910 Calle Negocio
2nd Floor
San Clemente, California
www.san-clemente.org
Council Chambers
Mayor Knoblock
Mayor Pro Tem Enmeier
Councilmember Cabral
Councilmember Loeffler
Councilmember Wu
4:00 p.m. - Commission and Committee
Interviews and Appointments
5:30 p.m. - Business Meeting
CITY OF SAN CLEMENTE
Tuesday, November 18, 2025
City Council
Special and Regular Meeting Agenda
Information concerning City Council Meeting protocols and procedures is contained at the end of this agenda.
MISSION STATEMENT
The City of San Clemente, in partnership with the community we serve, will foster a tradition dedicated to:
Maintaining a safe, healthy atmosphere in which to live, work and play; Guiding development to ensure responsible growth while preserving and enhancing our village character, unique environment and natural amenities; Providing for the City’s long-term stability through promotion of economic vitality and diversity…
Resulting in a balanced community committed to protecting what is valued today while meeting tomorrow’s needs.
CALIFORNIA ENVIRONMENTAL QUALITY ACT
The California Environmental Quality Act (“CEQA”) is the state law that requires the City to evaluate and document the potential environmental consequences of discretionary decision. (See, California Public Resources Code Sections 21000-21189.3; and the “CEQA Guidelines” at California Code of Regulations Title 14, Division 6, Chapter 3, Sections 15000-15387). For each item that requires a CEQA determination by the City Council, there is a reference to that determination on this agenda, and more information regarding the CEQA analysis is included in the documents that accompany this agenda. To the extent that City staff determines that particular items are not subject to CEQA, there will be no indication of a CEQA action on this agenda.
DISCLOSURE OF CAMPAIGN CONTRIBUTIONS
Pursuant to Government Code § 84308, City Council Members are disqualified and not able to participate in any agenda item involving contracts (other than competitively bid, labor, or personal employment contracts), franchises, discretionary land use permits and other entitlements if the City Council Member received more than $500 in campaign contributions from the applicant or contractor, an agent of the applicant or contractor, or any financially interested participant who actively supports or opposes the City’s decision on the agenda item since January 1, 2023. Members of the City Council who have received, and applicants, contractors or their agents who have made, campaign contributions totaling more than $500 to a City Council Member since January 1, 2023, are required to disclose that fact for the official record of the subject proceedings. Disclosures must include the amount of the campaign contribution and identify the recipient City Council Member and may be made either in writing to the City Clerk before the agenda item or by verbal disclosure during consideration.
1 City Council Special and Regular Meeting Agenda November 18, 2025
ARTS AND CULTURE COMMITTEE AND COMMUNITY SAFETY AND WELFARE COMMITTEE INTERVIEWS AND APPOINTMENTS (4:00 P.M.)
A. ARTS AND CULTURE COMMITTEE
Interview applicants for the Arts and Culture Committee and appoint one citizen to fill a term to expire June 30, 2027.
B. COMMUNITY SAFETY AND WELFARE COMMITTEE
Interview applicants for the Community Safety and Welfare Committee and appoint one citizen to fill a term to expire June 30, 2027.
CLOSED SESSION
None.
BUSINESS MEETING (5:30 P.M.)
CALL TO ORDER
INVOCATION – Reverend Dave Ricketts, San Clemente Presbyterian Church
PLEDGE OF ALLEGIANCE
ROLL CALL
1. Special Presentations
2. Council Member Reports
3. Oral Communications (Part 1)
Members of the audience who wish to address Council on matters that are within the jurisdiction of the City of San Clemente, but not separately listed on the agenda, may do so during the Oral Communications portion of the meeting. Speakers may address Council once during either Oral Communications Part 1 or Part 2. A total time limitation of 30 minutes is allocated for Oral Communications Part 1, with each speaker being allotted 3 minutes in which to give his or her presentation. Speaker order is determined by the order in which speaker cards are provided to the City Clerk or Deputy City Clerk at the meeting. Speakers that cannot be accommodated during Oral Communications Part 1 will be invited to address Council during Oral Communications Part 2, which appears on this agenda as Item No. 12. When invited by the Mayor, please step to the podium, and if you wish, state your name and the City in which you reside, and make your presentation. Under the Ralph M. Brown Act, the City Council cannot act on items raised during public comment but may respond briefly to statements made or questions posed, request clarification or refer the item to staff.
4. Motion waiving reading in full of all Resolutions and Ordinances
5. Consideration of agendizing items requiring immediate action Per Government Code section 54954.2(b) and 54956.5. Any items agendized will be considered under New Business, unless otherwise determined by a majority vote of the City Council.
2 City Council Special and Regular Meeting Agenda November 18, 2025
6. Closed Session Report - City Attorney
7. Staff Communications
8. Public Hearings
The Public Hearing process includes a staff presentation, a presentation by the applicant not to exceed ten (10) minutes, and public testimony (not to exceed three minutes per speaker). Following closure of the Public Hearing, the City Council will respond to questions raised during the hearing, discuss the issues, and act upon the matter by motion.
8A. CONSIDERATION OF RESOLUTION NO. 25-175, APPROVING THE COST
OF SERVICES STUDY, ADOPTING THE COST RECOVERY FOR BEACHES,
PARKS & RECREATION SERVICES POLICY, APPROVING THE
ASSOCIATED FEE SCHEDULE, REPEALING AND REPLACING
RESOLUTION NOS. 23-25, 89-54, 95-01, 11-66, AND 16-23, AND ALL OTHER
RESOLUTIONS THAT MAY CONFLICT THEREWITH, AND FINDING THE
ACTIONS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT
Public Hearing to consider adopting a comprehensive Cost Recovery Policy for the Beaches, Parks and Recreation Department. The policy establishes consistent principles and guidelines for determining user fees and cost recovery targets for programs, services, and facility rentals. The City Council will also consider amendments to the Beaches, Parks and Recreation Department Fee Schedule to align with the findings of the Comprehensive Cost of Services and Fee Study prepared by the Matrix Consulting Group.
This Public Hearing is conducted pursuant to California Government Code Sections 66018, which require local agencies to hold a public hearing prior to adopting new fees or increasing existing fees, and to make available supporting data at least 10 days in advance of the hearing. The proposed adjustments pertain solely to recreation facility fees, which are voluntary charges incurred only when an individual or organization elects to use the City’s recreation facilities. These fees are not mandatory taxes or assessments, but rather per-use fees to cover a portion of the operating and maintenance costs of each facility.
Staff and the Beaches, Parks & Recreation Commission recommendation
1. Conduct the public hearing pursuant to California Government Code section 66018.
2. After conducting the public hearing, adopt Resolution No. 25-175, which will:
a. Determine that the actions are statutorily exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15273 (14 CCR § 15273).
3 City Council Special and Regular Meeting Agenda November 18, 2025 b. Approve the 2025 Cost of Services (User Fee) Study prepared by the Matrix Consulting Group.
c. Adopt Policy No. 201-15 - Cost Recovery for Beaches, Parks & Recreation Services.
d. Adopt a revised fee schedule for the Beaches, Parks & Recreation Department effective January 1, 2026; and repeal and replace conflicting resolutions.
e. Direct staff to incorporate all revenue and expense impacts into future budgets.
8B. OVERVIEW OF THE MILLS ACT PROGRAM AND CONSIDERATION OF A
RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE A
HISTORIC PROPERTY PRESERVATION AGREEMENT (HPPA) FOR A
QUALIFIED HISTORIC PROPERTY AT 121 W. ESCALONES AND FINDING
THE ACTION CATEGORICALLY EXEMPT FROM THE CALIFORNIA
ENVIRONMENTAL QUALITY ACT
Continued Public Hearing to consider a Mills Act agreement between the City and the owner(s) of a historic property located at 121 West Escalones. Staff recommends the City Council determine this historic preservation agreement is not a project, as defined by Section 15378 of the California Environmental Quality Act and is exempt from environmental review.
Staff Recommendation
Adopt Resolution No. 25-176, which will:
1. Find the Historic Preservation Agreement categorically exempt from the California Environmental Quality Act (CEQA) under Class 31, Section 15378 of the CEQA Guidelines (14 CCR § 15331 - Historical Resource Restoration/Rehabilitation).
2. Approve, and authorize the City Manager to execute, Contract No. 25-58, Historic Property Preservation Agreement, for the property located at 121 West Escalones.
4 City Council Special and Regular Meeting Agenda November 18, 2025 8C. CONSIDERATION TO INTRODUCE, AND CONDUCT A FIRST READING OF, ORDINANCE NO. 1798 TO APPROVE PUBLIC HEARING PROJECT (PHP) 25-395, ZONING AMENDMENT (ZA) 25-396, EMERGENCY SHELTER
OVERLAY DISTRICT UPDATES AND FINDING THE ACTION EXEMPT FROM
THE CALIFORNIA ENVIRONMENTAL QUALITY ACT
Public Hearing for the City Council to consider Zoning Amendment 25-396 to update the development standards, operational standards, and management standards within the Emergency Shelter Overlay consistent with Housing Element commitment and State law.
The City Council will also consider whether the project is Categorically Exempt from the requirements of the California Environmental Quality Act (CEQA) per the Community Plan exemption pursuant to Public Resources Code Section 21083.3 and CEQA Guidelines Section 15183.
Staff Recommendation
1. Open the public hearing, receive and consider public comment, and close the public hearing.
2. Determine that the proposed zoning code amendment is categorically exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21083.3 and Guidelines Section 15183.
3. Introduce, and conduct a first reading of, Ordinance No. 1798 entitled AN
ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN
CLEMENTE, CALIFORNIA, APPROVING PUBLIC HEARING PROJECT
25-395, ZONING AMENDMENT 25-396 TO TITLE 17 (ZONING) OF THE SAN CLEMENTE MUNICIPAL CODE, AMENDING SECTION 17.56.100,
EMERGENCY SHELTER OVERLAY DISTRICT, TO UPDATE THE
DEVELOPMENT STANDARDS AND OPERATIONAL AND
MANAGEMENT STANDARDS WITHIN THE EMERGENCY SHELTER
OVERLAY CONSISTENT WITH PROGRAM 15 OF THE SAN
CLEMENTE CERTIFIED HOUSING ELEMENT AND STATE LAW; AND
FINDING THIS ACTION IS EXEMPT FROM CALIFORNIA
ENVIRONMENTAL QUALITY ACT (CEQA) PURSUANT TO PUBLIC
RESOURCES CODE SECTION 21083.3 AND CEQA GUIDELINES
SECTION 15183.
5 City Council Special and Regular Meeting Agenda November 18, 2025
9. Unfinished Business
9A. CONSIDERATION OF A RESOLUTION TO APPROVE THE NOVEMBER 2025
WATER RATE STUDY FINAL REPORT, APPROVE THE PUBLIC HEARING NOTICE, SET A DEADLINE OF JANUARY 15, 2026 FOR SUBMISSION OF OBJECTIONS, SCHEDULE A PUBLIC HEARING FOR FEBRUARY 3, 2026
TO CONSIDER OBJECTIONS (EXHAUSTION OF ADMINISTRATIVE
REMEDIES) AND SCHEDULE A PUBLIC HEARING FOR FEBRUARY 17, 2026 TO CONSIDER ADOPTION OF PROPOSED UPDATES TO WATER
RATES AND CHARGES UNDER PROPOSITION 218 AND CONDUCT A
PROTEST HEARING
Staff Recommendation
Adopt Resolution No. 25-178, which will:
1. Approve the City of San Clemente November 2025 Water Rate Study Final Report.
2. Approve and authorize staff to mail the Notice of Public Hearings to Consider Proposed Adjustments to Water Rates based on the analysis in the City of San Clemente November 2025 Water Rate Study Final Report.
3. Set a deadline of January 15, 2026 at 5:00 p.m. for the submission of timely written objections to the proposed fees and charges and exhaustion of administrative remedies.
4. Set a Public Hearing for February 3, 2026 at 5:30 p.m. for the exhaustion of administrative remedies (objection hearing) to consider all timely written objections along with the draft written responses and determine whether clarifications or further review or reduction or abandonment of the proposed water rate and charge increases are warranted.
5. Set a Public Hearing for February 17, 2026 at 5:30 p.m. to consider all written protests and hear all oral comments on the proposed water rate and service charge increases and consider approval of the proposed rates and charges.
6 City Council Special and Regular Meeting Agenda November 18, 2025 9B. CONSIDERATION OF A RESOLUTION AUTHORIZING THE CITY MANAGER
TO NEGOTIATE, FINALIZE AND EXECUTE A LEASE AGREEMENT WITH
THE DEPARTMENT OF HOMELAND SECURITY CUSTOMS AND BORDER
PROTECTION AGENCY FOR THE INSTALLATION AND OPERATION OF A
MARITIME SURVEILLANCE SYSTEM ON CITY-OWNED LAND AT THE
RESERVOIR 5 COMMUNICATIONS SITE (APN 690-502-16 AND 690-502-12),
AND FINDING THE ACTIONS EXEMPT FROM THE CALIFORNIA
ENVIRONMENTAL QUALITY ACT
Staff Recommendation
Adopt Resolution No. 25-180, which will:
1. Determine that the actions are categorically exempt from the California Environmental Quality Act (CEQA) under Class 3, Section 15303 of the state CEQA Guidelines (14 CCR 15303).
2. Authorize the City Manager to negotiate, finalize and execute a lease agreement with the Department of Homeland Security Customs and Border Protection Agency (CBP) for the purpose of installing and operating a maritime surveillance system at the Reservoir 5 Communications Site based on the following key terms:
a. 20-year term, with (2) five-year extensions.
b. $10 per month rent.
c. City to pay electrical costs.
d. CBP to pay for equipment and installation costs.
e. CBP and City staff to agree on facility dimensions, design and placement.
7 City Council Special and Regular Meeting Agenda November 18, 2025
10. New Business
10A. CONSIDERATION OF A RESOLUTION APPROVING A PARKING
AGREEMENT BETWEEN HAPPY COFFEE CLUB AND THE CITY OF SAN
CLEMENTE
Staff Recommendation
Adopt Resolution No. 25-181, which will approve, and authorize the City Manager to execute, Contract No. C25-59, by and between the City of San Clemente and Happy Coffee Club, for a parking agreement, included as Exhibit A to proposed Resolution 25-181 for an initial annual license fee of $2,160 for the initial term of five years with one five-year option exercisable in the City Manager’s discretion.
10B. DISCUSSION REGARDING FINAL NATURE BASED ADAPTATION PROJECT
FEASIBILITY STUDY AND DIRECTION ON NEXT STEPS
Staff Recommendation
1. Approve and direct staff to submit the Final Nature Based Adaptation Project Feasibility Study to the Coastal Commission as a final deliverable for California Coastal Commission Grant 21-07.
2. Direct staff to pursue funding for the next phase to study a pilot sand retention project at North Beach.
10C. DISCUSSION AND POSSIBLE DIRECTION TO EXPLORE PARTICIPATION IN
A COALITION OF COASTAL CITIES FACING LANDSLIDE, BLUFF FAILURE
AND GENERAL EARTH MOVEMENT IN COASTAL AREAS
Staff Recommendation
Receive and file the Administrative Report dated November 18, 2025 and on file with the City Clerk, and direct staff to explore participation in the proposed coalition.
10D. EMERGENCY SUPPORT FOR SAN CLEMENTE RESIDENTS RECEIVING
CALFRESH AND ARE IMPACTED BY THE FEDERAL GOVERNMENT
SHUTDOWN AND SUBSEQUENT FUNDING DEFICIT OF THE
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)
Agendized by Councilmember Wu, with the support of Mayor Pro Tem Enmeier at the November 4, 2025 City Council Meeting.
Staff Recommendation
Provide direction to staff concerning potential emergency support for San Clemente residents not receiving CalFresh benefits due to the Federal Government shutdown.
8 City Council Special and Regular Meeting Agenda November 18, 2025
11. Consent Calendar
All items listed on the Consent Calendar are considered to be routine and will be enacted by one motion without discussion unless Council or Staff requests removal of an item for separate discussion and action.
A. City Council Minutes
Staff Recommendation:
(1) APPROVE THE REGULAR CITY COUNCIL MEETING MINUTES OF NOVEMBER 4, 2025.
B. Commission/Committee Minutes
Staff Recommendation:
Receive and file the following:
(1) ARTS AND CULTURE COMMITTEE REGULAR MEETING MINUTES OF JULY 28, 2025.
(2) GOLF COURSE COMMITTEE SPECIAL AND REGULAR MEETING
MINUTES OF AUGUST 7, 2025.
(3) GOLF COURSE COMMITTEE SPECIAL MEETING MINUTES OF
SEPTEMBER 22, 2025.
(4) DESIGN REVIEW SUBCOMMITTEE REGULAR MEETING MINUTES
OF OCTOBER 15, 2025.
(5) ZONING ADMINISTRATOR REGULAR MEETING MINUTES OF
OCTOBER 23, 2025.
(6) DESIGN REVIEW SUBCOMMITTEE REGULAR MEETING MINUTES
OF OCTOBER 29, 2025.
(7) PLANNING COMMISSION REGULAR MEETING MINUTES OF
NOVEMBER 5, 2025.
C. Warrant Register
(1) APPROVE WIRE TRANSFER NOS.
3331 THROUGH 3338 AND WARRANT NOS.
608031 THROUGH 608164, PAID ON
10-31-25, IN THE AMOUNT OF $2,275,850.90
(2) APPROVE WARRANT NOS.
608165 THROUGH 608281, PAID ON
11-7-25, IN THE AMOUNT OF $3,553,666.91
TOTAL WARRANT REGISTER $5,829,517.81
9 City Council Special and Regular Meeting Agenda November 18, 2025 Payroll Register
APPROVE WARRANT NO. 988,
AUTOMATIC DEPOSIT ADVISES 107323
THROUGH 107655, FOR THE PERIOD
10-13-25 THROUGH 10-26-25, PAID
ON 10-31-25, IN THE AMOUNT OF $562,338.26
TOTAL PAYROLL REGISTER $562,338.26
11D. NOTICE OF COMPLETION - STORM DRAIN GRAVITY MAIN SWGM-16135
REPAIRS
Staff Recommendation
Adopt Resolution No. 25-183, which will:
1. Accept the Storm Drain Gravity Main SWGM-16135 Repairs, Project No. 26001, from the contractor, Diamond Construction & Design.
2. Authorize the City Clerk to execute and record the Notice of Completion for the completed Storm Drain Gravity Main SWGM-16135 Repairs.
3. Authorize the City Clerk to release the Payment Bond 35 days from the recordation of the Notice of Completion upon verification with the Engineering Division that no liens have been levied against the contractor, Diamond Construction & Design.
4. Authorize the City Clerk to release the performance bond for this project upon receipt of a warranty bond in a form acceptable to the Public Works Director/City Engineer in the amount of 25% of the total construction cost. 11E. NOTICE OF COMPLETION - STREET REHABILITATION PROGRAM FY 2025 Staff Recommendation
Adopt Resolution No. 25-184, which will:
1. Accept the FY 2025 Street Rehabilitation Program, CIP Project No. 15325, from the contractor, L.C. Paving & Sealing, Inc.
2. Authorize the City Clerk to execute and record the Notice of Completion for the FY 2025 Street Rehabilitation Program.
3. Authorize the City Clerk to release the payment bond 35 days from the recordation of the Notice of Completion upon verification with the Engineering Division that no liens have been levied against the contractor,
10 City Council Special and Regular Meeting Agenda November 18, 2025 L.C. Paving & Sealing, Inc.
4. Authorize the City Clerk to release the performance bond for this project upon receipt of a warranty bond in a form acceptable to the Public Works Director/City Engineer in the amount of 25% of the total construction cost. 11F. CONTRACT AWARD - LA PATA/VISTA HERMOSA SPORTS PARK SOCCER
FIELD SYNTHETIC TURF REPLACEMENT
Staff Recommendation
Adopt Resolution No. 25-185, which will:
1. Award a contract to Asphalt Fabric and Engineering, Inc., as the lowest responsible bidder, for the La Pata/Vista Hermosa Synthetic Soccer Field Turf Replacement, Project No. 14810.
2. Approve, and authorize the City Manager to execute, Contract No. C25- 60, by and between the City of San Clemente and Asphalt Fabric and Engineering, Inc., providing for the La Pata/Vista Hermosa Synthetic Soccer Field Turf Replacement, in an amount not to exceed $680,804, in a form substantially similar to Contract No. C25-59 (Attachment 2). 11G. CONSIDERATION OF A RESOLUTION APPROVING AN EXEMPTION TO
THE FORMAL SOLICITATION PROCESS, AWARDING AN AGREEMENT TO
MICHAEL BAKER INTERNATIONAL FOR PROFESSIONAL
ENVIRONMENTAL SERVICES RELATED TO THE HANSON HOTEL
PROJECT (PHP) 25-323, AND AUTHORIZING THE CITY MANAGER TO
EXECUTE THE AGREEMENT
Staff Recommendation
Adopt Resolution No. 25-186, which will:
1. Approve an exemption to the formal solicitation process within the City’s Purchasing Policy (reference Section XI. A. 1.8).
2. Award a Professional Services Agreement to Michael Baker International to provide environmental consulting services for the Hanson Hotel Project.
3. Approve, and authorize the City Manager to execute, Contract No. C25- 61, by and between the City of San Clemente and Michael Baker International, providing for environmental consulting services for the Hanson Hotel Project, in an amount not to exceed $99,375, funded through the developer deposit account for the Hanson Hotel Project.
11 City Council Special and Regular Meeting Agenda November 18, 2025 11H. CONSIDERATION OF A RESOLUTION REJECTING ALL BIDS FOR THE
DIJE COURT AND EL PORTAL BEACH WOOD STAIRS REPLACEMENT, CIP PROJECT NO. 22801
Staff Recommendation
Adopt Resolution No. 25-187, which will:
..recommendation
1. Reject all bids received on April 24, 2025, for the Dije Court and El Portal Beach Wood Stairs Replacement, CIP Project No. 22801, pursuant to Section 20166 of the Public Contract Code.
2. Authorize staff to re-scope the bid package and re-bid the Dije Court and El Portal Beach Wood Stairs Replacement based on a revised scope of work that includes replacement of the landings.
11I. CONSIDERATION OF A RESOLUTION REJECTING ALL BIDS FOR THE REEVES BOOSTER PUMP STATION, CIP PROJECT NO. 17405
Staff Recommendation
Adopt Resolution No. 25-188, which will:
..recommendation
1. Reject all bids received on September 25, 2025, for the Reeves Booster Pump Station, CIP Project No. 17405, pursuant to Section 20166 of the Public Contract Code.
2. Authorize staff to conduct a value engineering and re-scoping to further identify cost-saving opportunities while maintaining the required level of serviceability for the Reeves Booster Pump Station; and revise the project plans and specifications accordingly to re-bid the project. 11J. ACKNOWLEDGMENT OF OFFICIAL APPOINTMENT OF CITY FINANCE
MANAGER TO THE ROLE OF DEPUTY CITY TREASURER
Staff Recommendation
Adopt Resolution No. 25-189, which will:
1. Acknowledge the appointment of Sheryl Mariano, Finance Manager as the Deputy City Treasurer, coterminous with the Finance Manager’s tenure in that role, in accordance with the official confirmation of the appointment made by the City Treasurer during the Regular Meeting of the Investment Advisory Committee on October 30, 2025.
2. Acknowledge the authorization of the Deputy City Treasurer to perform the duties of the City Treasurer in accordance with San Clemente Municipal Code section 2.14.030 and Government Code sections 41003
12 City Council Special and Regular Meeting Agenda November 18, 2025 and 41005.
12. Oral Communications (Part 2)
Members of the audience who wish to address Council on matters that are within the jurisdiction of the City of San Clemente, but not separately listed on the agenda, may do so during the Oral Communications portion of the meeting. When invited by the Mayor, please step to the podium, and if you wish, state your name and the City in which you reside, and make your presentation, not to exceed three minutes. Under the Ralph M. Brown Act, the City Council cannot act on items raised during public comment but may respond briefly to statements made or questions posed, request clarification or refer the item to staff.
13. Future Agenda Items
14. Reports
A. City Attorney
B. City Manager
15. Adjournment
Adjourn to an Adjourned Regular City Council meeting to be held on December 9, 2025. Closed Session will begin at 4:30 p.m. and the Regular Business Meeting will begin at 5:30 p.m. The meeting will take place in the Council Chambers, located at 910 Calle Negocio, 2nd Floor, San Clemente.
13 City Council Special and Regular Meeting Agenda November 18, 2025
CITY COUNCIL MEETING PROCEDURES
RULES FOR ADDRESSING COUNCIL
• Members of the public may address the City Council on matters within the jurisdiction of the City of San Clemente.
• If you wish to address Council, please complete one of the blue speaker cards located at the entrance to the Council Chambers and turn it in to the City Clerk or Deputy City Clerk. • Persons wishing to address Council concerning an agendized item will be invited to address Council during the time that Council is considering that particular agenda item.
Persons wishing to address Council concerning a non-agendized issue will be invited to address Council during the “Oral Communications” portion of the meeting. • When invited by the Mayor, please step to the podium, and if you wish, state your name and the City in which you reside, and make your presentation. Please limit your presentation to three minutes.
PRESENTATION OF WRITTEN MATERIALS TO COUNCIL
In order to ensure that Councilmembers have adequate time to consider written materials concerning agenda items, it is strongly recommended that such materials be submitted to the City Clerk by noon the date preceding the Council meeting.
MEETINGS RECORDED AND TELEVISED
City Council meetings are broadcast live and are replayed periodically on Cox Communications Local Access Channel 854. Meetings are also available for live-stream or post meeting viewing from the City’s website.
Meetings are also recorded via audio CD and/or DVD and retained as a City record in accordance with the City’s records retention schedule.
USE OF ELECTRONIC VISUAL AIDS BY PUBLIC AT MEETINGS
To allow staff adequate time to confirm software compatibility, individuals wishing to utilize electronic visual aids to supplement their oral presentations at the meeting, must submit the electronic files to the City Clerk by no later than 12:00 p.m. on the day of the meeting. Only compatible electronic formats will be permitted to be used on City audio/visual computer equipment. Staff makes no guarantee that such material will be compatible, but will use its best efforts to accommodate the request. Electronic presentations shall be limited to visual media, without prerecorded audio narration, that augment a live verbal presentation addressed to the City Council. The display of visual media shall be ancillary to, and not presented in place of, live verbal narration. Members of the public shall not be permitted to connect equipment to the City's computer system. Members of the public shall not be permitted to access the internet from the City's computer equipment. Visual presentations must be provided to the City Clerk in a display-ready format. In no case shall Staff be required to develop a presentation for public use.
This prohibition includes, but is not limited to, compiling of City records, downloading data from websites, or gathering or modifying data provided by the public.
LENGTH OF MEETINGS
At 11:00 p.m., the City Council will determine which of the remaining agenda items can be considered and acted upon at this meeting and will continue all other agenda items to a future meeting.
AMERICANS WITH DISABILITIES ACT
Pursuant to the Americans with Disabilities Act, persons with a disability who require a disability-related modification or accommodation in order to participate in a meeting, including auxiliary aids or services, may request such modification or accommodation from the City Clerk at (949) 361-8200. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to assure accessibility to the meeting.
COMMUNICATION DEVICES
To minimize meeting distractions and sound system interference, please be sure all personal communication devices are turned off or on silent mode.
14 City Council Special and Regular Meeting Agenda November 18, 2025
MEETING SCHEDULE
Regular Council Meetings are held on the first and third Tuesdays of each month in the Council Chambers, located at 910 Calle Negocio, 2nd floor, San Clemente. Closed Session are considered at 5:00 p.m. and the Business Meeting begins at 6:00 p.m. Additional meetings of the City Council may be called as needed.
AGENDAS, ADMINISTRATIVE REPORTS AND SUPPLEMENTAL WRITTEN MATERIALS Agendas and Administrative Reports are available for review and/or copying at the City Clerk’s Department as soon as agendas are posted, by accessing the City’s website at www.san-clemente.org. An “Inspection Copy” of agenda materials is also located at the entrance to the Council Chambers during meetings for public review. All written material distributed to a majority of the Council after the original agenda packet was distributed is available for public inspection in the City Clerk’s Department, located at 910 Calle Negocio, San Clemente, during normal business hours.
The City Clerk’s Department offers an agenda packet subscription service free of charge. If you wish to receive email copies of City Council agendas, which include hyperlinks to staff reports and other back-up material, register at http://san-clemente.org/enotification.
15 910 Calle Negocio
2nd Floor
San Clemente, California
www.san-clemente.org
AGENDA REPORT
CITY OF SAN CLEMENTE
CITY COUNCIL MEETING
CITY OF SAN CLEMENTE 1
Meeting Date: November 18, 2025 Agenda Item: A.
16 Arts and Cultural Committee Application--Julia Darden-Lentz 1 Name:
Julia Darden-Lentz
How long have you lived in San Clemente:
51 Years
What is your occupation:
While I’m now mostly retired, I still lead DardenLentz, a boutique marketing and branding agency specializing in creative and strategic projects that help bring innovative healthcare products to market.
Please explain why you would like to serve on the Arts and Cultural Committee:
I’m passionate about art—both the performing arts and visual arts. I have worked to support the arts through pro bono marketing of the Casa Romantica, and have contributed to the quality of the art and architecture in our community through my work on the Planning Commission and DRSC.
I would like to continue contributing to our art community in any way possible and would be honored to be part of a team working to support and stimulate art in our community through the Arts and Cultural Committee.
Please explain how your background and experience would contribute to the Arts and Culture Committee.
Strong and effective team player and team leader
Experience with promoting the arts in San Clemente through Casa Romantica Experience reviewing art and architecture projects and programs through Planning Commission and Design Review Subcommittee
Strong Team Player: I have spent my life, both in my professional and my community work, serving on strategic and creative teams. Whether I’ve led the team or had the most junior role, I’ve always found joy and fulfillment in working as part of a group to solve a challenge or create a new program or project. I thrive in a collegial atmosphere that combines the best of disparate members to net a result 17 Arts and Cultural Committee Application--Julia Darden-Lentz 2 that is better than the contribution of any one member. I’ve been fortunate in working on teams that made a difference—whether it’s in the world of healthcare or in my community. I believe that the Arts and Cultural Committee will make a difference in San Clemente, and I believe that my experience on effective teams— from global marketing teams to the San Clemente Planning Commission—can contribute to the committee’s success.
Casa Romantica: Beginning in the early years of the Casa Romantica, I worked for the better part of a decade to help strengthen the brand of the Casa and promote events to help gain community support and participation in programming. My firm provided pro bono marketing support in the early years, working with current Arts and Cultural Committee Chair Amanda Greco, who was then the marketing director, and then continuing as the Casa’s agency of record for many years. This work helped form my understanding of how critical art and arts programs are to the soul of our community.
Planning Commission and Design Review Sub-Committee: My service on the Planning Commission, and DRSC in particular, gave me eight years of experience reviewing the design of projects that would reside in and contribute to the architectural fabric of our community. It also taught me a great deal about the importance of soliciting and respecting public input to contribute to fair and wellreasoned decisions and advice to City Council.
My service on DRSC pre-dated the Arts and Cultural Commission. At that time, DRSC provided recommendations to the Planning Commission and City Council on public art installations. We reviewed many such projects during my tenure, but those that stick in my mind are: the iconic Katherine Stovall-Dennis tile mural installations at the Sports Park and Farmers and Merchant Bank, the painted Paul Gavin murals at the Pier entrance, the Drew Brophy murals in Los Molinos, and the Utility Box Art Program.
As part of DRSC, I also participated in reviews of public art policies of other coastal communities as we initiated the early process of determining policies for public art.
While the Arts and Culture Committee is a different entity, and policies and procedures have evolved, I believe my DRSC experience dealing with arts-related programs gives me a good foundation for the work of the Arts and Culture Committee. My overall service on the Planning Commission, including my two years as Chair, also gives me an understanding of how to work effectively with staff and my fellow members to provide guidance and input that is useful to the City Council.
What is your educational background?
18 Arts and Cultural Committee Application--Julia Darden-Lentz 3 San Clemente High School, Graduate
UCLA, BS English Literature
Please explain any experience you have in community, governmental, charitable or educational affairs.
Government
San Clemente Leadership Program Graduate
Landmark Preservation Task Force Member
San Clemente Planning Commission 2007-2015
o 2 years as Chair, leading the commission during the completion of the Centennial General Plan.
Design Review Sub-committee
o Full-time member of the DRSC for all eight years on the PC Community/Charitable
Casa Romantica Marketing Support
o Helped build the brand, promote the Casa, and gain support and participation in programs over approximately 10 years
Saddleback Memorial Hospital Foundation Board
o Created and co-chaired “Dancing to a New Beat” fundraiser, designed to involve the community and garner support for the hospital; raised approximately 1 million dollars in three years
Pier Pride Inaugural President—2 years, 2015-2017
o Worked with founders and led the board in determining the mission, strategy, and initial projects for Pier Pride. Provided marketing services to launch the organization.
Business Marketing Association Board Member—1996-1998 19 Arts and Cultural Committee Application--Julia Darden-Lentz 4 Availability for Meetings
While I still operate my business part-time, at this point my time is my own and I am able to make preparing for and attending the meetings a top priority. While on the Planning Commission and DRSC I had four meetings a month and worked full time, yet I rarely missed a meeting. I take my commitments seriously.
Please describe your understanding of the principal roles and responsibility of the Arts and Culture Committee
The Committee is primarily an advisory body, assisting the City Council in supporting and developing the arts in San Clemente. The Committee is currently engaged in 1) Implementing specific Council-approved programs, such as the Utility Box Art Program, 2) Exploring new opportunities for arts programs and activities, such as the art in public places and a possible amphitheater, and 3) Working with staff to develop policies for consideration by Council.
20 1
City of San Clemente, CA: ARTS & CULTURE COMMITTEE APPLICATION A new entry to a form/survey has been submitted.
Form Name:
Date & Time:
Response #:
Submitter ID:
Service Application - Arts & Culture Committee
10/23/2025 2:37 PM
9 36938
Time to complete: 17 min. , 46 sec.
Survey Details
1. Name
Julie Heinze
2. How long have you lived in San Clemente?
34 years
3. What is your occupation?
Graphic Designer/Art Director
4. Please explain why you would like to serve on the Arts and Culture Committee.
I would like to serve to help strengthen our town's sense of place and creative spirit. The arts can bring people together in unexpected ways. I believe cultural opportunities and/or art-centered experiences can be designed to teach or celebrate San Clemente's history, to be thoughtful or unexpectedly playful, to connect us by celebrating the unique vibe and history of San Clemente. By serving on the Arts & Culture Committee I hope to give ideas and energy to these types of meaningful projects.
5. Please explain how your background and experience would contribute to the Arts and Culture Committee.
My experience spans studio art to corporate advertising and a few design-related tangents. I have been a graphic designer for almost 40 years, starting my career at Apple in corporate advertising. I design logos, magazine advertising, corporate collateral, event spaces, social media & merchandise. I have designed graphics for and managed large events for National Charity League and, locally, the San Clemente Car Show and Glitz. My education includes one year of intensive Art History in Paris and a Communications Art degree. I taught Graphic Design at FIDM for 11 years and had my horizons expanded by the brilliance of my young design students. I'm open-minded about art—knowing that it comes in all formats and styles—but it's objective is always the same: to communicate and to connect.
