Agenda packet — San Carlos City Council, August 28, 2023 (part 1 of 4)

CITY OF SAN CARLOS
City Council/Successor Agency to the
Redevelopment Agency/Housing Authority
Regular Meeting
August 28, 2023 7:00 PM
Council Chambers, City Hall
600 Elm Street, San Carlos, CA 94070
www.cityofsancarlos.org
AGENDA
This meeting will be conducted both inperson at City Hall and virtually via Zoom. Members of the public will have the option to observe the meeting and address the City Council as outlined below.

InPerson Participation:

Location. City Hall – 600 Elm Street, Council Chambers.

Masks are no longer required, but are still recommended by the California Department of Health. To maintain public health and safety, please do not attend in person if you are experiencing respiratory symptoms (e.g. cough, runny nose, and/or sore throat).

Provide Public Comment. To address the City Council on any item on the posted agenda, fill out a Request to Speak Form located in the back of the Council Chambers and submit it to the City Clerk; or, you may raise your hand when the Mayor calls for public comments.

Remote Participation:

Observe via:
Zoom. https://us02web.zoom.us/j/88256140939; or call 16699009128 and enter the Meeting ID #: 882 5614 0939
Meeting Webportal. www.cityofsancarlos.org/agenda Local TV. Comcast Channel 27 and AT&T Uverse Channel 99 Provide Public Comment. If you plan to make a public comment on any item on the posted agenda, please observe the meeting via Zoom (see above access information), and during the public comment period for the agenda item you wish to address, use the “raise hand” feature. If joining Zoom by phone, press *9 to “raise hand”.

Councilmembers may participate in this meeting remotely as authorized by Assembly Bill 2449.

MAYOR: Adam Rak
COUNCIL:Ronald Collins, John Dugan, Sara McDowell, Pranita Venkatesh

1. CALL TO ORDER
1 ageda,peaseobseeteeetgaoo(seeaboeaccessoato),addugtepubc comment period for the agenda item you wish to address, use the “raise hand” feature. If joining Zoom by phone, press *9 to “raise hand”.

Councilmembers may participate in this meeting remotely as authorized by Assembly Bill 2449.

MAYOR: Adam Rak
COUNCIL:Ronald Collins, John Dugan, Sara McDowell, Pranita Venkatesh

1. CALL TO ORDER

2. ASSEMBLY BILL 2449 TELECONFERENCE REQUESTS

3. PLEDGE OF ALLEGIANCE

4. CHANGES TO THE ORDER OF THE AGENDA

5. REPORT FROM CLOSED SESSION

6. PRESENTATIONS
a. Present a City Coin to Community Volunteer Cameron Miller. b. Present a Proclamation Recognizing the Medical Equipment Loan Program.

7. COUNCIL COMMUNICATIONS AND ANNOUNCEMENTS
Council Communications and Announcements are brief items from members of the City Council regarding upcoming events in the community and correspondence that they have received. They are informational in nature and no action will be taken on these items at this meeting.

8. PUBLIC COMMENT
Persons wishing to address the City Council on matters NOT on the posted agenda may do so.

Each speaker is limited to two minutes. If there are more than five individuals wishing to speak during public comment, the Mayor may choose to allow the first five speakers to speak during this time, and the balance of the Public Comment speakers will be called upon at the end of the Council Meeting.

If the item you are speaking on is not listed on the agenda, please be advised that the City Council may briefly respond to statements made or questions posed as allowed under the Brown Act (Government Code Section 54954.2). The City Council's general policy is to refer items to staff for attention, or have a matter placed on a future City Council agenda for a more comprehensive action or report and formal public discussion and input at that time.

9. CONSENT CALENDAR
a. Motion to Waive Reading of All Ordinances.
b. Approve the June 26, 2023 City Council Special Meeting Minutes. c. Approve the June 26, 2023 City Council Regular Meeting Minutes. 2 yypqp
Brown Act (Government Code Section 54954.2). The City Council's general policy is to refer items to staff for attention, or have a matter placed on a future City Council agenda for a more comprehensive action or report and formal public discussion and input at that time.

9. CONSENT CALENDAR
a. Motion to Waive Reading of All Ordinances.
b. Approve the June 26, 2023 City Council Special Meeting Minutes. c. Approve the June 26, 2023 City Council Regular Meeting Minutes. d. Accept Fiscal Year 202223 Fourth Quarter Investment Report Ending June 30, 2023.
e. Authorize the City Manager to Sign the Letter Prepared by Staff in Response to the 20222023 San Mateo County Civil Grand Jury Report “Accessory Dwelling Units:

Affordable Housing's Panacea or Prevarication."
f. Adopt a Resolution Accepting the 2023 Citywide Sewer System Root Foaming Project C1752 and Authorizing the Public Works Director to Issue and Record a Notice of Completion.
g. Deny Claim of Johanna Siegrist.
h. Adopt a Resolution Approving the Use of the Library Excess Funds in Fiscal Year 202324 in Accordance with the Library Joint Powers Authority Agreement; Creating a New Capital Project AC Rooftop Unit Project; and Appropriating $965,000 from the Library Tenant Fund 0095 (Fund 95) in FY 202324 to the New AC Rooftop Unit Project ($800,000), Library Maintenance and Repair Project (C1734) ($130,000) and Library Maintenance Funds ($35,000). i. Deny Claim of Nina and Ray Gabb.
j. Adopt a Resolution Appropriating $74,560 from the Wastewater Fund (Fund 06) in Fiscal Year 202324; Authorizing the City Manager to Execute a Professional Services Agreement with Black & Veatch for the Sanitary Sewer Model Update and Management Plan C2302 in the Amount of $299,411; and Authorizing an Expenditure of Contingency up to the Remaining Project Budget. k. Adopt a Resolution Appropriating $780,016 from the Wastewater Fund (Fund 06) to C9617 in Fiscal Year 202324; Awarding the 2023 Sewer Rehabilitation Project C9617; Authorizing the City Manager to Execute a Public Projects Agreement with JMB Construction, Inc. of South San Francisco, CA in the Amount of $5,965,671; and Authorizing the Expenditure of Contingency up to the Project Budget. l. Adopt Ordinance 1598 Approving the 642 Quarry Road Project Planned Development Plan and Related Zoning Map Amendment to Rezone the Project Site from Light Industrial (IL) to Planned Development (PD) at 642 Quarry Road (APN 046041380).
m. Adopt Ordinance 1599 Approving a Development Agreement with 642 Quarry Owner, LLC for the 642 Quarry Road Project.

10. NEW BUSINESS
a. Consideration of Adopting a Resolution Adopting a Memorandum of Understanding Between the City of San Carlos and the American Local 856, Freight Checkers, Clerical Employees and Helpers Union, International Brotherhood of Teamsters ("Teamsters") Unit for the Period of September 1, 2023 through August 31, 2026. b. Consideration of Adopting a Resolution Authorizing an Additional Appropriation of $445,000 in Fiscal Year 202324 from the General Capital Fund 0025 (Fund 25) Unassigned Fund Balance to Project C2105 – Downtown Planning Initiative; Authorizing the City Manager to Execute Professional Services Agreements with WRT, LLC in the Amount of $768,781 and with WTrans in the Amount of $118,690; and Authorizing an Expenditure of Contingency up to the Revised Project Budget. c. Consideration of Adopting a Resolution Providing Authority to the City Manager to Administer a Program Allowing for the Temporary Closure of the 700 Block of Laurel Street for Special Events and Other TimeLimited Purposes, Extending the Temporary Downtown Parklet Program, and Providing for Expiration of Both Programs on September 15, 2024.
d. Consideration of Adopting a Resolution of Intent for the Closure of the 700 Block of Laurel Street Between Cherry and Olive Streets to Vehicular Traffic Under the Pedestrian Mall Law of 1960.

11. PUBLIC HEARING
a. Consideration of Below Actions for the Life Science/Research & Development Project at 841 Old Country Road (APNs 046133160, 046134050, 046134060, 046135010, 046135020, 046135030, 046135040, 046182100, 046182110, 046182150):
i. Adopt a Resolution Adopting the Mitigated Negative Declaration and the Associated Mitigation Monitoring and Reporting Program. ii. Introduce an Ordinance Approving the 841 Old County Road Project Planned Development Plan and Related Zoning Map Amendment to Rezone the Project Site from Heavy Industrial (IH) to Planned Development (PD) at 841 Old County Road (APN 046133160, 046134 050, 046134060, 046135010, 046135020, 046135030, 046135 040, 046182100, 046182110, 046182150).
iii. Introduce an Ordinance Approving a Development Agreement with the Sobrato Family Foundation.

12. AGENDA SETTING
Items discussed in this Agenda Setting Section will be considered by the Council for placing on a future agenda. No action will be taken on these items at this meeting. a. Consideration of Agendizing an Item to Discuss Best Practices and New Standards to Fully Memorialize and Communicate Public Access Rights to Private Property with Deeded Public Easements.
b. Consideration of Agendizing an Item to Discuss the Preparation of a Historical Resource Inventory of the City.
4 12. AGENDA SETTING
Items discussed in this Agenda Setting Section will be considered by the Council for placing on a future agenda. No action will be taken on these items at this meeting. a. Consideration of Agendizing an Item to Discuss Best Practices and New Standards to Fully Memorialize and Communicate Public Access Rights to Private Property with Deeded Public Easements.
b. Consideration of Agendizing an Item to Discuss the Preparation of a Historical Resource Inventory of the City.

13. ADJOURNMENT
______________________________________________________________________________ Any writings or documents provided to a majority of the City Council regarding any item on this agenda will be made available for public inspection upon request.

In compliance with the Americans with Disabilities Act and Title VI, and as outlined in the City’s Reasonable Accommodations Policy, if you need special assistance or translation services to participate in this meeting, please contact the City Clerk’s Office at (650) 8024222 or via email at [email protected]. Notification in advance of the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. 5 San Carlos City Council/Successor Agency to the
Redevelopment Agency/Housing Authority Special Meeting
Collaboration Room, City Hall
600 Elm Street, San Carlos, CA 94070
June 26, 2023 6:00 PM

MINUTES

ROLL CALL
City Council Present: Adam Rak, Mayor
Ronald Collins, Councilmember
John Dugan, Vice Mayor
Sara McDowell, Councilmember
Pranita Venkatesh, Councilmember
Staff Present: Adam Aronson, Economic Development and Housing Manager Jeff Maltbie, City Manager
Rebecca Mendenhall, Administrative Services Director
Crystal Mui, City Clerk
Amy Newby, Parks and Recreation Director
Angie Rodriguez, Human Resources Manager
Gregory Rubens, City Attorney
Al Savay, Community Development Director

1. CALL TO ORDER
The meeting was called to order at 6:00 PM.

2. PUBLIC COMMENT
None.

3. CLOSED SESSION
a. Conference with Labor Negotiators Cue, Maltbie, Mendenhall, Rodriguez and Rubens- (Closed Session Pursuant to Government Code Section 54957.6) All Units. b. Conference with Labor Negotiator Maltbie and Mendenhall - (Closed Session Pursuant to Govt.

Code Section 54957.6) - City Attorney.
c. Conference with Real Property Negotiators Maltbie, Rubens, and Savay - (Closed Session Held Pursuant to Government Code Section 54956.8) Regarding Assignment of Existing Lease for the Property Located at 1144 El Camino Real (APN 051-344-430). Price and Terms d. Conference with Real Property Negotiators Aronson, Maltbie, Newby, Savay, Rubens (Closed Session Held Pursuant to Government Code Section 54956.8) to Discuss the Crestview Park Condominium Property Located at “Lot G”, Assessor Parcel Number (APN) 049-040-460. Price and Terms

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4. REPORT FROM CLOSED SESSION
None.

5. ADJOURNMENT
The meeting adjourned at 6:54 pm.

Crystal Mui
City Clerk

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San Carlos City Council/Successor Agency to the
Redevelopment Agency/Housing Authority Regular Meeting
Council Chambers, City Hall
600 Elm Street, San Carlos, CA 94070
June 26, 2023 7:00 PM

MINUTES

ROLL CALL
City Council Present:

Staff Present:

Adam Rak, Mayor
Ronald Collins, Councilmember
John Dugan, Vice Mayor
Sara McDowell, Councilmember
Pranita Venkatesh, Councilmember
Adam Aronson, Economic Development and Housing Manager
Nil Blackburn, Assistant City Manager
Lisa Costa Sanders, Principal Planner Consultant
Greg D. Cunha, Deputy Fire Chief
Gareth Harris, Fire Marshall
Al Savay, Community Development Director
Steven Machida, Public Works Director
Jeff Maltbie, City Manager
Andrea Mardesich, Assistant Community Development Director Rebecca Mendenhall, Administrative Services Director
Crystal Mui, City Clerk
Amy Newby, Parks and Recreation Director
Lisa Porras, Planning Manager
Gregory Rubens, City Attorney

1. CALL TO ORDER
Mayor Rak called the meeting to order at 7:00 PM.

2. 3.

ASSEMBLY BILL 2449 TELECONFERENCE REQUESTS
All Councilmembers participated in this meeting in-person.

PLEDGE OF ALLEGIANCE
Mayor Rak led the Pledge of Allegiance.

4. CHANGES TO THE ORDER OF THE AGENDA
None.

5. REPORT FROM CLOSED SESSION
City Attorney Greg Rubens stated that there are no reports from the Closed Session items held this evening at the 6:00 PM Special Council Meeting.

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6. PRESENTATIONS
a. Present a Proclamation Recognizing July 2023 as Parks and Recreation Month.

Mayor Rak presented Parks and Recreation Director Amy Newby with a proclamation recognizing July 2023 as Parks and Recreation Month.

Ms. Newby thanked the Council for the recognition and encouraged the public to visit the City’s parks and events.
b. Present Proclamations to Outgoing Economic Development and Advisory Commissioner Don Mancini; Museum of San Carlos History Boardmember Gordy Burton; and Parks, Recreation and Culture Commissioner Stacy Cooper-Dent in Recognition of Their Years of Service.

Mayor Rak presented a proclamation to Gordy Burton for his years of service on the Museum Board.

Mr. Burton thanked Council for the recognition and thanked the Council for their support to the Museum.

Mayor Rak presented a proclamation to Stacey Cooper-Dent for her years of service on the Parks, Recreation and Culture Commission.

Mayor Rak presented a proclamation to Don Mancini for his years of service on the Economic Development Advisory Commission.

Mr. Mancini thanked Council for the opportunity to serve. c. Present a City Coin to Community Volunteer Cynthia Wiggin.

Mayor Rak presented a City Coin to Cynthia Wiggins for her community service.

Ms. Wiggins thanked her mom for instilling the volunteer spirit in her and spoke on the importance of volunteering.

7. COUNCIL COMMUNICATIONS AND ANNOUNCEMENTS
None.

8. PUBLIC COMMENT
None.

9. CONSENT CALENDAR
City Attorney Greg Rubens recused himself from item ‘j’ on the Consent Calendar.

MOTION: Approve the City Council Consent Calendar items ‘a’ through ‘v’.

MOVER: John Dugan
SECONDER: Sara McDowell
AYES: Collins, McDowell, Venkatesh, Dugan, Rak
NAYS: None.

RESULT: Motion Passed 5 - 0

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a. Motion to Waive Reading of All Ordinances.
b. Approve the May 8, 2023 City Council Special Meeting Minutes. c. Approve the May 8, 2023 City Council Regular Meeting Minutes. d. Adopt a Resolution Approving the Plans and Specifications for the 2023 Annual Storm Drain Improvement Project C9531 (3017 Brittan Ave, 1000 Drake Ct, 1005 Drake Ct, and 200 Block of El Camino Real) and Authorizing a Call for Bids. Resolution 2023-068 e. Adopt a Resolution Accepting the 447 Hillcrest Road Wall Replacement Project C2203; and Authorizing the Public Works Director to Issue and Record a Notice of Completion.

Resolution 2023-069
f. Adopt a Resolution Approving the Submittal of Annual Property Assessments to San Mateo County for National Pollutant Discharge Elimination System Stormwater Fees; Pulgas Creek Levee Assessment Fees; and Sewer Service Charges for Fiscal Year 2023-2024.

Resolution 2023-070
g. Adopt a Resolution Authorizing the City Manager to Execute a Three-Year Agreement for Products and/or Services with Peninsula Christmas Light Pros for Downtown Lighting Program Maintenance in an Amount Not to Exceed $257,892, with the Option to Renew for Two Additional Years. Resolution 2023-071
h. Adopt a Resolution Authorizing Two-Year Extensions to the Professional Services Agreements with the Firms of West Coast Code Consultants, Inc., CSG Consultants, Inc., and Bureau Veritas of North America, Inc. for Building and Fire Plan Check Services. Resolution 2023- 072
i. Deny Claim of Margarito Hernandez.
j. Adopt a Resolution Approving the Following Classification Specifications: City Attorney, Legal Secretary, Deputy City Clerk, Assistant Building Official, Senior Mechanic, and Principal Engineer; and Amending Appendices of the Local 856, Freight Checkers, Clerical Employees and Helpers Union, International Brotherhood of Teamsters (Teamsters) Memorandum of Understanding (MOU), Confidential Group Salary and Benefit Resolution, and Management Group Salary and Benefit Resolution. Resolution 2023-073 k. Deny Claim of Gerald Alchimisti.
l. Adopt a Resolution Appropriating $380,000 in Fiscal Year (FY) 2022-23 and $430,000 in FY 2023-24 from the Wastewater Fund to Establish the Silicon Valley Clean Water (SVCW) Debt Reserve Service Fund to Satisfy the SVCW Debt Service Coverage Ratio Requirements of the State Revolving Fund (SRF) Loan Program. Resolution 2023-074 m. Adopt a Resolution Transferring $60,000 from Park-in-Lieu Fund 0027 to the Sport Field Lighting Project C1818 in the General Capital Fund 0025. Resolution 2023-075 n. Adopt a Resolution Awarding the 2023 Pavement Crack Seal Project C9416; Authorizing the City Manager to Execute a Public Projects Agreement with Graham Contractors, Inc. of San Jose, CA in the Amount of $82,380; and Authorizing the Expenditure of a Contingency in the Amount of $12,357. Resolution 2023-076
o. Adopt a Resolution Authorizing the City Manager to Execute an Amendment to the Professional Services Agreement with KimleyHorn & Associates, Inc. in the Amount of

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$143,970 for Additional Professional Engineering Services for the Traffic Signal System Analysis Project (C2007) and Authorizing the Expenditure of Contingency up to the Project Budget. Resolution 2023-077
p. Adopt a Resolution Granting Consent to the City of Burlingame to Form the San Francisco Peninsula Tourism Marketing District (SFPTMD) and Include the City of San Carlos.

Resolution 2023-078
q. Adopt a Resolution Extending the Agreement with Savant Solutions, Inc. for Firewall Hardware and Services for an Additional Three Years in a Total Amount Not to Exceed $30,000, with the Option to Renew Until the Hardware is Replaced. Resolution 2023-079 r. Adopt a Resolution Authorizing the City Manager to Execute an Agreement with Peninsula Clean Energy to Administer City Electric Vehicle Charging Incentives for Existing Multi-Family Buildings in San Carlos. Resolution 2023-080
s. Adopt a Resolution Accepting and Approving the Annual Investment Policy for Fiscal Year 2023-24. Resolution 2023-081
t. Adopt a Resolution Authorizing the City Manager to Execute a Two-Year Lease Agreement for Office Space at the San Carlos Library Building with the Friends of the San Carlos Library (FOSCL), with the Option to Extend for an Additional Three Years. Resolution 2023- 082
u. Adopt a Resolution Authorizing the City Manager to Enter into a Professional Services Agreement with PlaceWorks for Consulting Services to Prepare a General Plan Capacity Revision and an Accompanying Environmental Impact Report in an Amount Not to Exceed $390,000 and Authorizing an Additional Appropriation from the General Capital Fund 0025 Unassigned Fund Balance in the Amount of $140,000 to Project C2311 -2030 General Plan Amendment. Resolution 2023-083
v. Adopt a Resolution Authorizing Application by the City to the Local Agency Formation Commission Requesting Approval for Extension of Sewer Service Outside Jurisdictional Boundaries Pursuant to Government Code Section 56133 and Authorizing the City Manager to Execute the Outside Sewer Services Agreement with Kyle C. Cady and Christen G.

DiPetrillo for 83 El Vanada Road and all Associated Agreements. Resolution 2023-084

10. NEW BUSINESS
a. Consider Acquisition of Properties Located at 1800 El Camino Real and 1131-1133 Eaton Ave, San Carlos (APNs: 051-379-010, 051-379-020, 051-379-030, 051-379-040, 051-379-050, 051- 379-060) for Potential Future Affordable Housing Development Including Authorization for the City Manager to Execute a Purchase and Sale Agreement and Approval of a $7,000,000 Loan from the Strategic Property Acquisition Reserve (SPAR) Fund to Fund 29, the Affordable Housing In-Lieu Fund and Authorization of an Amendment to the Fiscal Year (FY) 2023-24 Project Budget for C2332 – Affordable Housing Site Acquisition/Construction to Transfer $3,100,000 in Appropriation from FY 2024-25 to FY 2023-24 to Facilitate the Purchase.

Adam Aronson, Economic Development and Housing Manager, presented on the potential acquisition of properties at 1800 El Camino and 1131-1133 Eaton Ave for a future affordable housing development and responded to Council questions.

Councilmember Venkatesh suggested staff proceed in a family-oriented direction.

Council voiced their support for the project.

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i. Adopt a Resolution of the City Council of the City of San Carlos Approving and Authorizing the Execution of a Financing Agreement with the San Carlos Housing Authority Including the Approval of a $7 Million Loan from the Strategic Property Acquisition (SPAR) Fund to Fund 29, the Affordable Housing in-Lieu Fund, and Authorizing an Amendment to the Fiscal Year (FY) 2023-24 Project Budget for C2332 – Affordable Housing Site Acquisition/Construction, to Transfer $3.1 Million in Appropriation from FY 2024-25 to FY 2023-24.

MOTION: Adopt Resolution 2023-085 Approving and Authorizing the Execution of a Financing Agreement with the San Carlos Housing Authority Including the Approval of a $7 Million Loan from the Strategic Property Acquisition (SPAR) Fund to Fund 29, the Affordable Housing in-lieu Fund, and Authorizing an Amendment to the Fiscal Year 2023-24 Project Budget for C2332 – Affordable Housing Site Acquisition/ Construction, to Transfer $3.1 Million in Appropriation from FY 2024-25 to FY 2023-24.

MOVER: Sara McDowell
SECONDER: John Dugan
AYES: Dugan, Collins, McDowell, Venkatesh, Rak
NAYS: None
RESULT: Motion Passed 5 – 0
ii. Adopt a Resolution of the Housing Authority of the City of San Carlos Approving and Authorizing the Execution of a Financing Agreement with the City of San Carlos.

MOTION: Adopt Resolution HA-011 Approving and Authorizing the Execution of a Financing Agreement with the City of San Carlos
MOVER: John Dugan
SECONDER: Ronald Collins
AYES: Venkatesh, Dugan, Collins, McDowell, Rak
NAYS: None
RESULT: Motion Passed 5 – 0
iii. Adopt a Resolution of the Housing Authority of the City of San Carlos Approving a Purchase and Sale Agreement Between the Housing Authority and Ann C. Gaskell, as Successor Sole Trustee of the Peck Revocable Trust Dated June 4, 1997, as to an Undivided Eighty-Six (86%) Interest, and David L. Peck, a Married Man, as His Sole and Separate Property, as to an Undivided Fourteen Percent (14%) Interest for the Purchase of 1131-33 Eaton Avenue (APNs 051-379-040, 051-379-050, And 051-379- 060).

MOTION: Adopt Resolution HA-012 Approving a Purchase and Sale Agreement Between the Housing Authority and Ann C. Gaskell, as Successor Sole Trustee of the Peck Revocable Trust Dated June 4, 1997, as to an Undivided Eighty-Six (86%) Interest, and David L. Peck, a Married Man, as His Sole and Separate Property, as to an Undivided Fourteen Percent (14%) Interest for the Purchase of 1131-33 Eaton Avenue (APNs 051-379-040, 051-379-050, and 051-379-060).

MOVER: Pranita Venkatesh
SECONDER: Ronald Collins
AYES: McDowell, Venkatesh, Dugan, Collins, Rak

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NAYS: None
RESULT: Motion Passed 5 – 0
iv. Adopt a Resolution of the Housing Authority of the City of San Carlos Approving a Purchase and Sale Agreement Between the Housing Authority and Koff Consolidated Realty Inc. for the Purchase of 1800 El Camino Real (APNs 051-379-010, 051-379-020, and 051-379-030).

MOTION: Adopt Resolution HA-013 Approving a Purchase and Sale Agreement Between the Housing Authority and Koff Consolidated Realty Inc. for the Purchase of 1800 El Camino Real (APNs 051-379-010, 051-379- 020, and 051-379-030).

MOVER: Ronald Collins
SECONDER: Sara McDowell
AYES: Collins, McDowell, Venkatesh, Dugan, Rak
NAYS: None
RESULT: Motion Passed 5 – 0
b. Consideration of Adopting a Resolution Authorizing the City Manager to Sign an Amendment to the Disposition, Development, and Loan Agreement with Cherry Street Commons, L.P.; Approving a Total City Loan Amount of $12,860,000, Including an Allocation Under this Amount of $2,000,000 to the Existing Predevelopment Loan; and Appropriating an Additional $1,000,000 from the City’s Affordable Housing In-Lieu Fund (Fund 29) to Capital Project C9754 to Cover these Costs and Support the Construction of an Affordable Housing Project at 1232-1244 Cherry Street (Assessor’s Parcel Numbers (APNs) 050-132-110, 050-132-100, and 050-680-040).

Adam Aronson, Economic Development and Housing Manager, presented on the next steps to proceed with the 1232-1244 Cherry Street affordable housing project and turned the presentation over to HIP Housing Developer Kate Comfort Harr to provide an update on the project; Eden Housing Developer Mike Rogers to provide information on the proposed affordable housing; and Van Meter Williams Pollack Architect Rick Williams to review the details of the site development. Mr. Rogers, Ms. Harr, and Mr. Aronson responded to Council questions.

Council requested the following:
- notify Council when the State responds to the development’s grant funding application - pay close attention to the parking ratio to ensure it’s meeting the needs of the residents - provide an update report to the Council after the development is completed Public Comment:
- Brian Perkins, resident, spoke in favor of the 1232-1244 Cherry Street affordable housing project.

MOTION: Adopt Resolution 2023-086 Authorizing the City Manager to Sign an Amendment to the Disposition, Development, and Loan Agreement with Cherry Street Commons, L.P.; Approving a Total City Loan Amount of $12,860,000, Including an Allocation Under this Amount of $2,000,000 to the Existing Predevelopment Loan; and Appropriating an Additional $1,000,000 from the City’s Affordable Housing In-Lieu Fund (Fund 29) to Capital Project C9754 to Cover these Costs and Support the Construction of an Affordable Housing Project at 1232-1244 Cherry Street (Assessor’s Parcel Numbers (APNs) 050- 132-110, 050-132-100, and 050-680-040).

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MOVER: John Dugan
SECONDER: Pranita Venkatesh
AYES: Dugan, Collins, McDowell, Venkatesh, Rak
NAYS: None
RESULT: Motion Passed 5 – 0
c. Consideration of Adopting a Resolution Authorizing the City Manager to Execute an Agreement to Abandon Non-Conforming Use; Settlement Agreement and Release and Assignment of Lease at 1144 El Camino Real, San Carlos to the City and Authorizing an Appropriation of $390,000 in Fiscal Year (FY) 2022-23, $96,000 in FY 2023-24 and $98,000 in FY 2024-25 from the General Fund Unassigned Fund Balance to Cover the Settlement and Ongoing Lease and Maintenance Costs.

City Attorney Greg Rubens spoke on the proposed agreements pertaining to the 1144 El Camino Real property to bring El Camino in compliance with the City’s current zoning. He responded to Council questions.

Public Comment
- Rob Anson spoke in support of the City’s efforts to reduce gun availability. - Danielle Lacampagne, resident, spoke in support of the proposed lease. - Mark Berns questioned if Imbert and Smithers could operate at another location.

Mayor Rak requested the City Attorney address Mr. Berns’ questions.

MOTION: Adopt Resolution 2023-087 Authorizing the City Manager to Execute the Agreement Abandoning Non-Conforming Use; Settlement Agreement and Release and Assignment of Lease at 1144 El Camino Real; and Authorizing an Appropriation of $390,000 in Fiscal Year (FY) 2022-23, $96,000 in FY 2023-24, and $98,000 in FY 2024-25 from the General Fund Unassigned Fund Balance to Cover the Settlement and Ongoing Lease and Maintenance Costs.

MOVER: Ronald Collins
SECONDER: Sara McDowell
AYES: Venkatesh, Dugan, Collins, McDowell, Rak
NAYS: None
RESULT: Motion Passed 5 – 0
d. Consideration of Adopting a Resolution Approving the City Attorney Employment Agreement.

City Attorney Greg Rubens recused himself as he has a conflict with this item.

Administrative Services Director Rebecca Mendenhall presented on the proposed City Attorney’s employment agreement and responded to Council question.

Public Comment
A member of the public inquired on the City Attorney’s medical benefits.

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MOTION: Adopt Resolution 2023-088 Approving the City Attorney Employment Agreement.

MOVER: Pranita Venkatesh
SECONDER: Ronald Collins
AYES: McDowell, Venkatesh, Dugan, Collins, Rak
NAYS: None
RESULT: Motion Passed 5 – 0
Council recessed at 8:48 PM and reconvened the meeting at 8:58 PM.

11. PUBLIC HEARING
a. Consideration of Introducing an Ordinance(s) Amending the City of San Carlos Municipal Code Title 18 and Title 8.30 to Regulate Laboratories with Biosafety Levels (BSL).

Community Development Director Al Savay provided background on the regulation of Biosafety Levels (BSL) and outlined the 4 options for Council consideration and turned the presentation over to Dr. Laura Flores, High Containment Facilities Director/ Assistant Biosafety Officer at UC Berkeley, to speak on the BSL-3 Design Features.

Dr. Flores, Carla Boragno, Former Vice President of Site Services at Genetech, Mr. Savay, Principal Planner Lisa Costa Sanders, Planning Director Carol Johnson and City Attorney Greg Rubens responded to Council questions.

Councilmember Venkatesh disclosed that her husband works in the life sciences industry.

Public Comment
- Michael Crockett, resident, spoke in support of the Conditional Use Permit process. - Lori Guelman, resident, spoke in support of the Conditional Use Permit process. - Scott Jeffries, resident, spoke in support of the Ordinances that provide Council with the ability to maintain their voice and have flexibility in the process. - David Crabbe, resident and on behalf of the Sierra Club, spoke in support of option 2 to prohibit BSL 3 and 4 labs.
- Greg Walker, resident, spoke in support of option 2 to prohibit BSL 3 and 4 labs. - Tara Berta, resident, spoke in support of option 2 to prohibit BSL 3 and 4 labs. - Christine Shrilla, a Bay Area Policy Maker for Biocom California, spoke in support of the Conditional Use Permit process for BSL 3.
- Zinovy Fichenholz, resident, spoke in support of option 2 to prohibit BSL 3 and 4. - Steven Goodale spoke in support of option 2 to prohibit BSL 3 and 4 labs. - Jeff Maley, resident, spoke in support of option 2 to prohibit BSL 3 and 4 labs. - Anna Axiaq, resident, spoke in support of option 2 to prohibit BSL 3 and 4 labs.

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- Dennis Miller, owner of AABC Testing and Certification, cautioned on the need for careful testing of BSL 3 and 4 labs.
- Amy Buckmaster, representing Chamber San Mateo County, spoke in support of options 3 and 4 to proceed at a minimum with the Conditional Use Permit process for BSL 3 labs.

MOTION: At 10:24 PM, Extend Meeting to 11:30 PM.

MOVER: Ronald Collins
SECONDER: Sara McDowell
AYES: Dugan, Collins, McDowell, Venkatesh, Rak
NAYS: None
RESULT: Motion Passed 5 – 0
- Gita Dev, with Sustainable Land Use Committee from the Sierra Club, spoke in support of option 2 to prohibit BSL 3 and 4 labs.
- Gladwyn d’ Souza spoke in support of option 2 to prohibit BSL 3 and 4 labs. - Nick Sharf, resident, spoke in support of option 2 to prohibit BSL 3 and 4 labs. - Debbie Baldocchi, resident, spoke in support of option 2 to prohibit BSL 3 and 4 labs. - Gary Baldocchi, resident, spoke in support of option 2 to prohibit BSL 3 and 4 labs. - Susanne D, resident, spoke in support of option 2 to prohibit BSL 3 and 4 labs. - Bryce Nickels, Professor of Genetics from Ruckers University and cofounder of Biosafety Now, disclosed that he’s attending this meeting by invitation of the community and spoke in support of option 2 to ban BSL 3 and 4.
- Paul Magginetti, resident on behalf of Greater East San Carlos Association, spoke in support of option 2 to ban BSL 3 and 4.
- Dimitri Vandellos, resident, spoke in support of option 2 to ban BSL 3 and 4 labs and suggested conducting further studies to also consider a Conditional Use Permit process on BSL 1 and 2 labs.
- Racquel Rendon-Walker, resident, spoke in support of option 2 to prohibit BSL 3 and 4 labs. - Klare Allen cautioned the Council on BSL 3 and 4 labs and provided suggestions on how to conduct further research.
- Tim Hillborn, resident, spoke in support of option 2 to ban BSL 3 and 4 labs and consider a Conditional Use Permit on BSL 1 and 2 labs.

MOTION: Approve to Close the Public Hearing.

MOVER: Sara McDowell
SECONDER: Ronald Collins
AYES: Collins, McDowell, Venkatesh, Dugan, Rak
NAYS: None
RESULT: Motion Passed 5 – 0

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Ms. Boragno, Mr. Savay and Dr. Flores responded to Council’s additional questions.

Council discussion ensued.

MOTION: At 11:27 PM, Extend Meeting to 12:00 AM.

MOVER: John Dugan
SECONDER: Sara McDowell
AYES: Venkatesh, Dugan, Collins, McDowell, Rak
NAYS: None
RESULT: Motion Passed 5 – 0
Council suggested that the County develop a countywide regulatory framework for BSL labs.

MOTION: Introduce Ordinance 1597 Amending San Carlos Municipal Code, Title 18, Zoning, Sections 18.06.020 (Commercial Districts Land Use Regulations),

18.07.020 (Industrial Districts Land Use Regulations), and 18.41.020 (Definitions) to Prohibit Research and Development Activities Requiring Biosafety Level (BSL) 3 and 4 Containment.

MOVER: John Dugan
SECONDER: Sara McDowell
AYES: McDowell, Dugan, Rak
NAYS: Venkatesh, Collins
RESULT: Motion Passed 3 – 2

12. AGENDA SETTING
None.

13. ADJOURNMENT
The meeting adjourned at 11:32 PM.

Crystal Mui, City Clerk

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CITY COUNCIL

STAFF REPORT
MEETING DATE: August 28, 2023
ITEM TITLE: Accept Fiscal Year 2022-23 Fourth Quarter Investment Report Ending June 30, 2023.

RECOMMENDATION:

Staff recommends that the City Council review and accept the Quarterly Investment Report (“Report”) for the third quarter of Fiscal Year (“FY”) 2022-23 ending June 30, 2023.

FISCAL IMPLICATIONS:

There is no fiscal impact associated with accepting the Report.

BACKGROUND:

On August 22, 2022, the City Council approved the FY 2022-23 Annual Investment Policy (“Policy”) per Resolution No. 2022-091. In accordance with the Policy, the City Administrative Services Director is responsible for investing the unexpended cash used for funding operations of the City of San Carlos (“City”).

The investment of funds for the City is directed by the goals of safety, liquidity, and yield. The authority governing investments for municipal governments is set forth in the California Government Code, sections 53601 through 53686 (“Code”). Effective January 1, 2023, per section 53646 (b)(1) of the Code, the Investment Committee serving as the legislative body will have the quarterly reports for its review within forty-five (45) days, changed from thirty (30) days, following the end of the quarter. Thus, this Report and its attachments are furnished for review and information, and the Investment Policy for Fiscal Year 2023-24 was revised and adopted on June 26, 2023 per Resolution No. 2023-081.

Beginning in FY 2016-17, the City included the checking account balance as part of this Report.

Although a checking account is not a typical investment account, this balance is included to show the total cash on hand for the quarter. The City typically maintains $1 million to $3 million, and a larger balance at the end of the calendar year, in the checking account to meet cash disbursement needs. Transfers are usually made into the investment accounts during the quarter to account for receipts that exceed disbursements.

Investment Strategy
The City’s investment priorities, in order, are “safety, liquidity, and yield,” while meeting the cash flow needs of the City through prudent investment of unexpended cash.

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Compliance with Policy
Historical cash flow trends are compared to current cash flow requirements on an ongoing basis to ensure the City’s investment portfolio will remain sufficiently liquid to enable the City to meet all reasonably anticipated operating requirements. As of June 30, 2023, the portfolio contains sufficient liquidity to meet the next six months of expected expenditures by the City.

As of June 30, 2023, the City has no investment instruments with a maturity date longer than one year. All investments are in highly liquid accounts, using the State of California and County of San Mateo investment pools, and are in compliance with the Policy.

The primary objective of the Policy of the City of San Carlos is “safety of principal”. The permitted investments section of the Policy also states:

Local Agency Investment Fund (LAIF), which is a State of California managed investment pool, and San Mateo County Investment pool, may be used up to the maximum permitted by California State Law. A review of the pool/fund is required when they are part of the list of authorized investments, with the knowledge that the pool/fund may include some investments allowed by statute but not explicitly identified in this investment policy.

The City’s Investment Committee, consisting of City Manager Jeff Maltbie, City Treasurer Inge Tiegel, and Administrative Services Director Rebecca Mendenhall, has reviewed and approved this Report.

ANALYSIS:

The Investment Portfolio (Attachment 1) indicates that on June 30, 2023, City funds in the amount of $187,838,212 were invested, producing a weighted average yield of 3.12% for this quarter. The amount in the checking account was $3,112,159. The Local Agency Investment Fund (“LAIF”), the City’s benchmark for comparison of investment yield, was 3.15% for the quarter. The investment yield, net of administrative fees, for the County Pool was 3.10%. The allocation of the investment portfolio balance to various City funds is included on page 3 of the attachment.

Below is a summary of the changes from the last quarter.

The portfolio balance at the end of the fourth quarter is $190,950,371, an increase of approximately $8.0 million. The increase in the portfolio balance was due to the timing of cash receipts and cash payments. There were two large property tax receipts in the quarter - $10.3 million was received in April, and $3.1 million was received in May. The City also received a total of $3.0 million in sales tax in the fourth quarter. The City draws on the investment portfolio throughout the year for normal operating activity typically with the more significant levels of draw occurring in the first quarter (July through September) and fourth quarter (April through June).

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The City’s cash position typically improves in late December and April due to the receipt of property tax collections from San Mateo County.

The increase in cash during the quarter, driven by the above revenues, was partially offset by several major distributions: (1) $2.1 million payment to San Mateo County for law enforcement services for the fourth quarter of FY 2022-23; (2) annual Other Post-Employment Benefits payments of $0.9 million; (3) $1.6 million operating expenditure contributions to Silicon Valley Clean Water; and (4) $3.7 million for capital improvement projects (Annual Street Resurfacing, Fire Station 16 Replacement, Installation of New Sports Field Lighting at Flanagan and Stadium Fields, and Cherry Street Below Market Rate Housing Acquisition).

Below is a comparison of the City’s quarterly cash position for the past three years.

Below is a summary of the changes in the total investment interest earnings from the prior quarter.

The increase in interest earnings this quarter occurred due to higher interest rates compared to the prior quarter. Interest for the investment accounts was $1,448,255 and $52,006 for the checking account.

ALTERNATIVES:

The alternatives available to the City Council include:

1. Accept the Quarterly Investment Report for the fourth quarter of Fiscal Year 2022-23 as of June 30, 2023; or

2. Do not accept the Report; or

3. Provide staff with alternative direction.

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August 28, 2023 Packet Pg. 20
Respectfully submitted by:

Rebecca Mendenhall, Administrative Services Director
Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Q4 2023 Investment Portfolio 06-30-2023

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CITY OF SAN CARLOS Historical GASB 31
Date Purchase Book % of Market Quarterly
Investment Type Account/CUSIP # Purchased Price ($) Qtr. Year-to-date Value ($) Portfolio Value ($)* Income

LIQUID ACCOUNTS
Checking Account $ 3,112,159 3.69% 3.25% $ 3,112,159 2% $ 3,112,159 $ 52,006 Investment Accounts
San Mateo County Pool-City of San Carlos 114,209,600 3.10% 2.12% 114,209,600 60% 110,954,626 869,599 State of California LAIF-City of San Carlos 73,628,612 3.15% 2.28% 73,628,612 38% 72,511,556 578,656 Total Liquid Accounts $ 187,838,212 3.12% 2.19% $ 187,838,212 98% $ 183,466,182 $ 1,448,255 Total for City of San Carlos 190,950,371 $ 3.13% 2.20% 190,950,371 $ 100% 186,578,341 $ 1,500,261 $ * Note: Difference in value between Historical Value and Market Value may be due to timing of purchase. Investments in the investment pools may have been purchased when interest rates were lower or higher than the end date of this report. As interest rates increase or decrease, the value of the investment pools will decrease or increase accordingly. However, the interest rate fluctuations does not have impact to the City's balance in the investment pools. The market values are presented as a reference only.

