. 20339 LOCATED AT THE SOUTHWEST CORNER OF PALM AVENUE AND TRANSIT STREET.

That the City Council adopt a Resolution approving the Downtown Ontario Improvement Association (“DOIA”) Annual Report for FY 2202-23.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ONTARIO, CALIFORNIA,

APPROVING THE ANNUAL REPORT SUBMITTED BY THE DOWNTOWN ONTARIO

IMPROVEMENT ASSOCIATION FOR THE DOWNTOWN ONTARIO COMMUNITY BENEFIT DISTRICT FOR FY 2022-23.

That the City Council authorize the City Manager, or designee to execute Amendment No. 15 to the On-Call Design Services Agreement (on ﬁle in the Records Management Department) with Infrastructure Engineering Co. (IEC) of Irvine, California, for a total not-to-exceed amount of $100,000 for grant support services and a term from May 7, 2019, to May 6, 2024.

That the City Council authorize the City Manager or his designee to execute Amendment No. 2 to the Design Services Agreement (on ﬁle in the Records Management Department) with HMC Architects of Ontario, California, to provide On-call Architectural, Space Planning and Engineering Services for the City Hall Annex Project in a total not-to-exceed amount of $3,978,123.

That the City Council adopt a Resolution declaring the intent to vacate Fern Avenue from Transit Street to Emporia Street and set the date, time and place for the public hearing.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ONTARIO, CALIFORNIA,

PERTAINING TO THE VACATION OF FERN AVENUE FROM TRANSIT STREET TO CITY OF ONTARIO Regular City Council/Housing Authority Meeting CITY HALL 303 EAST B STREET, ONTARIO CA 91764 • www.OntarioCA.gov 5

ATTACHMENT:

NOI to Vacate Fern^01^Exh A

ATTACHMENT:

20230221 NOI to Vacate Fern^02 RESO^RM

ATTACHMENT:

NOI to Vacate Fern^03^Exh^A and B

10. PRE-AUTHORIZED LIST OF VENDORS TO PROVIDE RENTAL EQUIPMENT AND

ENTERTAINMENT SERVICES FOR SPECIAL EVENTS

11. PRE-AUTHORIZED LIST OF VENDORS TO PROVIDE TRANSLATION AND COPY EDITING

12. SAN BERNARDINO COUNTY FLOOD CONTROL DISTRICT AGREEMENT AUTHORIZING CITY

OF ONTARIO TO ENFORCE TRESPASSING AND PARKING VIOLATIONS AT DISTRICT

PROPERTY WITHIN THE CITY

13. ADOPTION OF AN ORDINANCE AMENDING THE ONTARIO MUNICIPAL CODE RELATING TO

PURCHASING AUTHORITY OF THE CITY MANAGER FOR PUBLIC PROJECTS

ATTACHMENT:

Increasing City Manager Spending Authority for Public Projects ORD^RM

EMPORIA STREET AND TO SET THE DATE, TIME AND PLACE FOR A PUBLIC HEARING.

That the City Council approve the attached list of pre-authorized vendors to provide rental equipment and entertainment services for the Community Life & Culture Agency.

That the City Council approve the attached list of pre-authorized vendors to provide translation and copy-editing services for the Community Life & Culture Agency.

That the City Council approve San Bernardino County's Flood Control District Agreement which authorizes law enforcement oﬃcers and code enforcement oﬃcers of the City of Ontario to enforce trespassing and parking violations on Flood Control District property within Ontario's city limits.

That the City Council adopt
an

Ordinance,
ﬁrst introduced on February 7, 2023, to amend the
Ontario Municipal Code to increase the City Manager’s spending authority for Public Projects up to a maximum of $150,000.

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ONTARIO, CALIFORNIA, AMENDING SECTION 2-6.18(H) OF CHAPTER 6 OF TITLE 2 OF THE ONTARIO

MUNICIPAL CODE RELATING TO PURCHASING AUTHORITY OF THE CITY MANAGER FOR PUBLIC PROJECTS.

PUBLIC HEARINGS

Pursuant to Government Code Section 65009, if you challenge the City’s zoning, planning or any other decision in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City Council at, or prior to the public hearing. Aﬃdavits of posting compliance, for all items below, CITY OF ONTARIO Regular City Council/Housing Authority Meeting CITY HALL 303 EAST B STREET, ONTARIO CA 91764 • www.OntarioCA.gov 6

14. A PUBLIC HEARING TO CONSIDER A CONDITIONAL USE PERMIT, FILE NO. PCUP22-006, TO ESTABLISH AND OPERATE A 118-ROOM LIMITED-SERVICE HOTEL ON PROPERTY LOCATED AT THE SOUTHEAST CORNER OF CORONA AVENUE AND G STREET (APN: 0110-241-33)

ATTACHMENT:

File No. PCUP22-006 Everhome CC^02 AR ATTACH A - MARKET STUDY

ATTACHMENT:

File No. PCUP22-006 Everhome CC^03 AR ATTACH B - Opposition Letter #2

ATTACHMENT:

File No. PCUP22-006 Everhome CC^04 AR ATTACH C - PC Backup

ATTACHMENT:

20230221 File No.PCUP22-006 Everhome CC^05^RESO^RM

ATTACHMENT:

File No. PCUP22-006 Everhome CC^06 RESO ATTACH A - COA

ATTACHMENT:

CBRE Consistency Memo^07

15. A PURCHASE AND SALE AGREEMENT FOR THE ACQUISITION OF REAL PROPERTY LOCATED

SOUTH OF RIVERSIDE DRIVE BETWEEN VINEYARD AVENUE AND ONTARIO AVENUE are on file with the Records Management Department.

That the City Council consider and adopt a Resolution approving File No. PCUP22-006, granting the right to establish and operate a 118-room limited-service hotel (Everhome Suites) on a

2.11-acre portion of the 3.37-acre Project site located at the southeast corner of Corona Avenue and G Street.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ONTARIO, CALIFORNIA, APPROVING FILE NO. PCUP22-006, A CONDITIONAL USE PERMIT TO ESTABLISH AND OPERATE A 118-ROOM, LIMITED-SERVICE HOTEL (EVERHOME SUITES) ON A

2.11-ACRE PORTION OF A 3.37-ACRE PROJECT SITE LOCATED AT THE SOUTHEAST

CORNER OF CORONA AVENUE AND G STREET, WITHIN THE CCS (CONVENTION

CENTER SUPPORT COMMERCIAL) ZONING DISTRICT, AND MAKING FINDINGS IN SUPPORT THEREOF - APN: 0110-241-33.

ADMINISTRATIVE REPORTS/DISCUSSION/ACTION
That City Council take the following actions:

A
.

Approve a Purchase and Sale Agreement and Joint Escrow Instructions; and B
.

Authorize the City Manager or his designee to any action required to execute any and all documents, amendments, and instruments necessary to implement the Agreement.

STAFF MATTERS

City Manager Ochoa
CITY OF ONTARIO Regular City Council/Housing Authority Meeting CITY HALL 303 EAST B STREET, ONTARIO CA 91764 • www.OntarioCA.gov 7

COUNCIL MATTERS

Mayor Leon
Mayor pro Tem Dorst-Porada
Council Member Wapner
Council Member Bowman
Council Member Valencia

A RESOLUTION TO CENSURE A COUNCIL MEMBER
That the City Council discuss and provide direction to staff regarding the adoption of a Resolution censuring Council Member Ruben Valencia for unauthorized representation of the City's interests and/or positions.

ADJOURNMENT
CITY OF ONTARIO Regular City Council/Housing Authority Meeting CITY HALL 303 EAST B STREET, ONTARIO CA 91764 • www.OntarioCA.gov 8

ONTARIO CITY COUNCIL/

ONTARIO HOUSING AUTHORITY

MINUTES
JANUARY 17, 2023
(Not Official Until Approved)
(Not Official Until Approved)

JOINT MEETINGS
The Special meetings of the Ontario City Council and Housing Authority were held on Tuesday, January 17, 2023 at Anthony Munoz Community Center, 1240 W. 4 th Street, Ontario, California.

CALL TO ORDER
Mayor Leon called the Ontario City Council and Ontario Housing Authority special meetings to order at 10:06 a.m.

ROLL CALL
PRESENT: Mayor/Chairman Paul S. Leon
Mayor pro Tem/Vice Chair: Debra Dorst-Porada
Council/Authority Members: Alan D. Wapner, Jim W. Bowman, and Ruben Valencia
ABSENT: Council/Authority Members: None.

Also present were City Manager / Executive Director Scott Ochoa and City Attorney/Legal Counsel Ruben Duran.

PLEDGE OF ALLEGIANCE
The Pledge of Allegiance was led by Mayor pro Tem Dorst-Porada.

Page 2 of 2 ends

 GC GC 54957.6, LABOR NEGOTIATIONS: City Negotiator: City Manager or his designees; Bargaining Units: AFSCME Local 3061, Teamsters Local 1932, Association of Management Employees, Confidential Group, Part-time Employees, Department Heads, Executives, Ontario Professional Firefighters Association Local 1430; Ontario Fire Management Group, Ontario Police Officers Association, and the Ontario Police Management Group.

Mayor Leon recessed the meeting at 10:08 a.m. and reconvened at 11:44 a.m.

REPORT ON CLOSED SESSION
City Attorney Duran announced there was no reportable action.

ADJOURNMENT
Mayor Leon adjourned the special meetings of the Joint Agencies at 11:44 a.m. and announced the next regular meeting to be held on Tuesday, January 17, 2023.

Respectfully submitted,
____________________________________

SHEILA MAUTZ, CITY CLERK/SECRETARY
APPROVED:
_____________________________________
PAUL S. LEON, MAYOR/CHAIRMAN
10 ONTARIO CITY COUNCIL/

ONTARIO HOUSING AUTHORITY

MINUTES
JANUARY 17, 2023
(Not Official Until Approved)
(Not Official Until Approved)

JOINT MEETINGS
The regular meetings of the Ontario City Council and Housing Authority were held on Tuesday, January 17, 2023 at Ontario City Hall, 303 E. B Street Ontario, California.

CALL TO ORDER
Mayor Leon called the joint meetings to order at 6:00 p.m.

Also present were City Manager / Executive Director Scott Ochoa, City Attorney/Legal Counsel Ruben Duran, and City Clerk / Secretary Sheila Mautz.

CLOSED SESSION PUBLIC COMMENT
Mayor Leon inquired whether persons were present who wished to speak to the Closed Sessions items. Hearing no one, City Attorney Duran announced the matters for discussion as listed on the agenda, and the City Council recessed to Closed Session at 6:01 p.m. for discussion of the following:
 GC 54956.9(d)(4), CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED LITIGATION One (1) Case
 GC 54956.9(d)(1), CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION Chino Basin Municipal Water District v. City of Chino et al., San Bernardino Superior Court Case No. RCVRS51010
 GC 54956.9(d)(1), CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION City of Ontario v. Inland Empire Utilities Agency, San Bernardino Superior Court Case No. CIVSB 2211925
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Regular Meeting Minutes – January 17, 2023

Page 2 of 9 ends

OPEN MEETING CALLED TO ORDER
Mayor Leon reconvened the meetings at 6:34 p.m. for the regular session.

PLEDGE OF ALLEGIANCE
The Pledge of Allegiance was led by Council Member Valencia.

INVOCATION
The invocation was led by Senior Pastor Gresford Thomas, Ontario Seventh-Day Adventist Church.

REPORT ON CLOSED SESSION
City Attorney Duran announced there was no reportable action.

PUBLIC COMMENTS
Karen Haughey, representative of San Bernardino County Board Supervisor Hagman’s Office announced upcoming events.

Al Boling, with Life Stream Blood Bank announced mobile drives.

Kristine Scott, with SoCal Gas announced upcoming gas price increase and offered tips for cutting on gas prices.

Peggy Hazlett, President of the Greater Ontario Business Council announced upcoming events.

Krystle Joseph, with Big Brothers Big Sisters, talked about the importance of the program.

Stephanie, spoke on charging time limitations for EV stations.

Alfie Sanchez, with Majestic Cycling announced an upcoming bike race.

Karen May, invited residents to the Ontario International Airport Authority meeting.

Randy Bekendam, with Amy’s Farm, announced upcoming fieldtrips.

AGENDA REVIEW/ANNOUNCEMENTS
City Manager Ochoa announced updated materials to the Exhibits of the resolution being considered under Agenda Item No. 6. The update reflects payments received from property owners up to 8:30am on Tuesday, January 17, 2023. The updated materials reflect a revised and reduced amount for assessments now totaling $72,323.41 related to 79 parcels, which means that $9,044.60 for 29 parcels was collected since the public agenda was prepared.
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Regular Meeting Minutes – January 17, 2023

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CONSENT CALENDAR
MOTION: Moved by Mayor pro Tem Dorst-Porada, seconded by Council Member Valencia and carried by unanimous vote 5-0, to approve the Consent Calendar as presented, with the exception of Item Nos. 11 and 13.

1. APPROVAL OF MINUTES
Minutes for the regular meetings of the City Council and Housing Authority of December 6, 2022, special meetings of the City Council and Housing Authority of December 9, 2022, and regular meetings of the City Council and Housing Authority of December 20, 2022, and approving same as on file in the Records Management Department.

2. BILLS & PAYROLL
Bills from December 2, 2022 through December 27, 2022 in the amount of $32,607,194.55 and Payroll from November 20, 2022 through December 17, 2022 in the amount of $9,813,943.79, when audited by the Finance Department.

3. A DESIGN SERVICES AGREEMENT FOR A TRAFFIC SIGNAL SYSTEM (TR2304) AT SAN ANTONIO AVENUE AND STATE STREET
The City Council approved a Design Services Agreement with JMD of City of Industry, California, to provide engineering design services for a Traffic Signal System at San Antonio Avenue and State Street in the amount of $197,006 plus a 10% contingency of $19,700, for a total authorized amount expenditure of $216,706; and authorized the City Manager, or his designee, to execute said Agreement and future amendments within the authorization limits.

4. A LICENSE AGREEMENT FOR MICROSOFT 365 SUBSCRIPTION WITH SOFTWAREONE INC.

The City Council authorized the City Manager to execute a three-year License Agreement with SoftwareONE Incorporated, of Milwaukee, Wisconsin, for a Citywide Microsoft 365 Subscription, in an amount not-to-exceed $1,608,651.

5. CONSTRUCTION CONTRACTS FOR ON-CALL FIBER CONDUIT AND CABLE

INSTALLATION FOR THE EXPANSION OF THE CITY'S BROADBAND FIBER

AND WIRELESS NETWORK
The City Council took the following actions:

A. Approved a Construction Contract No. BB-2022-001, On-call Fiber Conduit Installation Services, to HP Communications, Inc. of Corona, California, to 13 Ontario City Council/Ontario Housing
Regular Meeting Minutes – January 17, 2023

Page 4 of 9 ends

provide fiber optic conduit installation services in the amount not to exceed $8,000,000; and
B. Approved a Construction Contract No. BB-2022-002, On-call Fiber Cable Installation Services, to SECC Corporation of Chino, California, to provide fiber optic cable installation services in the amount not to exceed $3,000,000; and
C. Authorized the City Manager or designee to execute said contracts for three-year terms with the option to extend the respective contracts for up to two additional one-year periods at the City's discretion, and to execute all documents required for the completion of the project, including, but not limited to purchase orders, contracts, agreements, easements, reduction of retention accounts, and the filing of a Notice of Completion at the conclusion of all related work.

6. A RESOLUTION FOR PLACEMENT OF SPECIAL ASSESSMENTS ON THE SAN

BERNARDINO COUNTY TAX ROLLS
The City Council adopted a Resolution for recovery of fees and costs incurred in abating property and dangerous building violations, as well as administrative citations and civil penalties associated with property maintenance violations and placing assessments on the San Bernardino County Tax Rolls.

RESOLUTION NO. 2023-001 A RESOLUTION OF THE CITY COUNCIL OF THE

CITY OF ONTARIO, CALIFORNIA, ADOPTING A REPORT REQUESTING THE

PLACEMENT OF SPECIAL ASSESSMENTS ON PROPERTY TAX BILLS FOR

CIVIL PENALTIES OR RECOVERY OF COSTS INCURRED FOR ABATEMENT OF VIOLATIONS OF CITY CODES AND ORDINANCES.

7. A DESIGN SERVICES AGREEMENT FOR THE SULTANA AVENUE STORM

DRAIN AND STREET IMPROVEMENTS PROJECT
The City Council approved a Design Services Agreement with Infrastructure Engineering Corporation, an Ardurra Company, of El Segundo, California, to provide engineering design services for the Sultana Avenue Storm Drain and Street Improvements Project in the amount of $812,605; and authorize the City Manager, or his designee, to execute said Agreement and future amendments within the authorization limits.

8. A THIRD AMENDMENT TO THE DISPOSITION AND DEVELOPMENT

AGREEMENT WITH ONTARIO MILLS LIMITED PARTNERSHIP TO ALLOW FOR

THE CONTINUED PROVISION OF POLICE AND PUBLIC SAFETY SERVICES AT

THE ONTARIO MILLS MALL
A. The City Council authorized the City Manager to execute a third amendment extending for three years, certain terms of the Disposition and Development Agreement ("DDA") with Ontario Mills Limited Partnership, allowing for the 14 Ontario City Council/Ontario Housing
Regular Meeting Minutes – January 17, 2023

Page 5 of 9 ends

City's continued provision of police and public safety services through December 31, 2025; and
B. Consistent with certain terms and conditions of the DDA, authorized the billing of fees in the amount of $78,750 for each six-month period that such police and public safety services are rendered at the Ontario Mills Mall

9. AN AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT WITH TRANSTECH ENGINEERS, INC. FOR GRANT MANAGEMENT SERVICES The City Council authorized the City Manager or his designee to execute the Amendment to the Professional Services Agreement with Transtech Engineers, Inc., of Chino, California, for two grant applications from the Environmental Protection Agency (EPA) in an amount not to exceed $13,300.

10. AN AMENDMENT TO THE PROFESSONAL SERVICES AGREEMENT FOR

ENGINEERING DESIGN SERVICES FOR NATURAL GAS COMPRESSOR

REPLACEMENT AND UPGRADE PROJECT
The City Council authorized the City Manager or his designee to execute Amendment No. 4 to the Professional Services Agreement with STV Energy Services, Inc. of Douglassville, Pennsylvania, for engineering design services for the City’s Compressed Natural Gas (CNG) Compressor Replacement and Upgrade Project, adding $16,070 for a revised total contract authorization of $204,390 and a term from December 22, 2022 to April 17, 2023.

12. A GOODS & SERVICES AGREEMENT FOR CITY HALL OFFICE

IMPROVEMENTS
A. The City Council authorized the City Manager or his designee to execute a Goods and Services Agreement with Kirksey & Co. of Irvine, California, for City Hall Second Floor O ce Improvements Project for Furniture, Fixtures, and Equipment (FF&E), consistent with the terms and conditions of the cooperative purchasing contract with Omnia #R191804 in the amount of $55,712; and
B. Authorized the City Manager or his designee to execute all documents required for the completion of the project including, but not limited to, contracts, agreements, assessments, easements, reduction of retention accounts, and filing a notice of completion at the conclusion of all construction related activities.

14. AN AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT FOR ON-

CALL LAND ACQUISITION AND RELOCATION SERVICES
The City Council and Ontario Housing Authority Board of Directors ("City/Authority") approved and authorized the City Manager or his designee to execute Amendment No. 4 to the Professional Services Agreement with Property Specialists, Inc. (dba CPSI) in the amount of $100,000.
15 Ontario City Council/Ontario Housing
Regular Meeting Minutes – January 17, 2023

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15. AN AMENDMENT TO A PROFESSIONAL SERVICES AGREEMENT WITH

PRIMA PARTNERS, LLC FOR STATE ADVOCACY SERVICES
The City Council authorized the City Manager or his designee to execute Amendment No. 2 to the Professional Services Agreement with Prima Partners, LLC, for State Advocacy Services, for two additional years and increase compensation by $300,000, for a new total not-to-exceed contract amount of $450,000.

16. A GOODS AND SERVICES AGREEMENT FOR EMPLOYEE UNIFORMS AND

EVENT SUPPLIES
The City Council authorized the City Manager or designee to execute a Goods and Services Agreement with J6D, Inc. of Ontario, California for employee uniforms and event supplies for the Recreation and Community Services Department, for a total not to exceed amount of $300,000 for a three-year contract period.

17. A CONSTRUCTION CONTRACT FOR THE DESTRUCTION OF WATER WELL NOS. 11, 15, 17, AND 26
The City Council approved the plans and specifications and award Contract No.

UT1617-02 to General Pump of San Dimas, California, for the destruction of Water Well Nos. 11, 15, 17, and 26, in the amount of $541,575 plus a 10% contingency of $54,158, for a total not-to-exceed amount of $595,733, a term of 120 calendar days after issuance of notice to proceed, and authorize the City Manager or designee to execute said contract and file a notice of completion at the conclusion of all construction activities related to the project.

18. AN ORDINANCE FOR A PLANNED UNIT DEVELOPMENT (FILE NO. PUD20- 001) AT 549 WEST HOLT BOULEVARD
The City Council considered and adopted an Ordinance approving a Planned Unit Development, File No. PUD20-001, establishing development standards, design guidelines, and infrastructure requirements to facilitate the development of a mixed- use project located at 549 West Holt Boulevard.

ORDINANCE NO. 3240 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ONTARIO, CALIFORNIA, APPROVING FILE NO. PUD20-001, A PLANNED

UNIT DEVELOPMENT (THE ROOSEVELT TOWER PLANNED UNIT

DEVELOPMENT) ESTABLISHING DEVELOPMENT STANDARDS, DESIGN GUIDELINES, AND INFRASTRUCTURE REQUIREMENTS FOR 0.81-ACRE OF LAND LOCATED AT 549 WEST HOLT BOULEVARD, WITHIN THE MU-1/LUA-3 (DOWNTOWN MIXED-USE/HOLT BOULEVARD DISTRICT) ZONING DISTRICT - APN: 1049-021-09.
16 Ontario City Council/Ontario Housing
Regular Meeting Minutes – January 17, 2023

Page 7 of 9 ends

ITEMS PULLED FOR DISCUSSION
Mayor pro Tem Dorst-Porada pulled Item No. 11 for a separate vote.

11. A RESOLUTION APPROVING AN IMPROVEMENT AGREEMENT,
IMPROVEMENT SECURITY AND FINAL PARCEL MAP NO. 20253, LOCATED AT

THE SOUTHEAST CORNER OF ARCHIBALD AVENUE AND GUASTI ROAD The City Council adopted a Resolution approving an Improvement Agreement, Improvement Security and Final Parcel Map No. 20253, located at the southeast corner of Archibald Avenue and Guasti Road, located within the Guasti Plaza Specific Plan area.

RESOLUTION NO. 2023-002 A RESOLUTION OF THE CITY COUNCIL OF THE

CITY OF ONTARIO, CALIFORNIA, APPROVING AN IMPROVEMENT
AGREEMENT, IMPROVEMENT SECURITY AND FINAL PARCEL MAP NO. 20253

LOCATED AT THE SOUTHEAST CORNER OF ARCHIBALD AVENUE AND GUASTI ROAD.

Mayor pro Tem Dorst-Porada pulled the item to clarify that the Development Plan must conform to the existing Specific Plan and stated she would like to see a five star hotel with the best amenities.

MOTION: Moved by Mayor pro Tem Dorst-Porada, seconded by Council Member Valencia and carried by unanimous vote 5-0, to adopt Resolution No. 2023-002.

Council Member Valencia pulled Item No. 13 for a separate vote.

13. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ONTARIO,

CALIFORNIA, TERMINATING RELATIONSHIP WITH SISTER CITY

GUAMUCHIL, MEXICO
The City Council adopted a Resolution to end Sister City relationship with Guamuchil, Mexico.

RESOLUTION NO. 2023-003 A RESOLUTION OF THE CITY COUNCIL OF THE

CITY OF ONTARIO, CALIFORNIA, TERMINATING RELATIONSHIP WITH SISTER CITY GUAMUCHIL, SINALOA, MEXICO.

Mayor Leon stated he was interested in a reciprocal Sister City relationship.

Council Member Wapner asked staff to bring back suggestions on how to improve the Sister City program.

MOTION: Moved by Council Member Wapner, seconded by Mayor Leon and carried by a vote 4-1, with Council Member Valencia opposed, to adopt Resolution No. 2023-003. 17 Ontario City Council/Ontario Housing
Regular Meeting Minutes – January 17, 2023

Page 8 of 9 ends

PUBLIC HEARINGS

19. A PUBLIC HEARING TO CONSIDER THE SECOND AMENDMENT TO THE CONSOLIDATED PLAN ANNUAL ACTION PLAN FOR THE 2021-22 PROGRAM

YEAR TO ALLOCATE FUNDS RECEIVED FROM THE AMERICAN RESCUE

PLAN (ARP) ACT HOME SUPPLEMENTAL ALLOCATION
That City Council ("City") and the Board of the Ontario Housing Authority ("Authority") took the following actions:

A. Approved the Second Amendment to the FY 2021-22 Annual Action Plan (“Substantial Amendment”); and
B. Authorized the City Manager/Executive Director or his designee to sign all documents necessary to implement the Agreements
Notice of public hearing was duly given and affidavits of compliance are on file in the Records Management Department. There were no written communications.

Mayor Leon opened the public hearing and inquired if anyone was interested in speaking to the item, hearing no speakers, he closed the public hearing and opened the item for Council discussion.

MOTION: Moved by Council Member Bowman, seconded by Mayor pro Tem Dorst-Porada and carried by unanimous vote 5-0, to approve the second amendment to the Consolidated Plan Annual Action Plan for the 2021-22 Program Year to allocate funds received by from ARP.

ADMINISTRATIVE REPORTS/DISCUSSION/ACTION

20. MODIFY THE CLASSIFICATION TITLE AND SALARY RANGE FOR THE CHIEF

DEPUTY FIRE CHIEF CLASSIFICATION, AND THE SALARY RANGE FOR THE

CLASSIFICATION OF DEPUTY POLICE CHIEF
The City Council modified and approved the new classification title for Chief Deputy Fire Chief to Chief Deputy (Fire) including modifying the established salary ranges for this classification, as well as for the classification of Deputy Police Chief to minimize disparity with salary ranges while maintaining the City’s competitiveness in attracting and retaining highly qualified individuals.

City Attorney Duran announced the modified salary ranges as $16,754 - $25,704 per month.

STAFF MATTERS
City Manager Ochoa made no comments.
18 Ontario City Council/Ontario Housing
Regular Meeting Minutes – January 17, 2023

Page 9 of 9 ends

COUNCIL MATTERS
Mayor Leon made a call for Commission applications.

Mayor pro Tem Dorst-Porada announced free community college and encouraged residents to attend Inland Empire Utilities Agency meetings.

Council Member Wapner had no comments.

Council Member Bowman had no comments.

Council Member Valencia thanked staff for their work during the rainstorm and extended his condolences to Integrated Waste employee, Mike Leon’s family.

Mayor Leon spoke on the cost of utilities.

ADJOURNMENT
Mayor Leon adjourned the meetings of the Joint Agencies at 7:30 p.m. and announced the next regular meeting on February 7, 2023.

Respectfully submitted,
____________________________________

SHEILA MAUTZ, CITY CLERK/SECRETARY
APPROVED:
_____________________________________
PAUL S. LEON, MAYOR/CHAIRMAN
19 ONTARIO CITY COUNCIL/

ONTARIO HOUSING AUTHORITY

MINUTES
JANUARY 19, 2023
(Not Official Until Approved)
(Not Official Until Approved)

JOINT MEETINGS
The Special meetings of the Ontario City Council and Housing Authority were held on Thursday, January 19, 2023 at Anthony Munoz Community Center, 1240 W. 4 th Street, Ontario, California.

CALL TO ORDER
Mayor Leon called the Ontario City Council and Ontario Housing Authority special meetings to order at 10:06 a.m.

ROLL CALL
PRESENT: Mayor/Chairman Paul S. Leon
Mayor pro Tem/Vice Chair: Debra Dorst-Porada
Council/Authority Members: Alan D. Wapner, Jim W. Bowman and Ruben Valencia
ABSENT: Council/Authority Members: None.

Also present were City Manager / Executive Director Scott Ochoa and City Attorney/Legal Counsel Ryan Guiboa.

PLEDGE OF ALLEGIANCE
The Pledge of Allegiance was led by Council Member Wapner.

CLOSED SESSION PUBLIC COMMENT
Mayor Leon inquired whether persons were present who wished to speak to the Closed Sessions items. Hearing no one, City Attorney Ryan Guiboa announced the matters for discussion as listed on the agenda, and the City Council recessed to Closed Session at 10:14 a.m. for discussion of the following:
 GC GC 54957.6, LABOR NEGOTIATIONS: City Negotiator: City Manager or his designees; Bargaining Units: AFSCME Local 3061, Teamsters Local 1932, Association of Management Employees, Confidential Group, Part-time Employees, Department Heads, Executives, Ontario Professional Firefighters Association Local 1430; Ontario 20 Ontario City Council/Ontario Housing
Special Meeting Minutes – January 19, 2023

Page 2 of 2 ends

Fire Management Group, Ontario Police Officers Association, and the Ontario Police Management Group.
 GC 54957, PUBLIC EMPLOYEE PERFORMANCE EVALUATION
Title: City Manager
Mayor Leon recessed the meeting at 10:14 a.m. and reconvened at 11:07 a.m.

REPORT ON CLOSED SESSION
Assistant City Attorney Guiboa announced there was no reportable action.

ADJOURNMENT
Mayor Leon adjourned the special meetings of the Joint Agencies at 11:07 a.m. and announced the next regular meeting to be held on Tuesday, February 7, 2023.

Respectfully submitted,
____________________________________

SHEILA MAUTZ, CITY CLERK/SECRETARY
APPROVED:
_____________________________________
PAUL S. LEON, MAYOR/CHAIRMAN
21 Department: Information Technology
Prepared By: Samantha Robles
Staff Member Presenting:

Colin Fernandes, Executive Director Information
Technology
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 3
SUBJECT:

AN AMENDMENT TO THE CONSULTING SERVICES AGREEMENT FOR THE

COMPUTER-AIDED DISPATCH (CAD) REPLACEMENT PROJECT

CITY OF ONTARIO
Agenda Report
February 21, 2023
SECTION:

CONSENT CALENDAR

RECOMMENDATION:

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Operate in a Businesslike Manner
Maintain the Current High Level of Public Safety
FISCAL IMPACT:

The Fiscal Year 2022-23 Adopted Budget includes appropriations from the Information Technology Fund for Information Technology Agency consulting services. The proposed Amendment to the Professional Services Agreement increases the authorized contract amount by $162,879 for a not-to-exceed contract amount of $377,219. Actual expenditures will be based on services rendered and based on the ﬁxed billing rates outlined in the existing Agreement.

If approved, appropriations will be added to the future years' budget consistent with the annual adoption process.