6. What is your educational background?
21 2
High School/Colleges Attended Major/Field of Study Degree? 1 La Serna High School Not answered Not answered
2 American College in Paris Art History Not answered
3 University of Arizona Communications (Graphic) Design Bachelor of Fine Arts
7. Please explain any experience that you have had in community, governmental, charitable or educational affairs.
I have held these positions:
•Principal & Designer, Julie Heinze Design (Graphic Design, ongoing since 1995) •Founding Board Member, Communications Chair, National Charity League, Monarch Chapter •Faculty, Graphic Design, FIDM (Fashion Institute of Design & Merchandising) (11 years) •Director, San Clemente Downtown Business Association (3 years) •Docent, Casa Romantica (as part of National Charity League volunteerism) •Pro Bono Graphic Designer for various local groups: SCHS Boys Volleyball, SCHS Girls Water Polo, San Clemente Educational Foundation, among others.
8. The Arts and Culture Committee meets regularly on the fourth Monday of the months of January, April, July and October at 5:00 PM. Please explain any challenges, if any, you may have in meeting this commitment.
None.
9. Please describe your understanding of the principal roles and responsibilities of the Arts and Culture Committee.
I'm eager to learn more, but my initial understanding is that the San Clemente Arts & Cultural Committee would bring forth ideas and recommendations about new programs or installations (or refurbishment/change to any existing) that would appropriately enhance the cultural voice of San Clemente.
10. Please use the space below to explain any other factors about yourself that you would like for the Councilmembers to consider as they review your application.
Not answered
11. Applying for:
Arts & Culture Committee
12. CONFIDENTIAL The following information will only be used by Staff unless you authorize it to be released to the public.
13. The information provided is true and accurate to the best of my knowledge.
Digital Signature:
First Name Julie Last Name: Heinze Date: 10-23-
2025
22 3
Thank you,
City of San Clemente, CA
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City of San Clemente, CA: ARTS & CULTURE COMMITTEE APPLICATION A new entry to a form/survey has been submitted.
Form Name:
Date & Time:
Response #:
Submitter ID:
Service Application - Arts & Culture Committee
10/25/2025 6:59 AM
10 36943
Time to complete: 3 min. , 6 sec.
Survey Details
1. Name
Amanda Quintanilla
2. How long have you lived in San Clemente?
55 years
3. What is your occupation?
Registered Nurse
4. Please explain why you would like to serve on the Arts and Culture Committee.
I would like to serve on the Arts and Culture Committee because I have great love and passion for the arts. I believe that my Hispanic heritage will allow me to advocate and represent Latinos in the community. I think it is important to honor traditions that are significant to our ancestry such as the Día de Los Muertos, which the City will celebrating the 3rd Annual Día de Los Muertos at Max Berg Plaza Park. I have attended the Dia de Los Muertos events. This has created a sense of belonging that fostered inclusiveness. We are a Spanish Village By the Sea and we should embrace and support a spirit of togetherness. I was honored that the City Manager asked a fellow San Clemente resident and I if the community would embrace it and we definitely agreed. It is something that has been embraced by the entire community.
I have experience being on the Citizen's Amphitheater Committee to address some issues raised with an Amphitheater, which on their current work plan. I have attended the Arts and Culture Committee meeting and/or have listened to their meetings to be informed.
5. Please explain how your background and experience would contribute to the Arts and Culture Committee.
I reached out recently to a band, Los Mysteriosos, to be engaged in city events to promote inclusiveness I was on the Citizens Amphitheater Committee with Former Mayor Wayne Eggleston, Susie Lantz, Kirsti McCleary Drama Director at San Clemente High School, and Pamela Roth. We worked effortlessly together for having an Amphitheater in our 24 2
community. I mentioned that Max Berg Plaza Park has an Amphitheater stage and while on the Committee suggested having plays there. I had reached out to Shakespeare By the Sea for their input and they shared great information with me about plays at the park and at Amphitheaters.. After that committee was discontinued, I approached the City Manager to meet with Bella Collina in hopes of forming an agreement at Bella Collina's Amphitheater to have events. That would engage the community in bringing activities there..
Since I used to Hula Dance with a Halau, I reached out to Halau Hula Lani Ola and I spoke with them about a potential partnership and advice was given to me about Amphitheaters based on their experience. She provided great information. I have experience in working collaboratively with the community in accessing community needs and activities. I have spent over 25 years in collecting art work and selling artwork. .
6. What is your educational background?
High School/Colleges Attended Major/Field of Study Degree? 1 San Clemente High School General Diploma
2 Saddleback College Physical Sciences AA-Degree
3 Brigham Young University-Idaho Nursing Bachelor of Science
7. Please explain any experience that you have had in community, governmental, charitable or educational affairs.
Charitable:
San Clemente Garden Club (2022-present)- Volunteer at Park Semper Fi & Casa Romantica.
Arbor Day Celebration with San Clemente Tree Foundation/San Clemente Garden Club at the following San Clemente High School 2018 Planting Trees, Jim Johnson Memorial Park 2024, and at the San Clemente Municipal Golf Course 2025.
San Clemente Downtown Business Association- Volunteer- T-Shirt booth. (2025) Ocean Festival- Volunteer with check-in stations. (2024-2025) Coastal Clean Up with California Coastal Commission-(2024-2025) San Clemente Historical Society- Docent at the Historic Home Tour.. (2025) Humanitarian Missions:-Surgical Teams with Plasticos Foundation (2005-2008), Project Vietnam (2005), Women for World Health (2008), Medical Teams International 2008.
Beach Cities YMCA (1990’s)
Governmental AffairsCitizens Amphitheater Committee- Committee Member (2023) Leadership Academy (2023)
City of San Clemente Finance Session 2025
Speaking at Government Agencies
Public comments of TCA Board Meetings (2017-2021, 2024, and 2025) Public comments at OCTA Board Meetings (2024 to present) Testimony for former Senator Bates SB 1373 at hearing. (2020) Testimony at the Senate Subcommittee on LOSSAN Rail Resilience (2023-2024) Testimony at the California Energy Commission (2024-2025) Testimony at the South Coast Air Quality Management District (2025) Attendance at the South Orange County Beach Coalition (2025) Public comments at the South Orange County Community College District Board of Trustees. (2025) Public comment at a Laguna Niguel Community town hall hosted by BLESSIN regarding a Battery Energy Facility. 2025.
Community ExperienceCivic Activism (1998-present)
Opposition: El Toro Airport, (2000-2001) 73 Toll Road (1990's), Not My Toll Road (2017-2021) Los Patrones Parkway Extension, LPPE (2018-2022), La Pata Gas Station @ La Pata/Hermosa (2021) , Amazon Warehouse in San Clemente (2021- 2022), Managed lanes/HOV lanes on the I-5 in San Clemente (2017- present) , No Battery Energy Storage System in San Clemente (2023), No Compass Battery
25 3
Energy Storage System in San Juan Capistrano.(2025) South Coast Air Quality Management District, SCAQMD, conversion of Gas to Electric, amended rules 1111 & 1121.(2025) Doxxing of Personal Identifying Information-City of San Clemente. (2022) Support: Save Trestles, Save Trafalgar Canyon (2019-2022), Save Boca Del Canon (2022- present).
RV/Camper/Commercial Vehicle Ordinance-Public Safety at Max Berg Park & Las Palmas Elementary (2020- present). Private Security at North Beach, the Pier, and Del Mar(2023) .
8. The Arts and Culture Committee meets regularly on the fourth Monday of the months of January, April, July and October at 5:00 PM. Please explain any challenges, if any, you may have in meeting this commitment.
I am able to attend the Arts and Culture Committee meetings.
9. Please describe your understanding of the principal roles and responsibilities of the Arts and Culture Committee.
The Arts and Culture Committee is advisory committee to the City Council regarding arts and cultural programs. This also includes recommendations on art acquisitions and art displays in public spaces such as painting the electric boxes. The focus is to promote and foster art, programs, and cultural events in our community that are inclusive. The Committee develops an annual work plan, which is approved by the City Council. The City Council approved this at the October 21st city council meeting.
10. Please use the space below to explain any other factors about yourself that you would like for the Councilmembers to consider as they review your application.
I hope that the Councilmembers will understand my unwavering “dedication and commitment to advance common sense solutions, and inspiring residents to be engaged in the governmental process, “of, by & for the people” that strongly resonates in me. (Senator Bates). I think it is important to work collaboratively with governmental agencies and engaging our representatives such as Assemblywoman Davies and staff, and Supervisor Foley and staff.
I bring fact based recommendations, backed by extensive research, knowledge of historical information, and suggestions coming from dialogues with residents. I have been engaged in the community for years in bringing awareness regarding social issues that impact our community. I have been a strong patient advocate in my Nursing career and have demonstrated this same type of advocacy for the betterment of our town.
I wanted to add that in the Education section, I was not able to include the following information:
Golden West College Mayor/Field of Study: Nursing Degree: AS Degree
11. Applying for:
Arts & Culture Committee
12. CONFIDENTIAL The following information will only be used by Staff unless you authorize it to be released to the public.
13. The information provided is true and accurate to the best of my knowledge.
Digital Signature:
First Name Amanda Last Name: Quintanilla Date: 10/25/2025 26 4
Thank you,
City of San Clemente, CA
This is an automated message generated by Granicus. Please do not reply directly to this email. 27 910 Calle Negocio
2nd Floor
San Clemente, California
www.san-clemente.org
AGENDA REPORT
CITY OF SAN CLEMENTE
CITY COUNCIL MEETING
CITY OF SAN CLEMENTE 1
Meeting Date: November 18, 2025 Agenda Item: B.
28 1
City of San Clemente, CA: COMMUNITY SAFETY AND WELFARE COMMITTEE APPLICATION A new entry to a form/survey has been submitted.
Form Name:
Date & Time:
Response #:
Submitter ID:
Service Application - Community Safety and Welfare Committee 11/01/2025 1:02 AM
15 36966
Time to complete: 49 min. , 30 sec.
Survey Details
1. Name
Mike Kay
2. How long have you lived in San Clemente?
20 years
3. What is your occupation?
Retired. Now a goat herder.
4. Please explain why you would like to serve on the Community Safety and Welfare Committee.
I have a long history of volunteerism, some of it in Public Safety. I was the US Representative to the World Tomato Council, a volunteer Chief Warden of the US Embassy, Kampala, Uganda. I was a Volunteer Firefighter. For the last year or so i have been a volunteer manager of the San Clemente Goat Pilot Program. I am also currently active in the citizens initiative to increase retail taxes by .01 to pay for beach sand and fire prevention. Previously i was active with Save Our Beaches regarding sand delivery schemes. My brother is a major land owner and businessman in town, and i have many friends and contacts in the area. My oldest daughter recently graduated from SCHS. We are active here, with deep roots in the community. Both myself and my brother raised our kids here. I have owned property and resided in three distinct regions of our City, and understand the issues in those areas.
I grew up in coastal SoCal, have spent over 50 years in the State. I have advanced degrees from UC Davis. I am fluent in Spanish. My family lost our home to the 2017 Tubbs Fire in Sonoma, then the worst fire in California history. Post fire I worked in Fire Debris Removal under the US Army Corps, and then new house construction, re-building over 40 homes. I gave talks to Eaton and Pallisades fire survivors, and recently to local organizations interested in goat grazing for fire fuel load reduction as well as invasive species mitigation.
I have good oral communication, public speaking, and writing skills. I am a team oriented person, and i understand the intricacies of various Public Safety entities, like police, fire and other first responders. As a former Volunteer Firefighter, i passed an FBI background check, was issued a badge and a RedCard, and took an oath to uphold our State Constitution. 29 2
I am currently very involved in San Clemente's emerging Fire Fuel Load Reduction, and upcoming Fire Wise certification efforts. As such i can offer valuable insights into our towns pivot towards a more proactive fire prevention schemes. For all these reasons i think i would be an excellent addition to the newly combined Community Safety and Welfare Committee. -Mike Kay
5. Please explain your background and experience in the public safety field.
Chief Warden US Embassy, Kampala, Uganda.
Responsible for communications, assistance and monitoring of all Americans (journalists, Aid Workers, etc) in conflict zones of N. Uganda. Reported monthly directly to US Embassy. Was in a terrorist attack by Kony Rebels/LRA (77 casualties), driver abducted. Had to self rescue from a very remote location, and then rescued two Americans. Rescued abducted driver 3 days later.
Class 3 Firefighter. Volunteer Firefighter, Mountain Fire Department, Sonoma County, CA Certifications in Confined Space Rescue, Haz Mat Response. Worked as a Volunteer Firefighter in a very rural area, mostly attended car crashes, elderly issues, and wildfires. Certified at Sonoma County Fire Academy. Fought the North Bay Complex Fire for three weeks. Lost my own house while working fire emergency. Survived being engulfed by a massive fire tornado.
6. What is your educational background?
High School/Colleges Attended Major/Field of Study Degree? 1 Vista High School Not answered Not answered
2 San Francisco State University International Relations/Middle East Studies B.A. 3 UC Davis International Agriculture/Ecology M.S.
7. Please explain any experience that you have in community, governmental, charitable or educational affairs.
I have given various guest lectures on post-fire loss, fire fuel load reduction, and invasive species mitigation with goat grazing. I currently manage the San Clemente goat grazing program.
In past years i have been involved with other volunteer efforts. From sports team coaching to beach sand advocacy and many other issues. But none of that is Public Safety oriented.
8. Please describe your understanding of the principal roles and responsibilities of the Community Safety and Welfare Committee.
My understanding is that the Community Safety and Welfare Committee is primarily in place to assist City Council make informed decisions on relevant topics by offering insights and wisdom and deep analysis.
9. The Community Safety and Welfare Committee meets bimonthly on the fourth Tuesday at 3:00 p.m. Please explain any challenges, if any, you may have in meeting this commitment.
No challenges.
10. Please use the space below to explain any other factors about yourself that you would like for the Councilmembers to consider as they review your application.
I have been active in local issues in our town for the last 6 years. I worked with Save Our Beaches, regularly attend City Council meetings, where i sometimes weigh in on topics of interest. I am aware that my work with goat herding might lead to occasional conflicts of interest, and will recuse myself on the issues of goat grazing contracting, should that topic come up.
I am a very active person, i have hiked or mountain biked just about all the open land areas in our town. I have met and talked with hundreds of San Clemente residents in recent months regarding their concerns about wild fires.
IMO our town is in need of additional fire prevention. We need additional fire fighting resources, as well as significant fire fuel load reduction. I bring insight and understanding of those considerable issues. 30 3
11. Applying for:
Community Safety and Welfare Committee
12. CONFIDENTIAL The following information will only be used by Staff unless you authorize it to be released to the public.
13. The information provided is true and accurate to the best of my knowledge.
Digital Signature:
First Name Michael Last Name: Kay Date: Nov 1st,
2025
Thank you,
City of San Clemente, CA
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City of San Clemente, CA: COMMUNITY SAFETY AND WELFARE COMMITTEE APPLICATION A new entry to a form/survey has been submitted.
Form Name:
Date & Time:
Response #:
Submitter ID:
Service Application ‐ Community Safety and Welfare Committee 05/08/2025 10:53 PM
9 34657
Time to complete: 27 min. , 7 sec.
Survey Details
1. Name
Stephen Lamb
2. How long have you lived in San Clemente?
One year.
3. What is your occupation?
Special Agent, US Food and Drug Administration Office of Criminal Investigations
4. Please explain why you would like to serve on the Community Safety and Welfare Committee.
Since a young age I have put a high value on civic engagement, this value led me to my career in law enforcement.
Unfortunately, my career has also kept me from being engaged in other meaningful ways in my community. As a Special Agent for the Oklahoma Bureau of Narcotics and then as a Special Agent for the US Secret Service I was precluded from civic engagement by expectations to maintain undercover work and an erratic schedule. Now, as a Special Agent for the Food and Drug Administration Office of Criminal Investigations based in San Clemente, I have found a position that lends the time and stability for me to engage and invest in my local community.
After having to move six times in the last ten years I feel that I can say with experience that San Clemente is one of the most amazing places to live. In the past year, my wife and our five year old son have loved everything the city has to offer, the annual fishing derby, the amazing Halloween and Christmas festivities, clean beaches, and a beautiful, calm, and safe neighborhood.
I know that everything that makes San Clemente amazing is not inherent, it takes work. It takes dedicated community members doing their part. I would like to become part of the Community Safety and Welfare Committee to lend my background, unique perspectives, and skills to do my part in contributing to this wonderful city. 32 2
5. Please explain your background and experience in the public safety field.
I have a unique background in public safety. As a student at Brigham Young University I studied Spanish with the aim of utilizing the Spanish language to serve in a public safety capacity. Upon graduating I worked as a Special Agent for the Oklahoma Bureau of Narcotics. In this position I was assigned to work in panhandle Oklahoma, in a solo capacity, with my nearest colleague living around 200 miles away. Living in a sparsely populated section of the United States with limited resources I came to appreciate and understand the power of cooperation across various local, state and federal agencies to assist each other in creating positive community outcomes. In this position I did gain a great experience in counternarcotics operations, but also found myself assisting in search and rescue operations, community awareness programs, prescription drug takebacks, and translating to assist Spanish speaking members of the community to find services.
As I looked to expand my career and experience, I was hired by the US Secret Service. In this position I was trained in close protection, and financial and computer crimes. I was fortunate to be put into positions of leadership and responsibility. On dozens of occasions I was given the opportunity to act as the site planner for major events for protectees including Presidents, Vice Presidents, their family, foreign heads of state and other designated individuals. This necessitated the coordination between private, city, state, and federal entities to coordinate the safety of the protectees and the public. In some cases this involved the coordination of hundreds of law enforcement officers. In planning for these events, I came to appreciate that proper coordination and planning across many partners brought greater capabilities and made the burden of providing a safe environment much easier.
Seeking a more stable life, I applied for and was hired by the Food and Drug Administration Office of Criminal Investigations as a Special Agent. In this position I am assigned to investigate crimes that affect public health. This can include counterfeit medicine, adulterated products, and clinical trial fraud and many other crimes. In this job I have come to appreciate that public safety is more than protecting the public from violence, exploitation, and financial fraud. Working for the FDA, I have found that effective public communication matters and that effective communication is also more than what is said, it is building trust.
6. What is your educational background?
High School/Colleges Attended Major/Field of Study Degree? 1 Ogden High School N/A Yes/Diploma
2 Brigham Young University BA in Spanish Yes/Bachelors
3 Not answered Not answered Not answered
7. Please explain any experience that you have in community, governmental, charitable or educational affairs.
My career in government service has given me great experience in understanding the structures and functions of local, state and federal institutions and their roles. My positions have allowed me to be involved in various community initiatives like making formal presentations on the dangers of drugs or financial fraud, coordinating prescription drug take back events, assisting in translating for Child Protective Services among many others.
Unfortunately, my experience in being more directly involved in my local communities has been precluded by my previous government positions. Some of the most fulfilling memories I have are working on community projects in my youth through my church group, Eagle Scout project, or student government. In college I was most proud of my volunteer work as a translator for the Brigham Young University Law School and Utah County Family Justice Center's pro bono legal clinic.
8. Please describe your understanding of the principal roles and responsibilities of the Community Safety and Welfare Committee.
As I listened to the most recent recorded meeting of the San Clemente Public Safety Committee I heard the news that the Public Safety Committee and the Human Affairs Committee would be combining responsibilities and be renamed the Community Safety and Welfare Committee. From listening to previous meetings of both committees I understand that their responsibilities are to provide advice and accountability regarding their pertinent services. For the Public Safety Committee this includes the Orange County Sheriff's Department, Orange County Fire Authority, Marine Safety Division, and contracted ambulance services. The Human Affairs Committee interfaces with the public to act as a sounding board for concerns for human needs, like homelessness. In bringing these committees together I anticipate a positive relationship where human and community concerns can be more directly addressed by those in public safety. 33 3
9. The Community Safety and Welfare Committee meets bimonthly on the fourth Tuesday at 3:00 p.m. Please explain any challenges, if any, you may have in meeting this commitment.
I do not anticipate any challenges to this commitment.
10. Please use the space below to explain any other factors about yourself that you would like for the Councilmembers to consider as they review your application.
Not answered
11. Applying for:
Community Safety and Welfare Committee
12. CONFIDENTIAL The following information will only be used by Staff unless you authorize it to be released to the public.
13. The information provided is true and accurate to the best of my knowledge.
Digital Signature:
First Name Stephen Last Name: Lamb Date: 05/08/2025
Thank you,
City of San Clemente, CA
This is an automated message generated by Granicus. Please do not reply directly to this email. 34
1. Name
Charles (chuck) Seward
2. How long have you lived in San Clemente?
60 years
3. What is your occupation?
Retired, Battalion Chief and Training Officer, Southern California Edison, San Onofre Fire Department,
4. Please explain why you would like to serve on the Community Safety and Welfare Committee.
I have been committed to Public Safety and Fire Service for the past 45 years as Firefighter, Officer, Safety Officer, Chief, and Fire Instructor. I have provided training to Fire Instructors classes at Santa Anta Community College.
I would like the opportunity to give back to my community some of my knowledge, experience, and expertise I have gained throughout my lifetime from true professionals in the field of Public Safety and Fire Protection Service.
5. Please explain your background and experience in the public safety field.
I started my pursuit for public safety as a volunteer Fireman, which allowed me to advance to the positions of Officer and Chief within the City of San Clemente Fire Department.
This enabled me to further advance my passion and career at the San Onofre Fire Department Fire Chief, Battalion Chief, and Training Officer. I was responsible for initial organization and development of the San Onofre Fire Department where I obtained State of California, Fire Marshal, Certified Chief Officer and Master Instructor certifications.
6. What is your educational background?
High School/Colleges Attended Major/Field of Study
1 University of Redlands. Decree in Business Administration 2 Santa Anta Community College Fire Science
3 State of California Fire Marshal Training, Certification programs Fire Protection and Management
7. Please explain any experience that you have in community, governmental, charitable or educational affairs.
Former Treasurer and Director of a Large Federal Credit Union, Served in various service ministries’ and leadership roles Within my local church organization.
I am currently working with the California Fire Museum and Learning Center to restore the first City of San Clemente Fire truck, 1924 American La France engine, GMC chassis with a six‐cylinder Buick motor, Donated by the former Fire Chief Ronny Coleman and his Wife Marie, hoping to have fire truck at the San Clemente annual car show.
8. Please describe your understanding of the principal roles and responsibilities of the Community Safety and Welfare Committee.
My understanding are well defined and expressed in written “The Public Safety Committee's” mission statement, its functions and duties including reviewing public‐safety (Fire, Sheriff, Marine Safety, Ambulance) performance measures and making sound recommendations to the City Council for areas of improvement, and developing an annual work plan with Specific goals and objectives for the coming year. The work plan, with recommendations, shall be submitted to the City Council on a yearly basis. In addition I understand that the committee may also performs such other duties as may be prescribed by the City Council. 35 9. The Community Safety and Welfare Committee meets bimonthly on the fourth Tuesday at 3:00 p.m. Please explain any Challenges, if any, you may have in meeting this commitment.
I have no challenges which would diminish my commitment to this committee. The web site indicates that the committee meets monthly
10. Please use the space below to explain any other factors about yourself that you would like for the Councilmembers to Consider as they review your application.
Be Happy! We are truly blessed by God to be able to live in the beautiful City of San Clemente!!!
11. Applying for:
Community Safety and Welfare Committee
12. CONFIDENTIAL The following information will only be used by Staff unless you authorize it
13. The information provided is true and accurate to the best of my knowledge.
Digital Signature:
First Name Charles Last Name: Seward
Thank you,
City of San Clemente, CA
.
36 City of San Clemente
Community Safety and Welfare Committee Application
Name: Michael G. Spohn
How long have you lived in San Clemente?
47 years (Moved from WI in June 1978).
Please explain why you would like to serve on the Community Safety & Welfare Committee? 1) I have enjoyed living in San Clemente for almost 50 years. I would like to serve my city again. 2) I believe I have the knowledge, training, and experience to perform the duties of a committee member.
3) I have extensive experience in public safety:
• I was a police officer for 15 years (San Clemente and Newport Beach). • I was the San Clemente Peace Officer of the Year in 1981. • I was a traffic motor officer, juvenile, sex crime and burglary detective, and field training officer.
4) I am an experienced Ham radio operator and have deep expertise in disaster preparedness and emergency communications. I am a former member of the Tri-City RACES organization and currently act as a technical advisor to Orange County RACES (OCRACES). 5) I have deep expertise in cybersecurity investigations with more than 16,000 hours of on-site incident management experience all over the world. This experience may be relevant to this role due to the never-ending cyberattacks aimed at Cities. These attacks often result in threats to public safety and well-being.
6) My extensive investigative skills provide a good foundation for this role. Investigations require a high-level of detail, extensive research skills, excellent interview and listening skills, and the ability to communicate, particularly written communications. 7) I have deep knowledge of the City's history.
Please explain your background and experience in the public safety field.
I moved to San Clemente when I was 18 years old. I was hired as a San Clemente police cadet in November 1978. I was promoted to police officer and attended the Golden West College Police Academy in 1979 (Class 60/61). I completed my field training in early 1980 and was working patrol in San Clemente at age 20.
I was a San Clemente traffic motor officer for two years. I also cross-trained as a San Clemente lifeguard and worked beach patrol for two summers. In 1981 I was honored and humbled to be chosen Peace Officer of the Year.
In 1982, I was hired by the Newport Beach police department. I worked there from 1982-1994. I worked patrol, including beach patrol. J was a field training officer. I was also a juvenile detective, sex crime detective, and burglary detective.
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1 City of San Clemente, CA: COMMUNITY SAFETY AND WELFARE COMMITTEE APPLICATION A new entry to a form/survey has been submitted.
Form Name:
Date & Time:
Response #:
Submitter ID:
Service Application - Community Safety and Welfare Committee 11/06/2025 6:44 AM
16 36993
Time to complete: 20 min. , 4 sec.
Survey Details
1. Name
Angela Watts
2. How long have you lived in San Clemente?
9 years
3. What is your occupation?
Business Owner & Account Director
4. Please explain why you would like to serve on the Community Safety and Welfare Committee.
I would like to serve on the Community Safety and Welfare Committee because I’m deeply invested in the wellbeing of San Clemente. As a mother of two young children and a property owner in the district with some of our city’s highest crime rates, I see these issues firsthand. My children attend school here, and our family experiences the community’s challenges and successes every day.
Because I’m on the ground, engaged, and part of this community fabric, I bring a practical and personal perspective that often gets overlooked. I’m not just observing the problems — I’m living them alongside my neighbors. My motivation is simple: I care about this town, and I want to be part of building a safer, stronger San Clemente for our families as our kids grow up here.
5. Please explain your background and experience in the public safety field.
As for my experience in the public safety field, I currently serve as the leader of the Las Palmas Safety Committee — a group I founded when my daughter was in kindergarten. I launched the committee after noticing significant and overlooked safety concerns on campus that needed immediate attention.
Through this initiative, I’ve worked collaboratively with city officials, the school board, and the Orange County Sheriff’s Department to drive meaningful, tangible improvements in school safety. These efforts have resulted in important upgrades 43 2
such as higher perimeter fencing, improved lighting, and the installation of additional security cameras.
Beyond those projects, I continue to actively assess safety conditions at Las Palmas alongside the principal and staff.
Together, we review emergency preparedness protocols, ensure emergency supplies are adequately stocked, and evaluate evolving safety needs on an ongoing basis.
My hands-on leadership in this capacity has given me a deep understanding of both the operational and human elements of public safety — from planning and prevention to coordination and follow-through. I take pride in translating community concerns into practical, lasting solutions that make a real difference.
6. What is your educational background?
High School/Colleges Attended Major/Field of Study Degree? 1 Plymouth State University Physical Education / Health Education Bachelors of Science 2 Not answered Not answered Not answered
3 Not answered Not answered Not answered
7. Please explain any experience that you have in community, governmental, charitable or educational affairs.
I have extensive experience in community, governmental, charitable, and educational affairs that reflects a lifelong commitment to public service and advocacy. Early in my career, I served with AmeriCorps as a teacher in Oakland, California, working with underserved and low-income communities. That experience instilled in me a deep understanding of how civic engagement and education intersect to create lasting change.
Locally, I volunteer with the Boys & Girls Club as a youth coach, helping to foster teamwork, confidence, and leadership among young people. I am also actively involved in school and city governance — regularly attending school board and city council meetings to stay informed and contribute to community discussions that directly impact families.
As the Advocacy Representative for the Las Palmas PTA, I’ve traveled to Sacramento to meet with legislators and advocate for policies that strengthen public education and enhance student safety. On a broader scale, I’ve worked with the Goldman Sachs 10,000 Small Businesses Advocacy Team, traveling to Washington, D.C., to represent the interests of small business owners and engage in dialogue with policymakers on economic development and entrepreneurship.
These experiences have given me a well-rounded perspective that bridges education, community advocacy, and government relations — all rooted in a genuine desire to create safer, more equitable, and more connected communities.
8. Please describe your understanding of the principal roles and responsibilities of the Community Safety and Welfare Committee.
In my view, the CSWC holds an important role of “community translator” and “policy connector” — translating the lived experience of residents (especially families, homeowners, children in schools) into actionable guidance for the City, and ensuring that the City’s policy-makers can see what's happening on the ground. For example: what school safety looks like, what neighborhood lighting or fencing improvements matter, where trafficking or crime risk is concentrated, how residents perceive welfare or safety threats.
Because the Committee is advisory and not the primary implementer, the role also requires strong communication, listening skills, and willingness to coordinate — with City departments, public safety agencies, schools, nonprofits and residents.
If I were serving, I would focus on bringing that “on the ground” perspective (as a resident, parent, property owner and community volunteer) into the Committee’s work — ensuring that the Committee not only recommends high-level policies but also backs them with real community insights: how children move to and from school, where lighting is inadequate, how older neighborhoods experience safety, how families engage in prevention and resilience.
9. The Community Safety and Welfare Committee meets bimonthly on the fourth Tuesday at 3:00 p.m. Please explain any challenges, if any, you may have in meeting this commitment. n/a - no issues.
44 3
10. Please use the space below to explain any other factors about yourself that you would like for the Councilmembers to consider as they review your application.
Thank you for considering my application. I’m deeply committed to the San Clemente community and would be honored to contribute my experience, perspective, and energy to the Committee’s work. I care deeply about the safety and wellbeing of our residents — especially our children — and I’m eager to help the City continue building a safe, proactive, and connected community.
11. Applying for:
Community Safety and Welfare Committee
12. CONFIDENTIAL The following information will only be used by Staff unless you authorize it to be released to the public.
13. The information provided is true and accurate to the best of my knowledge.
Digital Signature:
First Name Angela Last Name: Watts Date: 11/6/25
Thank you,
City of San Clemente, CA
This is an automated message generated by Granicus. Please do not reply directly to this email. 45 910 Calle Negocio
2nd Floor
San Clemente, California
www.san-clemente.org
AGENDA REPORT
CITY OF SAN CLEMENTE
CITY COUNCIL MEETING
CITY OF SAN CLEMENTE 1
Meeting Date: November 18, 2025 Agenda Item: 8A.
Submitted By: Beaches, Parks and Recreation
Prepared By: Samantha Wylie, Beaches, Parks & Recreation Director Subject:
..titl e
PUBLIC HEARING – CONSIDERATION OF RESOLUTION NO. 25-175, APPROVING THE
COST OF SERVICES STUDY, ADOPTING THE COST RECOVERY FOR BEACHES, PARKS &
RECREATION SERVICES POLICY, APPROVING THE ASSOCIATED FEE SCHEDULE, REPEALING AND REPLACING RESOLUTION NOS. 23-25, 89-54, 95-01, 11-66, AND 16-23,
AND ALL OTHER RESOLUTIONS THAT MAY CONFLICT THEREWITH, AND FINDING THE ACTIONS EXEMPT FR ..body OM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT Fiscal Impact:
The actual fiscal impact is difficult to predict, but adoption of the Beaches, Parks & Recreation (BPR) Cost Recovery Policy and associated fee adjustments is expected to generate an additional estimated $500,000 to $900,000 in partial cost recovery annually upon full implementation within all program areas. Actual impacts will vary and phase in over time, supporting the City's ability to maintain high-quality programs and facilities, while providing ongoing subsidy for community benefit programs.
Staff expect that over the first several months of implementation, data from actual reservations, program enrollments, and rentals will provide a more accurate estimate of the overall fiscal impact. In the long term, the policy is expected to strengthen the Department’s cost recovery position, reduce reliance on General Fund subsidy, and align future revenue growth with inflation and operational cost trends.
The proposed policy will further improve fiscal transparency and sustainability by aligning future fee adjustments with inflation, operational costs, and community benefit priorities, rather than producing a defined short-term revenue increase. No budget adjustment or appropriations are required at this time. All projected revenue and expense impacts will be incorporated into the FY 2026-27 and FY 2027-28 Biennial Budget.
Summary:
This report presents the Beaches, Parks & Recreation Cost Recovery Policy No. 201-15 (Attachment 2) and corresponding fee schedule adjustments (Attachment 1, Exhibit A). The purpose of the report is to conduct a public hearing and consider the adoption of the Policy and associated fee adjustments based on the City’s comprehensive Fee Study. The proposed Policy establishes a data-driven, equitable, and transparent approach to fee setting that aligns with community benefit principles while strengthening long-term financial sustainability.
The fee adjustments reflect a phased implementation designed to balance affordability and access for residents with the increasing cost of providing high-quality municipal recreation 46 Meeting Date: November 18, 2025 Agenda Item: 8A.
CITY OF SAN CLEMENTE 2
services. The updated structure continues to prioritize and support youth activities, senior and adaptive programming, aquatics, and community-wide events through meaningful subsidy levels.
The Beaches, Parks & Recreation Commission reviewed the fee study and policy at two meetings in October 2025, and provided a recommendation to ensure community affordability, transparency, and stakeholder engagement. Commission recommendations from those meetings, including direction to phase increases and establish an Aquatics Subcommittee, have been incorporated into the background below.
Background:
The City last completed a comprehensive fee study for Beaches, Parks & Recreation (BPR) services in 2009. Over the past 16 years, operational costs, including labor, utilities, supplies/materials, and maintenance, have increased substantially while user fees have remained largely unchanged.
In early 2025, the City retained Matrix Consulting Group to conduct a comprehensive fee study for the Beaches, Parks & Recreation Department. The analysis included evaluation of:
Full cost of service (direct and indirect)
Current fee structure and subsidy levels
Regional and market benchmarks
Equity and community access considerations
National parks & recreation standards for cost recovery modeling The analysis indicates that overall cost recovery currently ranges from about 38 to 40 percent, with notable differences across program areas. These results match national municipal benchmarks and reaffirm both the City's historic dedication to subsidy for community benefit and the need for a structured, consistent cost recovery policy going forward.
The proposed Cost Recovery Policy establishes a tiered structure based on the degree of public versus private benefit and formalizes the City’s practices related to fee setting, discounting, and annual adjustments. It maintains significant subsidies for activities that provide broad community benefit, such as youth sports, senior services, adaptive programs, and community events, while moving services that primarily benefit individual users toward greater cost recovery over time.