Yield
%

INVESTMENT PORTFOLIO

CITY OF SAN CARLOS
June 30, 2023

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Investment Portfolio Diversification
City of San Carlos Checking Account 3,112,159 $ 2%
City of San Carlos SM County Pool 114,209,600 60%
City of San Carlos LAIF-General 73,628,612 38%
Total $ 190,950,372 100%
City - Checking
2%
City - SMC Pool
60%
City - LAIF
38%
City - Checking City - SMC Pool City - LAIF
City of San Carlos
Investment Portfolio
as of June 30, 2023

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Funds Cash Balance
% of Total
Balance
Capital Projects Funds (Fund 10, 14, 16, 18, 25, 27, and 28) $ 54,857,912 29% Sewer Fund (Fund 6) 42,868,591 22%
Housing Funds (Funds 29 and 31) 13,405,484 7%
Facility/Infrastructure Improvements 21,341,500 11%
General Fund Operations (includes checking account) 25,798,020 14% Unfunded Liabilities 3,000,000 2%
Economic Uncertainties Reserve 8,305,383 4%
Strategic Property Acquisition 7,191,795 4%
Special Revenue Funds and Library Debt Service (Funds 15, 17, 93 and 95) 4,408,097
2%
Internal Service Funds (Funds 32, 33, and 35) 2,619,893 1% Restricted by contract or outside party 7,153,696 4%
Total $ 190,950,371 100%
City of San Carlos
Investment Allocations
as of March 31, 2023
29%
22%
11% 7%
14%
2%
4%
4%
2%
1%
4%
Capital Projects Funds (Fund 10, 14, 16, 18, 25, 27, and 28) Sewer Fund (Fund 6)
Housing Funds (Funds 29 and 31)
Facility/Infrastructure Improvements
General Fund Operations (includes checking account)
Unfunded Liabilities
Economic Uncertainties Reserve
Strategic Property Acquisition
Special Revenue Funds and Library Debt Service (Funds 15, 17, 93 and 95) Internal Service Funds (Funds 32, 33, and 35)
Restricted by contract or outside party

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City of San Carlos Investment Portfolio
Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 City - Checking 2,321,355 2,329,948 3,214,823 5,993,674 2,166,789 2,115,336 3,257,964 2,755,075 3,112,159 City - SM County Pool 74,665,430 74,839,584 81,871,382 84,355,059 96,365,828 92,597,140 106,000,261 105,745,654 114,209,600 City - LAIF 60,644,252 58,692,480 51,978,289 51,260,708 66,551,266 69,161,866 70,891,695 74,441,588 73,628,612 Total 137,631,036 $ 135,862,013 $ 137,064,494 $ 141,609,441 $ 165,083,883 $ 163,874,342 $ 180,149,920 $ 182,942,317 $ 190,950,372 $ 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 City of San Carlos Historical Summary of Investment Portfolio City - Checking
City - LAIF
City - SM County
Pool

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Investment Accounts Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 San Mateo County Pool-City of San Carlos 1.07% 0.99% 0.88% 0.87% 0.91% 1.31% 1.45% 1.78% 2.12% State of California LAIF-City of San Carlos 0.57% 0.24% 0.25% 0.27% 0.38% 1.33% 1.66% 1.99% 2.28% Annualized Rate of Return

CITY OF SAN CARLOS

INVESTMENT ANNUALIZED RATE OF RETURN
June 30, 2023

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%
Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Investment Annualized Rate of Return
San Mateo County Pool-City of San Carlos State of California LAIF-City of San Carlos

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CITY COUNCIL

STAFF REPORT
MEETING DATE: August 28, 2023
ITEM TITLE: Authorize the City Manager to Sign the Letter Prepared by Staff in Response to the 2022-2023 San Mateo County Civil Grand Jury Report “Accessory Dwelling Units: Affordable Housing's Panacea or Prevarication."
RECOMMENDATION:

Staff recommends that the City Council authorize the City Manager to sign a letter (Attachment 1) prepared by staff in response to the San Mateo County 2022-2023 Civil Grand Jury’s (“Grand Jury”) Report entitled “Accessory Dwelling Units: Affordable Housing’s Panacea or Prevarication?”" (“Report”) (Attachment 2) per the letter received from the Superior Court (Attachment 3).

FISCAL IMPLICATIONS:

There are no fiscal implications associated with this action.

BACKGROUND:

On June 12, 2023, the 2022-2023 San Mateo County Civil Grand Jury issued a report titled “Accessory Dwelling Units: Affordable Housing’s Panacea or Prevarication?”. The City of San Carlos is required to submit comments on the findings and recommendations pertaining to the matters over which it has some decision-making authority within 90 days. The City’s response to the report is due to the Honorable Nancy L. Fineman no later than September 11, 2023.

ANALYSIS:

The Grand Jury made seven findings and six recommendations in its Report. While staff has collaborated with the County of San Mateo and its cities (via 21 Elements) on developing a collaborative and consistent approach to responding to this Report, there are responses unique to San Carlos. The City’s responses below address each finding and the six recommendations that the Grand Jury requested.

I. Response to Findings
Finding 1. Due to recent changes in California ADU-related laws, local governments cannot condition ADU permits in San Mateo County on complying with affordability monitoring and verification.

Response: The City of San Carlos agrees with this finding.

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Finding 2. San Mateo County and most of its municipalities rely on ADUs to meet their affordable housing commitments in their RHNA-6 plans.

Response: The City of San Carlos partially agrees with this finding. The RHNA allocation for the City of San Carlos is 2,735 units. The City of San Carlos’s adopted Housing Element plans for 3,525 units, which includes a surplus of 790 units. The portion of the City’s Below Market Rate (BMR) housing allocation that consists of ADUs is 173. The City would still meet its housing allocation, even if these BMR ADUs were not built in this planning period, due to the provision of surplus sites in other BMR categories.

Additionally, we have the following key programs, actions, or strategies in our adopted 2023- 2031 Housing Element:
● Revised development standards to allow for increased density (completed) (Action HOU4.2) ● Streamlined permitting processes for affordable housing through pre-approved ADU plans (Action HOU-3.3)
● Provide homeowners/applicants with tools and promote State funding resources including the CalHFA ADU grant program and Casita Coalition financing guide on the City’s website, and by promoting home sharing programs to connect ADU owners and renters and offering counselling with a City staff ADU specialist. (Action HOU-6.1, Table 4.2-2) ● Explore and pursue funding options to support ADU construction for lower-income homeowners (Action HOU-6.1, Table 4.2-2)
● Update our ADU ordinance in a timely manner to reflect State’s most recent changes to ADU law (Scheduled for adoption in October) (Action HOU-3.3) ● Work with regional/agencies and countywide partnerships to identify potential funding sources for ADU construction (Action HOU 3.3, fourth bullet) ● Utilize housing trust funds and other assistance programs (Administrative and Financial Resources, pg. 170-171)
● Inclusionary zoning that requires a certain percentage of new units be rented affordably (Housing Specific Policies enacted locally; BMR Housing Ordinance, pg. 185) ● Commercial Impact Fee (Housing Specific Policies enacted locally; Commercial Development Impact Fee, pg. 185)
● City Density Bonus (Housing Specific Policies enacted locally; City Density Bonus, pg. 185)
● Maintaining a Sites Inventory with ADU projections (pg.141) Finding 3. Atherton, Hillsborough, Portola Valley, and Woodside rely on ADUs to meet as much as 80 percent of their affordable housing commitments in their RHNA-6 plans.

Response: Not applicable to San Carlos.

Finding 4. HCD has instructed San Mateo County jurisdictions to monitor and verify future ADU production and affordability every two years but has yet to specify how to verify whether very low-, low-, or moderate-income households are occupying the ADUs as planned.

Response: San Carlos partially agrees with this finding. At this time, we do not anticipate HCD will provide instructions on how to verify the income levels of ADU occupants. San Carlos will support and participate in forthcoming regional ADU monitoring efforts through ABAG or 21 Elements, a long-standing collaboration among the 21 jurisdictions of San Mateo County. The City of San Carlos continues to comply with HCD’s monitoring requirement through the Annual

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Progress Report, where the City must report on all housing production at all affordability levels, not just ADUs.

Finding 5. Other than Brisbane and Redwood City, San Mateo County and its jurisdictions have yet to articulate how they will monitor and verify ADU production or affordability.

Response: San Carlos agrees with this finding. San Mateo County jurisdictions met on June 20, 2023 to discuss potential strategies for monitoring ADU affordability levels. San Carlos is planning to support a regional ADU monitoring effort through ABAG or 21 Elements. We expect this monitoring effort to begin no later than two years after the Housing Element was due (early 2025).

Finding 6. Without effective ADU monitoring and verification, it will be impossible to evaluate whether the jurisdictions are meeting their RHNA-6 obligations for low-, very-low, and moderateincome housing units.

Response: The City of San Carlos partially agrees with this finding. We will be able to evaluate the progress of meeting our RHNA obligation through the construction of deed-restricted BMR units required under the City of San Carlos’ Affordable Housing Program (inclusionary housing ordinance) for units other than ADUs. For ADUs, San Carlos is planning to support a regional approach to monitoring ADU affordability.

Finding 7. ADU affordability and occupancy could be monitored by agencies such as HIP Housing which has proven systems and processes to verify occupancy of deed-restricted rental properties in San Mateo County.

Response: The City of San Carlos agrees with this finding. HIP is one potential partner agency, and the City of San Carlos will support and participate in forthcoming regional ADU monitoring effort through ABAG or 21 Elements.

II. Response to Recommendations
Recommendation 1. San Mateo County and each City should immediately stop using ADUs to meet their State-mandated very low-, low-, and moderate-income housing targets in their Housing Element submissions until they have also proposed an effective monitoring system that verifies how newly developed ADU’s will be used.

Response: The recommendation will not be implemented because it is not warranted and/or is not reasonable. While the City of San Carlos shares the Civil Grand Jury’s goal to increase ADU affordability monitoring, it is not feasible to revise our Housing Element to eliminate the use of ADUs to meet affordable housing goals in each category. The Housing Element was developed through a rigorous process of multiple years of public input and revisions. The City of San Carlos is close to a final submission to HCD; it is simply not feasible for us to make a major change to our housing policy this late in the process. Moreover, undertaking this reassessment will impact HCD as it is working with San Carlos for certification; if such a change was made, HCD would have to redo its evaluation. However, the City is committed to following state housing law and to supporting the development of an effective regional ADU monitoring program which will be operated by 21 Elements or ABAG, which could be in place for future Housing Element cycles.

The City of San Carlos will consider participating in the development of a new ADU nonprofit that will have programs to incentivize the production of affordable ADUs in San Mateo County anticipated to launch in spring 2024 under the leadership of 21 Elements.

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Recommendation 2. By February 1, 2024, San Mateo County and each City should develop, adopt, and implement a verification system capable of monitoring and verifying how newly developed ADU’s are being used.

Response: Part of the recommendation has yet to be implemented but will be implemented in the future by participating in the forthcoming regional ADU monitoring effort through ABAG or 21 Elements. However, part of the recommendation is not warranted. The City of San Carlos agrees that it is important to have high quality information about who is living in ADUs. The City will participate in the ABAG or 21 Elements ADU monitoring system. This monitoring is projected to launch in January 2025 and will likely survey people about their plans for their ADU at the time permits are issued. However, due to homeowner privacy concerns and the cost of engaging with thousands of homeowners every year, it would not be practical to have an ongoing verification system that checks the income of every resident of every ADU in the county.

Recommendation 3. By February 1, 2024, San Mateo County and each City should develop and adopt incentives for ADU owners which could be offered in exchange for deed restrictions that would include requirements for ADU tenants to participate in independent monitoring.

Response: This recommendation requires further analysis. The City of San Carlos is working with the HCD to receive certification of the Housing Element which includes how to monitor and incentivize all kinds of housing production, including ADUs, to the extent necessary as determined by HCD, on a timeline that satisfies HCD. Staff continues to work with 21 Elements to learn how other jurisdictions incentivize ADUs through preapproved plans, loans, and other means.

Recommendation 4. By February 1, 2024, San Mateo County and each City should track the intended use of ADUs – rented or non-rented – during the permitting process and offer incentives in exchange for deed restrictions that require ADUs to be used as rentals.

Response: This recommendation requires further analysis. The City of San Carlos is committed to furthering affordable housing. BMR ADUs are a relatively small portion (173) of the City’s allocation (notwithstanding 790 units of surplus housing units across all income levels). The City of San Carlos will work with HCD to receive certification of the Housing Element, including how to monitor and incentivize all housing types, including but not limited to ADUs, in a manner and timeline that satisfies HCD.

Recommendation 5. By April 1, 2024, San Mateo County and each City should develop and adopt a new ADU affordability distribution formula specific to each jurisdiction to the extent they are used for meeting the very low-, low-, and moderate-income housing requirements in their RHNA housing elements.

Response: The recommendation will not be implemented because it is not warranted and is not reasonable. While we agree with the importance of an accurate distribution formula, given the relatively small size of San Carlos, a more meaningful distribution formula can be attained by collecting data on ADUs constructed across all San Mateo County jurisdictions. The City of San Carlos is supporting the creation of an ADU monitoring program through 21 Elements or ABAG, which will collect data that can be used to revise the distribution formula based on actual observed income levels. The ABAG assumptions are based on a UC Berkeley study that surveyed thousands of homeowners statewide with repeat mailing and the data was aggregated to reduce the margins of errors. The margin of error would be too large if we are the only agency surveying a dozen or couple of dozen households. There is also no evidence in the data to suggest significant variation from city to city. The recommendations of 30/30/30/10 (very

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low/low/moderate/above-moderate) had a significant cushion built in to ensure cities did not accidentally underproduce the amount of housing needed.

Recommendation 6. San Mateo County and each City should consider working together to address Recommendations 2 and 3.

Response: The City of San Carlos will support a collaborative effort to address Recommendations 2 and 3. San Mateo County jurisdictions work collaboratively through 21 Elements to develop, adopt, and implement housing policies and programs in the county. The City of San Carlos will work with HCD to achieve compliance with housing laws and will work with 21 Elements on its effort to address housing issues.

San Carlos intends to participate in the regional ADU Nonprofit Resource Center initiated by 21 Elements. This resource center could provide:
• Educational events and webinars
• ADU assessments for homeowners
• Online pre-reviewed plans
• Cost calculator
• Workbooks and process graphics
• Address look-up tool
• Staff person who will be available to help with questions • Forgivable loan programs
• Coordination with lender
• Project management support
• ADU affordability survey
ALTERNATIVES:

The alternatives available to the City Council include:

1. Authorize the City Manager to sign the letter prepared by staff in response to the San Mateo County Civil Grand Jury’s Report entitled “Accessory Dwelling Units: Affordable Housing’s Panacea or Prevarication?”; or

2. Do not authorize the city Manager to sign the proposed response letter; or

3. Provide staff with alternative direction.

Respectfully submitted by:

Al Savay, Community Development Director

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Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Proposed Letter Responding to Grand Jury Report

2. Grand Jury ADU Report 6.12.23

3. SMC Superior Court Letter 6.12.23

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Page 1 of 5 ends

August 28, 2023
Honorable Nancy L. Fineman
Judge of the Superior Court
c/o Bianca Fasuescu
Hall of Justice
400 County Center; 2nd Floor
Redwood City, CA 94063-1655
Subject: Response of the City of San Carlos to the San Mateo County Civil Grand Jury Report “Accessory Dwelling Units: Affordable Housing’s Panacea or Prevarication?”.

Dear Judge Fineman,
Thank you for the opportunity to comment on the report titled, “Accessory Dwelling Units:

Affordable Housing’s Panacea or Prevarication?” Please find our response to the findings and recommendations of the report below.

Response: The City of San Carlos agrees with this finding.

Finding 2. San Mateo County and most of its municipalities rely on ADUs to meet their affordable housing commitments in their RHNA-6 plans.

Response: The City of San Carlos partially agrees with this finding. The RHNA allocation for the City of San Carlos is 2,735 units. The City of San Carlos’s adopted Housing Element plans for 3,525 units which includes a surplus of 790 units. The portion of the City’s BMR housing allocation that consists of ADUs is 173. The City would still meet its housing allocation, even if these BMR ADUs were not built in this planning period due to the provision of surplus sites in other BMR categories.

Additionally, we have the following key programs, actions or strategies in our adopted 2023- 2031 Housing Element:
● Revised development standards to allow for increased density (completed) (Action HOU4.2) ● Streamlined permitting processes for affordable housing through pre-approved ADU plans (Action HOU-3.3)
● Providing homeowners/applicants with tools and promoting State funding resources including the CalHFA ADU grant program and Casita Coalition financing guide on the City’s website, and by promoting home sharing programs to connect ADU owners and

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Page 2 of 5 ends

renters and offering counselling with a City-staff ADU specialist. (Action HOU-6.1, Table

4.2-2)
● Exploring and pursuing funding options to support ADU construction for lower-income homeowners (Action HOU-6.1, Table 4.2-2)
● Updating our ADU ordinance in a timely manner to reflect State’s most recent changes to ADU law (Scheduled for adoption in October) (Action HOU-3.3) ● Work with regional/agencies and countywide partnerships to identify potential funding sources for ADU construction (Action HOU 3.3, fourth bullet) ● Utilization of housing trust funds and other assistance programs (Administrative and Financial Resources, pg. 170-171)
● Inclusionary zoning that requires a certain percentage of new units be rented affordably (Housing Specific Policies enacted locally; BMR Housing Ordinance, pg. 185) ● Commercial Impact Fee (Housing Specific Policies enacted locally; Commercial Development Impact Fee, pg. 185)
● City Density Bonus (Housing Specific Policies enacted locally; City Density Bonus, pg. 185)
● Maintaining a Sites Inventory with ADU projections (pg.141) Finding 3. Atherton, Hillsborough, Portola Valley, and Woodside rely on ADUs to meet as much as 80 percent of their affordable housing commitments in their RHNA-6 plans.

Response: Not applicable to San Carlos.

Finding 4. HCD has instructed San Mateo County jurisdictions to monitor and verify future ADU production and affordability every two years but has yet to specify how to verify whether very low-, low- or moderate-income households are occupying the ADUs as planned.

Response: San Carlos partially agrees with this finding. At this time, we do not anticipate HCD will provide instructions on how to verify the income levels of ADU occupants. San Carlos will support and participate in forthcoming regional ADU monitoring effort through ABAG or 21 Elements, a long-standing collaboration among the 21 jurisdictions of San Mateo County. The City of San Carlos continues to comply with HCD’s monitoring requirement through the Annual Progress Report, where the City must report on all housing production, at all affordability levels, not just ADUs.

Finding 5. Other than Brisbane and Redwood City, San Mateo County and its jurisdictions have yet to articulate how they will monitor and verify ADU production or affordability.

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Recommendation 2. By February 1, 2024, San Mateo County and each City should develop, adopt, and implement a verification system capable of monitoring and verifying how newly developed ADU’s are being used.

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Response: This recommendation requires further analysis. The City of San Carlos is working with the HCD to receive certification of the Housing Element which includes how to monitor and incentivize all kinds of housing production including ADUs, to the extent necessary as determined by HCD, on a timeline that satisfies HCD. Staff continues to work with 21 Elements to learn how other jurisdictions incentivize ADUs through preapproved plans, loans, and other means.

Response: The recommendation requires further analysis. The City of San Carlos is committed to furthering affordable housing. BMR ADUs are a relatively small portion (173) of the City’s allocation (not withstanding 790 units of surplus housing units across all income levels). The City of San Carlos will work with HCD to receive certification of the Housing Element, including how to monitor and incentivize all housing types, including but not limited to ADUs, in a manner and timeline that satisfies HCD.

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study that surveyed thousands of homeowners statewide with repeat mailing and the data was aggregated to reduce the margins of errors. The margin of error would be too large if we are only surveying a dozen or couple of dozen households. There is also no evidence in the data to suggest significant variation from city to city. The recommendations of 30/30/30/10 (very low/low/moderate/above-moderate) had a significant cushion built in to ensure cities did not accidentally underproduce the amount of housing needed.

Recommendation 6. San Mateo County and each City should consider working together to address Recommendations 2 and 3.

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Accessory Dwelling Units:

Affordable Housing’s Panacea or Prevarication?
Release Date: June 12, 2023
2022-2023 San Mateo County Grand Jury

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2022-2023 San Mateo County Civil Grand Jury 1
“You can always count on Americans to do the right thing – after they’ve tried everything else.” Winston Churchill
“Every man must decide whether he will walk in the light of creative altruism or in the darkness of destructive selfishness.” Martin Luther King, Jr.

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ISSUE
Are some San Mateo County communities misusing Accessory Dwelling Units (ADUs) to avoid the construction of multifamily low-income housing over the next eight years?

SUMMARY
Anointed the “epicenter of America’s housing dysfunction” by Harvard Business Review this year, the San Francisco Bay Area has faced an acute housing shortage at all levels for decades, especially for those who have the least.

And it is no longer news that many of the workers that San Mateo County communities depend upon daily – first responders, teachers, nurses, city employees, gardeners, and housekeepers, to name just a few – cannot afford a decent place to live and raise their families close to their jobs.

To address the issue, the State Legislature in 1969 passed the Housing Element Law, which says all California cities, towns, and counties, every eight years, must plan for the housing needs of all their residents regardless of income, which effectively requires development of affordable housing. Many changes and additions have been made to the law over the years, most recently eliminating zoning restrictions governing ADUs – small homes or apartments that share a single-family lot of a larger primary residence – and allowing communities to count them as affordable housing in their Regional Housing Needs Allocation (RHNA) plans.

At issue:
● Although their intentions have been good, the State has neglected to include any form of regulation to ensure low-income tenants ultimately use these ADUs as planned. ● Because owners often rent their ADUs to family and friends, they can exacerbate patterns of segregation and exclusion.1
● And perhaps most importantly – counting ADUs as affordable housing will likely result in cities issuing permits for fewer deed-restricted low-, very low-, and moderate-income apartments and homes.

Without accountability through oversight and regulations, low-, very low-, and moderate-income housing now planned in some San Mateo County jurisdictions may end up existing solely on paper and never in operation.

This problem is most acute in Atherton, Hillsborough, Portola Valley, and Woodside, where some residents are up in arms over the State-mandated housing requirements, and the city governments, trying to appease them, are proposing counting on ADUs to meet as much as 80 percent of their affordable housing targets.

1 Association of Bay Area Governments, “Final Regional Housing Needs Allocation (RHNA) Plan, San Francisco Bay Area, 2023-2031”, accessed May 27, 2023, https://abag.ca.gov/sites/default/files/documents/2021- 12/Final_RHNA_Allocation_Report_2023-2031-approved_0.pdf

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Assembly Bill 72 (2017) gives the California Department of Housing and Community Development (HCD) enforcement capability on local government’s land use, planning, and zoning requirements. In the current RHNA-6 (2023-2031) planning cycle, HCD demands that San Mateo County jurisdictions monitor and verify ADU affordability every two years. However, HCD has not specified how to prove the ADUs are rented to very low-, low- or moderate-income households, leaving it to the communities to find a solution.

So far, jurisdictions have yet to do so, even though local independent agencies such as HIP Housing have systems and services in place, which they use to verify affordability of deed-restricted affordable housing, and that could be adapted Countywide to monitor and verify ADUs’ affordability and occupancy in a manner that adheres to fair housing guidelines.

California needs to build 2.5 million homes by 2030 to meet current housing demands, according to the HCD. But the State averages only about 125,000 new homes annually – a shortfall by nearly two-thirds.

ADUs can, indeed, provide affordable housing. And to many citizens of affluent communities, they are an appealing alternative to multi-family, deed-restricted affordable housing projects. However, just because the law makes it possible to count ADUs as affordable housing, it does not exempt cities and towns from credibly planning for badly needed affordable housing.

BACKGROUND
One of the State’s long-standing priorities has been to increase the availability of affordable housing for all economic segments.

HCD – the California Department of Housing and Community Development – focuses on making this happen by working with local jurisdictions to create rental and homeownership opportunities for all Californians, including individuals and families who are experiencing homelessness.

Beginning in 1969, the State mandated that all California cities, towns, and counties must plan for the housing needs of all Californians, regardless of income. They meet this mandate by developing and updating a Housing Element, part of a local jurisdiction’s General Plan, which shows where they will allow new housing and describes the policies and strategies necessary to support building new housing.

The process of updating the Housing Element involves HCD working with various Councils of Governments (COG) to develop a RHNA plan that includes the Regional Housing Needs Determination (RHND), which assigns the number of housing units that each county and city are expected to facilitate being built in the subsequent eight years to accommodate projected growth.

In the case of the Bay Area, this Council of Governments is the Association of Bay Area Governments (ABAG), which represents all nine Bay Area counties, including San Mateo County and its 20 cities and towns. Components that ABAG considers in determining each Bay Area county’s and city’s allocation of housing units include population, employment potential, proximity to transportation centers, open space, inclusivity, and diversification, all of which are becoming increasingly important to the State, according to ABAG reports.

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Multiple bills in both houses of the State Legislature have been proposed over the years to change the process and increase the amount of State control over housing development. Particularly significant changes occurred during the 2017 legislative session when senators and assembly members proposed approximately 150 housing bills. That year the Governor ultimately signed a package of 15 bills related to funding for housing, streamlining development approvals, and increasing accountability for meeting the requirements of the Housing Element Law. These included bills that significantly changed the RHNA process, requiring additional outreach and reporting, modifying how to calculate the RHND to reflect unmet housing needs better, increasing the number of topics to be considered in the allocation methodology, and giving HCD, on behalf of the State, the ability to sue individual counties or cities for not meeting requirements.

Updating the Housing Element every eight years is an iterative process involving HCD, the regional COGs, the State Department of Finance (DOF), and local jurisdictions. (See Appendix D.) But the ultimate authority for approval of the RHNA, the RHND, and the associated Housing Elements resides with HCD.

The current approved RHNA plan developed by ABAG is known as RHNA-6, which spans 2023 to 2031.

HCD requires each jurisdiction to submit its completed Housing Element for review and approval by a specific date. For RHNA-6, the due date for San Mateo County and its cities was January 31, 2023.

Before the due date, the jurisdictions were able to send their draft Housing Elements to HCD for preliminary review and comments and make necessary modifications that HCD highlights. Any jurisdiction which fails to meet the deadline for submission of their completed Housing Element is subject to a potential “builders remedy” action that forces a city to allow building projects regardless of whether they meet most of the local zoning restrictions.

Once Housing Elements are approved, HCD monitors the progress of approved RHNA plans by requiring each jurisdiction to report its building permit activities annually. If progress is below expectations, the jurisdiction must develop alternative strategies for review and approval by HCD.

During the RHNA-5 (2015-2023) progress reviews submissions, cities began including ADUs as part of the overall housing inventory in their annual reports because State legislation (Government Code section 65852.150) that became effective in January 2017 stated that ADUs are a valuable form of housing in California, which also "provide housing for family members, students, the elderly, in-home health care providers, the disabled, and others, at below market prices within existing neighborhoods." Numerous Senate and Assembly bills were enacted in 2018 and 2020, requiring local jurisdictions to streamline and allow for ease of ADU production to increase housing for all income categories. With these encouragements, ADUs being deemed a viable housing option, and facing stringent RHNA-6 requirements of approximately three times more housing units than in the RHNA-5 cycle, a few affluent San Mateo cities have proposed using ADUs to satisfy most of their plans to meet the required number of housing units in the various income categories.
“ADUs are not a panacea, but they’re a good tool in the toolbox,” said a planning consultant working for a San Mateo County city. “Most land on The Peninsula is single-family homes. ADUs are opening land that was not open before. But higher density housing near transit is better.”

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Added a city manager: “I think they (ADUs) are a piece of the solution, but not all of it. I think ADUs are an important way to provide opportunities for other things – where people want multigenerational living onsite, for caretakers, or other folks – they can reside in an ADU even if they’re not paying rent.”

DISCUSSION
While HCD-approved RHNA Housing Elements do not require the cities and counties to build affordable housing, the jurisdictions must adjust zoning ordinances, issue permits to allow construction of affordable housing, and initiate programs that incentivize such construction.

However, as shown in Chart 1 below, significant portions of San Mateo County's affordable housing in RHNA-5 (2015-2023) plans did not materialize – most likely due to a lack of permit applications.

With RHNA-5’s significantly lower targets, the less-than-expected performance during the RHNA-5 cycle foreshadows the enormous challenge the County’s cities and towns now face in meeting the RHNA-6 goals for the next eight years, which are approximately three times larger, as shown in Chart 2 below.

Chart 1: RHNA-5 Affordable Housing Required vs. Permitted

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Chart 2: RHNA-5 Affordable Housing Allocations vs RHNA-6 Besides increasing affordable housing targets by nearly 300 percent, the State has made other significant changes in the ADU laws to address the current housing crunch.

Law Year Impact
AB671 2019 Through Housing Elements, HCD to promote ADUs for affordable rent AB670 2019 Any local covenants and restrictions on new housing are void AB587 2019 Deed-restricted sale of ADU is allowed separately from the main house AB 68 2019 Removes local restrictions on minimum size, requirement of owner occupancy, parking requirements for garage conversion, and any impact fee.

AB 3182 2020 Permitting process within 60 days
SB9 2021 Facilitates lot split and allows more than1 ADU per property AB 345 2021 Allows owners to sell ADUs separately
AB 2221 2023 Pre-specific time permit frame for approval of ADU applications SB 897 2023 Increases the ADU height limit to 18’ and allows retro permitting of previous unauthorized ADUs.

The net effect of these changes was to minimize municipal-level regulations on ADUs – such as parking requirements, property line setbacks, height limits, or the number of ADUs on one property – and make

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ADUs an acceptable means to meet affordable housing obligations. Given these changes, namely high mandatory targets for affordable housing, enthusiastic support by the State of ADUs as affordable housing, and requiring zero land use rezoning for ADUs, nearly all San Mateo County cities and towns include ADUs in their RHNA-6 Housing Elements.

The issue, however, is that for every ADU included in a Housing Element – regardless of whether the ADU is built and rented to very low-, low-, or moderate-income tenants – one verifiable, deed-restricted affordable housing unit will not be built in that jurisdiction by a developer.

So, How Did We Get Here?
California cities and counties can now use ADUs to help satisfy their RHNA requirements. But calculating how many ADUs to put into a Housing Element and how to distribute them into each income category, differ from other housing options.

ABAG instructs San Mateo County jurisdictions that the standard method is first to estimate the number of ADUs that homeowners will build in a planning period, which is 2023 through 2031 for RHNA-6.

In its technical memo “Using ADUs to Satisfy RHNA,” ABAG advises members that the estimate should be based on the average number of ADU building permits issued each year, multiplied by eight, because there are eight years in a housing element cycle.
“Most cities base their determination of annual ADU permits by averaging the building permits approved each year since 2019 when State law made it easier to construct the units,” the technical memo explains:
“There is a small amount of flexibility in the calculations,” the memo continues. “If numbers were low in 2019 but were high in 2020, 2021, and 2022, a jurisdiction could potentially use 2020-2022 as the baseline. This rationale would be bolstered if there was a logical explanation for the change, e.g., the jurisdiction further loosened regulations in 2020. Projecting a higher number of ADUs than what has been demonstrated through permit approvals in recent years may be possible, but more challenging. A slightly larger number may be warranted if a robust, funded, and clear plan to increase production has been put in place. However, you are strongly encouraged to coordinate with HCD before deviating from the standard methodology.”
Once cities complete their estimate, they must distribute those units into each income category.

To help its members, ABAG analyzed ADU affordability. Using data from a 2020 statewide survey of homeowners who had constructed ADUs in 2018 or 2019, ABAG concluded that the assumptions in the chart below are generally applicable in most jurisdictions. Many Bay Area jurisdictions chose to use these numbers instead of conducting their own affordability analysis.

Percent Income Category
30% Very Low Income
30% Low Income
30% Moderate Income
10% Above Moderate

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“UC Berkeley Terner Center did a statewide survey of ADU affordability, and they worked with ABAG to adjust it for the Bay Area specifically,” said a San Mateo County planner. “So those (numbers) are based on surveys and data analysis of actual ADUs that have been produced, and the rents that are being offered to tenants. We are just accepting their analysis as is.” San Mateo County jurisdictions have almost unanimously adopted ABAG’s 30-30-30-10 formula.

However, a 2021 report and recommendations for RHNA-6 prepared by ABAG’s Housing Technical Assistance Team, titled “DRAFT Affordability of Accessory Dwelling Units,” says that although ADUs are often affordable, jurisdictions should be cautious about relying on them too heavily because of fair housing concerns:
“Many ADUs are affordable to lower and moderate-income households because they are rented to family and friends of the homeowners,” the report states. “If minorities are underrepresented among homeowners, the families and potentially friends of the homeowners will be primarily white. Therefore, relying too heavily on ADUs could inadvertently exacerbate patterns of segregation and exclusion.” The report also acknowledges that ADUs often do not serve large families, another critical fair housing concern.

And while ADUs accomplish an essential fair housing goal by adding new homes in parts of the municipality that are more likely to be areas of opportunity, the report recommends that jurisdictions with fair housing concerns "may want to use more conservative assumptions based on open market rentals, excluding units made available to family and friends," as summarized below:

Percent Income Category
5% Very Low Income
30% Low Income
50% Moderate Income
15% Above Moderate
So far, 16 San Mateo County cities have chosen the 30-30-30-10 formula, implying there are no fair housing concerns in their jurisdictions.

Only two cities – San Carlos and San Mateo – use ABAG’s more conservative formula of 5-30-50-15 in their plans. One city – Belmont – used its own judgment.2 And one – Colma – does not use ADUs in their plans at all to meet State requirements.

But in all cases, these statistical estimates may not reflect the actual usage of constructed ADUs.

Determining that would require actual verification by each local jurisdiction.

2 City of Belmont, “General Housing Element Draft 2023-2031”, p. 25, accessed May 27, 2023, https://www.belmont.gov/home/showpublisheddocument/21721/637968613354630000

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ADUs planned in RHNA-6
(May 11, 2023)
City Very Low Low Moderate Above
Moderate
Total ADUs Total
RHNA-6
Requirement
Atherton 56 56 56 112 280 348
Belmont 0 0 80 0 80 1785
Brisbane 12 12 12 4 40 1588
Burlingame 50 50 50 17 167 3257
Colma - - - - 0 202
Daly City 151 151 151 50 503 4838
East Palo Alto 35 34 34 12 115 829
Foster City 7 7 7 3 24 1896
Hillsborough 84 84 84 28 280 554
Menlo Park 26 25 26 8 85 2946
Millbrae 34 34 33 11 112 2199
Pacifica 56 56 56 19 187 1892
Portola Valley 28 28 28 8 92 253
Redwood City 152 152 152 50 506 4588
San Bruno 72 72 72 24 240 3165
San Carlos 10 61 102 30 203 2735
San Mateo 22 132 220 66 440 7015
South San
Francisco
113 113 113 38 377 3956
Unincorporated
San Mateo
107 107 107 36 357 2833
Woodside 36 36 36 12 120 328
(This table includes all San Mateo County jurisdictions that have submitted Housing Element plans to HCD for review. As of June 1, 2023, Half Moon Bay and Daly City have not submitted RHNA-6 plans for HCD review.) Accordingly, if HCD approves cities and towns' current Housing Elements, San Mateo County may end up with many affordable housing units that exist only on paper because they are counted as affordable units by the State but never made available or occupied by people who need affordable housing:
“BMR (below market rate) unit displacement is a legitimate issue,” said a city planning consultant. “RHNA looks at (the number of) units, not the number of people being housed. For the State, they’re all counted the same – an ADU or three-bedroom apartment, five vs. one or two people. In the eyes of the State, they’re all the same.”

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Finally, the cities and towns relying primarily on ADUs to meet their RHNA-6 housing targets do not meet the overall objectives required by HCD and RHNA of:
● Increasing the housing supply and mix of housing types, tenure, and affordability ● Promoting infill development and socioeconomic equity, protecting environmental and agricultural resources, and encouraging efficient development patterns ● Promoting an improved intraregional relationship between jobs and housing ● Balancing disproportionate household income distributions ● Affirmatively furthering fair housing
Housing and Community Development Pushes Back
Four San Mateo County municipalities – Atherton, Hillsborough, Portola Valley, and Woodside – rely heavily on ADUs to meet low-income housing requirements in their RHNA-6 Housing Elements.

May 17, 2023
While HCD does not single out those four cities for their heavy reliance on ADUs to meet their affordable housing needs, throughout the process of submission and review of draft RHNA-6 plans, HCD consistently instructed San Mateo County cities and towns that they must monitor and verify ADU production and affordability at least every two years but has not specified an acceptable process for verifying the affordability level of ADUs as planned.

Should San Mateo County and its cities seek outside help on this issue, there are a handful of independent non-profit agencies and for-profit real estate management companies operating today in the Bay Area that have established systems and processes for monitoring and verifying rented occupied housing for continued affordability and adherence to fair housing guidelines while maintaining tenant and owner privacy – which was an issue continually raised by City Managers and other officials during Grand Jury interviews.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
ADUs as Percent of RHNA6 Affordable Housing

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ADU Affordability Monitoring Emphasized in HCD Review Letters to Jurisdictions Atherton (4-4-23)
Program 3.812 (New Construction of Affordable Accessory Dwelling Units): While the element was revised to include timing of each action, it is unclear how affordability will be established. The program should be revised to clarify actions to establish and track affordability.

East Palo Alto (4-25-23)
Accessory Dwelling Units (ADU): As noted in the prior review, the element should include a program that commits to frequent monitoring (every other year) for production and affordability, and specific commitment to adopt alternative measures such as rezoning or amending the element within a specific time (e.g., six months) as needed.

Foster City (4-24-23)
Program H-D-4-h (ADU Monitoring): While the program commits to evaluating alternative actions by the end of 2026, it must commit to specific alternative actions and monitor production and affordability of ADUs more than once in the planning period (e.g., every two years).

Hillsborough (1-10-23
This analysis should specifically address whether the ADU strategy to accommodate lower-income households contributes to continued exclusion and disparities in access to opportunity and how the strategy promotes housing choice for a variety of households including lower-income households, and large families.

To support assumptions for ADUs in the planning period, the element should reduce the number of ADUs assumed per year and reconcile trends with HCD records, including additional information such as more recent permitted units and inquiries, resources and incentives, other relevant factors, and modify policies and programs as appropriate. Further, programs should commit to additional incentives and strategies, frequent monitoring (every other year), and specific commitment to adopt alternative measures such as rezoning or amending the element within a specific time (e.g., six months) if ADU production assumptions are not being achieved.

Millbrae (1-24-23)
Accessory Dwelling Units (ADU): To support assumptions for ADUs in the planning period, programs should commit to additional incentives and strategies, frequent monitoring (every other year) of production and affordability and specific commitment to adopt alternative measures such as rezoning or amending the element within a specific time (e.g., 6 months) if needed.

Depending on the analysis, the element must commit to monitor ADU production and affordability throughout the planning period and implement additional actions if not meeting target numbers within a specified time period (e.g., within six months).

Redwood City (7-8-22)
Programs must be expanded to include incentives to promote the creation and affordability of Accessory Dwelling Units (ADUs).

Examples include exploring and pursuing funding, modifying development standards and reducing fees beyond State law, increasing awareness, pre-approved plans and homeowner/applicant assistance tools. In addition, given the city’s assumptions for ADUs, the element should include a program to monitor permitted ADUs and affordability every other year and take appropriate action such as adjusting assumptions or rezoning within a specified time period (e.g., 6 months).

San Bruno (3-29-23)
Accessory Dwelling Units (ADU): While the element revised the ADU assumptions, Program 4-P must be revised to commit to additional incentives and strategies, frequent monitoring (every other year) and specific commitment to adopt alternative measures such as rezoning or amending the element within a specific time (e.g., 6 months) if needed. The element must also address affordability assumptions for ADU projections.

San Mateo (3-27-23)
Accessory Dwelling Units (ADU): Program 1.4 must commit to also monitoring affordability of the ADU units that are permitted as well as provide additional incentives or identify additional sites if production and affordability assumptions are not met.

County of San Mateo (4-20-23)
Accessory Dwelling Units (ADU): Further, programs should commit to additional incentives and strategies, frequent monitoring for production and affordability (every other year) and specific commitment to adopt alternative measures such as rezoning or amending the element within a specific time (e.g., 6 months) if needed. The element must also address affordability assumptions for ADU projections, by clarifying what ABAG assumptions are utilized.

South San Francisco (3-30-23)
The element should include a commitment to reconcile trends with reported units within the Cities submitted annual progress report. Further, as Stated in the previous review, programs should commit to additional incentives and strategies, frequent monitoring (every other year) and specific commitment to adopt alternative measures such as rezoning or amending the element within a specific time (e.g., six months) if number and affordability assumptions are not met.

Woodside (10-14-22)
Depending on the analysis, the element must commit to monitor ADU production and affordability throughout the planning period and implement additional actions if not meeting target numbers within a specified time period (e.g., within six months).

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In their HCD approved housing plans, Brisbane and Redwood City aren’t definitive about how they will monitor ADU affordability but imply they will use surveys to comply with HCD instructions.

Redwood City plans to collect ADU rental data during its permitting process. And Brisbane says, if available, it will participate in a regional forgivable ADU construction loan program in exchange for limiting rentals of the ADUs to extremely low-income households for 15 years. Brisbane said it is also exploring a possible city forgivable loan program if the regional program doesn’t materialize. “We can’t force people to report to us or to be honest with us,” said one jurisdiction’s planner.

Another city’s chief planner concluded that a deed restriction – any limitation on a property that affects the ability of the property owner to utilize the property as they wish, such as a requirement to verify a tenant’s income and rent charged – “is the best way to (enforce) affordability.” Alternatively, one city planning official suggested the formation of a Countywide nonprofit to income-qualify and match renters to available ADUs, thereby monitoring and enforcing affordability because the smaller towns and cities don't have the resources to perform that function on their own.

Finally, a fourth city planner offered an alternative view: “We’re not a city hiding behind ADUs. ABAG gave us a formula. We plopped it in. If the State said you can’t count ADUs at all, that would be fine.” A Long, Long Way to Go
The Superior Court of California requires all San Mateo County Civil Grand Jury investigation reports to be completed and published by June 30 annually.