BACKGROUND & ANALYSIS:

National Public Safety Group (NPSG) is a concierge consulting ﬁrm that solely consults for public safety software projects to provide research and best practice methods in selecting, procuring, and implementing public safety software. NPSG began a partnership with the City of Ontario in 2020 for implementation services for the Public Safety Computer-Aided Dispatch (CAD) system replacement project. The system selected was best suited to the requirements of Police Dispatch, and NPSG is assisting Ontario Fire in the selection and implementation of a system that will better meet the needs of the City's Fire Suppression and Emergency Medical Services responsibilities. Staﬀ requests City Council approval for a not-to- exceed amount of $377,219.
22 Department: Utilities
Prepared By: Thomas Palmieri
Staff Member Presenting:

Scott Burton, Utilities General Manager
Reviewed By: Dennice Raygoza, Albert G
Gastelum, Michael Sigsbee
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 4
SUBJECT:

A CONSTRUCTION CONTRACT AND TWO AMENDMENTS FOR AUTOMATED

WATER METER READING WITH ADVANCED METERING INFRASTRUCTURE

TECHNOLOGY

CITY OF ONTARIO
Agenda Report
February 21, 2023
SECTION:

CONSENT CALENDAR

RECOMMENDATION:

That the City Council take the following actions:

A
.

B
.

Approve and authorize the City Manager, or designee to execute Amendment No. 9 to the Professional Services Agreement (on ﬁle in the Records Management Department) with Wallace and Associates Consulting LLC. of Santa Ana, California, for a total not-to-exceed amount of $220,560 for construction management and inspection services and a term from February 21, 2023, to October 1, 2024.

C
.

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Invest in the City's Infrastructure (Water, Streets, Sewers, Parks, Storm Drains and Public Facilities)
FISCAL IMPACT:

The recommended Contract award to LEED Electric Inc. is for $1,146,700 plus a 15% contingency of $172,005, for a total not-to-exceed amount of $1,318,705. Proposed Amendment No. 9 to Wallace and Associates Consulting LLC. increases the agreement by $220,560, 23 for a total revised agreement not-to-exceed amount of $2,034,773. Proposed Amendment No. 1 to Hazen and Sawyer Co. increases the agreement by $137,500, for a total revised agreement not-to- exceed amount of $193,493. The total cost for the recommended action is $1,676,765.

The Fiscal Year 2022-23 Adopted Capital Improvement Program includes appropriations from the Water Capital Fund in the amount of $1,050,965 for this project. If approved, additional appropriations in the amount of $625,800 from the Water Capital Fund will also be included in the next Quarterly Budget Update Report to City Council. Appropriations were not originally included in the budget to avoid over appropriation of funds. There is no impact to the General Fund.

BACKGROUND & ANALYSIS:

The City's potable water system includes approximately 40,000 water meters that are utilized by residential, commercial, and industrial consumers. The City’s existing AMI system consists of one antenna located at the Civic Center and currently captures 20,000 meters. The remaining 20,000 meters are captured during drive-by meter reading performed by Utility Operations. The meter information captured is then processed into the Customer Information & Billing System (CIS) for monthly billings to customers.

The work under this contract will include installation of two new AMI antennas and the retroﬁt of one existing antenna with AMI equipment. Once the project is complete, Customer Service Staﬀ will be able to connect remotely and have access to meter data in real time without drive-by meter reading. This real time data retrieval process will assist OMUC in the eﬀort to maintain up to date meter data, identify water waste and aid in the early detection process of potential leaks or breaks in consumers’ on-site lines.

The AMI Antennas that will be part of this infrastructure improvement are identiﬁed in the attached Exhibit “A” and include:

• T3 (Retrofitted AMI Antenna) - located at 1595 S. Dupont Ave. – Well No. 24 • T4 (New AMI Antenna) - located at 700 N. Haven Ave. – Well No. 49 • T5 (New AMI Antenna) - located at Archibald Avenue and Ontario Ranch Road

On December 16, 2022, one (1) bid was received for Bid No. 1594, Automated Water Meter Reading with AMI Technology (Phase 1) Project, OMUC Contract No. UT 1053:

Bidder
Location
Amount
LEED Electric Inc.

Santa Fe Springs, CA
$1,146,700

Support services will be required during construction of the Automated Water Meter Reading with AMI Technology (Phase 1) Project. Wallace and Associates Consulting LLC. will provide construction management and inspections services. The City ﬁrst contracted with Wallace and Associates Consulting LLC. in October of 2019 after an extensive Request for Proposal selection processes for on-call project management services. Hazen and Sawyer Co. will provide construction engineering services as they are the Engineer of Record for the Project and developed the project’s plans and specifications. Staff solicited and evaluated scopes and fee proposals from both consultants. 24 ENVIRONMENTAL REVIEW:

The project has been reviewed pursuant to the California Environmental Quality Act (CEQA) and has been determined to be categorically exempt from CEQA pursuant to Article 19, Section 15031, which states that operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of Class 1 "Existing Facilities" are exempt from the requirements of CEQA. Thus, no further CEQA analysis is required. 25 Exhibit A 26
Department: Engineering
Prepared By: Miguel Sotomayor
Staff Member Presenting:

Scott Murphy, Executive Director Community
Development
Reviewed By: Raymond Lee, Khoi Do
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 5
SUBJECT:

A RESOLUTION APPROVING AN IMPROVEMENT AGREEMENT, IMPROVEMENT SECURITY AND FINAL PARCEL MAP NO. 20339, LOCATED AT THE SOUTHWEST

CORNER OF PALM AVENUE AND TRANSIT STREET

CITY OF ONTARIO
Agenda Report
February 21, 2023
SECTION:

CONSENT CALENDAR

RECOMMENDATION:

That the City Council adopt a Resolution approving an Improvement Agreement, Improvement Security and Final Parcel Map No. 20339, located at the southwest corner of Palm Avenue and Transit Street.

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Invest in the Growth and Evolution of the City's Economy Focus Resources in Ontario's Commercial and Residential Neighborhoods Invest in the City's Infrastructure (Water, Streets, Sewers, Parks, Storm Drains and Public Facilities)
FISCAL IMPACT:

There is not a direct ﬁscal impact associated with this action. All public infrastructure improvements required for this subdivision will be constructed by the Developer at its sole cost.

BACKGROUND & ANALYSIS:

Final Parcel Map No. 20339, consisting of one numbered lot on approximately 1.4 acres of land, as shown on Exhibit A, has been submitted by the Developer, Ontario Emporia II Housing Partners, L.P., a California limited partnership. Tentative Parcel Map No. 20339 was approved by the Planning Commission on May 25, 2021.

The real property is currently owned by the Ontario Housing Authority, which intends to transfer said property to Ontario Emporia II Housing Partners, L.P. Following approval by the City Council, Final Parcel Map No. 20339 and the associated conveyance/ﬁnancing documents shall be recorded in the following order: (1) Final Parcel Map No. 20339; (2) grant deed, conveying the property to Ontario Emporia II Housing Partners, L.P.; (3) subdivision improvement agreement; and (4) any other associated financing documents.

27 Improvements will include streets, water main, ﬁber optic conduits, streetlights, parkway landscaping with irrigation, signing and striping. All landscape improvements will be consistent with current City approved drought measures.

The Developer has entered into an Improvement Agreement with the City for Final Parcel Map No. 20339 and posted adequate security to ensure construction of the required improvements. This map meets all conditions of the Subdivision Map Act and the Ontario Municipal Code and has been reviewed and approved by the City Engineer.
28 HOLT BLVD

EMPORIA STREET
FERN AVENUE.

PALM AVENUE

TRANSIT STREET
1 1

CITY OF ONTARIO
DSK
02/01/23
1"=100'
JOB NO. RELC-020
DATE:

SCALE:

SHEET OF
BY:

PROJECT: PM-2033
9 APPLICANT: RELATED COMPANIES

ENGINEERING DEPARTMENT

EXHIBIT A
29 RESOLUTION NO. ________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ONTARIO,

CALIFORNIA, APPROVING AN IMPROVEMENT AGREEMENT,
IMPROVEMENT SECURITY AND FINAL PARCEL MAP NO. 20339

LOCATED AT THE SOUTHWEST CORNER OF PALM AVENUE AND
TRANSIT STREET.

WHEREAS, Tentative Parcel Map No. 20339, submitted for approval by Ontario Emporia II Housing Partners, L.P., a California limited partnership, was approved by the Planning Commission of the City of Ontario on May 25, 2021; and WHEREAS, Tentative Parcel Map No. 20339 consists of 1 numbered lot, being a subdivision of lots 1 to 12 block 58 of the Town of Ontario, as per map recorded in book 9, page 43 of maps in the Office of the Recorder of San Bernardino County; and WHEREAS, to meet the requirements established as prerequisite to final approval of Final Parcel Map No. 20339, said developer has offered an improvement agreement, together with good and sufficient security, in conformance with the City Attorney’s approved format, for approval and execution by the City; and WHEREAS, the real property being subdivided by Final Parcel Map No. 20339 is currently owned by the Ontario Housing Authority, which intends to transfer said property to Ontario Emporia II Housing Partners, L.P.; and WHEREAS, following approval by the City Council, Final Parcel Map No. 20339 and the associated conveyance/financing documents shall be recorded only in the following order: (1) Final Parcel Map No. 20339; (2) grant deed, conveying the property to Ontario Emporia II Housing Partners, L.P.; (3) subdivision improvement agreement; and (4) any other associated financing documents.

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

SECTION 1. That said Improvement Agreement be, and the same is, approved and the City Manager is authorized to execute same on behalf of said City, and the City Clerk is authorized to attest thereto; and SECTION 2. That said Improvement Security is accepted as good and sufficient, subject to approval as to form and content thereof by the City Attorney; and SECTION 3. That Final Parcel Map No. 20339, be approved and that the City Clerk be authorized to execute the statement thereon on behalf of said City.

The City Clerk of the City of Ontario shall certify as to the adoption of this Resolution.
30 PASSED, APPROVED, AND ADOPTED this 21st day of February 2023. _
PAUL S. LEON, MAYOR
ATTEST:
________________________________

SHEILA MAUTZ, CITY CLERK
APPROVED AS TO FORM:
_______________________________

BEST BEST & KRIEGER LLP

CITY ATTORNEY
31 STATE OF CALIFORNIA )

COUNTY OF SAN BERNARDINO )

CITY OF ONTARIO )
I, SHEILA MAUTZ, City Clerk of the City of Ontario, DO HEREBY CERTIFY that foregoing Resolution No. 2023- was duly passed and adopted by the City Council of the City of Ontario at their regular meeting held February 21, 2023 by the following roll call vote, to wit:

AYES: MAYOR/COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:
____________________________________

SHEILA MAUTZ, CITY CLERK
(SEAL)
The foregoing is the original of Resolution No. 2023- duly passed and adopted by the Ontario City Council at their regular meeting held February 21, 2023. _____________________________________

SHEILA MAUTZ, CITY CLERK
32 Department: Economic Development
Prepared By: Karla Tavera
Staff Member Presenting:

Jennifer McLain Hiramoto, Economic
Development Director
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 6
SUBJECT:

DOWNTOWN ONTARIO IMPROVEMENT ASSOCIATION ANNUAL REPORT FOR FISCAL YEAR 22-23

CITY OF ONTARIO
Agenda Report
February 21, 2023
SECTION:

CONSENT CALENDAR

RECOMMENDATION:

That the City Council adopt a Resolution approving the Downtown Ontario Improvement Association (“DOIA”) Annual Report for FY 2202-23.

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Invest in the Growth and Evolution of the City's Economy Operate in a Businesslike Manner
Focus Resources in Ontario's Commercial and Residential Neighborhoods FISCAL IMPACT:

The Fiscal Year Adopted Budget includes appropriations of $155,000 in the General Fund for the Downtown Ontario Improvement Association (DOIA) parcel assessments.

BACKGROUND & ANALYSIS:

On August 20, 2019, the City Council approved the formation of the Downtown Ontario Community Beneﬁt District ("CBD") for an initial ﬁve-year term. The objective of the CBD is to provide enhanced services and improvements beneﬁting downtown property owners by increasing economic activity and enhancing the value of commercial, retail, and residential property. As a key component of the overall downtown revitalization strategy, the implementation of the CBD has increased commerce, attracted new businesses, and is supporting the transformation of the Downtown into an 18- hour vibrant hub of retail and residential activity.

California Streets and Highway Code, Section 36650, the law governing CBDs, requires that the Downtown Ontario Improvement Association ("DOIA") prepare an Annual Report for each ﬁscal year for which assessments are to be levied and collected for the purposes of paying for the cost of the improvements and activities described in the Annual Report. The Annual Report must be consistent with the components outlined in the District Management Plan. Per the District Management Plan, each year DOIA will establish a budget that focuses on three main components are Civil Sidewalk Improvements, Marketing/District Identity/Placemaking, and Administration.

The following items are highlights of the Annual Report.

33 The Assessment:

The CBD uses common parcel-based factors to assess special beneﬁt in a commercial/retail/residential business district. These factors are parcel size, street frontage, and building size. Street frontage has been determined to provide approximately 36% of the total assessment, land area approximately 26% of the total assessment, and building area approximately 38% of the total assessment. Annual assessments on the property will be $ 0.06 (6 cents) per parcel square foot, $0.16 (16 cents) per building square foot, plus $ 6.00 per frontage foot. Residential condominiums are assessed at $0.25 (25 cents) per square foot. The beneﬁts provided to properties within the district are listed in the diagram below. These services are only applied to properties within the boundaries of the district.

Category of Special Benefit
Services
Annual Amount 2022-2023
Percent of Total Budget
Civil Sidewalks
$303,522
55%
District Identity/Placemaking
$68,700
13%
Administration/Contingency
$176,108
32%
Total
$548,330
100%

The Budget:

The DOIA Board of Directors approved a budget for Fiscal Year 2022-23 for $548,330, which includes a 32% carry-over from FY 2020-2021. This is because Service Implementation for FY 2019-2020 did not begin until May of 2020. Those funds were incorporated into subsequent budgets. A detailed Fiscal Year 2022-23 budget and list of highlights from the previous year is shown in Exhibit A. In accordance with California Streets and Highway Code, Section 36650, Staﬀ recommends approval of the DOIA Annual Report for FY 2022- 23. 34 RESOLUTION NO. ________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ONTARIO,

CALIFORNIA, APPROVING THE ANNUAL REPORT SUBMITTED BY

THE DOWNTOWN ONTARIO IMPROVEMENT ASSOCIATION FOR THE

DOWNTOWN ONTARIO COMMUNITY BENEFIT DISTRICT FOR
FY 2022-23.

WHEREAS, on August 20, 2019, the City Council approved a Management District Plan entitled the “Downtown Ontario CBD Management District Plan” (the “Management District Plan”).

WHEREAS, the City Council conducted the public hearing on August 20, 2019, at which ballots cast in favor of and in opposition to proposed assessment and formation of the Downtown Ontario Community Benefit ("CBD”) for a five-year term were tabulated; and WHEREAS, of the ballots cast, property owners representing a majority of the total assessments voted in favor of the proposed assessment and formation of the CBD; and WHEREAS, Streets and Highways Code Section 36650 requires the improvement association of a property-based community benefit district submit an Annual Report to the legislative body for approval beginning its second year of operation and each year thereafter; and
WHEREAS, the Downtown Ontario Improvement Association (“DOIA”) has submitted its Annual Report for FY 2022-2023 for approval by the City Council.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Ontario, as follows:

SECTION 1. The City Council has reviewed the Annual Report for FY 2022-2023 submitted by the Downtown Ontario Improvement Association and determined that the Annual Report presented is consistent with the services and improvement components outlined in the approved Management District Plan.

SECTION 2. That the Annual Report for FY 2022-2023 is hereb y approved in substantially the form submitted and attached hereto as Exhibit A.

The City Clerk of the City of Ontario shall certify as to the adoption of this Resolution.
35 PASSED, APPROVED, AND ADOPTED this 21st day of February 2023. _____________________________________
PAUL S. LEON, MAYOR
ATTEST:
____________________________________

SHEILA MAUTZ, CITY CLERK
APPROVED AS TO FORM:
____________________________________

BEST BEST & KRIEGER, LLP

CITY ATTORNEY
36 STATE OF CALIFORNIA )

COUNTY OF SAN BERNARDINO )

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:
____________________________________

SHEILA MAUTZ, CITY CLERK
(SEAL)
37 Downtown Ontario
Community Benefit District

ANNUAL REPORT

December 1, 2022 to
November 30, 2023

January 16, 2023

Prepared By: Downtown Ontario Improvement Association Ismael Arias
Executive Director
425 N. Euclid Ave.

Ontario, CA 91762
(909) 706-7877
38 ANNUAL REPORT
December 1, 2022 to November 30, 2023
This Annual Report is being submitted to the City Council of the City of Ontario to outline current and past improvements, activities, expenses, budgets and assessments for the Downtown Ontario Community Benefit District ("CBD") for the fiscal year 20 22 - 2023. This annual report presents the budget and assessments approved by the DOIA Board of Directors on November 10, 2022.

EXECUTIVE SUMMARY

The fourth year of the Downtown Ontario CBD continues with the full implementation of services that have proved to be effective for the properties located within the district boundaries.

Also, the DOIA Executive Director manages and oversees the day-to-day operations to benefit downtown property owners and merchants. The Downtown Ontario CBD has been receiving the benefit of a 7-day maintenance ambassador program as well as marketing and advocacy initiatives.

All environmental and economic enhancements within the CBD augment, rather than replace services provided by the City of Ontario.

The Downtown Ontario Improvement Association (“DOIA”), the CBD’s governing body, continues to contract maintenance services from District Maintenance Services, Inc. a professional service provider. A truck and pressure washing machine continue to be in service provided by District Maintenance Services, Inc. to enhance the cleaning of sidewalks and gutters throughout downtown. DOIA is maintaining several pet clean-up stations, as a pilot program on the Euclid median. DOIA also installed seasonal Autumn décor and worked with city staff to continuously activate an open space to attract visitors to Downtown Ontario. This year DOIA secured funding, procured permits and with assistance of city staff installed three Downtown Ontario branded sidewalk benches, making downtown Ontario a more pedestrian friendly and attractive destination.

To further enhance the positive image of Downtown Ontario the DOIA is continuously updating its website www.DowntownOntario.org and uses various social media accounts such as, Facebook, TikTok, Twitter, and Instagram in order to promote the downtown and its many community events.

1 39

ADMINISTRATION
BOARD OF DIRECTORS:

President: Alex Baroian
Vice President: Rick Byrd
Secretary: Peggi Hazlett
Treasurer: Maria Razo
Member: Richard Centeno
Member: Richard Galvez
Member: Jack Gingold
Member: Jennifer Hiramoto
Member: David Puscizna
Member: Jerry Rowley
Member: Jerry Rosenblum
Member: Rolando Saldaña
Member: Andy Tai
Member: Octavio Vazquez

KEY PERSONNEL:

Executive Director: Ismael Arias

Contracted Service Providers:

Maintenance Contractor: District Maintenance Services, Inc.

Auditor: Smith Marion & Co.

Social Media: TumbleWeed Social

DOIA Meetings:

Board of Directors: 4th Thursday of the month at 9:00am at 425 N. Euclid Ave.

District Identity & Placemaking Committee: 2nd Thursday of the month at 10:00am at 425 N. Euclid .

Civil Sidewalks Committee: 2nd Thursday of January, March, May, July and October at 9:00am at 425 N. Euclid Ave.

In addition, every year the DOIA holds an Annual Meeting where all property owners are invited for a special report, board elections and discussion on DOIA’s programs and services. The Annual Meeting is held o n a date determined by the DOIA Board of Directors . The Annual Meeting for Fiscal 2021-2022 was held on September 2 2, 2022, a video summary was presented and is available for viewing on our website at downtownontario.org.

2 40

ACTIVITIES AND IMPROVEMENTS

Civil Sidewalks: The 2022-2023 budget is $303,522. The civil sidewalks committee oversees the civil sidewalk operations. The DOIA contracts with a maintenance service provider for two full time maintenance ambassadors to perform power washing, trash clean up, sidewalk and gutter sweeping along with other maintenance duties. One pickup truck equipped with a power washer provided by the maintenance provider along with two trash carts have been placed into service to facilitate operations. Since its creation, DOIA has funded over 10,000-man hours dedicated to cleaning and maintenance services within the downtown.

On-going and future projects:

▪ Seven days a week maintenance ambassador service:

▪ Regular sidewalk and gutter sweeping. (In 2022, A total of 2,250, 45 -gallon bags; approximately 43,858 pounds of litter picked up, and 229 clean ups of bio waste) Regular sidewalk power washing,
(In 2022, 190 Full city blocks pressure washed)
▪ Trash can emptying.
▪ Timely graffiti, stickers and poster removal, within 24 hours as necessary. (In, 2022 a total of 1,720 pieces of graffiti, stickers, and posters removed.) ▪ Shopping cart removal, (In 2022, 128 shopping cars returned to business or removed from the district.)
▪ Maintenance of existing and new public spaces.
▪ Beautification of the district.
▪ DOIA continues to work with the City of Ontario Utilities Dept. to address overflowing, illegal dumping and cleanliness of dumpsters and alleys in the Downtown. (In 2022, 141 reports filled: including broken city property, extensiv e graffiti, and illegal dumping.)
▪ DOIA uses environmentally friendly quiet leaf blowers and push trash carts have to facilitate sidewalk clean up.
▪ DOIA continuously maintains two Pet cleanup stations on the Euclid median between “D” Street and “E” Street.
▪ DOIA is in conversations with city staff to pilot surveillance cameras in key areas of the Downtown.
▪ DOIA has assisted various community nonprofit organizations as well as the city of Ontario with community event clean up assistance i.e., Ontario Art Walk, Ontario Arts Festival, Holiday of Lights parade.
▪ DOIA has also served as an advocate for Downtown property owners and businesses with Caltrans on issues pertaining to streetlight synchronization and vegetation maintenance along the Euclid median.
▪ DOIA continuously assists downtown property owners with filling “No Trespassing” forms with Ontario Police Department in an effort to prevent damage to their properties and to help address quality of life issues.
▪ DOIA Ambassadors have performed 1 61 homeless outreaches relating to business calls and disturbances.
▪ DOIA is continuously working closely with O ntario Police Department to address manners affecting the downtown.

3 41
District Identity/Placemaking : The 20 22-2023 District Identity/Placemaking budget is $68,700. The District Identity committee oversees and implements placemaking programs . In addition to ongoing advertising, the District Identity committee authorized the printing of QR coded promotional postcards, posters, and lawn signs which lead visitors to the Downtown Ontario website and social media platforms. The district identity committee has also authorized the creation of a Downtown Ontario banner program. in partnership with City of Ontario also activated the Downtown by installing Autumn and Dia de Los Muertos décor throughout the Downtown.

On-going and future projects:
▪ The consistent and continuous updates to the DOIA website www.downtownontario.org resulted in 10,500 visitors in the last year.
▪ The DOIA consistently promotes the downtown via various social media platforms , the analytic figures for the year 2022 were as follows, Facebook with a page reach of 87,000, Twitter with a page reach of 5,400, Instagram with a page reach 380,000 and now on TikTok with a page reach 19,000. All within the last year.
▪ DOIA continues to utilize its logo as its branding tool. ▪ DOIA has been one of the sponsors for the Ontario 5K Reindeer Run. ▪ DOIA is and will continue to sponsor events such as The Downtown Ontario Arts District Art Walk., OPOA Widows and Orphans Golf Tournament, and The Ontario Hispanic Chamber of Commerce.
▪ DOIA, and the City of Ontario, are continuing the downtown banner program which is funded by DOIA. The installation of new designs will be occurring in late January of 2023. ▪ DOIA’s office serves as an information center for all downtown visitors. ▪ DOIA continues to produce, print, and distributes QR coded postcards, posters, and lawn signs leading visitors to DOIA (link tree) which hosts the DOIA website; Facebook, Instagram, Twitter, and TikTok.
▪ DOIA is promoting the district as a pedestrian friendly community. ▪ DOIA promotes the downtown locally and regionally.
▪ DOIA continues to procure the services of a social media consultant to manage all social media platforms.
• DOIA procures permits, purchase s, install s and maintain s Autumn Décor, and Dia de los Muertos décor through the downtown and will provide other seasonal décor as well. • DOIA Ambassadors provide directions or recommendations to visitors of the downtown , in the last year they have given directions and/or recommendations to 133 visitors. • DOIA works with City staff to promote the downtown in a cohesive manner.

Administration: The 20 22-2023 administrative budget is $ 176,108.82. The Executive Committee and the Executive Director oversee administrative operations. The DOIA Executive Director manages and oversees the day -to-day operations to ensure effective delivery of services. The DOIA office also serves as a visitor center located at 425 North Euclid Ave., Ontario, CA 91762. The DOIA Executive Director is in close contact with city of Ontario staff which help to provide insight into the needs of the downtown. This year DOIA will be begin the processes of renewing the Downtown Ontario Community Benefit District, a portion of the one-time expenditure is reflected in the administrative budget.

On-going expenses:
▪ Staff and administrative costs
▪ Directors and Officers Insurance, General Liability and other insurance coverages. ▪ Office related expenses
▪ Financial reporting, accounting, and legal services.

4 42

BUDGET

The CBD (DOIA) is funded through downtown property tax assessments. Maintaining financial balance is a key objective in any organization; the budget is managed through monitoring expenditures and looking for variances. Marketing, maintenance, and administration , which include costs for building, equipment, supplies, services and staff, are all managed via the budget.

The board approved budget for Fiscal Year 2022-2023 is $548,330, which included a 32% carry over from FY 20 20-2021 (Service Implementation for FY 2019 -2020 did not begin until May of 2020). T hose funds were incorporated into the subsequent budgets. The FY 2022-2023 budget is shown in Exhibit A.

5 43

ASSESSMENTS

The CBD (DOIA) uses common parcel -based factors to assess special benefit in a commercial/retail/residential business district, which are parcel size, street frontage, and building size. Street frontage has been determined to provide approximately 36% of the total assessment, land area approximately 26% of the total assessment, and building area approximately 38% of the total assessment. Annual assessments on property will be $0.06 (6 cents) per parcel square foot, $0.16 (16 cents) per building square foot, plus $6.00 per frontage foot. Residential condominiums are assessed $0.25 (25 cents) per square foot for residential condominiums.

The benefits provided to properties within the district are listed in the diagram below.

These services are only applied to properties within the boundaries of the district.

Category of Special Benefit Services Annual Amount 2022-2023 Percentage of total budget
Civil Sidewalks $ 303,522 55%
District Identity/Placemaking $ 68,700 13%
Administration/Contingency $ 176,108 32%
Total $ 548,330 100%

Properties that are owned and operated as a non -profit, and are property tax exempt, are not assessed the full assessment because these parcels are deemed to benefit from most, but not all, of the proposed District improvements and services. As stated above, these properties receive benefits from, maintenance and streetscape, and administration, but do not receive any marketing.

Therefore, properties that are owned and operated as a non -profit, and are property tax exempt, and exclude the per building square foot assessment.

Based on the above factors, the resulting assessments are shown in the chart attached hereto as Appendix 1 . The CBD assessment is collected with regular property taxes. The assessment appeared as a separate line item on annual Property Tax bills prepared b y the County of San Bernardino.

6 44

EXHIBIT A
Downtown Ontario Improvement Association Detailed Budget Fiscal Year 2022-2023 Income
Assessment Income $471,929.96
Carry Forw ard
Delinquency (23,596.50)
Total Assessment Income $ 448,333.46
Non Assessment Income 10,000.00
Sponsorships -
Total Non Assessment Income 10,000.00 Total Income $ 458,333.46
Gross Profit
Expenses
Administration
Accounting Fees 8,500.00
Admin Contingency 4,500.00
Annual Elections/Mailings 240.00
Bank Charges/Interest 500.00
Board Meetings / Retreats 1,500.00
Conference/Travel Fees 2,500.00
Consultant Fees 30,000.00
Insurance - Liability, D and O 3,700.00
Legal Fees 25.00
Meeting Refreshments 350.00
Office Supplies 2,500.00
Payroll Service 2,500.00
Printing and Copying 700.00
Rent 18,333.00
Staff Contract 78,624.00
Dental and Vision Insurance 544.32
Health Insurance 4,828.32
Payroll Tax Expense 6,246.18
Workers Comp 1,258.00
Total Staff Contract $ 91,500.82
Telephone, Telecommunications 960.00
Utilities 7,800.00
Total Administration $ 176,108.82
Civil Sidew alks
Civil Sidew alks Contingency 3,922.00
DMS Contractor 240,600.00
Maintenance & Supplies 9,000.00
Metal Trash Cans -
Security Camera Project 50,000.00
Conference -
Supplies for Civil Sidew alks -
Total Civil Sidew alks 303,522.00 District Identity/Placemaking
Advertising 10,000.00
Branding & Signage 15,000.00
Creative Agency 22,000.00
District Identity Contingency 3,500.00
Window Vinyl Project -
Public Space Dev. 5,000.00
Seasonal Displays 9,000.00
Website 4,200.00
Total District Identity/Placemaking 68,700.00 Total Expenses $ 548,330.82
Net Operating Income -$ 89,997.36
Net Income (89,997.36)
Reserve Draw dow n 89,997.36$
Net Income/ (Loss) 0.00$
7 45

7 8
8 APPENDIX 1 – 2022-2023 PARCEL ASSESSMENT CALCULATIONS 46 9 47

10 48

11 49
Department: Utilities
Prepared By: Thomas Lambertson
Staff Member Presenting:

Scott Burton, Utilities General Manager
Reviewed By: Dennice Raygoza, Albert G
Gastelum, Michael Sigsbee
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 7
SUBJECT:

AN AMENDMENT TO ON-CALL DESIGN SERVICES AGREEMENT FOR ENGINEERING

GRANT SUPPORT SERVICES

CITY OF ONTARIO
Agenda Report
February 21, 2023
SECTION:

CONSENT CALENDAR

RECOMMENDATION:

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Operate in a Businesslike Manner
Invest in the Growth and Evolution of the City's Economy Invest in the City's Infrastructure (Water, Streets, Sewers, Parks, Storm Drains and Public Facilities)
FISCAL IMPACT:

Proposed Amendment No. 15 will increase the existing Agreement by $100,000 for a total revised Agreement not-to-exceed amount of $2,930,196. Fiscal Year 2022-23 Adopted Capital Improvement Program includes appropriations from the Water Capital Fund for this project. The City and IEC have agreed to the ﬁxed billing rates and IEC will be compensated for completion of the scope of work at the approved billing rates. There is no impact to the General Fund.

BACKGROUND & ANALYSIS:

The City’s adopted 2020 Urban Water Management Plan identiﬁes the use of recycled water as part of Ontario’s plan for providing a long-term sustainable water supply to the City. Expanding the use of recycled water provides a long-term sustainable water source that is not subject to the same limitations under drought conditions as potable water supplies and will result in signiﬁcant reductions in the City’s long-term reliance on more expensive and increasingly less reliable imported water supplies. The Euclid Avenue Recycled Water Project and a potential advanced water puriﬁcation facility are examples of projects that will enhance the City’s recycled water program.