In early 2025, the City retained the Matrix Consulting Group to conduct a Cost of Services (User Fee) Study for all departmental operations, including aquatics, recreation programming, facility rentals, and park services. The purpose of the study was to identify the full cost of providing services, evaluate cost recovery levels by program area, and establish a consistent, data-driven basis for future fee adjustments.
The findings of the Matrix study indicate that the Department currently operates at an overall cost recovery level of approximately 38 to 40 percent, which falls within the typical national range of 20 to 50 percent for municipal recreation services. The analysis also revealed that recovery levels vary significantly among program areas. The Ole Hanson Beach Club, Recreation Programs and Events, and the Vista Hermosa Sports Park/Aquatics Facility demonstrate the highest cost recovery levels, ranging from 53 to 79 percent, while the Community Center, Aquatics operations, 47 Meeting Date: November 18, 2025 Agenda Item: 8A.
CITY OF SAN CLEMENTE 3
and Steed Park have lower recovery levels ranging from 7 to 28 percent. Collectively, these gaps represent approximately $5.3 million in unrecovered costs annually that are subsidized through the General Fund.
In response to these findings, staff developed a formal Cost Recovery Policy that provides a clear framework for determining subsidy levels, setting fees, and maintaining equity and accessibility across programs. The proposed Policy would establish a five-tier structure based on the balance of community and individual benefit. Programs and services that provide the greatest public benefit, such as parks, playgrounds, and community events, would be highly subsidized, while those that serve primarily individual or commercial users, such as private facility rentals, weddings, and filming permits, would be priced at or near full cost recovery.
The proposed Policy also standardizes the Department’s approach to discounts and waivers, ensuring consistent treatment of resident, nonprofit, and commercial users. San Clemente residents would continue to receive the base rate, resident nonprofits would be eligible for the highest discount level, and commercial users would be charged full-cost or market-based rates.
Additionally, the policy formalizes the City’s ability to apply annual Consumer Price Index (CPI) adjustments, conduct comprehensive cost-of-service studies at least every five years, and allow limited administrative fee waivers for qualifying nonprofit organizations that demonstrate significant community benefit.
Implementation of the Policy would allow the City to achieve greater fiscal sustainability while maintaining accessibility for residents and local nonprofits. If adopted by the City Council, the Policy and updated Master Fee Schedule would take effect on January 1, 2026, with staff tracking annual compliance and reporting to both the BPR Commission and City Council each spring.
Staff anticipates that within several months of implementation, actual data from program enrollments, rentals, and facility reservations will provide a clearer measure of the fiscal impact.
Over time, the Cost Recovery Policy is expected to improve transparency, ensure equity in fee application, and support the Department’s goal of balancing community benefit with financial accountability.
Beaches, Parks & Recreation Commission Review
The Beaches, Parks & Recreation Commission reviewed the proposed Policy and fee recommendations at its meeting on October 14, 2025. At that meeting, the Commission emphasized the need to support affordability, ensure transparency, and provide ongoing public education regarding fee use and community benefit. Commissioners discussed the concept of a “round-up” donation option to support scholarships, a “Your Fees at Work” communication effort, the need to distinguish neighborhood block party permits from street closure permits, and the value of phasing increases gradually. The Commission also directed that additional input be sought from key user groups and members of the public and voted to form an Aquatics Fees Subcommittee to work with staff on a detailed review of aquatics fees and impacts before City Council consideration.
At its continued review on October 28, 2025, the Commission received the recommendations of the Aquatics Subcommittee and further staff analysis. During this meeting, Commissioners 48 Meeting Date: November 18, 2025 Agenda Item: 8A.
CITY OF SAN CLEMENTE 4
discussed aquatic program cost recovery, staffing challenges, maintenance demands, and the existing per-lane fee structure. They affirmed the designation of San Clemente Aquatics Team and San Clemente Water Polo as Tier 1 partners and emphasized gradual increases that maintain equitable access. The Commission ultimately voted unanimously (5-0) to recommend a ten-percent (10%) adjustment to lane fees from current rates as a more measured approach than the originally modeled adjustment, balancing financial sustainability with continued community access.
Staff recommends that the City Council conduct the public hearing and approve the Cost of Service Study, adopt the Beaches, Parks & Recreation Cost Recovery Policy, approve the revised fee schedule with phased implementation, determine that the action is exempt from CEQA, and direct staff to incorporate projected revenue and expense impacts into the FY 2026- 28 Biennial Budget.
Council Options:
Adopt Resolution No. 25-175, which will accept the 2025 Cost of Services (User Fee) Study prepared by the Matrix Consulting Group; approve Policy No. 201-15; adopt a revised fee schedule for the Beaches, Parks & Recreation Department; and determine the actions exempt from the California Environmental Quality Act (CEQA).
Modify the resolution.
Continue the Public Hearing and provide direction to staff to return at a future meeting Take no action.
Environmental Review/Analysis:
Adoption of the Cost Recovery Policy and approval of related fee adjustments are exempt from the California Environmental Quality Act (“CEQA”) under CEQA Guidelines Section 15273, which applies to the establishment, modification, collection, or approval of fees by a public agency for the purpose of meeting operating expenses, equipment, or materials; meeting financial reserve needs and requirements; or obtaining funds for capital projects necessary to maintain service within existing service areas.
The recommended fee adjustments are designed to recover a portion of the City's costs to provide existing services and facilities, maintain service levels, and help offset rising labor, utility, and operational expenses. The action does not involve the expansion of facilities or the construction of new infrastructure that would result in a physical change to the environment.
Recommended Actions:
Staff Recommendation ..recommendation
Staff and the Beaches, Parks & Recreation Commission recommend that the City Council:
1. Conduct the public hearing pursuant to California Government Code section 66018; and
2. After conducting the public hearing, adopt Resolution No. 25-175, which would:
49 Meeting Date: November 18, 2025 Agenda Item: 8A.
CITY OF SAN CLEMENTE 5
a. Determine that the actions are statutorily exempt from CEQA pursuant to Section 15273 (14 CCR § 15273);
b. Approve the 2025 Cost of Services (User Fee) Study prepared by the Matrix Consulting Group;
c. Adopt Policy No. 201-15 - Cost Recovery for Beaches, Parks & Recreation Services; d. Adopt a revised fee schedule for the Beaches, Parks & Recreation Department effective January 1, 2026; and repeal and replace conflicting resolutions; and e. Direct staff to incorporate all revenue and expense impacts into future budgets. ..end
Attachment:
1. Resolution No. 25-175
2. Cost Recovery for Beaches, Parks & Recreation Services Policy No. 201-15
3. Comprehensive Cost of Services Study by Matrix Consulting Group
4. Fee Schedule – Showing Current and Proposed Fees
5. Public Hearing Notice
Notification:
Published in the San Clemente Times on October 30, 2025 and November 13, 2025.
Aquatic Partner Organizations
City Non-Profit Partner Organizations
Frequent Renters (Fields and Facilities)
Swim Pass holders
Youth Sport Partner Organizations
50 Attachment 1
RESOLUTION NO. 25-175
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SAN CLEMENTE, CALIFORNIA, APPROVING THE COST OF
SERVICES STUDY, ADOPTING THE COST RECOVERY
FOR BEACHES, PARKS & RECREATION SERVICES
POLICY AND APPROVING AND ADOPTING THE
ASSOCIATED FEE SCHEDULE, AND REPEALING AND
REPLACING RESOLUTION NOS. 23-25, 89-54, 95-01, 11-66,
AND 16-23, AND ALL OTHER RESOLUTIONS THAT MAY
CONFLICT THEREWITH, AND FINDING THE ACTIONS
STATUTORILY EXEMPT FROM THE CALIFORNIA
ENVIRONMENTAL QUALITY ACT (“CEQA”) UNDER CEQA
GUIDELINES SECTION 15273 (14 CCR § 15273)
WHEREAS, the City of San Clemente last completed a comprehensive fee study for Beaches, Parks & Recreation (BPR) services in 2009, and operational costs, including labor, utilities, supplies, and maintenance, have since increased significantly; and WHEREAS, in 2025, the City retained Matrix Consulting Group to conduct a comprehensive Cost of Services Study (User Fee Study) for all BPR operations, including aquatics, recreation programming, facility rentals, and park services, to identify the full cost of service, evaluate recovery levels, and establish a fair and consistent fee framework; and WHEREAS, the study determined that the Department’s overall cost recovery level is approximately thirty-eight to forty percent, consistent with national benchmarks for municipal recreation services, and identified opportunities to enhance fiscal transparency and sustainability; and
WHEREAS, the Beaches, Parks & Recreation Commission reviewed the findings and proposed Cost Recovery for Beaches, Parks & Recreation Services in their regular meetings on October 14, 2025, and again on October 28, 2025, recommending refinements to ensure equitable implementation, continued affordability for residents, and the establishment of an Aquatics Fees Subcommittee to further review pool and lane rental rates; and
WHEREAS, following additional analysis and stakeholder consultation, the Commission unanimously recommended adoption of the Cost Recovery for Beaches, Parks & Recreation Services Policy (the “Policy”) and Fee Schedule as amended to reflect a phased implementation of certain aquatics fees, balancing cost recovery objectives with community access; and
WHEREAS, the City Council conducted a duly noticed public hearing in accordance with California Government Code Section 66018(a), allowing public testimony and review of the Cost of Service Study, the proposed Policy and the proposed Fee Schedule; and WHEREAS, the adoption of the Cost of Service Study, Policy and Fee Schedule will 51 Resolution No. 25-175 Page 2
provide a structured, transparent, and equitable framework for establishing and adjusting user fees, consistent with community benefit principles, fiscal stewardship, and City policy; and
WHEREAS, it is necessary and appropriate to repeal and replace outdated or conflicting fee resolutions, including Resolution No. 23-25 (Recreation Fees), Resolution No. 89-54 (Beach Event Fees), Resolution No. 95-01 (Commercial Film Permit Fees), Resolution No. 11-66 (Park and Recreation Facility Fees), and Resolution No. 16-23 (Pool Facility Fees).
NOW, THEREFORE, the City Council of the City of San Clemente does hereby find, determine and resolve as follows:
SECTION 1. The City Council hereby approves and adopts the 2025 Cost of Services (User Fee) Study prepared by the Matrix Consulting Group as presented to the City Council on November 18, 2025;
SECTION 2. The City Council hereby approves and adopts the Cost Recovery for Beaches, Parks & Recreation Services Policy No. 201-15, which is fully incorporated herein by this reference, as a formal City policy document to serve as the guiding framework for establishing, evaluating, and adjusting all fees within the Beaches, Parks & Recreation Department as presented to the City Council on November 18, 2025. The Policy shall be maintained by the Beaches, Parks & Recreation Director and made available to the public on the City’s website.
SECTION 3. The City Council hereby approves and adopts the Beaches, Parks & Recreation Fee Schedule, attached hereto as Exhibit A and incorporated fully herein by this reference, and finds and determines that such fees do not exceed the cost of providing services. The revised fees shall become effective January 1, 2026, and may be adjusted automatically annually based on the Consumer Price Index (CPI) – All Urban Consumers (LA/Long Beach/Anaheim region) as provided in the adopted Policy No. 201-15.
SECTION 4. Based on a review of the record as a whole, the City Council hereby finds and determines that the actions taken herein are statutorily exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15273 of the CEQA Guidelines (14 CCR § 15273), as the fees are established for the purpose of meeting operating expenses and maintaining existing services and facilities, and do not involve expansion or new construction that would result in a physical change to the environment.
SECTION 5. Effective January 1, 2026, the following resolutions are hereby repealed and replaced by this resolution:
Resolution No. 23-25 (Recreation Fees)
Resolution No. 89-54 (Beach Event Fees)
Resolution No. 95-01 (Commercial Film Permit Fees)
Resolution No. 11-66 (Park and Recreation Facility Fees) Resolution No. 16-23 (Pool Facility Fees)
Any other resolutions or the portions thereof that conflict with the provisions 52 Resolution No. 25-175 Page 3
of this resolution. To the extent that any resolution or portion thereof does not conflict with this resolution, it shall remain in full force and effect.
SECTION 6. The Beaches, Parks & Recreation Director, is authorized and directed to take all actions necessary and proper to implement this resolution and to incorporate all related budget and revenue projections into the Biennial Budget.
SECTION 7. Severability. If any provision, clause, or section of this resolution is found to be invalid or unenforceable, such invalidity shall not affect the remaining provisions, which shall remain in full force and effect.
SECTION 8. The City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.
PASSED AND ADOPTED this _____ day of ____________________, _______.
ATTEST:
___________________________ __________________________
City Clerk of the City of Steve Knoblock, Mayor of the
San Clemente, California City of San Clemente, California 53 Resolution No. 25-175 Page 4
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) §
CITY OF SAN CLEMENTE )
I, LAURA CAMPAGNOLO, City Clerk of the City of San Clemente, California, do hereby certify that Resolution No. 25-175 was adopted at a regular meeting of the City Council of the City of San Clemente held on the _______ day of _______________________, _________, by the following vote:
AYES:
NOES:
ABSENT:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Clemente, California, this _____ day of _________________, ________. __________________________
CITY CLERK of the City of
San Clemente, California
Approved as to form:
___________________________
Elizabeth A. Mitchell, City Attorney
54 Resolution No. 25-175 Page 5
Exhibit “A”
Beaches, Parks & Recreation Department Fee Schedule
ADMINISTRATIVE FEES
Change Fee
Facility Rentals Each $59
Park Rentals Each $38
Pool Rentals Each $58
Field Rentals Each $32
Refund Processing
Refund Processing Fee - Credit Card Per Class $9
Refund Processing Fee - Check Per Class $13
Deposits
Reservation Deposit (Facility, Park, Fields, Banners) % of Rental 25% Compliance / Damage Deposit % of Rental 25%
Light Key Deposit Per Key $25
Storage / Snack Bar Key Deposit Per Key $300
Non-Resident Fee Per Class $5
Building Monitor Support Staff Per Hour $26
Pool Lifeguard Support Staff Per Class $28
FACILITY RENTALS
Facility Rental Discounts
San Clemente Residents 25%
San Clemente-Based Non-Profit Organizations 70%
San Clemente-Based Businesses 10%
Non-Resident Non-Profit Organizations 50%
Non-Resident/Commercial N/A
Community Center
Weekday (Monday through Thursday & Sunday)
Auditorium (4000 sq ft), 2 Hour min Per Hour $351
Kitchen (based on availability) Per Hour $44
Ole Hanson Fireside Room w/ Terrace & Kitchen (1200 sq ft) Per Hour $256 Multi-Purpose Room (900 sq ft) Per Hour $150
Lower Dance Room Multi-Purpose (900 sq ft - Dance) Per Hour $95 Grounds Per Hour $78
Lobby Per Hour $33
Outdoor Courtyard Per Hour $256
Full Center Per Hour $1,450
Weekend (Friday & Saturday)
Auditorium (4000 sq ft), 2 Hour min Per Hour $362
Kitchen (based on availability) Per Hour $51
55 Resolution No. 25-175 Page 6
Ole Hanson Fireside Room w/ Terrace & Kitchen (1200 sq ft) Per Hour $294 Multi-Purpose Room (900 sq ft) Per Hour $173
Lower Dance Room Multi-Purpose (900 sq ft - Dance) Per Hour $109 Grounds Per Hour $90
Lobby Per Hour $38
Outdoor Courtyard Per Hour $295
Full Center Per Hour $1,668
Tierra Grande Park
Meeting Room Per Hour $246
Ole Hanson Beach Club
(Event Venue Discounts apply for Residents and Resident Non-Profit Only) Weekday (Monday through Thursday)
Club Room Per Hour $181
Grand Ballroom + Terraces Per Hour $353
Grounds Per Hour $197
Event Venue (Full Center) 9-Hour Min. Per Hour $802
Weekend (Friday/Saturday/Sunday)
Club Room Per Hour $181
Grand Ballroom + Terraces Per Hour $537
Grounds Per Hour $486
Event Venue (Full Center) 9-Hour Min. Per Hour $1,023
San Clemente Aquatics Center
Friends Room Per Hour $187
Grass Event Space Per Hour $187
PARK/OPEN SPACE RENTALS
Park Rental Discounts
San Clemente Residents & Resident Non-Profit Organizations 50% Non-Resident Non-Profit Organizations 25%
Food Vendors / Truck
Current Vendor Each $82
New Vendor Each $150
Bounce House Each $64
Other Contract Services (i.e., petting zoo, laser tag, characters) Each $76 Picnic Area and Open Space Rental Fees
1-49 People Per Hour $59
50-99 People Per Hour $118
100-199 People Per Hour $176
200-299 People Per Hour $233
Each Additional 100 People Per Hour $41
Fun on the Run Party Packages
12 Children (San Clemente Resident, Resident Non-Profit) Base $238 12 Children (Non-Resident, Business/Commercial) Base $296 56 Resolution No. 25-175 Page 7
Each Additional Child Per Child $11
FIELDS RENTALS
Field Rental Discounts (Tournaments are Excluded, except for Partners) San Clemente Residents 25%
San Clemente-Based Non-Profit Organizations 40%
San Clemente-Based Businesses 10%
Non-Resident Non-Profit Organizations 25%
Recreation Sport Tier I Partners 90%
Fields Rentals (Games, Practices, Scrimmages) 90%
Tournaments/Camps/Clinics 50%
Recreation Sport Tier II Partners
Fields Rentals (Games, Practices, Scrimmages) 80%
Tournaments/Camps/Clinics 30%
Recreation Sport Tier III Partners
Fields Rentals (Games, Practices, Scrimmages) 70%
Tournaments/Camps/Clinics 25%
Recreation Sport Tier IV Partners
Fields Rentals (Games, Practices, Scrimmages) 55%
Tournaments/Camps/Clinics 25%
Field Rental Application Each $32
Multi-Purpose Field - Grass Per Hour $78
Multi-Purpose Field - Synthetic Turf Per Hour $102
Baseball / Softball Per Hour $85
Scoreboard Per Hour $41
Light Fee (All Fields + Pools) Per Hour $24
Vista Hermosa Meadows Per Hour $177
Storage / Snack Bar Facility Fee Per Day $22
Late Filing Fee - Sport Tournament Application
(Less than 20 Business Days) Each $50
Player Fee (Aquatics & Sports Partners Only) Per Player $5 Deposits
Light Key Deposit Per Key $25
Storage / Snack Bar Key Deposit Per Key $300
Richard T. Steed Memorial Park Tournaments
(Includes 4 Fields, Saturday & Sunday)
Steed Park Discounts
Resident Youth Sports Organization 25%
Resident Non-Profit Organization 20%
Private Resident (Non-Commercial) 10%
Non-Resident Youth Sports Organization 20%
Category I Tournament (2-24 Teams) Per Weekend $4,200
Category II Tournament (25+ Teams) Category I + Per Team $25 57 Resolution No. 25-175 Page 8
Janitorial Fee Flat Rate $400
Field Prep Per Weekend $500
Tournament Deposit (Annual) Flat Rate $500
POOL RENTALS
Pool Rental Discounts
San Clemente Residents & Non-Resident Non-Profit 25%
Resident Non-Profit Organizations 35%
Aquatics Tier I Partners
Lane Rentals 60%
Off-Season meets/tournaments 60%
Camp/Clinics 50%
Aquatics Tier II Partners
Lane Rentals 55%
Off-Season meets/tournaments 55%
Camp/Clinics 40%
Aquatics Tier III Partners
Lane Rentals 40%
Off-Season meets/tournaments 40%
Camp/Clinics 35%
Aquatic Facility Rentals
All Pools and Deck - Aquatic Center Per Hour $501
All Pools and Deck - Beach Club Per Hour $381
Per Lane - 50 Meter Per Hour $60
Per Lane - 25 Yard Per Hour $28
50 Meter (SCAC) Per Hour $249
25 Yard (SCAC + OHBC) Per Hour $181
50 Meter Pool Entry Per Hour $27
Beach Club Teaching Pool Per Hour $143
Play Structure Per Hour $157
Cabana Per Hour $46
Additional Lifeguard Rental Per Hour $25
Diving Board (Including 3 lanes) Per Hour $93
Water Polo Cage (Including 2 lanes) Per Hour $78
Scoreboard Per Hour $18
Deck Per Hour $33
25-Yard Pool Lane Rental with Diving Blocks Per Hour $58 SCAC Front Grounds Per Hour $28
Pool Party Package
San Clemente Aquatics Center
Weekday Rentals - Play Structure Each $261
Weekend Rentals - Play Structure Each $429
Ole Hanson Beach Club
Standard (Pool Only) Each $235
58 Resolution No. 25-175 Page 9
Deluxe - Inflatable Dolphin or Obstacle Course Each $405 Tournaments/Meets/Competition
Swim Meet Fee - Short Course Per Hour $517
Swim Meet Fee - Long Course Per Hour $686
Water Polo Match Fee Per Hour $208
SPECIAL EVENT PERMITS
(MAY APPLY TO OTHER RENTALS)
Change Fee - Special Events
Category I (Simple Event) Each $64
Category II (Complex Event) - Single Day Each $86
Category III (Complex Event) - Multi-Day Each $129
Application Fees
Category I (Simple Event) Each $466
Category II (Complex Event): Single Day Each $1,430
Category III (Complex Event): Multi-Day Each $2,435
Category IV (Non-Profit/Resident Beach Clean-Up): Single Day Each $110
Vendor Shows
1-10 vendors (Single Day) Per Day $119
11-25 vendors Per Day $381
26-50 vendors Per Day $633
51-75 vendors Per Day $1,014
76-100 vendors Per Day $1,329
101+ vendors Per Day $1,568
Misc. Permits & Fees
Street Closure Per Day, Per
Street $1,028
Expedited Permit Fee/Late Filing Fee
(Fee per day for applications received less than 60 days in advance of the event)
Per Day $27
Block Party Permit Each $515
Janitorial Fee Each Pass Through
Trash Fee Each Pass Through
Sound Amplification Permit
Standard Each $77
Live Music Each $94
Parking Lot Per Space,
Per Day $42
Beach Events
Use of More than 250 ft. of beach Per Day $644
Less than or equal to 250 ft. of beach Per Day $387
Ocean Lifeguard Staff Per Hour Pass Through
SPECIAL USE RENTAL LOCATIONS
59 Resolution No. 25-175 Page 10
Skate Park / Pump Track Rental Fee Per Hour $65
Pickleball (Per Court) Per Hour $60
Sand Volleyball Court (Per Court) Per Hour $60
Tennis Court (Per Court) Per Hour $61
North Beach Lot (1832 N. El Camino Real) Per Hour $63
STREET BANNERS
Banner Hanging Permit (El Camino Real) Each $404
Banner Fix Fee Each $120
COMMERCIAL FILM PERMITS
Application Fee Each $129
Still Photography Per Day, Per Location $142
Motion Photography Per Day, Per Location $255
Motion & Still Photography Per Day, Per Location $341
Drone Permitting Each $94
SWIMMING FEES (LAP & RECREATION SWIM)
Daily Rate
Resident
Youth (0-17) and Senior (60+) Per Visit $4
Adult 18-59 Per Visit $8
Non-Resident
Youth (0-17) and Senior (60+) Per Visit $9
Adult 18-59 Per Visit $13
Monthly Pass
Resident
Youth (0-17) and Senior (60+) Per Pass $61
Adult 18-59 Per Pass $85
Non-Resident
Youth (0-17) and Senior (60+) Per Pass $96
Adult 18-59 Per Pass $132
Quarterly Pass (3 Months)
Resident
Youth (0-17) and Senior (60+) Per Pass $125
Adult 18-59 Per Pass $200
Non-Resident
Youth (0-17) and Senior (60+) Per Pass $281
Adult 18-59 Per Pass $385
Annual Pass
Resident
Youth (0-17) and Senior (60+) Per Pass $250
Adult 18-59 Per Pass $400
Non-Resident
60 Resolution No. 25-175 Page 11
Youth (0-17) and Senior (60+) Per Pass $534
Adult 18-59 Per Pass $732
61 Attachment 2
POLICY AND PROCEDURE
1.0 PURPOSE:
The purpose of this policy is to establish a comprehensive and consistent framework for determining, setting, and updating the level of cost recovery for services provided by the Beaches, Parks & Recreation Department (“BPR Department”). This policy is intended to balance the community’s interest in accessible and affordable recreational opportunities with the City’s responsibility to ensure fiscal sustainability and accountability. This policy ensures fiscal responsibility in the allocation of public resources by balancing resident access with sustainable cost recovery practices.
By defining cost recovery tiers, standardizing discount practices, and requiring regular review and adjustment of fees based on economic conditions, the policy promotes transparency, equity, and efficiency in the use of public resources. It also ensures that San Clemente residents and local nonprofit organizations are prioritized in access and pricing, while commercial and non-resident users pay rates that reflect the true cost of providing services. Ultimately, this policy guides the City Council, staff, and community in making fair and consistent decisions about how recreation programs, facility rentals, and services are subsidized and supported.
2.0 ORGANIZATION AFFECTED:
2.1 Beaches, Parks & Recreation Department
2.2 Finance Division
2.3 Maintenance Services Division
2.4 Marine Safety Division
2.5 Community partners, facility renters, program participants, and event organizers
3.0 REFERENCES:
3.1 Beaches, Parks & Recreation Department Master Fee Schedule (adopted by City Council Resolution No. 25-175)
Subject: Cost Recovery for
Beaches, Parks & Recreation Services
Index: Financial Services
Number: 201-15
Effective Date: Prepared By: Beaches, Parks &
Recreation Department
Supersedes: N/A Approved By:
62 3.2 Cost of Service and Fee Study, Matrix Consulting Group (2025)
3.3 Policy No. 204-1, Partnership of Activities, Facility Rentals, and Special Events
3.4 Policy No. 702-5, Recreation Sports Partnerships
3.5 Policy No. 702-9, Youth Aquatics Partnerships
4.0 POLICY:
4.1 The guiding principles for the creation of an effective pricing policy are as follows:
4.1.1 Accessibility, fairness, and affordability based on the category of service and benefit level.
4.1.2 Effective and appropriate funding strategies from General Fund, user fees, and other sources.
4.1.3 Improved efficiency in the cost of providing programs, services, and facilities.
4.1.4 Financial sustainability by achieving established cost recovery targets.
4.2 Accessibility, Fairness, and Affordability
4.2.1 This Policy supports equity and fairness because it requires those who personally benefit from a program or service above what the general taxpayer receives to pay for that added benefit.
Affordability should be based on both the level of benefit and the ability to pay. The type of service and benefit received will directly determine the cost-recovery level or pricing strategy to be used for services and products.
4.3 Cost Recovery Framework
4.3.1 The Department shall recover costs for programs, facilities, and services based on the balance of community benefit and
individual benefit, using a tiered framework to guide pricing and subsidy levels. Programs that provide the highest community benefit will receive the most subsidy, while those that serve individuals or private interests will target higher cost recovery. A minimum non-waivable fee shall apply to all rentals or permits, either through an application fee (where applicable) or a base rental fee (for facilities such as, but not limited to, the Ole Hanson Beach Club or Community Center).
4.4 Discount Matrix
4.4.1 San Clemente Resident: Base rate
63 4.4.2 Resident Non-Profit: Greatest Discount. Must demonstrate 501(c)(3) status and majority San Clemente participation.
4.4.3 Non-Resident Non-Profit: Equal to or greater than the resident rate; may qualify for partial reduction if serving significant San Clemente residents.
4.4.4 Commercial/Private: Full cost recovery or market-based pricing; no discounts.
4.5 Non-Resident Fee Differential
4.5.1 The criteria for establishing the differential percentage charged for non-residents for programs, services, or facility rentals will generally be as follows:
a. A higher general fund subsidy by the City will justify a higher non-resident fee. Conversely, a lower general fund subsidy of a program or service will justify a lower or no fee differential.
b. Higher demand by City residents or limitations in capacity will justify higher non-resident fees. Conversely, a low demand or high capacity will justify a lower or no fee
differential.
c. Where appropriate, San Clemente businesses may
receive a resident rate.
4.5.2 The discounts will be incorporated into the Department Master Fee Schedule adopted by Resolution of the City Council.
4.5.3 The Department will publicize the price differential for City residents versus non-residents as a “resident discount.” This language more accurately reflects the City's policy of subsidizing some programs for residents through General Fund tax support.
4.6 Right of Exclusion and Exceptions
4.6.1 The City Manager or his/her designee may authorize exceptions for programs, rentals, or events deemed essential to community well-being or unique City priorities.
4.6.2 The City Manager or his/her designee is authorized to exclude individual programs from the Cost Recovery Policy under the following circumstances:
a. Programs shall be budgeted as approved by the City
Council.
b. Programs shall not be required to meet Cost Recovery requirements and may operate below recovery levels for
the program category.
4.7 Fee Review & Adjustments
64 4.7.1 Fees will be reviewed annually in conjunction with the City’s budget process and consistent with applicable legal
requirements.
4.7.2 Staff shall recommend adjustments to the City Council based on:
a. Consumer Price Index (CPI) – All Urban Consumers
(LA/Long Beach/Anaheim region).
b. Market conditions and comparable agency rates.
c. Service cost trends (labor, utilities, maintenance,
equipment).
d. Actual cost of service.
e. Legal requirements.
4.7.3 CPI adjustments may be automatically applied administratively on an annual basis following a noticed public hearing and City Council approval of the Master Fee Schedule.
4.7.4 A comprehensive Cost of Service Study will be conducted at least once every 5 years or sooner if significant shifts in costs occur.
4.7.5 Fee increases, upward adjustments, and changes in tiers and discounts at a program level that result in users paying a higher fee require a duly noticed public hearing. Decreases in fees, waivers, or adjustments to tiers or discounts that result in the same or reduced fees do not require a noticed public hearing.
4.7.6 All changes or adjustments to fees shall comply with applicable law.
5.0 PROCEDURE:
5.1 Each service will be assigned a Cost Recovery Tier and discount category by staff during annual budget preparation.
5.1.1 Cost Recovery Tiers:
a. Tier 1 (0–20% recovery): Entirely community benefit (i.e., parks, playgrounds, open space, free community events). b. Tier 2 (20–40% recovery): Mostly community benefit (i.e., senior services, neighborhood events).
c. Tier 3 (40–70% recovery): Balanced benefit (i.e., aquatics, youth sports, recreation classes, camps).
d. Tier 4 (70–90% recovery): Considerable individual benefit (i.e., adult leagues, facility rentals, specialty classes). e. Tier 5 (90–100% recovery): Exclusive individual benefit (i.e., weddings, film permits, commercial use of facilities). 65 5.2 Staff will prepare an annual cost recovery report to the BPR Commission and City Council, summarizing compliance with targets.
5.3 The Master Fee Schedule shall be adopted by City Council resolution in compliance with applicable law and updated annually or as needed.
5.4 Fee Waivers
5.4.1 The City may consider fee waiver requests from bona fide nonprofit organizations for rentals, permits, or programs that demonstrate substantial community benefit and align with the mission of the Department and/or the City of San Clemente. Fee waivers shall not apply to minimum non-waivable fees or application fees.
The Beaches, Parks & Recreation Director or designee may approve waivers up to twenty-five percent (25%) of the total rental fee or up to $600, whichever is less. Requests exceeding these thresholds must be approved by the City Council. Base Rental Fees or Application Fees will not be waived.
Organizations requesting a waiver must complete a Fee Waiver Application identifying the event purpose, anticipated community impact, and proof of nonprofit status.
5.4.2 Approved waivers should be tracked in an annual Fee Waiver Summary Report presented to the Beaches, Parks & Recreation Commission and City Council.
6.0 DEFINITIONS:
6.1 Application Fee: A non-refundable fee required to process rentals or permits.
6.2 Base Rental Fee: The minimum non-waivable charge for premium facilities.
6.3 Direct Costs: Staff time, benefits, supplies, and utilities directly tied to service delivery.
6.4 Indirect Costs: Administrative, overhead, and citywide support allocated to the service.
6.5 Individual Benefit Services: Services where only the user benefits. For these services, the Department should implement a pricing strategy to achieve full cost recovery. The price of this particular service is intended to recover all direct and indirect costs associated with providing the service.
6.6 Partnership Tiers: Designations for recognized youth sports and aquatics organizations that meet residency, participation, and operational standards set by the Department.
66 6.7 Partnership: Partnerships are advantageous collaborations that position both the Department and participating partner organization(s) to efficiently utilize resources, leading to cost-effective and efficient service delivery, bridging of markets, reductions in duplication of services and fragmentation of resources, and cooperative capital development and/or improvements.
6.8 Public and Individual Benefit Services: Services whereby the user receives a higher level of benefit than the general taxpayer because the service provides a more livable community, and the service has a good public benefit as well. Public and Individual Services can be priced using either a partial overhead pricing strategy or a variable cost pricing strategy. Partial overhead pricing strategies recover all direct operating costs and a portion of fixed indirect costs. Variable cost pricing strategies recover a determined portion of the fixed direct costs by adding a markup to the variable costs. The expectation is that the markup will contribute to meeting all or a part of fixed direct costs and generate some level of indirect cost recovery.
6.9 Public Services: Services the Department offers that provide all users the same level of opportunity to access the service. The level of benefit is the same for all users. Public services typically have low or no user fees associated with their use. The cost for providing these services is borne by the general tax base.
6.10 Subsidy: The portion of cost not recovered through user fees, supported by the General Fund.
67 SAN CLEMENTE, CA
REPORT ON BEACHES, PARKS &
RECREATION COST OF SERVICES
(USER FEE) STUDY
SEPTEMBER 2025
Attachment 3
68 INTRODUCTION AND EXECUTIVE SUMMARY 1
LEGAL FRAMEWORK 3
USER FEE STUDY METHODOLOGY 4
FEE SCHEDULE MODIFICATIONS 6
DETAILED RESULTS 10
COST RECOVERY 15
APPENDIX A – COST RECOVERY GUIDELINES 18
APPENDIX B – COMPARATIVE SURVEY 20
TABLE OF CONTENTS
69 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 1
The report that follows presents the results of the Beaches, Parks & Recreation specific Cost of Services (User Fee) Study conducted by the Matrix Consulting Group for the City of San Clemente, California.
PROJECT BACKGROUND AND OVERVIEW
The City of San Clemente last conducted a formal fee study of its Beaches, Parks, and Recreation fees in 2009 and has not updated its fees since. The purpose of this study is to evaluate and determine the full cost (direct and indirect) of providing a variety of parks and recreational services. The Matrix Consulting Group analyzed the cost-of-service relationships that exist between fees for service activities department-wide. The results of this study provide a tool for understanding the current cost associated with these services and activities.
GENERAL PROJECT APPROACH AND METHODOLOGY
The work accomplished by the Matrix Consulting Group in the analysis of the proposed fees for service involved the following steps:
• Staff Interviews: The project team interviewed department / program staff regarding their needs for clarification to the structure of existing fee items or for the addition of new fee items. • Data Collection: Data was collected for each service, including time estimates and material costs. In addition, all budgeted costs and staffing levels for Fiscal Year 2025 were entered into the Matrix Consulting Group’s analytical software model.