And although the law required San Mateo County cities and towns to submit their housing plans by January 31, 2023, as of June 1, Daly City has yet to adopt and submit a draft plan to HCD for review and approval.

Meanwhile, plans from Foster City, Half Moon Bay, Millbrae and Pacifica are now under HCD review.

So far, HCD has reviewed and rejected plans from 14 jurisdictions: Atherton, Belmont, Burlingame, Colma, East Palo Alto, Hillsborough, Menlo Park, Portola Valley, San Bruno, San Carlos, San Mateo, South San Francisco, Woodside, and San Mateo County, which is responsible for unincorporated areas.

As of the publication of this report, only Redwood City and Brisbane had completed the process and received the green light from HCD to proceed.

One reason cited for the delay is most San Mateo County cities and towns don’t have a large enough staff to manage the workload that RHNA planning represents, so they outsource. And many could not find timely help because the consultants were busy preparing RHNA-6 plans for Southern California cities, which were due before San Mateo County municipalities. That caused many communities here to fall behind and are now out of compliance with the timing of their Housing Element submissions.

These delays, coupled with citizen objections to multifamily housing in their communities, almost guarantee RHNA-6 disputes will end up in the courts and remain unresolved for many years to come and postpone the building of sorely needed affordable housing indefinitely.

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FINDINGS
F1. Due to recent changes in California ADU-related laws, local governments cannot condition ADU permits in San Mateo County on complying with affordability monitoring and verification.

F2. San Mateo County and most of its municipalities rely on ADUs to meet their affordable housing commitments in their RHNA-6 plans.

F3. Atherton, Hillsborough, Portola Valley, and Woodside rely on ADUs to meet as much as 80 percent of their affordable housing commitments in their RHNA-6 plans.

F4. HCD has instructed San Mateo County jurisdictions to monitor and verify future ADU production and affordability every two years but has yet to specify how to verify whether very low-, low- or moderate-income households are occupying the ADUs as planned.

F5. Other than Brisbane and Redwood City, San Mateo County and its jurisdictions have yet to articulate how they will monitor and verify ADU production or affordability.

F6. Without effective ADU monitoring and verification, it will be impossible to evaluate whether the jurisdictions are meeting their RHNA-6 obligations for low-, very-low, and moderate-income housing units.

F7. ADU affordability and occupancy could be monitored by agencies such as HIP Housing which has proven systems and processes to verify occupancy of deed-restricted rental properties in San Mateo County.

RECOMMENDATIONS
R1. San Mateo County and each City should immediately stop using ADUs to meet their Statemandated very low-, low-, and moderate-income housing targets in their Housing Element submissions until they have also proposed an effective monitoring system that verifies how newly developed ADU’s will be used.

R2. By February 1, 2024, San Mateo County and each City should develop, adopt, and implement a verification system capable of monitoring and verifying how newly developed ADU’s are being used.

R3. By February 1, 2024, San Mateo County and each City should develop and adopt incentives for ADU owners which could be offered in exchange for deed restrictions that would include requirements for ADU tenants to participate in independent monitoring.

R4. By February 1, 2024, San Mateo County and each City should track the intended use of ADUs – rented or non-rented – during the permitting process and offer incentives in exchange for deed restrictions that require ADUs to be used as rentals.

R5. By April 1, 2024, San Mateo County and each City should develop and adopt a new ADU affordability distribution formula specific to each jurisdiction to the extent they are used for meeting the very low-, low-, and moderate-income housing requirements in their RHNA housing elements.

R6. San Mateo County and each City should consider working together to address Recommendations 2 and 3.

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REQUEST FOR RESPONSES
Pursuant to Penal Code Section 933.05, the Civil Grand Jury requests responses from San Mateo County and all 20 cities’ governing bodies for each and every Finding and Recommendation.

The governing bodies should be aware that their comments or responses must be conducted subject to the Brown Act's notice, agenda, and open meeting requirements.

RESPONSE REQUIREMENTS
California Penal Code Section 933.05 provides: For purposes of subdivision of Section 933, as to each Grand Jury finding, the responding person or entity shall report one of the following:
(1) The respondent agrees with the finding.
(2) The respondent disagrees wholly or partially with the finding; in which case the response shall specify the portion of the disputed finding and shall include an explanation of the reasons.

For purposes of subdivision of Section 933, as to each Grand Jury recommendation, the responding person or entity shall report one of the following actions:
(1) The recommendation has been implemented, with a summary regarding the implemented action. (2) The recommendation has yet to be implemented but will be implemented in the future, with a timeframe for implementation.
(3) The recommendation requires further analysis, with an explanation and the scope and parameters of an analysis or study and a timeframe for the matter to be prepared for discussion by the officer or head of the agency or department being investigated or reviewed, including the governing body of the public agency when applicable. This time frame shall be at most six months from the Grand Jury report's publication date.
(4) The recommendation will not be implemented because it is not warranted or is not reasonable, with an explanation therefore.

METHODOLOGY
The San Mateo County Civil Grand Jury used numerous approaches to develop this report. ● Preliminary Research
The Grand Jury studied RHNA-5 historical information and RHNA-6 Housing Elements submitted to HCD by the cities and towns in San Mateo County as they became available.

Before conducting in-depth research, the Grand Jury studied ABAG's reports on RHNA-6 housing allocations, introducing numerous issues and a means to understand how jurisdictions establish housing allocations. Additionally, the Grand Jury reviewed a 2021 ABAG report on ADU affordability for RHNA-6 and RHNA-5 annual progress reports to understand history.

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The Grand Jury also reviewed a report on ADUs titled “A Solution on the Ground: Assessing the Feasibility of Second Units in Unincorporated San Mateo County, Implementing the Backyard Revolution: Perspectives of California's ADU Owners,” April 22, 2021, Karen Chapple, Dori Ganetsos, Emmanuel Lopez, UC Berkeley Center for Community Innovation.

An additional resource for Preliminary Research has been the press. Particularly following the January 31, 2023 deadline for RHNA-6 submissions, nearly 60 articles provided insights and analysis the Grand Jury could not find elsewhere.

For a complete list of sources, see the Bibliography below. ● Survey
After conducting its Preliminary Research, the Grand Jury sent an eight-question survey in October 2022 to the city managers of the 20 San Mateo County cities and towns and the San Mateo County planning and building department responsible for the County's unincorporated areas.

See Appendix A for survey results.
● Interviews
Much of the time spent by the Grand Jury on this investigation was in more than 30 interviews with 21 city managers and planning managers, five heads of nonprofit housing entities in San Mateo County, and executives at ABAG, HCD, and several other government bodies. ● Continued Research
Because RHNA-6 submissions and HCD replies are ongoing, the Grand Jury has continued to monitor the status of RHNA-6 submissions and HCD responses.

This report reflects submissions received prior to the report's due date of June 30, 2023.

GLOSSARY
Accessory Dwelling Units (ADUs)
An accessory dwelling unit (ADU) is a legal and regulatory term for a secondary house or apartment that shares the building lot of a larger primary home. The unit is often used to provide additional income through rent or to house a family member. For example, an elderly parent could live in a small unit and avoid having to move to an assisted living facility. (Source: Investopedia) Affordable Housing: Very Low Income; Low Income; Moderate Income; Above Moderate Income Affordable housing is generally defined as housing on which the occupant is paying no more than 30 percent of gross income for housing costs, including utilities. (Source: www.hud.gov)

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Association of Bay Area Governments (ABAG)
The Association of Bay Area Governments (ABAG) is the Council of Governments (COG) for the ninecounty Bay Area. One of California’s earliest COGs, ABAG was founded to protect regional assets from State control. ABAG continues to serve the Bay Area by providing a regional venue for collaboration and problem-solving. ABAG’s work program includes management over key regional assets, such as the San Francisco Estuary and the Bay Trail Project. It also offers a variety of cost-effective member services programs such as Pooled Liability Assurance Network (PLAN) Corporation (offering affordable liability, property insurance, claims management, risk management, and bond coverage to 30 municipalities) and financial services (offering tax-exempt capital financing for the acquisition, construction, and rehabilitation of affordable multifamily housing, health care facilities, schools, and other community facilities). ABAG POWER Natural Gas Pool conducts pooled purchasing of natural gas on behalf of 38 local governments and special districts. ABAG is also the COG that allocates the regional housing needs assessment (RHNA). (Source: CALCOG)
Below Market Rate (BMR)
A BMR unit is a housing unit that is priced to be affordable to households that are of moderate income or below. These housing units are often built by local government, nonprofits, or as a requirement of the developer (Inclusionary Affordable Housing Ordinance). As a result, these homes have certain deed restrictions recorded on the property, ensuring the home remains affordable for future generations. (Source: County of San Mateo)
California Department of Finance (DOF)
The California Department of Finance is a state cabinet-level agency within the government of California.

The Department of Finance is responsible for preparing, explaining, and administering the state's annual financial plan, which the Governor of California is required under the California Constitution to present by January 10 of each year to the public. The Department of Finance's other duties include analyzing the budgets of proposed laws in the California State Legislature, creating, and monitoring current and future economic forecasts of the state, estimating population demographics and enrollment projections, and maintaining the state's accounting and financial reporting systems.

California Department of Housing and Community Development (HCD) The California Department of Housing and Community Development (HCD) develops housing policy and building codes (i.e., the California Building Standards Code), regulates manufactured homes and mobile home parks, and administers housing finance, economic development, and community development programs. (Source: https://www.hcd.ca.gov/about-hcd)

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Council of Governments (COG)
Councils of Governments (COGs) are voluntary associations representing member local governments, mainly cities, and counties, that seek to provide cooperative planning, coordination, and technical assistance on issues of mutual concern that cross jurisdictional lines. (Source: WRCOG) Deed Restrictions
A deed restriction is a term widely used in real estate to refer to any limitation on a property that limits the ability of the property owner to utilize the property as they wish. (Source: CA Realty Training) General Plan
State law requires every city and county in California to prepare a General Plan for its future growth and development. A General Plan covers land use, transportation, housing, open space, natural resources, and public services. Local General Plans have been mandatory in California since the 1950s. State law also requires the cities and counties to periodically update their General Plans in response to changing conditions. Each General Plan includes maps expressing the community's vision of how and where it will grow and change. The General Plan typically has a time horizon of about 20 years. Once a General Plan is adopted, it is used by the City Council, local commissions, and City Staff as they make day-to-day decisions about the community's future. (Source: City of San Rafael) Housing Element
Since 1969, California has required that all local governments (cities and counties) adequately plan to meet the housing needs of everyone in the community. California's local governments meet this requirement by adopting housing plans as part of their General Plan (also required by the State). General Plans serve as the local government's blueprint for how the city or county will grow and develop and include eight elements: land use, transportation, conservation, noise, open space, safety, environmental justice, and housing. California's Housing Element Law acknowledges that, for the private market to address Californians' housing needs and demand, local governments must adopt plans and regulatory systems that provide opportunities for (and do not unduly constrain) housing development. As a result, housing policy in California rests mainly on the effective implementation of local General Plans and, in particular, local Housing Elements. (Source: California Department of Housing and Community Development)
Jurisdiction (city, town, or county)
1: the power, right, or authority to interpret and apply the law; a matter that falls within the court’s jurisdiction
2: a: the authority of a sovereign power to govern or legislate b: the power or right to exercise authority: CONTROL
3: the limits or territory within which authority may be exercised (Source: Merriam-Webster) Regional Housing Needs Allocation (RHNA)
Every eight years, ABAG develops the Regional Housing Needs Allocation (RHNA) plan approved by HCD and used to assign each city and county in the Bay Area their fair share of new housing units to build. These housing units are intended to accommodate existing needs and projected growth in the region. The RHNA process is critical because it requires all cities and counties to plan for the region's housing needs, regardless of income, to prepare for future growth and ease the California's acute housing crisis. (Source: ABAG)

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Regional Housing Needs Determination (RHND)
The California Department of Housing and Community Development (HCD) identifies the total number of homes each region in California must plan to meet the housing needs of people at all income levels. They base the number on population projections produced by the California Department of Finance and adjustments incorporating the region's current housing needs. The jurisdictions separate the total number of housing units from HCD into four income categories that cover everything from housing for very lowincome households to market-rate housing. ABAG is responsible for developing a methodology to allocate a portion of this housing need to every local government in the Bay Area. (Source: ABAG)

BIBLIOGRAPHY
Government Agencies
● Department of Housing and Urban Development Office of Policy Development and Research. “U.S Accessory Dwelling Units: Case Study”. https://www.huduser.gov/portal/publications/adu.pdf. June 2008
● U.S. Department of Housing and Urban Development. “Glossary of Terms to Affordable Housing”. https://archives.hud.gov/local/nv/goodstories/2006-04-06glos.cfm. August 18, 2011 ● Department of Housing and Community Development Division of Housing Policy. “ADU Law Amendments Memorandum”. https://www.hcd.ca.gov/community-development/housingelement/housing-element-memos/docs/Accessory-Dwelling-Unit-Legislation.pdf. May 29, 2018 ● California Legislative Information. “Assembly Bill No. 68”. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB68. 2019-2020 ● OpenStates. “California Senate Bill SB 13”. https://openStates.org/ca/bills/20192020/SB13/. 2019- 2020
● 21 Elements. “Second Units and Junior Second Units”. http://www.21elements.com/second-units. 2020
● Department of Housing and Community Development Division of Housing Policy. “Local Agency Accessory Dwelling Units, Memorandum”. https://www.hcd.ca.gov/community-development/housingelement/docs/ADU_TA_Memo_Final_01-10-20.pdf. January 10, 2020 ● Department of Housing and Community Development Division of Housing Policy. “Final Regional Housing Need Determination”. https://www.hcd.ca.gov/community-development/housingelement/docs/ABAGRHNA-Final060920(r).pdf. June 9, 2020 ● Association of Bay Area Governments. “Housing Element Law. Changes from 1969 to the Present”. https://abag.ca.gov/sites/default/files/rhna_background.pdf. August 1, 2020 ● California Legislative Information. “Assembly Bill No. 3182”. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB3182. September 28, 2020

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● Southern California Association of Governments. “SCAG Regional Accessory Dwelling Unit Affordability Analysis”. https://scag.ca.gov/sites/main/files/fileattachments/adu_affordability_analysis_120120v2.pdf?1606868527. December 1, 2020 ● Association of Bay Area Governments. “DRAFT Affordability of Accessory Dwelling Units”. http://21elements.com/documents-mainmenu-3/housing-elements/rhna-6-2022-2030/1327-draft-aduaffordability-report-sep-8-2021-1/file. September 8, 2021 ● California Legislative Information. “Assembly Bill No. 345”. https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB345. September 28, 2021
● Association of Bay Area Governments. “Using ADUs to Satisfy RHNA”. https://abag.ca.gov/technicalassistance/using-adus-satisfy-rhna. March 10, 2022 ● Auditor of the State of California. “Regional Housing Needs Assessments”. https://www.auditor.ca.gov/pdfs/reports/2021-125.pdf. March 17, 2022 ● California Department of Housing and Community Development. “Accessory Dwelling Unit Handbook”. https://www.hcd.ca.gov/sites/default/files/2022-07/ADUHandbookUpdate.pdf. July 2022 ● Association of Bay Area Governments. “Final Regional Housing Needs Allocation (RHNA) Plan: San Francisco Bay Area, 2023-2031”. https://abag.ca.gov/sites/default/files/documents/2022- 12/Final%20RHNA%20Methodology%20Report%202023-2031_update_11-22.pdf. November 2022 ● State of California Department of Justice. “Attorney General Bonta Puts city of Huntington Beach on Notice That Its Proposed Ordinance Violates State Housing Law”. https://oag.ca.gov/news/pressreleases/attorney-general-bonta-puts-city-huntington-beach-notice-its-proposed-ordinance. February 13, 2023
● Department of Housing and Community Development Division of Housing Policy Development. “RE:

Town of Atherton’s 6th Cycle (2023-2031) Adopted Housing Element”. https://www.dropbox.com/home/Grand%20Jury%202022%20-%202023/Committees/ADUs/ADU%20- %20research%20materials/Housing%20Elements/Pending?preview=Atherton_HCD_Letter40423.pdf.

April 4, 2023

Grand Jury Reports
● San Mateo County Civil Grand Jury. “Second Units: Adding New Housing In The Neighborhood”. https://www.sanmateocourt.org/documents/grand_jury/2019/second_units.pdf. 2019-2020 Independent Agencies
● UC Berkeley. “A Solution on the Ground: Assessing the Feasibility of Second Units in Unincorporated San Mateo County”. https://smcrecovery.org/wp-content/uploads/2021/08/UC-Report-on-ADUfeasability.pdf. January 2017 ● Ramsey-Musolf, Darrel. “Accessory Dwelling Units as Low-Income Housing: California’s Faustian Bargain”. https://www.mdpi.com/2413-8851/2/3/89. September 18, 2018

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● AARP. “The ABCs of ADUs”. https://www.hcd.ca.gov/policy-research/docs/adu-guide-websingles.pdf. 2019 ● California YIMBY (Yes in My Back Yard). “AB 881”. https://cayimby.org/ab-881/. October 9, 2019 ● Center of Community Innovation. “The ADU Scorecard: Grading ADU Ordinances in California”. https://www.aducalifornia.org/wp-content/uploads/2020/02/ADU-Scorecard-InterimReport-200201-

1.pdf. February 1, 2020
● UC Berkeley Center for Community Innovation. “Implementing the Backyard Revolution: Perspectives of California’s ADU Owners”. https://www.aducalifornia.org/wpcontent/uploads/2021/04/Implementing-the-Backyard-Revolution.pdf. April 22, 2021 ● Terner Center for Housing Innovation, UC Berkely. “First Ever Statewide ADU Owner Survey Shows Growth, Room for Improvement”. https://ternercenter.berkeley.edu/blog/cci-adu-survey/. April 22, 2021
● University of California, Berkeley. “California ADU”. https://www.aducalifornia.org/. August 16, 2021 ● Colburn, Gregg. Aldern, Clayton. “Homelessness is a Housing Problem”. https://homelessnesshousingproblem.com/. 2021-2022
● Sumner, Scott. “California housing prices and homelessness”. https://www.econlib.org/californiahousing-prices-and-homelessness/. May 23, 2022 ● Williams, Paul. “Carving out a Path for Public Developers”. https://housingchronicle.substack.com/p/carving-out-a-path-for-public-developers. July 14, 2022 ● Terner Center for Housing Innovation, UC Berkeley. “ADUs for All: Breaking Down Barriers to Racial and Economic Equity in Accessory Dwelling Unit Construction”. https://ternercenter.berkeley.edu/research-and-policy/adu-equity-barriers/. August 4, 2022 ● Bertolet, Dan. “Washington Bill Would Boost In-Law Apartments Throughout the State”. https://www.sightline.org/2023/01/21/washington-bill-would-boost-in-law-apartments-throughout-theState/. January 21, 2021 ● Ohanian, Lee. “California’s Failed Soviet-Style Housing Mandates Should End Now”. https://www.hoover.org/research/californias-failed-soviet-style-housing-mandates-should-end-now.

February 7, 2023
● Hamilton, Emily. “Learning from Houston’s Townhouse Reforms”. https://www.mercatus.org/research/policy-briefs/learning-houstons-townhouse-reforms. April 11, 2023

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APPENDICES
● A: Survey Results
● B: Timeline of Important Legislative Events
● C: ADUs: An American Tradition
● D: Housing Elements Are an Iterative Process

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APPENDIX A
Survey Results
Who responded to the survey
Survey responses

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APPENDIX B
Timeline of Important Legislative Events

1. 1970 — the Legislature directed HCD to develop guidelines for housing element preparation on one and five year cycles. SB 1489 (Moscone), emphasized housing need, passed in 1971, and ABX 1 of 1971 established more standards. The California Housing Finance Agency (CalHFA), which also assisted communities in providing affordable housing, was created in 1975. The legislation authorized HCD to review local housing elements for conformity to its guidelines.

2. 1976 — Fair-share was added to the guidelines by HCD. The COGs are now given the responsibility by HCD to distribute shares of low-income and moderate-income housing. The local housing element had to include these income requirements — whether or not communities wanted them. HCD also was given responsibility to review local housing elements. Statewide hearings in 1977 brought out a number of positions on housing elements and HCD requirements.

3. Mid 1980’s — AB 2853 (Roos), provided for faster permit processing and higher densities, and allowed the housing element to meet State goals and be reviewed by HCD. COGs would continue to formulate the fair share for each community, but HCD had final approval of the numbers and each community was to revise its Housing Element every five years.

4. 1990s — Cities and counties looked at housing elements, if certified, as providing protection against lawsuits. In addition, this decade also created the concept of regional allocation “sharing burdens of lower- income households among geographic areas,” without mandated goals.

5. 1993 — The Senate Committee on Local Government held hearings on housing element progress and heard concerns that communities were not doing enough and that housing elements were despised by local governments. Bills changed the cycle timeframe, including AB 2172 (Hauser), SB 1703 (Costa) and SC 320 (Committee). Main topics for discussion by the Committee on Housing and Land Use hearings in 1995 were the housing allocations and the Department of Finance (DoF) projections. A common complaint was that the DoF projections were not complete enough for communities to develop appropriate allocations. The COGs projections also were criticized.

6. 1998 — AB 438 (Torlakson), allowing for the creation of sub-RHNA areas, looked at how housing units were counted. 2001 — SB 910 (Dunn) would have included imposing fines on jurisdictions not complying; and would have tied RHNA to transportation planning on a six year cycle. However, this bill did not pass. 2002 — SB 423 (Torlakson) created a jobs and housing balance incentive program, also known as Workforce Housing Incentive Program. In 2003, at HCD’s request, a working group of stakeholders met to make recommendations, which included:
● Develop more transparency in determining fair shares
● Clarify land inventories of building sites
● Ensure inventories were buildable
● Increase HCD review consistency of local elements
● Explore city self-certification
● Devise better housing element enforcement that would penalize non-compliance.

7. 2004 — AB 2348 (Mullin) clarified the relationship between the land inventory and adequate sites requirement, provided guidance on the content of adequate land inventory, and provided greater development certainty. AB 2158 (Lowenthal) revised the process for determining allocation from just

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DoF to include transportation planning numbers and created a review process.

8. 2005 — AB 1233 (Jones) assured that unmet need from previous RHNA cycles was added into the next cycle.

9. 2017 Housing Legislative Package
Approximately 150 housing bills were submitted in 2017. Fifteen relating to funding, streamlining and accountability, were signed by the governor. These bills significantly changed how RHNA is conducted, requiring additional outreach and reporting, increasing the number of factors included, and the ability of HCD to sue individual cities for not meeting requirements.

SB 2 (Atkins) Building Homes and Jobs Act is projected to generate hundreds of millions of dollars annually for affordable housing, supportive housing, emergency shelters, transitional housing, and other housing needs via a $75 to $225 recording fee on specified real estate documents.

SB 3 (Beall) Veterans and Affordable Housing Bond Act of 2018 places a $4 billion general obligation bond on the November 2018 ballot to fund affordable housing programs and the veterans homeownership program (CalVet).

SB 35 (Wiener) streamlines multifamily housing project approvals, at the request of a developer, in a city that fails to issue building permits for its share of the regional housing need by income category.

SB 35 city approval of a qualifying housing development on a qualifying site is a ministerial act, without need for CEQA review or public hearings.

AB 73 (Chiu) streamlines the housing approval process by allowing jurisdictions to create a housing sustainability district to complete upfront zoning and environmental review in order to receive incentive payments for development projects that are consistent with the ordinance.

SB 167 (Skinner), AB 678 (Bocanegra), and AB 1515 (Daly) are three measures that were amended late in the 2017 legislative session to incorporate changes to the Housing Accountability Act (HAA).

The HAA significantly limits the ability of a jurisdiction to deny an affordable or market-rate housing project that is consistent with existing planning and zoning requirements.

AB 1505 (Bloom) allows a jurisdiction to adopt an ordinance that requires a housing development to include a certain percentage of rental units affordable to and occupied by households with extremely low, very low, low or moderate income.

AB 879 (Grayson) expands upon existing law that requires, by April 1 of each year, general law cities and charter cities to send an annual report to their respective city councils, the State Office of Planning and Research (OPR) and HCD that includes information related to implementation of the General Plan.

AB 1397 (Low) makes numerous changes to how a jurisdiction establishes its housing element site inventory.

AB 72 (Santiago) provides HCD broad new authority to find a jurisdiction’s housing element out of substantial compliance if it determines that REGIONAL the jurisdiction fails to act in compliance with

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its housing element and allows HCD to refer violations of law to the attorney general.

10. 2018 — SB 828 (Wiener) changed the way HCD determines each region’s RHND, adding a number of new factors for consideration and accounting for “unmet need” in the existing housing stock by applying “adjustment factors” to a region’s total projected households, not just the incremental housing growth.

11. 2018 — AB 1771 (Bloom) and AB 686 (Santiago) strengthened the mandate for regions and local governments to combat discrimination, overcome historic patterns of segregation, and create equal access to opportunity through housing planning and decision-making, in other words, to “affirmatively further fair housing.” AB 1771 (Bloom) added to RHNA an enhanced focus on racial equity with an explicit mandate that COGs’ housing distribution plans affirmatively further fair housing and required COGs to survey jurisdictions on their fair housing activities, to identify regional barriers to furthering fair housing, and to recommend strategies or actions to overcome those barriers. AB 686 (Santiago) created a mandate that local jurisdictions plan and administer housing and community development programs and activities in a manner that affirmatively further fair housing.

12. 2019 — AB 1486 (Ting) strengthened the Surplus Lands Act (SLA), which requires that local agencies provide right of first refusal to affordable housing developers when disposing of surplus land by expanding the scope of land subject to the right of first refusal requirement, updating the mechanics of the surplus land disposal process, extending HCD’s enforcement mandate to include the SLA and establishing financial penalties for violation of the act.

AB 1487 (Chiu), authorized ABAG and MTC to place on the ballot regional housing measures to help fund affordable housing and established 3 REGIONAL HOUSING NEEDS ALLOCATION the Bay Area Regional Housing Authority. The 2019-20 State Budget also included significant new resources to support housing planning, including $250 million for local governments and COGs for planning activities. The Bay Area is receiving approximately $50 million in combined funds, split between ABAG and local jurisdictions.

SB 330 (Skinner) made further revisions to the HAA, establishing new criteria for housing approvals at the local level, including prohibiting a local agency from subjecting a project to new ordinances, rules or fees after an application is submitted and limiting the number of hearings on a project to five. The bill also prohibits a local agency from lowering the allowed residential density below that level in effect on January 1, 2018 in high rent, low-vacancy areas, as defined. The bill’s provisions sunset in five years.

AB-881, “Accessory dwelling units,” and AB-68, “Land use: accessory dwelling units”: Makes many of the current restrictions that cities place on ADUs obsolete. It also provides for a streamlined process for approvals.

These bills require permits for ADUs added to single-family and multifamily homes to be approved or denied faster. Current law permits these decisions to take 120 days, but this new law requires decisions within 60 days. These approvals or denials must be issued ministerially, so that way, there are fewer potential issues to encounter. Cities and counties may establish minimum and maximum ADU size requirements, but the maximum size cannot be less than 850 square feet for a one-bedroom ADU or 1,000 square feet for more than one bedroom.

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Most importantly, these bills prohibit any lot coverage, minimum lot size, etc. requirements that municipalities have. Cities have enacted these laws to have the effect of making it impossible to build an ADU. Cities cannot require the correction of nonconforming zoning conditions as part of the approval process.

SB-13 Accessory dwelling units are similar to AB-881 and AB-68 with a couple of significant differences. Before this bill, local agencies could require that the person applying for the ADU occupy either the primary residence or the proposed new structure. This bill exempts from these requirements all proposed ADUs until Jan. 1, 2025. Additionally, this bill removes the impact fee for ADUs smaller than 750 square feet. Even for ADUs larger than that, the impact fees assessed must correlate with the square footage of the primary residence.

SB-13 makes building ADUs cheaper and also removes an essential regulation. Now, landlords who rent their properties out can apply for an ADU for their rental properties.

AB-670, “Common interest developments: accessory dwelling units,” makes it easier for people within HOA complexes to construct ADUs. Specifically, it prevents banning or unreasonably restricting on single-family lots on the construction of these units. Presently, many HOAs have CCRs ("conditions, covenants and restrictions") that prevent people from building ADUs. HOAs may worry about the uniformity of the properties if one has an ADU on it, or they might be concerned that they don't know who is and who isn't renting from an ADU. Regardless, HOAs now need to have a way for people to construct ADUs if they so choose.

HOAs will likely challenge this bill, at least to some degree, in court, but for now, if you live in an HOA complex with single-family homes, you can construct an ADU.

AB-671, “Accessory dwelling units: incentives," requires that general plans incentivize homeowners in some way to construct these ADUs and make them available for low-to-moderate-income households to rent. While it doesn't specify what these incentives will be, it does require local agencies to think about financial incentives and construct a plan.

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APPENDIX C
ADUs: An American Tradition

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APPENDIX D
Housing Elements Are an Iterative Process

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CITY COUNCIL

STAFF REPORT
MEETING DATE: August 28, 2023
ITEM TITLE: Adopt a Resolution Accepting the 2023 Sewer System Root Foaming Project C1752 and Authorizing the Public Works Director to Issue and Record a Notice of Completion.

RECOMMENDATION:

Staff recommends that the City Council adopt a Resolution accepting the 2023 Sewer System Root Foaming Project C1752 (“Project”) and authorizing the Public Works Director to issue and record a Notice of Completion.

FISCAL IMPLICATIONS:

There are no fiscal implications or additional appropriations needed at this time.

The Project is funded from C1752 which has a remaining available budget of $205,518 for Fiscal Year 2022-23. On April 10, 2023, the City Council increased the total budget for this Project from $175,000 to $205,793 when it awarded the contract to Duke’s Root Control, Inc. (“Contractor”) in the amount of $171,327.43. The total award included a contingency not to exceed the total Project budget. The remaining Project balance reflects the timing of the invoices that have yet to be processed for the work done to date. Any unspent funds will be returned to the fund balance.

BACKGROUND:

Over the past eight years, the City's maintenance staff has managed the root control program on an as-needed basis. However, the City's engineering staff has taken over the root control program to address the large number of sewer mains with root intrusion and to coordinate repairs with the future annual sewer rehabilitation projects.

Staff designed and prepared the Project Specifications for the Project in February 2023. The City Engineer signed the final bid set construction documents on February 7, 2023, which were approved by the City Council on February 27, 2023.

The Project was publicly advertised on February 28, 2023, and sealed bids were opened by the City Clerk on March 21, 2023. The City Council awarded the Project to Duke’s Root Control, Inc. at its meeting on April 10, 2023. The Contractor began the Project on June 21, 2023.

ANALYSIS:

The Project was substantially completed on July 21, 2023, in accordance with the approved Project specifications.

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The Contractor will coordinate with staff and affected residents to complete the punch-list before the Project closeout and filing the Notice of Completion.

Therefore, staff recommends accepting the 2023 Sewer System Root Foaming Project C1752 and authorizing the Public Works Director to issue and record a Notice of Completion.

ALTERNATIVES:

The alternatives available to the City Council include:

1. Adopt a Resolution accepting the 2023 Sewer System Root Foaming Project C1752 and authorizing the Public Works Director to issue and record a Notice of Completion; or

2. Do not adopt the Resolution; or

3. Provide staff with alternative direction.

Respectfully submitted by:

Steven Machida, Public Works Director
Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Resolution

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RESOLUTION NO. 2023 – ____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN CARLOS ACCEPTING THE 2023 SEWER SYSTEM ROOT FOAMING PROJECT C1752; AND AUTHORIZING THE PUBLIC WORKS DIRECTOR TO ISSUE AND RECORD A NOTICE OF COMPLETION.

WHEREAS, over the past eight years, root control has been managed by the City's maintenance staff on an as-needed basis; and
WHEREAS, to address the large number of sewer mains with root intrusion and to coordinate repairs with the future annual sewer rehabilitation projects, the City's engineering staff has taken over the root control program; and
WHEREAS, the City Engineer signed the final bid set 2023 Sewer System Root Foaming Project C1752 (“Project”) specifications on February 7, 2023, which were approved by City Council on February 27, 2023; and
WHEREAS, the Project was publicly advertised on February 28, 2023, and sealed bids were opened by the City Clerk on March 21, 2023; and
WHEREAS, the Project is funded from C1752 which has a remaining available budget of $205,518 for Fiscal Year 2022-23; and
WHEREAS, the City Council increased the total budget for Project C1752 from $175,000 to $205,793 on April 10, 2023; and
WHEREAS, City Council awarded the contract to Duke’s Root Control, Inc. (“Contractor”) in the amount of $171,327.43 with contingency up to the Project budget on April 10 2023; and WHEREAS, the Contractor began the Project on June 21, 2023; and WHEREAS, the Project was completed on July 21, 2023, in accordance with the approved Project specifications; and
WHEREAS, staff recommends accepting the Project and authorizing the Public Works Director to issue and record a Notice of Completion.

NOW, THEREFORE BE IT RESOLVED, that the San Carlos City Council hereby accepts the 2023 Sewer System Root Foaming Project C1752 and authorizes the Public Works Director to issue and record a Notice of Completion.
* * * * *
I, Crystal Mui, hereby certify that the foregoing Resolution was duly and regularly passed and adopted by the City Council of the City of San Carlos at a scheduled meeting thereof held on the 28th day of August 2023, by the following vote:

AYES, COUNCILMEMBERS: ___________________________________________

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NOES, COUNCILMEMBERS: ___________________________________________ ABSENT, COUNCILMEMBERS: ___________________________________________ ________________________________
CITY CLERK of the City of San Carlos
APPROVED:
___________________________
MAYOR of the City of San Carlos

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CITY COUNCIL

STAFF REPORT
MEETING DATE: August 28, 2023
ITEM TITLE: Deny Claim of Johanna Siegrist.

RECOMMENDATION:

Staff recommends that the City Council deny the claim of Johanna Siegrist as recommended by the Sedgwick representative.

FISCAL IMPLICATIONS:

None for this action.

BACKGROUND:

This item is coming before the Council to act on the claim submitted by Johanna Siegrist. Staff recommends that the City Council deny the claim based on Sedgwick’s guidance.

The Tort Claims Act. California Government Code Sections 900, seq., mandates that all claims for money or damages against a public entity must be presented in writing to the public entity prior to filing suit. Generally, claims concerning personal injury, wrongful death, damage to personal property, or damage to crops must be presented to the public within six (6) months of the accrual of the claim. All other claims, principally claims on contracts and damage to real property, are subject to a one-year statute of limitations for presentation of the tort claim. Once a tort claim is received by the public entity, the entity has forty-five (45) days to act on the claim. A claim can be settled or rejected. If no action is taken within 45 days, the claim is deemed rejected by operation of law on the last day.

Claims Processing in San Carlos. When the City receives a claim, the claim is immediately forwarded to claims examiners at Sedgwick for investigation. After Sedgwick investigates the claim, Sedgwick provides a recommendation to the City on the handling of the claim.

About Sedgwick. Sedgwick is a leading global provider of technology-enabled risk, benefits and integrated business solutions. In July 2019, Sedgwick acquired York Risk Services Group (“York”). York was originally hired through the Pooled Liability Assurance Network Joint Powers Authority (“PLAN JPA”), and Sedgwick will continue claims administration services to provide claims administration services to the City. The City Council approved the City’s participation in the PLAN JPA (previously known as the Association of Bay Area Government Pooled Liability Assurance Network or “ABAG PLAN”) on November 27, 2017 and designated the Administrative Services Director and Senior Management Analyst as primary and alternate PLAN JPA Board members.

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ANALYSIS:

Claimant Johanna Siegrist filed a claim against the City seeking recovery of rental car costs while her vehicle was being repaired. Claimant alleges that on July 22, 2022, she was driving on Fay Avenue near Devonshire Boulevard when she drove over metal plates in the street which resulted in damages to her vehicle. She further alleges that there were no marking or warning signs.

This does not appear to be a case of liability against the City as the plates do not belong to the City nor were they placed there by City staff. Records show that West Valley Construction was working in the area performing pavement restoration on behalf of California Water Service prior to the date of incident. The plates were left at the loss location by the contractor. For this reason, Sedgwick has recommended formal rejection of Johanna Siegrist’s claim. Furthermore, this claim was tendered to California Water Service and West Valley Construction.

The Council’s rejection of this claim does not prevent City staff or staff of Sedgwick from continuing to work with claimant to resolve the dispute.

ALTERNATIVES:

The alternatives available to the City Council include:

1. Deny claim of Johanna Siegrist; or

2. Do not deny claim of Johanna Siegrist; or

3. Provide staff with alternative direction.

Respectfully submitted by:

Rebecca Mendenhall, Administrative Services Director
Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Siegrist Claim Form

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CITY COUNCIL

STAFF REPORT
MEETING DATE: August 28, 2023
ITEM TITLE: Adopt a Resolution Approving the Use of the Library Excess Funds in Fiscal Year 2023-24 in Accordance with the Library Joint Powers Authority Agreement; Creating a New Capital Project - AC Rooftop Unit Project; and Appropriating $965,000 from the Library Tenant Fund 0095 (Fund 95) in FY 2023-24 to the New AC Rooftop Unit Project ($800,000), Library Maintenance and Repair Project (C1734) ($130,000) and Library Maintenance Funds ($35,000).

RECOMMENDATION:

Staff recommends that the City Council adopt a Resolution:
- Approving the use of library excess funds in Fiscal Year (“FY”) 2024, in accordance with the San Mateo County Library Joint Powers Authority (“JPA”) Agreement; - Creating a new capital project, AC Rooftop Unit Project; and, - Appropriating $965,000 from the Library Tenant Fund 0095 (“Fund 95”) to fund the new AC Rooftop Unit Project $800,000, increase the Library Maintenance and Repair Project C1734 by $130,000, and increase the library maintenance funds by $35,000.

FISCAL IMPLICATIONS:

In accordance with Section VI. D. of the JPA Agreement, and as approved by the JPA Governing Board, at the end of each fiscal year, funds in excess of the amount required to operate a community library are distributed and held by the JPA in separate trust funds. The funds are segregated from the Library’s general operating budget where they accrue interest. Excess funds remaining in accounts currently held by a member city are depleted first before accessing any funds held by the JPA. Library trust funds represent County Free Library revenue set aside and restricted per the terms of the JPA Agreement and state law.

The total amount reported by the Library as being held in the Library JPA/San Carlos Library Trust Fund as of June 30, 2023 is $3,240,885. If not already part of an existing project or budget line item, the use of these funds must be appropriated. The requested appropriations this year and use of trust fund against previously approved projects will bring the balance to $1,467,320 as noted in the table below. Additional projects will be considered as part of the FY 2024-25 MidCycle Budget Review.

Library JPA Trust Fund Balance as of 6/30/2023 $3,240,885 Funds allocated to projects but funding not yet received (600,000) New Funding Request (1,173,565)
Total remaining balance in Trust account $1,467,320

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BACKGROUND:

Per the JPA Agreement, the Library Trust Fund balance can be used for library related activities within that member city including, but not limited to, facility maintenance, facility remodeling or expansion, increased service hours, or increased material and equipment purchases, as mutually agreed by the Library JPA and the governing board of that member city.

ANALYSIS:

The City's projects and the general maintenance requests are allowable uses of these trust fund dollars. Staff therefore recommends that the City Council apply $1,173,565 of the trust fund balance to fully cover the costs of the below essential projects for facility maintenance.

Project
New
Appropriation
Trust Fund
Request
C1734 - Library Maintenance and Repairs $ 130,000 $ 188,565 C2114 - Foundation/Staircase Repair $ - $ 150,000
New Project - AC Rooftop Unit $ 800,000 $ 800,000
New Maintenance Project - Skylight/Ceiling Maintenance $ 27,000 $ 27,000 New Maintenance Project - Exterior Light Pole $ 8,000 $ 8,000 Totals $ 965,000 $ 1,173,565
Staff recommends that the Council create a new capital project to replace the AC rooftop unit at the library facility and to appropriate funds in the amount of $800,000. The existing AC units are approaching 23+ years old and more maintenance is required to keep them operating. Replacing the AC units with more energy-efficient units will reduce our energy costs and maintenance staff time.

An appropriation of an additional $130,000 is also needed for the library exterior painting project, which is part of the Library Maintenance and Repair Project (C1734). Based on prior project bids, an additional appropriation is needed to paint the building and provide anti-graffiti coating.

Finally, an appropriation of $35,000 is requested to be added to the maintenance funds to pay for the costs of skylight and ceiling maintenance and the exterior light pole repair.

If the Council approves the proposed use of the excess funds, it will then be presented to the Library JPA Governing Board for approval.

ALTERNATIVES:

The alternatives available to the City Council include:

1. Adopt a Resolution approving the use of library excess funds in Fiscal Year 2023-24, in accordance with the San Mateo County Library Joint Powers Authority (“JPA”) Agreement; creating a new capital project – AC Rooftop Unit Project; and appropriating $965,000 from the Library Tenant Fund 0095 (“Fund 95”) in FY 2023-24 to fund the new AC Rooftop Unit Project ($800,000), Library Maintenance and Repair Project (C1734) ($130,000), and Library Maintenance Funds ($35,000); or

2. Do not adopt the Resolution; or

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3. Provide staff with alternative direction.