50 The State Water Resources Control Board (SWRCB) is responsible for ﬁnancial administration and distribution of State of California ﬁnancial assistance programs for potable and recycled water projects, including grants. In late 2022, the City was selected by the SWRCB Division of Financial Assistance (DFA) to receive $10 million in earmarked grant funding from the State General Fund (AB-179) for the design and construction of the Euclid Avenue Recycled Water Project which must begin prior to June 30, 2023. Other ﬁnancial assistance programs exist to support the completion of this and other potential future City water projects, such as the Water Recycling Funding Program (WRFP) and the Clean Water State Revolving Fund (CWSRF). Due to strict deadlines and the complexity of grant programs administered by the SWRCB DFA, Staﬀ solicited grant support services from on-call professional services consultant IEC to support administration of the City’s grant applications, and to explore and pursue additional grant opportunities for City water projects.

IEC has successfully prepared grant applications on past projects, including projects supported by SWRCB programs.

In May of 2019, the City Council awarded on-call design services agreements with IEC and two other consultants using a qualiﬁcation-based selection process. The agreements were awarded as three- year agreements with two (2) additional one (1) year periods. As projects arise, Staﬀ will request proposals from the consultants and amend the original Agreement with revised scope of works and costs.
51 Department: Public Works
Prepared By: Bonnie Tam
Staff Member Presenting:

Tito Haes, Executive Director Public Works
Reviewed By: Bonnie Tam
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 8
SUBJECT:

AN AMENDMENT TO DESIGN SERVICES AGREEMENT WITH HMC ARCHITECTS FOR

ON-CALL ARCHITECTURAL, SPACE PLANNING AND ENGINEERING SERVICES FOR

THE CITY HALL ANNEX PROJECT

CITY OF ONTARIO
Agenda Report
February 21, 2023
SECTION:

CONSENT CALENDAR

RECOMMENDATION:

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Invest in the City's Infrastructure (Water, Streets, Sewers, Parks, Storm Drains and Public Facilities)
FISCAL IMPACT:

The recommended amendment for the On-call Architectural, Space Planning and Engineering Services for the City Hall Annex Project is in the amount not to exceed $3,978,123. The Fiscal Year 2022-23 Adopted Budget includes appropriations in the Capital Projects Fund for this project.

BACKGROUND & ANALYSIS:

The proposal for the On-call Architectural, Space Planning and Engineering Services from HMC Architects for the City Hall Annex Project is in the amount not to exceed $3,978,123. The proposed City Hall Annex project will consist of a new three-story City Hall Annex building of approximately 60,000 SF, and associated site improvements, including paving, accessible path of travel and landscaping. The professional design services will include conceptual design, environmental review, schematic design, construction and bidding documents, and contract administration for the City Hall Annex project.
52 Department: Engineering
Prepared By: Miguel Sotomayor
Staff Member Presenting:

Scott Murphy, Executive Director Community
Development
Reviewed By: Raymond Lee, Khoi Do
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 9
SUBJECT:

A RESOLUTION OF INTENT TO VACATE FERN AVENUE FROM TRANSIT STREET TO

EMPORIA STREET

CITY OF ONTARIO
Agenda Report
February 21, 2023
SECTION:

CONSENT CALENDAR

RECOMMENDATION:

That the City Council adopt a Resolution declaring the intent to vacate Fern Avenue from Transit Street to Emporia Street and set the date, time and place for the public hearing.

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

There is not a direct ﬁscal impact associated with this action. The City did not pay for acquiring the subject right-of-way and will not incur any cost for vacating this right-of-way. The applicant has paid the applicable processing fees to defray the City's cost to process this request.

BACKGROUND & ANALYSIS:

The applicant, Ontario Emporia Housing II Partners, L.P., has requested that the City vacate Fern Avenue from Transit Street to Emporia Street, as shown on Exhibit A, to facilitate the development of the area. The subject street, neither now nor in the future will be needed for traﬃc circulation or public necessity and there will be no impact on the Master Plan of Streets and Highways when vacated. Currently, there are public utilities within the street.

However, a Public Utility Easement will be retained over the proposed vacated street.

If approved by the City Council, the date and time for a public hearing shall be ﬁxed as Tuesday, March 21, 2023, at 6:30 p.m. in the City Council Chambers. 53 HOLT BLVD

EMPORIA STREET
FERN AVENU.

PALM AVENUE

TRANSIT STREET
1 1

CITY OF ONTARIO
DSK
02/01/23
1"=100'
JOB NO. RELC-020
DATE:

SCALE:

SHEET OF
BY:

PROJECT: V-308
APPLICANT: RELATED COMPANIES

ENGINEERING DEPARTMENT

EXHIBIT A
54 RESOLUTION NO. ________

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ONTARIO,

CALIFORNIA, PERTAINING TO THE VACATION OF FERN AVENUE

FROM TRANSIT STREET TO EMPORIA STREET AND TO SET THE
DATE, TIME AND PLACE FOR A PUBLIC HEARING.

WHEREAS, the City Council of the City of Ontario, California, declares its intention to vacate Fern Avenue between Transit Street and Emporia Street, in the City of Ontario, County of San Bernardino, State of California, as per plat recorded in Book 9 page 43 of Maps, records of said county, as described in Exhibit “A” and depicted on Exhibit “B” subject to retaining a Public Utility Easement over said Fern Avenue; and WHEREAS, the vacation herein proposed shall be carried through pursuant to the “Public Streets, Highways and Service Easements Vacation Law,” being Part 3 of Division 9 of the Streets and Highways Code of the State of California; and WHEREAS, notice is hereby given that on Tuesday, the 21 st day of March 2023, at the hour of 6:30 p.m., in the City Council Chambers of the City Hall of the City of Ontario, California, is the time and place fixed for hearing all persons interested in, or objecting to, the proposed vacation; and
WHEREAS, the City Engineer of said City of Ontario shall cause to be conspicuously posted, along the lines of the proposed vacations, notices of the passage of this Resolution of Intention, in the time, form and manner provided by said Code; and WHEREAS, the City Clerk shall certify to the passage of this Resolution of Intention, and shall cause the same to be published after its adoption for at least two successive weeks in a newspaper of general circulation, published and circulated in said City of Ontario.

The City Clerk of the City of Ontario shall certify as to the adoption of this Resolution.

PASSED, APPROVED, AND ADOPTED this 21st day of February 2023. _____________________________________
PAUL S. LEON, MAYOR
55 ATTEST:
________________________________

SHEILA MAUTZ, CITY CLERK
APPROVED AS TO FORM:
_______________________________

BEST BEST & KRIEGER LLP

CITY ATTORNEY
56 STATE OF CALIFORNIA )

COUNTY OF SAN BERNARDINO )

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:
____________________________________

SHEILA MAUTZ, CITY CLERK
57 58
59 Department: Recreation & Community Services
Prepared By: Danielle Guevara
Staff Member Presenting:

Nicholas S. Gonzalez, Recreation & Community
Services Director
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 10
SUBJECT:

PRE-AUTHORIZED LIST OF VENDORS TO PROVIDE RENTAL EQUIPMENT AND

ENTERTAINMENT SERVICES FOR SPECIAL EVENTS

CITY OF ONTARIO
Agenda Report
February 21, 2023
SECTION:

CONSENT CALENDAR

RECOMMENDATION:

That the City Council approve the attached list of pre-authorized vendors to provide rental equipment and entertainment services for the Community Life & Culture Agency.

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Operate in a Businesslike Manner
FISCAL IMPACT:

The designation of the pre-authorized list of vendors to provide rental equipment and entertainment services does not aﬀect appropriations and does not commit the City to any speciﬁc level of future expenditures with these vendors. Expenditures for each vendor and the total for each ﬁscal year, will not exceed Community Life & Culture's appropriations limits established by City Council.

BACKGROUND & ANALYSIS:

The Community Life & Culture Agency ("CL&C") provides community members with several large-scale events. Many of these events take place in the evening and on weekends, outside of the normal business hours of many vendors.

CL&C selects vendors that provide services at a competitive price and can deliver and pick up equipment within the needed time frame. Both aspects are vital to the success of the event as some events require street closures and the equipment must be picked up before streets can be reopened.

Due to the nature of these events establishing a pre-authorized list of vendors will ensure that the City is better able to select vendors that are able to pick up equipment quickly after an event, resuming regular street operations in a timely manner. Also, a pre-authorized list of vendors will allow the City the ability to quickly select replacements for any vendors who cancel shortly before a scheduled event, ensuring a successful event rollout. Therefore, it is recommended that the City establish a list of pre-authorized vendors to provide rental equipment, including delivery services and entertainment service vendors for a period of 5 years. This is consistent with Ontario Municipal Code Section 2-6.23(b) and 2-6.23(c) of the Purchasing Ordinance which authorized the 60 Purchasing Oﬃcer to make purchases without following the standard purchasing procedure whenever (1) the goods can be obtained from only one source and/or (2) a breakdown in machinery, equipment or an essential service which requires an immediate purchase of supplies and equipment to protect public health, safety and welfare generates circumstances that a competitive process would be unavailing or would not produce an advantage, and the advertisement for competitive bid would thus be undesirable, impractical, or impossible.

61 APPROVED LIST OF AUTHORIZED VENDORS FOR RENTAL EQUIPMENT *Not to exceed amount on an annual basis
Non-Sole Source Vendors

Rental Equipment Provided
*
Not to Exceed
Party Plus Rentals, LLC
Tables/Chairs/Canopies/Linens $50,000
24831 Redlands Blvd
Loma Linda, CA 92354
Titan Tent & Event Rentals
Tables/Chairs/Canopies/Linens $50,000
14460 Veterans Way
Moreno Valley, CA 92553
Classe Party Rentals
Tables/Chairs/Canopies/Linens $50,000
10280 Indiana Ct
Rancho Cucamonga, CA 91730
Over the Top
Tents/Tables/Chairs $20,000 5482 Arrow Hwy, Suite B
Montclair, CA 91763
City Rentals
Light Towers $10,000 1035 N Vineyard Ave
Ontario, CA 91764
United Rentals
Light Towers/Portable Restrooms/ $50,000
10632 Monte Vista Ave Bike Rail Fencing Montclair, CA 91763
National Construction Rentals
Portable Restrooms $50,000 11029 Beech Ave
Fontana, CA 92337

62 United Site Services of
Portable Restrooms/Bike Rail $50,000
California, Inc
Fencing
PO Box 660475
Dallas, TX 75266
D & D Golf Cars Service, Inc
Golf Cart Rental $8,000 3505 Pomona Blvd
Pomona, CA 91768
Morningstar Productions LLC
Mobile Stage $15,000 41213 Sandalwood Cir
Murrieta, CA 92562

63 APPROVED LIST OF AUTHORIZED VENDORS FOR ENTERTAINMENT SERVICES *Not to exceed amount on an annual basis
Non-Sole Source Vendors

Entertainment Services Provided

*
Not to Exceed
Gemini Timing Company
Race Timing Services $15,000 26025 Newport Rd
Suite A490
Menifee, CA 92584
David’s Party Rentals, Inc
Carnival & Parade Enhancements $20,000
DBA Carnival Services
3866 E 9
th
St
Pomona, CA 91766
909 Jumpers & Party Rentals
Inflatable Games & Jumpers $5,000 16605 Orange Way
Fontana, CA 92335
Music Zirconia Talent
Musical Talent Management Services $80,000
5595 Magnatron Blvd., Suite A
San Diego, CA 92111

64 Department: Community Life & Culture
Prepared By: Matthew Hickey
Staff Member Presenting:

Helen McAlary, Executive Director Community
Life and Culture
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 11
SUBJECT:

PRE-AUTHORIZED LIST OF VENDORS TO PROVIDE TRANSLATION AND COPY

EDITING

CITY OF ONTARIO
Agenda Report
February 21, 2023
SECTION:

CONSENT CALENDAR

RECOMMENDATION:

That the City Council approve the attached list of pre-authorized vendors to provide translation and copy-editing services for the Community Life & Culture Agency.

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Operate in a Businesslike Manner
Encourage, Provide or Support Enhanced Recreational, Educational, Cultural and Healthy City Programs, Policies and Activities
FISCAL IMPACT:

The designation of the pre-authorized list of vendors to provide translation and copy-editing services does not commit the City to any speciﬁc level of future expenditures with these vendors. Expenditures for each vendor and the total for each ﬁscal year will not exceed Community Life & Culture's appropriations limits established by City Council.

BACKGROUND & ANALYSIS:

The Community Life & Culture Agency designs and creates multiple print and digital advertising and publicity to promote programs, events, and other activities throughout the City of Ontario. The Community Life & Culture Agency is seeking assistance in the translation and copy editing of print and digital advertising and publicity due to the time commitment required to translate, copy edit, and proofread the large number of materials created and distributed. In addition, copy editing services would provide the Agency with resources to review and edit reports, grant narratives, and other documents to ensure that documents are complete, thorough, and of professional quality.

The Community Life & Culture Agency has selected vendors that can provide services at a competitive price and are familiar with the City's needs. Therefore, it is recommended that the City establish a list of pre-authorized vendors to provide translation and copy editing services, for a period of 3 years. This is consistent with Ontario Municipal Code Section 2-6.23(b) and 2-6.23(c) of the Purchasing Ordinance, which authorizes the Purchasing Oﬃcer to make purchases without following the standard purchasing procedure whenever (1) the goods can be obtained from only one source, and/or (2) a breakdown in machinery, equipment or an essential service which requires 65 an immediate purchase of supplies and equipment to protect public health, safety and welfare generates circumstances that a competitive process would be unavailing or would not produce an advantage, and the advertisement for competitive bids would thus be undesirable, impractical, or impossible.

66 APPROVED LIST OF AUTHORIZED VENDORS FOR TRANSLATION
*Not to Exceed amount on an annual basis
Non-Sole Source Vendors

Not to Exceed
All Languages Translation Service
$10,000
301 S. Glendora Ave Suite 114
West Covina, CA 91790
Loma Linda, CA 92354
U.S. Language Services LLC
$10,000
1050 Lakes Dr Suite 225
West Covina, CA 91790

APPROVED LIST OF AUTHORIZED VENDORS FOR COPY-EDITING
*Not to Exceed amount on an annual basis
Non-Sole Source Vendors

Not to Exceed
Global Urban Strategies, Inc.
$20,000
2200 S. Fremont Avenue, Suite 208
Alhambra, CA 91803
The 20/20 Network
$20,000
1808 Albright Way
Upland, CA 91784
Geographic's
$20,000
4178 Chestnut Street
Riverside, CA 92501
67 Department: Police Department
Prepared By: Matthew Hernandez
Staff Member Presenting:

Mike Lorenz, Chief of Police
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 12
SUBJECT:

SAN BERNARDINO COUNTY FLOOD CONTROL DISTRICT AGREEMENT

AUTHORIZING CITY OF ONTARIO TO ENFORCE TRESPASSING AND PARKING

VIOLATIONS AT DISTRICT PROPERTY WITHIN THE CITY

CITY OF ONTARIO
Agenda Report
February 21, 2023
SECTION:

CONSENT CALENDAR

RECOMMENDATION:

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Maintain the Current High Level of Public Safety
Pursue City's Goals and Objectives by Working with Other Governmental Agencies Invest in the City's Infrastructure (Water, Streets, Sewers, Parks, Storm Drains and Public Facilities)
FISCAL IMPACT:

There is not a direct fiscal impact associated with this action.

BACKGROUND & ANALYSIS:

On December 18th, 2012, the Flood Control District passed Ordinance 12-03, addressing parking violations on Flood Control District property. On June 28th, 2022, the District passed Ordinance 22-02 addressing trespassing violations on their facilities and properties.

Both ordinances allow the Flood Control District to authorize local law enforcement oﬃcers and code enforcement oﬃcers to enforce the Ordinances created by the San Bernardino County Flood Control District upon the execution of a memorandum of understanding.

The proposed memorandum of understanding from the San Bernardino County Flood Control District will authorize the law enforcement oﬃcers and code enforcement oﬃcers of the City of Ontario to enforce the Ordinances that occur on property owned, leased, and/or operated by the District and located within the territorial limits of the City. 68 Department: City Manager's Office
Prepared By: Ruben Duran
Staff Member Presenting:

Ruben Duran, City Attorney
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 13
SUBJECT:

ADOPTION OF AN ORDINANCE AMENDING THE ONTARIO MUNICIPAL CODE

RELATING TO PURCHASING AUTHORITY OF THE CITY MANAGER FOR PUBLIC

PROJECTS

CITY OF ONTARIO
Agenda Report
February 21, 2023
SECTION:

CONSENT CALENDAR

RECOMMENDATION:

That the City Council adopt
an

Ordinance,
ﬁrst introduced on February 7,
2023, to amend the Ontario Municipal Code to increase the City Manager’s spending authority for Public Projects up to a maximum of $150,000.

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Operate in a Businesslike Manner
Invest in the City's Infrastructure (Water, Streets, Sewers, Parks, Storm Drains and Public Facilities)
FISCAL IMPACT:

Staﬀ does not anticipate any increased costs as a result of these authorization increases as expenditures are currently budgeted for in the annual budget.

BACKGROUND & ANALYSIS:

On February 7, 2023, The City Council, Successor Agency to the Redevelopment Agency and Housing Authority adopted a joint resolution to increase the City Manager’s spending authority relating to the purchases of goods and services.

The cost of doing business has
signiﬁcantly increased over the last few years, which is due in part to rising inﬂation. During the previous year, Staﬀ recognized some signiﬁcant increases on both products and services that are critical to the City’s regular operations. All monies approved by the City Manager have been approved by the City Council in advance of the expenditure in the annual budget. Due to the current increase for the cost of goods and services, the City Council increased the City Manager’s spending authority to $150,000 to protect the effective and efficient operations of the City operations.

In order to be consistent, the City Manager’s spending authority for Public Projects should also be increased to the same amount. Since the spending authority for Public Projects is outlined in the Ontario Municipal Code, an ordinance was needed to eﬀectuate an increase for Public Projects. As a result, the City Council introduced an ordinance to the City Manager's spending authority from $100,000 to $150,000.

Staff recommends that the City Council adopt the Ordinance first introduced on February 7, 2023. 69 ORDINANCE NO. ________

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ONTARIO, CALIFORNIA, AMENDING SECTION 2-6.18(H) OF CHAPTER 6 OF TITLE 2 OF THE ONTARIO MUNICIPAL CODE RELATING TO PURCHASING
AUTHORITY OF THE CITY MANAGER FOR PUBLIC PROJECTS.

WHEREAS, the Ontario Municipal Code authorizes the City Council of the City to prescribe by resolution procedures, rules and regulations governing the acquisition of equipment, materials, supplies, labor, services or other items required by the City; and WHEREAS, the Ontario Municipal Code provides a comprehensive system for centralized purchasing in equipment, supplies, and services; and WHEREAS, in order to efficiently expedite the acquisition of such items, the City often needs, during the course of its day-to-day operations to promptly obtain, hire, purchase, or rent equipment, materials, supplies, labor, services or other items included within the budget approved by the City Council costing less than $150,000.00; and WHEREAS, Section 2-6.18(H) of Chapter 6 of Title 2 of the Ontario Municipal Code currently authorizes the City Manager to award contracts for Public Projects in an amount up to one hundred thousand dollars ($100,000); and
WHEREAS, authorizing the City Manager to approve contracts and other instruments necessary for Public Projects included within the budget approved by the City Council, up to a maximum of $150,000.00 per contract, would allow the City to address Public Project needs in a more timely manner and is in the best interest of the City; and WHEREAS, all other legal prerequisites to the adoption of this Ordinance have occurred.

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

SECTION 1. The recitals above are true and correct and are hereby incorporated herein by this reference.

SECTION 2. Section 2-6.18(H) of Chapter 6 of Title 2 of the Ontario Municipal Code is hereby amended to read as follows:
“(H) Informal Bids shall be awarded to the lowest responsible bidder, consistent with the quality and delivery requirements. The City Manager, or his/her designee, shall be authorized to award contracts for Public Projects of up to one hundred fifty thousand dollars ($150,000). The City Council shall be authorized to award bids for Public Projects of more than one hundred fifty thousand dollars ($150,000).” 70 SECTION 3. If any section, subsection, subdivision, sentence, clause, or phrase in this Ordinance or any part thereof is for any reason held to be unconstitutional, invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this ordinance or any part thereof.

The City Council hereby declares that it would have adopted each section irrespective of the fact that any one or more subsections, subdivisions, sentences, clauses, or phrases be declared unconstitutional, invalid or ineffective.

SECTION 4. This Ordinance shall become effective thirty (30) days after its adoption by the City Council.

SECTION 5. The City Council finds that adoption of this Ordinance is exempt from the California Environmental Quality Act (“CEQA”) pursuant to Section 15358 (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Moreover, the City Council finds that this Ordinance is also exempt under CEQA pursuant to Guidelines Section 15061(b)(3) (there exists no possibility that the activity will have a significant adverse effect on the environment).

SECTION 6. The Mayor shall sign this Ordinance and the City Clerk shall certify as to the adoption and shall cause a summary thereof to be published at least once, in a newspaper of general circulation in the City of Ontario, California within fifteen (15) days of the adoption. The City Clerk shall post a certified copy of this Ordinance, including the vote for and against the same, in the Office of the City Clerk, in accordance with Government Code Section 36933.

PASSED, APPROVED, AND ADOPTED this ____ day of _______ 2023. _____________________________________
PAUL S. LEON, MAYOR
ATTEST:
_________________________________

SHEILA MAUTZ, CITY CLERK
71 APPROVED AS TO FORM:
_______________________________

BEST BEST & KRIEGER LLP

CITY ATTORNEY
72 STATE OF CALIFORNIA )

COUNTY OF SAN BERNARDINO )

CITY OF ONTARIO )
I, SHEILA MAUTZ, City Clerk of the City of Ontario, DO HEREBY CERTIFY that foregoing Ordinance No. ____ was duly introduced at a regular meeting of the City Council of the City of Ontario held February 7, 2023 and adopted at the regular meeting held _________, 2023 by the following roll call vote, to wit:

AYES: COUNCIL MEMBERS:

NOES: COUNCIL MEMBERS:

ABSENT: COUNCIL MEMBERS:
_________________________________

SHEILA MAUTZ, CITY CLERK
(SEAL)
I hereby certify that the foregoing is the original of Ordinance No. ____ duly passed and adopted by the Ontario City Council at their regular meeting held , 2023 and that Summaries of the Ordinance were published on _________, 2023 and _________, 2023, in the Inland Valley Daily Bulletin newspaper.
__________________________________

SHEILA MAUTZ, CITY CLERK
(SEAL)
73 Department: Planning
Prepared By: Alexis Vaughn
Staff Member Presenting:

Scott Murphy, Executive Director Community
Development
Reviewed By: Edmelynne V Hutter, Charles
Mercier, Rudy Zeledon
Approved By:

Submitted To: Council/OHA
Approved: _______________________________
Continued To: ___________________________
Denied: __________________________________
Item No: 14
SUBJECT:

A PUBLIC HEARING TO CONSIDER A CONDITIONAL USE PERMIT, FILE NO.

PCUP22-006, TO ESTABLISH AND OPERATE A 118-ROOM LIMITED-SERVICE HOTEL

ON PROPERTY LOCATED AT THE SOUTHEAST CORNER OF CORONA AVENUE AND G STREET (APN: 0110-241-33)

CITY OF ONTARIO
Agenda Report
February 21, 2023
SECTION:

PUBLIC HEARINGS

RECOMMENDATION:

That the City Council consider and adopt a Resolution approving File No.

PCUP22-006, granting the right to establish and operate a 118-room limited-service hotel (Everhome Suites) on a 2.11-acre portion of the 3.37-acre Project site located at the southeast corner of Corona Avenue and G Street.

THE FOLLOWING COUNCIL GOALS ARE BEING ACHIEVED:

Invest in the Growth and Evolution of the City's Economy Operate in a Businesslike Manner
Focus Resources in Ontario's Commercial and Residential Neighborhoods FISCAL IMPACT:

The proposed hotel is expected to open in 2024 and is projected to have an occupancy rate of 70-78 percent. The hotel is estimated to generate approximately $4.5 million in total revenue the ﬁrst year and $5.6 million by the ﬁfth year. Based on the projected revenues, the project will generate approximately $528,750 in estimated transit occupancy tax revenue the ﬁrst year and $658,000 by the ﬁfth year. In addition, the project will generate approximately $436,246 in Development Impact Fees.

Moreover, the project will result in increased property tax revenues, with an estimated $222,000 in a representative year of operation, based upon the prospective market value of the hotel.

BACKGROUND & ANALYSIS:

The Applicant is requesting Conditional Use Permit (File No. PCUP22- 006) approval to establish and operate a three-story, 118-room limited-service hotel (Everhome Suites) on
a 2.11-acre portion of a 3.37-acre project site,
located at the southeast corner of Corona
Avenue and G Street. The Conditional Use Permit was ﬁled in conjunction with Tentative Parcel Map No. 20505 (File No. PMTT22-013), subdividing the Project site into two lots, and a Development Plan (File No. PDEV22-021) to construct the hotel and a fast-food restaurant with a drive-thru (Chick-ﬁl- A).
74 On January 24, 2023, the Planning Commission conducted a duly noticed public hearing to consider the proposed Conditional Use Permit, Tentative Parcel Map and Development Plan and, upon conclusion of the hearing, voted unanimously (4-0) to approve the Tentative Parcel Map and Development Plan and recommend City Council approval of the Conditional Use Permit.

Pursuant to Development Code land use requirements for hotel accommodations, a Conditional Use Permit must be ﬁled concurrently with a Development Plan and, further, that the Conditional Use Permit requires City Council action. The purpose of the Conditional Use Permit application and review is to conﬁrm compliance with the City's Development Code required minimum amenity package for hotels and ensure the project's market feasibility.

The Applicant submitted a Market Feasibility Study demonstrating that the market is able to support the additional hotel within the City of Ontario and the region as a whole (see Attachment A, Market Feasibility Study). The Study, which was completed by CBRE in October 2021, analyzed current economic and demographic trends in San Bernardino County, with a focus on Ontario, to determine market trends in the area, including the competitive supply of lodging facilities in the greater Ontario area and the historic performance levels of that supply, along with the anticipated growth in supply and demand for lodging accommodations in the area. The study acknowledged immediate and uncertain volatility due to the market eﬀects of the COVID-19 pandemic, but overall found that the Project’s location, amenities, size, and price point all lend to a successful hotel development opportunity. Furthermore, the Choice Hotels brand is very active with publicity, marketing, and press events and continually champions their locations to ensure their ongoing success above and beyond initial buildout. The proposed product type (mid-range, limited-service, extended stay hotel) will provide additional amenities above and beyond those which are typically found at other limited-service hotels, including a pool, ﬁtness room, guest laundry facility, and marketplace, and rooms will be equipped with a kitchenette that will include a small stove, sink, dishwasher, utensils, pots and pans, cooking appliances, and a full-size refrigerator.

The Project was scheduled to be considered by the Planning Commission at its regularly scheduled meeting on December 19, 2022. However, a letter of opposition (see Attachment C to the Planning Commission Backup – Comment Letter) was received by the Planning Department prior to the meeting. As such, the applicant requested to continue the project to the January 24, 2023, Planning Commission meeting to allow additional time to address the concerns listed in the letter. A follow- up letter of opposition was also received on January 24, 2023 (see Attachment B, Opposition Letter No. 2). Both letters were submitted by Mitchell M. Tsai, attorney representing the Southwest Mountain States Regional Council of Carpenters (“SWMSRCC”) and outlined the following environmental reasons why they are opposed to the Project:

Issue 1 -
“The City should require the use of a local workforce to beneﬁt the community’s economic development and environment.”
The letter states that the community beneﬁts of local hire can also be helpful to reduce environmental impacts and improve the positive economic impacts of the project. It states that local hire provisions should require a certain percentage of workers to reside within 10 miles or less of the Project site, which will reduce the length of vendor trips and greenhouse gas emissions.
75 Staﬀ response
: The Applicant stated that their General Contractor (Buﬀalo Construction) utilizes local employees/labor, as does the contractor’s framing ﬁrm (Langston Construction), which has an established track record of using local southern California carpenters. Langston Construction has worked on many projects, including other projects that the Applicant or their contractor have been involved in, such as an Everhome Suites in Corona, and Woodspring Suites in Norco and Redlands, where they used all local carpenters. Additionally, their lumber and truss suppliers used for the Corona location were all local (in La Mesa and Riverside, respectively). While the Applicant will not be using the Carpenters Union’s workers, the Applicant will be utilizing the same construction team as their other projects, who use local labor.

Therefore, as the Applicant will be employing local carpenter labor to assist in framing the new Everhome Suites hotel in Ontario, traﬃc and other impacts alleged by the Carpenter’s Union and their representative would be reduced and/or eliminated.

Issue 2 - The Project does not qualify for the Class 32, Inﬁll Development categorical exemption allowed by CEQA – The letter states that the Project “fails to comply with all of the required conditions, and thus, does not qualify for the Class 32 'Inﬁll' Exemption.” The letter goes on to outline each condition of the Class 32 CEQA exemption that must be met, along with reasons why each condition has not been met, as follows:

Issue 2A –
The City lacks substantial evidence to support its determination that the project is consistent with the applicable plans and regulations.

Staﬀ response:

The Planning Commission staﬀ report fully explains how and why the proposed Project is consistent with both The Ontaro Plan ("TOP") Policy Plan (General Plan) land use designation of Hospitality and the CCS (Convention Center Support Commercial) zoning district, as well as the Development Code standards, and the Ontario Airport Land Use Compatibility Plan (“ONT ALUCP”). Further, the report explains how the Project meets the City Council goals. Additional explanation can be found in the project’s ﬁndings, located within the adopted Planning Commission Resolutions provided with this report.

Issue 2B –
The City lacks substantial evidence to support its determinations of the Project’s significant impacts.

The letter goes on to cite traffic, noise, and water impacts as significant.

Staﬀ Response
: The certiﬁed TOP 2050 Supplemental Environmental Impact Report ("TOP 2050 SEIR"), which is available for review on the City’s website, analyzed a range of impacts of development citywide, including commercial development. Four impacts were found to remain signiﬁcant and unavoidable, including air quality (AQMP consistency, regional construction emissions, regional operation emissions, and cumulative health risk), cultural resources (historic resources), noise (construction noise, construction vibration, and airport land use compatibility), and transportation 76 (vehicle miles traveled). As such, a Statement of Overriding Considerations was approved with the Project.

TOP 2050 assumed a ﬂoor area ratio ("FAR") of 1.0 for hospitality land uses and accounted for a cumulative Citywide non-residential buildout of 9,981,163 square feet.