• Cost Analysis: The full cost of providing each service included in the analysis was established. • Review and Approval of Results with City Staff: Department management has reviewed and approved these documented results.
A more detailed description of user fee methodology and legal and policy considerations is provided in subsequent chapters of this report.
SUMMARY OF COST RECOVERY
The project team evaluated the cost recovery for the Beaches, Parks & Recreation Department by assessing its direct operational costs while also factoring in indirect expenses, including departmental
INTRODUCTION AND EXECUTIVE SUMMARY
70 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 2
administration and citywide overhead. The table below compares FY24 Revenue to FY25 Expenditures and Indirect Costs (Full Cost), highlighting the difference and associated cost recovery percentage.
TABLE 1: FULL COST RECOVERY
Program FY24 Revenue FY25 Exp Difference Cost Recovery
Ole Hanson Beach Club (OHBC) $351,735 $503,798 ($152,063) 70% Community Center $332,326 $1,238,796 ($906,470) 27%
Aquatics $840,117 $1,712,597 ($872,480) 49%
VH Sports Field / SC Aquatics Facility $70,321 $1,125,660 ($1,055,339) 6% Steed Park Operations $1,158,004 $1,511,939 ($353,934) 77% Recreation Programs / Events $351,735 $503,798 ($152,063) 70% Total $3,321,672 $8,679,450 ($5,357,779) 38%
Beaches, Parks & Recreation is at a 38% cost recovery. The cost recovery for park and recreation services typically falls between 20% and 50%, and at 38% the City is within this range.
The display of the cost recovery figures shown in this report is meant to provide a basis for policy development discussions among Council members and City staff, and it does not represent a recommendation for where or how Council should act. The setting of the “rate” or “price” for services, whether at 100 percent full cost recovery or lower, is a policy decision to be made only by Council, with input from City staff and the community
These measures align with GFOA best practices for Establishing Government Charges and Fees, which state that governmental entities should review and update charges and fees periodically based on factors such as the impact of inflation, other cost increases, adequacy of cost recovery, use of services, and the competitiveness of current to avoid large infrequent fee increases. Additionally, adopting the practice of conducting comprehensive analyses every five to seven years allows for any changes to organizational structures, processes, or any new service areas to be captured. 71 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 3
This section of the report is intended to provide an overview regarding overall legal rules and regulations for fees for service. A “user fee” is a charge for service provided by a governmental agency to a public citizen or group. In California, several constitutional laws such as Propositions 13, 4, and 218, State Government Codes 66014 and 66016, and more recently Prop 26 and the Attorney General’s Opinion 92- 506 set the parameters under which user fees typically administered by local government are established and administered. Specifically, California State Law, Government Code 66014(a), stipulates that user fees charged by local agencies “…may not exceed the estimated reasonable cost of providing the service for which the fee is charged”. However, in the case of Parks and Recreation fees Proposition 26 allows for fee amount(s) to be based upon the rates that the market can bear. There are specific rules and regulations within the State Law that impact Parks and Recreation related activities directly. These can be separated into two categories – rental rates and recreation programs. The following points provide further information regarding these items:
• Rental Rates: One of the exceptions to the tax category under Proposition 26 is a charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property1
. There is no requirement that these rates must be limited to the cost of service, as they can be dependent upon a variety of features of the facility or park being rented. • Recreation Programs: Under Proposition 26, the exception to the tax category is a charge that is “imposed”. Based upon the League of California Cities implementation guide for Proposition 26, as well as other legal opinions, recreation classes, youth sports, and adult sports are not a charge that is “imposed upon residents”. Rather, residents have the option to voluntarily participate in those programs and utilize a private entity (non-governmental entity) for those activities. Therefore, these rates are allowed to be set based upon the market options within the area rather than being restricted to the cost of service being provided.
Utilizing these two principles is key to understanding the results generated through this analysis. As such, any over-recoveries reflected in the report do not need to be reduced to the cost of service, as the fee amount(s) should be based upon rates that the market can bear, as they are not a charge that is “imposed upon residents.” Rather, residents can rent facilities or participate in the recreational programs offered by local governments or utilize a private (non-governmental) entity for those activities / services.
As such, rental rates can depend upon a variety of features of the facility or park being rented, and recreation program rates can be set based on the combination of the cost of administering the program and the demand for the program (estimated participation). 1 Proposition 26 Article XIII C(1)(e)(4)
LEGAL FRAMEWORK
USER FEE STUDY METHODOLOGYLEGAL
FRAMEWORK
USER FEE STUDY METHODOLOGYLEGAL
FRAMEWORK
USER FEE STUDY METHODOLOGYLEGAL
FRAMEWORK
72 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 4
The Matrix Consulting Group utilizes a cost allocation methodology commonly known and accepted as the “bottom-up” approach to establishing User Fees. The term means that several cost components are calculated for each fee or service. These components then build upon each other to comprise the total cost for providing the service. The following chart describes the components of a full cost calculation:
The two identified components were used to calculate the full cost to the City of providing various services. The following sections detail each component.
STAFF COST
Calculate This cost component reflects the cost associated with staff time and effort associated with administering and providing these services. The cost is based upon two factors:
• Time Assumptions: This reflects the time associated with processing, reviewing, intaking, answering questions, set up / clean up, and other support activities. • Fully Burdened Hourly Rates (FBHR): This represents the full cost to the City of an employee existing and providing services. It consists of direct cost components such as salaries, benefits, and productive hours2
. It also includes costs associated with internal citywide overhead3.
The time assumption is multiplied by the FBHR to arrive at the total staff cost associated with providing or administering a particular fee-related activity.
MATERIAL COST
Certain fees include costs associated with materials that might be necessary to provide the service.
These material costs generally include items such as the cost of equipment or use of space / impact to the space sustained by the permitted activity.
PARTICIPATION / AVERAGE UTILIZATION COST
The two prior cost components (staffing and material) generate the total cost of a program or activity.
For recreation, the majority of activities or rentals are based on the average participation or utilization of 2 Productive hours refer to 2,080 hours of a full-time position reduced by sick, vacation, and holidays. 3 The citywide overhead value used was determined through the City’s cost allocation plan.
DIRECT
(Salaries, Benefits,
Productive Hours,
Overhead, etc.)
MATERIAL COST
(Cost of Space, Licensing
or Contract Cost, etc.)
Total Cost
USER FEE STUDY METHODOLOGY
RESULTS OVERVIEWUSER FEE STUDY
METHODOLOGY
RESULTS OVERVIEWUSER FEE STUDY
METHODOLOGY
RESULTS OVERVIEWUSER FEE STUDY
METHODOLOGY
73 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 5
hours / space. Therefore, a key assumption in this analysis has been the use of average participation or rental hours when determining the cost per participant or cost per hour. As such, if a service has more or less participants or is used for more or less hours that can directly impact the per unit result. Some items in this analysis may show an over-recovery or under-recovery, but that can be directly impacted based on the level of utilization of the program or the rental space. If it is used more frequently or has higher participation, the cost will decrease. For participation-based programs (i.e. camps & classes, afterschool sports, etc.), we take into consideration the max number of participants. For space rental we look at the total hours the space was available for rent. Therefore, when evaluating the results of this analysis, it is important to remember that the level of utilization (hours and participants) directly influences the per-unit results calculated through this analysis.
SUMMARY OF COST COMPONENTS
Together, these two cost components ensure that all costs involved in operating and providing services to the public have been accounted for in the calculation of the full cost of the fees.
The following sections provide a summary of fee schedule modifications and a comparison of the full cost of providing services to the current fee for services. The total cost does not represent what fees will actually be charged, rather the column represents what fees were calculated based on the components outlined in the User Fee Methodology chapter of this report. It is ultimately up to the City Council to set the rates to be charged.
74 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 6
The first step undertaken during the fee study was to evaluate the Department’s current fee schedule.
Fees that are set by agreements (i.e., contract instructors, outside agencies, etc.) were not evaluated in the scope of this study; as such, they are not addressed in this document. To assess potential adjustments, the project team met with various staff members responsible for administering fees and services. Below is a summary of the proposed modifications to the Department’s fee schedule:
• New Fees: Staff proposed the addition of the following fees to recover costs for the new rental spaces and programs offered to the community:
o Community Center
§ ‘Full Center’
§ ‘Lobby’
§ ‘Outdoor Courtyard’
§ ‘Building Monitor’
o Ole Hanson Beach Club
§ ‘Upstairs Room + Terraces’
§ ‘Ground – Weekday’
o Park Rentals
§ ‘Other Contract Services (i.e. petting zoo, laser tag, characters, etc.)’ o Field Rentals:
§ ‘Field Rental Application’
§ ‘Snack Bar / Storage Facility Fee’
o Pool Rentals
§ ‘Diving Board (Including 3 Lanes)’
§ ‘Water Polo Cage (Including 2 Lanes)’
§ ‘Scoreboard’
§ ‘Deck’
§ ‘25-Yard Pool Lane Rental with Diving Blocks’
§ ‘SCAC Front Grounds’
o Special Events
FEE SCHEDULE MODIFICATIONS
MODIFICATIONS
DETAILED RESULTSMODIFICATIONS
MODIFICATIONS
75 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 7
§ ‘Vendor Shows’:
• ‘1-10 vendors’
• ’11-25 vendors’
• ‘26-50 vendors’
• ’51-75 vendors’
• ‘76-100 vendors’
• ‘101+ vendors’
§ Misc. Permits
• ‘Street Closure’
• ‘Late Filing Fee (After 60 Days)’
• ‘Alcohol Permit’
o Special Use Rental Locations
§ ‘Skate Park Rental Fee’
§ ‘Pickleball’
§ ‘Sand Volleyball Courts’
§ ‘Tennis Courts’
§ ‘North Beach Dirt Lot’
o Street Banner – ‘Banner Fix Fee’
o Commercial Film Permits - ‘Drone Permitting’
• Consolidated: In an effort to streamline the fee schedule, the following services were proposed for consolidation
o Staff proposed consolidating the weekday and weekend rental rates for Ole Hanson Beach Club ‘Club Room’ and all of the Community Center rates, thus providing applicants with a single rate regardless of the date of the rental. o Ole Hanson Beach Club ‘Bridal Room Suite’ was consolidated under the ‘Upstairs Room’ rental, as these spaces are now rented in tandem.
o Pool Party Package rentals were consolidated; SCAC rentals are now a single fee weekend and weekday rental regardless of play structure, and OHBC deluxe rentals are a single fee regardless of play structure.
o The Beach Event categories where consolidated into two categories; ‘Use of More than 250 ft. of beach’ and ‘Less than or equal to 250 ft. of beach’ 76 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 8
o All fees within the ‘Beach Events – Lifeguard Assistance’ category were consolidated into a single ‘Lifeguard Staff Support’ fee. This fee is pass-through and is determined by the Marine Safety Division on a case-by-case application basis. • Expanded Fees: Due to variability in how the fees are administered, staff proposed expanding the following fee categories:
o Change Fees: Were expanded into various categories; ‘Facility Rentals’, ‘Park Rentals’, ‘Pool Rentals’, and ‘Special Events’. ‘Special Events’ was further parsed out into; ‘Simple Event’, ‘Complex – Single Day’, and ‘Complex – Multi-Day’. o Refund Processing: Was expanded into two categories; based on the tender used to pay for the classes; ‘Credit Card’ and ‘Check’.
o Food Vendor / Truck: Was parsed into two categories based on the type of applicant:
‘Current Vendor’ and ‘New Vendor’.
o Steed Park Tournament: Was parsed into two categories: ‘Weekday Tournament’ and ‘Weekend Tournament’
o All Pools and Deck: Was parsed into two categories based on the location of the pool rented: ‘Aquatics Center’ and ‘Beach Club’.
o Per Lane: Was parsed into two categories based on the length of the lane rented: ’50 Meter’ and ’25 Yard’.
o Tournaments / Meets / Competition: Was parsed into two categories based on the type of event: ‘Swim Meet Fee – Short Course’, ‘Swim Meet Fee – Long Course’, and ‘Water Polo Match Fee’.
o Category II (Complex Events): Was expanded into two categories; ‘Single-Day’ and ‘MultiDay’. o Sounds Amplification Permit: Was parsed into two categories based on the type of amplified sound: ‘Standard’ and ‘Live Music’.
• Eliminated Fees: The following fees were proposed for elimination as the city no longer offers these services or deposits.
o All Community Center Locker fees, ‘Closets in Auditorium’ and ‘Cabinets in Multi-Purpose Room / Kitchen’.
• Modified Fees: Various miscellaneous modifications were made to the fee schedule; these are outlined below:
o All deposit-based fees where consolidate under the deposits category. o Staff proposed revising Field Rental rates to better reflect the type of field being rented rather than its location. The prior categories — ‘Neighborhood,’ ‘Community,’ and ‘Sports’ have been modified to more descriptive classifications: ‘Multi-Purpose Field – Grass,’ ‘Multi-Purpose Field – Synthetic Turf,’ and ‘Baseball / Softball.’ 77 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 9
o The fee name ‘Scoreboard Use at Vista Hermosa Sports Park’ was modified to ‘Scoreboard’ and transitioned from a deposit to a per hour rate that can be used for the rental of any scoreboard.
The modifications noted above ensure that the proposed fee schedule better reflects the services being provided by the City.
78 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 10
The motivation behind a cost of services (User Fee) analysis is for Department staff to maintain services at a level that is both accepted and effective for the community, and to maintain control over the policy and management of these services. It should be noted that the results presented in this report are not a precise measurement. In general, a cost-of-service analysis takes a “snapshot in time”, where a fiscal year of financial and operational information is utilized. Changes to the structure of fee names, along with the use of time estimates, allow only for a reasonable projection of subsidies and revenue.
As stated previously, the total cost calculated for each service includes direct staff, material, use of space, departmental, and Citywide overhead. The following section provides a comparison of the full cost of providing services to the current fee for service and the resulting difference.
TABLE 2: TOTAL COST PER UNIT RESULTS
Fee Name Current Fee Total Cost Difference
Change Fee
Facility Rentals $50 $59 ($9)
Park Rentals $50 $38 $12
Pool Rentals $50 $58 ($8)
Field Rentals $50 $32 $18
Change Fee - Special Events
Category I (Simple Event) $50 $64 ($14)
Category II (Complex Event) - Single Day $50 $86 ($36)
Category III (Complex Event) - Multi-Day $50 $129 ($79) Refund Processing
Refund Processing Fee - Credit Card $8 $9 ($1)
Refund Processing Fee - Check $8 $13 ($5)
Facility Rentals
Community Center
Auditorium (4000 sq ft)-2 Hour min $300 $315 ($15)
Kitchen (based on availability) $100 $44 $56
Ole Hanson Fireside Room, Terrace, & Kitchen (1200 sq ft) $150 $256 ($106) Multi-Purpose Room (900 sq ft) $75 $150 ($75)
Lower Dance Room Multi-Purpose (900 sq ft - Dance) $75 $95 ($20) Grounds $50 $78 ($28)
Full Center New $1,450 N/A
Lobby New $33 N/A
Outdoor Courtyard New $256 N/A
Building Monitor New $78 N/A
Tierra Grande Park
Meeting Room $100 $246 ($146)
Ole Hanson Beach Club
Club Room $75 $181 ($106)
Upstairs Room + Terraces New $353 N/A
Grounds - Weekday New $197 N/A
Wedding Event: Venue
Weekday Rental
DETAILED RESULTS
DETAILED RESULTS
COST RECOVERYDETAILED RESULTS
DETAILED RESULTS
79 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 11
Fee Name Current Fee Total Cost Difference
Upstairs Room $250 $394 ($144)
Grounds $50 $408 ($358)
Weekend Rental
Upstairs Room $259 $537 ($278)
Grounds $50 $486 ($436)
Park Rentals
Food Vendors / Truck
Current Vendor $50 $82 ($32)
New Vendor $50 $150 ($100)
Bounce House $0 $64 ($64)
Other Contract Services (i.e. petting zoo, laser tag, characters, etc.) New $76 N/A Picnic Area and Open Space Rental Fees
1-49 People $50 $59 ($9)
50-99 People $75 $118 ($43)
100-199 People $100 $176 ($76)
200-299 People $200 $233 ($33)
Each Additional 100 People $50 $41 $9
Fun on the Run Party Packages
Party Package
12 Children $180 $238 ($58)
Each Additional Child $5 $11 ($6)
Field Rentals
Field Rental Application New $32 N/A
Multi-Purpose Field - Grass Modified $94 N/A
Multi-Purpose Field - Synthetic Turf Modified $123 N/A
Baseball / Softball Modified $102 N/A
Scoreboard New $41 N/A
Light Fee $15 $24 ($9)
Steed Park Tournament
Weekday Tournament $3,000 $4,766 ($1,766)
Weekend Tournament $3,000 $4,766 ($1,766)
Vista Hermosa Meadows $250 $177 $73
Snack Bar Facility Fee New $362 N/A
Pool Rentals
Pool Rentals
All Pools and Deck - Aquatic Center $500 $501 ($1)
All Pools and Deck - Beach Club New $381 N/A
Per Lane - 50 Meter $55 $70 ($15)
Per Lane - 25 Yard $25 $48 ($23)
50 Meter $250 $249 $1
25 Yard $125 $181 ($56)
Play Structure $200 $157 $43
Cabana $50 $46 $4
Grass Event Space at the Aquatics Center (200 Capacity) $200 $187 $13 Additional Lifeguard Rental $15 $25 ($10)
Diving Board (Including 3 lanes) New $93 N/A
Water Polo Cage (Including 2 lanes) New $78 N/A
Scoreboard New $18 N/A
80 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 12
Fee Name Current Fee Total Cost Difference
Deck New $33 N/A
25-Yard Pool Lane Rental with Diving Blocks New $58 N/A 50 Meter Pool Entry $25 $27 ($2)
SCAC Front Grounds Modified $28 N/A
Beach Club Teaching Pool $125 $143 ($18)
Pool Party Package
SCAC Rentals
Weekday Rentals - Play Structure $150 $261 ($111)
Weekend Rentals - Play Structure $300 $429 ($129)
OHBC
Standard (Pool Only) $100 $235 ($135)
Deluxe - Inflatable Dolphin or Obstacle Course $150 $405 ($255) Tournaments/Meets/Competition
Swim Meet Fee - Short Course $400 $517 ($117)
Swim Meet Fee - Long Course $400 $686 ($286)
Water Polo Match Fee $400 $208 $192
Aquatics Center
Friends Room $150 $187 ($37)
Special Events
Application Fees
Category I (Simple Event) $110 $466 ($356)
Category II (Complex Event): Single Day $240 $1,430 ($1,190) Category III (Complex Event): Multi-Day $240 $2,435 ($2,195) Vendor Shows:
1-10 vendors (Single Day) New $119 N/A
11-25 vendors New $381 N/A
26-50 vendors New $633 N/A
51-75 vendors New $1,014 N/A
76-100 vendors New $1,329 N/A
101+ vendors New $1,568 N/A
Misc. Permits & Fees
Street Closure New $1,028 N/A
Late Filing Fee (After 60 Days) New $0 N/A
Block Party Permit $100 $515 ($415)
Sound Amplification Permit:
Standard $60 $77 ($17)
Live Music $60 $94 ($34)
Parking Lot $25 $42 ($17)
Parking Pass Actual Cost
Beach Events
Use of More than 250 ft. of beach $400 $644 ($244)
Less than or equal to 250 ft. of beach $150 $387 ($237) Lifeguard Staff Support Actual Cost Pass Through
Special Use Rental Locations
Skate Park / Pump Track Rental Fee New $65 N/A
Pickleball New $60 N/A
Sand Volleyball Courts New $60 N/A
Tennis Courts New $61 N/A
81 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 13
Fee Name Current Fee Total Cost Difference
North Beach Dirt Lot New $63 N/A
Street Banner
Banner Hanging Permit (El Camino Real) $367 $593 ($226) Banner Fix Fee New $120 N/A
Commercial Film Permit
Application Fee $50 $129 ($79)
Film Permit Fee:
Still Photography $100 $142 ($42)
Motion Photography $200 $255 ($55)
Motion & Still Photography $300 $341 ($41)
Drone Permitting New $94 N/A
Pool Fees
Swim Fees: (Lap Swim and Rec Swim)
Resident:
Youth 0-17 and Senior 60+ $2 $8 ($6)
Adult 18-59 $4 $8 ($4)
Non-Resident:
Youth 0-17 and Senior 60+ $6 $8 ($2)
Adult 18-59 $8 $8 $0
Swim Passes
Monthly Pass:
Resident
Youth 0-17 and Senior 60+ $40 $83 ($43)
Adult 18-59 $55 $83 ($28)
Non-Resident
Youth 0-17 and Senior 60+ $55 $83 ($28)
Adult 18-59 $70 $83 ($13)
Quarterly Pass (3 Months):
Resident
Youth 0-17 and Senior 60+ $75 $246 ($171)
Adult 18-59 $100 $246 ($146)
Non-Resident
Youth 0-17 and Senior 60+ $150 $246 ($96)
Adult 18-59 $200 $246 ($46)
Annual Pass:
Resident
Youth 0-17 and Senior 60+ $150 $983 ($833)
Adult 18-59 $200 $983 ($783)
Non-Resident
Youth 0-17 and Senior 60+ $300 $983 ($683)
Adult 18-59 $400 $983 ($583)
Program Fees
Sports
Youth:
Flag Football League $200 $205 ($5)
Adult:
Softball $750 $998 ($248)
Soccer $650 $752 ($102)
82 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 14
Generally, the total costs calculated are higher than the fees currently charged by the City.
Staff proposed expanding ‘Change Fees’ into various categories to reflect the different levels of effort required to modify existing rental and event applications. The cost differences range from $129 for ‘Category III (Complex Event) - Multi-Day’ to $32 for ‘Field Rentals,’ supporting staff’s recommendation to categorize fees based on the complexity of services provided.
For facility and park rentals, the current fees are roughly aligned with the calculated full cost. This is typical, as rental fees are voluntary and are often set based on market demand rather than the actual cost of providing the service. At $278, the largest difference within the Facility Rentals category is in relation to ‘Ole Hanson Beach Club – Wedding Event: Venue – Weekend Rental – Upstairs Room’. At $1,766, the largest under-recovery within the Field Rental category is in relation to the daily fee for ‘Steed Park Tournament’. Within Pool Rentals, the Pool Party Packages section has the largest deficits, ranging from $255 to $111 per package. Staff proposed expanding the Tournaments/Meets/Competition category to reflect varying levels of staff time and effort based on the type of event. The range of resulting differences supports staff’s recommendation to parse out these services.
The Special Events category was expanded to allow for more flexibility in recovering the costs associated with coordinating and administering these events. Similar to the ‘Change Fees,’ the varied cost differences support the staff’s recommendation to expand fees based on the complexity of the event.
Overall, pool fees generally align with total calculated costs. The main exception is ‘Annual Pass’ fees, which are subsidized to encourage year-long memberships over seasonal or monthly options.
In Programming, the gap between current fees and total costs is common, as these fees are often subsidized to improve accessibility. It is important to note that again these differences are directly dependent on the level of participation in these programs. 83 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 15
The typical cost recovery for parks and recreation services is between 20% and 50%4. This range reflects the belief that these services primarily benefit the community at large and therefore should be subsidized by taxpayers. As part of this analysis, the project team calculated the cost recovery for the Beaches, Parks & Recreation department based on its direct costs of operations and accounting for any indirect costs (Departmental administration and Citywide). The following subsections provide the detailed programmatic cost recovery based on direct and total cost calculations.
DIRECT PROGRAM COST RECOVERY
Direct cost recovery compares budgeted programmatic costs against generated revenues associated with that specific program. To determine direct programmatic cost recovery, the project team compared budgeted revenues to budgeted costs associated with all Beaches, Parks & Recreation programs. The following table shows by program: FY24 Revenue, FY25 Budget5, the associated difference, and cost recovery percentage.
TABLE 3: DIRECT PROGRAM COST RECOVERY
Fee Program FY24 Revenue FY25 Budget Difference
Direct Cost
Recovery %
Ole Hanson Beach Club (OHBC) $351,735 $247,310 $104,425 142% Community Center $332,326 $602,440 ($270,114) 55%
Aquatics $569,168 $1,437,120 ($867,952) 40%
VH Sports Field / SC Aquatics Facility $840,117 $1,032,110 ($191,993) 81% Steed Park Operations $70,321 $630,220 ($559,899) 11%
Recreation Programs / Events $1,128,162 $790,410 $337,752 143% Total $3,291,829 $4,739,610 ($1,447,781) 69%
The Department is at a 69% cost recovery level on a direct cost basis. This direct cost recovery is above the typical cost recovery (20-50%). The large range of cost recovery levels between programs is typical for parks and recreation fees. For example, the optional nature of fees related to recreation services usually equates to those fees being set closer to cost recovery. On the other hand, services provided in relation to youth or senior services tend to be subsidized to account for the community benefit.
TOTAL PROGRAM COST RECOVERY
Total cost recovery looks at direct program costs, departmental administration, and citywide overhead and compares those costs against generated revenues. For programmatic services to be provided, 4 This 20% to 50% range generally includes Library and Senior services. As these are currently not services offered through this department cost recovery may exceed this typical range, as both services tend to be heavily subsidized due to the nature of the services provided. 5 The FY25 Budget does not include Beach, Parks, Rec Admin costs, as those are considered part of the overhead.
COST RECOVERY
COST RECOVERY
APPENDIX A – COST RECOVERY
GUIDELINESCOST RECOVERY
COST RECOVERY
84 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 16
recreation management and administration staff support is needed. Furthermore, support services are also needed from other City departments, including Finance, Human Resources, City Attorney, Facilities, Maintenance, and so forth. The following table shows by category, the indirect costs included:
TABLE 4: INDIRECT OVERHEAD COSTS BY PROGRAM
Fee Program Admin OH6 Citywide OH7 Total OH
Ole Hanson Beach Club (OHBC) $96,657 $131,609 $228,266
Community Center $235,453 $332,155 $567,608
Aquatics $561,672 $423,869 $985,541
VH Sports Field / SC Aquatics Facility $403,381 $159,325 $562,707 Steed Park Operations $246,310 $177,212 $423,522
Recreation Programs / Events $308,917 $322,413 $631,330 Total $1,852,390 $1,546,583 $3,398,973
The project team accounted for roughly $3.4 million in indirect overhead costs. The table below compares FY24 Revenue to FY25 Total Direct and Indirect Costs (Full Cost), highlighting the difference and associated cost recovery percentage.
TABLE 5: FULL COST RECOVERY
Program FY24 Revenue FY25 Exp Difference Cost Recovery
Ole Hanson Beach Club (OHBC) $351,735 $475,576 ($123,841) 74% Community Center $332,326 $1,170,048 ($837,721) 28%
Aquatics $569,168 $2,422,661 ($1,853,493) 23%
VH Sports Field / SC Aquatics Facility $840,117 $1,594,817 ($754,700) 53% Steed Park Operations $70,321 $1,053,742 ($983,421) 7%
Recreation Programs / Events $1,128,162 $1,421,740 ($293,578) 79% Total $3,291,829 $8,138,583 ($4,846,754) 40%
Based on the analysis, the Department has a Full Cost recovery level of 40%, which is within the typical range of 20-50% for parks and recreation services. Of the total direct and indirect expenditures, approximately 58% are direct expenditures, 23% are Administrative costs, and 19% are Citywide overhead.
In addition to the overall cost recovery range typically seen in relation to parks and recreation fees, there are typical cost recovery target ranges based upon the Matrix Consulting Group's experience conducting recreation fee studies. The following table highlights these ranges.
TABLE 6: TYPICAL COST RECOVERY RANGES
Fee Program Cost Recovery Range
Ole Hanson Beach Club (OHBC) 70% - 100%
6 This represents the FY25 budgeted expenditures for the Beaches, Parks, & Recreation Admin and Community Services programs, which were distributed to all programs based upon proportional expenditures. 7 This represents the citywide overhead assigned to each program based on the City’s FY25 cost allocation plan. 85 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 17
Fee Program Cost Recovery Range
Community Center 70% - 100%
Aquatics 50% - 70%
VH Sports Field / SC Aquatics Facility 50% - 80%
Steed Park Operations 30% - 50%
Recreation Programs / Events 50% - 80%
Generally, programs with a larger community impact (e.g., senior services, youth recreation) tend to have lower cost recovery, while programs with a larger individual benefit (e.g., rentals, adult recreation) tend to have higher cost recovery. The following table takes these cost recovery ranges and compares them to programs that are specific to the City of San Clemente.
TABLE 7: TYPICAL COST RECOVERY RANGES BY PROGRAM
Fee Program
Typical Cost
Recovery Range
Cost
Recovery %
Ole Hanson Beach Club (OHBC) 70% - 100% 74%
Community Center 70% - 100% 28%
Aquatics 50% - 70% 23%
VH Sports Field / SC Aquatics Facility 50% - 80% 53%
Steed Park Operations 30% - 50% 7%
Recreation Programs / Events 50% - 80% 79%
Recreation Programs / Events, VH Sports Field / SC Aquatics Facility, and Ole Hanson Beach Club (OHBC) are within the typical cost recovery range, and all other programs are lower than the typical ranges. The department should utilize the target cost recovery ranges as a guideline to setting rates.
Within these larger program categories, there can be different cost recovery targets for sub-programs or subsections. For example, within Recreation Programs / Events, there would be different cost recovery goals for adult athletics vs. youth athletics.
86 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 18
This study has identified areas where the City is under-collecting the cost associated with providing parks and recreation services. This known funding gap is, therefore, being subsidized by other City revenue sources. However, Beaches, Parks, & Recreation is unique and unlike other city services, in which there is a strong community benefit along with individualized benefits.
For parks and recreation services, we typically see the cost recovery policy developed at the service type and community benefit factor. The following graphic shows the cost recovery pyramid:
The Department should determine, based upon the fee / service area the level of benefit and utilize that to determine the level of subsidy. For example, special event permits are more of an individual benefit, so it should be less subsidized, whereas for something such as youth sports services, the City may consider subsidizing that more heavily. Therefore, when setting fees, the City must consider the following key components:
• Level of Benefit: Who is the beneficiary of the service, and does it only impact the individual, or does it have a larger community benefit? This allows the City and the department to set fees based on a conscientious decision and determine the level of subsidy. • Alternate Funding Sources: If other funding sources are available to offset programs (either annually or one-time), make use of those to be able to provide more services at a more cost-effective approach.
• Equity and Inclusion: Ensuring that services and programs are accessible to all community members.
If fee waivers, discounts, or scholarships are needed, those are also available to make activities and APPENDIX A – COST RECOVERY GUIDELINES
APPENDIX A – COST RECOVERY GUIDELINES
APPENDIX A – COST RECOVERY GUIDELINES
APPENDIX A – COST RECOVERY GUIDELINES
Highly
Individual
Mostly Individual
Individual / Community
Benefit
Community / Individual Benefit No Cost recovery
Community Benefit Full Subsidy
Full Recovery No
Subsidy
87 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 19
programs accessible. There should be clear policies and procedures to ensure consistent application of the waivers, discounts, and scholarships.
• Cost Recovery: For programs that are unique or have significant individualized benefits, it is important to aim for cost recovery or even an over-collection to continue to provide other services at a subsidized rate. Different cost recovery goals should be set for each division and within each division for the different fee-related programs and services.
• Market Rate: Annual market surveys should be done to ensure that prices are competitive for programs and services. High demand activities should be set at higher than market rate, while low demand should be set at a lower rate to encourage participation.
The department should utilize these guidelines to develop a cost recovery policy. The Government Finance Officers Association’s (GFOA) best practices for Establishing Government Charges and fees state that governmental entities should adopt formal policies regarding charges and fees which include the jurisdiction’s intention to recover the full cost or partial costs of providing services, set forth circumstances under which the jurisdiction might set a charge or fee at less than or more than 100% of full cost and outlines the considerations that might influence the jurisdiction’s pricing decision.
The development of cost recovery policies and procedures will serve to ensure that current and future decision makers understand how and why fees were determined and set, as well as provide a road map for ensuring consistency when moving forward.
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Matrix Consulting Group conducted a comparative market rate survey as part of this analysis. A comparative survey of parks and recreation fees provides the City and various stakeholders with a snapshot of what the market can bear. These types of fees are not static. They are reactive to economic conditions and public demands, balancing the community's needs with accessibility. When assigning fees, the department must strike a delicate balance, ensuring the fees are reasonable for users and generating sufficient revenue to support ongoing operations and improvements.
A comparative survey provides additional context for stakeholders and staff regarding the current market and its potential. The City identified 17 jurisdictions to be included in the comparative survey. The following eight beach cities: Carlsbad, Dana Point, Encinitas, Huntington Beach, Laguna Beach, Newport Beach, Oceanside, and San Marcos, along with the following nine non-beach cities Costa Mesa, Fountain Valley, Laguna Niguel, Lake Forest, Mission Viejo, Orange, Tustin, Vista, and Westminster. The following points provide a high-level comparative look at several fee-related services provided by the City.
AQUATICS
The following points provide an overview of the categories of aquatic-related services that were surveyed as part of the comparative analysis:
• Lap & Recreation Swim: The city currently charges residential and non-residential lap and recreational swim fees. Adults are charged $4-$8 per visit, while youth and seniors are charged $2-$6 per visit.
Oceanside most closely resembles San Clemente’s cost tiers. They charge resident and non-resident fees at $3 to $4 per visit for adults and $1 to $2 per visit for youth and seniors. However, this is only for recreational swim, for lap swim, they charge $4 to residents and $7 to non-residents. Carlsbad also charges based on residency but does not delineate between lap or recreational swim. Adults are charged $4 to $5, and youth are charged $2 to $3. The cities of Costa Mesa, Laguna Niguel and Mission Viejo charge adult and youth / senior fees per visit; ranging from $4 to $10 per visit for adults and $2 to $5 for youth and seniors. Huntington Beach ($3), Orange ($3), and San Marcos ($4) all charge a single fee for open swim regardless of residency or age. • Pool Passes & Memberships: The City currently offers various monthly ($40-$70), seasonal ($75- $200), and annual ($150-$400) swim passes with cost varying based on residency and age.
Oceanside offers monthly swim passes based on residency and age; adult passes are $50 to $60, and youth passes are $30 to $40. They also offer a family pass ($100 to $110) and a lap swim specific pass ($330 to $310). The city of Carlsbad offers individual and family passes on a monthly and quarterly basis. Individual passes are $40 per month or $116 per quarter, while family passes (two adults and two children) are $62 per month or $174 per quarter. They also offer a Master pass, which allows for unlimited access to aquatic fitness, lap swim, and recreational swim for $70 per month or $196 per quarter. San Marcos offers an annual family pass (five people) for $270 and an annual individual pass for $90. Costa Mesa, Laguna Niguel, and Orange offer passes based on the number of APPENDIX B – COMPARATIVE SURVEY
89 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 21
visits. Costa Mesa offers three passes which vary in cost based on visits and age: 10 visits ranges from $18 to $38, 20 visits range from $34 to $79, and 30 visits ranges from $42 to $90. Laguna Niguel offers a single 20-visit pass that varies in cost based on residency and age: an adult pass ranges from $60 to $80, and youth and senior passes range from $40 to $60. The city of Orange offers a single 15 visit pass for $30.