Respectfully submitted by:

Steven Machida, Public Works Director &
Crystal Mui, City Clerk
Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Resolution

2. 22-23 San Carlos Trust Fund Summary

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RESOLUTION NO. 2023 – ____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN CARLOS APPROVING THE USE OF THE LIBRARY EXCESS FUNDS IN FISCAL YEAR (FY) 2023-24 IN ACCORDANCE WITH THE LIBRARY JOINT POWERS AUTHORITY AGREEMENT; CREATING A NEW CAPITAL PROJECT – AC ROOFTOP UNIT PROJECT; AND APPROPRIATING $965,000 FROM THE LIBRARY TENANT FUND 0095 (FUND 95) IN FY 2023-24 TO THE NEW AC ROOFTOP UNIT PROJECT ($800,000), LIBRARY MAINTENANCE AND REPAIR PROJECT (C1734) ($130,000) AND LIBRARY MAINTENANCE FUNDS ($35,000).

WHEREAS, the Library Trust Fund was created to account for the funds in excess of the amount required to operate library related activities; and WHEREAS, the excess funds are to be used, but are not limited to, facility maintenance, facility remodeling or expansion, increased service hours, or increased material and equipment purchases, as mutually agreed by the Library Joint Powers Authority (“JPA”) and the City Council; and WHEREAS, the total amount held in the Library JPA/San Carlos Library Trust Fund as of June 30, 2023 is $3,240,885; and
WHEREAS, staff identified the following projects totaling $1,173,565, that would qualify for the use of these Trust Fund dollars:
- C1734 Library Maintenance and Repairs Project – Exterior Painting $185,565 - C2114 Foundation/Staircase Repair Project – Cherry Street Staircase Repair $150,000 - New Project – AC Rooftop Unit $800,000
- New Maintenance Project – Skylight and Ceiling Maintenance $27,000 - New Maintenance Project – Exterior Light Pole $8,000
WHEREAS, there is a need to create a new capital project to replace the AC rooftop unit at the library facility, as the existing AC units are approaching end of life and replacing them with more energy efficient units will reduce energy costs and maintenance staff time; and WHEREAS, in accordance with Generally Accepted Accounting Principles (“GAAP”), funds will need to be appropriated for any new projects not already appropriated. Therefore, an appropriation of $800,000 for the new AC Rooftop Unity Project, $130,000 for the Library Maintenance and Repair Project (C1734), and $35,000 for the maintenance funds is needed at this time.

NOW, THEREFORE BE IT RESOLVED, that the San Carlos City Council hereby approves:
 Use of the Library Excess Funds in accordance with the Library Joint Powers Authority Agreement;
 Creation of a new Capital Project for the AC Rooftop Unit Project; and  Appropriation of $965,000 to the new AC Rooftop Unit Project ($800,000), the Library Maintenance and Repair Project (C1734) ($130,000), and the library maintenance funds ($35,000).
* * * * *

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I, City Clerk Crystal Mui, hereby certify that the foregoing Resolution was duly and regularly passed and adopted by the City Council of the City of San Carlos at a scheduled meeting thereof held on the 28th day of August 2023, by the following vote:

AYES, COUNCILMEMBERS: ___________________________________________ NOES, COUNCILMEMBERS: ___________________________________________ ABSENT, COUNCILMEMBERS: ___________________________________________ ________________________________
CITY CLERK of the City of San Carlos
APPROVED:
___________________________
MAYOR of the City of San Carlos

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CITY COUNCIL

STAFF REPORT
MEETING DATE: August 28, 2023
ITEM TITLE: Deny Claim of Nina and Ray Gabb.

RECOMMENDATION:

Staff recommends that the City Council deny the claim of Nina and Ray Gabb as recommended by the Sedgwick representative.

FISCAL IMPLICATIONS:

None for this action.

BACKGROUND:

This item is coming before the Council to act on the claim submitted by Nina and Ray Gabb. Staff recommends that the City Council deny the claim based on Sedgwick’s guidance.

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ANALYSIS:

Attorney Charles Stone filed a claim against the City for bodily injury and loss of consortium on behalf of his clients, Nina and Ray Gabb (Claimants). Claimants allege that on December 23, 2022, Nina Gabb tripped and fell over boulders in Burton Park that were hard to see at dusk and after dark.

The boulders at Burton Park have been there since 2008 when they were installed as a part of the Burton Park Playground Renovation Project. At that time, the City hired contractor Suarez and Munoz Construction, Inc. to work in the area and place the boulders in the park. Records show that the City entered into an agreement with Suarez and Munoz Construction Inc. on June 4, 2008. The agreement shows an indemnity clause to defend, indemnify, and hold City harmless from any and all claims and liabilities related to or as a result of Contractor’s performance. In addition, the City did not receive any prior complaints related to the boulders at the loss location. For all these reasons, Sedgwick recommends formal rejection of Nina and Ray Gabb’s claim.

The Council’s rejection of this claim does not prevent City staff or the staff of Sedgwick from continuing to work with claimant to resolve the dispute.

ALTERNATIVES:

The alternatives available to the City Council include:

1. Deny claim of Nina and Ray Gabb; or

2. Do not deny claim of Nina and Ray Gabb; or

3. Provide staff with alternative direction.

Respectfully submitted by:

Rebecca Mendenhall, Administrative Services Director
Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Gabb Claim Form

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CITY COUNCIL

STAFF REPORT
MEETING DATE: August 28, 2023
ITEM TITLE: Adopt a Resolution Appropriating $74,560 from the Wastewater Fund (Fund 06) in Fiscal Year 2023-24; Authorizing the City Manager to Execute a Professional Services Agreement with Black & Veatch for the Sanitary Sewer Model Update and Management Plan C2302 in the Amount of $299,411; and Authorizing an Expenditure of Contingency up to the Remaining Project Budget.

RECOMMENDATION:

Staff recommends that the City Council adopt a Resolution appropriating $74,560 from the Wastewater Fund (Fund 06) in Fiscal Year (“FY”) 2023-24, authorizing the City Manager to execute a professional services agreement with Black & Veatch for the Sanitary Sewer Model Update and Management Plan C2302 (“Project”) in the amount of $299,411 and authorizing an expenditure of contingency up to the remaining Project budget.

FISCAL IMPLICATIONS:

Funding for the Project will come from C2302, which has an available budget of $299,700 for FY 2023-24.

There is sufficient budget to award the base amount; however, an additional appropriation of $74,560 is needed from the Wastewater Fund (Fund 06) in FY 2023-24 for approximately 25 percent contingency.

Black & Veatch Contract $299,411
Contingency 25% $74,849
Total Not to Exceed Amount $374,260
Project C2302 available budget $299,700
Additional Funds Needed $74,560
Total Revised Project Budget $374,260
With the additional appropriation, there is sufficient budget to execute a professional services agreement with Black & Veatch for the total amount including contingency. There is sufficient fund balance to cover this request.

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BACKGROUND:

The original hydraulic model for the sanitary sewer model was completed in 2013 and needs an update to reflect aging infrastructure, population growth, and proposed development in the coming years throughout the city.

The original model prioritized reducing, preventing, and mitigating the impacts of sanitary sewer overflows that occurred in the city. The model update will be driven by recent development growth and major planning initiatives such as the East Side Innovation District Vision Plan and the adoption of a new Housing Element, as well as ongoing efforts to prepare the Downtown Specific Plan and Northeast Area Specific Plan.

A request for proposals (“RFP”) was prepared and posted on June 20, 2023 to select a consultant to provide professional engineering services and assist in the preparation of the Project.

To prepare the sewer model update and management plan, the consultant will: perform hydrology and hydraulic modeling, flow monitoring, and model calibration; review land use planning information with Planning staff; develop parcel loads, large user loads, and loading information from the San Mateo County Sewer System Maintenance Districts; develop design flow criteria and hydraulic criteria; develop and evaluate relief project alternatives; develop cost criteria, estimates, rankings, and a potential capital improvement program; and, prepare a technical memorandum.

Statements of qualifications and cost proposals were due on July 21, 2023, and one submission was received by Black & Veatch.

ANALYSIS:

Staff reviewed the one statement of qualifications and cost proposal and interviewed Black & Veatch. The interview process consisted of a presentation by the consultants describing their approach to preparing the model update and management plan as well as a discussion.

After the interview and internal discussion, staff decided to move forward with Black & Veatch and not repost the RFP as they demonstrated a strong understanding that went beyond the qualifications-based information as well as an approach that suits the City’s overall objectives and goals.

Therefore, staff recommends appropriating $74,560 from the Wastewater Fund (Fund 06) in FY 2023-24, authorizing the City Manager to execute a professional services agreement with Black & Veatch for the Sanitary Sewer Model Update and Management Plan C2302 in the amount of $299,411, and authorizing an expenditure of contingency up to the remaining Project budget.

ALTERNATIVES:

The alternatives available to the City Council include:

1. Adopt a Resolution appropriating $74,560 from the Wastewater Fund (Fund 06) in Fiscal Year 2023-24; authorizing the City Manager to execute a professional services agreement with Black & Veatch for the Sanitary Sewer Model Update and Management Plan C2302

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in the amount of $299,411; and authorizing an expenditure of contingency up to the remaining Project budget; or

2. Do not adopt the Resolution; or

3. Provide staff with alternative direction.

Respectfully submitted by:

Steven Machida, Public Works Director
Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Resolution

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RESOLUTION NO. 2023 – ____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN CARLOS APPROPRIATING $74,560 FROM THE WASTEWATER FUND (FUND 06) IN FISCAL YEAR 2023-24; AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL

SERVICES AGREEMENT WITH BLACK & VEATCH FOR THE SANITARY SEWER MODEL UPDATE AND MANAGEMENT PLAN C2302 IN THE AMOUNT OF $299,411; AND

AUTHORIZING AN EXPENDITURE OF CONTINGENCY UP TO THE REMAINING PROJECT BUDGET.

WHEREAS, the original hydraulic model for the sanitary sewer model was completed in 2013 and needs an update to reflect aging infrastructure, population growth, and proposed development in the coming years throughout the City; and WHEREAS, the original model prioritized reducing, preventing, and mitigating the impacts of sanitary sewer overflows that occurred in the City; and WHEREAS, the model update will be driven by recent development growth and major planning initiatives such as, the East Side Innovation District Vision Plan, the adoption of a new Housing Element, and ongoing efforts to prepare the Downtown Specific Plan, and Northeast Area Specific Plan; and WHEREAS, a request for proposals (“RFP”) was prepared and posted on June 20, 2023, to select a consultant to provide professional engineering services and assist in the preparation of the Sanitary Sewer Model Update and Management Plan (“Project”); and WHEREAS, to prepare the Project, the consultant will also perform the following, but not limited to: hydrology and hydraulic modeling; flow monitoring; model calibration; review land use planning information with Planning Staff; develop parcel loads, large user loads, and loading information from the San Mateo County Sewer System Maintenance Districts; develop design flow criteria and hydraulic criteria; develop and evaluate relief project alternatives; develop cost criteria, estimates, rankings, and a potential capital improvement program; and prepare a technical memorandum; and WHEREAS, statements of qualifications and cost proposals were due on July 21, 2023, and one submission was received by Black & Veatch; and
WHEREAS, staff reviewed the one statement of qualifications and cost proposal and interviewed Black & Veatch which consisted of a presentation by the consultants as well as a discussion; and
WHEREAS, after the interview and internal discussion, staff decided to move forward with Black & Veatch and not repost the RFP as they demonstrated a strong understanding that went beyond the qualifications-based information as well as an approach that suits the City’s overall objectives and goals; and
WHEREAS, funding for the Project comes from C2302, which has an available budget of $299,700 for Fiscal Year 2023-24; and
WHEREAS, there is sufficient budget to award the base amount; and

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WHEREAS, an additional appropriation of $74,560 is needed from the Wastewater Fund (Fund 06) in FY 2023-24 for approximately 25% percent contingency; and WHEREAS, there is sufficient fund balance in Fund 06 to cover the additional appropriation request; and
WHEREAS, staff recommends appropriating $74,560 from the Wastewater Fund (Fund 06) in Fiscal Year 2023-24; authorizing the City Manager to execute a Professional Services Agreement with Black & Veatch for the Sanitary Sewer Model Update and Management Plan C2302 in the amount of $299,411; and authorizing an expenditure of contingency up to the remaining Project budget.

NOW, THEREFORE BE IT RESOLVED, that the San Carlos City Council appropriates $74,560 from the Wastewater Fund (Fund 06) in Fiscal Year 2023-24; authorizes the City Manager to execute a Professional Services Agreement with Black & Veatch for the Sanitary Sewer Model Update and Management Plan C2302 in the amount of $299,411 and authorizes an expenditure of contingency up to the remaining Project budget. * * * * *
I, Crystal Mui, hereby certify that the foregoing Resolution was duly and regularly passed and adopted by the City Council of the City of San Carlos at a scheduled meeting thereof held on the 28th day of August 2023, by the following vote:

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CITY COUNCIL

STAFF REPORT
MEETING DATE: August 28, 2023
ITEM TITLE: Adopt a Resolution Awarding the 2023 Sewer Rehabilitation Project C9617; Authorizing the City Manager to Execute a Public Projects Agreement with JMB Construction, Inc. of South San Francisco, CA in the Amount of $5,965,671; and Authorizing the Expenditure of Contingency up to the Project Budget.

RECOMMENDATION:

Staff recommends that the City Council adopt a Resolution awarding the 2023 Sewer Rehabilitation Project C9617 (“Project”), authorizing the City Manager to execute a Public Projects Agreement with JMB Construction, Inc. of South San Francisco, CA in the amount of $5,965,671, and authorizing the expenditure of contingency up to the Project budget.

FISCAL IMPLICATIONS:

There are no fiscal impacts and no additional funding is needed at this time.

Funding for the Project comes from C9617, which has an available budget of $7,000,000 in Fiscal Year 2023-24. There is sufficient budget to award the Project for the total bid amount of $5,965,671 and contingency up to the Project budget.

BACKGROUND:

In January 2013, the City completed the Sewer Collection System Master Plan (“Master Plan”) that identifies and prioritizes sanitary sewer pipelines for replacement and upsizing. In accordance with the Master Plan, staff created two programs: Sewer System Capacity Assurance and Sewer System Rehabilitation.

Projects associated with the Sewer System Capacity Assurance Report were completed in 2017.

Therefore, staff is now focusing attention on projects to rehabilitate or replace all Grade 4 and 5 sewer defects in the sewer system. Grade 5 defects are considered the most serious defects encountered in sewer mains.

The Sewer System Rehabilitation program addresses all the structurally deficient pipelines identified by the Master Plan. With a limited budget, approximately four to seven percent of the City’s defective pipes will be addressed each fiscal year, depending on the approved budget for that particular fiscal year.

The City’s sewer system is divided into 17 basins as depicted in the Sewer Master Plan. Staff created a systematic approach that will rehabilitate or replace all Grade 4 and 5 defects, basin by basin. The goal is to follow a program that will methodically and continuously monitor and improve

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the entire sewer system.

This Project will replace approximately 8,100 linear feet of sewer mains ranging in diameter between 6 and 10 inches, rehabilitate approximately 1,200 linear feet of sewer mains, replace 216 lower laterals, and replace 50 manholes at various locations throughout the city.

The City Engineer signed the final bid set construction documents on April 14, 2023, and the City Council approved the construction documents at its meeting on May 8, 2023.

ANALYSIS:

On May 9, 2023, the City advertised for bids for construction of the Project and bids were opened on May 30, 2023. The Engineer’s Estimate and the five bids received are listed below:

Contractor Bid Amount
Engineer’s Estimate $5,500,000 - $6,500,000
C2R Engineering Inc $4,297,806
JMB Construction Inc. $5,965,671
Ranger Pipeline Inc $6,150,970
Darcy & Harty Construction Inc. $7,231,558
Cratus Inc. $7,802,808
The apparent lowest bid was submitted by C2R Engineering, Inc. with a total bid amount of $4,297,806. However, C2R Engineering, Inc. requested to formally withdraw their bid proposal claiming that a clerical error was made in computing the bid items. After consultation with the City Attorney, C2R Engineering, Inc. was granted approval to withdraw their bid in accordance with Section 5102 and 5103 of the Government Code, as a mistake was made and written notice was given within five working days.

Therefore, the lowest responsible and responsive bidder is JMB Construction, Inc. with a total bid amount of $5,965,671. Staff recommends awarding the 2023 Sewer Rehabilitation Project C9617 to JMB Construction, Inc., authorizing the City Manager to execute an agreement with JMB Construction, Inc., and authorizing an expenditure of contingency up to the Project budget.

ALTERNATIVES:

The alternatives available to the City Council include:

1. Adopt a Resolution awarding the 2023 Sewer Rehabilitation Project C9617, authorizing the City Manager to execute a Public Projects Agreement with JMB Construction Inc. of South San Francisco, CA in the amount of $5,965,671; and authorizing the expenditure of contingency up to the Project budget; or

2. Do not adopt the Resolution; or

3. Provide staff with alternative direction.

Respectfully submitted by:

Steven Machida, Public Works Director

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Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Resolution

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RESOLUTION NO. 2023 – ____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN CARLOS AWARDING THE 2023 SEWER REHABILITATION PROJECT C9617; AUTHORIZING THE

CITY MANAGER TO EXECUTE A PUBLIC PROJECTS AGREEMENT WITH JMB CONSTRUCTION, INC. OF SOUTH SAN FRANCISCO, CA IN THE AMOUNT OF $5,965,671;

AND AUTHORIZING THE EXPENDITURE OF CONTINGENCY UP TO THE PROJECT BUDGET.

WHEREAS, in January 2013, the City completed the Sewer Collection System Master Plan (“Master Plan”) that identifies and prioritizes sanitary sewer pipelines for replacement and upsizing; and
WHEREAS, in accordance with the Master Plan, staff created two programs: Sewer System Capacity Assurance and Sewer System Rehabilitation; and WHEREAS, projects associated with the Sewer System Capacity Assurance Report were completed in 2017; and
WHEREAS, staff is now focusing attention on projects to rehabilitate or replace all Grade 4 and 5 sewer defects in the sewer system; and
WHEREAS, the Sewer System Rehabilitation program is needed to address all the structurally deficient pipelines identified by the Master Plan; and WHEREAS, the goal is to follow a program that will methodically and continuously monitor and improve the entire sewer system; and
WHEREAS, the 2023 Annual Sewer Rehabilitation Project C9617 (“Project”) will replace approximately 8,100 linear feet of sewer mains ranging in diameter between 6 and 10 inches, rehabilitate approximately 1,200 linear feet of sewer mains, replace 216 lower laterals, and replace 50 manholes at various locations throughout the city; and WHEREAS, the City Engineer signed the final bid set construction documents on April 14, 2023; and
WHEREAS, the City Council approved the construction documents at its May 8, 2023, meeting; and
WHEREAS, the Project was advertised publicly, and sealed bids were opened by the City Clerk on May 30, 2023, and the apparent lowest bid was submitted by C2R Engineering, Inc. in the amount of $4,942,477; and
WHEREAS, C2R Engineering, Inc. formally withdrew their bid proposal claiming that a clerical error was made in computing bid items; and
WHEREAS, after consultation with the City Attorney, C2R Engineering, Inc. was granted approval to withdraw their bid in accordance with Section 5102 and 5103 of the Government Code, as a mistake was made and written notice was given within five working days; and

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WHEREAS, therefore, the lowest responsible and responsive bidder is JMB Construction, Inc. with a total bid amount of $5,965,671; and
WHEREAS, there is sufficient budget to award the Project for the total bid amount for $5,965,671 and contingency up to the Project budget.

NOW, THEREFORE BE IT RESOLVED, that the San Carlos City Council hereby awards the 2023 Sewer Rehabilitation Project C9617; authorizes the City Manager to execute a Public Projects Agreement with JMB Construction, Inc. of South San Francisco, CA in the amount of $5,965,671; and authorizes the expenditure of contingency up to the Project budget. * * * * *
I, City Clerk Crystal Mui, hereby certify that the foregoing Resolution was duly and regularly passed and adopted by the City Council of the City of San Carlos at a scheduled meeting thereof held on the 28th day of August 2023, by the following vote:

AYES, COUNCILMEMBERS: ______________________________________________ NOES, COUNCILMEMBERS: ______________________________________________ ABSENT, COUNCILMEMBERS: ______________________________________________ ______________________________
CITY CLERK of the City of San Carlos
APPROVED:
___________________________
MAYOR of the City of San Carlos

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CITY COUNCIL

STAFF REPORT
MEETING DATE: August 28, 2023
ITEM TITLE: Adopt Ordinance 1598 Approving the 642 Quarry Road Project Planned Development Plan and Related Zoning Map Amendment to Rezone the Project Site from Light Industrial (IL) to Planned Development (PD) at 642 Quarry Road (APN 046-041-380).

RECOMMENDATION:

The Planning and Transportation Commission and staff recommend that the City Council adopt Ordinance 1598 approving the 642 Quarry Road Project Planned Development Plan and related Zoning Map Amendment to rezone the project site from Light Industrial (IL) to Planned Development (PD) at 642 Quarry Road (APN 046-041-380).

FISCAL IMPLICATIONS:

The applicant has paid the appropriate application fees and provided deposit funds to pay for expenses related to the environmental review and other reports and analyses associated with the project. The project will be required to pay building permit fees and City impact fees. City impact fees total over $11.9 million and include: commercial linkage (affordable housing), sewer, and traffic fees. The proposed development agreement includes community benefits that are valued at $4.3 million.

The proposed development will also benefit the City with increased property tax, increased sales tax revenue, and new job creation. The estimated increased revenue to the City is $10.6 million over the next 20 years.

BACKGROUND:

The Planning and Transportation Commission, at its June 19, 2023 meeting, conducted a public hearing and adopted Resolution PTC2023-14, recommending that the City Council adopt the Mitigated Negative Declaration and associated Mitigation Monitoring and Reporting Program and adopted Resolution PTC2023-15, which recommended that the City Council adopt the Ordinance to zone the site Planned Development (PD) Zoning, approve the associated Planned Development Plan, and adopt the Ordinance approving the development agreement. The Planning and Transportation Commission also approved the Design Review, Transportation Demand Management Plan, Signage Program, and Grading and Dirt Haul Certificate subject to the approval of the planned development zoning.

At its August 14, 2023 meeting, the City Council: conducted the public hearing and adopted Resolution 2023-099 approving the Mitigated Negative Declaration and Mitigation Monitoring and Reporting Plan; introduced Ordinance 1598 to rezone the site from Light Industrial (IL) to Planned Development Zoning and approve the Planned Development Plan; and, introduced Ordinance

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1599 approving the development agreement as corrected at the meeting.

ANALYSIS:

The Planned Development Ordinance authorizes two new research and development buildings with a parking structure at 642 Quarry Road with the following development standards:

1. Height: Exceed the maximum height of 75’ allowed the IL District. The zoning code also allows for 10’ projections above height limits, roof equipment with setback, roof coverage requirements, and a 16’ projection for elevator and stair towers. The applicant proposed a maximum height 99’ to the roof line and 117’ for the mechanical screen.

2. Floor Area: Exceed the maximum site floor area ratio of 1.0. The applicant proposes total building square footage, including the above grade parking, at 641,494 square feet on a lot of 205,036 square feet, resulting in an FAR of 3.13. The commercial usable building square footage is 407,672, resulting in a 1.98 FAR.

3. Child Care Use. Day care centers are not a permitted use in the industrial districts. The applicant proposes a 5,000 square foot child care facility, open to the public, on the ground floor of the south building. The PD Zoning would permit child care use by right as ancillary to the primary use.

4. Biohazard Safety Levels. Tenants of the proposed buildings are not currently known. The applicant requests that future tenants requiring the use of biohazard safety level (BSL) BSL-1 and BSL-2 activities be allowed by right, and that use of BSL-3 activities require a Planned Development Amendment by the City Council. The City Council recently introduced an ordinance to prohibit BSL-3 and 4 activities.

5. Sign Area: A total of 893 square feet of tenant signage is requested on the property. The sign program includes two monument signs and a maximum of seven tenant wall signs.

Environmental Review.

The City Council adopted Resolution 2023-099 approving the Mitigated Negative Declaration and Mitigation Monitoring Plan prepared in accordance with CEQA guidelines. With implementation of the mitigation measures, the project will not result in a significant impact to the environment.

ALTERNATIVES:

The alternatives available to the City Council include:

1. Adopt Ordinance 1598 approving the 642 Quarry Road project Planned Development Plan and related Zoning Map Amendment to rezone the project site from Light Industrial (IL) to Planned Development (PD) at 642 Quarry Road (APN 046-041-380); or

2. Do not adopt Ordinance 1598; or

3. Provide staff with alternative direction.

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Respectfully submitted by:

Al Savay, Community Development Director
Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Ordinance 1598 with Exhibit A – Zoning Map
Exhibit B to Ordinance – Planned Development Plans
Exhibit C to Ordinance – Required Findings

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ORDINANCE NO. 1598

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN CARLOS APPROVING THE 642 QUARRY ROAD PROJECT PLANNED DEVELOPMENT PLAN AND

RELATED ZONING MAP AMENDMENT TO REZONE THE PROJECT SITE FROM LIGHT INDUSTRIAL (IL) TO PLANNED DEVELOPMENT (PD) AT 642 QUARRY ROAD (APN 046-041-380).

WHEREAS, pursuant to Title 18 of the City of San Carlos Municipal Code (the “Zoning Code”), RMW Architecture Interiors, Inc on behalf of 642 Quarry Owners, LLC filed an application for approval of a Planned Development Plan and accompanying Zoning Map Amendment for the development of the 642 Quarry Road Project (APN 046-041-038); and WHEREAS, by Resolution PTC2023-14, adopted on June 19, 2023, the Planning and Transportation Commission recommended that the City Council adopt the Mitigated Negative Declaration and the Mitigation Monitoring and Reporting Plan pursuant to the California Environmental Quality Act (CEQA) for the implementation of the mitigation measures outlined in the Mitigated Negative Declaration; and
WHEREAS, at a duly noticed public hearing held on June 19, 2023, the Planning and Transportation Commission approved the Design Review Permit, Transportation Demand Management Plan, Signage Program, and Grading and Dirt Haul Certificate; and WHEREAS, by Resolution PTC2023-15, adopted on June 19, 2023, the Planning and Transportation Commission recommended that the City Council approve the Zoning Map Amendment as set forth in Exhibit A to this Resolution and adopt the Planned Development (PD) Plan as set forth in Exhibit B to this Resolution; and
WHEREAS, the City Council of the City of San Carlos held a duly noticed public hearing on August 14, 2023 to consider the Mitigated Negative Declaration, Mitigation Monitoring and Reporting Plan, the proposed Planned Development Plan, and the proposed Zoning Map Amendment; and
WHEREAS, by Resolution 2023-99, adopted on August 14, 2023, the City Council adopted the Mitigated Negative Declaration and Mitigation Monitoring and Reporting Plan pursuant to the California Environmental Quality Act (CEQA) for the implementation of the mitigation measures outlined in the Mitigated Negative Declaration.

NOW, THEREFORE THE CITY COUNCIL OF THE CITY OF SAN CARLOS DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1: The Zoning Map Amendment of San Carlos is hereby amended from Light Industrial (IL) District to Planned Development (PD) District (Exhibit A), by the adoption of a Planned Development Plan for the construction of two Research and Development buildings, one at 215,022 square feet with six floors and one at 192,650 square feet with six floors, and one 933 stall parking garage with nine floors and one subsurface level. The building height is 99’ to the roofline and 117’ to the top of the mechanical screen. The project includes an ancillary on-site childcare facility and landscape and creek improvements on the 4.7-acre site located at 642

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Quarry Road (APN 046-041-380) as shown on the plans prepared by DES Architects Engineers dated March 24, 2023 (Exhibit B).

SECTION 2: The City Council finds that the Planned Development Zone change and Plan of Development is consistent with the General Plan as described in Exhibit C.

SECTION 3: That the City Council hereby adopts the Plan of Development filed as “642 Quarry Road Project” attached hereto as Exhibit B. This plan indicates the location of the proposed building, the size of the building, the parking to be provided and areas to be landscaped.

Standards of Development are as follows:

1. The land use regulations for the PD zone shall be those uses allowed in the Light Industrial (IL) Zoning District. Research and Development Use shall be considered a Permitted Use.

2. A Day Care Center shall be considered a permitted use ancillary to the primary use of the building. The Development Agreement by and between 642 Quarry Owner LLC, a Delaware limited liability company and City (“Development Agreement”) requires Developer to enter into and record a Childcare Covenant restricting the use of the 5,500 square feet space in the south building as shown on the Plan of Development (“Day Care Center Space”) and allows for amendments to the Childcare Covenant upon certain terms and conditions. If the Childcare Covenant is amended to allow for additional uses pursuant to the Development Agreement, the Day Care Center Space may be used for the following uses as defined in Chapter 18.40 of the San Carlos Municipal Code as of the Effective Date of the Development Agreement:

Instructional Services, Eating and Drinking Establishments (excluding night clubs), Animal Care, Sales and Services (excluding veterinary services), Personal Services (excluding Tattoo or Body Modification Parlor), Retail Sales (excluding Retail Establishments Selling Ammunition or Firearms), Government Offices, and Cultural Institutions.

3. During the term of the Development Agreement, Life Science/Research and Development tenants shall comply with the Bio Safety regulations specified in the Development Agreement. Thereafter the tenants must comply with the Bio Safety regulations in effect at the time laboratory tenant improvements plans are submitted to the Building Department.

4. All tenants may only conduct activities classified as Biosafety Level 1 or 2. Activities classified as Biosafety Level 3 or Biosafety Level 4 will require City Council amendment of this Planned Development Ordinance. Such uses will be subject to the City (including but not limited to any City agency, body, department, officer or employee) or its electorate (through the power of initiative or otherwise) adopting any ordinance, resolution, order, rule, official policy, standards, specifications, guidelines and/or other regulations (collectively, ‘New City Laws’) permitting activities classified as Biosafety Level 3 or Biosafety Level 4 and the tenant obtaining all permits, approvals or other authorizations required by the New City Laws.

5. The total sign area shall be 895 square feet maximum in tenant signage for both buildings subject to consistency with the Signage Program as approved by the Planning and Transportation Commission.

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6. The building shall be situated on the property in accordance with the Plan of Development (attached hereto as Exhibit B) prepared by DES Architects Engineers, dated March 23, 2023. This plan indicates the location of the building, the size of the building, the parking to be provided and areas to be landscaped.

7. Floor area and height of the building shall be provided in substantial compliance with the Plan of Development. The project shall comply with the current zoning standards in effect except as follows:
i. The maximum building height is limited to 99’ to the roof line and 117’ to the top of the roof equipment/mechanical screen.
ii. The total allowed floor area for the site including the above grade parking is 641,949 square feet resulting in a FAR of 3.13.

8. The project shall be constructed in accordance with all requirements of the Mitigated Negative Declaration, Mitigation Monitoring & Reporting Plan, Design Review Certificate, Transportation Demand Management Plan and Grading and Dirt Haul Certificate.

SECTION 4: The City Council hereby declares that it would have passed this Ordinance sentence by sentence, paragraph by paragraph, and section by section, and does hereby declare that any provisions of this Ordinance are severable and if for any reason any sentence, paragraph or section of this Ordinance shall be held invalid, such decision shall not affect the validity of the remaining parts of this Ordinance.

SECTION 5: This Ordinance shall be published and posted according to law and shall take effect and be in force from and after 30 days after its passage and adoption. * * * *
I, City Clerk Crystal Mui, hereby certify that the foregoing Ordinance was introduced on the 14th day of August, 2023 and passed and adopted as an Ordinance of the City of San Carlos at a regular meeting thereof held on the 28th day of August, 2023 by the following vote:

AYES, COUNCILMEMBERS: ____________________________________________________ NOES, COUNCILMEMBERS: ___________________________________________________ ABSENT, COUNCILMEMBERS: _________________________________________________ ________________________________
CITY CLERK of the City of San Carlos
APPROVED:
____________________________
MAYOR of the City of San Carlos
Exhibits:

A. Zoning Map
B. Planned Development Plan
C. Findings

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EXHIBIT A

SAN CARLOS ZONING MAP
642 Quarry Road (APN 046-051-380) zone to Planned Development (PD) PD

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EXHIBIT C

REQUIRED FINDINGS FOR CITY COUNCIL CONSIDERATION
642 QUARRY ROAD PROJECT
Planned Development Zoning and Planned Development Plan Findings:

In considering whether to approve the Planned Development Zoning designation and Planned Development Plan, the City Council must consider the following findings.

A. The proposed development is consistent with the General Plan and any applicable specific plan, including the density and intensity limitations that apply.

Basis for Finding: The proposed life science/research and development is consistent with the General Plan as described in the City Council Staff Report, General Plan policies listed below, and the General Plan classification of Planned Industrial does not have an intensity limitation. The project complies with the LI Zoning District development standards except for height and floor area, and also requires the PD zoning accommodate the ancillary childcare use. The project site is not subject to an adopted Specific Plan. The project establishes an open space network, improves the creek, promotes environmental stewardship, prioritizes activity hubs, provides much needed childcare for the community and reduce congestion through coordinated transportation strategies.

General Plan policies: The site at 642 Quarry Road has a General Plan land use designation of Planned Industrial. The proposed life science/research and development project is consistent with the following General Plan Polices:
• LU-1.12: Promote the development of publicly accessible urban trails throughout the city to provide access to the natural environment and facilitate nonmotorized transportation options.
• LU-3.10: Encourage the creation of safe, walkable environments that include elements such as wide, smooth sidewalks, good lighting, safe crosswalks, clear signage, curb bulb-outs, curb cuts, street furniture and trees and traffic-calming measures which allow people of all ages and abilities to exercise and safely access public transportation, community centers and schools and goods and services.
• LU-5.2: Implement the City’s adopted Economic Development Plan, which is updated annually as it relates to supporting the local economy. • LU-5.3: Support and encourage businesses and land uses that contribute to the City’s financial viability.
• LU-5.7: Support high-wage industries that provide quality jobs for workers at all education levels.
• LU-5.11: Continue to require developers to pay their fair share of the capital cost of public facilities through appropriate development impact and utility connection fees. • LU-5.13: Consider use of multiple level parking facilities to provide increased space where available land is limited.
• LU-5.15: Promote economic revitalization on underutilized parcels designated for higher intensity land uses.
• LU-6.1: Support commercial/industrial activity and businesses on the East Side.

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• LU-6.2: Prohibit the conversion of property designated for industrial/commercial land on the East Side to non-industrial/commercial uses. Ensure proposed new uses in the East Side do not introduce land use conflicts that would adversely impact industrial/ commercial activities.
• LU-6.3: Support the expansion of key growth industries while maintaining the overall diversity of land uses within East Side employment areas. • LU-6.6: Encourage new development on the East Side to feature high quality architecture that reinforces the character of the area. • LU-8.1: Require all development to feature high quality design that enhances the visual character of San Carlos.
• LU-8.3: Encourage design features and amenities in new development and redevelopment, including, but not limited to:
o Landscaping on each lot
o Visual buffers.
o Facilitation of pedestrian activity.
o Distinctiveness and variety in architectural design
• LU-8.5: Optimize architectural quality by encouraging the use of quality materials, particularly as accents and authentic detailing, such as balconies and window trims. • LU-8.8: Encourage design of convenient pedestrian walkways with shade and minimal tripping hazards, preferably with landscape buffers.
• LU-8.9: Encourage the design of attractive outdoor pedestrian spaces that encourage impromptu public gathering places with features such as plazas, interior walkways and paseos, ornamental gates, trellises, lighting, trees and landscaping, seating and fountains.
• LU-8.10: On all sides of buildings, require the incorporation of quality architectural design elements for all building façades and stepping back upper floors in order to reduce bulk and mass and to break up monotonous wall lines. • LU-8.18: Encourage “green building” practices in new development and redevelopment, such as those that make a building more energy efficient and reduces its effect on human health and the environment through better siting, design, construction, maintenance and operation.
• CSH-3.3 Support the incorporation of Transportation Demand Measures in new development to reduce traffic impacts.
• CSH-3.11: New developments and businesses shall be required to provide adequate loading, unloading and delivery areas, and/or shall be required to conduct such activities during nonbusiness/ peak hours.
• CHS-7.1: Trails and paths intended for general circulation shall provide reasonably direct and convenient routes of travel for potential users.
• CHS-7.7: Public trails should be located and designed so that they serve the needs of the public while minimizing private property impacts.
• EM-1.1: Ensure that potential impacts to biological resources and sensitive habitat are carefully evaluated when considering development project applications. • EM-1.5: Promote the preservation of native species, habitat and vegetation types and overall natural diversity.
• EM-2.1: Preserve and enhance riparian areas.
• EM-2.5: Promote the establishment of native vegetation and the removal of nonnative invasive plants in riparian areas.
• EM-4.2: Support an open space system that is diverse in uses and opportunities and includes natural function/wildlife habitat as well as passive and appropriate active recreation.

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• CSS-2.2: Minimize impervious surfaces to reduce stormwater runoff and increase flood protection.

B. The subject site is physically suitable for the type and intensity of the land use being proposed;
Basis for Finding: The proposed project is consistent with the General Plan land use classification, which seeks to allow research and development, bio-tech, light industrial, flex, warehousing and related uses. The research and development use would be compatible with other research and development, as well as industrial and commercial uses in the surrounding area. The 4.7-acre site is large enough to accommodate the intensity of development while providing landscaping and open space, as well as adequate on-site circulation and emergency access.

C. Adequate transportation facilities and public services exist or will be provided in accord with the conditions of PD plan approval, to serve the proposed development; and the approval of the proposed development will not result in a reduction of traffic levels of service or public services so as to be a detriment to public health, safety, or welfare;
Basis for Finding: The City has undertaken an environmental review of the project as required by the California Environmental Quality Act (CEQA), including a complete Initial Study/Mitigated Negative Declaration and a separate Transportation Impact Analysis. The analysis concluded that there will not be a significant reduction in traffic levels of service associated with the project. There are no anticipated public service concerns associated with the project that would be detrimental to the public health, safety, or welfare.

D. The proposed development will not have a substantial adverse effect on surrounding land uses and will be compatible with the existing and planned land use character of the surrounding area;
Basis for Finding: The project includes demolition of the existing buildings and construction of two research and development office/lab buildings and one parking structure. As described above, the research and development use would be compatible with other research and development, as well as industrial and commercial uses in the surrounding area.

The project has been designed to be in scale with other newer developments in the east side industrial area including PAMF, 825/835 Industrial Road, 405 Industrial and 841 Old County Road.

While taller than existing buildings in the vicinity, the proposed buildings would be setback from surrounding buildings. The north building would be setback 18 feet from the west property line. It is located across Old County Road from the nearest buildings to the west, approximately 70 feet.

The south building would be setback 10 feet from the south property line. It is located across Quarry Road from the nearest buildings to the south, approximately 60 feet. The project has a rear setback of approximately 43 feet. The parking structure would be setback 10 feet from the east property line; however, this building is towards the rear of the site, and extends only 170 feet along this 260-foot property line (65%).

E. The development generally complies with applicable adopted design guidelines; and Basis for Finding: The City does not have adopted design guidelines. The project has undergone review by City staff to ensure quality architecture.

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F. The proposed development is demonstratively superior to the development that could occur under the standards applicable to the underlying base district, and will achieve superior community design, environmental preservation and/or substantial public benefit. In making this determination, the following factors shall be considered:

1. Appropriateness of the use(s) at the proposed location.

2. The mix of uses, housing types, and housing price levels.

3. Provision of units affordable to persons and families of low and moderate income or to lower income households.

4. Provision of infrastructure improvements.

5. Provision of open space.

6. Compatibility of uses within the development area.

7. Creativity in design and use of land.

8. Quality of design, and adequacy of light and air to the interior spaces of the buildings.

9. Overall contribution to the enhancement of neighborhood character and the environment of San Carlos in the long term.

Basis for Finding: The proposed development complies with the uses outlined in its General Plan and Zoning designations. The project complies with the IL Zoning District development standards except for height and floor area, and also requires the PD zoning to accommodate the ancillary childcare use. Redevelopment of the project site would include storm drain and sewer infrastructure improvements. The project includes approximately 39,550 square feet of landscaping that includes walkways, seating areas, a pickleball court, a bocce court, and multipurpose stage. The site design and building architecture are high quality. The project includes contribution of community benefit that may be utilized to benefit the community.

Development Agreement Finding:

In considering whether to approve the Development agreement, the City Council must find the Development Agreement consistent with the General Plan.

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• CHS-7.7: Public trails should be located and designed so that they serve the needs of the public while minimizing private property impacts.
• EM-2.1: Preserve and enhance riparian areas.
• EM-2.5: Promote the establishment of native vegetation and the removal of nonnative invasive plants in riparian areas.
• PR-2.5: Promote the development of publicly-accessible urban trails throughout the city to provide access to the natural environment and facilitate non-motorized transportation options.
• PR 2-7: Encourage new development to provide trails and trail connection easements or dedications where feasible and appropriate.

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CITY COUNCIL

STAFF REPORT
MEETING DATE: August 28, 2023
ITEM TITLE: Adopt Ordinance 1599 Approving a Development Agreement with 642 Quarry Owner, LLC for the 642 Quarry Road Project.

RECOMMENDATION:

The Planning and Transportation Commission and staff recommend that the City Council adopt Ordinance 1599 approving a development agreement with 642 Quarry Owner, LLC for the 642 Quarry Road Project, with the corrections identified at the August 14, 2023 City Council meeting.

FISCAL IMPLICATIONS:

The applicant has paid the appropriate application fees and provided deposit funds to pay for expenses related to the environmental review and other reports and analyses associated with the project. The project will be required to pay building permit fees and City impact fees. City impact fees total over $11.9 million and includes: commercial linkage (affordable housing), sewer, and traffic fees. The proposed development agreement includes community benefits, which are outlined in the analysis section below and are valued at $4.3 million.

BACKGROUND:

The Planning and Transportation Commission, at its June 19, 2023 meeting, conducted a public hearing and adopted Resolution PTC2023-14, recommending that the City Council adopt the Mitigated Negative Declaration and associated Mitigation Monitoring and Reporting Program, and adopted Resolution PTC2023-15, recommending that the City Council adopt the Ordinance to zone the site Planned Development (PD) Zoning, approve the associated Planned Development Plan, and adopt the Ordinance approving the development agreement. The Planning and Transportation Commission also approved the Design Review, Transportation Demand Management Plan, Signage Program, and Grading and Dirt Haul Certificate subject to the approval of the Planned Development zoning.