The hotel portion of the Project proposes a 0.63 FAR, which is 34 percent less intensive than what TOP 2050 analyzed and accounted for. Further, TOP 2050 assumed and accounted for a FAR of 0.30 for both neighborhood commercial and general commercial land uses (3,238,267 and 5,033,395 square feet of buildout, respectively), which would include the proposed drive-thru restaurant. The drive-thru restaurant portion of the Project is proposed at a 0.05 FAR, which is 83 percent less intensive than what TOP analyzed and accounted for. As such, both proposed land uses fall under the parameters of the range of impacts previously analyzed by TOP 2050, and neither land use introduces any new signiﬁcant impacts than were not already addressed by TOP 2050 SEIR. Further, studies were provided by the applicant, which analyzed noise impacts, air quality and GHG impacts, and traﬃc impacts, as explained in more depth in the attached Planning Commission Agenda Report.

Issue 2C –
The City lacks substantial evidence to
support its conclusion that public utilities
adequately serve the project.

The letter cites that both the Applicant and the City should be required to provide information about what speciﬁc utility-related buildouts will be necessary to adequately supply utilities to the Project site during construction and operation.

Staﬀ Response
: The project site is located within an urbanized, developed area.

Pursuant to the City’s utility atlas, both wet and dry utility lines are available within the existing G Street and Corona Avenue rights-of-way, and within public utility easements, in which the Project may readily avail itself. As a condition of the related Tentative Parcel Map and Development Plan, certain utility upgrades are required to accommodate the proposed Project. The attached Planning Commission Agenda Report and related conditions of approval imposed by the Planning Commission further explain the availability of public utilities to the Project site, including any requirements for off-site construction necessary to adequately serve the project.

During the January 24, 2023, Planning Commission meeting, a representative from

SWMSRCC
spoke in opposition to the project, reiterating the concerns included in the letters submitted by Attorney Mitchell M. Tsai.

CORRESPONDENCE:

As of the preparation of this report, the two letters of opposition submitted by the attorney representing the Southwest Mountain States Regional Council of Carpenters are the only correspondence received. The issues raised in the letters are summarized above along with staff responses.

HOUSING ELEMENT COMPLIANCE:

The Project is consistent with the Housing Element of the Policy Plan (General Plan) component of TOP, as the Project site is not one of the properties in the 77 Housing Element Sites contained in Tables B-1 and B-2 (Housing Element Sites Inventory) of the Housing Element Technical Report.

AIRPORT LAND USE COMPATIBILITY PLAN (ALUCP) COMPLIANCE:

The California State
Aeronautics Act (Public Utilities Code Section 21670 et seq.) requires that an Airport Land Use Compatibility Plan be prepared for all public use airports in the State; and requires that local land use plans and individual development proposals must be consistent with the policies set forth in the adopted Airport Land Use Compatibility Plan. On April 19, 2011, the City Council of the City of Ontario approved and adopted the ONT ALUCP, establishing the Airport Inﬂuence Area for Ontario International Airport, which encompasses lands within parts of San Bernardino, Riverside, and Los Angeles Counties, and limits future land uses and development within the Airport Inﬂuence Area, as they relate to noise, safety, airspace protection, and overﬂight impacts of current and future airport activity.

The Project Conditions of Approval include an Airport Land Use Compatibility Plan Consistency Determination report that determined the proposed project is located within the Airport Inﬂuence Area of Ontario International Airport (ONT) and was evaluated and found to be consistent with the policies and criteria of the Airport Land Use Compatibility Plan (ALUCP) for ONT. The Consistency Determination details the following: 1) the Project is located outside of ONT Safety Zones; 2) the Project is located within the 60-65 CNEL Noise Impact Zone and the proposed land uses are compatible land uses; 3) the allowable building height for the site is 85 feet and the Project is proposing a maximum building height of 40 feet and is consistent with Airspace Protection policies; and 4) the Project site is located within the Recorded Overﬂight Notiﬁcation Zone that only requires residential land uses to provide deed disclosures regarding aircraft overflight from ONT.

As the decision-making body for File No. PCUP22-006, the City Council has the responsibility to review and consider the facts and information contained in the Application and supporting documentation against the ONT ALUCP compatibility factors, including [1] Safety Criteria (ONT ALUCP Table 2-2) and Safety Zones (ONT ALUCP Map 2-2), [2] Noise Criteria (ONT ALUCP Table 2-3) and Noise Impact Zones (ONT ALUCP Map 2-3), [3] Airspace protection Zones (ONT ALUCP Map 2- 4), and [4] Overﬂight Notiﬁcation Zones (ONT ALUCP Map 2-5). The Planning Commission is recommending the City Council ﬁnd and determine that the Project, when implemented in conjunction with the conditions of approval, will be consistent with the policies and criteria set forth within the ONT ALUCP.

ENVIRONMENTAL REVIEW:

The Project is categorically exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Section 15332 (Class 32, In-Fill Development Projects) of the CEQA Guidelines, and meets the below-listed conditions:
1 .

The Project is consistent with the applicable General Plan designation and all applicable General Plan policies, as well as with applicable zoning designation and regulations. The proposed Project is located within the Hospitality land use designation of the Policy Plan (General Plan) Land Use Map, and the CCS (Convention Center Support Commercial) zoning district. The proposed Project is consistent with all applicable Policy Plan policies, as well as with the CCS zoning district and applicable Development Code regulations. The zoning district and land use designation are intended to accommodate uses developed at a maximum intensity of 1.0 FAR, which predominantly serve the Ontario Convention Center, regional uses, 78 and the special needs of leisure and business clientele who visit the City and surrounding region. The hotel and drive-thru restaurant land uses both lend themselves to serving the speciﬁed needs of the Ontario Convention Center and of leisure and business clientele visiting the city and surrounding region. Further, the hotel was proposed to be constructed with sensitivity to the neighboring multiple-family residential land use to the west, which limited the structure’s height (35-foot structure height, with architectural projections) and ultimately the FAR of the hotel (0.63, rather than the allowed 1.0, FAR). 2 .

The proposed development occurs within city limits on a project site of no more than ﬁve acres substantially surrounded by urban uses. The Project is proposed within the established boundaries of the City of Ontario, on a project site totaling 3.37 acres of land, which is surrounded by established development on all sides and consists of a mix of multiple-family, hotel, and restaurant land uses.
3 .

The Project site has no value as habitat for endangered, rare, or threatened species. The site was previously graded and is regularly disked for weed control, and is, therefore, not suitable habitat for any endangered, rare, or threatened species. Further, the site is located within an urbanized area already built out with a variety of land uses, such as hotels, drive-thru restaurants, and multiple-family dwellings, that do not lend themselves to valuable habitat for endangered, rare, or threatened species.
4 .

Per the studies attached to this staﬀ report, and per the ﬁndings of the TOP 2050 Supplemental Environmental Impact Report, approval of the Project would not result in any new signiﬁcant eﬀects related to traﬃc, noise, air quality, or water quality. The proposed hotel and fast-food restaurant buildings are similar to, and of no greater impact than other allowed uses and development projects within the CCS (Convention Center Support Commercial) zoning district. The land uses were reviewed by the Engineering Department, Traﬃc Division, Planning Department, and Ontario Municipal Utilities Company (“OMUC”), Utilities Division, and no signiﬁcant eﬀects were determined to be a result of the proposed Project. The Project’s land uses (hotel and drive-thru restaurant) have been proposed to be constructed at a lower intensity (less than 1.0 FAR – 0.05 FAR for the drive-thru restaurant and

0.63 FAR for the hotel) than was originally analyzed in TOP. 5 .

The site can be adequately served by all required utilities and public services. All necessary wet and dry utilities are available to the Project site, which is located in an already-developed, urbanized area containing hotels, drive-thru restaurants, and multiple-family residential land uses.
79 City Council Agenda Report
File No.: PCUP22-006
February 21, 2023
Attachment A: Market Feasibility Study
(Attachment follows this page)
80 MARKET STUDY REPORT

PROPOSED EVERHOME SUITES ONTARIO
SE Corner of East G Street & North Corona Avenue
Ontario, CA 91764
CBRE, Inc. File No. 21-414NH-1070-1
Mr. Philip Powers
Ontario Extended Stay, LLC
633 West 5th Street, 28th Floor
Los Angeles, CA 90071
www.cbre.com/valuation
www.cbrehotels.com
81 CBRE, In c.

CBRE Hotels Advisor y
400 S. Hope Street , Suit e 2500
Los Angeles, CA 90071
+1 213 613 3373 Of fice
+1 714 504 8559 Mobile
Brandon.Feighner @cbre.com
www.cbrehotels. com

CO MMERCIAL REAL ESTATE SERVIC ES
Brandon Fei ghner
Executi ve Vice Presi dent
CBR E Hotels A dvisory

www.
cbrehotels .com
October 19, 2021
M
r. Philip Powers
Ontario Extended Stay, LLC
633 West 5th Street, 28th Floor
Los Angeles, CA 90071
D
ear Mr. Philip Powers:

I
n accordance with our agreement, we hav e completed our analysis of potential market demand and prepared a statement of estimated annual operating results for a proposed EverHome Suites (the “Hotel” or “Subject”) to be located at the SE Corner of East G Street & North Corona Avenue (the “Site”) in Ontario , CA. Pursuant to our engagement, we have prepared this report summarizing our findings.

The conclusions reached are based on our knowledge of the competitive lo dging market as of October 2021. The following report summarizes our findings and reflects the conclusion of our analysis. As i n al l studies of this type, the estimated results are based upon competent and efficient management and presume no significant change in the competitive m arket from that as set forth in this report. Since our results are based on estimates and assumptions that are subject to uncertainty and variation, we do not represent them as results that will actually be achieved.

As in all studies of this type, the es timated results are based on competent and efficient management and presume no significant change in the status of the competitive lodging market from that as set forth in this report. Under the terms of our engagement, we are not obligated to revise this report to reflect events or conditions that occur subsequent to completion of our fieldwork; however, we are available to discuss the necessity for possible revision in light of changes in the economic environment and/or other market factors affecting the proposed Hotel.

Since the future performance of the proposed Hotel is based on estimates and assumpt ions that are subject to uncertainty and variation, we do not present them as results that will ac tually be achieved. However, our analysis has been cons cientiously prepared on the basis of inform ation obtained during the course of this assignment and on our experience in the industry and the local market. It is expressly understood that the scope of our study and the report thereon do not include the poss ible impact of zon ing or environmental regulations, licensing requirements, or other restrictions concerning the Subject except where such matters have been brought to our attention and are disclosed in the report. This report is subject to the Assumptions and Limiting Conditions presented in the Addenda.
82 Proposed EverHome Suites Ontario, Ontario, CA
Ontario Extended Stay, LLC
October 19, 2021
Page ii
Important Warning - Market Uncertainty from Novel Coronavirus: The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health Organization as a Global Pandemic on March 11, 2020, is causing heightened uncertainty in both local and global market conditions.

Global financial markets have seen steep declines since late February 2020 largely on the back of the pandemic over concerns of trade disruptions and falling demand. Many countries globally have implemented strict travel restrictions and a range of quarantine and “social distancing” measures.

Market activity is being impacted in most sectors. As at the valuation date, we consider that we can attach less weight to previous market evidence for comparison purposes, to inform opinions of value. Indeed, the current response to COVID-1 9 means that we are faced with an unprecedented set of circumstances on which to base a judgement. Our analysis is based on the information available to us as of October 2021. However, the forecasts for the market have been updated
to reflect the most recent data available from CBRE Hotels Americas Research.

Our analysis is therefore reported on the basis of ‘material valuation uncertainty’. Consequently, less certainty – and a higher degree of caution – should be attached to our analysis than would normally be the cas e. ADR, occupancy/demand levels, and revenues may change more rapidly and significantly than during standard market conditions. Given the unknown future impact that COVID-19 might have on the real estate market, we recommend that you keep the analysis of this property under frequent review.

We appreciate your cooperation extended to us during the course of our engagement and would be pleased to hear from you if we could be of further assistance in the interpretation of our findings and recommendations.

Sincerely,
Brandon Feighner Spencer Fields
Executive Vice President Senior Consultant
CBRE Hotels Advisory CBRE Hotels Advisory
83 iii

TABLE OF CONTENTS
P
age
Number
INTRODUCTION ......................................................................................................... 1 OVERVIEW OF THE MARKET STUDY ............................................................. 1 ASSUMPTIONS USED FOR PROJECTIONS ..................................................... 1 METHODOLOGY ....................................................................................... 1 AREA REVIEW ............................................................................................ 2 MARKET RESEARCH .................................................................................... 2 PREPARATION OF MARKET SUPPLY AND DEMAND ESTIMATES ......................... 2 SUBJECT OCCUPANCY AND AVERAGE DAILY RATE PROJECTIONS ................... 2 ESTIMATED ANNUAL OPERATING RESULTS ................................................... 3 SUMMARY OF CONCLUSIONS .................................................................... 3 MARKET PERFORMANCE AND MARKET SHARE ESTIMATES ............................... 3 ANALYSIS OF SITE LOCATION ..................................................................................... 1 ACCESS AND VISIBILITY .............................................................................. 4 RELATIONSHIP TO DEMAND GENERATORS AND AREA AMENITIES ................... 4 Transient .............................................................................. 4 Group .................................................................................. 4 SITE CONCLUSIONS .................................................................................. 5 FACILITIES PROGRAMMING ......................................................................................... 5 INTRODUCTION ....................................................................................... 5 Scope of Facilities ............................................................................ 5 Overall Quality Level and Design ....................................................... 5 EXTENDED STAY HO TEL ............................................................................. 5 Guest Rooms ................................................................................... 6 Food and Beverage Facilities ............................................................. 6 Meeting Space ................................................................................. 7 Other Facilities and Amenities ............................................................ 7 Facility Co nclusions .......................................................................... 7 SAN BERNARDINO-RIVERSIDE MSA AREA REVIEW .......................................................... 2 INTRODUCTION ....................................................................................... 2 SAN BERNARDINO -RIVERSIDE MSA OVERVIEW ............................................... 2 Lodging Market Forecast ................................................................... 2 AREA CONCLUSIONS ................................................................................ 3 NEIGHBORHOOD ANALYSIS ....................................................................................... 5 Introduction .................................................................................... 5 Local Government ............................................................................ 5 Transportation ................................................................................. 5 Employment .................................................................................... 6 New Model Colony General Plan (Ontario Ranch) ................................. 6 Ontario International Airport .............................................................. 7 The California Commerce Center ........................................................ 7 Ontari o Vintage Industrial Park .......................................................... 7 Ontario Convention Center ................................................................ 8 Tourist Attractions ............................................................................ 8 Ontario Mills Mall ................................................................. 8 Toyota Arena ........................................................................ 8 NEIGHBORHOOD CONCLUSION ................................................................ 9 HOTEL MARKET ANALYSIS ............................................................................................ 1 NATIONAL OVERVIEW ................................................................................ 1 National Economic Summary ................................................... 1 Baseline Forecast ............................................................................. 2 The Demand for Travel ...................................................................... 3 Impact on Profits .............................................................................. 3 84 iv

TABLE OF CONTENTS
P
age
Number
Investment Rates .............................................................................. 5 Investm ent Activity ............................................................................ 5 WHAT’S NEXT ........................................................................................... 6 LOCAL HOTEL MARKET ANALYSIS ................................................................ 7 Competitive Supply ........................................................................... 7 Additions to Supply ......................................................................... 11 HOTEL ROOMS DEMAND ......................................................................... 11 Historical Performance of the Competitive Supp ly ................................ 11 Mix of Demand .............................................................................. 13 Transient Segment ................................................................ 13 Group Segment ................................................................... 14 Summa ry of Demand Growth and Market Occupancies ........................ 15 PROJECTED MARKET PERFORMANCE OF THE PROPOSED SUBJECT ................ 17 Penetration Analysis ........................................................................ 17 Penetration of Subject ..................................................................... 17 Transient Demand Penetration ............................................... 18 Group Market Penetration ..................................................... 18 Overall Mix, Penetration, and Occupancy .......................................... 18 AVERAGE DAILY RATE ............................................................................... 21 Competitive Market ........................................................................ 21 Average Daily Rate and Yield for the Subject ...................................... 21 STATEMENTS OF ESTIMATED ANNUAL OPERATING RESULTS ......................................... 1 BASIS OF PROJECTIONS ............................................................................ 1 STATEMENT OF ESTIMATED ANN UAL OPERATING RESULTS ............................. 1 Income and Expense Estimates ........................................................... 1 Operating Statistics of Comparable Hotels ........................................... 2 REPRESENTATIVE YEAR ESTIMATE ................................................................. 5 Departmental Revenues and Expenses .................................................. 5 Rooms Department ................................................................. 5 Rooms Expense ...................................................................... 5 Other Revenue and Expense .................................................... 6 Undistributed Operating Expenses ....................................................... 7 Administrativ e and General ..................................................... 7 Information and Telecommunications Systems Expense ................. 7 Marketing ............................................................................. 8 Property Operations and Maintenance ....................................... 8 Energy and Ut ility Costs .......................................................... 9 Fixed Charges ................................................................................. 9 Management Fees .................................................................. 9 Property Taxes ....................................................................... 9 Insurance ........................................................................... 10 Reserves for Replacement ................................................................ 10 REPR ESENTATIVE YEAR OPERATING STATEMENT .......................................... 10 ESTIMATED ANNUAL OPERATING RESULTS ................................................. 12 Inflation ........................................................................................ 12 Statement of Estimated Annual Operating Results ................................ 12 85 Proposed EverHome Suites Ontario, Ontario, CA
Section I

INTRODUCTION
86 I-1Section I – Introduction
Proposed EverHome Suites Ontario, Ontario, CA

INTRODUCTION

OVERVIEW OF THE MARKET STUDY
CBRE Hotels was formally retained on September 1, 2021 by Ontario Extended Stay, LLC to perform a study of the potential market demand and operating results for a proposed EverHome Suites hotel (the “Hotel” or “Subject”) to be located at the SE Corner of East G Street & North Corona Avenue in Ontario, CA.

As a c omponent of this analysis, after we have identified the potential market de mand in the Ontario lodging market, we have then provided our p rojections of the occupancy and av erage daily room rate (“ADR”), and revenue per available room (“RevPAR”) the proposed Subject could reasonably be expected to achieve for its first five years of operation. Given these projections, we have also estimated the Subject’s annual operating results including total operating revenues and expenses, net income from operations, and ratio to total reven ues for ten years of operation. For the purpose of our analysis, we have assumed the S ubject will be a 125-room, EverHome Suites hotel. We have assumed that the proposed Hotel would be open and available for occupancy by January 1, 2024. This report represents the culmination of our market research, analysis, and assessments relative to the potential market demand for the proposed Hotel.

ASSUMPTIONS USED FOR P ROJECTIONS
Our analysis was based on the following set of assumptions:
 The proposed Hotel is to be located at the SE Corner of East G Street & North Corona Avenue in Ontario, CA;
 The proposed Hotel will contain 125 guest rooms;
 The Subject will be positioned an EverHome Suites hotel;  The Subject will offer facilities and services consistent with an extended stay hotel;  The ownership/developer of the Subject will obtain approvals from the City of Ontario to develop the property into a hotel; and,
 The Hotel project will open on January 1, 2024.

METHODOLOGY
In conducting the study, we:
 Physically inspected the S ubject site as we ll as researched existing and planned surrounding developments;
 Assessed the impact of the pro posed Subject’s accessibility, visibility, and location rela
tive to demand generators and overall marketability;
 Researched and anal yzed current economic and demo graphic trends in Sa n B
ernardino County with a focus on Ontario to determine the trends’ impact on future lodging demand within the market;
 Identified the competitive supply of lodging facilities in the greater Ontario area;  Reviewed the his torical performance levels for the competitive lodging supply on a composite basis;
87 I-2Section I – Introduction
Proposed EverHome Suites Ontario, Ontario, CA
 Estimated the anticipated growth in demand for, and sup ply of, lodging accommo- dations in the competitive market area;
 Determined the optimum positioning of the Hotel to b e located at the Subject Site w
ithin the competitive market and prepared a forecast of the pote ntial annual occupancy and average daily rate for the first five years of operation of the proposed Subject; and,
 Prepared a statement of estimated annual operat ing results for the Hotel for the ten- year period from January 1, 2024 through December 31, 2033.

Several sources were used in compiling the background information and preparing the analysis contained in this report. These resources included Trends in the Hotel Industry, published by CBRE Hotels; data on the local lodging market gathered through direct interviews with managers of the competitive properties; data provided by sources in the lodging chains with which the competitive properties are affiliated; and ec onomic data on the region fr om various local governmental and planning entities.

AREA REVIE W
We gathered and analyzed relevant economic, d emographic, and development data relative to San Bernardino County and the City of Ontario. The purpose of this analysis was to ascertain the economic cl imate in which the proposed H otel will operate and create a b asis for projecting future economic conditions as they relate to the proposed Subject.

MARKET RESEARCH
We have reviewed our database and conducted primary market research relative to the proposed Hotel’s competitive market and prepared a five- year history of occupancy and ADR trends. To obtain data on current conditio ns, market mix, and likely future results, we co nducted primary research of the competitive hotels and the planning department. Data on proposed projects was also researched and reviewed to determine the likelihood of future additions to supply.

PREPARA TION OF MARKET SUPPLY AND DEMAND ES TIMATES
We analyzed historical growth and the characteristics of each of the principal segments of demand for lodging accommodations and resea rched the potential add itions to s upply. Then, using the information gathered in our research, we projected the growth in demand from 2020 to 2028 for the comp etitive market, and combi ned the estimated future supply and dema nd to reach our conclusions of the overall market potential.

SUBJECT OCCUPANCY AND AVER AGE DAI LY RATE PROJECTIONS
After completing our estimates of the market area’s supply and demand, we estimated the share of the market that the proposed H otel should reasonably be expected to capture for its first five years of operation. From this, we derived its annual occupancy percentages. After considering the historical average d aily rate trends in the market an d t he projected market position for the 88 I-3Section I – Introduction
Proposed EverHome Suites Ontario, Ontario, CA
proposed Subject, the property’s average daily rate was projected from its estimated opening in 2024 through 2028.

ESTIMATED ANNUAL OPE RATING RESULTS
Based on our analysis of marke t demand and the estimated occupancy and average daily room rates for the proposed Hotel, we have estimated revenues and expenses for the Subject for its first ten years of operation. These estimates result in a “bottom line” of income before fixed charges of interest, depreciation, amortization, and income taxes.

SUMMARY OF CONCLUS IONS
Based on our e xisting knowledge of the Ontario and Gre ater San Bernardino County hotel markets coupled w ith our res earch relative to this assignment, we are o f the opinion that an opportunity exists for the developme nt of a n extended stay hotel at the S ubject Site. Its location within the Airport-adjacent neighborhood of Ontario offers convenient access to a wide variety of transient and group hotel demand generators in the local com petitive market. The site enjoys good accessibility and visibility relative to the region’s expansive transportation network.

MARKET PE RFORMAN CE AND MARKET SHARE E STIMATES
We have analyzed the performance and m ix of demand for the hotel properties with which the proposed Subject is expected to compete. Considering economic and market indicators, we have estimated the market area’s supply of and demand for hotel room nights and have estimated the share of the market that the proposed Hotel should reasonably be expected to capture for its first five years of operation. Based upon an analysis of the sources of demand available to the Subject property and its estimated competitive po sition, we have estimated the occupancy percentage and average daily rate that could pot entially b e achieved in a representative year, in current value dollars, and over the first five years of operation.

The following table outlines our estim ates of occup ancy, a verage daily rate, and the resulting revenue yield for the S ubject. It should be note d that figures are rounded to the nearest dollar amounts.

Projected Market Performance of the Subject Hotel
Annual Percent Occu pied Percent Occupancy Average Percent Percent Market Revenue Year Supply Change Rooms Change Percentage Daily Rate Change REVPAR Change Penetration Y ield 2024 45,625 32,100 70% 137.00 96.39 96% 93%
2025 45,625 0.0% 34,400 7.2% 75% 141.00 3.0% 106.31 10.3% 98% 96% 2026 45,625 0.0% 35,700 3.8% 78% 145.00 3.0% 113.46 6.7% 100% 98% 2027 45,625 0.0% 35,700 0.0% 78% 149.00 3.0% 116.59 2.8% 100% 98% 2028 45,625 0.0% 35,700 0.0% 78% 154.00 3.0% 120.50 3.4% 100% 98% CAAG 0.0% 2.7% 3.0% 5.7%
Source: CBRE Hotels
89 I-4Section I – Introduction
Proposed EverHome Suites Ontario, Ontario, CA
The estimates of revenues, costs, and expenses are based on the Subject’s assumed specific facilities and services and their operational characteristics. As a basis for our projections, we have analyzed the operating results of lodging properties with similar c haracteristics that are believed to operate with efficient management and proper control of costs and expenses. The following table summarizes the estimated operatin g result s for the first ten years of opera tion for th e proposed 125-room, EverHome Suites hotel, to be located in Ontario, CA.

Summary of Estimated Annual Operating Results
Total Net Operating Ratio to
Year Revenue Income* Total Revenues
2024 $4,445,000 $1,321,000 30%
2025 4,902,000 1,570,000 32%
2026 5,243,000 1,716,000 33%
2027 5,388,000 1,759,000 33%
2028 5,568,000 1,832,000 33%
2029 5,713,000 1,869,000 33%
2030 5,894,000 1,936,000 33%
2031 6,075,000 2,001,000 33%
2032 6,256,000 2,063,000 33%
2033 6,436,000 2,121,000 33%
Source: CBRE Hotels
* Income before the deduction of depreciation, interest, amortization, and income taxes, but after the deduction of a reserve for capital r
eplacement.
90 Proposed EverHome Suites Ontario, Ontario, CA
Section II

ANALYSIS OF SITE LOCATION AND

FACILITIES PROGRAMMING
91 II-1Section II – Analysis of Site Location and Facilities Programming Proposed EverHome Suites Ontario, Ontario, CA

ANALYSIS OF SITE LOCATION
The Subject is a corner irregularly shaped site located along the southeast corner of East G Street and North Corona Avenue, just west of the intersection of North Vineyard Avenue and East G Street in Ontario, CA. It is situated immediately proximate to the Interstate 10 Freeway and 0.7 miles north of the Ontario International Airport.

The Subject Site is irregularly shaped with approximately 770 feet of frontage along East G Street and 618 feet of frontage along North Corona Avenue. It is comprised of one assessor parcel/legal lot, containing a gross land area of 148,539 square feet (3.41 acres). Of the 3.41 acre lot, ownership has indicated plans to allocate approximately 2.02 acres to the development of the Subject ho tel, with the remaining 1.14 acres intended to be allocated to restaurant retail.

The parcel was comprised of vacant, raw land as of the date of our field work.

Land uses immediately surrounding the site include:

North: T o the north is the Ontario Airport Inn and the Interstate 10 Freeway . Further north on the opposite side of the Interstate 10 is residential development.

South: To the immediate south is the Sheraton Ontario Airport. Further south is an office building, Yoshino ya Onta rio, Circle K, and a commercial building with designated religious land use.

East: Located to the east of the S ite across East G Street is an In-N-Out Burger and a raw vacant land p arcel. Further east across North Vineyard Avenue is a Mobil gas station, a U -Haul Neighborhood Dealer, and the Qu ality Inn Ontario Airport. Further east is the Ontario Convention Center complex.

West: To the immediate west is Connect Staffing, Inc. employment agen cy, two raw vacant land parcels, and residential development. The area further west includes Ray Wiltsey Middle School.

An area map of the Subject’s location is presented on the following page. 92 II-2 Section II – Analysis of Site Location and Facilities Programming Proposed EverHome Suites Ontario, Ontario, CA

Area Map
93 II-3Section II – Analysis of Site Location and Facilities Programming Proposed EverHome Suites Ontario, Ontario, CA
Site Plan
94 II-4 Section II – Analysis of Site Location and Facilities Programming Proposed EverHome Suites Ontario, Ontario, CA

ACCE SS AND VISIBILITY
The Subject is accessible via East G Street and North Corona Avenue.

East G Street , at the S ubject, is improved with one lane of traffic in each direc tion. Street improvements inclu de asp halt paving and con crete curbs, gutters and sidewalks, and st reet lighting. Street parking is not permitted.

North Corona Avenue, at the Subject, is improved with one lane of traffic in each direction. Street improvements include as phalt paving and concrete curbs, gutters, a sidewalk on one side, and street lighting. Street parking is permitted on the side of the street adjacent to the Subject; parking is not permitted for vehicles measuring over six feet tall.

The Site can be easily accessed from major p arts of the Ontario metropolitan area, due to its proximity to the Interstate 10 Freeway.

RELATI ONSHIP TO DEMAND GE NERATORS AND AREA A MENITIES The Site is located in Ontario, CA , less than one mile from Ontario International Airport . The subject benefits from its proximity to the International Airport, which generate tra nsient demand for the local lodging market . The Site is also located less than f ive miles from the Ontario Montclair School District and the Inland Emp ire Health Plan, which have 2,500 and 2,000 local employees, respectively.

Transient
Transient demand within the local lodging market is comprised of corporate and leisure demand.

Commercial demand in the competitive market generally is derived from conventional commercial demand, generated largely by the large number of office parks and regional distribution centers located in the greater Ontario area. The commercial demand segment typically includes less price-sensitive individual business travelers as well as contract business with major corporations. Commercial travel is heaviest Monday through Thursday nights, with typica l fill nights on Tuesdays and Wednesdays. These travelers have a preference for hotels that are located near where they are conducting b usiness, offer services and amenities for commercial guests and are affiliated with a recognizable and reliable brand name. Leisure demand in the market is generated primarily by travelers visiting friends o r family in the local area. Additionally, leisure demand is generated from the local event venues such as the Ontario Convention Center and Toyota Arena. This segment is comprised of both domestic weekend travelers, as well as some international travelers. The hotels in the competitive supply are also used by leisur e travelers as a base destination for visiting the entire Southern California area as t hey are located within a reasonable proximity to attractions in Los Angeles and Orange County.

Group
Relative to the existing and comparable hotel supply in the market ar ea, the Subject’s location is similarly well situated to capture group demand emanating from the International Airport and 95 II-5 Section II – Analysis of Site Location and Facilities Programming Proposed EverHome Suites Ontario, Ontario, CA
Convention Center. However, as is common for e xtended stay properties, the s ubject is anticipated to have minimal designated meetin g space, and rather will serve to accommodate those holding meetings elsewhere within the City.

SITE CONCLUSIONS
The Site’s proximity to the Interstate 10 Freeway and Ontario International Airport affords it good neighborhood access. There are several vacant land p arcels, as well as unoccupied improved parcels available within the neighborhood and adjacent to the Subject Site. The Site enjoys good accessibility and visibility relative to the region’s expansive transportation n etwork. As noted herein, the Subject is well-located relative to demand generators in the local competitive market and should capture an appropriate mix of demand in the transient and group market segments.

FACILITIES PROGRAMMING

INTRODUCTION
We have considered the current development plans for the subject site in the context of the overall Ontario lodging mar ket. The following provides a general scope of the facilities that we recommend for the subject property.

Scope of Facilities
It is our understanding that t he Subject is currently envisioned as an EverHome Suites hotel to be located at t he SE Corner of East G Street & North Corona Avenue in Ontario, CA. Based on discussions with ownership, our analysis assumes the proposed Subject will include 125 guestrooms.