• Swim Lessons: Currently, San Clemente offers three types of swim lessons on a per participant per session basis: 25-minute lessons at $42, Summer lessons at $56, and private lessons at $80. Of the jurisdictions that do not contract their swim lessons they either charge based on age of the participant or the type of lesson offered. Carlsbad ($28 to $56) and Costa Mesa ($53 to $55) charge based on the age of the participant. Huntington Beach offers group classes at $106 (roughly 12 classes) and private sessions for $126 (two classes). Orange offers nine group sessions for $45 and a single private lesson for $30. Additionally, they offer a parent and child class at $22 for four lessons.
San Marcos offers group classes that range from $40 for four lessons to $80 for eight lessons and private classes that range from $100 for four lessons to $200 for eight lessons. • Pool Rentals: The City currently offers various pool rentals. Of the surveyed jurisdictions that rent their pools, it was common to see entire pool rentals, per lane rentals, and cabana rentals.
San Clemente currently offers their entire pool rental at $500 per hour. Carlsbad, Huntington Beach, Laguna Niguel, and Oceanside offer entire pool rentals with costs varying based on the type of applicant, ranging from a low of $75 to $80 for non-profit applicants to a high of $120 to $150 for commercial entities. Orange offers its pool rentals based on the size of the group, residency, and type of applicant. For groups of one to 100 people costs range from $165 to $435 per hour, for groups of 101 to 120 people costs range from $235 to $765.
Carlsbad offers a per lane rental ranging from $8 to $12, based on whether the applicant is a nonprofit, individual, or commercial entity. Laguna Niguel also offers a per lane rental ranging from $9 for youth competitive or residential adults to $20 for non-resident adults. Oceanside offers a single per lane rental at $8.75 per hour. At $25 per hour, the City’s current cost is the highest rental rate.
Carlsbad charges $18 per hour for a cabana rental, which is lower than San Clemente’s current rental rate of $50 per hour. San Marcos offers a cabana rental at a flat rate of $180, which includes pool admission for 25 people.
Additionally, staff proposed implementing a spectator fee for pool rentals for tournaments / competitions; Oceanside charges a similar fee at $1.50 for residents and $2 for non-residents and Carlsbad charges $60 annual fee for unlimited spectator admissions to their aquatic center. • Pool Party Packages: Only two of the surveyed jurisdictions, Carlsbad and Oceanside, offer specific pool party packages that bundle admission cost, exclusive use of the pool, and aquatic structures or floats. Carlsbad’s pool packages range from $250 to $400 for two hours of exclusive use. Costs range based on the aquatic structure or float requested; however, all packages include admission for 20 adults and 20 children. Oceanside offers a single package for $200 that includes admission for 25 children and 5 adults for two hours of exclusive use. At $150 to $175, San Clemente’s current package is less than both survey jurisdictions.
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Overall, based on the comparative analysis, San Clemente’s fee structure for aquatics is in alignment with other jurisdictions, and it has the potential to charge higher for certain services to keep in alignment with the market for these services.
RENTALS
The following points provide an overview of the categories of rental-related services that were surveyed as part of the comparative analysis:
• Facility Rentals: San Clemente currently offers various rentals within their Community Center on a per hour basis with costs varying based on the day of the rental. All surveyed jurisdictions charge their facility rentals on a per hour basis, with most requiring a two-hour minimum length of the rental.
Costs range primarily based on the type of applicant (residential, non-profit, commercial, etc.). The below dot points highlight common rentals seen across all surveyed jurisdictions:
o Auditorium / Hall / Banquet Room / Full Site Rental: This fee accounts for rental spaces for over 100 attendees; per-hour costs range from a low of $33 for non-profit, residents to a high of $798 for commercial, non-residents. At $300 per hour, San Clemente’s current fee is within the range of surveyed jurisdictions.
o Kitchen: Per-hour rentals ranged from a low of $6 to a high of $93. The City’s current fee of $100 per hour is higher than surveyed jurisdictions. Additionally, various jurisdictions charge a single flat rate for kitchen rentals ranging from $45 to $105, increasing in costs based on the extent of the kitchen amenities.
o Multi-Purpose Room: This fee accounts for rental spaces for 20 to 80 occupants; per-hour costs range from a low of $8 for non-profit, residents to a high of $144 for commercial, non-residents based on surveyed jurisdictions. At $75 per-hour, San Clemente’s current fee is within the range of surveyed jurisdictions.
o Courtyard / Patio: Staff proposed adding an hour rental of the Community Center courtyard. Various jurisdictions charge this fee on a per hour basis ranging from $20 to $250. The primary reason for the price variance is the type of applicant renting the space. • Picnic & Open Space Rentals: Encinitas charges a combined picnic and open space rental based on group size, similar to San Clemente, but they charge their fee per use rather than per hour. Their fees range from $26 to $68 for a group of 25 to 50 people, to $58 to $131 for a group of 101 to 499 people.
Dana Point, Mission Viejo, and Newport Beach all administer their picnic and open space rentals as a combined hourly rate, which varies based on applicant type. Dana Point ($33 to $132) charges the least per hour, while Mission Viejo ($75 to $255) charges the highest per hour rate. These rates align with the City’s current rates ($50 to $200 per hour).
Various jurisdictions charge a separate rate for picnic shelter and open space rentals. Carlsbad charges their picnic rentals based on the number of tables with one to two tables costing $14 to $23 per half hour and seven to eight tables costing $23 to $33 per half hour. The city of Orange offers picnic table rentals in five-hour blocks. Their cost is based on the group size (in increments of 50 or 100 people) and type of applicant, ranging from a low of $60 to $410 for a resident or non-profit to a 91 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 23
high of $240 to $1,290 for a non-resident or commercial entity. The cities of Tustin and Vista both offer per-hour picnic table rentals based on group size (either 1 to 50 people or 51 to 100 people) ranging from a low of $37 to a high of $272. Carlsbad charges an open space specific fee ranging from $13 to $23 per half hour. The city of Orange charges based on the group size (in increments of 50 or 100 people) and type of applicant, ranging from a low of $30 to $205 per hour for a resident or non-profit to a high of $120 to $645 per hour for a non-resident or commercial entity. • Field Rentals: All surveyed jurisdictions that rent fields administer their fee on a per-hour basis. Costs vary based on residency and type of applicant. On the low end, fees associated with residents or nonprofit organizations range from $5 to $79, while on the high end, fees associated with non-residents or commercial entities range from $18 to $335. San Clemente’s current per-hour fees range from $40 to $60 per hour, which are within the range of surveyed jurisdictions.
In addition to the field rentals, San Clemente charges a light fee of $15 per hour. Light fees in other jurisdictions range from $9 to $35 per hour. The City’s current fee is on the lower end of surveyed jurisdictions.
Mission Viejo, Lake Forest, and Orange combine light fees with their field rentals. Lake Forest ($8 to $75) charges the least per hour, while Orange ($25 to $145) charges the highest per hour rate.
Based on the comparative analysis, San Clemente’s rental fees are generally in line with those of other jurisdictions. Facility rentals, including banquet halls and multi-purpose rooms, fall within surveyed ranges, though kitchen rental fees are higher. Picnic and open space rentals vary by location and group size, with San Clemente's fees aligning with those of nearby cities. Field rental fees are also within the surveyed range, while the city’s light fees are on the lower end compared to other jurisdictions.
Additionally, the analysis supports the market viability of various newly proposed fees.
PROGRAMMING
The following points provide an overview of the categories of programming-related services that were surveyed as part of the comparative analysis:
• Camps: Various jurisdictions offer week-long (Spring Break, Summer Camps, etc.) or day camps. The week-long camps range in cost from $109 to $527 due to the residency of the applicant. San Clemente currently offers camps for $172 to $268, which is within the range of surveyed jurisdictions.
In addition, jurisdictions also offer single-day camps, which range in cost from $10 to $51 per participant
• Classes: Similar to San Clemente, most jurisdictions contract their classes, with the exception of Early Childhood and Afterschool Programs. Most administer their Early Childhood program on a monthly basis, ranging from $70 to $347. San Clemente’s current fee ranges from $84 to $94 and is on the lower end of the surveyed fee range. Similar to San Clemente’s Fun on the Run; Costa Mesa, Tustin, and Westminster offer free afterschool programs. Lake Forest offers an afterschool program for $860 per year or $430 per semester. Similarly, New Port offers an afterschool program for $1,185 per year or $395 per trimester. At $310, San Clemente’s GAP Program is below the surveyed rates. 92 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 24
• Sports: Most youth sports are hosted by outside agencies (i.e. AYSO, Seahawks, etc.) or are volunteerled. Of the jurisdictions that offer city-run youth sports most offer basketball and volleyball. Costa Mesa offers all youth sports free of charge. Vista offers Flag Football at $130 per child for residents and $156 per child for non-residents. Currently, San Clemente offers a youth Flag Football League at $130 per team per session.
Adult sports leagues primarily included men’s and coed softball and basketball. Similar to San Clemente, these leagues charged per team rather than per participant. Surveyed costs ranged from $250 to $600, at $600 to $700 San Clemente is on the higher end of the cost range.
The comparative analysis shows that San Clemente's camp, class, and sports program fees generally align with those of other jurisdictions. While its camp and youth sports fees fall within typical ranges, its Early Childhood and GAP Program fees are on the lower end. Adult sports league fees, however, are among the highest surveyed.
SPECIAL EVENT PERMITS
Most jurisdictions indicated that special event permits were needed for events with 50 or more people that occurred on city property or in the public right-of-way. Some jurisdictions have the permitting of these events under the purview of the Planning or Police Department. Various jurisdictions required a non-refundable application fee, ranging from $25 to $100 per application. The special event permit itself ranged in cost from $200 to $400, not including any staff time or rental of space. Carlsbad distinguishes between a minor event ($158) and a major event ($474). Similar to San Clemente, Newport Beach parses out its special event permits based on days the event is running and attendees. Fees range from $1,043 for a single day event or an event with less than 1,000 people to $5,973 for a four plus day event with or an event with more than 5,000 people. At $240, San Clemente’s current fee is below that of surveyed jurisdictions.
FILMING PERMITS
Most jurisdictions charge a permit fee for filming and still photography and in addition charge the cost of any space or facility rented in relation to the permit. Commercial filming permits ranged from $150 to $300 per day. Student filming ranged from $28 to $50 per day and still photography permits ranged from $100 to $150 per day. The City’s current fees of $100 for photography and $200 to $300 for filming align with the costs in surveyed jurisdictions.
CONTRACT INSTRUCTOR SPLITS
The most common contractor revenue split is 70/30, with contractors retaining 70% of resident fees collected. This matches San Clemente’s current 70/30 split. Other common arrangements include 60/40 and 65/35 splits. Some jurisdictions adjust rates by up to 10% based on factors such as whether the contractor uses a City facility or whether the class is held in person or virtually. Huntington Beach, 93 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 25
Laguna Niguel, and Lake Forest follow a 70/30 split, while Encinitas, Oceanside, and San Marcos use a 60/40 split. Laguna Beach, Newport Beach, and Tustin operate under a 65/35 split.
DISCOUNTS AND SCHOLARSHIPS
It is common practice in park and recreation services to discount fees based on the type of applicant requesting the services. The following points outline common discount pricing structures observed in the surveyed jurisdictions:
• Adult vs. Youth & Senior: Mission Viejo and Laguna Niguel have this type of tier in relation to aquatic services, while all jurisdictions have this tiered approach when administering court and field rentals. • Resident vs. Non-Resident: Oceanside has this type of delineation in relation to aquatic services, while all jurisdictions have this tiered approach when administering court and field rentals. • Competitive Youth vs. Non-Competitive Youth: Laguna Niguel, in particular, distinguishes between the type of youth sport renting their fields or pools.
• Non-Profit vs. Private vs. Commercial / Business: All jurisdictions have this tiered approach when administering all types of rentals.
• Peak vs. Non-Peak: park rentals – San Marcos in particular distinguishes the difference between the peak and non-peak days when renting picnic shelters and open spaces. • Percentage-based discounts: Similar to San Clemente's current discount structure, various jurisdictions offer a percentage discount based on applicant type. Below are some examples:
o 10% sibling discount for classes
o 30% senior discount on rentals
o 10% discount for veterans and seniors
o 10% resident discount for rentals
Generally, these pricing structures are layered onto of one another; for example: Residential Non-Profit entities are charged a lower fee than a Non-Resident Non-Profit organization, and both are charged a lower fee than a Non-Resident Commercial / Business entity.
Various jurisdictions also offer a fee assistance program or scholarship based on the applicant's income.
Primarily, it’s $500 per year and is available to applicants who qualify; the criteria include being a resident and being able to provide documentation of acceptance into other governmental assistance programs.
Applicants can then use this scholarship to offset the costs of recreational programs and camps. The City of San Clemente offers a scholarship of $100 per household per year and a ‘CAMPERship’ of $400 per child exclusively intended for use in registering for spring break and summer camps.
SUMMARY
Most surveyed jurisdictions provide services comparable to those offered in San Clemente. The structure and costs of Aquatic services align closely with those in Oceanside and Carlsbad, while Encinitas' rental 94 Beaches, Parks & Recreation Cost of Service (User Fee) Study Report MATRIX CONSULTING GROUP 26
offerings most closely resemble the City’s current fees. Recreational programs follow a flat participant fee model, with weekly camps structured similarly to those in other cities. This survey reflects only the current fees charged and does not account for the cost recovery goals of these jurisdictions.
Additionally, fee structures may be influenced by factors such as user volume, service demand, and unique amenities. City staff should utilize the survey results as a secondary tool for fee setting. 95 Beaches, Parks & Recreation Department
Fee Name Unit Current Fee Actual Cost Proposed Fee
ADMINISTRATIVE FEES
Change Fee
Facility Rentals Each $ 50 $ 59 $ 59
Park Rentals Each $ 50 $ 38 $ 38
Pool Rentals Each $ 50 $ 58 $ 58
Field Rentals Each $ 50 $ 32 $ 32
Refund Processing
Refund Processing Fee - Credit Card Per Class $ 8 $ 9 $ 9 Refund Processing Fee - Check Per Class $ 8 $ 13 $ 13
Deposits
Reservation Deposit (Facility, Park, Fields, Banners) % of Estimated Rental 25% N/A 25% Compliance / Damage Deposit % of Estimated Rental 25% N/A 25% Light Key Deposit Per Key $ 25 $ 25 $ 25
Storage / Snack Bar Key Deposit Per Key $ 300 $ 300 $ 300 Non-Resident Fee Per Class $ 3 N/A $ 5
Building Monitor Support Staff Per Hour New $ 78 $ 26
Pool Lifeguard Support Staff Per Class $ 18 N/A $ 28
FACILITY RENTALS
Facility Rental Discounts
San Clemente Residents % discount 25% 25%
San Clemente Based Non-Profit Organizations % discount 75% 70% San Clemente-Based Businesses % discount New 10%
Non-Resident Non-Profit Organizations % discount 50% 50% Non-Resident/Commercial/Private Use % discount New 0%
Community Center
Weekday (Monday through Thursday & Sunday)
Auditorium (4000 sq ft)-2 Hour min Per Hour $ 300 $ 315 $ 351 Kitchen (based on availability) Per Hour $ 100 $ 44 $ 44 Ole Hanson Fireside Room w/ Terrace & Kitchen (1200 sq ft) Per Hour $ 150 $ 256 $ 256 Multi-Purpose Room (900 sq ft) Per Hour $ 75 $ 150 $ 150 Lower Dance Room Multi-Purpose (900 sq ft - Dance) Per Hour $ 75 $ 95 $ 95 Grounds Per Hour $ 50 $ 78 $ 78
Lobby Per Hour New $ 33 $ 33
Outdoor Courtyard Per Hour New $ 256 $ 256
Full Center Per Hour New $ 1,450 $ 1,450
Weekend (Friday & Saturday)
Auditorium (4000 sq ft)-2 Hour min Per Hour $ 350 $ 315 $ 362 Kitchen (based on availability) Per Hour $ 150 $ 44 $ 51 Ole Hanson Fireside Room w/ Terrace & Kitchen (1200 sq ft) Per Hour $ 150 $ 256 $ 294 Multi-Purpose Room (900 sq ft) Per Hour $ 100 $ 150 $ 173 Lower Dance Room Multi-Purpose (900 sq ft - Dance) Per Hour $ 100 $ 95 $ 109 Grounds Per Hour $ 60 $ 78 $ 90
Lobby Per Hour New $ 33 $ 38
Outdoor Courtyard Per Hour New $ 256 $ 295
Full Center Per Hour New $ 1,450 $ 1,668
Tierra Grande Park
Meeting Room Per Hour $ 100 $ 246 $ 246
Ole Hanson Beach Club (Residents' Discounts Only for "Event Venue") Weekday (Monday through Thursday)
Club Room Per Hour $ 75 $ 181 $ 181
Grand Ballroom + Terraces Per Hour New $ 353 $ 353
Grounds Per Hour New $ 197 $ 197
Event Venue (Full Center) 9-Hour Min. Per Hour New $ 802 $ 802 Weekend (Friday/Saturday/Sunday)
Club Room Per Hour New $ 181 $ 181
Grand Ballroom + Terraces Per Hour New $ 537 $ 537
Grounds Per Hour New $ 486 $ 486
Event Venue (Full Center) 9-Hour Min. Per Hour $ 500 $ 1,204 $ 1,023
PARK RENTALS
Food Vendors / Truck
Current Vendor Each $ 50 $ 82 $ 82
New Vendor Each $ 50 $ 150 $ 150
Attachment 4
96 Fee Name Unit Current Fee Actual Cost Proposed Fee
Bounce House Each $ - $ 64 $ 64
Other Contract Services (i.e. petting zoo, laser tag, characters, etc.) Each New $ 76 $ 76 Picnic Area & Open Space Rental Discounts
San Clemente Residents & Resident Non-Profit Organizations % discount 50% 50% Non-Resident Non-Profit Organizations % discount 25% 25% Picnic Area and Open Space Rental Fees
1-49 People Per Hour $ 50 $ 59 $ 59
50-99 People Per Hour $ 75 $ 118 $ 118
100-199 People Per Hour $ 100 $ 176 $ 176
200-299 People Per Hour $ 200 $ 233 $ 233
Each Additional 100 People Per Hour $ 50 $ 41 $ 41
Fun on the Run Party Packages
Party Package
12 Children (San Clemente Resident, Resident Non-Profit) Base $ 180 $ 238 $ 238 12 Children (Non-Resident, Business/Commercial) Base $ 180 $ 238 $ 296 Each Additional Child Each Addtn'l Child $ 5 $ 11 $ 11
FIELDS RENTALS
Field Rental Application Each New $ 32 $ 32
Multi-Purpose Field - Grass Per Hour, Per Field Modified $ 94 $ 78 Multi-Purpose Field - Synthetic Turf Per Hour, Per Field Modified $ 123 $ 102 Baseball / Softball Per Hour, Per Field Modified $ 102 $ 85 Scoreboard Per Hour New $ 41 $ 41
Light Fee (All Fields) Per Hour $ 15 $ 24 $ 24
Vista Hermosa Meadows Per Hour $ 250 $ 41 $ 177
Storage / Snack Bar Facility Fee Per Day New $ 362 $ 22 Late Filing Fee - Sport Tournament Application
(Less than 20 Business Days) Each New $ 50
Player Fee (Aquatics & Sports Partners Only) Per Player $ 5 $ - $ 5 Richard T. Steed Park Tournaments (Includes 4 Fields, Weekends) Category I Tournament (2-24 Teams) Per Weekend $ 3,000 $ 9,532 $ 4,200 Category II Tournament (25+ Teams) Category I Tourn + Per Team Modified Modified $ 25 Janitorial Fee Flat Rate $ 90 $ 400 $ 400
Field Prep Per Weekend $ 500 $ 500 $ 500
Tournament Deposit Flat Rate/Annually $ 500 $ 500 $ 500 Deposits
Reservation Deposit % of Estimated Rental 25% N/A 25%
Compliance / Damage Deposit % of Estimated Rental 25% N/A 25% Light Key Deposit Per Key $ 25 $ 25 $ 25
Storage / Snack Bar Key Deposit Per Key $ 300 $ 300 $ 300 Field Rental Discounts
San Clemente Residents % discount 25% 25%
San Clemente Based Non-Profit Organizations % discount 40% 40% San Clemente-Based Businesses % discount New 10%
Non-Resident Non-Profit Organizations % discount 25% 25% Recreation Sport Tier I Partners. % discount 90% 90%
Recreation Sport Tier II Partners. % discount 85% 80%
Recreation Sport Tier III Partners. % discount 80% 70%
Recreation Sport Tier IV Partners. % discount 55% 55%
POOL RENTALS
Pool Rental Discounts
San Clemente Residents & Non-Resident Non-Profit Organizations % discount 25% 25% Resident Non-Profit Organizations % discount 40% 40%
Aquatics Tier I Partners. % discount 60% 60%
Aquatics Tier II Partners % discount 55% 55%
Aquatics Tier III Partners % discount 40% 40%
Pool Rentals
All Pools and Deck - Aquatic Center Per Hour $ 500 $ 501 $ 501 All Pools and Deck - Beach Club Per Hour New $ 381 $ 381 Per Lane - 50 Meter Per Hour $ 55 $ 70 $ 60
Per Lane - 25 Yard Per Hour $ 25 $ 48 $ 28
50 Meter (SCAC) Per Hour $ 250 $ 249 $ 249
25 Yard (SCAC + OHBC) Per Hour $ 125 $ 181 $ 181
50 Meter Pool Entry Per Hour $ 25 $ 27 $ 27
Beach Club Teaching Pool Per Hour $ 125 $ 143 $ 143
97 Play Structure Per Hour $ 200 $ 157 $ 157
Cabana Per Hour $ 50 $ 46 $ 46
Grass Event Space at the Aquatics Center (200 Capacity) Per Hour $ 200 $ 187 $ 187 Additional Lifeguard Rental Per Hour $ 15 $ 25 $ 25
Diving Board (Including 3 lanes) Per Hour New $ 93 $ 93 Water Polo Cage (Including 2 lanes) Per Hour New $ 78 $ 78 Scoreboard Per Hour New $ 18 $ 18
Deck Per Hour New $ 33 $ 33
25-Yard Pool Lane Rental with Diving Blocks Per Hour New $ 58 $ 58 SCAC Front Grounds Per Hour Modified $ 28 $ 28
Pool Party Package
SCAC Rentals
Weekday Rentals - Play Structure Each $ 150 $ 261 $ 261 Weekend Rentals - Play Structure Each $ 300 $ 429 $ 429 OHBC
Standard (Pool Only) Each $ 100 $ 235 $ 235
Deluxe - Inflatable Dolphin or Obstacle Course Each $ 150 $ 405 $ 405 Tournaments/Meets/Competition
Swim Meet Fee - Short Course Per Hour $ 400 $ 517 $ 517 Swim Meet Fee - Long Course Per Hour $ 400 $ 686 $ 686
Water Polo Match Fee Per Hour $ 400 $ 208 $ 208
Aquatics Center
Friends Room Per Hour $ 150 $ 187 $ 187
SPECIAL EVENT PERMITS (MAY APPLY TO OTHER RENTALS AT TIMES) Change Fee - Special Events
Category I (Simple Event) Each $ 50 $ 64 $ 64
Fee Name Unit Current Fee Actual Cost Proposed Fee
Category II (Complex Event) - Single Day Each $ 50 $ 86 $ 86 Category III (Complex Event) - Multi-Day Each $ 50 $ 129 $ 129 Application Fees
Category I (Simple Event) Each $ 110 $ 466 $ 466
Category II (Complex Event): Single Day Each $ 240 $ 1,430 $ 1,430 Category III (Complex Event): Multi-Day Each $ 240 $ 2,435 $ 2,435 Category IV (Non-Profit/Resident Beach Clean-Up): Single Day Each $ 110 $ 466 $ 110 Vendor Shows:
1-10 vendors (Single Day) Each, Per Day New $ 119 $ 119 11-25 vendors Each, Per Day New $ 381 $ 381
26-50 vendors Each, Per Day New $ 633 $ 633
51-75 vendors Each, Per Day New $ 1,014 $ 1,014
76-100 vendors Each, Per Day New $ 1,329 $ 1,329
101+ vendors Each, Per Day New $ 1,568 $ 1,568
Misc. Permits & Fees
Street Closure Per Day Per Street New $ 1,028 $ 1,028
Expedited Permit Fee/Late Filing Fee (Fee per day for applications received le Per Day New $ - $ 27 Block Party Permit Each $ 100 $ 515 $ 515
Sound Amplification Permit:
Standard Each $ 60 $ 77 $ 77
Live Music Each $ 60 $ 94 $ 94
Janitorial Fee Each Pass-Through
Trash Fee Each Pass-Through
Parking Lot Per Space, Per Day $ 25 $ 42 $ 42
Parking Pass Per Space, Per Hour Actual Cost
Beach Events
Use of More than 250 ft. of beach Per Day $ 400 $ 644 $ 644 Less than or equal to 250 ft. of beach Per Day $ 150 $ 387 $ 387 Lifeguard Staff Support Per Hour Actual Cost Pass Through Pass Through
SPECIAL USE RENTAL LOCATIONS
Skate Park / Pump Track Rental Fee Per Hour New $ 65 $ 65 Pickleball Per Hour Per Court New $ 60 $ 60
Sand Volleyball Courts Per Hour Per Court New $ 60 $ 60 Tennis Courts Per Hour Per Court New $ 61 $ 61
North beach Dirt Lot Per Hour New $ 63 $ 63
STREET BANNERS
Banner Hanging Permit (El Camino Real) Each $ 367 $ 593 $ 404 Pass-Through
Pass-Through
Actual Cost
98 Banner Fix Fee Each New $ 120 $ 120
COMMERCIAL FILM PERMITS
Fee Name Unit Current Fee Actual Cost Proposed Fee
Application Fee Each $ 50 $ 129 $ 129
Film Permit Fee:
Still Photography Per Day Per Location $ 100 $ 142 $ 142 Motion Photography Per Day Per Location $ 200 $ 255 $ 255 Motion & Still Photography Per Day Per Location $ 300 $ 341 $ 341 Drone Permitting Each New $ 94 $ 94
POOL FEES
Fee Name Unit Current Fee Actual Cost Proposed Fee
Swim Fees: (Lap Swim and Rec Swim)
Resident:
Youth 0-17 and Senior 60+ Per Visit $2 $8 $4
Adult 18-59 Per Visit $4 $8 $8
Non-Resident:
Youth 0-17 and Senior 60+ Per Visit $6 $8 $9
Adult 18-59 Per Visit $8 $8 $13
Swim Passes
Monthly Pass:
Resident
Youth 0-17 and Senior 60+ Per Pass $40 $83 $61
Adult 18-59 Per Pass $55 $83 $85
Non-Resident
Youth 0-17 and Senior 60+ Per Pass $55 $83 $96
Adult 18-59 Per Pass $70 $83 $132
Quarterly Pass (3 Months):
Resident
Youth 0-17 and Senior 60+ Per Pass $75 $246 $125
Adult 18-59 Per Pass $100 $246 $200
Non-Resident
Youth 0-17 and Senior 60+ Per Pass $150 $246 $281
Adult 18-59 Per Pass $200 $246 $385
Annual Pass:
Resident
Youth 0-17 and Senior 60+ Per Pass $150 $983 $250
Adult 18-59 Per Pass $200 $983 $400
Non-Resident
Youth 0-17 and Senior 60+ Per Pass $300 $983 $534
Adult 18-59 Per Pass $400 $983 $732
99 Attachment 5
San Clemente Times: October 30, 2025
November 13, 2025
NOTICE IS HEREBY GIVEN THAT A
A PUBLIC HEARING WILL BE HELD BY THE
CITY COUNCIL OF THE
CITY OF SAN CLEMENTE, CALIFORNIA
RELATIVE TO THE FOLLOWING:
Notice of Public Hearing on Proposed Adoption of the Beaches, Parks and Recreation Department Cost Recovery Policy and Fee Schedule Amendments NOTICE IS HEREBY GIVEN that the City Council of the City of San Clemente will conduct a Public Hearing on Tuesday, November 18, 2025, at 5:30 p.m., or as soon thereafter as the matter may be heard, in the Council Chambers, 910 Calle Negocio, San Clemente, California, to consider the following item:
The City of San Clemente is proposing to adopt a comprehensive Cost Recovery Policy for the Beaches, Parks and Recreation Department. The policy establishes consistent principles and guidelines for determining user fees and cost recovery targets for programs, services, and facility rentals. The City Council will also consider amendments to the Beaches, Parks and Recreation Department Fee Schedule to align with the findings of the Comprehensive Cost of Services and Fee Study prepared by the Matrix Consulting Group.
This public hearing is conducted pursuant to California Government Code Sections 66018, which require local agencies to hold a public hearing prior to adopting new fees or increasing existing fees, and to make available supporting data at least 10 days in advance of the hearing. The proposed adjustments pertain solely to recreation facility fees, which are voluntary charges incurred only when an individual or organization elects to use the City’s recreation facilities. These fees are not mandatory taxes or assessments, but rather per-use fees to cover a portion of the operating and maintenance costs of each facility.
The proposed policy and associated fee adjustments are anticipated to increase departmental cost recovery and improve long-term fiscal sustainability; however, the exact revenue impact will vary based on service demand and implementation timing.
Information is available for public inspection and comment at the San Clemente Community Center located at 100 North Calle Seville, San Clemente, California, 92672, and by contacting the San Clemente Community Center (949) 361-8264. If you challenge this project in court, you may be limited to raising only those issues you or someone else raised in written correspondence delivered to the City of San Clemente at or before the public hearing.
To allow staff adequate time to confirm software compatibility, individuals wishing to utilize electronic visual aids to supplement their oral presentations at the meeting must submit the electronic files to the City Clerk by no later than 12:00 p.m. on the 100
day of the meeting. Only compatible electronic formats will be permitted to be used on City audio/visual computer equipment. Staff makes no guarantee that such material will be compatible, but will use its best efforts to accommodate the request.
NOTICE IS FURTHER GIVEN that said public hearing will be conducted by the San Clemente City Council on Tuesday, November 18, 2025 at 5:30 p.m. in the City Council Chambers located at 910 Calle Negocio, 2nd floor, San Clemente. All interested persons are invited to attend said hearing or to provide written communication to the City Council to express their opinion on the proposed changes.
For further information, including the proposed policy and fee schedule amendments, please contact the Beaches, Parks & Recreation Department at (949) 361-8237 or [email protected].
Laura Campagnolo
City Clerk and Ex-Officio Clerk of the Council
101
910 Calle Negocio
2nd Floor
San Clemente, California
www.san-clemente.org
AGENDA REPORT
CITY OF SAN CLEMENTE
CITY COUNCIL MEETING
CITY OF SAN CLEMENTE 1
Meeting Date: November 18, 2025 Agenda Item: 8B.
Submitted By: Planning Division
Prepared By: David Carrillo, Associate Planner
Jessica Gatny, Assistant Planner
Subject:
..titl e
OVERVIEW OF THE MILLS ACT PROGRAM AND CONSIDERATION OF A RESOLUTION
AUTHORIZING THE CITY MANAGER TO EXECUTE A HISTORIC PROPERTY PRESERVATION AGREEMENT (HPPA) FOR A QUALIFIED HISTORIC PROPERTY AT 121 W.
ESCALONES AND FINDING THE ACTION CATEGORICALLY EXEMPT FROM THE CALIFORNIA ..body ENVIRONMENTAL QUALITY ACT
Fiscal Impact:
Execution of the Historic Property Preservation Agreement (HPPA) will result in a reduction of property tax revenues to the City of approximately $11,218 in total per year.
Summary:
The Mills Act program, implemented through the approval of property-specific HPPAs, provides a property tax reduction incentive to owners of historic properties with the intent that cost savings are invested into the historic property to restore, improve, and preserve their buildings and grounds, per a 10-year term work list. For the City Council’s consideration is an HPPA for a historic property located at 121 West Escalones (HPPA 25-312).
Background:
Enacted in 1972, the Mills Act legislation grants participating local governments the authority to enter into contracts with owners of qualified historic properties who actively participate in the restoration and maintenance of their historic properties while receiving property tax relief. In San Clemente, a “qualified” property is any property on the City’s designated list of historic structures.
Mills Act Agreements are known in the City of San Clemente as Historic Property Preservation Agreements (HPPAs). See Attachment 3 for additional background on the Mills Act.
Participants in the Mills Act program may realize substantial property tax savings of up to 70% in the initial year of the agreement. The County Assessor applies a special restricted rate; however, this rate is not subject to Proposition 13, so the assessment can increase by more than 2% annually. If property owners maintain ownership long enough, the Mills Act restricted rate may exceed the Proposition 13 rate, at which time the County Assessor would apply the lower rate.
The contract carries a minimum ten-year commitment and includes an automatic annual renewal.
Either party may choose to end the contract; however, there is a significant financial penalty to the property owner if the City cancels the contract due to noncompliance with the terms.
The City currently has 97 active HPPAs. City staff ensure the terms and conditions of these agreements are met by conducting 5-year inspections, paid for by the historic property owners. In 102
Meeting Date: November 18, 2025 Agenda Item: 8B.
CITY OF SAN CLEMENTE 2
2025, City staff inspected 18 properties to ensure compliance with the agreements. An example of a periodic inspection report is provided in Attachment 4. Through this process, staff, with the support of the City’s on-call historic preservation consultant, identifies maintenance tasks beyond those originally identified in the preliminary 10-year work plan.
Discussion:
On August 14, 2025, staff and the City’s historic preservation consultant, GPA Consulting (GPA), conducted a site visit at the property to evaluate the condition of the historic resource and determine which improvements should be pursued for the rehabilitation and maintenance of the property. The prioritized work items for this property are provided in the attached resolution (Attachment 1).
The task list is ordered by priority level. Staff first prioritizes structural-related items, or items that may pose a threat to a building’s structural health, and then adds more aesthetic-related items toward the end of the list. Additionally, the aesthetic-related items are ordered based on the building elevations or site areas that are affected in the following order: 1) primary elevations/yards (often the front); 2) secondary elevations/yards (often the sides); and tertiary elevations/yards (often the rear). The list of prioritized work was reviewed by the Design Review Subcommittee (DRSC), which serves as the Cultural Heritage Subcommittee (CHSC), on September 24, 2025. The CHSC reviewed the HPPA request and supported the recommended list of prioritized work. See Attachment 2 for the CHSC meeting minutes. The property owner would need to apply for and receive applicable permits at the time work is proposed consistent with HPPA requirements and Secretary of the Interior Standards for the Treatment of Historic Properties (Exhibit 1 of Attachment 1).
If approved by City Council, the HPPA will be executed after the owner submits the required $380 filing fee. The executed HPPA will then be recorded with the County and forwarded to the Tax Assessor. The exact amount of the special assessment will only be known after the County Tax Assessor completes a valuation for the property in 2026 based on the executed agreement. To confirm compliance with the conditions of the agreement, every five years from the commencement of the contract’s term, the property owner will be responsible to arrange a site inspection with the Planning Division and pay for the costs of such inspection.
Council Options:
Adopt Resolution No. 25-176, authorizing the City Manager to execute the new Historic Property Preservation Agreement and finding the action categorically exempt from CEQA. Modify and adopt Resolution No. 25-176.