The City Council, at its August 14, 2023 meeting: conducted the public hearing and adopted Resolution 2023-99 approving the Mitigated Negative Declaration and Mitigation Monitoring and Reporting Plan; introduced Ordinance 1598 to rezone the site from Light Industrial (IL) to Planned Development Zoning and approved the Planned Development Plan; and, introduced Ordinance 1599 approving the development agreement as corrected at the meeting. The corrections to the Development Ageement are shown in redline attached hereto as Attachment 2. The corrections have been incorporated into the clean version of the Development Agreement attached to

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Ordinance 1593 as Exhibit B.

ANALYSIS:

The City Council, at its August 14, 2023 meeting, introduced the Ordinance approving the Development Agreement with a correction to the developer contribution and credit amounts to reflect the amounts listed in the table below:

Downtown Improvement Fund $1,100,000
Community Improvement & Recreation Fund $1,400,000
Green Energy Efficiency & Sustainability Fund $200,000
Belmont Creek Restoration& Creek Path (credit) $500,000 On-Site Child Care (credit) $1,100,000
Sub Total $4,300,000
Per the development agreement, the developer will complete improvements to Belmont Creek, as well as a new, publicly accessible creek path. The developer has agreed to memorialize the creek path with a public access easement. In addition, the developer has agreed to a public access covenant for the central open space and corner plaza. The developer also proposes to provide an on-site child care facility that could serve up to 100 children. The developer has agreed that if there is an open space and less than half of the children attending the child care at that time have at least one parent or legal guardian who lives or works within the City limits, a child who has at least one parent or legal guardian who lives or works within the City limits must be offered the space before a child whose parents do not live or work within the City limits.

The development agreement is for a 10-year term and includes vesting of City laws and impact fee provisions.

Environmental Review.

ALTERNATIVES:

The alternatives available to the City Council include:

1. Adopt Ordinance 1599 approving a development agreement with 642 Quarry Owner, LLC for the 642 Quarry Road Project with the corrections identified at the August 14, 2023 City Council meeting; or

2. Do not adopt Ordinance 1599; or

3. Provide staff with alternative direction.

Respectfully submitted by:

Al Savay, Community Development Director

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Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Ordinance 1599 with Exhibit A - Findings
Exhibit B to Ordinance - Development Agreement

2. Excerpts of Redlined Development Agreement (pages 16-21)

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ORDINANCE NO. 1599

AN ORDINANCE OF THE CITY OF SAN CARLOS
APPROVING A DEVELOPMENT AGREEMENT WITH 642 QUARRY OWNER, LLC FOR THE 642 QUARRY ROAD PROJECT.

WHEREAS, pursuant to Title 18 of the City of San Carlos Municipal Code (“SCMC”) and California Government Code Sections 65864 to 65869.5, 642 Quarry Owner, LLC, a Delaware limited liability company, filed an application for approval of a Development Agreement in conjunction with its application for a Planned Development Plan and accompanying Zoning Map Amendment, Design Review, Grading and Dirt Haul Certificate, and Transportation Demand Management Plan to facilitate the development of a research and development campus that will include two six-story office/laboratory buildings with operations through Biosafety Level 2, which total approximately 410,072 square feet and one ten-level parking structure, including one below grade level (the “Project”); and
WHEREAS, by Resolution PTC2023-14, adopted on June 19, 2023, the Planning Commission recommended that the City Council adopt the Mitigated Negative Declaration for the Project (“MND”) and adopt the Mitigation Monitoring and Reporting Plan for the Project (“MMRP”) pursuant to the California Environmental Quality Act (CEQA) for the implementation of the mitigation measures outlined in the MND; and
WHEREAS, by Resolution PTC2023-15, adopted on June 19, 2023, the Planning Commission recommended that the City Council adopt an ordinance approving the Zoning Map Amendment to change the site from Light Industrial (IL) Zoning District to Planned Development (PD) Zoning District and adopt the Planned Development Plan; and WHEREAS, the Planning Commission discussed the specific terms of the Development Agreement and recommended that the City Council approve the Development Agreement by Resolution PTC-2023-15, adopted on June 19, 2023; and
WHEREAS, at a duly noticed public hearing held on June 19, 2023, the Planning Commission approved the Design Review, Grading and Dirt Haul Certificate, the Signage Program, and the Transportation Demand Management Plan, subject to approval of the Planned Development Plan and effective on the effective date of the Planned Development Plan; and WHEREAS, by Resolution 2023-099, adopted August 14, 2023, the City Council made findings and adopted the MND and the MMRP pursuant to the California Environmental Quality Act (CEQA) for the implementation of the mitigation measures outlined in the MND; and WHEREAS, the City Council of the City of San Carlos held a duly noticed public hearing on August 14, 2023 and introduced an ordinance amending the Zoning Map to change the site from Light Industrial Zoning District (IL) to Planned Development Zoning District (PD) and adopted the Planned Development Plan; and
WHEREAS, the City Council of the City of San Carlos held a duly noticed public hearing regarding the adoption of the Development Agreement on August 14, 2023.

NOW THEREFORE THE CITY OF SAN CARLOS DOES HEREBY ORDAIN AS FOLLOWS:

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SECTION 1: The City Council finds that the Project is a development for which a development agreement is appropriate in order to: 1) eliminate uncertainty in the City’s land use planning for the project and provide for the orderly development of the project; 2) assure installation of necessary improvements on the property; 3) provide for the public infrastructure and services appropriate to the development of the project; 4) secure City improvements that benefit the community; 5) provide for the developer to deliver community benefits in excess of those that the City could require as conditions of approval; and 6) otherwise achieve the goals and purposes of Chapter 18.37 of the SCMC.

SECTION 2: The City Council finds that the Development Agreement is consistent with the General Plan as described in Exhibit A.

SECTION 3: The City Council hereby approves the Development Agreement included as Exhibit B and the City Manager is hereby authorized to execute the Development Agreement on behalf of the City. The City Manager is further authorized, with concurrence of the City Attorney, to approve minor, non-monetary amendments to the Development Agreement that are necessary for the development of the Project as contemplated in the Development Agreement.

SECTION 4: Severability. The City Council hereby declares that it would have passed this Ordinance sentence by sentence, paragraph by paragraph, and section by section, and does hereby declare that any provisions of this Ordinance are severable and if for any reason any sentence, paragraph or section of this Ordinance shall be held invalid, such decision shall not affect the validity of the remaining parts of this Ordinance.

SECTION 5: Publication and Effective Date. This Ordinance shall be published and posted according to law and shall take effect and be in force from and after 30 days after its passage and adoption.
****
I, City Clerk Crystal Mui, hereby certify that the foregoing Ordinance was introduced on the 14th day of August, 2023 and passed and adopted as an Ordinance of the City of San Carlos at a regular meeting thereof held on the 28th day of August, 2023 by the following vote:

AYES, COUNCILMEMBERS: __________________________________________________ NOES, COUNCILMEMBERS: _________________________________________________ ABSENT, COUNCILMEMBERS: _______________________________________________ ______________________________
CITY CLERK of the City of San Carlos
APPROVED:

MAYOR of the City of San Carlos
Exhibits:

A. Consistency with the General Plan
B. Development Agreement

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Exhibit A
Development Agreement Finding:

In considering whether to approve the Development Agreement, the City Council must find the Development Agreement consistent with the General Plan.

Basis for Finding: The Development Agreement and provision of community benefits including the creek improvements, creek trail, publicly accessible open space and financial contributions are consistent with the following General Plan policies:
• LU-1.12: Promote the development of publicly accessible urban trails throughout the city to provide access to the natural environment and facilitate nonmotorized transportation options.
• LU-3.10: Encourage the creation of safe, walkable environments that include elements such as wide, smooth sidewalks, good lighting, safe crosswalks, clear signage, curb bulb-outs, curb cuts, street furniture and trees and traffic-calming measures which allow people of all ages and abilities to exercise and safely access public transportation, community centers and schools and goods and services.
• LU-8.9: Encourage the design of attractive outdoor pedestrian spaces that encourage impromptu public gathering places with features such as plazas, interior walkways and paseos, ornamental gates, trellises, lighting, trees and landscaping, seating and fountains.
• CHS-7.1: Trails and paths intended for general circulation shall provide reasonably direct and convenient routes of travel for potential users.
• CHS-7.7: Public trails should be located and designed so that they serve the needs of the public while minimizing private property impacts.
• EM-2.1: Preserve and enhance riparian areas.
• EM-2.5: Promote the establishment of native vegetation and the removal of nonnative invasive plants in riparian areas.
• PR-2.5: Promote the development of publicly-accessible urban trails throughout the city to provide access to the natural environment and facilitate non-motorized transportation options.
• PR 2-7: Encourage new development to provide trails and trail connection easements or dedications where feasible and appropriate.

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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

City of San Carlos
600 Elm Street
San Carlos, CA 94070
Attention: City Clerk
Exempt from Recording Fee per
Government Code Section 27383
Space

DEVELOPMENT AGREEMENT
between
, a Delaware limited liability company
and
the CITY OF SAN CARLOS
Dated
_________________, 2023

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TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS...........................................................................................................3 Definitions................................................................................................................3 ARTICLE 2. GENERAL PROVISIONS ........................................................................................7 Ownership of Property.............................................................................................7 ARTICLE 3. EFFECTIVE DATE; TERM; REPRESENTATIONS ..............................................7 Effective Date ..........................................................................................................7 Term.........................................................................................................................7 City Representations and Warranties.......................................................................7 Developer Representations and Warranties .............................................................8 ARTICLE 4. DEVELOPMENT OF PROPERTY...........................................................................8 Vested Rights...........................................................................................................8 Development and Design Standards ........................................................................9 Reservations of Authority........................................................................................9 Regulation by Other Public Agencies....................................................................10 Life of Project Approvals.......................................................................................11 Initiatives................................................................................................................11 Timing of Development.........................................................................................11 Expansion of Development Rights ........................................................................12 No Reservation of Sanitary Sewer or Potable Water Capacity..............................12 Public Improvement Agreement............................................................................12 ARTICLE 5. OTHER RIGHTS AND OBLIGATIONS OF THE PARTIES ...............................12 Fees ........................................................................................................................12 Exactions................................................................................................................13 Taxes and Assessments..........................................................................................13 Compliance with Law............................................................................................14 Prevailing Wage.....................................................................................................14 ARTICLE 6. PUBLIC BENEFITS................................................................................................15 General Public Benefits .........................................................................................15 Public Benefits for Greater Height and Density ....................................................16 ARTICLE 7. ANNUAL REVIEW ................................................................................................20 Annual Review.......................................................................................................20

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Process ...................................................................................................................20 No Waiver..............................................................................................................21 ARTICLE 8. MORTGAGEE PROTECTION...............................................................................21 Mortgagee Protection.............................................................................................21 Mortgagee Not Obligated ......................................................................................22 Notice of Default to Mortgagee .............................................................................22 Right to Cure..........................................................................................................22 No Supersedure......................................................................................................22 Technical Amendments to Article 8 ......................................................................22 ARTICLE 9. AMENDMENT........................................................................................................23 Amendment of Agreement By Mutual Consent ....................................................23 Insubstantial Amendments to Agreement..............................................................23 Requirement for Writing........................................................................................23 Amendments to Development Agreement Statute.................................................23 Operating Memoranda ...........................................................................................24 ARTICLE 10. ASSIGNMENT......................................................................................................24 Assignment ............................................................................................................24 Notice of Assignment ............................................................................................24 Release of Developer .............................................................................................25 Successive Assignment..........................................................................................25 Other Permitted Transfers......................................................................................25 ARTICLE 11. COOPERATION AND IMPLEMENTATION .....................................................25 Subsequent Project Approvals ...............................................................................25 Scope of Review of Subsequent Project Approvals ..............................................25 Processing ..............................................................................................................26 Other Agency Approvals .......................................................................................26 Mitigation Measures ..............................................................................................27 Cooperation in the Event of Legal Challenge........................................................27 Subsequent CEQA Review....................................................................................28 ARTICLE 12. DEFAULT; REMEDIES; TERMINATION .........................................................29 Breach and Default ................................................................................................29 Termination............................................................................................................29 Legal Actions.........................................................................................................29

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Rights and Remedies Are Cumulative...................................................................30 No Damages...........................................................................................................30 Resolution of Disputes...........................................................................................30 Survival..................................................................................................................30 Effects of Litigation ...............................................................................................30 California Claims Act ............................................................................................30 ARTICLE 13. MISCELLANEOUS ..............................................................................................31 Incorporation of Recitals; Introductory Paragraph; Exhibits.................................31 Permitted Delay .....................................................................................................31 Indemnity ...............................................................................................................31 Severability ............................................................................................................31 Construction...........................................................................................................32 Covenants Running with the Land.........................................................................32 Notices ...................................................................................................................32 Counterparts and Exhibits; Entire Agreement .......................................................33 Recordation of Agreement.....................................................................................33 No Joint Venture or Partnership ............................................................................33 Waivers ........................................................................................................34 Headings ........................................................................................................34 California Law; Venue...........................................................................................34 City Approvals and Actions...................................................................................34 Estoppel Certificates ..............................................................................................34 No Third Party Beneficiaries .................................................................................35 Signatures ........................................................................................................35 Time of the Essence...............................................................................................35 Limitation on Liability...........................................................................................35 EXHIBIT A LEGAL DESCRIPTION OF THE PROPERTY ................................................. A-1 EXHIBIT B MAP OF THE PROPERTY..................................................................................B-1 EXHIBIT C AA&R ...................................................................................................................C-1 EXHIBIT D WATER SUPPLY ASSESSMENT FOR THE PROJECT.................................. D-1 EXHIBIT E PUBLIC IMPROVEMENT AGREEMENT.........................................................E-1

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DEVELOPMENT AGREEMENT
Agreement
of _____________, 2023 Agreement Date
Developer
City
referred to individually he Party Parties

R E C I T A L S
This Agreement is entered into on the basis of the following facts, understandings and intentions of the Parties. The following recitals are a substantive part of this Agreement; capitalized terms used herein and not otherwise defined are defined in Article 1 of this Agreement.

A. In order to strengthen the public planning process, encourage private participation in comprehensive planning and reduce the economic costs and risks of development, the Legislature of the State of California enacted section 65864 et seq. of the Government Code Development Agreement Statute
equitable interest in real property to enter into a binding, long-term development agreement, establishing certain development rights in the property.

B. In accordance with the Development Agreement Statute, the City Council has Code Development Agreement Ordinance
agreements and sets forth the required contents and form of those agreements. The provisions of dinance are
Development Agreement Law
C. Developer is the fee owner of that certain real property located at 642 Quarry Road, designated as APN 046-041-380, and more particularly described in Exhibit A and depicted in Exhibit B Property
currently developed with multiple warehouse/retail/manufacturing/office buildings.

D. Developer intends to develop the Property with a research and development campus that will include two six-story office/laboratory buildings with operations through Building
ten-level parking structure, which includes one below grade level Project North Building
South Building
E. This Agreement sets forth, among other things, the applicable fees, policies and zoning requirements that apply to development of the Project, and provides Developer with a and the land use designations and zoning applicable to the Property, each as in effect as of the Effective Date.

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F. The City has prepared an Initial Study/Mitigated Negative Declaration for the MND
CEQA Resources Code section 21000 et seq.). On November 17, 2022, the City circulated the MND for public review and comment for a period through December 19, 2022.

City published a response to the comments submitted on the MND on June 15, 2023.

G. Prior to or concurrently with approval of this Agreement, the City has taken or will take the following actions to review and plan for the future development and use of the Existing Approvals

1. Adoption of the MND by Resolution No. _______ adopted by the City Council on _______________;

2. MMRP
by Resolution No. ___ adopted by the City Council on ____________;

3. Approval of rezoning and Planned Development Plan by Ordinance No. ________ adopted by the City Council on _____________;

4. Approval of Transportation Demand Management Plan by the Planning Commission on June 19, 2023;

5. Approval of Design Review Certificate by the Planning Commission on June 19, 2023; and

6. Approval of Grading & Dirt Haul Certificate by the Planning Commission on June 19, 2023.

H. Under this Agreement, Developer will provide substantial public benefits in connection with the Project as more specifically described herein, including: contributions to Downtown Specific Plan Fund, the Community Improvement and Recreation Fund, community organizations, the Belmont Creek public pathway, and on-site childcare.

I. City has determined that by entering into this Agreement, City will further the purposes set forth in the Development Agreement Ordinance and City will benefit from (1) enhancing the site and the surrounding neighborhood by redeveloping legacy industrial properties into a thoughtfully designed research and development campus; (2) strengthening the number of shorter term construction jobs; (3) adding an on-site childcare facility on the north Downtown Specific Plan Fund; (5) increasing funding for area infrastructure through a substantial contribution to the Community Improvement and Recreation Fund; (6) furthering the Sustainability fund; (7) creating a public pathway along the Belmont Creek, (8) providing significant contributions to a number of local community organizations; and (9) otherwise achieving the goals and purposes for which the Development Agreement Ordinance was enacted.

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J. For the reasons recited herein, City and Developer have determined that the Project is a development for which this Agreement is appropriate. This Agreement will eliminate uncertainty regarding Project Approvals, thereby encouraging planning for, investment in, and commitment to use and development of the Property. Development of the Property in accordance with the terms of this Agreement will in turn provide substantial public benefits to the City, thereby achieving the goals and purposes for which the Development Agreement Law was enacted.

K. The terms and conditions of this Agreement have undergone review by City staff, the Planning Commission and the City Council at publicly noticed meetings, and have been found to be fair, just and reasonable, in conformance with the Development Agreement Law and the goals, policies, standards and land use designations specified in the General Plan, and consistent with the requirement under Government Code Section 65867.5, and further, the City welfare will be best served by entering into this Agreement.

L. City has approved this Agreement by Ordinance No. __________, adopted by the Enacting Ordinance
NOW, THEREFORE, in consideration of the mutual promises, covenants and provisions set forth herein, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:

A G R E E M E N T
ARTICLE 1.

DEFINITIONS
Definitions.

Agreement
Agreement Date second reading of the Enacting Ordinance, which will be filled into the blanks in the preamble to this Agreement.

Applicable City Regulations
maximum density, the intensity of use, the maximum height and size of the proposed buildings, design standards and criteria, provisions for reservation or dedication of land for public purposes, the conditions, terms, restrictions, and requirements for subsequent discretionary actions, the provisions for public improvements and financing of public improvements, and other terms and conditions of development applicable to the Property as set forth in the General Plan of the City on the Effective Date, the Municipal Code of the City on the Effective Date, and the other ordinances, policies, rules, regulations, standards and specifications of the City in effect on the Effective Date; (b) New City Laws that apply to the Property as set forth in Section 4.3.3, 4.3.4 or 4.3.6 herein; and (c) regulations that apply to the Property as set forth in Section 4.3.1 and

4.3.2 herein.

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Applicable Law means (a) all State and Federal laws and regulations applicable to the Property and the Project as enacted, adopted and amended from time to time and (b) the Applicable City Regulations.
is defined in Section 10.2.
is defined in Section 10.1.
is defined in Recital D.
is defined in Section 6.1.1.

CEQA in Recital F.

Changes in the Law 4.3.6.

Childcare Covenant 6.2.5(g).

Childcare Facility ned in Section 6.2.5.
is defined in Section 6.2.5(b).

Childcare Operator Section 6.2.5(d).

Childcare Unit 6.2.5.

City Carlos, a California municipal corporation.

City Council
is defined in Section 6.2.5(e).

City Parties City, its elected and appointed officers, officials, employees, contractors, representatives and authorized agents.
is defined in Section 6.2.5(d).

Claims demands, obligations, lawsuits, administrative proceedings, , costs
of complying with or challenging a subpoena, and costs of carrying out a settlement, judgment, decree, or order.
is defined in Section 6.2.5(e).

Conflict fined in Section 4.1.
users as a cost for connecting to water, sanitary sewer and other applicable utilities.

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is defined in Section 6.1.1.

Creek Path 6.2.4.

Default 12.1.

Developer er LLC, a Delaware limited liability company. is defined in Section 6.2.5(d).

Development Agreement Law B.

Development Agreement Ordinance B.

Development Agreement Statute A.

Effective Date ned in Section 3.1.

Enacting Ordinance L.

Exactions
including requirements for acquisition, dedication or reservation of land; and obligations to construct on-site or off-site public and private infrastructure improvements such as roadways, utilities or other improvements necessary to support the Project, whether such exactions constitute subdivision improvements, mitigation measures in connection with environmental review of the Project, or impositions made under Applicable City Regulations. For purposes of this Agreement, Exactions do not include Impact Fees.

Existing Approvals G.
is defined in Section 6.2.5(d).

General Plan ity of San Carlos in effect as of the
Effective Date.

Impact Fees
assessments, charged by City in connection with a development project for the purpose of defraying all or a portion of the cost of mitigating the impacts of a development project or development of the public facilities and services related to a development project, including any Agreement, a monetary fee or imposition that meets both the definition of an Impact Fee and the definition of an Exaction will be considered an Impact Fee.

Impact Fee Limitation Period 5.1.1.

Insubstantial Amendment 9.2.

Litigation Challenge 11.6.2.

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MMRP
Council in connection with its certification of the MND. is defined in Recital F.

Mortgage 8.1.

Mortgagee 8.1.

Municipal Code of the City of San Carlos in effect as of the Effective Date.

New City Laws
policies, standards, specifications, guidelines or other regulations, which are promulgated or adopted by the City (including but not limited to any City agency, body, department, officer or employee) or its electorate (through the power of initiative or otherwise) after the Effective Date. is defined in Recital D.

Notice 13.7.

Other Agency Other Agencies
other public agencies (collectively) having jurisdiction over the Property or the Project.

Other Agency Fees 5.1.4.

Other Agency Approvals 4.4.

Party/Parties
Agreement.

Permitted Delay 13.2.

Planning Commission
is defined in Section 6.1.1.
and are defined in Section 5.5.2.

Prevailing Wage Laws 5.5.1.

Processing Fees -wide basis to cover the cost of City
processing of development project applications, including any required supplemental or other further environmental review, plan checking (time and materials) and inspection and monitoring for land use approvals, design review, grading and building permits, General Plan maintenance fees, and other permits and entitlements required to implement the Project, which are in effect at the time those permits, approvals or entitlements are applied for, and which fees are intended to e foregoing.

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Project D.

Project Approvals
accordance with the terms of this Agreement, the Subsequent Project Approvals.

Property C.
is defined in Section 4.9.
is defined in Recital D.

Subsequent Project Approvals 11.1.

Term 3.2.1.

ARTICLE 2.

GENERAL PROVISIONS
Ownership of Property. The Parties hereby acknowledge that, as of the Effective Date, Developer is the fee owner of the Property.

ARTICLE 3.

EFFECTIVE DATE; TERM; REPRESENTATIONS
Effective Date. This Agreement shall become effective the date that is thirty (30) days after the date the Enacting Ordinance is adopted as listed in Recital L Effective Date Term.

3.2.1 Initial Term of Agreement Term
commence on the Effective Date and shall expire on the tenth (10th) anniversary of the Effective Date, unless extended or earlier terminated as provided herein. In the event of a Litigation Challenge, the Term shall be automatically extended by the length of time required to fully and finally resolve the litigation (i.e., a day-for-day extension), provided however that in no event shall the Term be extended as a result of a Litigation Challenge for a period of longer than four (4) years from the date of the notice provided pursuant to Section 11.6.2 or one (1) year after a final settlement or non-appealable judgment is issued or affirmed, whichever is earlier.

3.2.2 Effect of Termination. Upon the expiration of the Term, this Agreement shall be deemed terminated and of no further force and effect, subject, however, to the provisions set forth in 12.7, below.

City Representations and Warranties. City represents and warrants to Developer that:

3.3.1 City is a municipal corporation, and has all necessary powers under the laws of the State of California to enter into and perform the undertakings and obligations of City under this Agreement.

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3.3.2 The execution and delivery of this Agreement and the performance of the obligations of City hereunder have been duly authorized by all necessary City Council action and all necessary approvals have been obtained.

3.3.3 This Agreement is a valid obligation of City and is enforceable in accordance with its terms.

3.3.4 The foregoing representations and warranties are made as of the Agreement Date. During the Term of this Agreement, City shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 3.3 not to be true, immediately give written Notice of such fact or condition to Developer.

Developer Representations and Warranties. Developer represents and warrants to City that:

3.4.1 Developer is duly organized, validly existing and in good standing under the laws of the State of California and has all necessary powers under the laws of the State of California to own property interests and in all other respects enter into and perform the undertakings and obligations of Developer under this Agreement.

3.4.2 The execution and delivery of this Agreement and the performance of the obligations of Developer hereunder have been duly authorized by all necessary corporate, partnership or company action and all necessary shareholder, member or partner approvals have been obtained.

3.4.3 This Agreement is a valid obligation of Developer and is enforceable in accordance with its terms.

3.4.4 Developer has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary suffered the appointment of a receiver to take possession suffered the attachment or other judicial
admitted in writing its inability to
pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally.

The foregoing representations and warranties are made as of the Agreement Date.

During the Term of this Agreement, Developer shall, upon learning of any fact or condition which would cause any of the warranties and representations in this Section 3.4 not to be true, immediately give written Notice of such fact or condition to City.

ARTICLE 4.

DEVELOPMENT OF PROPERTY
Vested Rights. City hereby grants to Developer a vested right to develop and construct the Project on the Property, including all on-site and off-site improvements authorized by, and in accordance with, the Project Approvals. Except as otherwise provided in this Agreement, no New City Laws that conflict with this Agreement, the Applicable City

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Regulations, or the Project Approvals shall apply to the Project or the Property. For purposes of this Section and Section 4.3.3 conflict
(i) limit the permitted uses of the Property, the maximum density and intensity of use (including but not limited to floor area ratios of buildings and the overall maximum size of allowed uses), or the maximum height and size of proposed buildings; (ii) impose requirements for reservation or dedication of land for public purposes or requirements for infrastructure, public improvements, or public utilities, other than as contemplated in the Project Approvals; (iii) impose conditions upon development of the Property other than as permitted by Applicable Law, Changes in the Law, and the Project Approvals; (iv) limit the timing, phasing, sequencing, or rate of development of the Property; (v) limit the location of building sites, grading or other improvements on the Property in a manner that is inconsistent with the Existing Approvals; (vi) limit or control the ability to obtain public utilities, services, infrastructure, or facilities (provided, however, nothing herein shall be deemed to exempt the Project or the Property from any water use rationing requirements that may be imposed on a City-wide basis from time to time in the future or be construed as a reservation of any existing sanitary sewer or potable water capacity); (vii) require the issuance of additional permits or approvals by the City other than those required by Applicable Law and the Existing Approvals; (viii) increase the permitted Impact Fees or add new Impact Fees, except as permitted by ARTICLE 5 of this Agreement; (ix) establish, enact, increase, or impose against the Project or the Property any special taxes or assessments other than those specifically permitted by this Agreement (x) apply to the Project any New City Laws that are not uniformly applied on a City-wide basis to all substantially similar types of development projects and project sites (i.e., to all office/laboratory projects); or (xi) impose against the Project any condition, dedication or other Exaction not specifically authorized by Applicable Law or the Existing Approvals. To the extent that New City Laws conflict with the vested rights granted pursuant to this Agreement, they shall not apply to the Property or the Project, except as provided in Section 4.3, below.

Development and Design Standards. Subject to Section 4.8, the Project shall be developed in conformance with the Existing Approvals and Applicable City Regulations, including the General Plan and the zoning in effect as of the Effective Date, and the yet-to-be adopted Subsequent Project Approvals. The permitted uses, density and intensity of development, maximum height and size of proposed buildings and development standards shall all be in accordance with the Existing Approvals and Applicable City Regulations. Such standards will be more particularly described and incorporated into the Subsequent Project the Project shall be in accordance with the Existing Approvals and the Applicable City Regulations.

Reservations of Authority. Notwithstanding any other provision of this Agreement to the contrary, the following regulations and provisions shall apply to the development of the Project:

4.3.1 Procedural Rules. Regulations relating to hearing bodies, petitions, applications, notices, records, hearings, reports, recommendations, appeals and any other matter of procedure then applicable in City at the time of permit application;

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4.3.2 Uniform Construction Codes. Regulations governing construction bing code, mechanical code,
electrical code, fire code and grading code, all other uniform construction codes, and any regional changes to any uniform construction code then applicable in City at the time of building permit application;

4.3.3 New City Laws Not in Conflict. New City Laws applicable to the Property or Project, which do not conflict with this Agreement, including but not limited to

4.1 above, the Applicable City Regulations, or the
Project Approvals;

4.3.4 New City Laws- Health and Safety. New City Laws which may be in conflict with this Agreement, but which are necessary to protect against a specific, adverse impact to the physical health and safety of the public and where there is no other feasible method to satisfactorily mitigate or avoid the adverse impact. This section shall not be construed to impose the requirements set forth in Government Code Section 65589.5.

4.3.5 Exactions. Exactions permitted by Section 11.2.

4.3.6 Changes in the Law. As provided in Section 65869.5 of the Development Agreement Law, this Agreement shall not preclude the applicability to the Project of changes in laws, regulations, plans or policies, to the extent that such changes are specifically mandated and required by changes in State or Federal laws or by changes in laws, regulations, plans or policies of special districts or other governmental entities, other than the City, created or operating Changes in the Law
the Law prevent or preclude compliance with one or more provisions of this Agreement, the Parties shall meet and confer in good faith in order to determine whether such provisions of this Agreement shall be modified or suspended, or performance thereof delayed, as may be necessary to comply with Changes in the Law. Following the meeting between the Parties, the provisions of this Agreement may, to the extent feasible, and upon mutual agreement of the Parties, be modified or suspended, but only to the minimum extent necessary to comply with such Changes in the Law. In such event, this Agreement together with any required modifications shall continue in full force and effect. Nothing in this Agreement shall preclude Developer from contesting by any available means (including administrative or judicial proceedings) such Changes in the Law or their applicability to the Project and, in the event that such challenge is successful, this Agreement shall remain unmodified and in full force and effect, unless the Parties mutually agree otherwise.

4.3.7 New City Laws Pertaining to Biosafety Levels. The Property shall be subject to any New City Laws regulating or prohibiting laboratory uses that are classified as a Biosafety Level 3 or 4, regardless of whether those New City Laws conflict with this Agreement, the Applicable City Regulations, or the Project Approvals.

Regulation by Other Public Agencies. Developer acknowledges and agrees that other public agencies, including the County of San Mateo, not within the control of City possess authority to regulate aspects of the development of the Property separately from or jointly with City, and this Agreement does not limit the authority of such other public agencies. Developer

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shall use reasonable diligence in applying for all such other permits and approvals as may be required by any Other Agency in connection with the development of, or the provision of Other Agency Approvals
when due to such public agencies. Developer acknowledges that City does not control the to obtain such Other Agency Approvals; provided, however, City shall have no obligation to incur any costs, without compensation or reimbursement by Developer, or to amend any policy, regulation or ordinance of City in connection therewith.

Life of Project Approvals. The term of any and all Project Approvals shall automatically be extended for the longer of the Term of this Agreement or the term otherwise applicable to such Project Approvals.

Initiatives. If any New City Law is enacted or imposed by an initiative or referendum, which New City Law would conflict with this Agreement, the Applicable City Regulations, or the Project Approvals or reduce the development rights or assurances provided by this Agreement or the Project Approvals, such New City Law shall not apply to the Property ement is
a legislative action subject to referendum. Without limiting the generality of the foregoing, no moratorium or other limitation (whether relating to the rate, timing, phasing or sequencing of development, whether imposed by ordinance, initiative, resolution, policy, order or otherwise, and whether enacted by the City Council, an agency of City, the electorate, or otherwise) affecting subdivision maps, use permits, building permits, occupancy permits, design review, or other entitlements to use that are approved or to be approved, issued or granted by City shall apply to the Property or Project. Developer agrees and understands that City does not have or permits or to impose a moratorium or other limitations that may affect the Project. City shall as may be necessary to ensure this Agreement remains in full force and effect. City, except to submit to vote of the electorate initiatives and referendums required by law to be placed on a ballot and fulfill any legal responsibility to defend a ballot measure passed by its voters, shall not support, adopt or enact any New City Law, or take any other action which would violate the express provisions or spirit and intent of this Agreement.

Timing of Development. Developer shall meet its obligation to provide the public benefits described in ARTICLE 6 within the times provided therein. However, and not in limitation of any of the foregoing, since the California Supreme Court held in Pardee Construction Co. v. City of Camarillo, 37 Cal.3d 465 (1984), that the failure of the parties therein to consider, and expressly provide for, the timing of development resulted in a laterment, it is the desire of the Parties hereto to avoid that result. Therefore, notwithstanding the adoption of that, except as otherwise provided for in the Existing Approvals, Developer shall have the vested right (but not the obligation) to develop the Project in such order and at such rate and at such times as Developer deems appropriate in the exercise of its business judgment.

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Expansion of Development Rights. If any New City Laws or Changes in Law law is mandatory, the provisions of this Agreement shall be modified as may be necessary to comply or conform with such new law, and (b) if such law is permissive, the provisions of this agreement shall not be unreasonably withheld, conditioned, or delayed. After enactment of any period not exceeding sixty (60) days (unless such period is extended by mutual written consent of the Parties) to prepare such modification in the case of a mandatory law or to discuss whether to prepare a proposed modification in the case of a permissive law. Developer shall have the t, and in the event such challenge is successful, this
Development Agreement shall be modified to comply with, or conform to, the new law.

No Reservation of Sanitary Sewer or Potable Water Capacity. City has found the Project to be consistent with the General Plan which anticipates that there will be sufficient potable water and sanitary sewer capacity to serve future development contemplated by the General Plan, including the Project, as indicated in the Water Supply Assessment for the Project dated October 2022 that was approved by Mid-Peninsula Water District by Resolution No. 2022- 28 on October 27, 2022 and attached as Exhibit D. However, nothing in this Agreement is intended to exempt the Project from any water use rationing requirements that may be imposed on a City-wide basis from time to time in the future or be construed as a reservation of any existing sanitary sewer or potable water capacity.

Public Improvement Agreement.
construction of, post improvement security and provide warranties for the various on-site and off-site public improvements required by the Project Approvals and this Agreement, including without limitation the sidewalks along Old County Road and Quarry Road and the upgraded Public Improvement
Agreements m as attached as Exhibit E. The Public Improvement Agreement shall be entered into prior to the issuance of the Grading and Dirt Haul Permit.

ARTICLE 5.

OTHER RIGHTS AND OBLIGATIONS OF THE PARTIES
Fees.

5.1.1 Impact Fees. City understands that the limited assurances by City concerning Impact Fees set forth below were a material consideration for Developer agreeing to develop the Project, to pay the Impact Fees set forth in this Agreement and the Existing Approvals and to provide the public benefits described in this Agreement. For the period commencing on the Effective Date and continuing until expiration of the Impact Fee Limitation Period (defined below), Developer shall pay when due all existing Impact Fees applicable to the Project in accordance with this Agreement in effect as of the Effective Date at the lower of (i) the rates in effect as of the Effective Date, including all existing fee escalation provisions (including without limitation the escalation provision set forth in Resolution No. 2016-108) or (ii) the rates in effect when such existing Impact Fees are due and payable, and shall not be required to pay

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any escalations in such Impact Fees in excess of the fee escalation provisions in any Impact Fee in effect as of the Effective Date or pay any new Impact Fees enacted or established after the Impact Fee Limitation Period
commencing on the Effective Date and expiring on the fifth (5th) anniversary thereof. Except as otherwise provided in this Section 5.1.1, Developer agrees to pay when due any and all existing, new, increased or modified Impact Fees, at the rates then in effect at the time building permits are issued on any or all portions of the Project so long as any new fees or increases in existing fees from the amount existing as of the Effective Date are uniformly applied by City to all substantially similar types of development projects and properties (i.e., to all office/laboratory projects, etc.) and are consistent with the provisions of applicable California law, including but not limited to the provisions of Government Code Section 66000 et seq., and all applicable nexus and rough proportionality tests and other legal requirements. Developer retains all rights to protest an imposition, fee, dedication, reservation, or other exaction, as set forth in California Government Code Section 66020.

Notwithstanding the foregoing, if Developer obtains all necessary Other Agency Approvals, Developer shall provide a Childcare Facility on-site and shall not be obligated to pay the child care development impact fee set forth in Chapter 8.52 of the Municipal Code. If Developer does not obta
reasonable, good faith efforts, Developer shall pay the sums provided in Section 6.2.5(a).

5.1.2 Processing Fees
challenge in law or equity to any new or increased Processing Fees, City may charge and Developer agrees to pay all Processing Fees which are in effect on a City-wide basis at the time permits, approvals or entitlements are applied for.

5.1.3 Connection Fees. Developer shall pay connection fees, whether they are assessed by City or non-City utility providers and other non-City agencies, at the rates in effect when payment is due.

5.1.4 Other Agency Fees. Nothing in this Agreement shall preclude City from collecting fees from Developer that are lawfully imposed on the Project by Other Agencies, Other Agency Fees
Exactions. City may impose and Developer shall comply with those Exactions required by this Agreement, the Existing Approvals, and Subsequent Project Approvals in accordance with Section 11.2 below.

Taxes and Assessments. Developer covenants and agrees to pay prior to delinquency all existing taxes and assessments and any and all new taxes or assessments that are adopted after the Effective Date and which conform to the terms of this Agreement, including this Section. As of the Agreement Date, City is unaware of any pending efforts to initiate, or consider applications for new or increased special taxes or assessments covering the Property, or any portion thereof. City shall retain the ability to initiate or process applications for the formation of new assessment districts or imposition of new taxes covering all or any portion of the Property. City may impose new taxes and assessments, other than Impact Fees, on the Property in accordance with the then applicable laws, but only if such taxes or assessments are

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adopted by or after Citywide voter approval, or approval by landowners subject to such taxes or assessments, and are imposed on other land and projects of the same category within the jurisdiction of City in a reasonably proportional manner as determined by City, and, as to assessments, only if the impact thereof does not fall disproportionately on the Property as compared to the benefits accruing to the Property as indicated in the engineers report for such assessment district. Nothing herein shall be construed so as to limit Developer from exercising whatever rights it may otherwise have in connection with protesting or otherwise objecting to the imposition of taxes or assessments on the Property.

Compliance with Law. Developer, at its sole cost and expense, shall comply with the requirements of, and obtain all permits and approvals required by local, State and Federal agencies having jurisdiction over the Property or Project. Furthermore, Developer shall carry out the Project work in conformity with all Applicable Law, including applicable state labor laws and standards; Applicable City Regulations; and all applicable disabled and handicapped access requirements, including the Americans With Disabilities Act, 42 U.S.C. Section 12101, et seq., Government Code Section 4450, et seq., Government Code Section 11135, et seq., and the Unruh Civil Rights Act, Civil Code Section 51, et seq.

Prevailing Wage.

5.5.1 Prevailing Wage Compliance. If and to the extent applicable, Developer shall (1) comply with, and cause its contractors and subcontractors to comply with, all State Labor Code requirements and implementing regulations of the Department of Industrial as defined by Labor Code section 1720, including the
payment of prevailing wages for any work identified in the Existing Approvals that may under Labor Code section 1720 Prevailing Wage
Laws ; (2) require the contractor(s) to submit, upon request by City, certified copies of payroll records to City at the Property or at another location within City, and to maintain and make records available to City and its designees for inspection and copying to ensure compliance with Prevailing Wage Laws; and (3) include in each of its contractor agreements, a provision in form acceptable to City, obligating the contractor to require its contractors and/or subcontractors to comply with Prevailing Wage Laws, and to submit, upon request by City, certified copies of payroll records to City and to maintain and make such payroll records available to City and its designees for inspection and copying during regular business hours at the Property or at another location within City.

5.5.2 Prevailing Wage Indemnity. In the event any Claims arise out of or are Prevailing Wage Laws or failure to comply with all Prevailing Wage Laws, including all Claims that may be made by contractors, subcontractors or other third party claimants pursuant to Labor Code sections 1726 and 1781 ( Prevailing Wage Claim
Prevailing Wage Claims shall meet and confer within 15 days of receipt of such Prevailing Wage Claim to coordinate the defense, provided that Developer and City Parties shall meet and confer within 5 days if the Prevailing Wage Claim is a subpoena.

Developer shall defend City Parties (with counsel reasonably acceptable to the City) against any Prevailing Wage Claims. Notwithstanding anything to the contrary, if the City Parties elect to retain independent counsel in connection with the Prevailing Wage Claims, the City Parties and

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the Developer shall enter into a Joint Defense Agreement. This provision in no way alters the applicability of Chapter 1.30 of the San Carlos Municipal Code to Prevailing Wage Claims.

5.5.3 Release of City. Developer hereby waives and releases City Parties from any and all manner of Claims or other compensation whatsoever, in law or equity, of whatever kind or nature, whether known or unknown, direct or indirect, foreseeable or unforeseeable, absolute or contingent, now existing or which may in the future arise, including lost business opportunities or economic advantage, and special and consequential damages, arising out of, Prevailing Wage Laws. Developer is aware of and familiar with the provisions of Section 1542 of the California Civil Code which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE

CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO

EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE

RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE

MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR OR RELEASED PARTY.

INITIALS: DEVELOPER _______
ARTICLE 6.

PUBLIC BENEFITS
General Public Benefits. Developer shall perform and provide the public benefit obligations described in this Section 6.1 which exceed those dedications, conditions, and exactions that may be imposed under Applicable Law in consideration for the rights and benefits conferred by City to Developer under this Agreement, which exceed those dedications, conditions, and exactions that may be imposed under Applicable Law.