The overall quality level of construct ion and furnishings is to be equal to, if not superior to the majority of the comp etitive market and well thought out to attract e xtended stay guests. For the purposes of this analysis, we have assumed an opening date of January 1, 2024.

Overall Quality Level and Des ign
Based on the existing facilities within the market and the S ubject’s location, it is our opinio n that the hotel room night demand within the market is strong enough to support the addition of a 125-room, EverHome Suites hotel. To appropr iately position the S ubject within the compet itive market, the Hotel’s overall quality level s hould be a t or above the competitive properties. As is standard for extended stay hotel properties, EverHo me Suites is designed to provide guests with accommodations which allow them to work, relax, eat and sleep. Given the demand generators in the area, the proposed Hotel will offer modern amenities t hat are appealing to extended stay travelers.

EXTENDED S TAY HOTEL
An extended-stay hotel is ch aracterized by reduced amenities with an emphasis on an all- suite guestroom product targeted to accommodate long-term stays (generally defined as five nights or 96 II-6Section II – Analysis of Site Location and Facilities Programming Proposed EverHome Suites Ontario, Ontario, CA
longer). One defining characteristic of the extended stay segment is the in- room kitchen, or in kitchenette. In addition, the customer service model emphasizes limited housekeeping, and complimentary breakfast and evening receptions. Examples of extended stay brands include Residence Inn by Marriott, Candlewood Suites by IHG, Element by Marriott, H yatt House by Hyatt and Homewood Suites and Home2Suites by Hilton.

The quality of the Subject and the amenities provided should be in line with other extended stay hotel products within the local market.

Guest Rooms
The Subject is intending to offer 1 25 guest rooms in three configurations, including single-king rooms, double-queen rooms and suites . Guest rooms will be locat ed on al l four floors. With a count of 125 rooms (mostly king room varieties), the Hotel will be well- positioned to capture an appropriate and diverse mix of predominantly transient demand, with a modest amount of group demand. Based on our understanding of the EverHome prototype, the proposed Hotel’s assumed guest room mix is summarized below.

Room Types No. of Rooms Percent
King 73 58%
Double Queen 43 34%
Suites 9 7%
Total 125 100%
Proposed EverHome Suites Ontario - Guest Room Mix
G
iven the intended positioning of the Hotel, we anticipate that the rooms and accomp anying bathrooms will be s tylishly designed, featuring a unique design theme and floorplans that focus on efficient space usage. We recommend that the guest rooms contain a remote controlled, 46” or larger flat -screen “Smart TV ” offering guest access to streaming s ervices, as well as the standard premium cable channels and an on -command movie system. Guest rooms should also offer wireless high-speed internet access, a wo rk desk and chair, telephone with dual lines and voicemail option s, kitchenette, sofa, modern and functional bathrooms, contemporary furnishings, hair dryer, iron and ironing board, and other amenities consistent with a high-quality extended stay hotel.

Food and Beverage Facilitie s
The Subject is anticipated to feature a marketplace adjacent to the reception desk in the lobby of the Hotel. We recommend that the marketplace be used to provide guests wi th complimentary breakfast, as is customary for extended stay hotels . Space permitting, t he marketplace can then either be refreshed to offer convenient grab-and-go options to guests throughout the remainder of the day, or the Hotel can maintain a 24- hour grab -and-go selection in a portion of the marketplace.
97 II-7 Section II – Analysis of Site Location and Facilities Programming Proposed EverHome Suites Ontario, Ontario, CA
Meeting Space
We recommend the Su bject provide a modest amount of meeting space in order to accommodate functions for SM ERF and other groups. The amount of meeting space sho uld be within the range of available space provided at the competitive properties, which are as follows:

Property Total
SpringHill Suites Ontario Airport Rancho Cucamonga 891
Comfort Suites Ontario Airport Convention Center 1,200
Comfort Inn & Suites Near Ontario Airport 240
Residence Inn Ontario Airport 0
Holiday Inn Ontario Airport 5,000
Embassy Suites by Hilton Ontario Airport 5,282
La Quinta Inns & Suites Ontario Airport 650
Holiday Inn Express and Suites Ontario Airport 4,052
Average
Competitive Set Meeting Space

As shown, most of the comparables include moderate amounts of meeting space, ranging from 0 to 5,282 square feet. Given the r ecommended room count, the primary demand generators in the market, and the S ubject’s p ositioning as an extended service hotel, a figure in the low-to- middle of the range appears reasonable. We recommend that the proposed Hotel offer approximately 500 square feet of meeting space.

Other Facilities and Amenities
Other amenities at the S ubject will include a fitness center, guest laundry, business services, and wireless high-speed internet access throughout the property. The fitness cen ter will be mo dern and include card io and s trength equipment, as well as core and balance k its. In addition, the proposed Hotel will include an outdoor pool and parking for 125 vehicles in a surface-level lot.

Facility Conclusions
The aforementioned facilities and amenities will optimize the market position and performance of an extended stay hotel at the Subject s ite. The proposed H otel is well suited to successfully integrate into the immediate area and cat er to the various segments o f demand within the Ontario market . With its newer facilities and high- quality design, the proposed H otel will be positioned to capture a solid bas e of transient demand as well as a moderate amount of group business. Based on the s elected program, the Subject will be one of the new est extended stay hotels in Ontario and will be associate d with a national brand affiliation. With its convenient location to transient and group demand generators in the local area, the property will have the proper facilities and an appropriate location to service the needs of its fair share of demand market s egments. Our market pro jections for the propos ed Subject as sume t hese facilities, amenities, and services. Brand prototype renderings and building sections of the proposed Hotel are provided on the following pages.
98 II-8 Section II – Analysis of Site Location and Facilities Programming Proposed EverHome Suites Ontario, Ontario, CA

Brand Prototype First Floor Rendering
99 II-9Section II – Analysis of Site Location and Facilities Programming Proposed EverHome Suites Ontario, Ontario, CA
Brand Prototype Second Floor Rendering
100
II-10 Section II – Analysis of Site Location and Facilities Programming Proposed EverHome Suites Ontario, Ontario, CA

Brand Prototype Third Floor Rendering
101
II-11 Section II – Analysis of Site Location and Facilities Programming Proposed EverHome Suites Ontario, Ontario, CA

Brand Prototype Fourth Floor Rendering
102
II-12 Section II – Analysis of Site Location and Facilities Programming Proposed EverHome Suites Ontario, Ontario, CA

Brand Prototype Rendering
103

Proposed EverHome Suites Ontario, Ontario, CA
Section III

AREA REVIEW
104
III-1Section III – Area Review and Neighborhood Analysis Proposed EverHome Suites Ontario, Ontario, CA
Regional Map
105
III-2 Section III – Area Review and Neighborhood Analysis Proposed EverHome Suites Ontario, Ontario, CA

SAN BERNARDINO-RIVERSIDE MSA AREA REVIEW

INTRODU CTION
The economic climate of t he market area encompassing the Subject property is an important consideration in forecasting ho tel demand and income potent ial. Historical economic and demographic trends that highlig ht the amount of visita tion or other travel- related indicators provide a basis for hote l demand projections. The S ubject proper ty is located in the Cit y of Ontario in San Bernardino County. The purpo se of thi s section is to r eview available economic and demographic data to dete rmine whether the Subject site’s regional and loca l market areas might experience future economic growth.

SAN BERNARDINO -RIVERSIDE MSA OVERVIEW
The metropolitan area is comprised of Riverside and San Bernardino counties and is often called the "Inland Empire." It is bordered by Los Angeles and Orange counties on the west, and on the east by the states of Nevada and Arizona. Riverside County covers 7,304 square miles while San Bernardino covers 20,106. The January 1, 2021 population of the area totaled approximately 4,630,400, making it larger than the Phoenix-Mesa-Scottsdale MSA. The majority of the county’s acreage is a mixture of mountainous terra in and arid deserts. The center of the Inland Empire is located approximately 60 miles east of the center of Los Angeles, 110 miles northeast of San Diego, and 200 miles south west of Las Vegas.

Lodging Mar ket Forecast
The following discussion is taken f rom data pr ovided by CBRE Hotels’ Americas Research for all hotels in the San Bernardino-Riverside MSA. The historical data (2016 through 2020) is provided by Kalibri Labs, while the projections were developed by CBRE Hotels’ Americas Research.

By year-end 2021, due to the availability of effective vaccines, the reopening of the economy and easing of social distancing efforts in respon se to t he Novel Coronavirus pandemic, San Bernardino-Riverside hotels are f orecast to se e a RevP AR increase of 33.2 percent. This is the result of an e stimated increase in occupancy of 20.8 percent and a 10.3 percent increase in average daily room rates (ADR).

Looking t owards 2022, San Bernardino -Riverside MSA RevPAR is expected to reach $82.97, which is only s lightly below the MSA’s pre-COVID 2019 RevPAR of $83.38, on a n ominal basis.

The following table presents the five-year historical performance of the San Bernardino-Riverside MSA hotel market for all hotels, as well as a five-year forecast. 106
III-3 Section III – Area Review and Neighborhood Analysis Proposed EverHome Suites Ontario, Ontario, CA
Year Occupancy
Percent
Change ADR
Percent
Change RevPAR
Percent
Change
2016 74.6% - $98.75 - $73.67 -
2017 75.0% 0.6% $103.87 5.2% $77.90 5.8%
2018 75.0% 0.0% $107.53 3.5% $80.65 3.5%
2019 75.0% 0.0% $111.17 3.4% $83.38 3.3%
2020 60.5% -19.4% $99.17 -10.8% $60.00 -28.1%
2021 73.1% 20.8% $109.34 10.3% $79.93 33.2%
2022 73.5% 0.6% $112.86 3.2% $82.95 3.8%
2023 74.0% 0.7% $115.72 2.5% $85.63 3.2%
2024 75.0% 1.3% $119.02 2.9% $89.27 4.2%
2025 76.0% 1.3% $122.51 2.9% $93.11 4.3%
HOTEL HORIZONS - FIVE YEAR HISTORY and FORECAST

SAN BERNARDINO-RIVERSIDE MSA - ALL HOTELS
Source: CBRE Hotels Americas Research, Hotel Horizons 2Q 2021

AREA C ONCLUSI ONS
While the Coronavirus P andemic has caus ed significant reductions in economic activi ty in the short term, the economic recovery is well underway and the MSA is expected to return to nominal pre-COVID RevPAR levels by early 2023 , which is at least a year earlier than much of Southern California as a whole . The a rea is a signi ficant hub for transportation and trade services in Southern California, with the Ontario International Airport serving as a UPS hub for bo th small packages and air freight. We are of the opinion that the mid- to long-term economic outlook for San Bernardino-Riverside MSA remains positive.
107
III-4Section III – Area Review and Neighborhood Analysis Proposed EverHome Suites Ontario, Ontario, CA
Neighborhood Map
108
III-5Section III – Area Review and Neighborhood Analysis Proposed EverHome Suites Ontario, Ontario, CA

NEIGHBORHOOD ANALYSIS
The Subject site is located in the City of Ontario, which is situated in San Bernardino County. The Subject site is situated about one mile north of the Ontario International Airport.

Introduction
The City of Ontario is located along the Interstate 10 and Route 60 corridors , where they meet Interstate 15. This area of Southern California is generally called the Inland Empire. Onta rio is one of S outhern California's oldest municipalities, having been i ncorporation in 1891, and has been a manufacturing hub since the 20th Century. The city is well located relative to some of the busiest transportation corridors in Southern California. Ontario is also proximate to the City of Los Angeles. It is home to more than 109 million square feet of industrial space, and 3.6 million square feet of current or under construction commercial office space.

Local G overnment
The city of Ontario is governed by a five-member city council with the mayor serving as presiding officer at all city council meeting s. Public schools within the city are under the jurisdiction of the Ontario-Montclair and Mountain View School Districts.

Transpo rtation
The San Bernardino Freeway ( Interstate 10), the Pomona Freeway (State Route 60), and th e Ontario Freeway (Interstate 15) provide access to the city. The San Bernardino (10) Freeway passes through the northern portion of the city in an east/west direction. There is one partial and eight full interchanges on the San Bernardino Freeway serving the city. The Pomona Freeway passes through the southern portion of the city in an east/west direction. From this freeway, there are six full interchanges providing access to the ci ty. Finally, the Ontario Freeway runs in a north/south direction in the eastern quadrant of the city. There is one full interchange from this freeway to the city, however, the freeway itself has full interchanges with both the San Bernardino and Pomona freeways, just east of the city limits.

Primary east/west arterials include, from north to south, Fourth Street, Inland Empire Boulevard, Jurupa Street, Mission Boulevard, and Philadelphia Street. Primary north/south surface arterials in the city include Mountain, Euclid, Campus, Grove, Vineyard, Haven, Milliken, and Etiwanda Avenues. Overall, vehicular access to and within the city is considered good.

Rail access to the city is provided by the Southern Pacific and Union Pacific railroads. Both rail lines roughly traverse t he central portion of the city in an east/west direction with spur lines serving existing industrial developments. Air transportation is provided by the Ontario International Airport, which is discussed in further detail in a section that follows. 109
III-6 Section III – Area Review and Neighborhood Analysis Proposed EverHome Suites Ontario, Ontario, CA
Employme nt
Approximately 49.3 percent of the city ’s workforce is em ployed in white- collar jobs. The largest category within white- collar jobs is that of administrative support. This is followed by sales and then executive and managerial positions. Other significant employment sectors include services and pr ofessional specialty. Approximately 38.2 percent of the workforce is employed in blue- collar jobs. Within this category, precision production and craftsmanship is the largest job classification, followed by machine operator, and material transportation.

In addition to general job classifications, we have examined information on major employers in the city, compiled by the City of Ontario Website. This data is presented in the following table.

The preceeding data indicates the city has a diverse employment base. There are a number of large employers in the city, with no one company or industry dominating the local economy.

New Mo del Colony General Plan (Ontario Ran ch)
The New Model Colo ny General Plan (now referred to as Ontario Ranch) was approved by the Ontario City Council on January 7, 1998 and annexed into the city on November 30, 1999. The plan was formerly known as the “Sphere of Influence” area, or “Ag Prese rve”, and was the last significant underdeveloped area in the San Bernardino Valley. The New Model Colony encompasses approximately 8,200 acres and is envisioned to provide a master planned environment with several individual neighborhoods. The population is estimated to increase by over 100,000 people ba sed on the City of Ontario’s build -out analysis. The plan a llows for a diverse mixture of housing product s and types. Lot sizes vary from large estate lots (one acre) to small cluster lots, with an overall density of 4.6 dwelling units per acre, and overall average lot size of 6,728 square feet. A menities include parks, open space, water features, buffers, parkways, trails and bicycle paths.
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Ontario International Airport
The Ontario International Airport is located within the city limits about two miles fro m downtown Ontario. This airport is located south of the Sa n Bernardino Freeway, roughly between Vineyard and Haven Avenues. Ontario Int ernational Airport has two terminals and a separate adjacent international arrivals facility. In an effort to become mor e international, the airport has added Dynamic Internationa l Airways to operate roundtrip charter flights between Ontario and Nanchang, China. Each flight plans to accommodate 235 passengers aboard Boeing 767- 300ER aircrafts. Historical passenger and airf reight volumes have increased steadily, with passenger volumes reaching 5,583,732 in 2019 and 5,115,894 the year before. In addition, freight volumes increased significantly for 2019, reaching 781,993 tons, an 4% increase from the year before. The airport is a major catalyst of growth in the Inland Empire and directly benefits both the city and Inland Empire overall. In November 2016, the O ntario International Airport Authority made an announcement to move f orward on plans to redevelop land at the airport t o generate money toward expanding and improving the regiona l airport, with new money offsetting landing fee costs to entice airlines to return and expand flights, including several more international airlines. The authority’s visi on includes a new international terminal, an upgrade of terminals 2 and 4, a parking structure, hotels, restaurants and shops.

The California Commerc e Center
The California Commerce Center (Phases I, II, III, IV and the California C ommerce Center South) is a master-planned business park originally developed by Ontario Industrial Partners o n 1,855 acres adjoining Ontario International Airport. The California Commerce Center is designated as part of Foreign Trade Zone (FTZ) 51 -1, an extension of the Port of Long Beach Foreign Trade Zone 50. This desig nation increases the marketability of prop erties in the project as FTZs are legally outside U.S. Customs territory and merchandise can be shipped into the FTZ for storage, assembly, repackaging, further manufacturing or other processing wit hout having to g o through Customs entry procedures. Payment of duties is deferred until the merchandise leaves the FTZ or, if it is exported outside the U.S. from the zone, no duty is paid. Insurance costs , paperwork and red tape can be reduced, and expensive bonds can be avoided. Merchandise can also be stored to await the most favorable market conditions and import quotas can be minimized by holding materials in an FTZ.

Ontario Vintage Industrial Park
The Ontario Vintage Industrial Park is located east o f the California Commerce Center. I t encompasses 3,000 acre s. The boundaries of this project area are roughly the San Bernardino Freeway on the north, Milliken Avenue on the west, Philadelphia Street on the south, and Etiwanda Avenue on the east. Union Pacific Realty was t he original develo per of a 500+ -acre portion of this park. It is now developed with distribution, manufacturing and service business facilities. The Ontario Redevelopment Agency's goal is to develop this area with proceeds from its bond issues, financing n ecessary public improvements, thereby enha ncing the accessibility and 111
III-8 Section III – Area Review and Neighborhood Analysis Proposed EverHome Suites Ontario, Ontario, CA
utilization of the area. One of the advantages of being located in the Vintage Industrial Park is that locations in this area typically have lower bond assessment s than locations in the California Commerce Center.

Ontario Convention Center
The Ontario Convention Center is located at the northwest corner of Holt Boulevard and Convention Center Way, immediately southwest of the 10 Freeway. Conveniently located approximately one-quarter mile north of the Ontario Airport, the center features 70,000 square feet of column- free exhibit space, a 20,000 square- foot ballroom divisible into three sections, and 24 meeting rooms tot aling 24,000 square feet of meeting space. It is an id eal venue for conventions, trade shows, consumer shows, exhibits, theme events and meetings of any size.

Tourist Attractions
Ontario Mills Mall
Ontario Mills is an indoor outlet mall that hosts many pop ular, well- known and high- end retailers. Many of these retailers don't have discount stores at other nearby outlet malls, which makes the Mills even more attractive to visitors. Some of its most popular discount stores include Abercrombie & Fitch, Converse, Ba nana Republic, the Disney Store, Hollister, Burlington Coat Factory, Vans, Tommy Bahama, J. Crew, Ralph Lauren and JC Penney. Ontario Mills also houses non-discount or warehouse branches of popular chains such as Bed, Bath & Beyond, Forever 21, H&M and Bath & Body Works.

Dining and entertainment options are also ample here. There are two large movie theaters on the mall's property, including AMC 30 Theaters and Edwards Ontario Palace Stadium 22 & IMAX.

Those looking for dining and entertainment in one can v isit the Improv Comedy Club & Dinner Theatre, GameWorks or Dave & B usters, which contain restaurants and a fu ll bar inside their arcades.

Toyota Arena
Opened in 2008, the Toyota Arena is a 9,500- seat venue that can accommodate concerts, rodeos and basketball and hockey games. In fact, Ontario' s minor- league hockey team, the Ontario Reign, calls the Arena home. This arena was a welcomed addition to the Ontario and Inland Empire regions, as local visitors and residents previously had to travel to Downtown Los Angeles or Orange County for major concerts or events. The arena contains 36 suites and offers a range of VIP services.
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NEIG HBORHOOD CONCL USIO N
The City of Ontario is strategically located along the Inte rstate 10 and Route 60 corridors, proximate to where they meet the Interstate 15. Ontario is one of Southern California's oldest municipalities and has been an economic and logistics hub for more than a century. The city is well located relative to som e of the busiest transportation corridors in Southern California, and benefits from its proximity to the County of Los Angeles. It is home to more than 100 million square feet of industrial space, and nearly four million square feet of commercial office space.

Additionally, the city has nearly 8,000 businesses. Furthermore, Ontario is home to the Ontario International Airport, Ontario Convention Center, Toyota Arena, Ontario Mills Mall and a number of development projects intended to position t he city as Southern California’s next urban center, and a regional destination for commerce, entertainment and lifestyle destination. 113

Proposed EverHome Suites Ontario, Ontario, CA
Section IV

HOTEL MARKET ANALYSIS
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HOTEL MARKET ANALYSIS
Understanding the relationship between supp ly and demand is a critical component of any analysis, particularly w ith respect to h otels. Unlike other property types, hotels essentially lease their ro oms on a daily basis. While this characteristic allows for an immediate response to changes in market c onditions, it also requires a high level of management intensity. There is an inverse relationship bet ween occupancy and average daily rate (ADR) and rai sing or lowering rates typically has an immediate impa ct on room -nights sold. Ef fective management ent ails finding the proper balance that allows for the maximization of revenue.

In this section, we first identify the Subject property’s competitive set (e.g., those hotels that tend to compete for the same sources of demand). We then identify relevant dema nd sources, analyze historical growth patterns and assess the potenti al for gr owth (o r lack there of) in demand by segment. The result is a projection of f uture market performance. Lastly, we conclude with a projection of occup ancy and ADR for the Subject p roperty, taking into consideration it s competitive strengths and weaknesses relative to the overall market.

As a hotel includes a going -concern business a s well as real property, the fu ture market performance of a lodging faci lity is a di rect function of t he supply and demand f or the hotel rooms within its market area. Acco rdingly, an analysis of the local area’s hotel market is a key component of our projections of future performance. The following is a discussion of the national hotel market as well as the Subject’s local competitive market.

NATIONAL OVERVIEW
Hotel Market Summary
The following overview was derived primarily from CBRE Hotels Research (CBRE Hotels) 2nd Qtr. 2021 Hotel Horizons© report for the United States, as well as CBRE Econometric Advisors (CBRE- EA), and Kalibri Labs.

National Economic Summary
Declining COVID-19 infection rates in the U.S. gave rise to robust pace of economic recovery in Q2 2021. According to the Bureau of Economic Analysis (BEA), GDP grew at an annualized rate of 6.6% in Q2, up from 6.3% in Q1. The two categories of GDP that most closely relate t o the hotel indus try are consumption of goods and services (+11.9% annualiz ed in Q2), and investment spending ( -4.0% annualized in Q2). Food services and A ccommodations posted the second quarterly increase in a row and saw the strongest gro wth of any of th e consumption categories, +68.5% annualized, in Q2. Total nonfarm payroll employment grew 615,000 jobs/month on average in Q2, according to the Bureau of L abor Statistics (BLS). At the end of Q2, employment remained 3.2% below June of 2019’ s levels, a shortfall of roughly 4.6 million jobs. Leisure and hospitality employment increased by an average of 348,000 jobs per month in Q2, narrowing the shortfall vs. 2019 levels from 2,700,000 (16.6%) in Q1 to 1,700,000 jobs 115
IV-2 Section IV – Hotel Market Analysis
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(10.4%) in Q2. Inflation, as measured by t he Consumer Price Index (CPI), increased to 4.8% in Q2 2021, up from 1.9% in Q1. This was the fastest rate since 2008. July data suggests moderating inflation and CBRE expects inflation to return to a moder ate pace of 2.0- 2.2% over the mid dle to long term . Although vaccin ation progress in Q2 was significant, and summer leisure demand was strong, the recent reacceleration in infection rates and delays to the return to office are likely to slow the pace of gains during the fall. Groups and international travel may begin to gain momentum in 2022 and beyond. Our revised forecasts ref lect a delay in recovery of a quarter compared to our previous forecast with a return of RevPAR to prior to pandemic levels by 2025, led by high margin ADR growth.

Baseline Forecas t
Strength in leisure travel continues to drive 2021's hotel recovery. The Q2 2021 occupancy level of 59.0% exceeded CBRE’s forecast of 52.7%. Third quarter da ta shows that this trend continued through the summer months. In fact, four of the 65 Horizons® m arkets are foreca st to exceed their Q3 2019 occupancy levels. Unfortunately , the rise in COVID -19 infections has moderated plans for the business - and meet ings-related travel that has historically driven mo st marke ts during the fall and winter months. Accordingly, CBRE has tempered expectations for Q4 2021 on a national basis. Of greater importance to hotel owners and operators is the growth in ADR. The surge in leisure travel has provided hotels with pricing leverage, especially those located in small town, interstate and resort locations. Properties in these geographies are projected to enjoy Q3 2021 ADRs at, or above, their Q3 2019 levels. Beyond 2021, we expect leisure demand will continue to boost the performance of properties in remote locations, supplemented by the advent of “bleisure” travel, but anecdotal conversations reveal that the Delta variant is having a negative impact on 2022 corporate travel budgets. Overall meetings demand will lag in growth, but in the near-term benefit markets with lower operati on costs, warmer weather, and less restrictive health regulations. C BRE is forecasting the U.S. national occupancy level to approach the long -run average of 62.0% in 2023, as illustrated in the following table.

We forecast a return of RevPAR to no minal 2019 levels during Q3 2024 based on lodging demand recovering to 2019 levels in 4Q 2023 and ADRs fully recovering in 1Q 2024 . However, 116
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fewer than exp ected si de-lined and conversion projects resulted in greater than previously forecast supply gains, and occupancy levels are not projected to recover to 2019's all-time high during the five-year forecast period.

The De man d for Travel
The demand for travel is driven by leisu re and t he ne ed for face -to-face b usiness meetings.

People avoid travel when they feel unsure about their future financial state (constraint #1) and when they feel afraid to make trips (constraint #2). I n the wake of th e 2008 financial crisis, for example, future cash flow and wealth uncer tainties severely impacted travel. Fear of travel is a broader and more com plicated phenomena than financial insecurity. Following the tragic 9/11 events, for example, potential travelers avoided boarding airplanes for fear of being entangled in terrorist acts.

The most complex constraint impairing travel comes from the fear of contracting communicable diseases o r infections. The w orld has recently experienced outb reaks o f se veral form s of transmissible viruses such as SARS, Ebola, an d H1N1 (Swine Flu). These illnesses took a l arge human toll, but w hile the effects on th e paid a ccommodation i ndustry were measu rable, they were not devastating. COVID-19 virus is far more dangerous, and the travel industry has braced for a continued reduction in business and leisure trips until travelers feel safe again.

Impact on Pro fits
As a re sult of the low occupancy levels achieved during 2020, hotel owners and o perators responded by reducing their fixed costs as much as possible and spending just a minimal amount on the variable costs. As expected, there is a c orrelation between the occupancy level and t he achieved profit margins. The lower the occupancy level, the lower the GOP and EBITDA margins.

While 2020 was grim, we did observe strong efforts of U. S. hotel operators to minimize losses.

Operational decisions that led to enhanced revenue yield and efficient cost controls contributed to muting declines in profits. As shown below, t he flow -through from r evenue decline to GOP decline has narrowed during each of the past three downturns, while the flow -through from revenue growth to GOP growth during recovery has amplified over the past two expansion cycles. 117
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As the industry starts t o recover from the pandemic, there have been o ther unexpected challenges. Worker shortages in the lodging industry present a challenging labor environment as many former employees have moved on to othe r industries or are staying home and still collecting unemployment. Others are worried about wider inflationary pr essures and the rising costs of goods. As costs rise, hoteliers will continue will be forced to find and implement new and effective cost saving measures.
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Investment Rates
Investment rate data for hotel properties from the latest Real Estate Investor Surveys published by PWC is illustrated in the following table:

HOTEL INVESTOR SURVEY DATA
Discount Rate Overall Cap Rate Terminal Cap Rate
Source/Type Average Average Average
PWC: 3rd Qtr. 2021
Select Service 6.50% - 11.00% 9.27% 4.00% - 9.50% 6.91% 5.00% - 9.50% 7.41% Limited Service 8.00% - 11.50% 9.60% 7.00% - 11.00% 9.03% 8.00% - 11.00% 9.15% Luxury 6.50% - 11.00% 9.27% 4.00% - 9.50% 6.91% 5.00% - 9.50% 7.41% Full Service 8.75% - 11.00% 10.23% 6.00% - 9.50% 7.80% 6.50% - 10.00% 8.50% Compiled by: CBRE
Range Range Range

According to P wC, as of 3rd Qtr. 2021 , discount rates in luxury/upper-upscale segment experienced a decrease (-26 basis points) compared to the 1st Qtr. 2021 survey. Overall rates of return decreased by -59 basis points. For the full-service segment, discount rates increased by 17 basis points while overall capitalization rates were down by -25 basis points. The select-service segment experienced decreases in discount rates by -8 basis points while overall capitalization rates decreased by -61 basis points. Limited-service hotels experienced a decline in discount rates (-10 basis points), while overall capitalization rates also decreased (-15 basis points).

Invest ment Activity
According to Real Capital Analytics (RCA) Q2 2021 US Capital Trends – Hotel report, “The hotel property sector posted tremendous gains in deal activity for the quarter, with growth rates that exceeded those of any other sector. The headline figures are a little misleading on the p ace of investor demand, however, as a onetime event drove much of the volume. Still, activity is activity, and the market is in a better spot than a year earlier”. Be low are some of the recent highlights indicated by RCA.
• ‘Anytime there is a d ouble-digit growth rate in deal volume — let alone the quadruple- digit rate posted by the hotel sector for the quarter — it is a sign tha t one big deal may have driven the activity. For the hotel sector, the Blackstone JV with Starwood Capital that purchased Extended Stay America was behind 42% of all the deal volume for the quarter.’ • ‘Stripping out this one deal however, volume would have been up over 900% YOY for the quarter. That rebound wa s m ore a story of just ho w bad conditions were in Q2’20 as opposed to an indicator of investor preference for hotel investments.’ • ‘L ooking at the investment activity relative to the second quarter periods from 2015 to 2019 it is clear that the market is rebounding, but not yet recovered to previous levels.