Continue the item and direct staff to provide additional information. Deny Resolution No. 25-176, and deny the approval of the Historic Property Preservation Agreement.
Environmental Review/Analysis:
This historic preservation agreement is categorically exempt under Class 31, Section 15378 of the California Environmental Quality Act Guidelines (14 CCR § 15331 - Historical Resource 103
Meeting Date: November 18, 2025 Agenda Item: 8B.
CITY OF SAN CLEMENTE 3
Restoration/Rehabilitation) because it consists of preservation of a historical resource and its maintenance, repair, rehabilitation or restoration in a manner consistent with the Secretary of the Interior Standards for the Treatment of Historic Properties with Guidelines for Preserving, Rehabilitating, Restoring, and Reconstructing Historic Buildings (1995), Weeks and Grimmer.
Recommended Actions:
Staff Recommendation ..recommendation
Staff recommends that the City Council adopt Resolution No. 25-176, which will:
1. Find the Historic Preservation Agreement categorically exempt from the California Environmental Quality Act under Class 31, Section 15378 of the CEQA Guidelines (14 CCR § 15331 - Historical Resource Restoration/Rehabilitation); and
2. Authorize the City Manager to execute the Historic Property Preservation Agreement for the property located at 121 West Escalones.
..end
Attachment:
1. Resolution No. 25-176
a. Exhibit 1: 121 West Escalones Mills Act Contract
2. Minutes from the CHSC Meeting of September 24, 2025
3. Mills Act Background Information
4. 2025 Example Mills Act Periodic Inspection Report (115 E. Canada)
5. Public Hearing Notice
Notification:
Public notices were distributed and posted per City and State requirements for the original public hearing on November 4, 2025, which was continued to the date certain of November 18, 2025.
Staff has not received any public comments on this item to-date. 104
Attachment 1
RESOLUTION NO. 25-176
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SAN CLEMENTE, CALIFORNIA, APPROVING HISTORIC
PROPERTY PRESERVATION AGREEMENT 25-312 FOR
THE PROPERTY LOCATED AT 121 WEST ESCALONES
AND FINDING THE PROJECT IS CATEGORICALLY
EXEMPT UNDER CLASS 31, SECTION 15378 OF THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT
GUIDELINES (14 CCR § 15331-HISTORICAL RESOURCE
RESTORATION/ REHABILITATION)
WHEREAS, the City Council of the City of San Clemente adopted Ordinance 1194 on October 15, 1977, which in Section 3, establishes procedures for property owners of designated historically significant structures to voluntarily enter into Historic Property Preservation Agreements in order to apply to receive property tax reductions as an incentive for historic preservation; and WHEREAS, on July 21, 2025, an application was submitted by Chloe Steblay, 121 West Escalones, San Clemente, CA 92672, the owner of a designated historically significant structure, to enter into an Historic Property Preservation Agreement (HPPA) for the property located at 121 West Escalones, the legal description being N TR 793 BLK 14 LOT 59, in the City of San Clemente, with Assessor’s Parcel Number 058-052-50; and
WHEREAS, on September 24, 2025, the Design Review Subcommittee, which serves as the Cultural Heritage Subcommittee of the Planning Commission, reviewed the application and recommended approval of HPPA 25-312 with preservation improvement conditions; and
WHEREAS, on November 4, 2025, the City Council held a duly noticed public hearing, and continued the public hearing to a date certain of November 18, 2025; and
WHEREAS, on November 18, 2025, the City Council conducted the continued public hearing, and considered testimony of City staff, the applicant and property owner, and other interested parties.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN
CLEMENTE HEREBY RESOLVES AS FOLLOWS:
SECTION 1: Recitals. The above recitals are considered findings by the City Council and fully incorporated into the body of this resolution.
SECTION 2: California Environmental Quality Act Findings. Based on a 105
Resolution No. 25-176 Page 2
review of the records as a whole, the City Council finds and determines that this historic preservation agreement is categorically exempt under Class 31, Section 15378 of the California Environmental Quality Act Guidelines (14 CCR § 15331 - Historical Resource Restoration/Rehabilitation) because it consists of preservation of a historical resource and its maintenance, repair, rehabilitation or restoration in a manner consistent with the Secretary of the Interior Standards for the Treatment of Historic Properties with Guidelines for Preserving, Rehabilitating, Restoring, and Reconstructing Historic Buildings (1995), Weeks and Grimmer.
SECTION 3: Based on the foregoing recitals and findings, and the written and oral comments, facts, and evidence presented, the City Council of the City of San Clemente, California approves HPPA 25-312.
SECTION 4: The City Council hereby authorizes and directs the City Manager to execute, and the City Clerk to record, HPPA 25-312, the HPPA for the property at 121 West Escalones, in a form substantially similar to that presented to the City Council on November 18, 2025 after the required application fee has been submitted to the City by the property owner, which shall be submitted no later than June 30, 2026.
SECTION 5: Certification. The City Clerk shall certify to the passage of this resolution and enter it into the book of original resolutions.
PASSED AND ADOPTED this _____ day of ____________________, 2025.
ATTEST:
___________________________ __________________________
City Clerk of the City of Steve Knoblock, Mayor of the
San Clemente, California City of San Clemente, California 106
Resolution No. 25-176 Page 3
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) §
CITY OF SAN CLEMENTE )
I, LAURA CAMPAGNOLO, City Clerk of the City of San Clemente, California, do hereby certify that Resolution No. 25-176 was adopted at a regular meeting of the City Council of the City of San Clemente held on the _______ day of _______________________, _________, by the following vote:
AYES:
NOES:
ABSENT:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Clemente, California, this _____ day of _________________, ________.
________________________
CITY CLERK of the City of
San Clemente, California
Approved as to form:
____________________________
Elizabeth A. Mitchell, City Attorney
107
EXHIBIT 1
Recording Requested by, and
when Recorded Mail to:
City Clerk
City of San Clemente
910 Calle Negocio
San Clemente, CA 92672
This Agreement is recorded for the benefit of the City of San Clemente and is exempt from the payment of recording fees pursuant to Government Code Sections 6103 and 27383.
HISTORIC PROPERTY PRESERVATION AGREEMENT
THIS AGREEMENT is made and entered into this 18th day of November, 2025, by and between the City of San Clemente (“City”), a municipal corporation of the State of California, and Froom Properties LLC (“Owner”).
RECITALS
WHEREAS, the owner possesses fee title in and to that certain qualified historic real property, together with associated structures and improvements thereon, located on Assessor’s Parcel Number 058-052-50, located at 121 West Escalones, San Clemente, California 92672 (hereafter the “Historic Property”), more specifically described in Exhibit “A” attached hereto and made fully a part hereof; and
WHEREAS, the Historic Property is a qualified historic property in that it is privately owned property which is not exempt from property taxation and is listed in the City’s Designated Historic Resources List, which is the City’s official register of historically significant sites adopted October 2, 2007 by Resolution 07-72 of the San Clemente City Council, as amended; and
WHEREAS, both City and Owner desire to carry out the purposes of Article 12 (commencing with Section 50280) of Chapter 1, Part 1, Division 1 of Title 5 of the California Government Code and Article 1.9 (commencing with Section 439) of Chapter 3, Part 2 of Division 1 of the California Revenue and Taxation Code; and WHEREAS, both City and Owner desire to enter into this Agreement for the purpose of protecting and preserving the characteristics of historical significance of the Historic Property through the incentive of a potential property tax reduction; and WHEREAS, Owner, in consideration for abiding by the terms of this Agreement, shall be entitled to qualify for a reassessment of valuation of the Historic Property, pursuant to provisions of the aforementioned California Revenue and Taxation Code, and any corresponding adjustment in property taxes resulting therefrom. 108
AGREEMENT
NOW, THEREFORE, both Owner and City, in consideration of the mutual promises, covenants and conditions contained herein and the substantial public benefits to be derived therefrom, do hereby agree as follows:
1. AGREEMENT SUBJECT TO GOVERNMENT CODE SECTIONS 50280-50290.
This agreement is made pursuant to California Government Code Sections 50280 through 50290 and Article 1.9 (commencing with Section 439) of Chapter 3, Part 2 of Division 1 of the California Revenue and Taxation Code and is subject to all of the provisions of those statutes, now existing and as amended from time to time.
2. REASSESSMENT OF VALUATION. The determination of property valuation pursuant to Chapter 3, Part 2 of Division 1 of the California Revenue and Taxation Code, is in the sole discretion of the Orange County Tax Assessor’s Office. City makes no representations regarding the actual tax savings any person may realize by entering into this Agreement.
3. PRESERVATION OF PROPERTY. Owner agrees to preserve and maintain the Historic Property and its character-defining features, as provided below. Characterdefining features include, but are not necessarily limited to, the general architectural form, style, materials, design, scale, details, mass, roof line and other aspects of the appearance of the exterior of the property. The Secretary of the Interior’s Standards for the Treatment of Historic Properties and minimum maintenance standards, attached hereto and incorporated herein by reference as Exhibit “B,” shall constitute the minimum standards and conditions for maintenance, use, and preservation of the Historic Property, and shall apply to the Historic Property throughout the term of this Agreement. Owner shall, where necessary, restore and rehabilitate the Historic Property to conform to the now existing and hereafter amended or enacted rules and regulations of the Office of Historic Preservation of the California Department of Parks and Recreation, the U.S.
Secretary of the Interior’s Standards for the Treatment of Historic Properties, the City of San Clemente Design Guidelines and in accordance with the attached schedule of improvements, attached hereto and incorporated fully herein by reference as Exhibit “B”.
4. BUILDING CHANGES. All building changes shall comply with applicable City specific plans, City regulations and guidelines, and with the rules and regulations of the Office of Historic Preservation of the California Department of Parks and Recreation, namely the U.S. Secretary of the Interior’s Standards for Rehabilitation and Standards and Guidelines for Historic Preservation Projects now existing or hereafter amended or enacted.
5. NOTIFICATION OF DIRECTOR. The Community Development Director shall be notified by the Owner of any planned changes to character-defining exterior features prior to their execution, such as major landscaping projects and tree removals, exterior door or window replacement, exterior repainting, remodeling, or other exterior alterations requiring a building permit. The Owner agrees to secure all necessary City approvals and/or permits prior to changing the building’s exterior appearance or use, or prior to commencing construction work.
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6. PROHIBITED. The following are prohibited: demolition or partial demolition of the historic building or accessory buildings without prior City approval; exterior alterations or additions not in keeping with the standards listed above; dilapidated, deteriorating or unrepaired structures such as fences, roofs, doors, walls, windows; outdoor storage of junk, trash, debris, appliances, or furniture visible from a public way; or any device, decoration, structure or vegetation which is unsightly due to lack of maintenance or because such feature adversely affects, or is visually incompatible with, the property’s recognized historic character, significance and design, as determined by the Community Development Director in the exercise of his/her discretion.
7. INSPECTIONS. Owner agrees to permit the periodic examination, by prior appointment, of the interior and exterior of the Historic Property by the County Assessor, the Department of Parks and Recreation, the State Board of Equalization and City as may be necessary to determine Owner’s compliance with the terms and provisions of this Agreement. After five years and every five years thereafter, the City shall inspect the property to determine the Owner’s continued compliance with the Agreement.
8. PAYMENT OF INSPECTION FEE. Every five years from the commencement of the contract’s term, Owner shall pay City an inspection fee as provided in the City’s current Planning Fee Schedule, which fee does not exceed the reasonable cost of conducting ongoing and five-year site inspections to confirm compliance with the conditions of the Agreement. Said fee shall be made payable to the City of San Clemente and shall be remitted to the Planning Division prior to each five-year inspection conducted by the Planning Division.
9. PAYMENT OF APPLICATION FEE. As a condition of executing the Agreement, Owner shall pay City a fee as provided in the City’s current Planning Fee Schedule, after City Council approval of the Agreement, which fee does not exceed the reasonable cost of administering City’s historical preservation program. Said fee shall be made payable to the City of San Clemente and shall be remitted to the Planning Division prior to the Agreement being executed by City.
10. TERM. The term of this Agreement shall be from November 18, 2025, to and including November 18, 2035.
11. AUTOMATIC RENEWAL. On each yearly anniversary of the effective date of this Agreement (hereinafter referred to as the “renewal date”), one year shall be added automatically to the initial term of this Agreement unless notice of non-renewal is given as provided in this Agreement.
12. NOTICE OF NONRENEWAL. If in any year either the Owner or City desires not to renew this Agreement, that party shall serve written notice of nonrenewal on the other party in advance of the annual renewal date. Unless the notice is served by Owner to City at least 90 days, or by City to Owner at least 60 days, prior to the renewal date, one year shall automatically be added to the term of the Agreement. Within 15 days of receipt by Owner of a notice of nonrenewal, Owner may make a written appeal of nonrenewal. Such appeal shall include, but is not limited to, a statement of the grounds on which the appeal is based. Upon receipt of such an appeal, the City Clerk shall set a 110
hearing before the City Council prior to the annual renewal date of this Agreement, or following the renewal date at the earliest date such hearing can reasonably be held.
Owner may furnish the City Council with any information which the Owner deems relevant, and shall furnish the City Council with any information it may require. At any time prior to the renewal date, City may withdraw its notice of nonrenewal.
13. EFFECT OF NOTICE NOT TO RENEW. If in any year either party serves notice of intent not to renew this Agreement, this Agreement shall remain in effect for the balance of the period since the original execution, or the last renewal of the Agreement, as the case may be. Thereafter, this Agreement shall terminate.
14. FURNISHING OF INFORMATION. Owner shall furnish City with any information City shall require in order to enable City to determine eligibility of the property to be classified as a qualified Historic Property.
15. ENFORCEMENT OF AGREEMENT. In lieu of, and/or in addition to, any provisions to cancel the Agreement as referenced herein, City may specifically enforce, or enjoin the breach of, the terms of this Agreement. In the event of a default under the provisions of this Agreement by Owner, City shall give written notice to Owner by registered or certified mail addressed to the address stated in this Agreement of violations of this Agreement. If such violation(s) is not corrected to the reasonable satisfaction of the City within thirty (30) days after the date of the notice of violation, or within such reasonable time as may be required to cure the breach or default [provided that acts to cure the breach or default are commenced within thirty (30) days and thereafter diligently pursued to completion], then City may, without further notice, declare a default under the terms of this Agreement and bring any action necessary to specifically enforce the obligations of Owner growing out of the terms of this Agreement, including, but not limited to, bringing an action for injunctive relief against the Owner or for such other relief as may be appropriate.
The City has the option to either cancel the Agreement or bring action in court to enforce the Agreement, if the City determines that the Owner has breached any of the conditions of the Agreement or has allowed the Historic Property to deteriorate to the point that it no longer meets the standards for a qualified historical property. As an alternative to canceling the Agreement, the Owner may bring any action in court necessary to enforce the Agreement.
City does not waive any claim of default by Owner if City does not enforce or cancel this Agreement. All other remedies at law or in equity which are not otherwise provided for in this Agreement or in City’s regulations governing historic properties are available to City to pursue in the event there is a breach of this Agreement. No waiver by City or any breach or default under this Agreement shall be deemed to be a waiver of any other subsequent breach thereof or default thereunder.
16. CANCELLATION. City may cancel this Agreement if City determines Owner has breached any of the conditions or covenants of this Agreement or has allowed the Historic Property to deteriorate to the point that it no longer meets the standards for a qualified historic property. City may also cancel this Agreement if it determines Owner has failed to restore or rehabilitate the property in the manner specified in this Agreement. 111
17. NOTICE OF CANCELLATION. This Agreement cannot be canceled until after City has given notice and has held a public hearing as required by Government Code Section 50284. Notice of the hearing shall be mailed to the last known address of each owner of property on the City’s Designated Historic Structures List and shall be published in accordance with Government Code section 6061. Cancellation shall be effective on the date of Council adoption of a resolution cancelling the Agreement.
18. CANCELLATION FEE. If City cancels this Agreement in accordance with Sections 15, 17 and 17 above, Owner shall pay a cancellation fee of twelve and one-half percent (12½%) of the full value of the property at the time of cancellation. The full value shall be determined by the County Assessor without regard to any restriction on the property imposed pursuant to this Agreement. The cancellation fee shall be paid to the Controller at such time and in such manner as the Controller shall prescribe in accordance with State law.
19. NOTICES. All notices required by or provided for in the Agreement shall be given in writing and may be mailed or delivered in person at the address of the respective parties as specified below or at any other address as may be later specified by the parties hereto:
To City: City of San Clemente
910 Calle Negocio
San Clemente, CA 92672
Attention: City Manager
To Owner: Chloe Steblay and Ronald Froom
1000 Green Street #1101
San Francisco, CA 94133
Deposit of notice in the mail, postage prepaid, shall be deemed receipt of the notice.
20. NO COMPENSATION. Owner shall not receive any payment from City in consideration of the obligations imposed under this Agreement, it being recognized and agreed that the consideration for the execution of this Agreement is the substantial public benefit to be derived from the preservation and maintenance of historic resources and the right to reassessment under State law.
21. REMEDY IF AGREEMENT HELD NOT ENFORCEABLE. In the event that it is finally determined that this Agreement does not constitute an enforceable restriction within the meaning of the applicable provisions of the California Government Code and the California Revenue and Taxation Code, except for an unenforceability arising from the cancellation or nonrenewal of this Agreement, then this Agreement shall be null and void and without further effect and the property subject to this Agreement shall from that time be free from any restriction whatsoever under this Agreement without any payment or further act of the parties to this Agreement.
22. EFFECT OF AGREEMENT. None of the terms, provisions or conditions of this Agreement shall be deemed to create a partnership between the parties hereto and any 112
of their heirs, successors or assigns, nor shall such terms, provisions or conditions cause the parties hereto to be considered joint ventures or members of any joint enterprise.
23. INDEMNITY OF CITY. The applicant shall defend (with counsel acceptable to the City), indemnify, and hold harmless the City of San Clemente and its officers, employees, and agents from and against any claim, action, proceeding, fines, damages, expenses, and costs (including attorneys' fees) against the City, its officers, employees, or agents to attack, set aside, challenge, void, modify or annul any findings, permits, approval or condition of approval of the City concerning this project, including but not limited to any approval or condition of approval of the City Council, Planning Commission, or City Planner or any environmental finding. Owner shall pay all costs upon request by the City. The City shall promptly notify the applicant of any claim, action, or proceeding concerning the project and the City shall cooperate in the defense of the matter at the Owner’s expense. The City reserves the right, at its own option, to choose its own attorney to represent the City, its officers, employees, and agents in the defense of the matter at the Owner’s cost. If the Owner fails to so defend the matter, the City shall have the right, at its own option, to do so and, if it does, the Owner shall promptly pay the City's full cost of the defense.
24. SUCCESSORS AND ASSIGNS. This Agreement is binding upon and shall inure to the benefit of all successors in interest of the Owner. A successor in interest shall have the same rights and obligations under this Agreement as the original Owner who entered into this Agreement.
25. RECORDATION. No later than twenty (20) days after the parties execute and enter into this Agreement, City shall cause this Agreement to be recorded in the office of the County Recorder of the County of Orange.
26. AMENDMENTS. This Agreement may be amended, in whole or in part, only by a written and recorded instrument executed by the parties hereto.
27. FLEXIBLE PROPERTY IMPROVEMENT SCHEDULE. The Community Development Director (Director) or his/her designee has the authority to modify the timeline and/or the order for completing required property improvements, provided that the Director makes required findings per Resolution No. 11-68.
28. COMPLIANCE WITH APPLICABLE LAWS. During the term of this Agreement, Owner shall maintain and use the Historic Property in compliance with all applicable State and local statutes, ordinances, regulations and official policies now existing and hereafter amended or enacted; provided that, except as specifically set forth in Paragraph 3, nothing in this Agreement shall be deemed to require Owner to waive any vested rights or rights to continue to maintain a legally non-conforming structure or use existing as of the date of this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have caused their names to be affixed hereto on the day and year first written above evidencing their agreement to the terms and conditions herein.
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City of San Clemente
By _________________________
Andy Hall, City Manager
ATTEST:
__________________________________
Laura Campagnolo, City Clerk
APPROVED AS TO FORM:
__________________________________
Elizabeth A. Mitchell, City Attorney
Owner
_________________________
Chloe Steblay
_________________________
Ronald Froom
114
EXHIBIT A
HISTORIC PROPERTY LEGAL DESCRIPTION
Lot 59, Block 14 of Tract 793, IN THE CITY OF SAN CLEMENTE, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 24, PAGES 1 TO 4 INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. 115
EXHIBIT B
SECRETARY OF THE INTERIOR’S STANDARDS FOR THE TREATMENT
OF HISTORIC PROPERTIES
Rehabilitation (making possible a compatible use for a property through repair, alterations and additions while preserving portions/features that convey its historical, cultural or architectural values)
1. A property will be used as it was historically or be given a new use that requires minimal change to its distinctive materials, features, spaces and spatial relationships.
2. The historic character of a property will be retained and preserved. The removal of distinctive materials or alteration of features, spaces and spatial relationships that characterize a property will be avoided.
3. Each property will be recognized as a physical record of its time, place and use.
Changes that create a false sense of historical development, such as adding conjectural features or elements from other historic properties, will not be undertaken.
4. Changes to a property that have acquired historic significance in their own right will be retained and preserved.
5. Distinctive materials, features, finishes and construction techniques or examples of craftsmanship that characterize a property will be preserved.
6. Deteriorated historic features will be repaired rather than replaced. Where the severity of deterioration requires replacement of a distinctive feature, the new feature will match the old in design, color, texture and, where possible, materials.
Replacement of missing features will be substantiated by documentary and physical evidence.
7. Chemical or physical treatments, if appropriate, will be undertaken using the gentlest means possible. Treatments that cause damage to historic materials will not be used.
8. Archeological resources will be protected and preserved in place. If such resources must be disturbed, mitigation measures will be undertaken.
9. New additions, exterior alterations or related new construction will not destroy historic materials, features and spatial relationships that characterize the property.
The new work will be differentiated from the old and will be compatible with the historic materials, features, size, scale and proportion, and massing to protect the integrity of the property and its environment.
10.New additions and adjacent or related new construction will be undertaken in such a manner that, if removed in the future, the essential form and integrity of the historic property and its environment would be unimpaired.
Preservation (applying measures necessary to sustain the existing form, integrity and materials)
1. A property will be used as it was historically, or be given a new use that maximizes the retention of distinctive materials, features, spaces and spatial relationships. 116
Where a treatment and use have not been identified, a property will be protected and, if necessary, stabilized until additional work may be undertaken.
2. The historic character of a property will be retained and preserved. The replacement of intact or repairable historic materials or alteration of features, spaces and spatial relationships that characterize a property will be avoided.
3. Each property will be recognized as a physical record of its time, place and use.
Work needed to stabilize, consolidate and conserve existing historic materials and features will be physically and visually compatible, identifiable upon close inspection and properly documented for future research.
4. Changes to a property that have acquired historic significance in their own right will be retained and preserved.
5. Distinctive materials, features, finishes and construction techniques or examples of craftsmanship that characterize a property will be preserved.
6. The existing condition of historic features will be evaluated to determine the appropriate level of intervention needed. Where the severity of deterioration requires repair or limited replacement of a distinctive feature, the new material will match the old in composition, design, color and texture.
7. Chemical or physical treatments, if appropriate, will be undertaken using the gentlest means possible. Treatments that cause damage to historic materials will not be used.
8. Archeological resources will be protected and preserved in place. If such resources must be disturbed, mitigation measures will be undertaken.
Restoration (accurately depicting the form, features, and character of a property as it appeared at a particular period of time)
1. A property will be used as it was historically or be given a new use that interprets the property and its restoration period.
2. Materials and features from the restoration period will be retained and preserved.
The removal of materials or alteration of features, spaces and spatial relationships that characterize the period will not be undertaken.
3. Each property will be recognized as a physical record of its time, place and use.
Work needed to stabilize, consolidate and conserve materials and features from the restoration period will be physically and visually compatible, identifiable upon close inspection and properly documented for future research.
4. Materials, features, spaces and finishes that characterize other historical periods will be documented prior to their alteration or removal.
5. Distinctive materials, features, finishes and construction techniques or examples of craftsmanship that characterize the restoration period will be preserved.
6. Deteriorated features from the restoration period will be repaired rather than replaced. Where the severity of deterioration requires replacement of a distinctive feature, the new feature will match the old in design, color, texture and, where possible, materials.
7. Replacement of missing features from the restoration period will be substantiated by documentary and physical evidence. A false sense of history will not be created by adding conjectural features, features from other properties, or by combining features that never existed together historically.
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8. Chemical or physical treatments, if appropriate, will be undertaken using the gentlest means possible. Treatments that cause damage to historic materials will not be used.
9. Archeological resources affected by a project will be protected and preserved in place. If such resources must be disturbed, mitigation measures will be undertaken.
10. Designs that were never executed historically will not be constructed.
Reconstruction (depicting, by means of new construction, the form, features, and detailing of a non-surviving site, landscape, building, structure or object at a specific time period in its historic location)
1. Reconstruction will be used to depict vanished or non-surviving portions of a property when documentary and physical evidence is available to permit accurate reconstruction with minimal conjecture, and such reconstruction is essential to the public understanding of the property.
2. Reconstruction of a landscape, building, structure or object in its historic location will be preceded by a thorough archeological investigation to identify and evaluate those features and artifacts that are essential to an accurate reconstruction. If such resources must be disturbed, mitigation measures will be undertaken.
3. Reconstruction will include measures to preserve any remaining historic materials, features and spatial relationships.
4. Reconstruction will be based on the accurate duplication of historic features and elements substantiated by documentary or physical evidence rather than on conjectural designs or the availability of different features from other historic properties. A reconstructed property will re-create the appearance of the nonsurviving historic property in materials, design, color and texture.
5. A reconstruction will be clearly identified as a contemporary re-creation.
6. Designs that were never executed historically will not be constructed. 118
EXHIBIT C
CITY OF SAN CLEMENTE HISTORIC PROPERTY
MINIMUM MAINTENANCE STANDARDS
All buildings, structures, yards and other improvements shall be maintained in a manner which does not detract from the appearance of the immediate neighborhood. The following conditions are prohibited:
1. Dilapidated, deteriorating, or un-repaired structures, such as: fences, roofs, doors, walls and windows.
2. Publicly visible storage of scrap lumber, junk, trash or debris.
3. Publicly visible storage of abandoned, discarded or unused objects or equipment, such as automobiles, automobile parts, furniture, stoves, refrigerators, cans, containers or similar items.
4. Stagnant water or excavations, including pools or spas.
5. Any device, decoration, design, structure or vegetation which is unsightly by reason if its height, condition, or its inappropriate location. 119
EXHIBIT D
HISTORIC PROPERTY IMPROVEMENTS TO BE COMPLETED
Historic property improvements due prior to and up to the date of sale or transfer of the Historic Property shall be completed prior to sale or transfer of the Historic Property and no later than ten years from the Effective Date or on an ongoing basis, as applicable.
Item Proposed Work/Task Proposed
Completion
Phase I
1. Roof. Carefully remove existing red clay tiles, replace any damaged wood framing and plywood sheathing, and reinstall red clay tiles in accordance with City of San Clemente
Building Code requirements. Any missing or damaged clay tiles should be replaced in kind.
2026
2. Termite Report. Provide a termite / wood destroying
organism (WDO) report indicating a termite-free condition or take recommended actions within the report if pests are present.
2026
3. Foundation. Engage a qualified structural engineer
experienced in working with historic properties to properly inspect the foundation and make recommendations with an implementation plan. Execute any recommended work,
according to the implementation plan based on City staff guidance, in a timely manner to ensure foundation is
structurally sound and weathertight. Work to be completed in a sensitive manner to avoid causing damage to the historic fabric or visually impacting the historic building.
2026
Phase II
4. Roof Insulation/ Mortar Packing. Replace inappropriate and visible insulation/mortar packing of roof tiles on the north elevation roof perimeter with appropriate mortar material (see Photo 3).
2027
5. Exposed Flashing. Remove and replace exposed flashing on the north elevation with more compatible option or paint existing to better blend with the exterior (see Photo 4). 2027
120
Item Proposed Work/Task Proposed
Completion
Phase II
6. Chimneys. Engage a qualified structural engineer or chimney specialist experienced in working with historic properties to properly inspect both chimneys and prepare a report detailing any recommended work with an implementation plan.
Execute any necessary work, according to the
implementation plan based on City staff guidance, to ensure the chimneys are structurally sound and weathertight. Work to be completed in a sensitive manner to avoid causing
damage to the historic fabric or visually impacting the historic character (see Photo 1 & Photo 2).
2027
7. Stucco. Gently prepare surface by cleaning away debris and brushing or scraping away any loose or peeling paint. Inspect and repair any damaged stucco, such as hairline cracks, and inappropriate patching (such as on the base of the east elevation) using stucco that matches the existing to create a cohesive finish and repaint in a historically appropriate color as approved by the City (see Photo 5).
2027
Phase III 8.
Exterior Wood Features. Gently scrape existing paint from exterior wood elements (wood eaves, rafters, posts and
beams), remove inappropriately nails and make repairs to any damaged wood by filling minor damaged areas with
epoxy or by splicing larger damaged sections and replacing in kind. Prep and repaint in a historically appropriate color as approved by the City (see Photo 3).
2028
Phase IV
9. Wood Windows. Inspect wood windows and trim. Gently
scrape existing paint, sand, and make repairs to any
deteriorated wood to ensure proper operation and seal, and repaint in a historically appropriate color as approved by the City (see Photo 6 and Photo 7).
2029
10. Main Entrance Door. Remove existing incompatible main entrance door and, if available, restore original door based on documentary evidence or install new door that is
compatible with the historic character of the property in terms of style and materials (see Photo 9).
2029
Phase V 11.
Non-Original Decorative Tile. Repair, replace, or remove non-original, deteriorated glazed ceramic tile on north elevation of chimney. If replaced, replace with equally compatible option (see Photo 8).
2030
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Item Proposed Work/Task Proposed
Completion
12. Damaged Concrete Steps. Repair damaged concrete at base of main entrance steps using concrete that matches the
existing in terms of mix (color/texture) and refinish as appropriate (see Photo 10).
2030
Phase VI
13. Front Retaining Wall. Repair damaged/leaning brick planter retaining wall install proper drainage as needed (see Photo 1).
2031
14. Incompatible Light Fixture. Remove incompatible light fixture and conduits from west elevation (see Photo 11). 2031
15. Metal Conduits. Paint metal conduits to blend better with the exterior (see Photo 12). 2031
Phase
VII
16. Metal/Wrought Iron Elements. Gently scrape existing paint from wrought iron features, including decorative grills and awning brackets, clean of corrosion, and reapply appropriate protective coat (see Photo 7).
2032
17. Metal Awning/ Flashing above Doors. Remove incompatible metal awnings/flashing from above doors on east elevation (see Photo 13).
2032
Phase
VIII
18. Exposed Utility Wires. Remove any obsolete utility equipment from east elevation, including exposed wiring and piping.
Improve appearance of remaining equipment by relocating to less visible area and/or concealing within appropriately designed utility boxes (see Photo 14).
2033
19. Clay Vents (east elevation). Gently remove overpaint from clay to restore historic appearance of unpainted clay (see Photo 15).
2033
20. East Property Fence. Repair termite damaged wood fence or replace with new option that is compatible with the historic character of the property (see Photo 16).
2033
Phase IX 21.
Rear Patio Entrance Door. Retain and repair south (rear) patio entrance door. Gently scrape existing paint, sand, and make repairs to any deteriorated wood and repaint in the same or historically appropriate color (see Photo 12).
2034
Phase X
22. Saltillo Tile. Repair damaged Saltillo tiles of south (rear) and east patios or replace with equally compatible option (see Photo 17).
2035
23. South Yard Wall. Patch and repair damaged stucco, such as hairline cracks, and inappropriate patching using stucco that matches the existing to create a cohesive finish (see Photo 18).
2035
122
Item Proposed Work/Task Proposed
Completion
Contract
Duration
24. Landscaping. Inspect landscaping at least once per year to ensure plants/branches are kept trimmed away from building to prevent moisture/insect damage and debris build-up to structure, exterior materials, and finishes.
Ongoing
25. Painted Wood Features. Prep, patch, repair and repaint exterior wood elements (wood eaves, rafters, posts, beams) as needed in the same or historically appropriate color.
Ongoing
Contract
Duration
26. Windows and Doors. Gently scrape existing paint, remove previously installed weatherproofing, inspect wood, and make any necessary repairs to wood windows and frames. Fill
damaged areas with epoxy or by splicing larger damaged
wood sections and replacing in kind. Replace any cracked or broken glazing in kind. Repaint frames and sills in the same or historically appropriate color to keep wood protected from moisture and sun damage. Ensure any frames of window
screens are wood and painted to match. Inspect for proper operation and seal and make related repairs as needed.
Ongoing
27. Exterior Stucco. Inspect exterior stucco for damage such as visible hairline cracks. Patch as needed using stucco that matches the existing to create a cohesive finish.
Ongoing
28. Residence Roof. Maintain by repairing any leaks or broken tiles as needed.
Ongoing
29. Termite and Pest Control. Treat property for termites and any other insects or pests, such as rats, thereby preventing damage to historic fabric. Professional termite reports should be submitted to the City at least once every 5 years.
Ongoing
30. General Building Upkeep. Property owner should inspect annually for termite, weather, or other damage and make related repairs in kind as needed to primary and accessory buildings. If deterioration necessitates replacement, features should be replaced in kind.
Ongoing
123
Attachment 2
124
125
126
127
Purpose of the Mills Act Program
Economic incentives foster the preservation of residential neighborhoods and the revitalization of downtown commercial districts. The Mills Act is the single most important economic incentive program in California for the restoration and preservation of qualified historic buildings by private property owners.
Enacted in 1972, the Mills Act legislation grants participating local governments (cities and counties) the authority to enter into contracts with owners of qualified historic properties who actively participate in the restoration and maintenance of their historic properties while receiving property tax relief.
Benefits to Local Governments
The Mills Act allows local governments to design preservation programs to accommodate specific community needs and priorities for rehabilitating entire neighborhoods, encouraging seismic safety programs, contributing to affordable housing, promoting heritage tourism, or fostering pride of ownership. Local governments have adopted the Mills Act because they recognize the economic benefits of conserving resources and reinvestment as well as the important role historic preservation can play in revitalizing older areas, creating cultural tourism, building civic pride, and retaining the sense of place and continuity with the community’s past.
A formal agreement, generally known as a Mills Act or Historical Property Contract, is executed between the local government and the property owner for a minimum ten-year term. Contracts are automatically renewed each year and are transferred to new owners when the property is sold. Property owners agree to restore, maintain, and protect the property in accordance with specific historic preservation standards and conditions identified in the contract. Periodic inspections by city or county officials ensure proper maintenance of the property. Local authorities may impose penalties for breach of contract or failure to protect the historic property.
The contract is binding to all owners during the contract period.
Benefits to Owners
Owners of historic buildings may qualify for property tax relief if they pledge to rehabilitate and maintain the historical and architectural character of their properties for at least a ten-year period.