6.1.1 Publicly Accessible Open Space. The plaza at the corner of Old County Corner Plaza
pickleball court, a bocce court, a community event space, a multi-purpose stage, a fenced dog park, and a community botanical garden (excluding any open space on the roof decks) Central Open Space covenant
agreement that will require Developer and its successors and assigns to allow public access to and maintain the Corner Plaza and Central Open Space, in substantially the form attached hereto as Exhibit F POPA Covenant , prior to the issuance of the first building permit for vertical construction for the Project. The Parties intend that the terms of the POPA Covenant shall be construed as covenants and equitable servitudes that impose use restrictions on the Central Open Space and Corner Plaza and not as an easement, shall run with the land, and shall be binding on successors and assigns. The POPA Covenant shall require Developer to allow public access to the Corner Plaza and Central Open Space from thirty (30) minutes prior to sunrise to thirty (30) minutes after sunset, use
(including without limitation tenant priority and reservation system for use of the pickleball and bocce courts), safety, maintenance and repairs. The POPA Covenant shall require Developer to provide instructions, whether in an electronic format or other format, regarding use of the courts

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and reservations and a schedule showing existing reservations. Such instructions shall be provided in or immediately adjacent to the courts. The POPA Covenant shall allow Developer to temporarily exclude the public or temporarily limit public access to portions of the Corner Plaza and Central Open Space if necessary to address safety concerns and perform maintenance, renovations, and repairs to improvements within or adjacent to the Corner Plaza or Central Open Space. The POPA Covenant shall require Developer to maintain the Corner Plaza and Central Open Space at all times and indemnify and hold City harmless from any and all Claims arising from or relating to the design, construction, or maintenance of the Corner Plaza and Central The POPA Covenant shall terminate in the event the
Project is demolished or the Project undergoes a substantial change that is not already permitted under the Existing Approvals and public access cannot be maintained by modifying the boundaries of the Central Open Space or Corner Plaza, provided that the POPA Covenant shall not terminate in the event of demolition and reconstruction of any building or buildings in the Project following a casualty. The POPA Covenant shall require Developer to obtain and record a subordination from any Mortgagee holding any Mortgage recorded prior to the POPA Covenant.

The terms of this Section 6.1.1 shall survive the expiration or termination of this Agreement for purposes of providing notice of the POPA Covenant, the restrictions of which may be in effect after the expiration or termination of this Agreement.

Public Benefits for Greater Height and Density. Developer shall perform and provide the public benefit obligations described in this Section 6.2 in exchange for the approval of Planned Development zoning designation and a Planned Development Plan that allow Developer to construct buildings with a greater height and Floor Area Ratio than permitted under t
Eight Million Five Hundred Thousand Dollars ($8,500,000). The Parties agree that the public benefit obligations have a value of Four Million Three Hundred Thousand Dollars ($4,300,000).

6.2.1 Downtown Improvements. Developer shall make a One Million One Hundred Thousand Dollar ($1,100,000) contribution to the Downtown Improvements Fund. The payment shall be due prior to the issuance of the first temporary certificate of occupancy for the Project. In the event the Downtown Improvements Fund is not established prior to issuance of the first temporary certificate of occupancy or certificate of occupancy, the temporary certificate of occupancy or certificate of occupancy shall issue without delay and the City may elect to have this contribution deposited into the San Carlos General Fund.

6.2.2 Community Improvement and Recreation Fund. Developer shall make a One Million Four Hundred Thousand Dollar ($1,400,000) contribution to the Community Improvement and Recreation Fund. The payment shall be due prior to the issuance of the first temporary certificate of occupancy or certificate of occupancy for the Project. In the event that the Community Improvement and Recreation Fund is not established prior to issuance of the first temporary certificate of occupancy or certificate of occupancy, the temporary certificate of occupancy or certificate of occupancy shall issue without delay and the City may elect to have this contribution deposited into the San Carlos General Fund.

6.2.3 Green Energy Efficiency and Sustainability Fund. Developer shall make a Two Hundred Thousand Dollar ($200,000) contribution to the Green Energy Efficiency and Sustainability Fund. The payment shall be due prior to the issuance of the first temporary

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certificate of occupancy or certificate of occupancy for the Project. In the event that the Green Energy Efficiency and Sustainability Fund is not established prior to issuance of such temporary certificate of occupancy or certificate of occupancy, the temporary certificate of occupancy or certificate of occupancy shall issue without delay and the City may elect to have this contribution deposited into the San Carlos General Fund.

6.2.4 Belmont Creek Path. Developer shall construct a path on the Property for public access along Belmont Creek in the location shown in the Project Approvals Creek Path nd Dollars ($500,000). The Creek Path
shall be constructed prior to the issuance of the first temporary certificate of occupancy or certificate of occupancy for the Project. Developer shall execute and record a public access easement to City providing for public access to the Creek Path and maintenance of the Creek Path by Developer, in a form reasonably acceptable to the City Attorney, prior to the issuance of the first building permit for vertical construction for the Project. The public access easement shall require public access from thirty (30) minutes prior to sunrise to thirty (30) minutes after sunset and,
maintenance, and repairs. The public access easement shall allow Developer to temporarily exclude the public or temporarily limit public access to the Creek Path if necessary to address safety concerns and perform maintenance, renovations, and repairs to improvements within or adjacent to the Creek Path. Except in cases of emergency, where notice shall be provided to City if reasonably feasible, Developer shall provide City forty-eight (48) hours advance written or telephonic notice and post signs notifying the public of the limitation or closure. The public access easement shall require City to modify the public access easement to modify the location of the Creek Path in the event that (i) there is a substantial change in the Project that is not already permitted under the Existing Approvals, including without limitation relocation of a building or construction of a building addition such that the building or building addition would interfere with or encroach on the public access easement or (ii) demolition of the Project. Upon such substantial change in or demolition of the Project, the public access easement shall terminate in the event the Belmont Creek no longer exists and the Creek Path does not connect to a trail system on an adjacent parcel.

6.2.5 Childcare Facility. Developer shall construct a childcare facility consisting of an approximately 5,500 square foot classroom with 2,028 square feet of dedicated outdoor space as more particularly described in the Project Approvals Childcare Unit off area, and reserved teacher parking (collectively Childcare Facility Unit shall be located in the South Building unless it must be located in another building to obtain an Other Agency Approval and Developer obtains appropriate Subsequent Project Approvals.

City reserves discretion with respect to any such requested Subsequent Project Approvals. The total net benefit to the community in excess of the Childcare Impact Fee is anticipated to be One Million One Hundred Thousand Dollars ($1,100,000).
(a) Developer shall make reasonable, good faith efforts to obtain all necessary Other Agency Approvals for the Childcare Facility, including without limitation approvals from the County of San Mateo. If Developer fails to secure such Other Agency Approvals within two (2) years of the Effective Date despite its reasonable, good faith efforts, Developer shall have no further obligation to construct the Childcare Facility and shall instead (1) pay the child care development impact fee at the rate determined in accordance with Section

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5.1.1 and 2) pay a community amenity fee in the amount of One Million One Hundred Thousand Dollars ($1,100,000). If Developer obtains all necessary Other Agency Approvals, the provisions of subsections (b), (c) (d), (e) and (f) shall apply. (b) The certificate of occupancy for the South Building must be issued prior to the issuance of a certificate of occupancy for any other building or structure in the Project. If Developer relocates the Childcare Unit to another building to obtain an Other Agency Approval, no certificate of occupancy for any building or structure shall be issued until the certificate of occupancy is issued for the building in which the Childcare Unit is located. The Childcare Facility will be licensed to accommodate at least seventy-five (75) and up to one hundred (100) children as determined by the California Department of Social Services Child Care Licensing Child Care License
more than thirty-seven (37) spaces but fewer than seventy-five (75) spaces, Developer shall pay a penalty of Twenty-Nine Thousand Seven Hundred Thirty Dollars ($29,730) for each space above thirty-seven (37) and below seventy-five (75) that Developer fails to provide. If the -seven (37) spaces, Developer
shall pay (i) a community amenity fee in the amount of One Million One Hundred Thousand Dollars ($1,100,000) and (ii) the sum of Forty-Three Thousand Dollars ($43,000) for each space below thirty-seven (37) that Developer fails to provide. For example, if Developer provides thirty-five (35) spaces, Developer shall pay One Million One Hundred Eighty-Six Thousand Dollars ($1,186,000).
(c) The core and shell construction for the classroom and construction of the outdoor space that comprise the Childcare Unit shall be complete at the time that Developer applies for a temporary certificate of occupancy or certificate of occupancy for the South Building (or any building to which the Childcare Unit is relocated to obtain an Other Agency Approval). Developer shall complete construction and obtain a certificate of occupancy for the tenant improvements for the Childcare Facility within six (6) months of the issuance of the first certificate of occupancy for tenant improvements for any space in the Project. If any of the milestones regarding the core and shell construction or construction of the tenant improvements for the Childcare Facility are not met at the required times, the Developer shall (1) pay the child care development impact fee at the rate then in effect, adjusted pursuant to any escalation provision then in effect (or if there is no such impact fee or escalation provision then in effect, the rate most recently established and/or the escalation provision most recently in effect) and 2) pay a community amenity fee in the amount of One Million One Hundred Thousand Dollars ($1,100,000).
(d) The Developer shall make reasonable, good faith efforts to lease the Childcare Facility at an initial triple net rent rate that does not exceed a Fair Market Rent rate to a childcare operator holding all licenses required by Applicable Law, including the Child Care License Childcare Operator The intent of the Parties is for the Childcare Operator to offer less than twenty-four (24) hour daily nonmedical child care and supervision, Monday through Friday. Fair Market Rent : (i) Developer shall provide City a written opinion of fair market rent prepared by a licensed, commercial real estate broker in San Opinion is unreasonably high, City may provide a written opinion of fair market rent prepared by a licensed, commercial real estate broker in San Mateo County and supported by comparable

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Broker Opinion
the Parties shall meet and confer in good faith for a period not to exceed fifteen (15) business days to arrive at a reasonable rent rate; provided, however, Developer shall in its reasonable discretion make the final determination of a reasonable rent rate at the end of this period. The rentals consisting of child care spaces in the Bay Area constructed within the last five (5) years. (e) The Parties acknowledge that Developer has signed a letter of intent or term sheet with an entity who is or will be a Childcare Operator. However, if that entity does not sign a lease and the Developer fails to lease the Childcare Facility to a Childcare Operator within twelve (12) months of the issuance of the certificate of occupancy for the tenant improvements for the Childcare Facility or within a twelve (12) month period after any subsequent vacancies, then Developer shall provide City notice of its inability to lease the the City shall provide notice to Developer of its election City Leasing Election Notice to (i) for an additional
period of one hundred eighty (180) days; (ii) propose two (2) alternate brokers with experience in San Mateo County for Developer to select from, and the selected broker shall be retained by to attempt to lease the Childcare Facility for a
period of one hundred eighty (180) days; (iii) enter into a lease of the Childcare Facility within sixty (60) days of the City Leasing Election Notice for a term of twelve (12) months with free rent for six (6) months and triple net rent not exceeding Fair Market Rent (defined in subsection (d)) thereafter, during which time City may attempt to sublease, assign or operate the Childcare Facility; or (iv) amend the Childcare Covenant (defined below) to allow a Community Serving Use. If a Childcare Operator has not signed a lease at the end of the applicable period identified in (i), (ii), or (iii), or if City elects option (iv), the parties shall, within sixty (60) days, enter into a recorded amendment to the Childcare Covenant that may be approved and signed by the City Manager. For purposes of this Section 6.2.5(e) Community Serving Use uses in the following categories of Chapter 18.40 in the San Carlos Municipal Code, without waiving any requirement under Applicable Law for Developer to obtain a minor use permit, conditional use permit or any other Subsequent Project Approvals for such uses: Instructional Services, Eating and Drinking Establishments (excluding night clubs), Animal Care, Sales and Services (excluding veterinary services), Personal Services (excluding Tattoo or Body Modification Parlor), Retail Sales (excluding Retail Establishments Selling Ammunition or Firearms), Government Offices, and Cultural Institutions. If Developer makes reasonable, good the Childcare
Facility for a Community Serving Use for at least twelve (12) months following the amendment to the Childcare Covenant or following vacation by a tenant providing the selected Community Serving Use, Developer shall have the option to pay Five Hundred Fifty Thousand Dollars ($550,000) to be relieved of the Community Serving Use restriction and the Parties shall record a release of the Childcare Covenant. The City Manager shall be authorized to sign the release on behalf of the City.
(f) Developer shall include in the lease with the Childcare Operator that if there is an open childcare space and at that time less than fifty percent (50%) of the children attending the Childcare Facility have at least one (1) parent or legal guardian who

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resides or works within the City limits, a child with at least one (1) parent or legal guardian who resides or works within the City limits shall be offered the space before a child who does not have a parent or legal guardian who resides or works within the City limits. (g) Pursuant to a separate agreement to be entered into by Developer or Assignee and City and recorded prior to the issuance of the building permit for the South Building (or any building to which the Childcare Unit is relocated to obtain an Other Agency Childcare Covenant all provide City quarterly
offer the Childcare Facility at an initial triple net rent rate that does not exceed a Fair Market Rent, (iii) Developer or Assignee shall notify City when a Childcare Operator has executed a assigns shall make good faith efforts, as described in subsection (d), to ensure that the Childcare Facility is continuously leased to a Childcare Operator at any time during which the South Building (or any building to which the Childcare Unit is relocated to obtain an Other Agency Approval) remains on the Property, including a reconstructed South Building following a casualty, and (v) Developer or Assignee shall obtain and record a subordination from any Mortgagee holding any Mortgage recorded prior to the Childcare Covenant. The Childcare Covenant shall also provide that if any milestone for the Childcare Facility described in subsection (c) is not met Developer shall pay the penalties provided therefor in subsection (c), and the Childcare Covenant shall incorporate the terms of subsection (d), (e) and (f) above. (h) The terms of this Section 6.2.5 shall survive the expiration or termination of this Agreement for purposes of providing notice of the Childcare Covenant, the restrictions of which may be in effect after the expiration or termination of this Agreement.

ARTICLE 7.

ANNUAL REVIEW
Annual Review. As required by California Government Code Section 65865.1 and the Development Agreement Ordinance, City and Developer shall review this Agreement and all actions taken pursuant to the terms of this Agreement with respect to the development of the Project every twelve (12) months to determine good faith compliance with this Agreement. for the purposes of determining good faith
compliance by Developer with its obligations under this Agreement. Each annual review shall Process. The annual review shall be conducted as provided in the Development

7.2.1 By the last business day of January of each year, the Developer shall provide documentation of its compliance with the Agreement during the previous calendar year.

Development Director shall review the documentation and determine, on the basis of substantial evidence, whether the Developer has complied with the provisions of this Agreement.

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7.2.2 Director or his or her designee shall so notify Developer in writing in a form that may be Community Development Director shall notify Developer in writing in a form that may be recorded when final and that specifies the respects in which Developer has failed to comply, terms of compliance, and provide that Developer shall have the period specified in Section 12.1 to meet the terms of compliance. If Developer does not comply with any terms of compliance within the prescribed time limits, this Agreement shall be subject to termination or modification pursuant to Section 7.2.3.

7.2.3 Within seven (7) days after issuance of a finding of compliance or a finding of noncompliance, any interested person may file a written appeal of the finding with the City Council. The appellant shall pay fees and charges for the filing and processing of the appeal in amounts established by resolution of the City Council. The appellant shall specify the reasons for the appeal. The issuance of a finding of compliance or finding of noncompliance by the or the confirmation by the City Council of the issuance of the finding on such appeal, shall conclude the review for the applicable period and such determination shall be final.

7.2.4 If a finding of noncompliance does not include terms of compliance, or if Developer does not comply with the terms of compliance within the time specified for compliance, the Parties may terminate or modify the Agreement by mutual consent or Community Development Director may refer the Agreement to the City Council for termination or modification. The City Council shall conduct a public hearing after the time specified for compliance. After the public hearing, the City Council may terminate the Agreement, modify the finding of noncompliance, or rescind the finding of noncompliance and issue a finding of compliance.

No Waiver. Failure of City to conduct an annual review shall not constitute a waiver by the City of its rights to otherwise enforce the provisions of this Agreement nor shall Developer have or assert any defense to such enforcement by reason of any such failure to conduct an annual review unless such failure contributed to the failure to perform that is the subject of the enforcement.

ARTICLE 8.

MORTGAGEE PROTECTION
Mortgagee Protection. This Agreement shall not prevent or limit Developer in the Property or any portion
thereof or any improvement thereon by any mortgage, deed of trust or other security device Mortgage
and senior to any lien placed upon the Property or any portion thereof after the date of recording the Agreement, including the lien of any Mortgage. Notwithstanding the foregoing, no breach hereof shall defeat, render invalid, diminish or impair the lien of any Mortgage made in good faith and for value, but all of the terms and conditions contained in this Agreement shall be

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binding upon and effective against and shall run to the benefit of any person or entity, including Mortgagee tle or possession to
otherwise.

Mortgagee Not Obligated. No Mortgagee (including one who acquires title or possession to the Property, or any portion the
foreclosure or otherwise) shall have any obligation to construct or complete construction of improvements, or to guarantee such construction or completion; provided, however, that a Mortgagee shall not, without obtaining any required approvals, be entitled to devote the Property to any use except in full compliance with this Agreement and the Project Approvals nor to discontinue any uses or demolish improvements required by this Agreement or the Project Approvals. Except as otherwise provided in this Section 8.2, all of the terms and conditions contained in this Agreement and the Project Approvals shall be binding upon and effective against and shall run to the benefit of any person or entity, including any Mortgagee, who acquires title or possession to the Property, or any portion thereof.

Notice of Default to Mortgagee. If City receives a notice from a Mortgagee requesting a copy of any Notice of Default given Developer hereunder and specifying the address for service thereof, then City agrees to use its diligent, good faith efforts to deliver to such Mortgagee, concurrently with service thereon to Developer, any Notice of Default given to Developer.

Right to Cure. In the event of a Default by Developer, any Mortgagee shall have the right to remedy, or cause to be remedied, such Default within ninety (90) days following the later to oc Section

8.3 above, or (ii) the expiration of the period provided herein for Developer to remedy or cure such Default, and City shall accept such performance by or at the insistence of the Mortgagee as if the same had been timely made by Developer; provided, however, that (a) if such Default is not capable of being cured within the timeframes set forth in this Section 8.4 and Mortgagee commences to cure the Default within such timeframes, then Mortgagee shall have such additional time as is required to cure the Default so long as Mortgagee diligently prosecutes the cure to completion and (b) if possession of the Property (or portion thereof) is required to effectuate such cure or remedy, the Mortgagee shall be deemed to have timely cured or remedied if it commences the proceedings necessary to obtain possession thereof within ninety (90) days after receipt of the copy of the notice, diligently pursues such proceedings to completion, and, after obtaining possession, diligently completes such cure or remedy.

No Supersedure. Nothing in this ARTICLE 8 shall be deemed to supersede or release a Mortgagee or modify a
improvement agreement or other obligation incurred with respect to the Project outside this Agreement, nor shall any provision of this ARTICLE 8 constitute an obligation of City to such Mortgagee, except as to the notice requirements of Section 8.3.

Technical Amendments to Article 8. City agrees to reasonably consider and approve interpretations and/or technical amendments to the provisions of this Agreement that are required by lenders for the acquisition and construction of the Project on the Property or any

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refinancing thereof and to otherwise cooperate in good faith, at Developer's expense, to facilitate ARTICLE 9.

AMENDMENT
Amendment of Agreement By Mutual Consent. This Agreement may be amended in writing from time to time by mutual consent of the Parties hereto or their successorsin-interest or assigns.

Insubstantial Amendments to Agreement. Any amendment to this Agreement which, in the context of the overall Project contemplated by this Agreement, does not substantially affect (i) the Term of this Agreement; (ii) permitted uses of the Property; (iii) provisions for the reservation or dedication of land; (iv) conditions, terms, restrictions or requirements for subsequent discretionary actions; (v) the density or intensity of use of the Property or the maximum height or size of proposed buildings; or (vi) the nature, timing of delivery, or scope of public improvements required by the Existing Approvals or Subsequent Insubstantial Amendment to the
extent otherwise required by law or this Agreement, require notice or public hearing before the parties may execute an amendment hereto. Notwithstanding the foregoing, the City Manager shall have the authority to extend any milestone set forth in Section 6.2.5(c) for six (6) months or less and to extend any deadline set forth in Section 6.2.5(e)(except 6.2.5(e)(iii)) for a collective total of six (6) months or less in total and such extensions shall be an Insubstantial Amendment.

The City Manager shall have the authority to execute an Insubstantial Amendment or, in his or her discretion, seek approval of an Insubstantial Amendment by City resolution.

Requirement for Writing. No modification, amendment or other change to this Agreement or any provision hereof shall be effective for any purpose unless specifically set forth in a writing which refers expressly to this Agreement and is signed by duly authorized representatives of both Parties or their successors.

Amendments to Development Agreement Statute. This Agreement has been entered into in reliance upon the provisions of the Development Agreement Statute as those provisions existed as of the Agreement Date. No amendment or addition to those provisions which would materially affect the interpretation or enforceability of this Agreement shall be applicable to this Agreement, unless such amendment or addition is specifically required by the California State Legislature, or is mandated by a court of competent jurisdiction. In the event of the application of such a change in law, the Parties shall meet in good faith to determine the feasibility of any modification or suspension that may be necessary to comply with such new law or regulation and to determine the effect such modification or suspension would have on the purposes and intent of this Agreement. Following the meeting between the Parties, the provisions of this Agreement may, to the extent feasible, and upon mutual agreement of the Parties, be modified or suspended but only to the minimum extent necessary to comply with such new law or regulation. If such amendment or change is permissive (as opposed to mandatory), this Agreement shall not be affected by same unless the Parties mutually agree in writing to amend this Agreement to permit such appl
unreasonably withheld, conditioned, or delayed. Developer and/or City shall have the right to

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challenge any new law or regulation preventing compliance with the terms of this Agreement, and in the event such challenge is successful, this Agreement shall remain unmodified and in full force and effect.

Operating Memoranda. The provisions of this Agreement require a close degree of cooperation between City and Developer and development of the Property hereunder may demonstrate that refinements and clarifications are appropriate with respect to the details of performance of City and Developer. If and when, from time to time, during the Term of this Agreement, City and Developer agree that such clarifications are necessary or appropriate, City and Developer may effectuate such clarifications through operating memoranda approved by City and Developer, which, after execution, shall be attached hereto as addenda and become a part hereof, and may be further clarified from time to time as necessary with future approval by City and Developer. No such operating memoranda shall constitute an amendment to this Agreement requiring public notice or hearing. The City Manager, in consultation with the City Attorney, shall make the determination on behalf of City whether a requested clarification may be effectuated pursuant to this Section 9.5 or whether the requested clarification is of such a character to constitute an amendment hereof pursuant to Section 9.1 or Section 9.2 above. The City Manager is authorized to execute any operating memoranda hereunder on behalf of City.

ARTICLE 10.

ASSIGNMENT
Assignment. Because of the necessity to coordinate development of the entirety of the Property pursuant to plans for the Project, particularly with respect to the provision of onand off-site public improvements and public services and benefits, certain restrictions on the right of Developer to assign or transfer its interest under this Agreement with respect to the Property are necessary in order to assure the achievement of the goals, objectives and public benefits of the Project and this Agreement. Developer agrees to and accepts the restrictions set forth in this ARTICLE 10 as reasonable and as a material inducement to City to enter into this Agreement. Developer shall have the right to sell or transfer its rights and obligations under this Agreement, in whole but not in part, to any person, partnership, joint venture, firm, company, corporation o Assignee
City, which consent will not be unreasonably withheld, conditioned, or delayed.

Notice of Assignment. Developer shall provide the City with written notice of any prop
Assignment
such Assignment, as provided herein. Each such notice of proposed Assignment shall be obligations hereunder
substantially in the form of Exhibit C, which would be recorded in the Official Records of San Mateo County concurrent with the transfer. Developer shall pay the actual costs borne by City in connection with its review of the proposed Assignment, including the costs incurred by the City

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Release of Developer. Notwithstanding any sale, transfer or assignment of the Property, Developer shall continue to be obligated under this Agreement unless City has consented to the Assignment as provided above, which consent will not be unreasonably withheld, conditioned, or delayed. If the required City consent is given, then Developer shall be released from any further liability or obligation under this Agreement provided: (i) neither Developer nor Assignee is in default under this Agreement at the time of such transfer; (ii) Developer and Assignee have executed and acknowledged and delivered to City for recordation in the Official Records of the County of San Mateo an assignment and assumption agreement substantially in the form of Exhibit C attached hereto; and (iii) the Assignee has expressly assumed for the benefit of City the obligations of Developer. No release of Developer shall be effective unless and until each of the above conditions have been met.

Successive Assignment. In the event there is more than one Assignment under the provisions of this ARTICLE 10, the provisions of this ARTICLE 10 shall apply to each successive Assignment and Assignee.

Other Permitted Transfers. The provisions in this ARTICLE 10 shall not be deemed to prohibit or otherwise restrict Developer from (i) granting easements or licenses or modifying existing easements or licenses to facilitate development of the Property consistent with the Project Approvals; (ii) encumbering the Property or any portion hereof or of the improvements thereon by a Mortgage securing financing with respect to the Property or Project; (iii) transferring all or a portion of the Property pursuant to a foreclosure, conveyance in lieu of foreclosure, or other remedial action in connection with a Mortgage, or to any transferee from a Mortgagee or owner of the Property upon foreclosure or after a conveyance in lieu of foreclosure; or (iv) transferring any completed components of project common areas, and certain ARTICLE 11.

COOPERATION AND IMPLEMENTATION
Subsequent Project Approvals. Certain subsequent land use approvals, entitlements, and permits other than the Existing Approvals, will be necessary or desirable for Subsequent Project Approvals he Subsequent Project
Approvals may include, without limitation, the following: amendments of the Existing Approvals, a Grading and Dirt Haul Permit, building permits, sewer connection permits, certificates of occupancy, conditional use permits, variances, design review, demolition permits, improvement agreements, encroachment permits, and any amendments to, or repealing of, any of the foregoing. As required by Government Code Section 65867.5, any tentative map prepared for the Project shall comply with the water supply verification requirements set forth in Government Code Section 66473.7.

Scope of Review of Subsequent Project Approvals. With the Existing Approvals, City has made a final policy decision that the Project is in the best interests of the public health, safety and general welfare. Applications for Subsequent Project Approvals that are consistent with this Agreement and the Existing Approvals shall be processed and considered in a manner consistent with the vested rights granted by this Agreement and shall be deemed to be tools to implement those final policy decisions, and shall be approved by City so long as they are

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consistent with this Agreement and the Existing Approvals. While City expressly reserves its discretion with respect to all Subsequent Project Approvals, City agrees that it shall not use its authority in considering any application for a Subsequent Project Approval to change the policy decisions reflected by the Existing Approvals, including by reducing the density or height of buildings or changing the permitted uses of the Property or the permitted rate of development, or otherwise to prevent development of the Project as set forth in the Existing Approvals.

City reserves discretion to impose appropriate Exactions in connection with issuance of Subsequent Project Approvals, provided that in exercising its discretion in connection with consideration of Subsequent Project Approvals, City agrees that City shall not revisit the fundamental policy decisions reflected by the Existing Approvals or impose any Exactions that would (i) conflict with the Applicable City Regulations or the Existing Approvals as set forth in Section 4.1 herein unless expressly permitted by Sections 4.3 or Section 11.7. Subject to the foregoing, Exactions imposed on Subsequent Project Approvals may include dedications of land for public uses and requirements that Developer construct or cause the construction of ancillary public rights-of-way and internal streets, utilities, and public facilities, including all applicable in-tract subdivision improvements. At such time as any Subsequent Project Approval applicable to the Property is approved by City, then such Subsequent Project Approval shall become subject to all the terms and conditions of this Agreement applicable to Project Approvals and shall be Processing.

11.3.1 Developer Covenant. Developer acknowledges that City cannot begin processing applications for Subsequent Project Approvals until Developer submits complete applications on a timely basis. Developer shall use diligent good faith efforts to (i) provide to City in a timely manner any and all documents, applications, plans, and other information necessary for City to carry out its obligations hereunder; and (ii) engineers, and all other consultants to provide to City in a timely manner all such documents, applications, plans and other materials required under Applicable Law. It is the express intent of Developer and City to cooperate and diligently work to obtain any and all Subsequent Project Approvals.

11.3.2 City Covenant. Upon submission by Developer of all appropriate applications and Processing Fees for any pending Subsequent Project Approval, City shall, to the full extent allowed by Applicable Law, promptly and diligently, subject to City ordinances, policies and procedures regarding hiring and contracting, commence and complete all steps approval, reasonable overtime staff assistance, additional staff and/or staff consultants for concurrent, expedited planning and processing of each pending Subsequent Project Approval application; (ii) if legally required, providing notice and holding public hearings; and (iii) acting on any such pending Subsequent Project Approval application.

Other Agency Approvals. Other Agencies not within the control of City may possess authority to regulate aspects of the development of the Property separately from or jointly with City, and this Agreement does not limit the authority of such Other Agencies to issue

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or deny an Other Agency Approval. Nevertheless, City shall be bound by, and shall abide by, its covenants and obligations under this Agreement in all respects when dealing with any such agency
required, Other Agency Approvals.

Mitigation Measures. Developer shall, at its sole cost and expense, comply with the MMRP requirements as applicable to the Property and Project.

Cooperation in the Event of Legal Challenge.

11.6.1 No Delay. The filing of any third party lawsuit(s) against City or Developer relating to this Agreement, the Project Approvals or construction of the Project shall not delay or stop the development, processing or construction of the Project or approval of any Subsequent Project Approvals, unless the third party obtains a court order preventing the activity. City shall not stipulate to or cooperate in the issuance of any such order.

11.6.2 Cooperation by Parties. City and Developer shall cooperate in the defense of any court action or proceeding instituted by a third party or other governmental entity or official challenging the validity of any provision of this Agreement or the Project Approvals Litigation Challenge
relating to such defense, subject only to confidentiality requirements that may prevent the communication of such information. A Party against whom a Litigation Challenge is brought shall provide written notice to the other Party within five (5) business days of being served with process. If Developer opts not to contest or defend such Litigation Challenge, City shall have no obligation to do so, but shall have the right to do so at its own expense.

11.6.3 Potential Joint Defense. If Developer desires to contest or defend a Litigation Challenge and the Parties determine to undertake a joint defense or contest of such Litigation Challenge: i) the Parties will cooperate in the joint defense or contest of such approval, which shall not be unreasonably withheld, conditioned, or delayed; iii) Developer will shall enter into a joint defense agreement in a form reasonably acceptable to the City Attorney to facilitate the sharing of materials and strategies related to the defense of such Litigation Challenge without waiver of attorney client privilege; v) Developer shall reimburse City, within forty- efor, which may be made from time to
time during the course of such litigation, all reasonable costs incurred by City in connection with the Litigation Challenge.

11.6.4 Potential Separate Defense. If Developer desires to contest or defend any Litigation Challenge and if at any time one or both of the Parties determine that they require separate representation: i) Developer shall take the lead role in defending such Litigation Challenge; ii) Developer shall be separately represented by legal counsel of its choice; iii) in any action or proceeding, City shall be separately represented by the legal counsel of its choice, selected after consultation with Developer, with reasonable costs of such representation to be paid by Developer; iv) Developer shall reimburse City, within forty-five (45) days following

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litigation, all reasonable costs incurred by City in connection with the Litigation Challenge; and quest, City shall enter into a joint defense agreement in a form reasonably acceptable to the City Attorney to facilitate the sharing of materials and strategies related to the defense of such Litigation Challenge without waiver of attorney client privilege.

11.6.5 Cost Awards and Proposed Settlements. Developer shall indemnify, assessed or awarded in any Litigation Challenge against City by way of judgment, settlement, or stipulation. Any proposed settlement of a Litigation Challenge by a Party shall be subject to the approval of the other Party, such approval not to be unreasonably withheld, conditioned or delayed. If the terms of the proposed settlement would constitute an amendment or modification of this Agreement or any Project Approvals, the settlement shall not become effective unless such amendment or modification is approved by City in accordance with Applicable Law, and City reserves its full legislative discretion with respect thereto.

11.6.6 Revision to Project. In the event of a court order issued as a result of a successful Litigation Challenge, City shall, to the extent permitted by law or court order, in good faith seek to comply with the court order in such a manner as will maintain the integrity of the Project Approvals and avoid or minimize to the greatest extent possible (i) any impact to the development of the Project as provided for in, and contemplated by, the Project Approvals, or (ii) any conflict with the Project Approvals or frustration of the intent or purpose of the Project Approvals.

Subsequent CEQA Review. The City has prepared and certified the MND, which evaluates the environmental effects of the Project, and has imposed all feasible mitigation measures to reduce the significant environmental effects of the Project. The Parties understand that the MND is intended to be used not only in connection with the Existing Approvals, but also, to the extent legally permitted, in connection with necessary Subsequent Project Approvals.

However, the Parties acknowledge that certain Subsequent Project Approvals may legally require additional analysis under CEQA. Nothing contained in this Agreement is intended to prevent or limit the City from complying with CEQA. In acting on Subsequent Project Approvals, City will rely on the MND to the fullest extent permissible by CEQA as determined by City in its reasonable discretion. In the event supplemental or additional review is required for a Subsequent Project Approval, City shall limit such supplemental or additional review to the in
connection with the Subsequent Project Approval. Developer acknowledges that, if the City determines based upon supplemental or additional CEQA review in connection with a Subsequent Project Approval that the Project will result in new significant effects or substantially increase the severity of effects that were identified in the MND, City may require additional feasible mitigation measures necessary to mitigate such impacts. In the event further mitigation measures are identified by such additional environmental review, as a condition of the Subsequent Project Approval, City may require Developer to implement all feasible mitigation measures necessary to substantially lessen new or substantially more severe significant environmental impacts of the Project, which were not foreseen at the time of execution of this Agreement.

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ARTICLE 12.

DEFAULT; REMEDIES; TERMINATION
Breach and Default
under Section 8.4, failure by a Party to perform any material action or covenant required by this Agreement (not including any failure by Developer to perform any term or provision of any Project Approval) within thirty (30) days following receipt of written Notice from the other Party Default
if the failure to perform cannot be reasonably cured within such thirty (30) day period, a Party shall be allowed additional time as is reasonably necessary to cure the failure so long as such Party commences to cure the failure within the thirty (30) day period and thereafter diligently prosecutes the cure to completion. Any Notice of Default given hereunder shall specify in detail the nature of the failures in performance that the noticing Party claims constitutes the Default, all facts constituting evidence of such failure, and the manner in which such failure may be satisfactorily cured in accordance with the terms and conditions of this Agreement. During the time periods herein specified for cure of a failure of performance, and during the period that an appeal may be filed and while an appeal is pending pursuant to Section 7.2.3, the Party charged therewith shall not be considered to be in Default for purposes of (a) termination of this Agreement, (b) institution of legal proceedings with respect thereto, or (c) issuance of any approval with respect to the Project. The waiver by either Party of any Default under this Agreement shall not operate as a waiver of any subsequent breach of the same or any other provision of this Agreement.

Termination. In the event of a Default by a Party, the non-defaulting Party shall have the right to institute legal proceedings pursuant to Section 12.3 and/or terminate this Agreement effective immediately upon giving notice of intent to terminate. Termination of this Agreement shall be subject to the provisions of Section 12.7 hereof. In the event that this Agreement is terminated pursuant to Section 7.2.4 herein or this Section 12.2 and the validity of such termination is challenged in a legal proceeding that results in a final decision that such termination was improper, then this Agreement shall immediately be reinstated as though it had never been terminated.

Legal Actions.

12.3.1 Institution of Legal Actions. In addition to any other rights or remedies, a Party may institute legal action to cure, correct or remedy any Default, to enforce any covenants or agreements herein, to enjoin any threatened or attempted violation thereof, or to obtain any other remedies consistent with the terms of this Agreement.

12.3.2 Acceptance of Service of Process. In the event that any legal action is commenced by Developer against City, service of process on City shall be made by personal service upon the City Clerk of City or in such other manner as may be provided by law. In the event that any legal action is commenced by City against Developer, service of process on e of
process, or in such other manner as may be provided by law.

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Rights and Remedies Are Cumulative. The rights and remedies of the Parties are cumulative, and the exercise by a Party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same Default or any other Default by the other Party, except as otherwise expressly provided herein.

No Damages. In no event shall a Party, or its boards, commissions, officers, agents or employees, be liable in damages for any Default under this Agreement, it being expressly understood and agreed that the sole legal remedy available to a Party for a breach or violation of this Agreement by the other Party shall be an action in mandamus, specific performance or other injunctive or declaratory relief to enforce the provisions of this Agreement by the other Party, or to terminate this Agreement. This limitation on damages shall not preclude actions by a Party to enforce payments of monies or the performance of obligations requiring an obligation of money from the other Party under the terms of this Agreement, including, but not monies. In connection with the foregoing provisions, each Party acknowledges, warrants and represents that it has been fully informed with respect to, and represented by counsel of such reunder and the
waivers herein contained, and after such advice and consultation has presently and actually in equity, to waive and relinquish such rights and remedies to the extent specified herein, and to rely to the extent herein specified solely on the remedies provided for herein with respect to any breach of this Agreement by the other Party.

Resolution of Disputes. With regard to any dispute involving the Project, the resolution of which is not provided for by this Agreement or Applicable Law, a Party shall, at the request of the other Party, meet with designated representatives of the requesting Party promptly following its request. The Parties to any such meetings shall attempt in good faith to resolve any such disputes. Nothing in this Section 12.6 shall in any way be interpreted as requiring that Developer and City reach agreement with regard to those matters being addressed, nor shall the outcome of these meetings be binding in any way on City or Developer unless expressly agreed to in writing by the Parties to such meetings.

Survival. In the event this Agreement expires or is terminated, neither Party shall have any further rights or obligations hereunder, except for those obligations of Developer set forth in Section 11.6 (Cooperation in the Event of Legal Challenge) and Section 13.3 (Indemnity) or expressly set forth herein as surviving the expiration or termination of this Agreement. The termination or expiration of this Agreement shall not affect the validity of the Project Approvals (other than this Agreement).

Effects of Litigation. In the event litigation is timely instituted, and a final judgment is obtained, which invalidates in its entirety this Agreement, neither Party shall have any obligations whatsoever under this Agreement, except for those obligations which by their terms survive termination hereof.

California Claims Act. Compliance with the procedures set forth this ARTICLE 12 shall be deemed full compliance with the requirements of the California Claims Act

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(Government Code Section 900 et seq.) including, but not limited to, the notice of an event of default hereunder constituting full compliance with the requirements of Government Code Section 910.

ARTICLE 13.

MISCELLANEOUS
Incorporation of Recitals; Introductory Paragraph; Exhibits. The Recitals contained in this Agreement, the introductory paragraph preceding the Recitals and the Exhibits attached hereto are hereby incorporated into this Agreement as if fully set forth herein.

Permitted Delay. The time within which either Party shall be required to perform any act under this Agreement shall be extended for a period of time equal to the number of days during which performance of such act is delayed unavoidably and beyond the reasonable control of the Party claiming its performance is delayed as a result of (a) calamities, including without limitation earthquakes, floods, pandemics, and fire; (b) civil commotion; (c) riots or terrorist acts; (d) strikes or other forms of material labor disputes; (e) shortages of materials or supplies; Permitted Delay
financing or adverse economic conditions generally shall not be grounds for claiming a Permitted Delay. The Party claiming a Permitted Delay shall notify the other Party of its intent to claim a Permitted Delay, the specific grounds of the same and the anticipated period of the Permitted Delay within thirty (30) business days after the occurrence of the conditions which establish the grounds for the claim. If notice by the Party claiming such extension is sent to the other Party more than thirty (30) days after the commencement of the cause, the period shall commence to run only thirty (30) days prior to the giving of such notice. The period of Permitted Delay shall last no longer than the conditions preventing performance. In no event shall any Permitted Delay extend the Term of this Agreement.

Indemnity. Developer shall indemnify, at
under this Agreement or a
subcontractors, agents, or employees) work performed in connection with the development of the Property or the Project, including without limitation, Claims involving bodily injury, death or apply to the extent any such Claims are the result of the active negligence or willful misconduct under this Section includes any and all

5.4. Severability. If any term or provision of this Agreement, or the application of any term or provision of this Agreement to a particular situation, is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining terms and provisions of this Agreement, or the application of this Agreement to other situations, shall continue in full force and effect unless amended or modified by mutual consent of the Parties.

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Construction. Each reference herein to this Agreement or any of the Existing Approvals or Subsequent Project Approvals shall be deemed to refer to the Agreement, Existing Approval or Subsequent Project Approval as it may be amended from time to time, whether or not the particular reference refers to such possible amendment. Section headings in this Agreement are for convenience only and are not intended to be used in interpreting or construing the terms, covenants or conditions of this Agreement. This Agreement has been reviewed and revised by legal counsel for City and Developer, and no presumption or rule that ambiguities shall be construed against the drafting party shall apply to the interpretation or enforcement of this Agreement. Unless the context clearly requires otherwise, (i) the plural and singular numbers shall each be deemed to include the other; (ii) the masculine, feminine, and neuter fically provided otherwise.

Covenants Running with the Land. Except as otherwise more specifically provided in this Agreement, this Agreement and all of its provisions, rights, powers, standards, terms, covenants and obligations, shall be binding upon the Parties and their respective successors (by merger, consolidation, or otherwise) and assigns, and all other persons or entities acquiring the Property, or any interest therein or portion thereof, and shall inure to the benefit of the Parties and their respective successors and assigns, as provided in Government Code section 65868.5.