Deal volume averaged $9 .0b for the second quarter periods over those five years, and, stripping out that one entity-level deal for the quarter, the remaining $8.3b in sales stands 7% lower than the pre-pandemic average.’
• ‘Individual asset sales did stage a recovery for the quarter, with sale volume back above the trends set before the pandemic. Over the five years from 2015 to 2019, individu al asset sales for a second quarter averaged $6.5b. The $7.0b in individual asset sales for Q2’21 stands higher than the pre-pandemic trend.’
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• ‘Hotel price growth is improving, though still challenged. The RCA CPPI for the hotel sector was up 1.4% YOY for Q2’21. This figure sits well below the pace of overall inflation, but it is at least above a 1% pace of growth for the first time since Q2’19.’ • ‘While pricing is improving for the hotel market overall, there are some divergent trends underway. Cap rates are generally falling for the hotel sector due to the impact of the limited-service segments. RCA Hedonic Series cap rates for the limited -service segments fell 30 bps YOY to reach 8.7% in Q2’21. This move has brought the level back to the lows seen from 2014 to 2015 before fears over excessive construction boosted cap rates.’ • ‘The full-service segments, by contrast, posted less favorable cap rate trends. Cap rates for these segments as measured by the RCA Hedonic Series rose 10 bps YOY to reach

7.5% for the quarter. Despite the stronger move for cap rates, the sale of individual assets in the full- service segments is further into the recovery period than are sales for t he
lim
ited-service segments.’
• ‘Looking at investment in individual assets can help one to see the underlying trend in the m
arket in periods where large entity -level deals skew recent activity. Sales of individual limited-service hotels totaled $2.3b for the quarter. This figure is on par with every second quarter period from 2015 to 2019, where sales also averaged $2.3b.’ • ‘The sale of individual full-service buildings climbed beyond the pre-pandemic pace. Such sales totaled $4.7b for the quarter versus an average of $4.2b seen in the five years before COVID-19 hit.’
WH
AT’S NEXT
While the l odging industry is recovering from the worst downturn in history, there are still many challenges. Business travel remains muted while meeting a nd group demand and international travel will not start recovering until 2022. Full RevPAR reco very for U.S. hotels is not expected until early -2025, however, the recovery tra jectory var ies considerably by ma rket. While the recovery is generally ex pected to be long and protracted, there are still some bright spots. Sales volume is healthy, and many states no longer have any restrictio ns. Additionally, offices are re- opening and urban core markets are starting to see more activity. Moreover, household savings is at a record high, and c onsumer spending is proj ected to remain aggressive and continue shifting from goods to services . Wh ile the recovery will take time, we anticipate overall performance to continue to improve in 2022.
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LOCAL HOTEL MARKET ANALYSI S
Comp etitive S upply
In order to develop conclusions relative to the competitive environment in which the Subject will compete, we have analyzed the local lodging market and have identified eight hotels that we feel would offer primary competition to the proposed Subject. The competitive propert ies have been selected based on their facilities, locat ion, market performance and orientation, property rating, and rate structure. Though there are a number of additional properties in the city of Ontario, we have not included thes e for a number of reasons, including pos itioning, loca tion, and rate structure. We believe the properties selected in our analysis reflect the primary competition for the subject due to their locations, market orientation, amenities offered, and rate structures.

The following chart summarizes the competitive set for the proposed Hotel. A map indicating their locations, a d escription of each of the competitive hotels and a discus sion of the potential additions to the competitive supply are presented on the subsequent pages.

Map Code Property Name Location No. of Rooms Open Date
1 SpringHill Suites Ontario Airport Rancho Cucamonga Ontario, CA 126 O ct-18 2 Comfort Suites Ontario Airport Convention Center Ontario, CA 100 Dec-08 3 Comfort Inn & Suites Near Ontario Airport Ontario, CA 92 Jul-08 4 Residence Inn Ontario Airport Ontario, CA 200 Feb-86
5 Holiday Inn Ontario Airport Ontario, CA 180 Feb-08
6 Embassy Suites by Hilton Ontario Airport Ontario, CA 175 Jun-11 7 La Quinta Inns & Suites Ontario Airport Ontario, CA 144 Oct-98 8 Holiday Inn Express and Suites Ontario Airport Rancho Cucamonga, CA 93 Jan-06 Total 1,110
Average 266
Source: STR, Inc.

SUMMARY OF THE COMPETITIVE LODGING MARKET
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Competitive Hotels
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Summary of Competitive Hotels
Property SpringHill Suites Ontario Airport Comfort Suites Ontario Airport Comfort Inn & Suites Residence Inn Ontario Airport Picture

Address 3595 E Guasti Road 1811 E Holt Blvd 333 Shelby Street 2025 E Convention Center Way Ontario, CA 91761 Ontario, CA 91761 Ontario, CA 91764 Ontario, CA 91764 Year Opened 2018 2008 2008 1986
Number of Rooms 126 100 92 200
Type of Hotel Extended Stay All-Suite Limited Service Extended Stay Amenities/Services
Restaurant/Bistro No No No No
Pool/Whirlpool Yes Yes Yes Yes
Comp. Breakfast Yes Yes Yes Yes
Business Center Yes Yes Yes Yes
Exercise Room Yes Yes Yes Yes
Meeting Space (SF) 891 1,200 240 None
RevPAR Penetration
(Year-End 2019)
Below Below Below Above
Renovation History
The SpringHill Suites Ontario Airport
Rancho Cucamonga opened in 2018
and is in excellent condition.

The Comfort Suites Ontario Airport
opened in 2008 and is in average
condition.

The Comfort Inn & Suites opened in
2008 and is in average condition.

The Residence Inn Ontario Airport
opened in 1986 and was last
renovated in 2015. It is
considered to be in good
condition.

Source: CBRE Hotels
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Summary of Competitive Hotels (Continued)
Property Holiday Inn Ontario Airport Embassy Suites Ontario Airport La Quinta Ontario Airport Holiday Inn Express & Suites Picture

Address 2155 E Convention Center Way 3663 E Guasti Road 3555 Inland Empire Blvd 2280 S Haven Ave Ontario, CA 91764 Ontario, CA 91761 Ontario, CA 91764 Ontario, CA 91761 Year Opened 2008 2011 1998 2006
Number of Rooms 180 175 144 93
Type of Hotel Full Service All-Suite All-Suite All-Suite Amenities/Services
Restaurant/Bistro Yes Yes No No
Pool/Whirlpool Yes Yes Yes Yes
Comp. Breakfast No Yes Yes Yes
Business Center Yes Yes Yes Yes
Exercise Room Yes Yes Yes Yes
Meeting Space (SF) 5,000 5,282 650 4,052
RevPAR Penetration
(Year-End 2019)
Above Above Below Below
Renovation History
The Holiday Inn Ontario Airport
opened in 2008 and is in average
condition.

The Embassy Suites Ontario Airport
opened in 2011 and is in good
condition.

The La Quinta Ontario Airport
opened in 2998 and was last
renovated in 2016. It is in good
condition.

The Holiday Inn Express & Suites
opened in 2006 and is in average
condition.

Source: CBRE Hotels

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Additions to Supply
In conducting our investigations regarding the potential for additions to supply in the propo sed Subject’s competitive market, we identified th e following additions to the hotel supply which are either under construction or which are moving forward and are anticipated to be competitive with the proposed Subject based upon location, market orientation and amenities.

Hyatt Place | Hyatt House Ontario Airport – This project is located at 2800 Inland Empire Boulevard approximately 1.7 miles west of the proposed Subject. The proposed dual- branded hotel will feature a 1 19-room Hyatt House hotel and a 146 -room Hyatt Pl ace.

The ground floor will feature a café and bar, as w ell as an outdoor pool . The hotel is expected to break ground during the third quarter of 2022 and is anticipated to open in 2024.

Additiona lly, we are aware of other projects in the pipeline, but ha ve not included them as the y are con sidered to be speculative or are of an anticipated higher pos itioning and/or product differentiation than the proposed Subject and may lack on e or m ore of the following criteria:
specific development programs and timeline, branding, operator, financing, planning and permitting. While we have made several at tempts to determine the level of new hotel sup ply entering the marketplace, it is im possible to determine every hotel that will be developed in the future, when they will be compl eted, or their potential impact to the S ubject. The inherent risk of any future new hotel supply has been implicitly considered in t he selection of a stabilized occupancy level for the Subject property, and the larger competitive market as a whole.

HOTEL ROOMS DEMAND
Demand for hotel rooms is categorized in three ways:
 Demonstrated Demand: the demand already captured at competitive hotels.  Induced Demand: the dem and that does not presently seek accommoda tions in th e competitive market but could be persuaded to do so through marketing efforts, room rates, facilities, services and amenities.
 Unsatisfied Demand: the demand that seeks accommodations in the market but is not satisfied due to one of a number of factors: sell-outs during peak season; la ck of a particular type of accommodation; lack of meeting space; or high room rates.

Historical Per formance of the Competitive Supply
The aggregate average annual availab le and occupied rooms, r esulting occupancy levels, average daily rat e, and revenue per available room ( RevPAR) for this s ample set between 2013 and 2020, as well as yea r-to-date thro ugh August 2020 and 2021, are present ed on the following page.
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Historical Market Performance of the Competitive Supply Annual Percent Occupied Percent Market A verage Percent Percent Year Supply Change Rooms Change Occupancy Daily Rate Change REVPAR Change 2013 359,160 71.4% 257,101 62.1% 71.6% $95.94 -24.3% $68.67 -28.4% 2014 359,160 0.0% 275,522 7.2% 76.7% $100.43 4.7% $77.05 12.2% 2015 359,160 0.0% 287,796 4.5% 80.1% $108.05 7.6% $86.58 12.4% 2016 359,160 0.0% 283,516 -1.5% 78.9% $117.53 8.8% $92.78 7.2% 2017 359,160 0.0% 282,655 -0.3% 78.7% $121.97 3.8% $95.99 3.5% 2018 370,752 3.2% 284,203 0.5% 76.7% $129.15 5.9% $99.00 3.1% 2019 405,150 9.3% 313,328 10.2% 77.3% $132.12 2.3% $102.18 3.2% 2020 401,244 -1.0% 221,682 -29.2% 55.2% $112.81 -14.6% $62.33 -39.0% CAGR/Avg. 1.6% -2.1% 74.6% 2.3% -1.4%
Aug-20 YTD 265,824 N/A 134,007 N/A 50.4% $118.27 N/A $59.62 N/A Aug-21 YTD 269,730 1.5% 197,076 47.1% 73.1% $126.87 7.3% $92.69 55.5% Source: STR, Inc.

As noted in the preceding table, the suppl y within the competi tive market has in creased at a compound average annual growth (CAAG) rate of 1.6 percent o ver the period. In 2018, the annual room supply in the competitive hotel market experienced a 3.2 percent increase in rooms supply as the SpringHill Suites Ontario Airport Rancho Cucamonga opened in October 2018. In 2019, the competit ive hotel market experienced a further 9.3 percent increase in rooms supply from the annualized rooms from the October 2018 opening of the SpringHill Suites Ontario Airport Rancho Cucamonga. As indicated above, notwithstanding 2013 or 2020, the competitive market achieved six consecutive years with a mark et occupancy of 76. 0 percent or g reater. By comparison, as reported by Smith T ravel Research (STR), the occupancy rate nationwide in 2019 was 66.1 percent, which was the highest level on record.

Demand for rooms, as demonstrated by occupied room nights, decreased at a CAAG rate of 2.1 percent during the period, which is primarily attributable to the 29.2 percent decrease in 2020 due to the C OVID-19 Pandemic. Marke t occupancy peaked at 80.1 percent in 2015, then dropped slightly to 78.9 percent and 78.7 percent in 2016 and 2017, resp ectively, before decreasing to 76.7 percent in 2018 due to the addition of the SpringHill Suites Ontario Airport Rancho Cucamonga’s 126 rooms in October 2018. Due to the COVID-19 Pandemic, 2020 year- end occupancy for the competitive market was 55.2 percent.

Year-to-date through August 2021, occupied rooms increased by 47.1 percent, which resulted in a competitive market occupancy o f 73.1 percent as compared to 50. 4 percent during the sa me period in 2020. This is indicative of the s trong recovery to pre-Pandemic performance levels in the market.

The average daily rate (AD R) of the competitive market increased by an an nual average of 2.3 percent du ring the historical perio d. ADR growth was strong between 2014 and 2019, with increases ranging from 2.3 to 8.8 percent annually. The year-to-date through August 2021 ADR growth of 7.3 percent demonstrates the strong performance of the market. 126
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Revenue per available room (RevPAR), a combination of occupancy and average daily room rate, decreased at a compound average r ate of 1. 4 percent annually over the period, which is primarily attributable to the impact of the COVID -19 Pandemic on performance during 2020.

However, the 55.5 percent growth in RevPAR for year- to-date August 2021 indicates a st rong recovery to near pre-Pandemic level performance.

Mix of D emand
The demand captured by the competit ive su pply is derived f rom th e commercial, leisure and group market s egments. The following table summa rizes the 2020 mix of demand fo r the competitive market.

Competitive Market
2020 Mix of Demand
Market Segment Room Nights Ratio
Transient 188,264 85%
Group 33,223 15%
Total 221,487 100%
Source: CBRE Hotels
The following presents our p rojections of the competitive market. Using the historical growth in the market as a base and taki ng into account the current demonst rated and f uture projected economic conditi ons, w e have est imated future g rowth in the ove rall market demand. Eac h market segment is dis cussed in the following paragraphs, followed b y a summary table setting forth our estimated growth in demand by market segment.

Transient Segment
In 2020, th e transient s egment accounted for 85. 0 percent, or approximatel y 188,264 room nights of captured demand in t he com petitive set. As outlined in the previous table, transient demand represents the single lar gest demand source for the comp etitive supp ly. Transient demand is comprised of both commercial and leisure demand. Co mmercial travelers generally select a hotel based on its location relative to area amenities such as restaurants and shopping or location and setting rather than its proxim ity to the comp any’s office. The leisure subsegment consists of pleasure travelers to and within the city of Ontario for mostly recreational reasons.

This segment is comprised of both domestic weekend travelers, as well as international travelers.

The proximity of the competi tive properties to local attrac tions, entertainment, shopping, and dining options in the greater Ontario area generate the majority of leisure demand in the market.

The leisure de mand subsegment tends to h ave strong weekend (Friday thro ugh Monday) travel patterns, but not seas onal fluctuations, due to the year- round temperat e climate of Southern California. Leisure travelers are typically most concerned with the hotel’s proximity to area leisure attractions. Room size is also an importan t consideration for the leisure traveler, as it balances 127
IV-14Section IV – Hotel Market Analysis
Proposed EverHome Suites Ontario, Ontario, CA
with the hotel’s amenities and orientation. Leisure travelers are typically more price sensitive than other types of travelers and have a preference for hotels with recreational amenities.

We have estimated that the transient demand will experience a 5.0 percent increase in demand in 2022 before returning to a stabilized growth rate of 3.0 percent in 2023. With the opening of Hyatt Place | Hyatt House Ontario Airp ort, along with the pro posed Subject, we have induced 50,000 transient room nights into the market over the period from 2024 through 2025. With the newer facilities, we anticipate these new hotels will attract new vi sitors to the market from surrounding submarkets.

Group Segment
The group market represented the smallest percentage of the market demand for the competitive supply in 2020. The group market segment is made up of traditional group business consisting of corporate meetings and catering- based social groups . Groups are listed as those room nights that are booked in blocks of ten or more.

The group segment accounted for approxi mately 33,223 room nights, or 15.0 percent of the demand in 2020. We have estimated that group demand will experience a 5.0 percent increase in demand in 2022 before returning to a stabilized growth rate of 3.0 percent in 2023. With the opening of Hyatt Place | Hyatt House Ontario Airport, along with the proposed Subject, we have induced 22,000 group room nights into the market in 2024. 128
IV-15Section IV – Hotel Market Analysis
Proposed EverHome Suites Ontario, Ontario, CA
Summa ry of Demand G rowth and Market Oc cupa ncies
The competitive hotel market faced major headwinds during 2020 a s a result of the COVID-19 Pandemic, includ ing: a c ontraction in economic activ ity, restrictions on travel and large gatherings, and social distancing measures . However, the introduction of wide -spread and substantial government and cent ral bank su pport policies has helped companies survive the difficult interim period and drive the economic recovery . CBRE America’s Research anticipates a reasonable strong recovery as consumers of travel have pent -up demand to utilize hotel lodging.

Based on the foregoing, market-wide demand growth during 2021 and 2022 are anticipated to be robust.

In 2021 based on year -to-date data, we anticipat e t hat t he market occupancy will rebound significantly to 74.0 percent. In 2022, the market is a nticipated to increase to 78.0 percent, its projected stabilized occupancy. Occupancy is then projected to decline slightly to 74.0 percent in 2024 as the new competitive rooms enter the marke t. Market occupancy is then estimated to increase to 77.0 percent in 2025 and 78.0 percent in 2026. Occupancy i s projected to stabilize at 78.0 percent for the remainder of the projection period, which we believe to be the competitive market’s long -term stabiliz ed level of occ upancy. While the market may f luctuate above and below this number, we are of the opinion that an occupancy of 78.0 percent is appropriate for the local market considering the sup ply and de mand patterns, seasonality, and mix of business within the competitive market. This stabilized occupancy is below the averag e historical occupancy of the competitive market but takes into account the current m arket dynamics and the expansion of t he area lodg ing supply. T he projected future growth in supply and demand is presented in the following table.
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IV-16 Section IV – Hotel Market Analysis
Proposed EverHome Suites Ontario, Ontario, CA
Proposed EverHome Suites Ontario
Competitive Market
Estimated Future Growth in Lodging Supply and Demand
2020 - 2028
2020 2021 2022 2023 2024 2025 2026 2027 2028
ROOMS SUPPLY 1,099
Additions/(Deletions) to Supply
Proposed EverHome Suites Ontario 125
Hyatt Place | Hyatt House Ontario Airport 265
Cumulative Rooms Supply 1,099 1,110 1,110 1,110 1,500 1,500 1,500 1,500 1,500 --------- --------- --------- --------- --------- --------- --------- --------- --------- Total Annual Rooms Supply 401,244 405,150 405,150 405,150 547,500 547,500 547,500 547,500 547,500 Growth Over the Prior Year -1.0% 1.0% 0.0% 0.0% 35.1% 0.0% 0.0% 0.0% 0.0%

DEMONSTRATED DEMAND IN BASE YR
Transient 188,264 85%
Group 33,223 15%
--------- ---------
TOTAL DEMONSTRATED DEMAND 221,487 100%
--------- ---------

INDUCED/(UNSATISFIED) DEMAND
Transient 0 0 0 45,000 5,000 0 0 0
Group 0 0 0 22,000 0 0 0 0
--------- --------- --------- --------- --------- --------- --------- --------- TOTAL INDUCED/(UNSATISFIED) DEMAND 0 0 0 67,000 5,000 0 0 0 --------- --------- --------- --------- --------- --------- --------- ---------

GROWTH RATES
Transient 40.0% 5.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
Group 15.0% 5.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

PROJECTED DEMAND
Transient
Demonstrated 188,264 263,569 276,748 285,050 293,602 348,760 364,372 375,304 386,563 Induced/(Unsatisfied) 0 0 (740) (9,043) 45,000 5,000 (4,894) (15,825) (27,084) --------- --------- --------- --------- --------- --------- --------- --------- --------- Total 188,300 263,600 276,000 276,000 338,600 353,800 359,500 359,500 359,500 Growth Over Prior Year N/A 40.0% 4.7% 0.0% 22.7% 4.5% 1.6% 0.0% 0.0% --------- --------- --------- --------- --------- --------- --------- --------- --------- Group
Demonstrated 33,223 38,206 40,117 41,320 42,560 66,497 68,492 70,546 72,663 Induced/(Unsatisfied) 0 0 (107) (1,311) 22,000 0 (920) (2,975) (5,091) --------- --------- --------- --------- --------- --------- --------- --------- --------- Total 33,200 38,200 40,000 40,000 64,600 66,500 67,600 67,600 67,600 Growth Over Prior Year N/A 15.1% 4.7% 0.0% 61.5% 2.9% 1.7% 0.0% 0.0% --------- --------- --------- --------- --------- --------- --------- --------- --------- Total Market Demand 221,500 301,800 316,000 316,000 403,200 420,300 427,100 427,100 427,100 Growth Over Prior Year N/A 36.3% 4.7% 0.0% 27.6% 4.2% 1.6% 0.0% 0.0% Market Occupancy 55% 74% 78% 78% 74% 77% 78% 78% 78%
Source: CBRE Hotels

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IV-17 Section IV – Hotel Market Analysis
Proposed EverHome Suites Ontario, Ontario, CA

PROJECTED MARKE T PERFORMANCE OF THE PROPOSED SUBJECT Penetr ation Analysis
Our estimates of occupancy are based on our survey of c ompetitive hotels, an analysis of the segmentation of deman d in the market area , and our assessment of the Su bject’s market position. The “penetration rate” of a hotel is the percentage of room nights captured relative to the property’s “fair share.” The ho tel's “fair share” is determined by di viding the S ubject property’s number of guest rooms by the total number of guest rooms in the competitive market (including the Subject property). Factors indicating a hotel would possess competitive advantages suggest a market p enetration in excess of 100 percent of fair mark et share, while compet itive weaknesses are reflect ed in penetration rates of less than 100 percent. However, ot her factors besides competitive weaknesses could result in penetrations of less than 100 percent. The actual penetration of each market segment by the subject property may deviate from fair mark et share for the following reasons:
• The competitive advantages or disadvantages of t he Subject versus the competition taking into consid eration su ch factors as loc ation, room r ate structure, room size, quality and extent of amenities offered, chain affiliation, quality o f management, marketing efforts and image;
• The characteristics, composition and needs of each market segment; • The restraint o n demand captured due t o capacity cons traints during certain perio ds of the week or seas on, or due to the acc ommodation of certain market segments; and,
• Management decisions concerning target markets.

Estimated occupancy levels for the Subject have been p rojected on the ba sis o f a pen etration analysis. Our projections are based on our knowledge of the mark et as of the completion of this study as well as interviews with hotel managers from the competitive properties and several large employers in the area.

Pene tration of Subject
Our est imates of subject penetration by ea ch segment of demand a re presented in the paragraphs below. We have assumed a January 1, 2024 opening date. The following favorable factors have been considered to project the Subject’s penetration of the market:
• The Subject’s location relative to commercial , group and leisure demand generators within the city of Ontario;
• The Subject’s positioning as an extended stay hotel; and, • The Subject’s newer facilities and amenities relative to the competitive set.

Based on the S ubject’s location and proposed facilities, we are of the opinion that the Hotel will outperform the market with regard to the transient market demand segment, but achieve below 131
IV-18 Section IV – Hotel Market Analysis
Proposed EverHome Suites Ontario, Ontario, CA
its fair share of the g roup market segment . This is at tributable mainly to its higher rated positioning and limited meeting and event space.

Transient Dema nd Penetration
We have estimated that the Hotel will have a transient penetration of 100 percent in 2024 during its first year of operation. This will be followed by an increase to 102 percent in 2025 and to 104 percent in 2026 and remain there for each year thereafter. We have estimated t his penetration level due to the fact tha t the Subject’s location positions it well relative to th e major existing and proposed comme rcial demand generators as compared to the competitive hotels, and it s anticipated level of product offering, management and af filiation, and size. This equates to 31,200 annual room nights, or 87.0 percent of the Hotel’s overall demand on a stabilized basis.

Group Marke t Penetra tion
Group demand consists of travelers who book blocks of rooms exceeding ten rooms per n ight.

The Subject will have less meeting space than many of its competit ors in the city of Ontario; thus, it is anticipated to capture less than its fair share of group demand. We ha ve estimated that the Subject will penetrate the group market at 72 percent in the opening year 2024. In the following year, the Hotel’s penetration of the group segment is estimated to increase t o 78 percent in 2025. In 2026, we expect the Subject’s penetration to increase to 80 percent where it will remain throughout the duration of the projection period. This equates to 4,500 annual room nights, or

13.0 percent of the Hotel’s overall demand on a stabilized basis.

Overall Mix, Penetration, and Occ upan cy
We have estimated the overall penetration of the proposed Hotel with regards to the competitive market given the propert y’s location w ith respect to d emand generators, its proposed facilities and amen ities, and t he l evel of patronage that is exp ected at the property. The estimated stabilized market mix and penetration for the Subject are presented in the following table.

Proposed EverHome Suites Ontario
Stabilized Mix of Demand and Market Penetration
Market Segment Room Nights Ratio Penetration
Transient 31,200 87% 104%
Group 4,500 13% 80%
Total 35,700 100% 100%
Source: CBRE Hotels
Combining our estimates of the penetration rate s for the proposed Hotel, we estimate that the Subject property will achieve below its fair share of market demand upon its op ening in 2024, with the penetration rate estimated at 96 .0 percent. This equates to an occupancy level of 70.0 percent. In 2025, the S ubject’s penetration rate is expected to increase to 98.0 percent of its fair share, equal to an o ccupancy of 75 .0 pe rcent. In 2026 , the Subject is project ed to reach its stabilized level of penetration at 100 percent, resulting in its stabilized occupancy of 78.0 percent. This stabilized overall occupancy level is commensurate with the ma rket’s lo ng-run 132
IV-19Section IV – Hotel Market Analysis
Proposed EverHome Suites Ontario, Ontario, CA
stabilized occupancy level. In consideration of the Su bject’s location, its unique features, as well as its proxim ity to demand generators, we are of the opinion that this projected level of occupancy is reasonable.

The table on the following page sets forth p rojected penetration for the S ubject from 2024 through 2030.
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IV-20 Section IV – Hotel Market Analysis
Proposed EverHome Suites Ontario, Ontario, CA
Proposed EverHome Suites Ontario
Market Penetration and Projected Occupancy
2024 2025 2026 2027 2028 2029 2030

TOTAL ROOMS AVAILABLE
Proposed EverHome Suites Ontari 45,625 45,625 45,625 45,625 45,625 45, 625 45,625 Competitive Market 547,500 547,500 547,500 547,500 547,500 547,500 547,500 ==== ==== ==== ==== ==== ==== ====
Fair Share of Supply 8.3% 8.3% 8.3% 8.3% 8.3% 8.3% 8.3% ==== ==== ==== ==== ==== ==== ====

ESTIMATED TOTAL MARKET DEMAND
Transient 338,600 353,800 359,500 359,500 359,500 359,500 359,500 Group 64,600 66,500 67,600 67,600 67,600 67,600 67,600
------- ------- ------- ------- ------- ------- ------- TOTAL 403,200 420,300 427,100 427,100 427,100 427,100 427,100 ------- ------- ------- ------- ------- ------- -------

FAIR SHARE OF DEMAND
Transient 28,200 29,500 30,000 30,000 30,000 30,000 30,000 Group 5,400 5,500 5,600 5,600 5,600 5,600 5,600
------- ------- ------- ------- ------- ------- ------- TOTAL 33,600 35,000 35,600 35,600 35,600 35,600 35,600
------- ------- ------- ------- ------- ------- -------

SUBJECT PENETRATION
Transient 100% 102% 104% 104% 104% 104% 104%
Group 72% 78% 80% 80% 80% 80% 80%
------- ------- ------- ------- ------- ------- -------

ROOM NIGHTS CAPTURED
Transient 28,200 30,100 31,200 31,200 31,200 31,200 31,200 Group 3,900 4,300 4,500 4,500 4,500 4,500 4,500
------- ------- ------- ------- ------- ------- ------- TOTAL CAPTURED DEMAND 32,100 34,400 35,700 35,700 35,700 35,700 35,700 ==== ==== ==== ==== ==== ==== ====
MARKET SHARE CAPTURED 8.0% 8.2% 8.4% 8.4% 8.4% 8.4% 8.4% OVERALL MARKET PENETRATION 96% 98% 100% 100% 100% 100% 100% ------- ------- ------- ------- ------- ------- ------- SUBJECT OCCUPANCY 70% 75% 78% 78% 78% 78% 78%
------- ------- ------- ------- ------- ------- -------

MARKET MIX
Transient 88% 88% 87% 87% 87% 87% 87%
Group 12% 13% 13% 13% 13% 13% 13%
------- ------- ------- ------- ------- ------- ------- TOTAL 100% 100% 100% 100% 100% 100% 100%
==== ==== ==== ==== ==== ==== ====
Source: CBRE Hotels
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IV-21Section IV – Hotel Market Analysis
Proposed EverHome Suites Ontario, Ontario, CA

AVERAGE DAILY RAT E
Competitive M arket
We have also estimated the average daily rate (ADR) of the compet itive market based up on our analysis of the historical rates achieved, the anticipated impact of the new supply ent ering the market, and the changing economic conditions.

Based on the foreg oing analysis, the following table summarizes our estimates of future supply, accommodated demand, occupancy, average daily rate, an d RevPAR for the competitive market from 2021 to 2030.

Projected Market Performance of the Competitive Supply
Annual Percent Occupied Percent Market Average Percent Percent Year Supply Change Rooms Change Occupancy Daily Rate Change REVPAR Change 2021 405,150 1.0% 301,800 36.3% 74% $128.00 13.5% $95.35 53.1% 2022 405,150 0.0% 316,000 4.7% 78% 132.00 3.1% 102.95 8.0% 2023 405,150 0.0% 316,000 0.0% 78% 136.00 3.0% 106.07 3.0% 2024 547,500 35.1% 403,200 27.6% 74% 140.00 2.9% 103.10 -2.8% 2025 547,500 0.0% 420,300 4.2% 77% 144.00 2.9% 110.54 7.2% 2026 547,500 0.0% 427,100 1.6% 78% 148.00 2.8% 115.45 4.4% 2027 547,500 0.0% 427,100 0.0% 78% 153.00 3.4% 119.35 3.4% 2028 547,500 0.0% 427,100 0.0% 78% 157.00 2.6% 122.47 2.6% 2029 547,500 0.0% 427,100 0.0% 78% 162.00 3.2% 126.37 3.2% 2030 547,500 0.0% 427,100 0.0% 78% 167.00 3.1% 130.28 3.1% CAAG 3.4% 3.9% 3.0% 3.5%
Source: CBRE Hotels
Average Daily Rate and Yield for the Subject
Our derivation of the average daily rate for the Subject property in a stabilized year of ope ration is based prima rily on the historical average daily rates achieved by the comparable prop erties, the quality of the proposed facilit ies of the S ubject property, as well as information concerning ongoing rate increases. Considerations were also g iven to the comparison of the other competitive properties with the Subject in terms of quality of facility, location, and mix of demand.

In th e Subject’s firs t y ear of op eration, we e stimate that the Hotel’s average daily rate will b e $137.00 in 2024. We estimate that the S ubject will be able to increase its averag e daily rate by

3.0 percent on a compound average annual basis beginning in 2024 and through the remainder of the project ion period. At this rate of growth, the Subject’s rate in a representative year ADR translates to $125.00 in calendar year 2021 dollars. In cons ideration of its antici pated facilities and amenities, as well as its positioning as an extended stay hotel, we fin d this rate reasonable, placing the Subject at a (1.5) percent discount below the overall market average and within the range of the competitive hotels.
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Projected Market Performance of the Subject Hotel
Annual Percent Occu pied Percent Occupancy Average Percent Percent Market Revenue Year Supply Change Rooms Change Percentage Daily Rate Change REVPAR Change Penetration Y ield 2024 45,625 32,100 70% 137.00 96.39 96% 93%
2025 45,625 0.0% 34,400 7.2% 75% 141.00 3.0% 106.31 10.3% 98% 96% 2026 45,625 0.0% 35,700 3.8% 78% 145.00 3.0% 113.46 6.7% 100% 98% 2027 45,625 0.0% 35,700 0.0% 78% 149.00 3.0% 116.59 2.8% 100% 98% 2028 45,625 0.0% 35,700 0.0% 78% 154.00 3.0% 120.50 3.4% 100% 98% CAAG 0.0% 2.7% 3.0% 5.7%
Source: CBRE Hotels
A
lthough it is possible that the Subject will experience growth in occupancy and ADRs above those estimated in this report, it is also possible that sudden economic downturns, unexpected additions to the room supply , or oth er external factors will force the property below the s elected point of stability. Consequently, the estimated occupancy and ADR levels are representative of the mos t likely potential operations of the Subject over the projected analysis period based on our investigation of the market as of the date of this report. 136

Proposed EverHome Suites Ontario, Ontario, CA
Section V

STATEMENTS OF ESTIMATED ANNUAL OPERATING RESULTS
137
V-1 Section V – Statements of Estimated Annual Operating Results Proposed EverHome Suites Ontario, Ontario, CA

STATEMENTS OF ESTIMATED ANNUAL OPERATING RESULTS

BASIS OF PROJECTIONS
To prepare estimates of future operating results for the proposed Subject as of January 1, 2024, the starti ng point or basis is the b est estimate of results t hat c ould be a chieved with good management in a representative year or stabilized market, calculated in current calendar year 2021 dollars.