The Mills Act program is especially beneficial for recent buyers of historic properties and for current owners of historic buildings who have made major improvements to their properties.
Mills Act participants may realize substantial property tax savings of between 40% and 60% each year for newly improved or purchased older properties because valuations of Mills Act properties are determined by the Income Approach to Value rather than by the standard Market Approach to Value. The income approach, divided by a capitalization rate, determines the assessed value of the property. In general, the income of an owner-occupied property is based on comparable rents for similar properties in the area, while the income amount on a commercial property is based on actual rent received. Because rental values vary from area to area, actual property savings vary from county to county. In addition, as County Assessors are required to assess all properties annually, Mills Act properties may realize slight increases in property taxes each year.
Attachment 3
128
Qualified Historic Property
A qualified historic property is a property listed on any federal, state, county, or city register, including the National Register of Historic Places, California Register of Historical Resources, California Historical Landmarks, State Points of Historical Interest, and locally designated landmarks. Owner-occupied family residences and income-producing commercial properties may qualify for the Mills Act program, subject to local regulations.
OHP’s Role
OHP provides technical assistance and guidance to local governments and property owners. OHP maintains a current list of communities participating in the Mills Act program and copies of Mills Act ordinances, resolutions, and contracts that have been adopted. OHP does not participate in the contract negotiations and is not a signatory to the contract. 129
HISTORIC PRESERVATION PROPERTY AGREEMENT (HPPA)
Periodic Inspection Report
HPPA Periodic Inspection | 115 E Canada, San Clemente 1 Prepared by GPA Consulting
1. PROPERTY INSPECTION INFORMATION
Address: 115 E Canada
San Clemente, CA 92672
Inspection Date: July 30, 2025 at 10:00am
APN: 057-154-25 Parties Present: Audrey von Ahrens and Phoebe Rayburn, Architectural Historians, GPA Consulting;
David Carrillo, Associate Planner, City of
San Clemente
Contract Year: 2013
2. REHABILITATION/RESTORATION/MAINTENANCE PLAN (WORK PLAN) PROGRESS Work Plan Items and Proposed Completion Date
Excerpted from EXHIBIT “C” of HPPA Status Inspection Notes
1. Add wood fascia board around the garage and
above the courtyard entrance to rehabilitate the
original architectural elements.
2018 ☐ Complete
☐ In progress
☒ Not completed
Owner found a circa 1970 photo
showing wood lintel and surround.
Owner reported contractor believed
restoring this feature would cause
potential water infiltration/would
compromise the structure.
2. The light fixture at the front of the house is
undersized and shall be replaced to be in scale
with the house.
2018 ☒ Complete
☐ In progress
☐ Not completed
See Photo 6.
3. Paint the building white to be historically
accurate. Paint the flashing to match the
building.
2020 ☐ Complete
☐ In progress
☒ Not completed
Owner reported they are waiting for
clarification on how to implement item 1
before commencing this work (see Photo
7 and Photo 9).
3. MINIMUM MAINTENANCE STANDARDS COMPLIANCE
Minimum Maintenance Standards (Exhibit B of Contract, on file with City) All buildings, structures, yards and other improvements shall be maintained in a manner which does not detract from the appearance of the immediate neighborhood. The following conditions are prohibited:
Condition Present?
Yes No
1. Dilapidated, deteriorating, or un-repaired structures, such as: fences, roofs, doors, walls and windows
☐ ☒
2. Publicly visible storage of scrap lumber, junk, trash or debris. ☐ ☒
3. Publicly visible storage of abandoned, discarded or unused objects or equipment, such as automobiles, automobile parts, furniture, stoves, refrigerators, cans, containers or similar items ☐ ☒
4. Stagnant water or excavations, including pools or spas. ☐ ☒
5. Any device, decoration, design, structure or vegetation which is unsightly by reason if its height, condition, or its inappropriate location.
☐ ☒
Attachment 4
130
HISTORIC PRESERVATION PROPERTY AGREEMENT (HPPA)
Periodic Inspection Report
HPPA Periodic Inspection | 115 E Canada, San Clemente 2 Prepared by GPA Consulting
4. INSPECTION NOTES AND OBSERVATIONS
Foundation/Structure
• Foundation redone in 2006.
Roof
• Full re-roofing last completed in 2006.
• Metal flashing is highly visible in some areas of roof perimeter (see Photo 9).
Chimney(s)
• No work completed since initiation of HPPA.
• Chimney cap appears to be missing (see Photo 1).
Exterior
• Owner tested potential exterior paint colors on wall within courtyard (see Photo 7). • Chipped wood on front porch support (see Photo 8).
• Stucco texture finish is inconsistent across elevations and various cracks and damaged areas observed (see Photo 10 and Photo 11).
• Red clay foundation vents and attic tube vents are chipped and/or overpainted (see Photo 12). Cracked tile and stucco at rear entrance steps.
Windows and Doors
• Chipped paint on doors and surrounds in courtyard and rear elevation (see Photo 8).
Systems
• Solar panels on rear portion of roof added prior to initiation of HPPA.
Site/Landscape/Ancillary Buildings (garage or carriage house, landscape, walk/drive, fencing, and similar) • Drainage system with sump pump added to site.
• Front and rear yards re-landscaped. Artificial turf was inappropriately installed in the front yard as part of this work (see Photo 15).
• Scored concrete front walkway and driveway were replaced with colored concrete pavers (see Photo 15). 131
HISTORIC PRESERVATION PROPERTY AGREEMENT (HPPA)
Periodic Inspection Report
HPPA Periodic Inspection | 115 E Canada, San Clemente 3 Prepared by GPA Consulting
5. INSPECTION RESULTS
A. REQUIRED ACTIONS TO BE COMPLETED FOR CONTRACT COMPLIANCE:
To achieve compliance with the obligations of the HPPA, the following are required actions to be completed. Acts to remedy the required work below must be diligently pursued to completion by the Owner or the HPPA is at risk of default:
1. Commence and complete all outstanding work items identified in the HPPA Work Plan (EXHIBIT “C” in the Agreement), specifically:
a. Restore wood lintel and surround at garage door opening, and above the courtyard entrance based on documentary evidence (see Section B. Additional Recommendations, below). b. Re-paint exterior stucco in a historically accurate white color. c. Paint all visible flashing to better blend with the roof perimeter.
2. Commence and complete the following work items to conform with the Secretary of the Interior’s Standards for Rehabilitation (SOIS) and Minimum Maintenance Standards (EXHIBIT “B” in the Agreement):
a. Prior to repainting the exterior as required per the HPPA Work Plan, i. remove the obsolete metal utility fixture on the east end of the north elevation (Photo 14), and ii. gently sand-blast existing stucco, patch any cracks and damaged areas, and re-apply stucco to restore historic appearance of cohesive texture finish (see Photo 10). b. Remove artificial turf installed in front yard and replace with option that is consistent with the City’s Design Guidelines.
c. Repair damaged doors and surrounds. Gently sand wood, repair or replace in kind any severely damaged units, and re-stain (see Photo 8 and Photo 13).
d. Repair all damaged clay foundation and attic vents, and where overpainted, gently remove paint and restore historic appearance of unpainted clay.
B. ADDITIONAL RECOMMENDATIONS:
The following additional recommendations are intended to assist the property owner(s) in maintaining compliance with the obligations of the Agreement moving forward.
1. During the inspection, it was noted that the outline of the missing wood lintel and surround of the garage door opening is discernable in the Stucco, suggesting that the original wood may be extant beneath (see Photo 1 and Photo 5).
Recommend investigative work by completed to gently and carefully sand/remove a portion of the existing in a small, discrete location, to determine whether the original wood is extant and was simply covered over with stucco. If found intact, gently remove remainder of stucco at opening and restore complete the restoration work. Otherwise, consider embedding new wood units into the stucco to match the original lintel and surround; thereby recreating its historic appearance.
2. Engage the services of a chimney specialist or structural engineer with experience in historic preservation to investigate the existing condition of chimney and prepare an implementation plan for any recommended work to ensure chimney is structurally sound and weathertight. Commence and complete any necessary work as recommended.
3. If relandscaped in the future, recommend replacing existing colored concrete pavers of front walkway and driveway with a new option that is more compatible with the historic character of the property, such as scored concrete or clay tile.
4. If existing non-original double pane windows are proposed to be replaced in the future, recommend replacing with new multi-light, single pane wood windows that are more compatible with the historic character of the property, in terms of style and materials.
132
HISTORIC PRESERVATION PROPERTY AGREEMENT (HPPA)
Periodic Inspection Report
HPPA Periodic Inspection | 115 E Canada, San Clemente 4 Prepared by GPA Consulting
6. PHOTOGRAPHS
Photo 1. Primary (south) elevation and front yard landscaping, looking north.
Photo 2. Side (west) elevation, looking northeast.
133
HISTORIC PRESERVATION PROPERTY AGREEMENT (HPPA)
Periodic Inspection Report
HPPA Periodic Inspection | 115 E Canada, San Clemente 5 Prepared by GPA Consulting
Photo 3. Rear (north) elevation, looking south.
Photo 4. Side (east) elevation, looking southwest.
134
HISTORIC PRESERVATION PROPERTY AGREEMENT (HPPA)
Periodic Inspection Report
HPPA Periodic Inspection | 115 E Canada, San Clemente 6 Prepared by GPA Consulting
Photo 5. South elevation, east end, showing missing wood lintel and surround at garage door opening.
Photo 6. South elevation, showing replacement light fixture. 135
HISTORIC PRESERVATION PROPERTY AGREEMENT (HPPA)
Periodic Inspection Report
HPPA Periodic Inspection | 115 E Canada, San Clemente 7 Prepared by GPA Consulting
Photo 7. South elevation courtyard, west-facing wall, showing sample paint color.
Photo 8. South elevation, entrance courtyard, showing damage at wood post (foreground) and base of door (distance, left). 136
HISTORIC PRESERVATION PROPERTY AGREEMENT (HPPA)
Periodic Inspection Report
HPPA Periodic Inspection | 115 E Canada, San Clemente 8 Prepared by GPA Consulting
Photo 9. South elevation, entrance courtyard, detail of roof flashing.
Photo 10. South elevation, main entrance, showing damaged stucco. 137
HISTORIC PRESERVATION PROPERTY AGREEMENT (HPPA)
Periodic Inspection Report
HPPA Periodic Inspection | 115 E Canada, San Clemente 9 Prepared by GPA Consulting
Photo 11. West (at left) and south (at right) elevations, showing inappropriate texture of stucco.
Photo 12. West elevation, showing chipped clay tile foundation vent. 138
HISTORIC PRESERVATION PROPERTY AGREEMENT (HPPA)
Periodic Inspection Report
HPPA Periodic Inspection | 115 E Canada, San Clemente 10 Prepared by GPA Consulting
Photo 3. North elevation, rear entrance door.
Photo 14. North elevation, west end, showing metal projecting from exterior wall. 139
HISTORIC PRESERVATION PROPERTY AGREEMENT (HPPA)
Periodic Inspection Report
HPPA Periodic Inspection | 115 E Canada, San Clemente 11 Prepared by GPA Consulting
Photo 15. Front landscaping, showing artificial turf and concrete pavers. 140
Attachment 5
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN THAT PUBLIC HEARING
WILL BE HELD BY THE CITY COUNCIL OF THE
CITY OF SAN CLEMENTE, CALIFORNIA,
RELATIVE TO THE FOLLOWING:
A request to consider a Historic Property Preservation Agreement (Mills Act Contract) for a qualified historic property:
Public Hearing to consider a Mills Act agreement between the City and the owner(s) of a historic property located at 121 West Escalones. Staff recommends the City Council determine this historic preservation agreement is not a project, as defined by Section 15378 of the California Environmental Quality Act and is exempt from environmental review.
Materials for this project are on file at the Planning Division, at 910 Calle Negocio, and are available for public inspection and comment by contacting Tamara Tatich with the Planning Division at (949) 498-6083 or [email protected]. If you challenge this item in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City of San Clemente at, or prior to, the public hearing.
To allow staff adequate time to confirm software compatibility, individuals wishing to utilize electronic visual aids to supplement their oral presentations at the meeting, must submit the electronic files to the City Clerk by no later than 12:00 p.m. on the day of the meeting. Only compatible electronic formats will be permitted to be used on City audio/visual computer equipment. Staff makes no guarantee that such material will be compatible, but will use its best efforts to accommodate the request.
NOTICE IS FURTHER GIVEN that said public hearing will be conducted by the City Council on Tuesday, November 4, 2025, at 5:30 p.m. in the San Clemente City Council Chambers, located at 910 Calle Negocio, 2nd Floor, San Clemente, California. All interested persons are invited to attend said hearing or provide written communication to the City Council to express their opinion for or against the project.
For further details, please call or visit the Community Development Department at the above phone number and address where information is on file and available for public inspection.
Laura Campagnolo
City Clerk and Ex-Officio Clerk of the Council
141
910 Calle Negocio
2nd Floor
San Clemente, California
www.san-clemente.org
AGENDA REPORT
CITY OF SAN CLEMENTE
CITY COUNCIL MEETING
CITY OF SAN CLEMENTE 1
Meeting Date: November 18, 2025 Agenda Item: 8C.
Submitted By: Community Development
Prepared By: Zach Rehm, Principal Planner
Araceli Mejia, Assistant Planner
Subject:
..titl e
PUBLIC HEARING: CONSIDERATION TO INTRODUCE, AND CONDUCT A FIRST READING OF, ORDINANCE NO. 1798 TO APPROVE PUBLIC HEARING PROJECT (PHP) 25-395, ZONING AMENDMENT (ZA) 25-396, EMERGENCY SHELTER OVERLAY DISTRICT
UPDATES AND FINDING THE ACTION EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT ..body
Fiscal Impact:
None.
Summary:
The City Council will conduct a public hearing and consider introduction of an Ordinance by first reading of Zoning Amendment 25-396 to update the development standards, operational, and management standards within the Emergency Shelter Overlay (ESO) consistent with Housing Element commitment and State law; and finding that the Zoning Amendment is exempt from California Environmental Quality Act (CEQA) per the Community Plan exemption pursuant to Public Resources Section 21083.3 and CEQA Guidelines Section 15183.
Background:
In 2017, the City amended the ESO within the Rancho San Clemente Business Park area to comply with State law, and in 2018, the City launched the SC Rides program to provide required transportation alternatives serving the ESO. Through the 2021 Housing Element certified by the State, the City committed to ongoing monitoring and updates of the ESO and rideshare program.
The City commitment, as it relates to the ESO, is contained in the currently-certified 6 th Cycle
Housing Element’s Housing Action Plan as Program 15: Monitoring of Emergency Shelter Overlay, and requires the City to take specific actions related to the ESO in 2023, 2024, and 2025. These actions, and the City’s compliance with the established timeframes, is described in detail below.
In 2023, the City reviewed the ESO development standards to update the bed-limit per shelter cap on number of shelters, and maximum separation requirements to accommodate the potential demand for services in the City identified in the most recent point-in-time count (which estimates the unhoused population within the City), and updated parking requirements within the ESO to comply with State law. In 2024, the City consulted with Interwest Consulting (Consultant) to draft the required update to the ESO ordinance and evaluate additional sites for potential expansion.
Consistent with the City’s Housing Element, an analysis of potential sites is required, but new sites need not be added if the City determines that the overlay maintains 5 to 10 acres that is 142
Meeting Date: November 18, 2025 Agenda Item: 8C.
CITY OF SAN CLEMENTE 2
suitable for development with access to transportation and services. The analysis included 17 sites (Attachment 2), and found four of them suitable for inclusion/expansion of the overlay based on proximity to transit, proximity to jobs, proximity for unhoused people, and lack of environmental site constraints.
The final phase of implementing Program 15 of the Housing Action Plan is to occur by the end of the current calendar year. As a result of the analysis described above and conducted in 2023 and 2024, the City committed to amending the ESO in 2025 to ensure the ESO consists of up to five to ten acres that is suitable for development with access to transportation and services. The action contemplated by this Zoning Amendment accomplishes this final committed task.
Since the adoption of the current ESO, the criteria required by State law have been updated to require that proposed sites are zoned for residential uses or are otherwise suitable for emergency shelters based on specified criteria (AB 2339). The City is not subject to these new requirements yet based on the date of the Housing Element’s certification, and based on the sites’ analysis, the City’s current ESO is adequate with respect to zoning and proximity to transit, jobs, and services, consistent with Housing Element commitments and the law which will be in effect for the next Housing Element adoption. Thus, staff are not recommending an expansion of the overlay at this time because it already includes 5-10 acres suitable for development; and the identified sites may be held in reserve for a future update to the City’s Housing Element or State law. Furthermore, the Consultant contracted to implement Program 15 of the Housing Action Plan did not recommend updating the cap on the number of shelters or separation requirements between shelters. The Consultant recommended, and staff supports, an increase in the bed-limit per emergency shelter from the existing maximum of 35 to a new maximum of 45, which will be enough to satisfy the potential demand for emergency shelter services in the City without expanding the areas in which emergency shelters may be located. This is due to the increase in individuals requiring shelter in the City’s point-in-time count.
17.16.040 Zoning Amendments Required Findings:
1. General Findings. Prior to approval of a zoning amendment or amendment to the zoning maps, the following findings shall be made:
a. The proposed amendment is consistent with the General Plan. b. The proposed amendment will not adversely affect the public health, safety and welfare.
Amendments to the San Clemente Municipal Code (SCMC) Title 17 – Zoning (Zoning Ordinance) are necessary to maintain its effectiveness as a regulatory and informational document and to ensure its consistency with the City’s General Plan, adopted specific plans, and state law. Zoning amendments are also necessary to provide for the implementation of the City’s General Plan.
Pursuant to SCMC § 17.56.100 - Emergency Shelter Overlay District, the purpose and intent of the ESO “is to identify those areas where emergency shelters are allowed by right, subject to development and operation standards.” This Section also highlights specific goals for the areas within the emergency shelter designation including, but not limited to, identifying locations where emergency shelters are allowed by right and establishing objective development and operational 143
Meeting Date: November 18, 2025 Agenda Item: 8C.
CITY OF SAN CLEMENTE 3
standards. Additionally, the location of the facilities should be sited close to public transportation, public and community services, near job centers, and away from residential neighborhoods, schools, and parks. This Zoning Amendment (Exhibit A of Attachment 1) to the ESO would maintain compliance by increasing the maximum allowable capacity of the shelters in order to meet the demand for services identified in the City’s most recent point-in-time count, conducted in 2024, which identified 65 unsheltered individuals in San Clemente.
The proposed Zoning Amendment addresses the requirements of State law, which are enumerated in Program 15 of the Housing Action Plan, by increasing the bed-limit, modifying parking standards, and other development standards and operational standards. Furthermore, the proposed amendment will not adversely affect the public health, safety, and welfare given that the amendment meets the community needs and conditions per the Consultant’s study. The project reflects the Land Use Plan and Specific Plans regarding land use and is consistent with the City’s 6th Cycle Housing Element which the City Council determined will not adversely impact the public health, safety, and welfare at the point of adoption.
On October 8, 2025, the Planning Commission reviewed this item and recommended that the City Council adopt the proposed Zoning Amendment. The meeting minutes and the Planning Commission’s adopted resolution recommending approval of the Zoning Amendment, from the October 8, 2025 Planning Commission meeting, are provided as Attachments 3 and 4, respectively.
Council Options:
Conduct the public hearing, and introduce and conduct the first reading of Ordinance No. 1798 (Attachment 1) approving the Zoning Amendment (Exhibit A of Attachment 1) and finding the ordinance exempt from the California Environmental Quality Act. Continue the Item with direction to staff to revise the Zoning Amendment or provide additional information.
Decline to introduce the ordinance, which would result in the City being non-compliant with the Housing Element’s Housing Action Plan, and may subject the City to potential de-certification of the City’s Housing Element.
Environmental Review/Analysis:
The SCMC amendments within the ordinance are exempt from California Environmental Quality Act (CEQA) and/or not subject to further environmental review pursuant to Public Resources Code Section 21083.3 and CEQA Guidelines Section 15183. Since the project would adopt development standards consistent with the land uses and development intensities already analyzed in the certified EIR for the Housing Element Update, and because the project would not introduce any new or peculiar potentially significant environmental impacts, the SCMC amendments are eligible for the Community Plan exemption from CEQA pursuant to Public Resources Code Section 21083.3 and CEQA Guidelines Section 15183. 144
Meeting Date: November 18, 2025 Agenda Item: 8C.
CITY OF SAN CLEMENTE 4
Recommended Actions:
Staff Recommendation ..recommendation
1. Open the public hearing, receive and consider public comment, and close the public hearing; and
2. Determine that the proposed zoning code amendment is categorically exempt from the requirements of the CEQA pursuant to Public Resources Code Section 21083.3 and Guidelines Section 15183; and
3. Introduce, and conduct a first reading of, Ordinance No. 1798 entitled AN ORDINANCE OF
THE CITY COUNCIL OF THE CITY OF SAN CLEMENTE, CALIFORNIA, APPROVING PUBLIC HEARING PROJECT 25-395, ZONING AMENDMENT 25-396 TO TITLE 17 (ZONING) OF THE SAN CLEMENTE MUNICIPAL CODE, AMENDING SECTION 17.56.100,
EMERGENCY SHELTER OVERLAY DISTRICT, TO UPDATE THE DEVELOPMENT
STANDARDS AND OPERATIONAL AND MANAGEMENT STANDARDS WITHIN THE EMERGENCY SHELTER OVERLAY CONSISTENT WITH PROGRAM 15 OF THE SAN CLEMENTE CERTIFIED HOUSING ELEMENT AND STATE LAW; AND FINDING THIS
ACTION IS EXEMPT FROM CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) PURSUANT TO PUBLIC RESOURCES CODE SECTION 21083.3 AND CEQA GUIDELINES SECTION 15183.
4. ..end
Attachments:
1. Ordinance No. 1798
Exhibit A - Redline of Amendment to SCMC 17.56.100 Emergency Shelter Overlay
2. Sites Analysis
3. Meeting Minutes of the Regular Planning Commission Meeting of October 8, 2025
4. Resolution No. PC 25-016
5. Public Hearing Notice
Notification:
Public notice for the zoning amendment was published in the San Clemente Times on November 6, 2025, distributed and posted per City and State requirements. 145
Attachment 1
ORDINANCE NO. 1798
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SAN CLEMENTE, CALIFORNIA, APPROVING PUBLIC
HEARING PROJECT 25-395, ZONING AMENDMENT 25-
396 TO TITLE 17 (ZONING) OF THE SAN CLEMENTE
MUNICIPAL CODE, AMENDING SECTION 17.56.100,
EMERGENCY SHELTER OVERLAY DISTRICT, TO
UPDATE THE DEVELOPMENT STANDARDS AND
OPERATIONAL AND MANAGEMENT STANDARDS
WITHIN THE EMERGENCY SHELTER OVERLAY
CONSISTENT WITH PROGRAM 15 OF THE SAN
CLEMENTE CERTIFIED HOUSING ELEMENT AND STATE
LAW; AND FINDING THIS ACTION IS EXEMPT FROM
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)
PURSUANT TO PUBLIC RESOURCES CODE SECTION
21083.3 AND CEQA GUIDELINES SECTION 15183
WHEREAS, in 2007, the State of California passed Senate Bill 2 ("SB2"), the "Emergency Shelter Act," to clarify and strengthen housing element law to ensure zoning encourages and facilitates emergency shelters and limits the denial of emergency shelters and transitional and supportive housing under the State's housing element law, Government Code Sections 65580 - 65589.8; and
WHEREAS, SB2 became effective January 1, 2008 and requires all California cities and counties to address their communities' homeless needs by designating a zone or zones where emergency shelters are allowed by right; and WHEREAS, on November 1, 2016, the City Council of the City of San Clemente (“City”) adopted Ordinance No. 1643 which established the Emergency Shelter Overlay and applicable development and operational standards; and
WHEREAS, on December 20, 2022, the City adopted Ordinance No. 1741 which amended Chapter 17.56 Overlay Districts and Standards of the San Clemente Municipal Code to comply with Assembly Bill 139 regarding parking requirements for emergency shelters; and
WHEREAS, on September 20, 2022, the City adopted the 6
th Cycle of the Housing
Element, which included an Action Plan that set timelines for different programs to be implemented or maintained including the maintenance of the Emergency Shelter Overlay; and
WHEREAS, the Department of Housing and Community Development (HCD) certified the City’s Housing Element on October 12, 2022; and WHEREAS, on September 20, 2022, as part of its action on the Housing Element, the City Council certified Program Environmental Impact Report SCH No. 2021020256 146
Ordinance No. 1798 Page 2
(“Housing Element and Safety Element EIR”) pursuant to the California Environmental Quality Act (“CEQA”), approved mitigation measures, and adopted a Statement of Overriding Considerations; and
WHEREAS, this ordinance (“Ordinance”) amends the San Clemente Municipal Code Chapter 17.56, amending Section 17.56.100 Emergency Shelter Overlay District, that implements the requirements of State housing laws and the City of San Clemente’s certified Housing Element to effectuate the City Council’s directives on the same; and WHEREAS, the City, as Lead Agency, has conducted an environmental review of the proposed Ordinance for compliance with the CEQA and State CEQA Guidelines. The San Clemente Municipal Code amendments within the ordinance are exempt from CEQA and/or not subject to further environmental review pursuant to Public Resources Code (PRC) Section 21083.3 and CEQA Guidelines Section 15183. Since the project would adopt development standards consistent with the land uses and development intensities analyzed in the certified EIR for the Housing Element Update, and because the project would not introduce any new or peculiar potentially significant environmental impacts, the San Clemente Municipal Code amendments are eligible for the Community Plan exemption from CEQA pursuant to Public Resources Code Section 21093.3 and Guidelines Section 15183; and
WHEREAS, on October 8, 2025, the Planning Commission held a duly noticed public hearing on the proposed Zoning amendment, considered testimony, and other evidence, and recommended the City Council approve and adopt this Ordinance; and WHEREAS, on November 18, 2025, the City Council held a duly noticed public hearing on this Ordinance, considered the agenda report, including the policy considerations discussed therein, and the written and oral testimony received. The City Council has also reviewed and considered the Planning Commission’s recommendation, and the agenda report and other evidence that was considered by the Commission, in connection with the proposed amendments; and
WHEREAS, all legal prerequisites to the adoption of this Ordinance have occurred.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN CLEMENTE DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1: Incorporation of Recitals.
The City Council hereby finds that all of the facts in the Recitals are true and correct and are incorporated and adopted as findings of the City Council as fully set forth in this resolution.
147
Ordinance No. 1798 Page 3
SECTION 2: CEQA Findings.
Based upon its review of the entire record, including but not limited to, the Staff Report, any public comments, all related information presented to the City, and the facts outlined below, the City Council finds the San Clemente Municipal Code amendment within the Ordinance is exempt from CEQA and/or not subject to further environmental review pursuant to PRC Section 21083.3 and Guidelines Section 15183. Since the project would adopt modifications to the Emergency Shelter Overlay District consistent with the land uses and development intensities analyzed in the certified EIR for the Housing Element Update, the San Clemente Municipal Code amendments are eligible for Community Plan exemption from CEQA pursuant to PRC Section 21083.3 and CEQA Guidelines Section 15183.
SECTION 3: Zoning Amendment Findings
The City Council finds the following for the attached Ordinance approving Zoning Amendment ZA25-396 amending the San Clemente Municipal Code:
A. The proposed zoning amendment is consistent with the General Plan, in that:
1. The City’s 6
th Cycle Housing Element is a component of the General Plan, including the Housing Action Plan goal to provide adequate opportunities for new housing for people of all economic levels and those with special needs.
2. Objectives of Program 15 of the Housing Action Plan of the City’s 6 th Cycle
Housing Element include updating the Emergency Shelter Overlay bed-limit, caps, parking standards, and maximum separation requirements to reflect and accommodate the most recent point-in-time count, to ensure development standards comply with State law and are not impediments to siting shelters.
B. The proposed amendment will not adversely affect the public health, safety, and welfare, in that:
1. The amendment meets community needs and conditions without expanding the areas in which emergency shelters may be located.
2. The project reflects the City’s review, direction, and independent judgment regarding land use.
3. The project is consistent with the City’s 6
th Cycle Housing Element, whereby
the City Council determined that implementation of the Programs of the City’s Housing Element will not adversely impact the public health, safety and welfare.
SECTION 4: San Clemente Municipal Code Amendments.
Title 17 (Zoning) of the San Clemente Municipal Code is hereby amended as set forth in Exhibit A, attached hereto and incorporated herein fully by reference. 148
Ordinance No. 1798 Page 4
SECTION 5: Severability.
If any section, sentence, clause or phrase of this Ordinance or the application thereof to any entity, person or circumstance is held for any reason to be invalid or unconstitutional, such invalidity or unconstitutionality shall not affect other provisions or applications of this Ordinance that can be given effect without the invalid provision or application, and to this end the provisions of this Ordinance are severable. The City Council hereby declares that it would have adopted this Ordinance and each section, sentence, clause or phrase thereof, irrespective of the fact that any one or more section, subsections, sentences, clauses or phrases be declared invalid or unconstitutional.
SECTION 6: Effective Date.
This Ordinance takes effect within 30 days after adoption of this Ordinance by the City Council.
SECTION 7: Reference to Existing Provisions.
All existing provisions of the Municipal Code that are repeated herein are repeated only to aid decision-makers and the public in understanding the effect of the proposed changes. Restatement of existing provisions does not constitute a new enactment.
SECTION 8: Custodian of Records.
The documents and materials associated with this ordinance that constitute the record of proceedings on which the City Council’s findings and determinations are based are located at San Clemente City Hall, 910 Calle Negocio, San Clemente, CA 92673.
SECTION 9: Certification and Publication.
The City Clerk shall certify to the passage of this ordinance and cause the same to be published as required by law.
APPROVED, ADOPTED AND SIGNED this day of ,
.
ATTEST:
City Clerk of the City of Steve Knoblock, Mayor of the
San Clemente, California City of San Clemente, California 149
Ordinance No. 1798 Page 5
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) §
CITY OF SAN CLEMENTE )
I, LAURA CAMPAGNOLO, City Clerk of the City of San Clemente, California, hereby certify that Ordinance No. 1798 having been regularly introduced at the meeting of _______________________, was again introduced, the reading in full thereof unanimously waived, and duly passed and adopted at a regular meeting of the City Council held on the _____day of _____________, _______, and said ordinance was adopted by the following
AYES:
NOES:
ABSENT:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Clemente, California, this day of , .
CITY CLERK of the City of
San Clemente, California
Approved as to form:
Elizabeth A. Mitchell, City Attorney
150
Created: 2023-02-20 10:19:52 [EST]
(Supp. No. 58, Update 1)
17.56.100. Emergency Shelter Overlay District.
A. Purpose and Intent. The purpose of the Emergency Shelter "SB2" Overlay Zone designation is to identify those areas where emergency shelters are allowed by right, subject to development and operation standards and in accordance with Section 65583 of the California Government Code. The SB2 Emergency Shelter Overlay Zone meets the requirements of state law (SB2) by designating specific areas where emergency shelters, also referred to as "homeless shelters", may be established and operated by right, to meet the shelter needs based on homeless population estimates established by current reliable information and in the City's General Plan Housing Element. The goals for areas with this designation are as follows:
1. To facilitate efforts to address the needs of homeless persons in the City of San Clemente by identifying locations where emergency shelters are allowed by right and by establishing objective development and operation standards for emergency shelters.
2. To protect public safety, maintain land use compatibility, and preserve property values, neighborhood quality and economic vitality while addressing an identified humanitarian need.
3. To locate such facilities, to the maximum extent possible, close to public transportation, public and community services, near job centers, away from residential neighborhoods, schools and parks.
4. To allow small-scale, family-oriented emergency shelters as an accessory use to churches and other religious institutions.
5. To ensure that emergency shelters are designed in accordance with applicable standards, as allowed under state law, and that they comply with City standards and guidelines applying to all other uses in the zone.
6. To ensure that emergency shelters are operated in a responsible and community-sensitive manner that prevents and avoids impacts to adjacent neighborhoods and enables residents, businesses and property owners to support, monitor, communicate with shelter operators, and seek City action to protect public health, safety and welfare.
7. To achieve a housing element which complies with state law and that fully addresses all housing needs in the community while balancing other important community needs and goals, to protect public safety, neighborhood peace and aesthetics, and economic vitality.
B. Application of SB 2 Emergency Shelter Overlay District Requirements.
The requirements of this section are for emergency shelters within the Emergency Shelter SB 2 Overlay Zone.
Emergency shelters that comply with these standards may be established without use permit or any other discretionary review.
C. SB 2 Emergency Shelter Overlay District Established.
The City hereby establishes an "SB 2Emergency Shelter Overlay Zone" or District. In this District, emergency shelters which meet the following objective standards shall be allowed by right and are exempt from the provisions of the California Environmental Quality Act. The Emergency Shelter SB 2 Overlay shall consist of the Rancho San Clemente Business Park Sub-Area. This sub-area is shown in Figure A below.
Redline of Amendment to SCMC 17.56.100 Emergency Shelter Overlay District
EXHIBIT A
151
Created: 2023-02-20 10:19:52 [EST]
(Supp. No. 58, Update 1)
D. Emergency Shelter Development Standards.
Emergency shelters shall comply with the following objective standards:
1. Separation. An emergency shelter shall not be established or operated at any location less than three hundred (300) feet from another emergency shelter providing shelter and other services to homeless persons, provided, however, that this standard shall not apply where homeless shelters proposed to be located within three hundred (300) feet of each other are operated by the same social service provider, as defined in Subdivision F.3 of this section.
2. Number of Emergency Shelters. The number and capacity of emergency shelters allowed without a conditional use permit approval shall be limited to that required to meet the shelter needs of the number of estimated homeless persons in the City, as established by current reliable information and approved by the City Council. This number shall be updated every two (2) years, after the "point-in-time counts" are published for the County.
3. Maximum Number of Beds. The maximum number of beds per emergency shelter facility shall not exceed thirty-five (35). The maximum number of beds permitted per emergency shelter facility shall be the lesser of the following: 1) the most recent point-in-time count of unsheltered individuals within San Clemente at the time of application submittal; or 2) forty-five (45) beds per facility. Beds shall be made available to individuals meeting the City-defined criteria for local individuals; the emergency shelter facility shall not be a regional facility.
4. On-site Waiting and Intake Areas. On-site waiting and client intake areas shall be provided in the emergency shelter building. Outdoor waiting areas, if provided, shall be visually screened from the public right-of-way and from adjacent land uses.
5. Parking. Subject to Government Code Section 65583(a)(4)(BA)(ii), sufficient parking shall be provided to accommodate all staff working in the emergency shelter, provided that the standards do not require more parking for emergency shelters than other residential or commercial uses within the same zoneonsite parking shall be supplied at a ratio of not less than one (1) space for every employee in the largest shift. C
Redline of Amendment to SCMC 17.56.100 Emergency Shelter Overlay District EXHIBIT A 152
Created: 2023-02-20 10:19:52 [EST]
(Supp. No. 58, Update 1)
6. Site Lighting. Site lighting shall be provided for safety and security, consistent with City standards and Design Guidelines.