Notices. Any notice or communication required hereunder between City and Notice
certified mail (return receipt requested), or by Federal Express or other similar courier promising overnight delivery. If personally delivered, a Notice shall be deemed to have been given when delivered to the party to whom it is addressed. If given by registered or certified mail, such Notice shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the Party to whom Notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such Notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar courier, a Notice shall be deemed to have been given and received on the date delivered as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (10) days written Notice to the other Party hereto, designate any other address in substitution of the address to which such Notice shall be given. Such Notices shall be given to the Parties at their respective addresses set forth below.

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To City:

City of San Carlos
600 Elm Street
San Carlos, CA 94070
Attn: City Manager
With copies to: City of San Carlos
600 Elm Street
San Carlos, CA 94070
Attn: City Attorney
City of San Carlos
600 Elm Street
San Carlos, CA 94070
Attn: CDD Director
To Developer: 642 Quarry Owner LLC
Attn: Cyrus Sanandaji
160 Pacific Avenue, Suite 204
San Francisco, CA 94111
[email protected]
[email protected]
With a copy to:

Reuben, Junius & Rose LLP
Attn: Matthew D. Visick
One Bush Street, Suite 600
San Francisco, CA 94104
[email protected]
Counterparts and Exhibits; Entire Agreement. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original. This Agreement, together with the Project Approvals and attached Exhibits, constitutes the final and exclusive understanding and agreement of the Parties and supersedes all negotiations or previous agreements of the Parties with respect to all or any part of the subject matter hereof.

Recordation of Agreement. Pursuant to California Government Code Section 65868.5, no later than ten (10) days after the Effective Date, the City Clerk shall record an executed copy of this Agreement in the Official Records of the County of San Mateo. Thereafter, if this Agreement is terminated, modified or amended, the City Clerk shall record notice of such action in the Official Records of the County of San Mateo.

No Joint Venture or Partnership. It is specifically understood and agreed to by and between the Parties hereto that: (i) the subject development is a private development; (ii) City has no interest or responsibilities for, or duty to, third parties concerning any public improvements until such time, and only until such time, that City accepts the same pursuant to the provisions of this Agreement or in connection with the various Existing Approvals or Subsequent Project Approvals; (iii) Developer shall have full power over and exclusive control of the Project herein described, subject only to the limitations and obligations of Developer

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under this Agreement, Existing Approvals, Subsequent Project Approvals, and Applicable Law; and (iv) City and Developer hereby renounce the existence of any form of agency relationship, joint venture or partnership between City and Developer and agree that nothing contained herein or in any document executed in connection herewith shall be construed as creating any such relationship between City and Developer.

Waivers. Notwithstanding any other provision in this Agreement, any failures or delays by any Party in asserting any of its rights and remedies under this Agreement shall not operate as a waiver of any such rights or remedies, or deprive any such Party of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. A Party may specifically and expressly waive in writing any condition or breach of this Agreement by the other Party, but no such waiver shall constitute a further or continuing waiver of any preceding or succeeding breach of the same or any other provision. Consent by one Party to any act by the other Party shall not be deemed to imply consent or waiver of the necessity of obtaining such consent for the same or similar acts in the future.

Headings. Section headings in this Agreement are for convenience only and are not intended to be used in interpreting or construing the terms, covenants, or conditions of this Agreement.

California Law; Venue. This Agreement shall be construed and enforced in accordance with the laws of the State of California, without reference to choice of law provisions. The exclusive venue for any disputes or legal actions shall be the Superior Court of California in and for the County of San Mateo, except for actions that include claims in which the Federal District Court for the Northern District of the State of California has original jurisdiction, in which case the Northern District of the State of California shall be the proper venue.

City Approvals and Actions. Whenever reference is made herein to an action or approval to be undertaken by City, the City Manager or his or her designee is authorized to act on behalf of City, unless specifically provided otherwise or the context requires otherwise.

Estoppel Certificates. A Party may, at any time during the Term of this Agreement, and from time to time, deliver written Notice to the other Party requesting such Party to certify in writing that, to the knowledge of the certifying Party, (i) this Agreement is in full force and effect and a binding obligation of the Parties; (ii) this Agreement has not been amended or modified either orally or in writing, or if amended, identifying the amendments; (iii) the requesting Party is not in default in the performance of its obligations under this Agreement, or if in default, to describe therein the nature and amount of any such defaults; and (iv) any other information reasonably requested. The requesting Party shall be responsible for all reasonable costs incurred by the Party from whom such certification is requested and shall reimbursement. The Party receiving a request hereunder shall execute and return such certificate, or give a written, detailed response explaining why it will not do so, within twenty (20) days following the receipt thereof. The failure of either Party to provide the requested certificate within such twenty (20) day period shall constitute a confirmation that this Agreement

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is in full force and effect and no modification or default exists. The City Manager shall have the right to execute any certificate requested by Developer hereunder. City acknowledges that a certificate hereunder may be relied upon by transferees and Mortgagees.

No Third Party Beneficiaries. City and Developer hereby renounce the existence of any third party beneficiary to this Agreement and agree that nothing contained herein shall be construed as giving any other person or entity third party beneficiary status.

Signatures. The individuals executing this Agreement represent and warrant that they have the right, power, legal capacity, and authority to enter into and to execute this Agreement on behalf of the respective legal entities of Developer and City and that all necessary obtained.

Time of the Essence. Time is of the essence of this Agreement. All references to time in this Agreement shall refer to the time in effect in the State of California.

Limitation on Liability. In no event shall: (a) any partner, officer, director, member, shareholder, employee, affiliate, manager, representative, or agent of Developer or any general partner of Developer or its general partners be personally liable for any breach of this Agreement by Developer, or for any amount which may become due to City under the terms of this Agreement; or (b) any member, officer, agent or employee of City be personally liable for any breach of this Agreement by City or for any amount which may become due to Developer under the terms of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, this Agreement has been entered into by and between Developer and City as of the Effective Date.

CITY:

CITY OF SAN CARLOS, a California
municipal corporation
By:

Jeff Maltbie, City Manager
APPROVED AS TO FORM: [signature must be notarized]
By:

Gregory Rubens, City Attorney
ATTEST:

By:

Crystal Mui, City Clerk
DEVELOPER:
642 Quarry Owner LLC, a Delaware limited
liability company
By:

Name:

Title:
[signature must be notarized]
By:

Name:

Title:
[signature must be notarized]

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EXHIBIT A

LEGAL DESCRIPTION OF THE PROPERTY

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EXHIBIT B

MAP OF THE PROPERTY

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EXHIBIT C
AA&R

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FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO: _________________________________ _________________________________
_________________________________ Attention: ________________________ Exempt from Recording Fee per
Government Code Section 27383
Space

ASSIGNMENT OF RIGHTS AND OBLIGATIONS UNDER

DEVELOPMENT AGREEMENT
This Assignment of Rights and Obligations Under Development Agreement (this Assignment Effective Date
by and between _________________________________________, a _________________ Assignor
Assignee Parties

R E C I T A L S
A. City
DA
which was recorded in the Official Records of San Mateo County on _____________, 20__ as Instrument No. _____________.

B. Assignor has requested approval from the City of the assignment to Assignee described herein pursuant to Section 10.1 of the DA.

C. City has consented to the assignment described herein pursuant to Section 10.1 of the DA.

A G R E E M E N T S
NOW, THEREFORE, in exchange for the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1. Assignment and Assumption of Interest
and interest in and to, and all obligations, duties, responsibilities, conditions and restrictions

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Rights and Obligations . Assignee, for itself and its successors and assigns, hereby accepts the foregoing assignment, assumes all such Rights and Obligations, and expressly agrees for the benefit of City, to pay, perform and discharge all obligations of Assignor under the DA and to comply with all covenants and conditions of Assignor arising from or under the DA.

2. Governing Law; Venue
This Assignment shall be interpreted and enforced in accordance with the laws of the State of California without regard to principles of conflicts of laws. Any action to enforce or interpret this Assignment shall be filed and litigated exclusively in the Superior Court of San Mateo County, California or in the Federal District Court for the Northern District of California.

3. Entire Agreement/Amendment
This Assignment constitutes the entire agreement among the Parties with respect to the subject matter hereof, and supersedes all prior written and oral agreements with respect to the matters covered by this Assignment. This Assignment may not be amended except by an instrument in writing signed by each of the Parties and consented to in writing by City.

4. Further Assurances
Each Party shall execute and deliver such other certificates, agreements and documents and take such other actions as may be reasonably required to consummate or implement the transactions contemplated by this Assignment and the DA.

5. Benefit and Liability
Subject to the restrictions on transfer set forth in the DA, this Assignment and all of the terms, covenants, and conditions hereof shall extend to the benefit of and be binding upon the respective successors and permitted assigns of the Parties.

6. Rights of City
All rights of City under the DA and all obligations to City under the DA which were enforceable by City against Assignor prior to the Effective Date of this Assignment shall be fully enforceable by City against Assignee from and after the Effective Date of this Assignment.

7. Rights of Assignee
All rights of Assignor and obligations to Assignor under the DA which were enforceable by Assignor against City prior to the Effective Date of this Assignment shall be fully enforceable by Assignee against City from and after the Effective Date of this Assignment.

8. Release
As of the Effective Date, Assignor hereby relinquishes all rights under the DA, and all obligations of Assignor under the DA shall be terminated as to, and shall have no more force or

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effect with respect to, Assignor, and Assignor is hereby released from any and all obligations under the DA.

9. In the event of any litigation pertaining to this Assignment, the losing Party shall pay the

10. City Consent; City is a Third-Party Beneficiary
rsignature below is for the limited purposes of indicating consent to the assignment and assumption and release set forth in this Assignment (if necessary under the DA) pursuant to Section 10.1 of the DA, and for clarifying that there is privity of contract between City and Assignee with respect to the DA. The City is an intended third-party beneficiary of this Assignment, and has the right, but not the obligation, to enforce the provisions hereof.

11. Recordation
Assignor shall cause this Assignment to be recorded in the Official Records of San Mateo County, and shall promptly provide conformed copies of the recorded Assignment to City and Assignee.

12. Address for Notices
[ADDRESS]

13. Captions; Interpretation
The section headings used herein are solely for convenience and shall not be used to interpret this Assignment. The Parties acknowledge that this Assignment is the product of negotiation and compromise on the part of both Parties, and the Parties agree, that since both have participated in the negotiation and drafting of this Assignment, this Assignment shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it.

14. Severability
If any term, provision, condition or covenant of this Assignment or its application to any party or circumstances shall be held by a court of competent jurisdiction, to any extent, invalid or unenforceable, the remainder of this Assignment, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent permitted by law unless the rights and obligations of the Parties have been materially altered or abridged thereby.

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15. Counterparts
This Assignment may be executed in counterparts, each of which shall, irrespective of the date of its execution and delivery, be deemed an original, and the counterparts together shall constitute one and the same instrument.

IN WITNESS WHEREOF Assignor and Assignee have executed this Assignment as of the date first set forth above.

ASSIGNOR: ________________________________, _________________________________ By: FORM DO NOT SIGN Name:

Its:

ASSIGNEE: ________________________________, _________________________________ By: FORM DO NOT SIGN Name:

Its:
[City Signatures on Following Page]

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City of San Carlos, a California municipal corporation, hereby consents to the assignment and assumption described in the foregoing Assignment and Assumption Agreement.

CITY:

CITY OF SAN CARLOS, California municipal corporation
By: FORM DO NOT SIGN
_______________, City Manager
ATTEST:
________________, City Clerk
APPROVED AS TO FORM:
__________________, City Attorney

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Exhibit D Page 1
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EXHIBIT D

WATER SUPPLY ASSESSMENT FOR THE PROJECT

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EKI ENVIRONMENT & WATER, INC.
www.ekiconsult.com
2001 Junipero Serra Blvd, Suite 300 • Daly City, CA 94014 Water Supply Assessment for
642 Quarry Road Project
Mid-Peninsula Water District
October 2022
EKI C20105.00

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Legend
Mid-Peninsula Water District
Service Area and Project Location
642 Quarry Road Project October 2022
EKI C20105.00
Figure 1
City of San Carlos, CA
Project Boundary
Mid-Peninsula Water District
Proposed Project
0 4,000 8,000
Feet
MPWD Service Area
Notes

1. All locations are approximate.

Abbreviations
MPWD - Mid-Peninsula Water District
Sources

1. Basemap provided by ESRI.

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Project Location and
Parcel Boundaries
642 Quarry Road Project
City of San Carlos, CA
October 2022
EKI C20105.00
Figure 2
Notes

1. All locations are approximate.

Abbreviations
APN = Assessor Parcel Number
Sources

1. Parcel Boundaries courtesy of San Mateo County GIS.

2. Basemap is ESRI's ArcGIS Online world aerial map,
obtained 3 October 2022.
0 150 300
Feet
Project Boundary
Legend
APN 046041380

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Appendix A

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642 QUARRY ROAD Project Number: 10294.001 PRE APPLICATION SUBMITTAL 08.31.2021 PLANNING SUBMITTAL 10.15.2021 0 GRAPHIC SCALE: 1" = 30' 60 30 30

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Appendix B

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Appendix C

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Exhibit E Page 1
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EXHIBIT E

PUBLIC IMPROVEMENT AGREEMENT

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4856-8447-6239 v23

NO FEE DOCUMENT
Government Code §6103

RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:

City of San Carlos
600 Elm Street
San Carlos, CA 94070
Attention: City Clerk
Only
O.K. to accept: ___________ Project
Name: _______________________
Date: __________________ Project
Address: ______________________________________________ APN: _______________________ Project No.: _______________________

PUBLIC IMPROVEMENT AGREEMENT
_____________, 20__ by and between the City of San Carlos, a California municipal corporation l may be

RECITALS
A. Principal owns the real property located at 642 Quarry Road, in the City of San Carlos, California, which is more particularly described in Exhibi B. Principal has applied for and obtained certain development approvals from the City Principal to construct certain public improvements and dedicate those public improvements to the City after construction is complete.

C. This Agreement memorializes the understanding between the parties regarding the terms and conditions under which Principal will construct and City will accept the required public improvements.

OPERATIVE PROVISIONS
NOW, THEREFORE, in consideration of the mutual promises and covenants made by the parties and contained here and other consideration, the value and adequacy of which are hereby acknowledged, the parties agree as follows:

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1. Construction of Improvements. The Principal agrees to construct and install on the improvement plans submitted by Principal and approved by the City Engineer or his or her designee (hereafter the
at its sole cost and expense, obtain all necessary permits and approvals and give all necessary and incidental notices required for the lawful construction of the Required Improvements and agreements required by the respective utility companies and agreed to make all improvements required by each of the said utility companies in connection with the Required Improvements. The Required Improvements shall be constructed in accordance with all approved maps, plans, specifications, standard drawings, and special amendments thereto on file with City, as well as all applicable federal, state, and local laws, ordinances, regulations, codes, standards, and other requirements applicable at the time work is actually commenced. Principal shall complete the construction of the Required Improvements prior to issuance of a Temporary Certificate of Occupancy (or Certificate of Occupancy if no Temporary Certificate of Occupancy issues) for the first building in the Project.
a. Standard of Performance. Principal and its contractors, if any, shall perform all work required to construct the Required Improvements under this Agreement in a skillful and workmanlike manner, and consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California. Principal represents and maintains that it or its contractors shall be skilled in the professional calling necessary to perform the work. Principal warrants that all of its employees and contractors shall have sufficient skill and experience to perform the work assigned to them, and that they shall have all licenses, permits, qualifications and approvals of whatever nature that are legally required to perform the work, and that such licenses, permits, qualifications and approvals shall be maintained throughout the term of this Agreement.
b. Alterations to Improvements. All work shall be done and improvements made and completed as shown on approved plans and specifications, and any subsequent alterations thereto. If during the course of construction and installation of the Required Improvements it is determined that the public interest requires alterations in the Required Improvements, Principal shall undertake such design and construction changes as may be reasonably required by City. Any and all alterations in the plans and specifications and the Required Improvements to be completed may be accomplished without giving prior notice thereof c. Fees and Charges. Principal shall pay when due all persons furnishing labor or materials in connection with this Agreement. Principal shall, at its sole cost and expense, pay all fees, charges, and taxes arising out of construction of the Required Improvements, including, but not limited to, all plan check, design review, engineering, inspections, and other service fees, and any connection fees established by City ordinance, resolution, regulation, or policy, or as established by City or as required by other governmental agencies having jurisdiction over the Required Improvements. Inspection fees shall include inspections which are required to be

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as a result of the failure to pass prescribed tests or specifications due to improper methods or materials of construction or quality of the workmanship and where a second or subsequent - 2. Completion of Improvements. The Required Improvements shall be complete prior to issuance of a Temporary Certificate of Occupancy (or Certificate of Occupancy if no Temporary Certificate of Occupancy issues) for the first building in the Project. Upon satisfactory completion of all Required Improvements as determined by the City Engineer, Principal shall offer to dedicate the Required Improvements to the City, and City agrees to accept that offer of dedication in accordance with its policies and procedures and the terms of this Agreement.

3. Title to Required Improvements. The City shall not accept the Required Improvements unless they are constructed in conformity with the approved plans and specifications, approved modifications, if any, the approved final or parcel map, and City Improvement Standards and Specifications, to the satisfaction of the City Engineer. Until such time as the Required Improvements are accepted by the City, Principal shall retain title and shall be responsible for, and bear the risk of loss to, any of the improvements constructed or installed.

Title to the Required Improvements shall vest absolutely in the City upon completion and acceptance in writing of such Required Improvements by City. The City shall not accept the Required Improvements unless title to the Required Improvements is entirely free from lien. Prior to acceptance, Principal shall supply the City with appropriate lien releases, at no cost to and in a form acceptable to the City.
a. . Upon the acceptance of the Required
Improvements by City, Princip
a notice of completion for the accepted Required Improvements in accordance with Article 2 of Chapter 4 of Title 2 of Part 6 of Division 4 of the Civil Code, at which time the accepted Required Improvements shall become the sole and exclusive property of City without payment therefor. b. City Acceptance of Public Improvements. Issuance by City of occupancy permits for any buildings or structures located on the Property shall not be construed in any manner c. -Built or Record Drawings.

Notwithstanding the foregoing, City may not accept any Required Improvements unless and until Principa - such Required Improvements. The drawings shall be certified and shall reflect the condition of the Required Improvements as constructed, with all changes incorporated therein.

4. Inspection. Principal shall at all times maintain proper facilities and safe access for inspection of the Required Improvements. City shall be allowed to inspect the Required Improvements and all materials to be used therein at any time. Upon completion of the work, the Principal may request a final inspection by the City Engineer or his designee. If the City Engineer or the designated representative determines that the work has been completed in accordance with this Agreement, then the City Engineer shall certify the completion of the Required Improvements to the City. No improvements shall be finally accepted unless all aspects of the work have been

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inspected and determined to have been completed in accordance with the Improvement Plans and City standards. Principal shall bear all costs of plan check, inspection and certification.

5. Maintenance of Improvements. City shall not be responsible or liable for the maintenance or care of the Required Improvements until City formally approves and accepts them in accordance with its policies and procedures. City shall exercise no control over the Required Improvements until approved and accepted. Any use by any person of the Required Improvements, or any portion thereof, shall be at the sole and exclusive risk of the Principal at all Required Improvements in a state of good repair until they are completed by Principal and approved and accepted by City, and until the security for the performance of this Agreement is released. Maintenance shall include, but shall not be limited to, repair of pavement, curbs, gutters, sidewalks, signals, parkways, water mains, and sewers; maintaining all landscaping in a vigorous and thriving condition reasonably acceptable to City; removal of debris from sewers and storm drains; and sweeping, repairing, and maintaining in good and safe condition all streets and street to initiate all maintenance work, but if it shall
fail to do so, it shall promptly perform such maintenance work when notified to do so by City. If Principal fails to properly prosecute its maintenance obligation under this section, City may do all work necessary for such maintenance and the cost thereof shall be the responsibility of Principal and its surety under this Agreement. City shall not be responsible or liable for any damages or injury of any nature in any way related to or caused by the Required Improvements or their condition prior to acceptance. Until final acceptance of the Required Improvements, Principal shall give good and adequate warning to the public of each and every dangerous condition existing on the Property, and will take reasonable actions to protect the public from such dangerous conditions.

6. Injury to Public Improvements, Public Property or Public Utilities Facilities.

Principal shall replace or repair, or have replaced or repaired, all public streets, public improvements, public utility facilities, and surveying monuments which are destroyed or damaged in the performance of any work under this Agreement. Principal shall bear the entire cost of replacement or repairs of any and all public or private utility property damaged or destroyed in the performance of any work done under this Agreement, whether such property is owned by the United States or any agency thereof, or the State of California, or any agency or political subdivision thereof, or by the City or any public or private utility corporation or by any combination of such Principals. Any repair or replacement shall be to the satisfaction of the City Engineer. City shall be under no obligation whatsoever to accept the Required Improvements completed under this agreement until such time as all such repairs have been fully made.

7. Warranty. If, within a period of two (2) years after final acceptance by the City of the Required Improvements, any improvement or part of any improvement furnished and/or installed or constructed, or caused to be installed or constructed by Principal, or any of the work done under this Agreement materially fails to fulfill any of the requirements of this Agreement or the specifications referred to herein, Principal shall without delay and without any cost to City, repair, replace or reconstruct any defective or otherwise unsatisfactory part or parts of the improvements. If the Principal fails to act promptly or in accordance with this requirement, or if the exigencies of the situation require repairs or replacements to be made before the Principal can be notified, then the City may, at its option, make the necessary repairs or replacements or perform

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the necessary work, and Principal shall pay to City the actual cost of such repairs plus fifteen percent (15%) within thirty (30) days of the date of billing for such work by City. As to any Required Improvements which have been repaired, replaced, or reconstructed during the Warranty, Principal and its surety hereby agree to extend the Warranty for an additional __ year period Nothing herein shall relieve Principal from any other liability it may have under federal, state, or local law to repair, replace, or reconstruct any Required Improvement following expiration of the the expiration or termination of this Agreement.

8. Defense, Indemnification and Hold Harmless. Principal shall defend, indemnify, and hold harmless City, its elected officials, officers, employees, and agents from any and all actual or alleged claims, demands, causes of action, liability, loss, damage, or injury, to property or persons, including wrongful death, whether imposed by a court of law or by administrative action of any federal, state, or local governmental body or agency, arising out of or incident to any acts, omissions, negligence, or willful misconduct of Principal, its personnel, employees, agents, or contractors in connection with or arising out of construction or maintenance of the Required Improvements, or performance of this Agreement. This indemnification includes, without limitation, the payment of all penalties, fines, judgme related costs or expenses, and the reimbursement of City, its elected officials, officers, employees, and/or agents for all legal expenses and costs incurred by each of them. This indemnification excludes only such portion of any claim, demand, cause of action, liability, loss, damage, penalty, fine, or injury, to property or persons, including wrongful death, which is caused solely and exclusively by the gross negligence or willful misconduct of City as determined by a court or survive the expiration or termination of this Agreement, and shall not be restricted to insurance proceeds, if any, received by City, its elected officials, officers, employees, or agents.

9. Security.
a. Required Security. Concurrently with the execution of this Agreement, the Principal shall furnish the City with:
(1) Faithful Performance Security. Principal shall provide faithful performance security
security). This security shall be in the amount of one hundred percent (100%) of the total estimated cost of the Required Improvements, as determined by the City Engineer, which total cost is in the amount of $ ( and No/100 Dollars). (2) Payment Security. Principal shall also provide payment security to secure payment to the contractors, subcontractors, laborers, material men, and other persons furnishing labor, materials, or equipm
be in the amount of fifty percent (50%) of the total estimated cost of the Required Improvements, as determined by the City Engineer, which total cost is in the amount of $ ( and No/100 Dollars), and shall secure the obligations set forth in Title 1 (commencing with Section 8000) through Title 3 (commencing with Section 9000) of Part 6 of Division 4 of the Civil Code of the State of California.

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(3) Guarantee and Warranty Security. Principal shall also file with this estimated cost of the Required Improvements, as determined by the City Engineer, which total cost is in the amount of $ ( and No/100 Dollars) to guarantee and warrant the Required Improvements for a period of two (2) years following their completion and acceptance against any defective work or labor done, or defective materials furnished. b. Letter of Credit in Lieu of Bonds. In lieu of said surety bonds, Principal shall have the right to deposit with the City, either a standby irrevocable letter of credit in a form acceptable to the City, issued by a financial institution to the City as beneficiary, or cash, in the sum of $ _________ to secure the faithful performance of this agreement as aforesaid, and the sum of $ _________ for the purpose of securing payment of the claims of the contractor, subcontractor and all persons renting equipment or furnishing labor and materials to them in connection with said work and improvements.
c. Additional Requirements.
(1) Any bonds submitted as security pursuant to this section shall be furnished by companies who are authorized and licensed by the Insurance Commissioner of the The company shall maintain in this State at least one office for the conduct of its business. Bonds must be approved as to form by the City Attorney and approved as to sufficiency by the City Engineer. The premiums for said bonds shall be paid by Principal. (2) The surety (or sureties) shall furnish reports as to the financial conditions from time to time as requested by the City.
(3) Alternative forms of security shall be approved by the City Engineer and shall be approved as to form by the City Attorney. All required securities shall be in a form approved by the City Attorney.
(4) No change, alteration, or addition to the terms of this Agreement or the plans and specifications incorporated herein shall in any manner affect the obligation of the sureties.
(5) The securities shall be irrevocable, shall not be limited as to time (except as to the one-year guarantee and warranty period) and shall provide that they may be released, in whole or part, only upon the written approval of the City Engineer and as provided in this Agreement. All securities provided pursuant to this Agreement shall expressly obligate the Improvements, whether or not the surety is given notice of such an extension by the City. (6) The Attorney-in-Fact (resident agent) who executes the securities on behalf of the surety company must attach a copy of his/her Power of Attorney as evidence of his authority. A notary shall acknowledge the power as of the date of the execution of the surety bond that it covers.

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d. . While no action of Principal shall be required in order for City to realize on its security under any security instrument, Principal agrees to cooperate with City to facilitate C
City from such realization under any Security instrument. Notwithstanding the giving of any security instrument or the subsequent expiration of any security instrument or any failure by any surety or financial institution to perform its obligations with respect thereto, Principal shall be personally liable for performance under this Agreement and for payment of the cost of the labor and materials for the improvements required to be constructed or installed hereby and shall, within ten (10) days after written demand therefor, deliver to City such substitute security as City shall require satisfying the requirements in this Section 10. e. Release of Security.
(1) Guarantee and Warranty Security. Any unused portion of the guarantee and warranty security may be released two (2) years after acceptance of the Required Improvements by the City. The amount to be released shall first be reduced by the amount deemed necessary by the City to correct any defects in the Required Improvements that are known or believed by the City to exist at the end of the guarantee and warranty period. Any unreleased portion of the guarantee and warranty security shall remain in full force and effect unless and until the City notifies Principal in writing that the necessary repairs have been made to the satisfaction of the City Engineer and that the warranty period has been successfully completed. (2) Payment Security. The payment security may be released after passage of the time within which claims of lien are required to be recorded pursuant to Article 2 of Chapter 4 of Title 2 of Part 6 of Division 4 of the Civil Code (commencing with Section 8410) and upon presentation of proof to the satisfaction of the City Attorney that no claims have been recorded, but in no event shall such security be released prior to one hundred and twenty (120) days after acceptance of the Required Improvements by the City. The amount to be released shall first be reduced by the total of all claims on which an action has been filed and notice thereof given in writing to the City. City expressly may require the surety not to release the amount of security deemed necessary by City to assure payment of reasonable expenses and fees, including reasonable (3) Faithful Performance Security. The faithful performance security may be released upon acceptance of the Required Improvements by the City.

10. Insurance. Principal shall procure and maintain, and shall require its contractors to procure and maintain, during construction of any Public Improvement pursuant to this Agreement, insurance of the types, in the amounts, and meeting the terms and conditions described in Exhibit

11. Principal Not Agent of City. Neither Principal nor any contractors, or subcontractors are or shall be considered to be agents of the City in connection with

12. Default; Notice; Remedies.

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a. Notice. If Principal neglects, refuses, or fails to fulfill or timely complete any obligation, term, or condition of this Agreement, or if City determines there is a violation of any federal, state, or local law, ordinance, regulation, code, standard, or other requirement, City may at any time thereafter declare Principal to be in default or violation of this Agreement and make written demand upon Principal or its surety, or both, to immediately remedy the default or violation. Principal shall commence the work required to remedy the default or violation within ten (10) days of the written demand from the City. If the default or violation constitutes an immediate threat to the public health, safety, or welfare, City may provide the demand verbally, and Principal shall commence the required work within twenty-four (24) hours thereof. shall be liable to City for all costs of construction and installation of the Required Improvements and all other administrative costs expenses as provided for in Section 9.0 of this Agreement. b. Failure to Remedy; City Action. If the work required to remedy the noticed default or violation is not diligently prosecuted to a substantial completion acceptable to City within a reasonable time designated by the City, City may complete all remaining work, arrange for the completion of all remaining work, and/or conduct such remedial activity as in its sole and absolute discretion it believes is required to remedy the default or violation. All such work or remedial activity shall be at the sole and absolute cost, expense, and liability of Principal and its such actions shall in no way be limited by the fact that Principal or its surety may have constructed for performance. In the event City elects to complete or arrange for completion of the remaining work and improvements, City may require all work by Principal or its surety to cease in order to allow adequate coordination by City. Notwithstanding the foregoing, if conditions precedent for reversion to acreage can be met and if the interests of City will not be prejudiced thereby, City may also process a reversion to acreage and thereafter recover from Principal or its surety the full cost and expense incurred.
c. Other Remedies. No action by City pursuant to this section shall prohibit City from exercising any other right or pursuing any other legal or equitable remedy available under this Agreement or any federal, state, or local law. City may exercise its rights and remedies independently or cumulatively, and City may pursue inconsistent remedies. City may institute an action for damages, injunctive relief, or specific performance.

13. Notices. All notices required under this Agreement shall be in writing, and delivered in person or sent by registered or certified mail, postage prepaid.

Notices required to be given to City shall be addressed as follows:

City of San Carlos
City Engineer
600 Elm St.

San Carlos, CA 94070
Notices required to be given to Principal shall be addressed as follows:

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Name
Address
Address

14. . If any arbitration, lawsuit, or other legal action or proceeding is brought by one Party against the other Party in connection with this Agreement, the prevailing party, whether by final judgment or arbitration award, shall be entitled to and recover from the other party all fees and costs. Any judgment, order, or award entered in such legal and costs.

15. Assignment. Principal shall not assign, hypothecate, or transfer, either directly or by operation of law, this Agreement or any interest herein without prior written consent of City.

Any attempt to do so shall be null and void, and any assignee, hypothecate, or transferee shall acquire no right or interest by reason of such attempted assignment, hypothecation, or transfer. or transfer shall not release or discharge Principal from any duty or responsibility under this Agreement.

16. Compliance with Laws. Principal, its agents, employees, contractors, and subcontractors shall comply with all federal, state and local laws in the performance of the work required by this Agreement including, but not limited to, obtaining all applicable permits and licenses.

17. Prevailing Wage. If and to the extent applicable, Principal shall comply with, and cause its contractors and subcontractors to comply with, all State Labor Code requirements and implemen
as defined by Labor Code section 1720, including the payment of prevailing wages for any of the ode section 1720
Prevailing Wage Laws
City, certified copies of payroll records to City at the Property or at another location within City, and to maintain and make records available to City and its designees for inspection and copying to ensure compliance with Prevailing Wage Laws; and (3) include in each of its contractor agreements, a provision in form acceptable to City, obligating the contractor to require its contractors and/or subcontractors to comply with Prevailing Wage Laws, and to submit, upon request by City, certified copies of payroll records to City and to maintain and make such payroll records available to City and its designees for inspection and copying during regular business hours at the Property or at another location within City.

In the event any liabilities, demands, obligations, lawsuits, proceedings, orders, claims, g
with or challenging a subpoena, and costs of carrying out a settlement, judgment, decree, or order comply with all Prevailing Wage Laws or failure to comply with all Prevailing Wage Laws, including all Claims that may be made by contractors, subcontractors or other third party claimants Prevailing Wage Claim
Prevailing Wage Claims

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City Parties
shall meet and confer within 15 days of receipt of such Prevailing Wage Claim to coordinate the defense, provided that Principal and City Parties shall meet and confer within 5 days if the Prevailing Wage Claim is a subpoena. Principal shall defend City Parties (with counsel reasonably acceptable to the City) against any Prevailing Wage Claims. Notwithstanding anything to the contrary, if the City Parties elect to retain independent counsel in connection with the Prevailing Wage Claims, the City Parties and the Principal shall enter into a Joint Defense Agreement. This provision in no way alters the applicability of Chapter 1.30 of the San Carlos Municipal Code to Prevailing Wage Claims.

Principal hereby waives and releases City Parties from any and all manner of Claims or other compensation whatsoever, in law or equity, of whatever kind or nature, whether known or unknown, direct or indirect, foreseeable or unforeseeable, absolute or contingent, now existing or which may in the future arise, including lost business opportunities or economic advantage, and special and consequential damages, arising out of, directly or indirectly, or in any way connected familiar with the provisions of Section 1542 of the California Civil Code which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE

CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO

EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE

RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE

MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR OR RELEASED PARTY.

INITIALS: PRINCIPAL _______

18. Waiver
this Agreement, shall not relieve Principal of any of its obligations under this Agreement, whether intentional or
unintentional. Principal agrees to waive, as a defense, counterclaim or set off, any and all defects, irregularities or deficiencies in the authorization, execution or performance of the Required Improvements or this Agreement, as well as the laws, rules, regulations, ordinances or resolutions of City with regards to the authorization, execution or performance of the Required Improvements or this Agreement.

19. No Vesting of Rights. Entering into this Agreement shall not be construed to vest change in any zoning or building law or ordinance.

20. Approvals by City; Amendment. Any approval or consent that is to be given by the City under this Agreement shall be in writing, and any approval or consent that is not in writing shall not be binding on the City. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties.

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21. Construction and Interpretation. It is agreed and acknowledged by Principal that the provisions of this Agreement have been arrived at through negotiation, and that Principal has had a full and fair opportunity to revise the provisions of this Agreement and to have such provisions reviewed by legal counsel. Therefore, the normal rule of construction that any ambiguities are to be resolved against the drafting party shall not apply in construing or interpreting this Agreement.

22. Successors and Assigns -- Covenant Running With the Land. This Agreement shall inure to the benefit of, and be binding upon, the successors and assigns of the respective parties.

The Agreement shall be recorded in the Office of the Recorder of San Mateo County and shall constitute a covenant running with the land and an equitable servitude upon the subject property.

23. Actions. Any action by any party to this Agreement, or any action concerning a security furnished pursuant thereto, shall be brought in the appropriate court of competent jurisdiction within the County of San Mateo, State of California, notwithstanding any other provision of law which may provide that such action may be brought in some other location. The law governing this Agreement is the law of the State of California.

24. Integration. This Agreement is an integrated agreement. It supersedes all prior negotiations, representations, or agreements, either written or oral.

25. Construction; References; Captions. It being agreed the Parties or their agents have participated in the preparation of this Agreement, the language of this Agreement shall be construed simply, according to its fair meaning, and not strictly for or against any Party. Any term referencing time, days, or period for performance shall be deemed calendar days and not work days. All references to Principal include all personnel, employees, agents, and subcontractors of Principal, except as otherwise specified in this Agreement. All references to City include its elected officials, officers, employees, agents, and volunteers except as otherwise specified in this Agreement. The captions of the various articles and paragraphs are for convenience and ease of reference only, and do not define, limit, augment, or describe the scope, content, or intent of this Agreement.

26. Severability. If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall continue in full force without being impaired.

27. Counterparts. This Agreement may be executed in counterpart originals, which taken together, shall constitute one and the same instrument.

28. Effective Date of Agreement. This Agreement shall not become effective until the date it has been formally approved by the City and executed by the appropriate authorities of City and Principal.

29. Relationship Between The Parties. The Parties hereby mutually agree that neither this Agreement, nor any other related entitlement, permit, nor approval issued by City for the Property shall operate to create the relationship of partnership, joint venture, or agency between

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control and dominion of Principal. Nothing herein shall be deemed to make Principal or its contractors an agent or contractor of City.

IN WITNESS WHEREOF, the parties have executed this Agreement as follows:

CITY OF SAN CARLOS
Jeff Maltbie, City Manager
ATTEST: ___________________________ Crystal Mui
City Clerk

APPROVED AS TO FORM
___________________________ Gregory J. Rubens
City Attorney
PRINCIPAL:

Name:

Title:

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LEGAL DESCRIPTION OF PROPERTY

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INSURANCE
following policies:

Construction Minimum General Liability - $2 million per occurrence & general aggregate limit of twice required occurrence, naming City as additional insured as set forth below
Minimum Auto Liability - $1 million per occurrence & general aggregate limit of twice required occurrence
- $1 million per accident for bodily injury or disease
The Certificate of Insurance submitted shall be maintained during the term of this Agreement. In City of San Carlos, its Council Members, and all officers, employees, and agents of each of , and all officers, employees,
any claim, demand, suite or judgment made, brought or recovered against Principal. The policy shall protect each of them in the same manner as though a separate policy had been issued to policy beyond the amount or amounts shown or to which the company would have been liable if on
Contractor shall be primary over any insurance carried by the City and that the policy will not be cancelled or reduced without thirty (30) days prior notice in writing being given to the City.

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EXHIBIT F

PUBLIC ACCESS COVENANT

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OFFICIAL BUSINESS
Document entitled to free recording
Government Code Section 6103

RECORDING REQUESTED BY AND
PLEASE RETURN TO:

City of San Carlos
600 Elm Street
San Carlos, CA 94070
Attention: City Clerk

SPACE ABOVE THIS LINE FOR
APN: 046-041-380
Address: 642 Quarry Road, San Carlos, CA

COVENANTS, AGREEMENTS, AND DEED RESTRICTIONS FOR PRIVATELY

OWNED PUBLICLY ACCESSIBLE (POPA) OPEN SPACE
This Covenants, Agreements, and Deed Restrictions for Privately Owned Publicly Agreement
Effective Date
City Grantor

RECITALS
A. Grantor owns that certain real property located in the City of San Carlos, State of California, as more particularly described in Exhibit A Property Property
B. Grantor intends to develop the Property with a research and development campus that will include two six-story office/laboratory buildings with operations through Biosafety Building -level
parking structure, which includes o Project
North Building
South Building
C. Grantor and City are parties to that certain Development Agreement dated ____ Development Agreement
Project Approvals

1. Certification of the MND by Resolution No. _______ adopted by the City Council on _______________;

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2. MMRP
Resolution No. ___ adopted by the City Council on ____________;

3. Approval of rezoning and Planned Development Plan by Ordinance No. ________ adopted by the City Council on _____________;

4. Approval of Transportation Demand Management Plan by the Planning Commission on June 19, 2023;

5. Approval of Design Review Certificate by the Planning Commission on June 19, 2023;

6. Approval of Grading & Dirt Haul Certificate by the Planning Commission on June 19, 2023.

D. Central
Plaza
Corner Plaza
as more particularly described in Exhibit B POPA Open Space incorporated herein. The portion of the Property that is subject to and bound by this Agreement is described in Exhibit B.

D. This Agreement is intended to satisfy Condition No. ___ of the _____, as well as Section ___ of the Development Agreement.

E. The parties now desire to set forth their respective rights and obligations with respect to the operation, use and maintenance of the POPA Open Space.

NOW, THEREFORE, for good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby covenant, represent, and agree as follows:

1. Definitions. The following defined terms shall apply to this Agreement. a. means the building structures located on the Property. b. means the pickleball court, a bocce court, a community event space, a multi-purpose stage, a fenced dog park, and a community botanical garden. c. Furnishings -affixed outdoor equipment and furnishings, including, but not limited to, outdoor dining furniture, displays, and seating. d. means the landscape area(s) within the POPA Open
Space as shown in Exhibit C.
e. Creek Path the proposed path adjacent to Belmont Creek and to the POPA Open Space, as depicted on Exhibit B, that functions as a public path for bicyclists and pedestrians. The Creek Path is governed by a separately recorded public access easement (PAE).

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f. means all other improvements on the
Property not associated with the POPA Open Space, which may be located adjacent to or below (i.e., below-grade parking or utilities) the POPA Open Space. g. POPA Open Space Improvements Section 6.
h. is defined in Section 2.
i. means all other improvements within the
POPA Open Space, including, but not limited to, Furnishings, benches, signage, trash receptacles, lighting, finish materials, and utilities. j. means pathway
improvements, consisting of sidewalk materials suitable for sidewalk use consistent with applicable law, including the Americans with Disabilities Act (ADA), constructed by Grantor within the POPA Open Space, and related landscaping, landscape improvements, including an irrigation system, and Related Improvements installed within the Landscape Area by Grantor. k.
entitlements, and permits other than the Existing Approvals necessary or desirable for implementation or modification of the Project.

2. Grant of Public Access to POPA Open Space. The POPA Open Space shall be Public Plaza Purposes
Space as a privately owned and maintained plaza held open to the public for public access and open space purposes, including, but not limited to, walking, sitting, picnicking, dining, active and passive recreational uses, and travel by non-automotive means, every day between and during the hours set forth in Section 5 (Operating Hours) of this Agreement.

3. Termination. Notwithstanding any other provision of this Agreement, this Agreement shall terminate in the event that:
a. All Buildings and Improvements associated with the Project are demolished (provided that this Agreement shall not terminate in the event that any Building is demolished and reconstructed following a casualty), or the Project undergoes a substantial change that is not already permitted under the Project Approvals, and public access cannot be maintained by modifying the boundaries of the Central Open Space or Corner Plaza; or b. City unilaterally terminates this Agreement by a document that has been approved and executed by City, acknowledged and recorded in the Official Records of San Mateo County, California.