We estimate that during a representative year, t he Subject property could achieve a stabi lized occupancy of 78 percent at an average daily room rate of $125.00, stated in calendar year 2021 dollars. From this base, we considered the effects of inflation, development, and occupancy levels for the projection perio d starting January 1, 2024 through December 31, 2033, reflecting ten years of operation. The projections are p resented on a calendar year basis and the underlying ra tionale and assumptions used in preparing these estimates are presented in this section.

The estimates of revenues, costs and expenses are based on the propos ed facilities and services and the operational characteristics thereof. The Subject is believed to operate with efficient management and proper control over costs and expenses.

STATEMEN T OF ES TIMAT ED ANN UAL OPERATING RESULTS
The Uniform Syst em of Acco unts for Hot els, recomme nded by the American Hotel and Motel Association and ut ilized throughout the industry, has been used in the clas sification of income and expenses for this report. In confor mity with this system of account classific ations, only direct operating expenses are charged to the operating departments of the subject. T he gen eral overhead items that are applicable to operatio ns as a whole are classified as dedu ctions from income and inclu de administrative and general expenses , market ing expens es, property operations and maintenance , utility costs, and informati on & telecommun ication s ystems.

Additional costs for man agement fees , fixed charges, which include real estate taxes and insurance, and reserves for replacement are deducted to derive the net operating income.

Income and Expense Estimates
Data from the following sources have be en used as a basis for the income and exp ense estimates.
 The market performance (average daily rate and occupancy levels) of the competitive hotels to the Subject; and,
 Comparable data from five hot els with similar average daily rate, occupancy , size, facilities, and market positioning from CBRE Hotel’s Trends in the Hotel Industry survey (referred to as Comparables “A”, “B”, “C”, “D”).
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V-2 Section V – Statements of Estimated Annual Operating Results Proposed EverHome Suites Ontario, Ontario, CA
Operating Statistics of Comparable Hotels
An analysis was performed on the operating results of four generally similar extended stay or all- suite hotels located throughout Southern California. All are considered to be comparable with the proposed Subject property due t o their locations, size, overall quality , l evel o f amenities, and market orientation.

The comparable p roperties range in size from 86 rooms to 143 rooms, with an average roo m count of 151 rooms. Occupancies for the comparable hotels ranged from 85.6 percent to 86.5 percent, and ADRs ranged fro m $106.09 to $137.13. Together, these hotels had a composi te occupancy of 84.7 percent and an average daily rat e of $124.76. The statistical information is taken from act ual financials f or the compara ble hotels for the mos t rec ent cal endar year available. For reasons of confidentiality, we cannot disclose the identity of the comparable hotels.

The following pages contain the operating results of the comparable hotels as mentioned above. 139
V-3 Section V – Statements of Estimated Annual Operating Results Proposed EverHome Suites Ontario, Ontario, CA
Proposed EverHome Suites Ontario
Operating Results of Comparable Hotels
Hotel A Hotel B Hotel C
Ratio Per Room P.O.R. Ratio Per Room P.O.R. Ratio Per Room P.O.R.

Revenues
Rooms 95. 9% $43,007 $136.29 97.2% $42,821 $137.13 98.8% $33,378 $106.09 Other Operated Departments 4. 1% 1,862 5.90 2.8% 1,217 3.90 1.2% 419 1.33 Total Revenues 100. 0% 44,869 142.19 100.0% 44,039 141.02 100.0% 33,797 107.42 Departmental Expenses
Rooms 24. 3% 10,463 33.16 24.8% 10,611 33.98 18.3% 6,105 19.40 Other Operated Departments 9. 0% 168 0.53 12.5% 153 0.49 32.7% 137 0.43 Total Departmental Expenses 23. 7% 10,631 33.69 24.4% 10,764 34.47 18.5% 6,242 19.84 Departmental Profit 76.3% 34,238 108.50 75.6% 33,275 106.55 81.5% 27,555 87.58 Undistributed Expenses
Administrative & General 8. 8% 3,967 12.57 9.1% 4,004 12.82 9.5% 3,201 10.17 Information and Telecommunication Systems 0. 6% 278 0.88 1.9% 844 2.70 1.6% 557 1.77 Marketing 5. 7% 2,554 8.09 12.9% 5,694 18.23 7.5% 2,547 8.10 Property Operations and Maintenance 4. 0% 1,787 5.66 4.3% 1,879 6.02 2.7% 910 2.89 Energy and Utility 2. 6% 1,186 3.76 2.9% 1,260 4.04 3.3% 1,128 3.58 Total Undistributed Operating Expenses 21. 8% 9,772 30.97 31.1% 13,681 43.81 24.7% 8,343 26.52 Gross Operating Profit 54.5% 24,467 77.53 44.5% 19,594 62.74 56.8% 19,213 61.06 Base Management Fee 6. 6% 2,963 9.39 2.7% 1,211 3.88 0.6% 217 0.69 Fixed Expenses
Property Taxes 6. 4% 2,882 9.13 0.0% 0 0.00 4.0% 1,360 4.32 Insurance 1. 1% 504 1.60 0.2% 86 0.27 1.1% 361 1.15
Total Fixed Expenses 7. 5% 3,386 10.73 0.2% 86 0.27 5.1% 1,720 5.47 Net Operating Income Before Reserve 40.4% 18,117 57.41 41.5% 18,297 58.59 51.1% 17,275 54.91 FF&E Reserve * 4. 0% 1,795 5.69 4.0% 1,762 5.64 4.0% 1,352 4.30 Net Operating Income After Reserve 36.4% $16,322 $51.72 37.5% $16,535 $52.95 47.1% $15,923 $50.61 Source: CBRE Hotels
* Reserves for replacement expense added by CBRE for consistency within our analysis. 140
V-4 Section V – Statements of Estimated Annual Operating Results Proposed EverHome Suites Ontario, Ontario, CA
Proposed EverHome Suites Ontario
Operating Results of Comparable Hotels
Hotel D Weighted Average 1
Ratio Per Room P.O.R. Ratio Per Room P .O.R.

Revenues
Rooms 98.7% $38,008 $121.65 97.5% $39, 159 $124.76
Other Operated Departments 1.3% 488 1.56 2.5% 1, 000 3.18 Total Revenues 100.0% 38,496 123.21 100.0% 40, 159 127.95 Departmental Expenses
Rooms 27.9% 10,614 33.97 24.1% 9, 447 30.10
Other Operated Departments 77.2% 377 1.21 21.7% 217 0. 69 Total Departmental Expenses 28.5% 10,990 35.17 24.1% 9, 663 30.79 Departmental Profit 71.5% 27,506 88.03 75.9% 30, 495 97.16 Undistributed Expenses
Administrative & General 6.7% 2,579 8.26 8.4% 3, 389 10.80 Information and Telecommunication Systems 1.1% 433 1.38 1.2% 491 1. 56 Marketing 10.6% 4,062 13.00 8.8% 3, 531 11.25
Property Operations and Maintenance 5.0% 1,930 6.18 4.0% 1, 626 5.18 Energy and Utility 2.4% 940 3.01 2.8% 1, 115 3.55
Total Undistributed Operating Expenses 25.8% 9,944 31.83 25.3% 10, 151 32.34 Gross Operating Profit 45.6% 17,562 56.21 50.7% 20, 345 64.82 Base Management Fee 3.0% 1,155 3.70 3.6% 1, 459 4.65
Fixed Expenses
Property Taxes 4.4% 1,701 5.44 4.1% 2, 016 6.42
Insurance 0.9% 339 1.08 0.9% 348 1. 11
Total Fixed Expenses 5.3% 2,040 6.53 5.0% 2, 010 6.40
Net Operating Income Before Reserve 37.3% 14,367 45.98 42.0% 16, 875 53.77 FF&E Reserve * 4.0% 1,540 4.93 4.0% 1, 606 5.12
Net Operating Income After Reserve 33.3% $12,828 $41.06 38.0% $15, 269 $48.65 Source: CBRE Hotels
* Reserves for replacement expense added by CBRE for consistency within our ana

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V-5 Section V – Statements of Estimated Annual Operating Results Proposed EverHome Suites Ontario, Ontario, CA

REPRESEN TATI VE YEAR ESTIMATE
Presented in the following text is a brief discussion of the basis used in developing our estimate of the Representative Year Operating Statement for the S ubject. A “representat ive year” illustrates the Hotel’s performance as if it were at a stabilized occ upancy today, afte r the a nticipated real growth in room rate, with all revenues and expenses expressed in current value dollars.

Departmental Revenues and Expenses
In the Uniform S ystem of Accounts, revenue to the f acility is categorized by the department from which it is derived. In the case of the subject, this includes income from rooms, food & beverage, and other operated departments. In the Uniform System of Accounts, only d irect operat ing expenses associated with each department a re charged to the op erating departments. General overhead items which are applicable to the overall operation of the facility are class ified as undistributed operating expenses.

Rooms Departm ent
Rooms revenue is based on the number of occupied rooms multiplied by the average daily room rate for each of t he Subject’s f irst t en years as pr esented in this report. As indicated in ou r previous analysis, we have estimated the stabilized average rate of the subject to be $125.00, stated in calendar year 2021 dollars. Stabilized occupancy is estimated at 78 percent; therefore, gross rooms revenue in a representative year is calculated as follows:
125 rooms x 365 days x 78.0% occupancy x $125.00/day = $4,448,000 (rounded) The following table summarizes the average daily room rates, occupanci es, and rooms revenues estimated for the projection period.

Average Annual Rooms
Year Daily Rate Occupancy Revenue
2024 $137.00 70.00% $4,375,000
2025 $141.00 75.00% $4,825,000
2026 $145.00 78.00% $5,160,000
2027 $149.00 78.00% $5,303,000
2028 $154.00 78.00% $5,480,000
2029 $158.00 78.00% $5,623,000
2030 $163.00 78.00% $5,801,000
2031 $168.00 78.00% $5,979,000
2032 $173.00 78.00% $6,157,000
2033 $178.00 78.00% $6,335,000
Source: CBRE Hotels
Estimated Rooms Revenue

Rooms Expen se
Rooms Expenses consist of salaries and wages, empl oyee benefits, co mmissions, con tract cleaning, guest transportation, laundry and d ry cleaning, linen, operating supplies, reservation costs, uniforms, and o ther items rela ted to t he rooms department. The comparable hotels had 142
V-6 Section V – Statements of Estimated Annual Operating Results Proposed EverHome Suites Ontario, Ontario, CA
rooms expenses ranging from $19.40 to $33.98 per occupied room (POR), with ratios to rooms revenue ranging from 18.3 percent to 27.9 percent. In a representative year, w e estimate the Subject’s rooms e xpense at $32.00 POR, or a r atio to rooms revenue of 25.6 percent. This incorporates the projected services and am enities at the H otel and is within the range of t he comparables on a POR basis and on a ratio to revenue basis.

Rooms Expense
Per Occupied Room Ratio to Rms Revenue
Comparables
Hotel A $33.16 24.3%
Hotel B 33.98 24.8%
Hotel C 19.40 18.3%
Hotel D 33.97 27.9%
Weighted Average $30.10 24.1%
Subject Stabilized Year $32.00 25.6%

Other Revenue a nd Expense
Other Operated Departments revenues can vary signif icantly among the comparable properties and the Su bject depending on the nature of the additional revenue generators. Other operated department revenue is typ ically generated from guest laundry, b usiness center, parkin g, s pa and/or other recreational amenities. Other operated departments revenue at the Subject property will include t elecommunications revenue, in- room entertainment and guest laundry . Other operated d epartments revenue at the compar able hotels ranged from $1.33 to $5.90 POR.

Based upon the various com ponents of this line item and the S ubject’s anticipated facilities and amenities, we have estimated the o ther income for the Hotel to be approximately $2.00 POR in a representative stabilized year of operations.

Other Operated Departments Revenue
Per Occupied Room
Comparables
Hotel A $5.90
Hotel B 3.90
Hotel C 1.33
Hotel D 1.56
Weighted Average $3.18
Subject Stabilized Year $2.00

Other Operated D epartments expenses that a re associated with these departments include payroll costs, employee benefits, and other operating supplies. The comparables’ other operating expenses ranged from a 9.0 percent to a 77.2 percent expense ratio. For a representative year of operations, we have estimated the Subject’s other operated department expense at approximately

35.0 percent of other revenues which is in line with the comparable hotels. 143
V-7 Section V – Statements of Estimated Annual Operating Results Proposed EverHome Suites Ontario, Ontario, CA
Other Operated Departments Expense
Ratio to O.O.D. Rev.

Comparables
Hotel A 9.0%
Hotel B 12.5%
Hotel C 32.7%
Hotel D 77.2%
Weighted Average 21.7%
Subject Stabilized Year 35.0%

Undistributed Operating Expe nses
Operating expenses that are not chargeable to a particular operating department are presented as undistributed operating expenses, in accordance with the Uniform System of Accounts for the Lodging Industry . These expenses include administ rative and general, ma rketing, property operations and maintenance, energy and utilit ies, and information and t elecommunication systems. T hese ex penses are rel atively unaf fected by fluct uations in o ccupancies and ADR.

Excluding management fees, which are a fixed percentage based on a contract agreement a nd market parame ters, these expenses are analyzed primarily on a dollar amount per availa ble room (PAR) basis.

Administ rative and General
Expenses in this category include s alaries and w ages associated with the operation of the administrative function of the property, cash overages and shortages, cred it card commissions, bad debt expense, informati on syst ems, donations, dues and subscriptions, human resources, loss and damage, security, ex ecutive office expenses, professional fees, tra vel reimbursements, and supplies. The ad ministrative and general expense of the comparab le hotels ranged fro m $2,579 to $4,004 per available room (PAR), or 6.7 to 9.5 percent of tota l revenue. We ha ve estimated an administrative and general expense of approximately $3,200 PAR for the Subject in a representative stabilized year, or 8.9 percent of total revenues. This is within the range of the comparables on a PAR and ratio to total revenue basis.

Administrative and General
Per Available Room Ratio to Total Rev.

Comparables
Hotel A $3,967 8.8%
Hotel B 4,004 9.1%
Hotel C 3,201 9.5%
Hotel D 2,579 6.7%
Weighted Average $3,389 8.4%
Subject Stabilized Year $3,200 8.9%

Information and Teleco mmu nications Syste ms Expense
Per the 11th Rev ised Edition of the Uniform System of Accounts for the Lodg ing Industry, there has recently been a reorganization of ope rating expenses as they relate to telecommunicat ions.

Specifically, t he (1) cost of ce llular telephones, administrative phone calls and internet connectivity; (2) cost of complimentar y phone calls and internet connectivity; and, (3) all other 144
V-8 Section V – Statements of Estimated Annual Operating Results Proposed EverHome Suites Ontario, Ontario, CA
telecommunications related expenses (labor, maintenance, operating supplies, etc.) moved to the new Information and Telecommunications Systems (IT) department. Based on the expense data of the comparables, we estimate a n IT expense of approximately $450 PAR fo r the Subject in a representative stabilized year.

Information and Telecommunication Systems
Per Available Room Ratio to Total Rev.

Comparables
Hotel A $278 0.6%
Hotel B 844 1.9%
Hotel C 557 1.6%
Hotel D 433 1.1%
Weighted Average $491 1.2%
Subject Stabilized Year $450 1.2%
Mar keting
This account is charged with all costs incurred in the connection with the creation and maintenance of t he image of the hotel and t he development, promotion, and f urtherance of business whether paid for in cash or in hotel t rade. This includes the cost of print advertising, the printing of brochures, salaries, wages, and benefits associ ated with sales and mar keting personnel, franchise fees, and other costs associat ed with sales and promotional programs. The comparable properties ranged from $2,547 to $5,694 PAR with ratios to total revenue ranging from 5.7 percent to 12.9 percent.

We estimate fixed marketing costs of approx imately $4,000 PAR in a repres entative stabilized year, or 11.1 p ercent of total revenues in a representative year. We find this reasonable as it is within the range of comparables, especially those that are franchised operations, on a PAR and percentage of revenue basis.

Marketing
Per Available Room Ratio to Total Rev.

Comparables
Hotel A $2,554 5.7%
Hotel B 5,694 12.9%
Hotel C 2,547 7.5%
Hotel D 4,062 10.6%
Weighted Average $3,531 8.8%
Subject Stabilized Year $4,000 11.1%
Pro perty Oper ations and Maintenance
This category in cludes the maintenance of the building, grounds and lands cape, electrical and mechanical equipment, salaries, wa ges, a nd benefits of the engineering department st aff, refrigeration, operating supplies, cleaning, waste removal and uniform s. The com parable properties ranged from $910 to $1,930 PAR. We estim ate maintenance expenditures f or the Subject at approximately $1,600 PAR in a representative stabilized year. We find this reasonable as it is within the range on a PAR and ratio to total revenues basis. 145
V-9 Section V – Statements of Estimated Annual Operating Results Proposed EverHome Suites Ontario, Ontario, CA
Property Operations and Maintenance
Per Available Room Ratio to Total Rev.

Comparables
Hotel A $1,787 4.0%
Hotel B 1,879 4.3%
Hotel C 910 2.7%
Hotel D 1,930 5.0%
Weighted Average $1,626 4.0%
Subject Stabilized Year $1,600 4.4%
Ener gy and Ut ility Costs
Energy and utility costs include electric, fuel, steam, water, and sewer charges. The cost of utilities at the comparable properties ranged from $940 to $1,260 PAR. We estimate that energy costs to operate the Subject will be approx imately $1,200 PAR in a repres entative stabilized year of operation. We find this re asonable as it is within the range on a per available room and ratio basis.

Energy and Utility
Per Available Room Ratio to Total Rev.

Comparables
Hotel A $1,186 2.6%
Hotel B 1,260 2.9%
Hotel C 1,128 3.3%
Hotel D 940 2.4%
Weighted Average $1,115 2.8%
Subject Stabilized Year $1,200 3.3%
Fixed C harges
Manag ement Fees
A management fee is an expense item representing the value of the management services. It is a variable operating expense normally exp ressed as a percentage of total revenues. Based on comparable hotels and industry standards, we have utilized a management fee of 3.0 percent of total revenues. This equates to a representative year expense of approximately $135,570.

Property Taxes
The subject p roperty is assessed by the Los Angeles County. The current method of taxation of real property in California is mandated by the Jarvis -Gann Property Tax Initiative, kn own as Proposition 13, un der which real esta te taxes were reduced to one percent of t he property’s full market value as of the 1975/76 fis cal y ear, plus an y voter-approved bond indebtedness.

Proposition 13 limits real estate taxes to a two-percent annual increase except upon sale or major alteration of the property. In eit her of t hese two events, the property is re -appraised to current market value, usually as evidenced by the sales price or the construction cost.

We have a pplied a base t ax rate for t he subject property of 1.1038 percent, or app roximately $222,000 in a representative year of operation based upon the pros pective market value of the 146
V-10 Section V – Statements of Estimated Annual Operating Results Proposed EverHome Suites Ontario, Ontario, CA
hotel. This figure has been inflated at 2.0 percent per year in accordanc e with the Jarvis-Gann Amendment.

Insur ance
Insurance for liability and building and contents at the comparable properties ranged from $86 to $504 PAR. We estimate that insurance costs for the Subject will be approximately $350 PAR in a representative stabilized year of operation. We find this re asonable based on our analysis of comparable hotel properties and the specific attributes of the proposed Subject.

Insurance
Per Available Room
Comparables
Hotel A $504
Hotel B 86
Hotel C 361
Hotel D 339
Weighted Average $348
Subject Stabilized Year $350
Reserves f or R eplacement
An additional item not typically listed on an owner’s income statement is the amount required for the periodic replaceme nt of certain short -lived items such as carpeting, drap eries, and ot her furniture, fixtures and equipment. For a new hotel, reserves are often lower in the first few years, because very litt le capital improvements will be necessary. We have increased the r eserves gradually over the first three full years of the projection period to build up reserves as the building ages. We have p rojected reserve for replacement of 2.0 percent for the first year of operation (2024), 3.0 percent for the second year of opera tion (2025), and 4.0 percent for the third year (2026) and thereafter.

REPRESENTATIVE Y EAR OPERATING ST ATEMENT
The following presents our estimates of annual op erating results for the Subject pro perty in a representative year of operations, shown in current calendar year 2021 d ollars, based on the aforementioned analysis. The representa tive year statement is presented on a calendar year basis.
147
V-11 Section V – Statements of Estimated Annual Operating Results Proposed EverHome Suites Ontario, Ontario, CA
Proposed EverHome Suites Ontario
Representative Year of Operation
Stated in 2021 Dollars
Number of Units: 125
Number of Annual Rooms Available: 45,625
Number of Rooms Occupied: 35,588
Annual Occupancy: 78.0%
Average Daily Rate: $125.00
Revenue Per Available Room: $97.50
Amount (Rounded) Ratio Per Room P.O.R.

Revenues
Rooms $4,448,000 98.4% $35,584 $124. 99
Other Operated Departments 71,000 1.6% 568 2. 00
Total Revenues 4,519,000 100.0% 36,152 126. 98
Departmental Expenses
Rooms 1,139,000 25.6% 9,112 32. 01
Other Operated Departments 25,000 35.2% 200 0. 70
Total Departmental Expenses 1,164,000 25.8% 9,312 32. 71 Departmental Profit 3,355,000 74.2% 26,840 94. 27
Undistributed Expenses
Administrative & General 400,000 8.9% 3,200 11. 24
Information and Telecommunication Systems 56,000 1.2% 448 1. 57 Marketing 500,000 11.1% 4,000 14. 05
Property Operations and Maintenance 200,000 4.4% 1,600 5. 62 Energy and Utility 150,000 3.3% 1,200 4. 21
Total Undistributed Operating Expenses 1,306,000 28.9% 10,448 36. 70 Gross Operating Profit 2,049,000 45.3% 16,392 57. 58
Base Management Fee 136,000 3.0% 1,088 3. 82
Fixed Expenses
Property Taxes 222,000 4.9% 1,776 6. 24
Insurance 44,000 1.0% 352 1. 24
Total Fixed Expenses 266,000 5.9% 2,128 7. 47
Net Operating Income Before Reserve 1,647,000 36.4% 13,176 46. 28 FF&E Reserve 181,000 4.0% 1,448 5. 09
Net Operating Income After Reserve $1,466,000 32.4% $11,728 $41. 19 Source: CBRE Hotels

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V-12 Section V – Statements of Estimated Annual Operating Results Proposed EverHome Suites Ontario, Ontario, CA

ESTIMATE D ANNUAL OPERATING RESULTS
The previous analysis provided for th e income and expenses incurred in the operation of the Subject in a stabilized year. In the following analysis, we provide estimated income and expenses for the Subject during each year of the 10-year holding period anticipated for a typical invest or.

Our estimate of the per formance for the Subject in the stabilized year is used as a basis for our analysis, considering the effects of inflation, business development, and varying occupancy.

Inflation
To portray price level cha nges during the holding period, we have assumed an inflation rate of

3.0 percent throug hout the projection period. This rate reflects the consens us of s everal well- recognized economists for the current long-term outlook for the future movement of prices and is consistent with his torical inflation rates. All expenses, save for p roperty taxes, are projected to increase at 3.0 percent throughout the holding period. Prope rty taxes are assumed to in flate at

2.0 percent annually in accordance with California’s Proposition 13.

It should be noted that inf lation is caused by many fact ors and un anticipated events and circumstances can affect the forecasted rate. Therefore, the estimated operating results computed over the projection period can vary from the actual operat ing results, and the variations may be material.

The following table s ummarizes the ten -year statement of o perating income and rat io to tot al revenue of income.

Statement of Estim ated Annual Operating Res ults
Presented on the following pages are the Subject property's estimated annual operating results for the calendar years 2024 through 2033. This time period reflects the first ten years of operation. 149
V-13 Section V – Statements of Estimated Annual Operating Results Proposed EverHome Suites Ontario, Ontario, CA
Proposed EverHome Suites Ontario
Projected Operating Results
Calendar Years
2024 2025 2026 202 7 2028
Number of Units: 125 125 125 125 125
Number of Annual Rooms Available: 45,625 45,625 45, 625 45,625 45,625 Number of Rooms Occupied: 31,938 34,219 35, 588 35,588 35,588 Annual Occupancy: 70.0% 75.0% 78. 0% 78.0% 78.0%
Average Daily Rate: $137.00 $141.00 $145. 00 $149.00 $154.00 Revenue Per Available Room: $95.90 $105.75 $113. 10 $116.22 $120.12 Amount Ratio Am ount Ratio Amount Ratio Amount Ratio Amount Ratio Revenues
Rooms $4,375,000 98.4% $4,825,000 98.4% $5,160,000 98.4% $5,303,000 98.4% $5,480,000 98.4% Other Operated Departments 70,000 1.6% 77, 000 1.6% 83,000 1.6% 85,000 1.6% 88,000 1.6% Total Revenues 4, 445,000 100.0% 4,902,000 100.0% 5,243,000 100.0% 5,388,000 100.0% 5,568,000 100.0% Departmental Expenses
Rooms 1,168,000 26.7% 1,252,000 25.9% 1,320,000 25.6% 1,360,000 25.6% 1,401,000 25.6% Other Operated Departments 24,000 34.3% 27, 000 35.1% 29,000 34.9% 30,000 35.3% 31,000 35.2% Total Departmental Expenses 1, 192,000 26.8% 1,279,000 26.1% 1,349,000 25.7% 1,390,000 25.8% 1,432,000 25.7% Departmental Profit 3,253,000 73.2% 3,623,000 73.9% 3,894,000 74.3% 3,998,000 74.2% 4,136,000 74.3% Undistributed Expenses
Administrative & General 437,000 9.8% 450,000 9.2% 464,000 8.8% 478,000 8.9% 492,000 8.8% Information and Telecommunication Systems 61,000 1.4% 63, 000 1.3% 65,000 1.2% 67,000 1.2% 69,000 1.2% Marketing 546,000 12.3% 563,000 11.5% 580,000 11.1% 597,000 11.1% 615,000 11.0% Property Operations and Maintenance 219,000 4.9% 225,000 4.6% 232,000 4.4% 239,000 4.4% 246,000 4.4% Energy and Utility 164,000 3.7% 169,000 3.4% 174,000 3.3% 179,000 3.3% 184,000 3.3% Total Undistributed Operating Expenses 1, 427,000 32.1% 1,470,000 30.0% 1,515,000 28.9% 1,560,000 29.0% 1,606,000 28.8% Gross Operating Profit 1,826,000 41.1% 2,153,000 43.9% 2,379,000 45.4% 2,438,000 45.2% 2,530,000 45.4% Base Management Fee 133,000 3.0% 147,000 3.0% 157,000 3.0% 162,000 3.0% 167,000 3.0% Fixed Expenses
Property Taxes 235,000 5.3% 240,000 4.9% 245,000 4.7% 249,000 4.6% 254,000 4.6% Insurance 48,000 1.1% 49, 000 1.0% 51,000 1.0% 52,000 1.0% 54,000 1.0% Total Fixed Expenses 283, 000 6.4% 289,000 5.9% 296,000 5.6% 301,000 5.6% 308,000 5.5% Net Operating Income Before Reserve 1,410,000 31.7% 1,717,000 35.0% 1,926,000 36.7% 1,975,000 36.7% 2,055,000 36.9% FF&E Reserve 89,000 2.0% 147,000 3.0% 210,000 4.0% 216,000 4.0% 223,000 4.0% Net Operating Income After Reserve $1,321,000 29.7% $1,570,000 32.0% $1,716,000 32.7% $1,759,000 32.6% $1,832,000 32.9% Source: CBRE Hotels Full Year of Operation
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V-14 Section V – Statements of Estimated Annual Operating Results Proposed EverHome Suites Ontario, Ontario, CA
Proposed EverHome Suites Ontario
Projected Operating Results
Calendar Years
2029 2030 2031 2032 2033
Number of Units: 125 125 125 125 125
Number of Annual Rooms Available: 45,625 45,625 45,625 45,625 45,625 Number of Rooms Occupied: 35,588 35,588 35,588 35,588 35,588 Annual Occupancy: 78.0% 78.0% 78.0% 78.0% 78.0%
Average Daily Rate: $158.00 $163.00 $168.00 $173.00 $178.00 Revenue Per Available Room: $123.24 $127.14 $131.04 $134.94 $138.84 Amount Ratio Amount Ratio Amount Ratio Amount Ratio Amount Ratio Revenues
Rooms $5,623,000 98.4% $5,801,000 98.4% $5,979,000 98.4% $6,157,000 98.4% $6,335,000 98.4% Other Operated Departments 90,000 1.6% 93,000 1.6% 96,000 1.6% 99,000 1.6% 101,000 1.6% Total Revenues 5,713,000 100.0% 5,894,000 100.0% 6,075,000 100.0% 6,256,000 100.0% 6,436,000 100.0% Departmental Expenses
Rooms 1,443,000 25.7% 1,486,000 25.6% 1,530,000 25.6% 1,576,000 25.6% 1,624,000 25.6% Other Operated Departments 32,000 35.6% 33,000 35.5% 33,000 34.4% 34,000 34.3% 36,000 35.6% Total Departmental Expenses 1,475,000 25.8% 1,519,000 25.8% 1,563,000 25.7% 1,610,000 25.7% 1,660,000 25.8% Departmental Profit 4,238,000 74.2% 4,375,000 74.2% 4,512,000 74.3% 4,646,000 74.3% 4,776,000 74.2% Undistributed Expenses
Administrative & General 507,000 8.9% 522,000 8.9% 538,000 8.9% 554,000 8.9% 570,000 8.9% Information and Telecommunication Systems 71,000 1.2% 73,000 1.2% 76,000 1.3% 78,000 1.2% 80,000 1.2% Marketing 633,000 11.1% 652,000 11.1% 672,000 11.1% 692,000 11.1% 713,000 11.1% Property Operations and Maintenance 253,000 4.4% 261,000 4.4% 269,000 4.4% 277,000 4.4% 285,000 4.4% Energy and Utility 190,000 3.3% 196,000 3.3% 202,000 3.3% 208,000 3.3% 214,000 3.3% Total Undistributed Operating Expenses 1,654,000 29.0% 1,704,000 28.9% 1,757,000 28.9% 1,809,000 28.9% 1,862,000 28.9% Gross Operating Profit 2,584,000 45.2% 2,671,000 45.3% 2,755,000 45.3% 2,837,000 45.3% 2,914,000 45.3% Base Management Fee 171,000 3.0% 177,000 3.0% 182,000 3.0% 188,000 3.0% 193,000 3.0% Fixed Expenses
Property Taxes 260,000 4.6% 265,000 4.5% 270,000 4.4% 275,000 4.4% 281,000 4.4% Insurance 55,000 1.0% 57,000 1.0% 59,000 1.0% 61,000 1.0% 62,000 1.0% Total Fixed Expenses 315,000 5.5% 322,000 5.5% 329,000 5.4% 336,000 5.4% 343,000 5.3% Net Operating Income Before Reserve 2,098,000 36.7% 2,172,000 36.9% 2,244,000 36.9% 2,313,000 37.0% 2,378,000 36.9% FF&E Reserve 229,000 4.0% 236,000 4.0% 243,000 4.0% 250,000 4.0% 257,000 4.0% Net Operating Income After Reserve $1,869,000 32.7% $1,936,000 32.8% $2,001,000 32.9% $2,063,000 33.0% $2,121,000 33.0% Source: CBRE Hotels

151
Addendum
Terms and Conditions
152
Assumptions and Limiting Conditions

1. CBRE, Inc. through its appraiser (collectively, “CBRE”) has inspected through r easonable observation the subject property. However, it is not possible or reasonably practicable to personally inspect conditions be neath the soil and the e ntire interior and exterior of the improvements on t he subject property. Th erefore, no representa tion is made as to such matters.