Except as provided in this Section, the Agreement shall survive any damage, renovation, repair or replacement of all or any portion of Grantor's Property or the privately owned improvements thereon. The rights granted pursuant to this Agreement shall not be terminated or extinguished by nonuse, abandonment, or merger.

4. Signage. The following signage shall be clearly and visibly posted within the POPA Open Space by Grantor and maintained in good condition. Signs must comply with all

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Laws (defined below) and Grantor must obtain all required Subsequent Project Approvals prior to installation.
a. A primary monument sign with the name of the plaza must be prominently located at the main entrance to the Central Plaza; additional monument signs located at secondary entrances may be considered.
b. At each entrance(s) to the POPA Open Space, a sign shall be posted with the following rules, regulations, and information for visitors:

1. announce the area as a privately owned publicly accessible open space for public recreation and use;

2. hours of use;

3. contact for maintenance and safety concerns; and

4. -1-
c. Fire lane signage must be posted in accordance with Fire Code requirements.

5. Operating Hours. The POPA Open Space shall be publicly accessible during the operating hours of City parks, which may change from time to time, but are generally seven days a week from thirty minutes prior to sunrise to thirty minutes after sundown. The Creek Path, under a separate PAE, is accessible to the public for ingress and egress by pedestrians and nonautomotive travel during the operating hours of City parks, which may change from time to time, but are generally seven days a week from thirty minutes prior to sunrise to thirty minutes after sundown.

6. Compliance with Law. Grantor shall comply with all applicable legal requirements including all federal, state and local laws and regulations (including City ordinances, resolutions and policies, and requirements of other agencies with authority), whether or not said laws or regulations are expressly s Laws
shall, at its sole cost and expense, obtain and maintain all necessary permits and licenses.

7. Maintenance. Grantor, at its expense, shall diligently maintain, repair and care for the POPA Open Space and the improvements to be constructed within the POPA Open Space in accordance with the Development Agreement and the Project Approvals, including, but not limited to, the Elements, Landscape Area, Related Improvements, and Sidewalk and Landscape Improvem POPA Open Space Improvements
replacements of the same in conformance with this Agreement and in accordance with the custom and practice generally applicable to public open spaces in the City. City shall not be responsible for any of the costs of maintaining, repairing or replacing the POPA Open Space Maintenance Standards
complied with by Grantor and its maintenance staff, contractors and/or subcontractors.

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a. Landscape Maintenance: Landscape maintenance shall include:
watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural appearance, and irrigation coverage; replacement, as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; regular maintenance and care of the demonstration/educational garden; staking for support of trees; and repair and replacement of irrigation system components, as needed. Irrigation shall be installed and maintained in a manner that preserves vegetation while reducing use of water. b. Clean-Up Maintenance: Clean-up maintenance shall include: maintenance of all sidewalks, paths, and other paved areas, play equipment, benches, picnic tables and other improvements, in clean and weed-free condition; maintenance of all such areas clear of dirt, mud, trash, waste, debris or other matter which is unsafe or unsightly; removal of graffiti or other forms of vandalism; removal of all trash, litter, and other debris from improvements and landscaping prior to mowing; clearance and cleaning of all areas maintained prior to the end of the day on which maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers. c. Hardscape and Improvements Maintenance: Hardscape and improvements maintenance shall include: upkeep, repair and replacement of all exterior lighting fixtures, bulbs, ballasts and wiring; benches and other seating; picnic tables; utilities systems; concrete work; path paving; water fountains; bollards; pergolas; gateways; trash containers; fencing; and all other improvements comprising the POPA Open Space Improvements and any replacements thereof.
d. General: All maintenance work shall conform to all applicable federal and state Occupational Safety and Health Act standards and regulations for the performance of maintenance. Any and all chemicals, unhealthful substances, and pesticides used in and during maintenance shall be applied in strict accordance with all Laws. Precautionary measures shall be employed recognizing that all areas are open to public access. Glyphosate (Roundup) shall not be used at any time.
e. Buildings Along POPA Open Space: The Project Approval includes Buildings with ground-floor commercial uses fronting along the POPA Open Space, which may include Furnishings from time to time. These Furnishings shall not impede use or enjoyment of the POPA Open Space; any Furnishings in the POPA Open Space must be open to general public use; and no Furnishings shall be permanently affixed within the POPA Open Space.

8. Grantor Default; City May Maintain Improvements.
a. If Grantor does not maintain the POPA Open Space and the POPA Open shall have the right but not the obligation to maintain the POPA Open Space and the POPA Open Space Improvements, or to contract for the correction of such deficiencies, after written notice to Grantor. However, prior to taking any such action, City shall notify Grantor in writing if the condition of the POPA Open Space and/or the POPA Open Space Improvements does not conform to the Maintenance Standards and to specify in detail the deficiencies and the actions to be taken by Grantor to cure the deficiencies. Upon notification of any maintenance deficiency,

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Grantor shall have thirty (30) days within which to correct, remedy or cure the deficiency. If the written notice states that the problem is urgent and relates to the public health and safety, then Grantor shall have a reasonable time not to exceed three (3) business days to rectify the problem. b. If Grantor fails to cure any such deficiencies following written notice and an opportunity to cure as provided for above, or should an emergency require immediate action, City, at its option, may make the necessary repairs, replacements or other work, and Grantor shall reimburse City such costs, plus a 15% administrative fee. In addition to the foregoing remedy, City may also pursue any and all other remedies available in law or equity in the event nance obligations set forth herein, and, in the event legal action interest from the date City provided notice under this paragraph 8, as determined by the court.

9. Procedures for Repairs, Upgrades, and Modifications; Closures. It is anticipated that over time the POPA Open Space will require repairs, replacements, upgrades, and modifications by Grantor, similar to a City park, for which the following procedures shall apply:
a. Repairs. Should an Element or Related Improvement be in disrepair, Grantor shall repair it as quickly as feasible to the same working condition as previously existed and approved.
b. Like-for-Like Replacements. Any Element or Related Improvement that has exceeded its useful life or needs replacement can be modified with a like-for-like replacement. Grantor shall submit and obtain all necessary Subsequent Project Approvals prior to performing any such replacement.
c. Upgrades. From time to time, Grantor may desire to upgrade an existing approved Element or Related Improvement to a different Element that provides a similar recreational benefit, enjoyment or activity. Grantor shall submit and obtain all necessary Subsequent Project Approvals prior to installing any such upgrades. d. Modifications. Grantor from time-to-time may wish to modify the POPA Open Space design to align with current recreational trends or changing community interests and Grantor shall submit and obtain all necessary Subsequent Project Approvals prior to performing modifications.
e. Closures During Repairs, Replacements, Upgrades, or Modifications. If Grantor performs repairs, replacements, upgrades, or modifications to the Elements, Sidewalk and Landscape Improvements, and Related Improvements or any Building adjacent to the POPA Open Space Improvements, Grantor may temporarily exclude the public from those Elements, Sidewalk and Landscape Improvements, and Related Improvements that are undergoing or are adjacent to a Building undergoing repairs, replacements, upgrades, or modifications. Grantor shall erect appropriate signage and safety barriers to notify the public of any restriction on public use of the Elements, Sidewalk and Landscape Improvements, and Related Improvements during repairs, replacements, upgrades, and modifications thereto or to any adjacent Building. Grantor shall provide City at least fortyCorner Plaza or Central Plaza lasting one (1) day or more, except that in cases of emergency

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Grantor shall provide City as much notice as reasonably feasible by e-mail or telephone at the email address or telephone number designated by City by written notice.

10. Rules and Regulations. Grantor may adopt and implement reasonable rules and regulations for use of the POPA Open Space consistent with this Agreement, for purposes of public health, safety and security, and to ensure that the POPA Open Space is available and used for Public Plaza Purposes. In addition, Grantor may establish reasonable rules relating to use of the pickleball and bocce courts. Grantor shall provide City notice of such rules and meet and confer with City regarding any City concerns about such rules. Grantor may offer tenants priority and establish an electronic reservation system for use of the pickleball and bocce courts. Signs or directions for accessing the electronic rules and reservation system for the pickleball and bocce courts shall be available to the public in a conspicuous location in, on, or immediately adjacent to the pickleball and bocce courts.

11. Future Redevelopment of Site. Should Grantor desire to redevelop the Property and modify the POPA Open Space design, location, and/or configuration, Grantor shall submit applications to City for all necessary Subsequent Project Approvals and shall make best efforts to ensure that any proposed redevelopment provides substantially the same acreage as the POPA Open Space.

12. No Liability of City. City shall not be responsible for any of the costs of maintaining, repairing, replacing or modifying the POPA Open Space or POPA Open Space Improvements. In addition, neither City nor any of its officers, agents, volunteers or employees shall be liable to Grantor, or its contractors, subcontractors, officers, agents or employees, for any act or omission, injury or damage that may result to any person or property, or any obligation whatsoever, arising out of or in connection with any work to be performed by Grantor hereunder or by failure to perform under this Agreement.

13. Concurrent Uses. Each party agrees and acknowledges that the POPA Open Space will be concurrently used by the public and Grantor. Grantor shall not obstruct, use or permit the use of the POPA Open Space in any manner that will unreasonably interfere with Public Plaza Purposes, its obligations under the Development Agreement, Project Approvals or this Agreement, ingress to, egress from, or public use and enjoyment of the POPA Open Space, or other rights granted hereunder. Without limiting the foregoing, Grantor agrees to utilize diligent good faith efforts to ensure that any maintenance, repair or other work is undertaken expeditiously and in a manner that minimizes any adverse impacts on any of the rights under this Agreement.

14. Liens. Grantor shall pay, when due, all persons furnishing labor or materials in connection with any work to be performed by or on behalf of Grantor related to the POPA Open Space or the POPA Open Space Improvements, and shall kee lien.

15. Covenants Running with the Land. All of the provisions contained in this Agreement shall be binding upon Grantor and its successors and assigns, and all other persons whatsoever. All of the provisions contained in this Agreement shall be enforceable as equitable

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servitudes and shall constitute covenants running with the land pursuant to California law. The provisions of this Agreement shall not be construed as personal obligations of Grantor or as an easement. The parties acknowledge and agree that this Agreement is to implement Section 6.1.1 of the Development Agreement, the terms of which constitute covenants running with the land pursuant to California Government Code Section 65868.5. Each covenant herein to act or refrain binding on Grantor and its heirs, successors and assigns. Each and every contract, deed or other instrument covering, conveying or otherwise transferring the Property or any portion thereof or interest therein shall conclusively be held to have been executed, delivered and accepted subject owner, as applicable, the conveying party shall be released from all obligations under this Agreement accruing after the effective date of such conveyance.

16. Recordation; Amendment; No Waiver. This Agreement shall be recorded in the Official Records of San Mateo County. The parties hereto declare and agree that each of the rights granted hereunder are a burden on the Grantor's Property, and shall inure to the benefit of City, its successors and assigns, and all those taking by, under or through City. This Agreement may be modified only by the written consent of the parties, evidenced by a document that has been fully executed, acknowledged and recorded in the Official Records of San Mateo County, California. No waiver of any breach of any of the terms, covenants, agreements, restrictions or conditions of this Agreement shall be construed to be a waiver of any succeeding breach of the same or other terms, covenants, agreements, restrictions and conditions hereof.

17. Legal and Equitable Relief. Each party shall have the right to prosecute any proceedings at law or in equity against any other party, or any other person or entity, violating or attempting to violate or defaulting in the performance of any of the provisions contained in this Agreement in order to prevent such party, person or entity from violating or attempting to violate or defaulting in the performance of any of the provisions of this Agreement or to recover damages for any such violation or default. It is agreed that damages would be an inadequate remedy for violation of this Agreement by any party and, therefore, injunctive or other appropriate equitable relief shall be available to the other party. The remedies available under this Section 16 shall include, by way of illustration but not limitation, ex parte applications for temporary restraining orders, preliminary injunctions and permanent injunctions enjoining any such violation or attempted violation or default, and actions for specific performance of this Agreement. The result of every action or omission whereby any covenant, condition or restriction herein contained is violated in whole or in part is hereby declared to be and to constitute a nuisance, and every remedy allowed by law or equity against any party, either public or private, shall be applicable against every such result and may be exercised by any party.

18. Attorneys' Fees. In the event that any action is brought by either party hereto as against the other party for the enforcement or declaration of any right or remedy in or under this Agreement or for the breach of any covenant or condition of this Agreement, the prevailing party shall be entitled to recover, and the other party agrees to pay (in addition to any other relief that may be granted) all fees and costs to be fixed by the court therein including, but not limited to, attorneys' fees.

19. Indemnification. Grantor shall indemnify, defend (with counsel reasonably acceptable to City) and hold harmless City and its elected and appointed officials, officers,

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City Party
City Parties
fees) (collectively "Claims"), including, but not limited to, Claims for bodily injury, sickness, disease or death of any person or damage to real or personal property, tangible or intangible arising directly or indirectly from the acts, omissions, negligence or willful misconduct of Grantor or its contractors Grantor Party
Grantor Parties
Agreement. Grantor's indemnity obligations under this Section 19 shall not extend to Claims to the extent occasioned by the gross negligence or willful misconduct of a City Party.

Notwithstanding the foregoing sentence, Grantor shall be required to defend the City Parties against any and all Claims, regardless of the extent to which (or if at all) a City Party contributed or is alleged or found to have caused or contributed to such Claims. Grantor's indemnity obligations shall apply regardless of whether any City Party insurance policies, self-insurance or joint self-insurance has been determined to be applicable to such Claims and regardless of whether or not City has prepared, supplied or approved of plans and specifications for maintenance, repair or replacement of the POPA Open Space Improvements.

20. Insurance.
a. Grantor shall obtain and continuously maintain insurance against claims for injuries to persons or damage to property which may arise out of any manner including (a) any injury to or death of any person or damage to or destruction of any property occurring in, on or about the POPA Open Space, or any part thereof, whether such injury, death, damage or destruction is caused by the person or property of the Grantor, representatives, employees or subcontractors. The insurance carrier is required to maintain an A.M. Best rating of not less than - b. Coverages and Limits. Grantor, at its sole expense, shall continuously maintain the types of coverages and minimum limits indicated below, unless otherwise approved by City in writing. These minimum amounts of coverage will not constitute any limitations or cap on Grantor's indemnification obligations under this Agreement.

1. Commercial General Liability Insurance. Grantor shall maintain occurrence based coverage with limits not less than $2,000,000 per occurrence. If the submitted policies contain aggregate limits, such limits will apply separately to the services, project, or location that is the subject of this Agreement or the aggregate will be twice the required per occurrence limit. The Commercial General Liability insurance policy shall be endorsed to name the City, its officers, agents, employees and volunteers as additional insureds, and to state that the insurance will be primary and not contribute with any insurance or self-insurance maintained by the City.

2. Business Automobile Liability Insurance. Grantor shall maintain coverage with limits not less than $1,000,000 per each accident for owned, hired and non-owned automobiles.

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3. Workers' Compensation and Employer's Liability Insurance.

Liability limits with limits not less than $1,000,000 per each accident for bodily injury or Compensation policy shall contain an endorsement stating that the insurer waives any right to subrogation against the City, its officers, agents, employees, and volunteers.

21. Notices. Any notices required or permitted hereunder shall be in writing and shall be served on the parties at the addresses set forth below. Each such notice shall be either sent by:
(a) overnight delivery using a nationally recognized overnight courier, in which case notice shall be deemed delivered upon receipt or refusal of delivery; (b) by sending the same to such Party by registered or certified mail, return receipt requested, with postage prepaid, in which case notice shall be deemed delivered upon receipt or refuse of delivery; or (c) personal delivery, in which case noti
be changed by written notice to the other parties, provided, however, that no notice of a change of address shall be effective until actual receipt of such notice. Notice given by counsel shall be deemed given by the party represented by such counsel.

To City: City of San Carlos
600 Elm Street
San Carlos, CA 94070
Attn: City Manager
With copies to: City of San Carlos
600 Elm Street
San Carlos, CA 94070
Attn: City Attorney
City of San Carlos
600 Elm Street
San Carlos, CA 94070
Attn: CDD Director
To Grantor: 642 Quarry Owner LLC
Attn: Cyrus Sanandaji
160 Pacific Avenue, Suite 204
San Francisco, CA 94111
[email protected]
[email protected]
With a copy to: Reuben, Junius & Rose LLP
Attn: Matthew D. Visick
One Bush Street, Suite 600
San Francisco, CA 94104
[email protected]

22. Mortgagee Protection and Subordination. No violation of this Agreement by, or enforcement of this Agreement against, a party hereto, shall impair, defeat, eliminate, or render invalid the lien of any Mortgage (defined below), but this Agreement shall be enforceable

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in good faith and for value which constitutes a mortgage lien on all or any portion of the Mortgage is foreclosed, Grantor shall remain liable for any defaults existing at the time of foreclosure, and the successor in title to Grantor following foreclosure shall be responsible to the extent necessary to bring the POPA Open Space and the POPA Open Space Improvements into se the
Mortgagee of any Mortgage recorded against the POPA Open Space as of the recordation date hereof to subordinate the lien of its Mortgage to this Agreement within sixty (60) days following the effective date of this Agreement, or as soon thereafter as is reasonably practicable, with the form of subordination agreement substantially as set forth on the Lender Consent and Subordination page immediately following the signature page hereof, or such other form as is reasonably approved by the City Attorney.

23. Miscellaneous.
a. Captions. The captions of this Agreement are inserted only as a matter of convenience and for reference. They do not define, limit, or describe the scope or intent of this Agreement and they shall not affect the interpretation hereof. b. Exhibits and Recitals. The Recitals above and each of the exhibits attached hereto are incorporated herein by reference.
c. Entire Agreement. This Agreement, together with the Development Agreement and the Project Approvals represent the entire understanding of the parties as to those matters contained herein. No prior or other understanding shall be of any force or effect with respect to those matters covered herein.
d. Amendment. This Agreement may be amended only by an instrument in writing executed by the parties hereto or their successors and assigns and only with the prior written consent of each party.
e. Governing Law. This Agreement shall be construed and governed in accordance with the laws of the State of California, without regard to conflict of law principles. f. No Partnership, Co-venture, or Principal-Agent Relationship. Nothing in this Agreement is intended to or does establish the parties hereto as partners, coventurers, or principal and agent with one another.
g. Severability. If any term, provision, condition or covenant of this Agreement or its application to any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of this Agreement, or the application of the term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable to the fullest extent by law.
h. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original, and all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the parties hereto have duly executed this instrument as of the day and year first above written.

CITY OF SAN CARLOS,
a California municipal corporation
By:

City Manager
[signature must be notarized] _______________ Printed Name _________________________________, a _______________________ company [signature must be notarized]
By:

Printed Name
Title:

APPROVED AS TO CONTENT:

By: _________________________
Print Name: _________________
Its: Community Development Director
APPROVED AS TO FORM:

By: ____________________
Print Name: _________________
Its: City Attorney

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Recording Requested by and
When Recorded Return to:

City of San Carlos
600 Elm Street
San Carlos, CA 94070
Attention: City Clerk
Exempt from Recording Fees per Govt. Code §§ 6103 and 27383 Space above This Line for Recorder's Use Only

SUBORDINATION AND CONSENT OF LENDER
[Lender] , a _____________________, with an office at ____________________, __________________, _______________, Attention: ____________, and its successors and assigns Beneficiary [Deed of Trust] ,
executed by [Trustor] , a _____________________, as Trustor, dated as of __________________, 20__ and recorded on __________________, 20__ in the Official Records Official Records
Deed of Trust
Agreement between the City
of San Carlos and Trustor dated _______________, 20__ and recorded in the Official Records of San Mateo County on __________________, 20__ as Instrument No. ________. As the beneficiary under said Deed of Trust, Beneficiary hereby consents to execution and recordation of the Agreement, and agrees that Bene
Deed of Trust shall be subject and subordinate to the Agreement.

Dated ___________________, 20__
[Lender],
a ________________
By:

Name:

Title:
[Signature must be notarized.

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Exhibit F Page A-1

EXHIBIT A

LEGAL DESCRIPTION OF THE PROPERTY

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Exhibit F Page B-1

EXHIBIT B

LEGAL DESCRIPTION AND PLAT OF POPA OPEN SPACE

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EXHIBIT C

POPA OPEN SPACE DESIGN

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and reservations and a schedule showing existing reservations. Such instructions shall be provided in or immediately adjacent to the courts. The POPA Covenant shall allow Developer to temporarily exclude the public or temporarily limit public access to portions of the Corner Plaza and Central Open Space if necessary to address safety concerns and perform maintenance, renovations, and repairs to improvements within or adjacent to the Corner Plaza or Central Open Space. The POPA Covenant shall require Developer to maintain the Corner Plaza and Central Open Space at all times and indemnify and hold City harmless from any and all Claims arising from or relating to the design, construction, or maintenance of the Corner Plaza and Central Open Space and the public’s use thereof. The POPA Covenant shall terminate in the event the Project is demolished or the Project undergoes a substantial change that is not already permitted under the Existing Approvals and public access cannot be maintained by modifying the boundaries of the Central Open Space or Corner Plaza, provided that the POPA Covenant shall not terminate in the event of demolition and reconstruction of any building or buildings in the Project following a casualty. The POPA Covenant shall require Developer to obtain and record a subordination from any Mortgagee holding any Mortgage recorded prior to the POPA Covenant.

Public Benefits for Greater Height and Density. Developer shall perform and provide the public benefit obligations described in this Section 6.2 in exchange for the approval of Planned Development zoning designation and a Planned Development Plan that allow Developer to construct buildings with a greater height and Floor Area Ratio than permitted under the Property’s previous Light Industrial zoning designation. These approvals have a value of Eight Million Five Hundred Thousand Dollars ($8,500,000). The Parties agree that the public benefit obligations have a value of Four Million Three Hundred Thousand Dollars ($4,300,000).

6.2.1 Downtown Improvements. Developer shall make a One Million One Hundred Thousand Dollar ($1,000,000$1,100,000) contribution to the Downtown Specific Plan Improvements Fund. The payment shall be due prior to the issuance of the first temporary certificate of occupancy for the Project. In the event the Downtown Specific Plan Improvements Fund is not established prior to issuance of the first temporary certificate of occupancy or certificate of occupancy, the temporary certificate of occupancy or certificate of occupancy shall issue without delay and the City may elect to have this contribution deposited into the San Carlos General Fund.

6.2.3 Green Energy Efficiency and Sustainability Fund. Developer shall make a Two Hundred Thousand Dollar ($200,000) contribution to the Green Energy Efficiency and

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Sustainability Fund. The payment shall be due prior to the issuance of the first temporary certificate of occupancy or certificate of occupancy for the Project. In the event that the Green Energy Efficiency and Sustainability Fund is not established prior to issuance of such temporary certificate of occupancy or certificate of occupancy, the temporary certificate of occupancy or certificate of occupancy shall issue without delay and the City may elect to have this contribution deposited into the San Carlos General Fund.

6.2.4 Belmont Creek Path. Developer shall construct a path on the Property for public access along Belmont Creek in the location shown in the Project Approvals (“Creek Path”), with a construction cost of Five Hundred Thousand Dollars ($500,000). The Creek Path shall be constructed prior to the issuance of the first temporary certificate of occupancy or certificate of occupancy for the Project. Developer shall execute and record a public access easement to City providing for public access to the Creek Path and maintenance of the Creek Path by Developer, in a form reasonably acceptable to the City Attorney, prior to the issuance of the first building permit for vertical construction for the Project. The public access easement shall require public access from thirty (30) minutes prior to sunrise to thirty (30) minutes after sunset and, subject to the Developer’s reasonable rules and regulations related to safety, maintenance, and repairs. The public access easement shall allow Developer to temporarily exclude the public or temporarily limit public access to the Creek Path if necessary to address safety concerns and perform maintenance, renovations, and repairs to improvements within or adjacent to the Creek Path. Except in cases of emergency, where notice shall be provided to City if reasonably feasible, Developer shall provide City forty-eight (48) hours advance written or telephonic notice and post signs notifying the public of the limitation or closure. The public access easement shall require City to modify the public access easement to modify the location of the Creek Path in the event that (i) there is a substantial change in the Project that is not already permitted under the Existing Approvals, including without limitation relocation of a building or construction of a building addition such that the building or building addition would interfere with or encroach on the public access easement or (ii) demolition of the Project. Upon such substantial change in or demolition of the Project, the public access easement shall terminate in the event the Belmont Creek no longer exists and the Creek Path does not connect to a trail system on an adjacent parcel.

6.2.5 Childcare Facility. Developer shall construct a childcare facility consisting of an approximately 5,500 square foot classroom with 2,028 square feet of dedicated outdoor space as more particularly described in the Project Approvals (“Childcare Unit”), pickup/drop off area, and reserved teacher parking (collectively, the “Childcare Facility”). The Childcare Unit shall be located in the South Building unless it must be located in another building to obtain an Other Agency Approval and Developer obtains appropriate Subsequent Project Approvals.

City reserves discretion with respect to any such requested Subsequent Project Approvals. The total net benefit to the community in excess of the Childcare Impact Fee is anticipated to be One Million One Hundred Thousand Dollars ($1,000,000$1,100,000). (a) Developer shall make reasonable, good faith efforts to obtain all necessary Other Agency Approvals for the Childcare Facility, including without limitation approvals from the County of San Mateo. If Developer fails to secure such Other Agency Approvals within two (2) years of the Effective Date despite its reasonable, good faith efforts, Developer shall have no further obligation to construct the Childcare Facility and shall instead

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(1) pay the child care development impact fee at the rate determined in accordance with Section

5.1.1 and 2) pay a community amenity fee in the amount of One Million One Hundred Thousand Dollars ($1,000,000). $1,100,000). If Developer obtains all necessary Other Agency Approvals, the provisions of subsections (b), (c) (d), (e) and (f) shall apply. (b) The certificate of occupancy for the South Building must be issued prior to the issuance of a certificate of occupancy for any other building or structure in the Project. If Developer relocates the Childcare Unit to another building to obtain an Other Agency Approval, no certificate of occupancy for any building or structure shall be issued until the certificate of occupancy is issued for the building in which the Childcare Unit is located. The Childcare Facility will be licensed to accommodate at least seventy-five (75) and up to one hundred (100) children as determined by the California Department of Social Services Child Care Licensing (“Child Care License”). If the Childcare Facility’s Child Care License allows more than thirty-seven (37) spaces but fewer than seventy-five (75) spaces, Developer shall pay a penalty of Twenty-Seven Twenty-Nine Thousand Twenty-Seven Seven Hundred Thirty Dollars ($27,027($29,730) for each space above thirty-seven (37) and below seventy-five (75) that Developer fails to provide. If the Childcare Facility’s Child Care License allows fewer than thirty-seven (37) spaces, Developer shall pay (i) a community amenity fee in the amount of One Million One Hundred Thousand Dollars ($1,000,000$1,100,000) and (ii) the sum of Forty-Three Thousand Dollars ($43,000) for each space below thirty-seven (37) that Developer fails to provide. For example, if Developer provides thirty-five (35) spaces, Developer shall pay One Million One Hundred Eighty-Six Thousand Dollars ($1,086,000$1,186,000). (c) The core and shell construction for the classroom and construction of the outdoor space that comprise the Childcare Unit shall be complete at the time that Developer applies for a temporary certificate of occupancy or certificate of occupancy for the South Building (or any building to which the Childcare Unit is relocated to obtain an Other Agency Approval). Developer shall complete construction and obtain a certificate of occupancy for the tenant improvements for the Childcare Facility within six (6) months of the issuance of the first certificate of occupancy for tenant improvements for any space in the Project. If any of the milestones regarding the core and shell construction or construction of the tenant improvements for the Childcare Facility are not met at the required times, the Developer shall (1) pay the child care development impact fee at the rate then in effect, adjusted pursuant to any escalation provision then in effect (or if there is no such impact fee or escalation provision then in effect, the rate most recently established and/or the escalation provision most recently in effect) and 2) pay a community amenity fee in the amount of One Million One Hundred Thousand Dollars ($1,000,000$1,100,000).
(d) The Developer shall make reasonable, good faith efforts to lease the Childcare Facility at an initial triple net rent rate that does not exceed a Fair Market Rent rate to a childcare operator holding all licenses required by Applicable Law, including the Child Care License (“Childcare Operator”). The intent of the Parties is for the Childcare Operator to offer less than twenty-four (24) hour daily nonmedical child care and supervision, Monday through Friday. “Fair Market Rent” shall be determined as follows: (i) Developer shall provide City a written opinion of fair market rent prepared by a licensed, commercial real estate broker in San Mateo County (“Developer’s Broker Opinion”); (ii) if City believes the Developer’s Broker Opinion is unreasonably high, City may provide a written opinion of fair market rent prepared by

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a licensed, commercial real estate broker in San Mateo County and supported by comparable rentals within fifteen (15) business days of receipt of the Developer’s Broker Opinion (“City’s Broker Opinion”); and (iii) Developer shall consider in good faith City’s Broker Opinion and the Parties shall meet and confer in good faith for a period not to exceed fifteen (15) business days to arrive at a reasonable rent rate; provided, however, Developer shall in its reasonable discretion make the final determination of a reasonable rent rate at the end of this period. The Developer’s Broker Opinion and City’s Broker Opinion shall each be supported by comparable rentals consisting of child care spaces in the Bay Area constructed within the last five (5) years. (e) The Parties acknowledge that Developer has signed a letter of intent or term sheet with an entity who is or will be a Childcare Operator. However, if that entity does not sign a lease and the Developer fails to lease the Childcare Facility to a Childcare Operator within twelve (12) months of the issuance of the certificate of occupancy for the tenant improvements for the Childcare Facility or within a twelve (12) month period after any subsequent vacancies, then Developer shall provide City notice of its inability to lease the Childcare Facility. Within one hundred and eighty (180) days of receipt of Developer’s notice, the City shall provide notice to Developer of its election (“City Leasing Election Notice”) to (i) allow Developer’s broker to continue attempting to lease the Childcare Facility for an additional period of one hundred eighty (180) days; (ii) propose two (2) alternate brokers with experience in San Mateo County for Developer to select from, and the selected broker shall be retained by Developer at Developer’s sole cost and expense to attempt to lease the Childcare Facility for a period of one hundred eighty (180) days; (iii) enter into a lease of the Childcare Facility within sixty (60) days of the City Leasing Election Notice for a term of twelve (12) months with free rent for six (6) months and triple net rent not exceeding Fair Market Rent (defined in subsection (d)) thereafter, during which time City may attempt to sublease, assign City’s lease or operate the Childcare Facility; or (iv) amend the Childcare Covenant (defined below) to allow a Community Serving Use. If a Childcare Operator has not signed a lease at the end of the applicable period identified in (i), (ii), or (iii), or if City elects option (iv), the parties shall, within sixty (60) days, enter into a recorded amendment to the Childcare Covenant that may be approved and signed by the City Manager. For purposes of this Section 6.2.5(e) “Community Serving Use” shall mean uses in the following categories of Chapter 18.40 in the San Carlos Municipal Code, without waiving any requirement under Applicable Law for Developer to obtain a minor use permit, conditional use permit or any other Subsequent Project Approvals for such uses: Instructional Services, Eating and Drinking Establishments (excluding night clubs), Animal Care, Sales and Services (excluding veterinary services), Personal Services (excluding Tattoo or Body Modification Parlor), Retail Sales (excluding Retail Establishments Selling Ammunition or Firearms), Government Offices, and Cultural Institutions. If Developer makes reasonable, good faith efforts, as determined in the City Manager’s reasonable discretion, to lease the Childcare Facility for a Community Serving Use for at least twelve (12) months following the amendment to the Childcare Covenant or following vacation by a tenant providing the selected Community Serving Use, Developer shall have the option to pay Five Hundred Fifty Thousand Dollars ($500,000$550,000) to be relieved of the Community Serving Use restriction and the Parties shall record a release of the Childcare Covenant. The City Manager shall be authorized to sign the release on behalf of the City.
(f) Developer shall include in the lease with the Childcare Operator that if there is an open childcare space and at that time less than fifty percent (50%) of the

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children attending the Childcare Facility have at least one (1) parent or legal guardian who resides or works within the City limits, a child with at least one (1) parent or legal guardian who resides or works within the City limits shall be offered the space before a child who does not have a parent or legal guardian who resides or works within the City limits. (g) Pursuant to a separate agreement to be entered into by Developer or Assignee and City and recorded prior to the issuance of the building permit for the South Building (or any building to which the Childcare Unit is relocated to obtain an Other Agency Approval) (the “Childcare Covenant”), (i) Developer or Assignee shall provide City quarterly reports of Developer’s efforts to lease the Childcare Facility, (ii) Developer or Assignee shall offer the Childcare Facility at an initial triple net rent rate that does not exceed a Fair Market Rent, (iii) Developer or Assignee shall notify City when a Childcare Operator has executed a lease of the Childcare Facility, (iv) Developer, Assignee, and any of Assignee’s successors or assigns shall make good faith efforts, as described in subsection (d), to ensure that the Childcare Facility is continuously leased to a Childcare Operator at any time during which the South Building (or any building to which the Childcare Unit is relocated to obtain an Other Agency Approval) remains on the Property, including a reconstructed South Building following a casualty, and (v) Developer or Assignee shall obtain and record a subordination from any Mortgagee holding any Mortgage recorded prior to the Childcare Covenant. The Childcare Covenant shall also provide that if any milestone for the Childcare Facility described in subsection (c) is not met Developer shall pay the penalties provided therefor in subsection (c), and the Childcare Covenant shall incorporate the terms of subsection (d), (e) and (f) above. (h) The terms of this Section 6.2.5 shall survive the expiration or termination of this Agreement for purposes of providing notice of the Childcare Covenant, the restrictions of which may be in effect after the expiration or termination of this Agreement.

6.2.6 Contribution to Community Organizations. Developer shall contribute a total of at least Two Hundred Thousand Dollars ($200,000) to community organizations including: San Carlos Educational Foundation, San Carlos Parks and Recreation Foundation, San Carlos Children’s Theater, East Side Arts and Innovation District Association, San Carlos Community Foundation, Chamber San Mateo County, Redwood City/Silicon Valley Chamber of Commerce, San Mateo County Economic Development Association, Healthy Cities Tutoring, Harbor Industrial Association, Build Up SMC, and/or Industrial Arts Business Association.

Developer shall commit the total monetary amount prior to the issuance of the first temporary certificate of occupancy or certificate of occupancy for the Project. The total contributions may be split into annual donations that will be provided to each organization through Project stabilization. Project stabilization is anticipated to be four years from issuance of the last certificate of occupancy for the Project. Developer shall provide City a report of payments made to community organizations during the previous calendar year as part of the annual review process described in ARTICLE 7.

ARTICLE 7.

ANNUAL REVIEW

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CITY COUNCIL

STAFF REPORT
MEETING DATE: August 28, 2023
ITEM TITLE: Consideration of Adopting a Resolution Adopting a Memorandum of Understanding Between the City of San Carlos and the American Local 856, Freight Checkers, Clerical Employees and Helpers Union, International Brotherhood of Teamsters ("Teamsters") Unit for the Period of September 1, 2023 through August 31, 2026.

RECOMMENDATION:

Staff recommends that the City Council adopt a Resolution adopting the Memorandum of Understanding (“MOU”) with the American Local 856, Freight Checkers, Clerical Employees and Helpers Union, International Brotherhood of Teamsters (“Teamsters”) Unit for the period of September 1, 2023 through August 31, 2026.

FISCAL IMPLICATIONS:

There is no fiscal impact and no additional appropriation is needed at this time.

The additional cost for the provisions below is approximately $261,400 for Fiscal Year (“FY”) 2023-24, $249,500 for FY 2024-25, and $286,900 for FY 2025-26. As discussed with the City Council during the budget study sessions, certain assumptions were presumed and included as part of the development of the Adopted FY 2023-25 Biennial Budget, therefore, there is sufficient funding for FYs 2023-25.

BACKGROUND:

The current MOU was for a term of 24 months: September 1, 2021 through August 31, 2023. The City’s negotiating team and Teamsters began presenting proposals to each other in early June and reached agreements on the proposed MOU in mid-August.

In accordance with City’s Employer Employee Relations Resolution #78-18, Section 5.C, agreements reached as a result of negotiations shall be included in a Memorandum of Understanding signed by the City Manager and the duly designated representatives of each recognized employee organization. All signed Memoranda of Understanding must be presented to the City Council for approval in order to be binding.

ANALYSIS:

City officials met and conferred in good faith with members of Teamsters and have agreed to the terms identified in the attached MOU. These terms include the following provisions:

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• Term. Three years: September 1, 2023 through August 31, 2026; • Salary Adjustments: Effective on the first pay period commencing on or after the date of the adoption of the MOU by the City Council and sign-off by both Teamsters and City officials, increase base wage rates for all positions by five percent (5%). Effective the first pay period on or after September 1, 2024, increase base wage rates by three percent (3%) and effective the first pay period on or after September 1, 2025, increase base wage rates by three percent (3%);
• Equity Adjustments: Effective each year, beginning on the first pay period of September 2023 to September 2025, some positions are eligible for equity adjustments based on market comparables in the following agencies:

Burlingame, Cupertino, Foster City, Fremont, Hayward, Menlo Park, Milpitas, Mountain View, Palo Alto, Redwood City, San Mateo, Santa Clara, Sunnyvale, and Union City.

All adjustments have been incorporated into the hourly wage schedule as shown in Appendix A in the MOU.
• Overtime Definition: Any authorized time worked in excess of twelve (12) hours shall be compensable at the rate of two (2) times the employee’s regular straight-time rate of pay; • California Water Environment Association (CWEA): Employees in the designated positions holding any level of CWEA certification shall be compensated an additional fifty dollars ($50.00) per month per certification;
• Holidays: The City will now designate June 19 (Juneteenth) as an observed and paid holiday;
• Bereavement Leave: Update language to comply with new state law by removing the word “consecutive” and adding language that all paid and unpaid bereavement leave must be taken within three calendar months of the date of death; Employees who qualify for three (3) paid workdays above may request up to an additional two (2) workdays for bereavement purposes. The additional time may be paid utilizing available vacation, sick or compensatory time or taken unpaid at the employee’s discretion. All paid and unpaid bereavement leave must be taken within three calendar months of the date of death;
• Vision Plan: Remove the two percent (2%) administrative fee the City currently charges for enrollment into a two-party or family vision plan;
• Safety Shoes: Increase the reimbursement amount to $350.00 annually for the purchase safety shoes;
• Tuition Reimbursement: Increase the reimbursement amount to $3,000 annually for expenses incurred in job related educational programs or job-related certificate programs;

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• Deferred Compensation Match: Effective September 11, 2023, the City shall provide a contribution to an employee's deferred compensation account in an amount equal to the employee's contribution at a ratio of 1:1, to a maximum of two hundred and twenty-five dollars ($225) per month.

ALTERNATIVES:

The alternatives available to the City Council include:

1. Adopt the Resolution approving the Memorandum of Understanding (“MOU”) for the American Local 856, Freight Checkers, Clerical Employees and Helpers Union, International Brotherhood of Teamsters (“Teamsters”) Unit for the period of September 1, 2023 through August 31, 2026; or

2. Do not adopt the Resolution; or

3. Provide staff with alternative direction.

Respectfully submitted by:

Rebecca Mendenhall, Administrative Services Director
Approved for submission by:
_______________________
Jeff Maltbie, City Manager
ATTACHMENT(S):

1. Resolution
Exhibit A to Resolution - Teamsters Memorandum of Understanding

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RESOLUTION NO. 2023 – ____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN CARLOS ADOPTING A MEMORANDUM OF UNDERSTANDING (“MOU”) BETWEEN THE CITY OF SAN CARLOS AND THE AMERICAN LOCAL 856, FREIGHT CHECKERS, CLERICAL

EMPLOYEES AND HELPERS UNION, INTERNATIONAL BROTHERHOOD OF TEAMSTERS (“TEAMSTERS”) UNIT FOR THE PERIOD OF SEPTEMBER 1, 2023
THROUGH AUGUST 31, 2026.

WHEREAS, on August 23, 2021, the City Council adopted Resolution 2021-079 approving a Memorandum of Understanding (“MOU”) between the City of San Carlos and the American Local 856, Freight Checkers, Clerical Employees and Helpers Union, International Brotherhood of Teamsters Unit (“Union”) ending August 31, 2023; and WHEREAS, the City met and conferred in good faith with the Union and both parties have agreed to the new terms as included in the attached MOU; and WHEREAS, is it now necessary to adopt a new MOU for the period of September 1, 2023 through August 31, 2026.

NOW, THEREFORE BE IT RESOLVED, that the San Carlos City Council hereby adopts the Memorandum of Understanding with the Teamsters Unit (attached as Exhibit A). * * * * *
I, City Clerk Crystal Mui, hereby certify that the foregoing Resolution was duly and regularly passed and adopted by the City Council of the City of San Carlos at a scheduled meeting thereof held on the 28th day of August 2023, by the following vote:

AYES, COUNCILMEMBERS: _____________________________________________ NOES, COUNCILMEMBERS: _____________________________________________ ABSENT, COUNCILMEMBERS: _____________________________________________ ________________________________
CITY CLERK of the City of San Carlos
APPROVED:
___________________________
MAYOR of the City of San Carlos
Exhibit A: Teamsters Memorandum of Understanding

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MEMORANDUM OF UNDERSTANDING

BETWEEN THE

CITY OF SAN CARLOS

AND THE
LOCAL 856, FREIGHT CHECKERS,

CLERICAL EMPLOYEES AND HELPERS

UNION, INTERNATIONAL BROTHERHOOD

OF TEAMSTERS
SEPTEMBER 1, 2023
THROUGH AUGUST 31, 2026

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San Carlos City CouncilAugust 28, 2023

San Carlos City Council
August 28, 2023