2. The report, including its conclusions and any portion of such report (the “Report”), is as of the date set forth in the letter of transmittal and based upon the information, market, economic, and property conditions and projected levels of operation existing as of such date. The dollar amount of any conclusion as to value in the Report is based upon the purcha sing p ower of the U.S. D ollar on su ch date. T he Report is subject to change as a result o f fluctuations in any of the foregoing. CBRE has no obligation to revise the Report to reflect any such fluctuations or other events or conditions which occur subsequent to such date.

3. Unless otherwise expressly noted in the Report, CBRE has assumed that:
(i) Title to the subject property is clear and marketable and that there are no recorded or unrecorded matters or exceptions to title that would adversely affect market ability or value. C BRE h as not examined title records (including without limitation liens, encumbrances, easements, deed restrictions, and other conditions that may affect the title or use of the subjec t property) and makes no representations regardi ng title or its limitations on the use of the subject property. Insurance a gainst financial loss that may arise out of de fects in title should be sought from a qualified title insurance company.
(ii) Existing improvements on the subject property conform to app licable local, state, and federal building codes and ordinances, are structurally sound and seismically safe, and have been built and repaired in a workmanlike manner according to standard practices; all building systems (mechanical/electrical, HVAC, elevator, plumbing, etc.) are in go od working order with no major deferred maint enance or repair requ ired; and t he roof and exterior are in good condition and free fro m intrusion by th e elements. CB RE has not ret ained independent structural, mechanical, electr ical, or civil engineers in connection with this app raisal and, therefore, m akes no representations relative to the condit ion of i mprovements. CBRE appraisers ar e not eng ineers a nd are n ot qualified to judge matters of an engineering nature, and furthermore str uctural problems o r building system problems may not be visible. It i s expressly assumed that any purchaser would, as a pre condition to closing a sale, obtain a satisfactory engineering report relative to the structural integrity of the property and the integrity of building systems.
(iii) Any p roposed improvements, on or off-site, as well as any alterations or repairs considered will be completed in a workmanlike manner according to standard practices. (iv) Haz ardous materials are not present on the subject proper ty. CBRE is not qualified to detect such substances.

The presence of substances such as asbe stos, urea formaldehyde foam i nsulation, contaminated groundwater, mold, or other potentially hazardous materials may affect the value of the property. (v) No mineral deposit or subsurface rights of value exist with respect to the subject property, whether gas, liquid, or solid, and no a ir or development rights of va lue may be transfer red. CB RE has not considered any rights associated with extraction or exploration of any resources, unless otherwise expressly noted in the Report. (vi) There are no contemplated public initiatives, governmental development controls, rent controls, or changes in the present zoning ordinances or regulations governing use, density, or shape that would significantly affect the value of the subject property.
(vii) All required licenses, cert ificates of occupancy, consents, or other legislative or adm inistrative authority from any local, state, nor national government or private entity or organization have been or can be readily obtained or renewed for any use on which the Report is based.
(viii) The subject property is m anaged and operated in a prudent and competent ma nner, neither inefficiently or super-efficiently.
(ix) The subject property and its use, m anagement, a nd operation are i n full comp liance with all applicable federal, state, and local re gulations, laws, and restr ictions, including without limitation en vironmental laws, seismic hazards, flight patt erns, deci bel levels/noise envelopes, fire hazar ds, hi llside ordinances, density, allowable uses, building codes, permits, and licenses.
(x) The subject property is in full compliance with the Americans with Disabilities Act (ADA). CBRE is not qualified to assess the subject property’s compliance with th e ADA, notwithstanding a ny discussion of possible readily achievable barrier removal construction items in the Report. (xi) All information regarding the areas and dimensions of the subject property furnished to CBRE are correct, and no encroachments exist. CBRE has neither undertaken any survey of the boundaries of the subject property nor reviewed or confirmed the accuracy of any legal description of the subject property.

Unless ot herwise ex pressly noted in th e Report, no issues regarding the foregoing were brought to CBRE’s attention, and CBRE ha s no knowle dge of any such facts a ffecting the subject prop erty. If any informat ion 153
Assumptions and Limiting Conditions
(continued)

inconsistent w ith any of the foreg oing assum ptions is discovered, s uch information could hav e a substantial negative impact on the Report. Accordingly, if any such information is subsequently made known t o CBRE, CBRE reserves the right to amend the Re port, wh ich m ay in clude the conclusion s of the R eport. C BRE as sumes no responsibility for any c onditions regarding the foregoing, or for any expertise or kno wledge required to discover them. Any user of the R eport is urged to re tain an expert in the applicable field(s) for information regarding such conditions.

4. CBRE has assumed that all documents, data and information furnished by or behalf of the client, p roperty owner, or owner’s representative are accura te and correct, unless ot herwise expressly noted in the Report. Such data and informat ion include, with out limitation, numerical street addres ses, lot and block numbers, Assessor’s Parcel Numbers, land dim ensions, square footage are a of the land, dimensio ns of the improvement s, g ross building areas, n et rentable areas, usable areas, unit count, roo m count, rent schedules, income data, hi storical operating expenses, budgets, and related data. Any error in any of the above could have a substantial impact on the Report. Accordi ngly, if an y such errors a re subsequently made known to CBRE, CB RE reserves the right to amend the Report, which may include the conclusions of the Report. The client and intended user should carefully review all assumptions, data, re levant calculations, and conclusions of the Rep ort and shoul d immediately notify CBRE of any questions or errors within 30 days after the date of delivery of the Report.

5. CBRE assumes no re sponsibility (including any obligation to pr ocure the same) for any documents, data or information not provided to CBRE, including without limitation any termite inspection, survey or occupancy permit.

6. All fu rnishings, equipment and business oper ations have been disrega rded w ith only re al property being considered in the Report, except as otherwise expressly stated and typically considered part of real property.

7. Any cash flows included in the analysis are forecasts of estimated future operating c haracteristics based upon the information and assumptions contained within the Report. Any projections of income, expenses and economic conditions utilized in th e Report , including suc h cash f lows, should be considered as only estimates of the expectations of future income and expenses as of the date of the Report and not predic tions of the future. Actual results are affect ed by a number of factors outside the control of CBRE, including without limitation fluc tuating economic, market, and property conditi ons. Actual results may ultimately differ from these projections, and CBRE does not warrant any such projections.

8. The Report contains professional opinions and is ex pressly not intended to serve as any w arranty, assurance or guarantee of any particula r value of the subject property. Other appraisers may reach different conclusions as to the val ue o f the s ubject property. Furth ermore, ma rket value is highly related t o exposure time , promotion effort, terms, motivation, and conclusions surrounding the offeri ng of the subject p roperty. The Re port is for the sole purpose of pr oviding the intended user with CBRE’s independe nt profe ssional op inion of the value o f the subject property as of the date of the Rep ort. Accordingly, CBRE shall not be liable for a ny losses that arise from any investment or lending decisions based upon th e Report that the cli ent, intended user, or any buyer, seller, investor, or lending institution may undertake related to the subject property, and CBRE has not been compensated to a ssume any of these risks . Nothing contained in the R eport shall be construed as any direct or in direct recommendation of CBRE to buy, sell, hold, or finance the subject property.

9. No op inion is expressed on m atters whi ch may require legal expertise or spec ialized investigation or knowledge beyond that customarily employed by real estate appraisers. Any user of the Report is advised to retain experts in areas that fall outside the scope of the real estate appraisal profession for such matters.

10. CBRE assumes no res ponsibility for an y costs or consequences arising due to the need, or the lack of need, for flood hazard insurance. An agent for the Federal Flood Insurance Program should be contacted to determine the actual need for Flood Hazard Insurance.

11. Acceptance or use of the Report constitutes full acceptance of these Assumptions and Limiting Conditions and any special assumptions set forth in the Report. It is t he responsibility of the us er of t he Report to r ead in ful l, comprehend and thus become aware of all s uch as sumptions an d limiting condit ions. CBRE assumes no responsibility for any situation arising out of the user’s failure to become familiar with and understand the same.

12. The Report applies to the pr operty as a whole only, and any pro ration or division of the title in to fractional interests will invalidate such conclu sions, unless the Rep ort expressly assumes such pro rat ion o r div ision of interests.

13. The allocations of the to tal value estimate in t he Report between land and improvements apply on ly to th e existing use o f the subject property. The allocations of values f or each of the land and improvements are not intended to be used with any other property or appraisal and are not valid for any such use.

14. The maps, plats, sketches, graphs, photogr aphs, and ex hibits inclu ded in this Repor t are for i llustration purposes only and shall be utilized only to assist in visualizing matters discussed in the Report. No such items shall be removed, reproduced, or used apart from the Report.
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Assumptions and Limiting Conditions
(continued)

15. The Report shall not be duplicated or provided to any unintended users in whole or in part w ithout the written consent of CB RE, which conse nt CBRE may w ithhold in its sole discr etion. Ex empt from this restriction is duplication for the internal use of the intended user an d its attorneys, accountants, or advisors for the sole benefit of the intended user. Also exempt from this restriction is transmission of the Report pursuant to any requirement of any court, governmental authority, or regulatory agency having jurisdiction over the intended user, provided that the Report and its contents shall no t be published, in wh ole or in part, in any pub lic document without the written consent of CBRE, which consent CBRE may withhold in its sole discretion. Finally, the Report shall n ot be ma de available to the public or otherwise used in any offering of the property or any secu rity, as defined by applicable law. Any unintended user who may po ssess th e Report is adv ised tha t it shall not re ly upon the Report or its conclusions and that it sh ould r ely on its o wn app raisers, ad visors and other consultants for a ny decision in connection with the subject property. CBRE shall have no liability or responsibility to any such unintended user.

155
City Council Agenda Report
File No.: PCUP22-006
February 21, 2023
Attachment B: Opposition Letter No. 2
(Attachment follows this page)
156
P: (
626) 381-9248
F: (626) 389-5414
E: [email protected]
Mitchell M. Tsai
Attorney At Law
139 South Hudson Avenue
Suite 200
Pasadena, California 91101

VIA EMAIL
January 24, 2023
Alexis Vaughn
Assistant Planner
303 East B Street
Ontario, CA 91764
(909) 395-2416
Em: [email protected]
RE: January 24, 2023, Planning Commission Hearing Agenda Item C – City of Ontario’s Everhome Suites Ontario Airport Project.

Dear Alexis Vaughn,
On behalf of the Sou thwest M ountain States Regional Council of Carpenters (“Southwest Mountain States Carpenters” or “SWMSRCC”), my Office is submitt
ing these comments for the City of Ontario’s (“City” or “Lead Agency”) January
24, 2023, Planning Commission hearing for the Everhome Suites Ontario Airport Project (File Nos. PMTT22-013, PDEV22-021, PCUP22-006) (“Project”).

A
pplicant Paladin Equity Capital, LL C ( “A pplicant ”) is requesting to subdivide the

3.37-acre Project site located at 18 20 E ast G Street, Ontario, California 91764 into two parcels in order to develop a 2,930-square-foot drive-thru restaurant (Chick-fil-A) and a 118-room1 limited-ser vice hotel (Everhome Suites) ( File No. PMTT22-01 3 (TPM 20505)). Ap plicant i s a lso r equesting the approval of a Conditional Use Permit (“CPU”)2 to establish the hotel and use on the site (File No. PCUP22-006) and of a Development Plan (File No. PD EV22-021). The City claims that t h e Project is ca
tegorically exempt from the requirements of the California Environmental Quality 1 The Market Study Report, prepared by CBRE Hotels, states that the proposed hotel will contain 125 rooms, yet the Application and Staff Report list 118 rooms. This discrepancy must be reconciled before an adequate analysis can be made as to the Project’s potential impacts.
2 City Council action is required for the proposed Conditional Use Permit. 157
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Act (“CEQA”) pursuant to section 15332 (Class 32, In-Fill Development Projects (“Exemption”) of the CEQA Guidelines.

SWMSRCC is a labor union representing over 63,000 union carpenters in 10 states, including California, and has a strong interest in well-ordered land use planning and in addressing the environmental impacts of development projects.

Individual members of SWMSRCC live, work, and recreate in the City and the surrounding communities and would be directly affected by the Project’s environmental impacts.

SWMSRCC expressly reserves the right to supplement these comments at or prior to hearings on the Project, and at any later hearing and proceeding related to this Project.

Gov. Code, § 65009(b); Pub. Res. Code, § 21177(a); see Bakersfield Citizens for Local Control v. Bakersfield (2004) 124 Cal.App.4th 1184, 1199-1203; see also Galante Vineyards v. Monterey Water Dist. (1997) 60 Cal.App.4th 1109, 1121.

SWMSRCC incorporates by reference all comments raising issues regarding the Project and its environmental review and associated documents and reports (including the City’s Staff Report), or lack thereof. See Citizens for Clean Energy v City of Woodland (2014) 225 Cal.App.4th 173, 191 (finding that any party who has objected to the project’s environmental documentation may assert any issue timely raised by other parties).

Moreover, SWMSRCC requests that the City provide notice for any and all notices referring or related to the Project issued under CEQA (Pub. Res. Code, § 21000 et seq.), and the California Planning and Zoning Law (“Planning and Zoning Law”) (Gov. Code, §§ 65000–65010). California Public Resources Code, sections 21092.2 and 21167(f) and California Government Code, section 65092 require agencies to mail such notices to any person who has filed a written request for them with the clerk of the agency’s governing body.

I. THE CITY SHOULD REQUIRE THE USE OF A LOCAL
WORKFORCE TO BENEFIT THE COMMUNITY’S ECONOMIC
DEVELOPMENT AND ENVIRONMENT.

The City should require that the Project be built using local workers who have graduated from a Joint Labor-Management Apprenticeship Program approved by the State of California, have at least as many hours of on-the-job experience in the 158
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applicable craft which would be required to graduate from such a program, or are registered apprentices in such a program.

Community benefits such as local hire can also be helpful to reduce environmental impacts and improve the positive economic impacts of the Project. Local hire provisions requiring that a certain percentage of workers reside within 10 miles or less of the Project site can reduce the length of vendor trips, reduce greenhouse gas emissions, and provide localized economic benefits. As environmental consultants Matt Hagemann and Paul E. Rosenfeld note:
[A]ny local hire requirement that results in a decreased worker trip length from the default value has the potential to result in a reduction of construction-related GHG emissions, though the significance of the reduction would vary based on the location and urbanization level of the project site.

March 8, 2021, SWAPE Letter to Mitchell M. Tsai re Local Hire Requirements and Considerations for Greenhouse Gas Modeling.

Workforce requirements promote the development of skilled trades that yield sustainable economic development. As the California Workforce Development Board and the University of California, Berkeley Center for Labor Research and Education concluded:
[L]abor should be considered an investment rather than a cost —and investments in growing, diversifying, and upskilling California’s workforce can positively affect returns on climate mitigation efforts. In other words, well-trained workers are key to delivering emissions reductions and moving California closer to its climate targets.3
Furthermore, workforce policies have significant environmental benefits given that they improve an area’s jobs-housing balance, decreasing the amount and length of job commutes and the associated greenhouse gas (“GHG”) emissions. In fact, on May 7,

3 California Workforce Development Board (2020) Putting California on the High Road: A Jobs and Climate Action Plan 2030 at p. ii, available at https://laborcenter.berkeley.edu/ wp-content/uploads/2020/09/Putting-California-on-the-High-Road.pdf. 159
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2021, the South Coast Air Quality Management District found that that the “[u]se of a local state-certified apprenticeship program” can result in air pollutant reductions.4 Locating jobs closer to residential areas can have significant environmental benefits.

As the California Planning Roundtable noted in 2008:

People who live and work in the same jurisdiction would be more likely to take transit, walk, or bicycle to work than residents of less balanced communities and their vehicle trips would be shorter. Benefits would include potential reductions in both vehicle miles traveled and vehicle hours traveled.
5 Moreover, local hire mandates and skill-training are critical facets of a strategy to reduce vehicle miles traveled (“VMT”). As planning experts Robert Cervero and Michael Duncan have noted, simply placing jobs near housing stock is insufficient to achieve VMT reductions given that the skill requirements of available local jobs must match those held by local residents.
6 Some municipalities have even tied local hire and
other workforce policies to local development permits to address transportation issues. Cervero and Duncan note that:

In nearly built -out Berkeley, CA, the approach to balancing jobs and housing is to create local jobs rather than to develop new housing. Th e city’s First Source program encourages businesses to hire local residents, especially for entry- and intermediate-level jobs, and sponsors vocational training to ensure residents are employment -ready. While the program is voluntary, some 300 businesses h ave used it to date, placing more than 3,000 city residents in local jobs since it was launched in 1986. When

4 South Coast Air Quality Management District (May 7, 2021) Certify Final Environmental Assessment and Adopt Proposed Rule 2305 – Warehouse Indirect Source Rule – Warehouse Actions and Investments to Reduce Emissions Program, and Proposed Rule 316 – Fees for Rule 2305, Submit Rule 2305 for Inclusion Into the SIP, and Approve Supporting Budget Actions, available at http://www.aqmd.gov/docs/default- source/Agendas/Governing-Board/2021/2021-May7-027.pdf?sfvrsn=10. 5 California Planning Roundtable (2008) Deconstructing Jobs-Housing Balance at p. 6, available at https://cproundtable.org/static/media/uploads/publications/cpr-jobs- housing.pdf
6 Cervero, Robert and Duncan, Michael (2006) Which Reduces Vehicle Travel More: Jobs- Housing Balance or Retail-Housing Mixing? Journal of the American Planning Association 72 (4), 475-490, 482, available at http://reconnectingamerica.org/assets/Uploads/UTCT- 825.pdf.
160
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needed, these carrots are matched by sticks, since the city is not shy about negotiating corporate participation in First Source as a condition of approval for development permits.

Recently, the State of California verified its commitment towards workforce development through the Affordable Housing and High Road Jobs Act of 2022, otherwise known as Assembly Bill No. 2011 (AB2011). AB2011 amended the Planning and Zoning Law to allow ministerial, by-right approval for projects being built alongside commercial corridors that meet affordability and labor requirements.

The City should consider utilizing local workforce policies and requirements to benefit the local area economically and to mitigate GHG emissions, improve air quality, and reduce transportation impacts.

II. THE CALIFORNIA ENVIRONMENTAL QUALITY ACT.

A. Background Concerning Environmental Impacts Reports.

The California Environmental Quality Act is a California statute designed to inform decision-makers and the public about the potential significant environmental effects of a project. CEQA Guidelines, § 15002(a)(1).
7 At its core, its purpose is to “inform the
public and its responsible officials of the environmental consequences of their decisions before they are made.” Citizens of Goleta Valley v. Board of Supervisors (1990) 52 Cal.3d 553, 564.

CEQA directs public agencies to avoid or reduce environmental damage, when possible, by requiring alternatives or mitigation measures. CEQA Guidelines, § 15002(a)(2)-(3); see also Berkeley Keep Jets Over the Bay Committee v. Board of Port Comes (2001) 91 Cal.App.4th 1344, 1354; Citizens of Goleta Valley v. Board of Supervisors (1990) 52 Cal.3d 553; Laurel Heights Improvement Assn., 47 Cal.3d at p. 400. The EIR serves to provide public agencies and the public in general with information about the effect that a proposed project is likely to have on the environment and to “identify ways that environmental damage can be avoided or significantly reduced.” CEQA Guidelines, § 15002(a)(2). If the project has a significant effect on the environment, the

7 The CEQA Guidelines, codified in Title 14 of the California Code of Regulations, section 15000 et seq., are regulatory guidelines promulgated by the state Natural Resources Agency for the implementation of CEQA. Pub. Res. Code, § 21083. The CEQA Guidelines are given “great weight in interpreting CEQA except when . . . clearly unauthorized or erroneous.” Center for Biological Diversity v. Dept. of Fish & Wildlife (2015) 62 Cal.4th 204, 217. 161
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agency may approve the project only upon finding that it has “eliminated or substantially lessened all significant effects on the environment where feasible” and that any unavoidable significant effects on the environment are “acceptable due to overriding concerns” specified in Public Resources Code section 21081. See CEQA Guidelines, §§ 15092(b)(2)(A)-(B).

While the courts review an EIR using an ‘abuse of discretion’ standard, the reviewing court is not to uncritically rely on every study or analysis presented by a project proponent in support of its position. Berkeley Jets, 91 Cal.App.4th at p. 1355 (quoting Laurel Heights Improvement Assn., 47 Cal.3d at pp. 391, 409 fn. 12) (internal quotations omitted). A clearly inadequate or unsupported study is entitled to no judicial deference. Id. Drawing this line and determining whether the EIR complies with CEQA’s information disclosure requirements presents a question of law subject to independent review by the courts. Sierra Club v. County of Fresno (2018) 6 Cal.5th 502, 515; Madera Oversight Coalition, Inc. v. County of Madera (2011) 199 Cal.App.4th 48, 102, 131. As the court stated in Berkeley Jets, prejudicial abuse of discretion occurs if the failure to include relevant information precludes informed decision-making and informed public participation, thereby thwarting the statutory goals of the EIR process. 91 Cal.App.4th at p. 1355 (internal quotations omitted).

The preparation and circulation of an EIR is more than a set of technical hurdles for agencies and developers to overcome. Communities for a Better Environment v. Richmond (2010) 184 Cal.App.4th 70, 80 (quoting Vineyard Area Citizens for Responsible Growth, Inc. v. City of Rancho Cordova (2007) 40 Cal.4th 412, 449-450). The EIR’s function is to ensure that government officials who decide to build or approve a project do so with a full understanding of the environmental consequences and, equally important, that the public is assured those consequences have been considered. Id. For the EIR to serve these goals it must present information so that the foreseeable impacts of pursuing the project can be understood and weighed, and the public must be given an adequate opportunity to comment on that presentation before the decision to go forward is made. Id.

A strong presumption in favor of requiring preparation of an EIR is built into CEQA.

This presumption is reflected in what is known as the “fair argument” standard under which an EIR must be prepared whenever substantial evidence in the record supports a fair argument that a project may have a significant effect on the environment. Quail 162
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Botanical Gardens Found., Inc. v. City of Encinitas (1994) 29 Cal.App.4th 1597, 1602; Friends of “B” St. v. City of Hayward (1980) 106 Cal.3d 988, 1002.

The fair argument test stems from the statutory mandate that an EIR be prepared for any project that “may have a significant effect on the environment.” Pub. Res. Code, § 21151; see No Oil, Inc. v. City of Los Angeles (1974) 13 Cal.App.3d 68, 75; accord Jensen v. City of Santa Rosa (2018) 23 Cal.App.5th 877, 884. Under this test, if a proposed project is not exempt and may cause a significant effect on the environment, the lead agency must prepare an EIR. Pub. Res. Code, §§ 21100(a), 21151; CEQA Guidelines, §§ 15064(a)(1), (f)(1). An EIR may be dispensed with only if the lead agency finds no substantial evidence in the initial study or elsewhere in the record that the project may have a significant effect on the environment. Parker Shattuck Neighbors v. Berkeley City Council (2013) 222 Cal.App.4th 768, 785. In such a situation, the agency must adopt a negative declaration. Pub. Res. Code, § 21080(c)(1); CEQA Guidelines, §§ 15063(b)(2), 15064(f)(3).
“Significant effect upon the environment” is defined as “a substantial or potentially substantial adverse change in the environment.” Pub. Res. Code, § 21068; CEQA Guidelines, § 15382. A project may have a significant effect on the environment if there is a reasonable probability that it will result in a significant impact. No Oil, Inc., 13 Cal.3d at p. 83 fn. 16; see Sundstrom v. County of Mendocino (1988) 202 Cal.App.3d 296, 309. If any aspect of the project may result in a significant impact on the environment, an EIR must be prepared even if the overall effect of the project is beneficial. CEQA Guidelines, § 15063(b)(1); see County Sanitation Dist. No. 2 v. County of Kern (2005) 127 Cal.App.4th 1544, 1580.

This standard sets a “low threshold” for preparation of an EIR. Consolidated Irrigation Dist. v. City of Selma (2012) 204 Cal.App.4th 187, 207; Nelson v. County of Kern (2010) 190 Cal.App.4th 252; Pocket Protectors v. City of Sacramento (2004) 124 Cal.App.4th 903, 928; Bowman v. City of Berkeley (2004) 122 Cal.App.4th 572, 580; Citizen Action to Serve All Students v. Thornley (1990) 222 Cal.App.3d 748, 754; Sundstrom, 202 Cal.App.3d at p. 310. If substantial evidence in the record supports a fair argument that the project may have a significant environmental effect, the lead agency must prepare an EIR even if other substantial evidence before it indicates the project will have no significant effect. See Jensen, 23 Cal.App.5th at p. 886; Clews Land & Livestock v. City of San Diego (2017) 19 Cal.App.5th 161, 183; Stanislaus Audubon Society, Inc. v. County of Stanislaus (1995) 33 Cal.App.4th 144, 150; Brentwood Assn. for No Drilling, Inc. v. City of 163
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Los Angeles (1982) 134 Cal.App.3d 491; Friends of “B” St., 106 Cal.App.3d 988; CEQA Guidelines, § 15064(f)(1).

B. Background Concerning Initial Studies, Negative Declarations, and Mitigated Negative Declarations.

CEQA and CEQA Guidelines are strict and unambiguous about when an MND may be used. A public agency must prepare an EIR whenever substantial evidence supports a “fair argument” that a proposed project “may have a significant effect on the environment.” Pub. Res. Code, §§ 21100, 21151; CEQA Guidelines, §§ 15002(f)(1)- (2), 15063; No Oil, Inc., 13 Cal.3d at p. 75; Communities for a Better Environment v. California Resources Agency (2002) 103 Cal.App.4th 98, 111-112. Essentially, should a lead agency be presented with a fair argument that a project may have a significant effect on the environment, the lead agency shall prepare an EIR even though it may also be presented with other substantial evidence that the project will not have a significant effect. CEQA Guidelines, §§ 15064(f)(1)-(2); see No Oil Inc., supra, 13 Cal.3d at p. 75 (internal citations and quotations omitted). Substantial evidence includes “enough relevant information and reasonable inferences from this information that a fair argument can be made to support a conclusion, even though other conclusions might also be reached.” CEQA Guidelines, § 15384(a).

The fair argument standard is a “low threshold” test for requiring the preparation of an EIR. No Oil Inc., supra, 13 Cal.3d at p. 84; County Sanitation Dist. No. 2 of Los Angeles County v. County of Kern (2005) 127 Cal.App.4th 1544, 1579. It “requires the preparation of an EIR where there is substantial evidence that any aspect of the project, either individually or cumulatively, may cause a significant effect on the environment, regardless of whether the overall effect of the project is adverse or beneficial[.]” County Sanitation, supra, 127 Cal.App.4th at p. 1580 (quoting CEQA Guidelines, § 15063(b)(1)).

A lead agency may adopt an MND only if “there is no substantial evidence that the project will have a significant effect on the environment.” CEQA Guidelines, § 15074(b).

Evidence supporting a fair argument of a significant environmental impact triggers preparation of an EIR regardless of whether the record contains contrary evidence.

League for Protection of Oakland’s Architectural and Historical Resources v. City of Oakland (1997) 52 Cal.App.4th 896, 904-905. “Where the question is the sufficiency of the evidence to support a fair argument, deference to the agency’s determination is not 164
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appropriate[.]” County Sanitation, 127 Cal.App.4th at 1579 (quoting Sierra Club v. County of Sonoma (1992) 6 Cal.App.4th 1307, 1317-1318).

Further, it is the duty of the lead agency, not the public, to conduct the proper environmental studies. “The agency should not be allowed to hide behind its own failure to gather relevant data.” Sundstrom, 202 Cal.App.3d at p. 311. “Deficiencies in the record may actually enlarge the scope of fair argument by lending a logical plausibility to a wider range of inferences.” Id; see also Gentry v. City of Murrieta (1995) 36 Cal.App.4th 1359, 1382 (lack of study enlarges the scope of the fair argument which may be made based on the limited facts in the record).

Thus, refusal to complete recommended studies lowers the already low threshold to establish a fair argument. The court may not exercise its independent judgment on the omitted material by determining whether the ultimate decision of the lead agency would have been affected had the law been followed. Environmental Protection Information Center v. Cal. Dept. of Forestry (2008) 44 Cal.4th 459, 486 (internal citations and quotations omitted). The remedy for this deficiency would be for the trial court to issue a writ of mandate. Id.

Both the review for failure to follow CEQA’s procedures and the fair argument test are questions of law, thus, the de novo standard of review applies. Vineyard Area Citizens for Responsible Growth v. City of Rancho Cordova (2007) 40 Cal.4th 412, 435. “Whether the agency’s record contains substantial evidence that would support a fair argument that the project may have a significant effect on the environment is treated as a question of law. Consolidated Irrigation Dist., 204 Cal.App.4th at p. 207; Kostka and Zischke, Practice Under the Environmental Quality Act (2017, 2d ed.) at § 6.76.

In the MND context, courts give no deference to the agency. The agency or the court should not weigh expert testimony or decide on the credibility of such evidence⁠—this is the EIR’s responsibility. As stated in Pocket Protectors v. City of Sacramento:

Unlike the situation where an EIR has been prepared, neither the lead agency nor a court may “weigh” conflicting substantial evidence to determine whether an EIR must be prepared in the first instance.

Guidelines section 15064, subdivision (f)(1) provides in pertinent part: if a lead agency is presented with a fair argument that a project may have a significant effect on the environment, the lead agency shall prepare an EIR even though it may also be presented with other substantial evidence that 165
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Ontario City CouncilFebruary 21, 2023

Ontario City Council
February 21, 2023