7. Personal Storage. A private storage area, such as a locker may be provided with each on-site bed.
Regulations regarding personal storage use shall be set by City-approved policy, posted on-site, and provided upon intake to all clients.
8. Shower and Toilet Facilities. Toilets, sinks, and showers shall be provided on-site. The emergency shelter manager shall be responsible for ensuring that all restroom and shower facilities comply with the City’s Building Code requirements.
9. Separate Housing for Families with Children. Families with children shall be housed separately from other clients and be provided separate restrooms and shower facilities.
10. Food Service Areas. The emergency shelter manager shall be responsible for ensuring that any food service or on-site meal preparation areas comply with all applicable requirements of the County Health Department.
11. Outdoor Storage. Emergency shelters shall screen all outdoor storage areas from all public rights-ofway and on-site and adjacent parking lots. The emergency shelter manager shall ensure that all outside storage areas be maintained in a neat, clean, and orderly manner at all times.
12. Exterior Lighting. Lighting shall be provided in all parking and exterior waiting areas and along the periphery of the building without lighting adjoining properties. 713. Architectural Review. Emergency Shelters shall comply with the City's Design Guidelines, Specific Plans, and the Zoning Ordinance regarding architectural and development standards to ensure shelters are compatible with their surroundings, provide adequate privacy between uses, and minimize potential impacts of the proposed shelter on adjacent uses.
The process to review emergency shelter compliance with these requirements shall be a ministerial review that shall be considered at the time of building permit review or business license review, which ever comes first. Emergency shelters shall be exempt from all discretionary review processes including Site Plan Permit (Zoning Ordinance Section 17.16.070) and Architectural Permit (Zoning Ordinance Section 17.16.100) in accordance compliance with state law.
E. Emergency Shelters Management and Operational Standards.
Emergency shelters shall be managed and operated in conformance with the following objective standards:
1. Shelter Operator. The emergency shelter shall be operated by a social service provider, as defined in Section 17.56.105.C.1
2. On-Site Management. The emergency shelter shall provide at least one (1) qualified on-site manager at all times, plus one (1) attendant for each twenty (20) occupants.
3. Maximum Stay. Occupancy for any individual or family shall not exceed six (6) months in a three hundred sixty-five (365) day period. No individual shall be denied emergency shelter because of an inability to pay.
4. Security Measures. Each emergency shelter operator shall submit to the Community Development Director a plan for security during hours that the emergency shelter is in operation, taking into account the location of the emergency shelter. Such security plan may include fencing, appropriate surveillance measures, and/or on-site security personnel. Said Plan shall include a Management Plan. Each 1Editor's note(s)—Section 17.56.105 has been repealed by Ord. No. 1630, § 2, adopted Sept. 6, 2016.
Redline of Amendment to SCMC 17.56.100 Emergency Shelter Overlay District EXHIBIT A 153
Created: 2023-02-20 10:19:52 [EST]
(Supp. No. 58, Update 1)
emergency shelter operator shall submit to the Community Development Director a Management Plan which contains the following information:
a. Client intake and screening processes;
b. A description of services to be provided at the emergency shelter; c. Length of stay allowed for clients;
d. Hours of operation;
e. A set of facility rules and procedures for maintaining a safe environment within and outside the emergency shelter.
f. The posting of signage regarding rules of the emergency shelter. g. Staff training programs.
h. Referral service and distribution of resources available to clients for obtaining permanent shelter, mental and physical health care and other supportive services. i. ie. Emergency plan, including, but not limited to emergency contact numbers, evacuation plans and on-site safety measures
j. Submission of the Emergency Plan and the Management Plan to the Community Development Director shall be solely for informational purposes; said plans shall not be subject to discretionary review and/or approval.
F. Definitions.
1. "Emergency Shelter" (also referred to as "homeless shelter") means housing with minimal supportive services for homeless persons, and that is limited to occupancy of six (6) months in a three hundred sixty-five (365) day period by a homeless person.
2. "Church or Religious Institution" means a building which is used as an established place of worship, has a regular congregation and regularly offers religious services, represents a recognized creed and form of worship, and is affiliated with an organization of ordained clergy.
3. "Social Service Provider" means an agency or organization licensed or supervised by any federal, state or local health/welfare agency that participates in the federal Homeless Management Information System (HMIS) and has demonstrated experience with the homeless population by assisting individuals and families achieve economic self-sufficiency and self-determination through a comprehensive array of programs and actions.
Redline of Amendment to SCMC 17.56.100 Emergency Shelter Overlay District EXHIBIT A 154
San Ma
State Beach
San Clemente
State Beach
San Onofre
B e a c h
Capistrano
San Onofre
San Diego Fwy
Avenida Vista Hermosa
Avenida Pico
Avenida La Pata
N. El Camino Real
F 0 0.25 0.5 0.75 1
Miles
San Clemente
City Boundary
Community Services
Half-Mile Buffer
Public Transit
Half-Mile Buffer
Job Centers
Half-Mile Buffer
Intersection of
Above Buffers
Sites Analysis Attachment 2
155
MINUTES OF THE REGULAR MEETING
OF THE CITY OF SAN CLEMENTE
PLANNING COMMISSION
October 8, 2025@ 6:00 p.m.
San Clemente City Hall �ouncil Chamber
910 Calle Negocio, San Clemente, CA 92673
Teleconference via www.san-clemente.org
1. CALL TO ORDER
Chair Cosgrove called the Regular Meeting of the Planning Commission of the City of San Clemente to order at 6:11 p.m. The meeting was offered in person at San Clemente City Hall Council Chambers, 910 Calle Negocio, San Clemente, California, 92673, and also via live stream from the City's YouTube Channel
2. PLEDGE OF ALLEGIANCE
Chair Pro Tern McKhann led the Pledge of Allegiance.
3. ROLL CALL
Commissioners Present: Chair Cameron Cosgrove; Chair Pro Tern Scott McKhann; Karen Prescott-Loeffler; Gary Mccaughan; Brett Freeman
Commissioners Absent: Vice Chair M. Steven Camp; Patrick Griffin Staff Present: Zach Rehm, Principal Planner
Jessica Gatny, Assistant Planner
Brendan Hanley, Planning Technician
Gena Burns, Deputy City Attorney
Tamara Tatich, Recording Secretary
These minutes reflect ·the order in which items appeared on the meeting agenda and do not necessarily reflect the order in which items were actually considered.
4. SPECIAL ORDER OF BUSINESS/SPECIAL PRESENTATION
None.
5. MINUTES
A. Receive and file Minutes from the Planning Commission Regular Meeting of September 17, 2025.
IT WAS MOVED BY COMMISSIONER PRESCOTT-LOEFFLER, SECONDED BY CHAIR PRO TEM MCKHANN, AND CARRIED 5-1-2, COMMISSIONER MCCAUGHAN
ABSTAINED, VICE CHAIR CAMP AND COMMISSIONER GRIFFIN ABSENT, TO Attachment 3
156
157
158
159
160
161
162
Attachment 4
163
164
165
166
167
168
169
170
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF SAN CLEMENTE )
I, LAURA CAMPAGNOLO, City Clerk of the City of San Clemente, California, hereby certify that Ordinance No. XXXX having been regularly introduced at the meeting of _______________________, was again introduced, the reading in full thereof unanimously waived, and duly passed and adopted at a regular meeting of the City Council held on the _____day of _____________, _______, and said ordinance was adopted by the following vote:
AYES:
NOES:
ABSENT:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Clemente, California, this _____ day of ______________________, ________.
__________________________
CITY CLERK of the City of
San Clemente, California
APPROVED AS TO FORM:
___________________________
Elizabeth A. Mitchell, City Attorney
Exhibit A Page 5
171
Attachment 5
NOTICE IS HEREBY GIVEN THAT A
PUBLIC HEARING WILL BE HELD BY THE
CITY COUNCIL OF THE
CITY OF SAN CLEMENTE, CALIFORNIA
RELATIVE TO THE FOLLOWING:
Public Hearing Project (PHP)25-395, ZA25-396 Emergency Shelter Overlay District
Public Hearing for the City Council to consider Zoning Amendment 25-396 to update the development standards, operational standards, and management standards within the Emergency Shelter Overlay consistent with Housing Element commitment and State law.
The City Council will also consider whether the project is Categorically Exempt from the requirements of the California Environmental Quality Act (CEQA) per the Community Plan exemption pursuant to Public Resources Code Section 21083.3 and CEQA Guidelines Section 15183.
This application is on file at the City of San Clemente Community Development Department, 910 Calle Negocio, and is available for public inspection and comment by contacting (949) 361-6183. If you challenge this project in court you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City of San Clemente at, or prior to, the public hearing.
To allow staff adequate time to confirm software compatibility, individuals wishing to utilize electronic visual aids to supplement their oral presentations at the meeting, must submit the electronic files to the City Clerk by no later than 12:00 p.m. on the day of the meeting. Only compatible electronic formats will be permitted to be used on City audio/visual computer equipment. Staff makes no guarantee that such material will be compatible, but will use its best efforts to accommodate the request.
NOTICE IS FURTHER GIVEN that said public hearing will be conducted by the City Council on Tuesday, November 18, 2025 at 5:30 p.m. at the San Clemente City Council Chambers, located at 910 Calle Negocio, 2nd Floor, San Clemente, California.
All interested persons are invited to attend said hearing or provide written communication to the City Council to express their opinion for or against the project.
Further information may be obtained by contacting the Planning Division at (949) 361- 6183.
Laura Campagnolo
City Clerk and Ex-Officio Clerk of the Council
172
910 Calle Negocio
2nd Floor
San Clemente, California
www.san-clemente.org
AGENDA REPORT
CITY OF SAN CLEMENTE
CITY COUNCIL MEETING
CITY OF SAN CLEMENTE 1
Meeting Date: November 18, 2025 Agenda Item: 9A.
Submitted By: Public Works
Prepared By: David Rebensdorf, Public Works Director/City Engineer Subject:
..titl e
CONSIDERATION OF A RESOLUTION TO APPROVE THE NOVEMBER 2025 WATER RATE
STUDY FINAL REPORT, APPROVE THE PUBLIC HEARING NOTICE, SET A DEADLINE OF JANUARY 15, 2026 FOR SUBMISSION OF OBJECTIONS, SCHEDULE A PUBLIC HEARING FOR FEBRUARY 3, 2026 TO CONSIDER OBJECTIONS (EXHAUSTION OF ADMINISTRATIVE REMEDIES) AND SCHEDULE A PUBLIC HEARING FOR FEBRUARY 17, 2026 TO
CONSIDER ADOPTION OF PROPOSED UPDATES TO WATER RATES AND CHARGES UNDER PROPOSITION 218 AND CONDUCT A PROTEST HEARING ..body Fiscal Impact:
Other than the cost of noticing, there is no fiscal impact for the actions recommended to be taken in this report. The proposed updates to water rates, to be considered by City Council at a future public hearing on February 17, 2026, are based on the November 2025 Water Rate Study Final Report and cost of service model prepared by Water Resources Economics, LLC (WRE) to ensure there is adequate revenues to meet current and future expenditures consisting of operations, purchased water, capital costs and funding reserves. The impact on each customer will vary based on the adopted water rates and usage. As proposed, a typical residential customer’s monthly water bill (one inch meter using 10 units of water) would increase by $7.69 (9.8%) on March 1, 2026, and be reflected on the April bill and would increase 3.5% January 1, 2027 each year through January 1, 2030.
Summary:
The City Council hired WRE on May 6, 2025 to conduct a Cost-of-Service Study to evaluate water rates. On September 16, 2025, the City Council considered results and findings from the draft Cost-of-Service Study and provided direction to finalize a Water Rate Study to include:
uniform rates for all customer classes, increase fixed revenue recovery to stabilize revenue more aligned with the City’s fixed costs, continue to utilize a pass-through for water supply, include Municipal Water District of Orange County (MWDOC) fixed costs in fixed meter charges, institute revised Demand Management Rates and develop a five year rate increase. In addition, staff was directed to finalize a draft Proposition 218 Notice of Public Hearing.
On October 7, 2025, the City Council adopted water rate setting procedures under Proposition 218 and Government Code sections 53750 through 53759.2 and 54354.5 to establish a process for property owner objections to proposed water fees.
WRE has completed the final draft November 2025 Water Rate Study for the City Council to receive and consider (Attachment 3). The study addresses the direction provided by the City 173
Meeting Date: November 18, 2025 Agenda Item: 9A.
CITY OF SAN CLEMENTE 2
Council on September 16, 2025 with more detail under the background section of this report and within the study.
Staff is also seeking approval of and direction to mail the Proposition 218 Notices (Attachment 2) of the proposed rate increases to all billing customers, as well as affected property owners within the City of San Clemente’s service area who are not utility billing customers (e.g., landlords). The notice explains the rate proposal, the basis for the rates, why rate adjustments are necessary, and the method for protesting or objecting to the rate increases, as well as providing the January 15, 2026 deadline of 5:00 p.m. for submission of timely written objections to the fees and charges, and the day, time, and place of the Public Hearings on February 3, 2026 for the exhaustion of administrative remedies (objection process) and February 17, 2026 for the protest hearing and adoption of the water rates and implementing them as outlined in the City of San Clemente 2025 Water Rate Study Final Report from WRE being presented by this report.
Background:
The most recent previous Water Cost-of-Service Study was completed by Carollo Engineers, Inc. in 2017 and included a five-year rate increase through 2022. In 2017, rates were simplified from a tiered rate structure to a uniform rate based on customer class, fixed rates were increased from 22% to 32% (which was more closely aligned with the City’s fixed costs of approximately 42%), costs for imported water and operating costs for Municipal Water District of Orange County were established as a pass-through, and drought rates were developed. The modified rate structure simplified rates for ease of customer understanding, created improved revenue stability due to the pass-through and increased fixed rate recovery.
During the annual budget, City staff coordinated with finance and the City Manager’s office to evaluate proposed expenditures to find reductions wherever possible and to establish a budget that provides an adequate level of service to provide water service, operate and maintain the system, and rehabilitate/replace existing infrastructure. Due to rising expenses from purchased water, electricity, chemicals, materials, new regulatory requirements and construction, WRE was hired to evaluate the City’s revenues, expenses and reserve policy to establish a funding level to continue to provide service to the City’s customers.
As a government agency, the City does not make a profit; all water revenues are used to fund the water system. Revenues from the proposed water rates will not exceed the cost of providing water service to customers. The revenues will not be used for any purpose other than financing the City’s water operations and capital needs.
The water fund is a separate enterprise fund within which the costs associated with potable and recycled water are separately tracked. To maintain financial sufficiency, potable and recycled water rates fully fund operations and maintenance costs, capital improvement plan expenditures, and financial policies, which include target reserve balances and debt coverage. There are three key factors impacting water fund financial performance: debt coverage requirements, capital needs and reserve policy targets.
Debt Coverage Requirements - The City’s annual debt service payment from the Water Fund is approximately $900k for the expansion of the Recycled Water System through the study period and the City is required to meet an annual debt coverage requirement of 110 174
Meeting Date: November 18, 2025 Agenda Item: 9A.
CITY OF SAN CLEMENTE 3
percent. This means the City’s net operating revenue must be 110 percent greater than its annual debt service, which the City is not currently meeting. Capital Investments – The cost of planned capital projects over the next five years (FY 2026 through FY 2030) are approximately $21 million, accounting for inflation of project costs over time.
Reserve Policy Targets – The City’s current reserve policy includes targets for operating, capital projects and debt service reserves. To meet a more industry-standard reserve policy, WRE is recommending the following changes: an operating reserve of 25 percent of annual operating expenses, capital project reserve based on a five-year rolling average, emergency reserve with $2 million in the event of a major asset failure or emergency, and a debt service reserve with one year of debt service. City staff intends to bring an update to the Reserve Policy to reflect the recommended changes at a future City Council meeting.
Based on an analysis of the current and future expenditures, a proposed financial plan scenario includes five years of revenue adjustments, which are required to meet the debt coverage ratio as well as maintain financial sufficiency and resiliency as shown below:
Line Fiscal
Year
Effective
Date
Revenue Adjustments
(Potable and Recycled)
1 FY 2026 3/1/2026 9.5%
2 FY 2027 1/1/2027 3.5%
3 FY 2028 1/1/2028 3.5%
4 FY 2029 1/1/2029 3.5%
5 FY 2030 1/1/2030 3.5%
Proposed Rate Structure Changes and Water Rates
The main objective of the study was to conduct a comprehensive cost-of-service analysis while maintaining as much of the current rate structures as possible to minimize customer impacts. The City’s current water rate structure includes a monthly service charge based on meter size and a uniform consumption rate per ccf (one hundred cubic feet or approximately 748 gallons) that varies by customer class.
Upon examination of the existing rate methodology and the City’s water supply profile, WRE recommended that the City implement a uniform consumption rate for all customer classes.
Additionally, to continue pass-through of water supply costs from MWDOC on the variable rate component, who is the City’s main water supplier, WRE recommended that the City implement a separate MWDOC monthly service charge based on meter size for the MWDOC fixed charge.
The proposed five-year potable and recycled water rate schedules are based on the proposed rate structure and methodology changes, the updated cost-of-service analysis, and the proposed revenue adjustments over the five-year period. The proposed rate schedule shows the proposed potable and recycled water rates to be implemented in March 2026 through January 2030. Note that MWDOC potable water supply costs will be billed to customers as pass-through charges.
The proposed rates shown for these years may differ depending on changes to MWDOC rates because of the pass-through provision of MWDOC water supply costs. As proposed, the City is 175
Meeting Date: November 18, 2025 Agenda Item: 9A.
CITY OF SAN CLEMENTE 4
authorized to pass-through those increases in costs from MWDOC by providing a 30-day mailed notice to the City’s customers.
Current and Proposed Monthly Fixed Water Service Charge – City Portion (Potable and Recycled)
Line
Monthly Fixed Water
Service Charge - City
Portion (Potable and
Recycled)
As of
1/1/2022
Effective
3/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Up to 1" $27.41 $27.76 $28.74 $29.75 $30.80 $31.88
2 1.5" $67.72 $76.67 $79.36 $82.14 $85.02 $88.00
3 2" $102.09 $118.60 $122.76 $127.06 $131.51 $136.12
4 3" $211.23 $251.37 $260.17 $269.28 $278.71 $288.47
5 4" $372.08 $447.03 $462.68 $478.88 $495.65 $513.00
6 6" $756.96 $1,124.86 $1,164.24 $1,204.99 $1,247.17 $1,290.83 Current and Proposed Monthly Fixed Water Service Charge – MWDOC (Potable) Line
Monthly Fixed Water
Service Charge -
MWDOC (Potable )
Effective
3/1/2026 Effective 1/1/2027 Effective 1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Up to 1" $5.34
Pass-Through Going Forward
2 1.5" $17.80
3 2" $28.48
4 3" $62.30
5 4" $112.14
6 6" $284.80
Current and Proposed Consumption Rates (Potable and Recycled)* Line
Consumption Rates
($/ccf) (Potable and
Recycled)
As of
1/1/2022
Effective
3/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Single Family
Residential $5.11 $5.31 $5.50 $5.70 $5.90 $6.11
2 Multi Family Residential $4.92 $5.31 $5.50 $5.70 $5.90 $6.11 3 Commercial $4.95 $5.31 $5.50 $5.70 $5.90 $6.11
4 Irrigation $6.01 $5.31 $5.50 $5.70 $5.90 $6.11
5 Recycled Water $3.29 $3.52 $3.65 $3.78 $3.92 $4.06
*One unit of water is 100 cubic feet (ccf) or approximately 748 gallons of water. For potable water rates effective 3/1/2026, the MWDOC supply unit cost is $4.03 and City’s unit cost for delivery, conservation and revenue offset is $1.28. For illustration, $4.03 remains the same unit rate in future years, but will depend upon future MWDOC supply costs, and supply unit costs are subject to change.
Recycled Water Rates
Recycled water is used by irrigation customers where it is available and utilized for irrigating parks, schools, golf courses, slopes and medians throughout the City. The use of recycled water is a local supply of tertiary treated wastewater and offsets the amount of imported water that the 176
Meeting Date: November 18, 2025 Agenda Item: 9A.
CITY OF SAN CLEMENTE 5
City needs from MWDOC. The City’s current monthly fixed charges are the same for both potable and recycled water customers and the proposed rates are recommended to retain the current rate policy. However, recycled water customers will not be charged the MWDOC monthly fixed charges because they do not use MWDOC water.
Proposed Recycled Water Monthly Fixed Water Service Charge Line
Monthly Fixed
Water Service
Charge
Effective
3/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Up to 1" $27.76 $28.74 $29.75 $30.80 $31.88
2 1.5" $76.67 $79.36 $82.14 $85.02 $88.00
3 2" $118.60 $122.76 $127.06 $131.51 $136.12
4 3" $251.37 $260.17 $269.28 $278.71 $288.47
5 4" $447.03 $462.68 $478.88 $495.65 $513.00
6 6" $1,124.86 $1,164.24 $1,204.99 $1,247.17 $1,290.83
Demand Management Rates
Demand Management Rates work to offset reduced revenues when the City is in a declared water shortage emergency. The City’s Urban Water Management Plan includes six stages of water shortages, which all require a different level of usage reduction from the City’s customers.
When customers reduce their usage in each stage, the City’s rate revenues from variable charges are directly impacted. When water shortage emergencies occur, especially during more severe stages, the amount of lost revenue can significantly impact the City’s ability to meet its operating, capital, and reserve requirements.
Demand management rates are a tool for the City to effectively respond to water shortage emergencies while maintaining financial sufficiency and operational reliability. Demand management rates are designed to recover the costs of water shortages, which include loss of variable revenues and cost differences (savings) from purchased water supply changes. Demand management rates are only in effect to the extent that the City Council declares a water shortage at Level 1 through Level 6, as shown in the following table.
Proposed Demand Management Rates
Line Shortage
Level
Usage
Reduction
Effective
3/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Level 1 up to 10% $0.21 $0.22 $0.23 $0.24 $0.25
2 Level 2 up to 20% $0.46 $0.48 $0.50 $0.52 $0.54
3 Level 3 up to 30% $0.78 $0.81 $0.84 $0.87 $0.91
4 Level 4 up to 40% $1.21 $1.26 $1.31 $1.36 $1.41
5 Level 5 up to 50% $1.81 $1.88 $1.95 $2.02 $2.10
6 Level 6 >50% $2.71 $2.81 $2.91 $3.02 $3.13
Public Hearings
To comply with procedural requirements of Proposition 218, staff has prepared a draft Notice of Public Hearings (Notice) to consider the adoption of the proposed water rates changes which will be mailed to all residents and owners. The Notice informs the public of the City’s proposal to 177
Meeting Date: November 18, 2025 Agenda Item: 9A.
CITY OF SAN CLEMENTE 6
adjust water rates, and its intent to reaffirm and adjust the pass-through of all adjustment to MWDOC charges for wholesaler water and services for a period of five years ending January 1, 2030. The Notice also explains the processes for property owners to file written objections (to exhaust administrative remedies) and written protests.
Staff recommends that the deadline to submit timely written objections to the proposed fees and charges and exhaust administrative remedies be set for January 15, 2026 at 5:00 p.m.
Staff recommends that the public hearing to consider timely written objections and the City’s response to said written objections be set for February 3, 2026 at 5:30 p.m. At the conclusion of the February 3, 2026 public hearing, the City Council could direct changes to the proposed rates, but the rates cannot be adopted until after the protest hearing, which is recommended to be set for February 17, 2026 at 5:30 p.m.
At the February 17, 2026 public hearing, if there is a written protest filed by owners or ratepayers representing the majority of parcels serviced by the City, the proposed updates to the rates may not be adopted. If there is not a majority protest, the City Council can continue and adopt the rates as proposed.
Both public hearings will be noticed in the same mailer (Attachment 2) to customers and property owners and are recommended to take place in the City Council Chambers at 910 Calle Negocio, San Clemente, 92673 during regular City Council meetings.
Council Options:
Adopt Resolution No. 25-178, which will approve the City of San Clemente 2025 Water Rate Study Final Report, approve the public hearing notice, set a January 15, 2026 objection deadline, schedule a Public Hearing for February 3, 2026 to consider objections (exhaustion of administrative remedies) and schedule a Public Hearing for February 17, 2026 to consider adoption of proposed updates to water rates and charges under Proposition 218 and conduct a protest hearing all in accordance with Proposition 218 and Government Code sections 53750 through 53759.2 and 54354.5.
Modify and approve Resolution No. 25-178.
Continue the Item and direct staff to provide additional information.
Environmental Review/Analysis:
Not a “project” under the California Environmental Quality Act Guidelines section 15378 (14 CCR section 15378). Scheduling future public hearings to consider proposed updates to fees and charges for providing ongoing water service has no potential to result in either a direct or physical change in the environment or a reasonably foreseeable indirect physical change in the environment.
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Meeting Date: November 18, 2025 Agenda Item: 9A.
CITY OF SAN CLEMENTE 7
Recommended Actions:
Staff Recommendation ..recommendation
STAFF RECOMMENDS THAT the City Council adopt Resolution No. 25-178, which will:
1. Approve the City of San Clemente November 2025 Water Rate Study Final Report;
2. Approve and authorize Staff to mail the Notice of Public Hearings to Consider Proposed Adjustments to Water Rates based on the analysis in the City of San Clemente November 2025 Water Rate Study Final Report;
3. Set a deadline of January 15, 2026 at 5:00 p.m. for the submission of timely written objections to the proposed fees and charges and exhaustion of administrative remedies;
4. Set a Public Hearing for February 3, 2026 at 5:30 p.m. for the exhaustion of administrative remedies (objection hearing) to consider all timely written objections along with the draft written responses and determine whether clarifications or further review or reduction or abandonment of the proposed water rate and charge increases are warranted; and
5. Set a Public Hearing for February 17, 2026 at 5:30 p.m. to consider all written protests and hear all oral comments on the proposed water rate and service charge increases and consider approval of the proposed rates and charges.
..end
Attachment:
1. Resolution No. 25-178
2. Draft Notice of Public Hearing 218 Notice
3. November 2025 Water Rate Study Report
Notification:
None.
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Attachment 1
RESOLUTION NO. 25-178
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SAN CLEMENTE, CALIFORNIA, TO APPROVE THE
NOVEMBER 2025 WATER RATE STUDY FINAL REPORT,
APPROVE THE PUBLIC HEARING NOTICE, SET A
DEADLINE OF JANUARY 15, 2026 FOR SUBMISSION OF
OBJECTIONS, SCHEDULE A PUBLIC HEARING FOR
FEBRUARY 3, 2026 TO CONSIDER OBJECTIONS
(EXHAUSTION OF ADMINISTRATIVE REMEDIES) AND
SCHEDULE A PUBLIC HEARING FOR FEBRUARY 17, 2026
TO CONSIDER ADOPTION OF PROPOSED UPDATES TO
WATER RATES AND CHARGES UNDER PROPOSITION
218 AND CONDUCT A PROTEST HEARING
WHEREAS, the City owns and operates approximately 230 miles of water lines, 15 reservoirs, 16 pump station and 56 pressure reducing stations; and WHEREAS, the City receives imported water from Metropolitan Water District from Northern California and the Colorado River Basin through its wholesaler Municipal Water District of Orange County; and
WHEREAS, the City has local water resources from two wells and produces recycled water at the Water Reclamation Plant for irrigation purposes; and WHEREAS, the City provides water service meeting state and federal standards to approximately 17,600 service meters consisting of residential, multifamily, irrigation and commercial accounts; and
WHEREAS, in order to provide service to City customers and maintain operation of the water system, the City Council hired Water Resources Economics, LLC on May 6, 2025 to conduct a Cost-of-Service Study to evaluate the City’s expenses and revenues; and WHEREAS, Water Resources Economics, LLC reviewed the City’s water finances, presented preliminary recommendations and received direction from the City Council on September 16, 2025; and
WHEREAS, on October 7, 2025, the City Council adopted water rate setting procedures under Proposition 218 and Government Code sections 53750 through 53759.2 and 54354.5 to establish a process for property owner objections to proposed water fees; and
WHEREAS, Water Resources Economics, LLC completed a Cost-of-Service Study (November 2025 Water Rate Study Final Report) which recommended changes in the rate structure, five-year rate adjustments, fixed and pass through of charges from the Municipal Water District of Orange County, and establishment of recycled water rates and demand manager rates in the event there is a required reduction in water use; and 180
Resolution No. 25-178 Page 2
WHEREAS, a draft Notice to Property Owners and Tenants of Public Hearings on Proposed Water Rates (“Public Hearing Notice”) has been prepared with information regarding the proposed rates and written objections and protest requirements; and WHEREAS, the City Council received a presentation regarding the November 2025 Water Rate Study Final Report and heard and considered any public comment related thereto at its regular meeting of November 18, 2025.
NOW, THEREFORE, the City Council of the City of San Clemente does hereby find, determine and resolve as follows:
SECTION 1. The above recitations are true and correct and fully incorporated herein.
SECTION 2. The City Council approves the City of San Clemente November 2025 Water Rate Study Final Report prepared by Water Resources Economics, LLC.
SECTION 3. A deadline of January 15, 2026 at 5:00 p.m. is hereby set for the submission of written objections.
SECTION 4. A Public Hearing is hereby set for February 3, 2026, at 5:30 p.m., to consider all timely written objections submitted by property owners that choose to exhaust administrative remedies, along with the written responses thereto prepared by City staff, and determine whether clarifications or further review or reduction or abandonment of the proposed water rate and charge increases are warranted.
SECTION 5. A Public Hearing is hereby set for February 17, 2026, at 5:30 p.m., to conduct a protest hearing under Proposition 218 and to consider proposed adjustments to and adoption of water rates and service charges based on the analysis in the City of San Clemente November 2025 Water Rate Study Final Report.
SECTION 6. The Public Hearing Notice is hereby approved and City staff is authorized and directed to mail to all property owners receiving City water services (including tenants who are directly liable to pay water rates) said Notice in a form substantially similar to that presented to the City Council on November 18. 2025.
SECTION 7. City Staff is hereby authorized and directed to take such other and further actions as are necessary and proper to fulfill the purposes of this resolution and ensure that the requirements of applicable law, including Proposition 218 and Government Code sections 53750 through 53759.2 and 54354.5, are met and that such Public Hearings are duly noticed.
SECTION 8. That the City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.
PASSED AND ADOPTED this _____ day of November, 2025.
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Resolution No. 25-178 Page 3
ATTEST:
___________________________ __________________________
City Clerk of the City of Steve Knoblock, Mayor of the
San Clemente, California City of San Clemente, California
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) §
CITY OF SAN CLEMENTE )
I, LAURA CAMPAGNOLO, City Clerk of the City of San Clemente, California, do hereby certify that Resolution No. 25-178 was adopted at a regular meeting of the City Council of the City of San Clemente held on the _______ day of November, 2025, by the following vote:
AYES:
NOES:
ABSENT:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Clemente, California, this _____ day of _____________, ______. __________________________
CITY CLERK of the City of
San Clemente, California
Approved as to form:
_____________________________
Elizabeth A. Mitchell, City Attorney
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Attachment 2
NOTICE TO PROPERTY OWNERS AND TENANTS OF PUBLIC HEARINGS
ON PROPOSED WATER RATES
Objection Hearing Date/Time: February 3, 2026 5:30 PM
Protest Hearing Date/Time: February 17, 2026 5:30 PM
Location: City Council Chambers
910 Calle Negocio, San Clemente, CA 92673
Why are you receiving this notice?
The City of San Clemente will hold a public hearing (a Proposition 218 Protest Hearing) on February 17, 2026, at 5:30 p.m., or as soon thereafter as the matter may be heard, in the City Council Chambers located at 910 Calle Negocio, San Clemente, to count timely written protests and to consider changes to the City's water rate structure, potential rate increases over a five-year period, implementation of wholesale water costs pass-through adjustments, and implementation of a "demand management rate" to offset revenue fluctuations during periods of reduced water demands (such as a prolonged drought) to stabilize City revenues so the City can continue to operate and maintain the City's water system. These rate changes, if approved, will take effect on March 1, 2026. This notice describes the reason for the new proposed rates, how they were calculated, the amount of the proposed new rates, and how to file a protest and/or objection to this proposed action. While the proposed new rates cannot be adopted until after the Proposition 218 protest hearing) on February 17, 2026, the public hearing on exhaustion of administrative remedies (the objection hearing) will be held by the City on February 3, 2026, at 5:30 p.m., or as soon thereafter as the matter may be heard, in the City Council Chambers located at 910 Calle Negocio, San Clemente, to consider written objections timely received before January 15, 2026, at 5 p.m.
What do Water Rates Fund?
The water utility must be financially self-sufficient. Monthly rates paid by users are the primary sources of revenue to fund water operations. All revenue generated from rates on your water utility bill is used to maintain and operate the water system, purchase imported water and provide emergency supply and storage. It is not used for other general governmental purposes. These revenues must meet costs such as purchased raw water, electricity, chemicals, maintenance, and salaries and benefits for water utility enterprise staff. The City of San Clemente is committed to providing a safe and reliable supply of water now, and into the future.
The City’s water system serves roughly 83% of City residents, while some residents are served by other water districts. The boundaries for customers served by the City’s water system are identified in the City’s Water Service Area Exhibit at www.sanclemente.gov/water-rates. The Water Rate Study Final Report dated November 2025 was prepared on behalf of the City by Water Resources Economics (WRE) to evaluate the City’s costs of providing water services to customers, and to recommend rates to cover the City’s proportionate costs of providing those services to customers, as summarized in this notice. 183
City water customers receive water sourced from local groundwater, imported water, and recycled water.
In normal conditions, about five percent of the City’s water supply is groundwater pumped from two City owned wells, 80 percent is imported water from the Northern California State Water Project and from the Colorado River by Metropolitan Water District as purchased by the City through the City’s wholesaler Municipal Water District of Orange County (MWDOC), and 15 percent is recycled water treated at the City’s Water Reclamation Plant and distributed for irrigation purposes only. The water system infrastructure includes: 230 miles of water pipelines, two groundwater wells, 15 local and two regional water storage reservoirs, 16 pumping stations, 56 pressure regulating stations, and one filtration plant.
Why Water Rate Increases Are Needed
As documented in the Water Rate Study Report, the City reviewed operational costs, planned capital projects, and water revenues that revealed a shortfall and the need for continued annual rate increases to address the following issues:
• Address rising costs of wholesale water supply, utilities, chemicals, and supplies. • Replace, rehabilitate, and modernize aging infrastructure to prevent breaks and service disruptions and improve system resiliency.
• Maintain financial sustainability while addressing debt service coverage ratios for the expansion of the recycled water system, reducing the City’s dependency on imported water. • Meet minimum reserve requirements and fund emergency/unplanned expenses.
The majority of funds required to operate and invest in the City’s water system come directly from the rates customers pay for water service. Revenues from current rates are no longer adequate to support operations and fund the much-needed system improvements and maintenance planned over the next five years. With costs continually outpacing revenues in recent years and the last rate increase occurring January 1, 2022, the City enlisted utility finance experts at WRE to examine the City’s costs to purchase water and operate the water system.
The proposed changes to water rates and charges described in this notice are necessary to proactively maintain the water production and distribution systems, so it doesn't cost more later to do so; and the City incorporates ongoing evaluations of operational and capital expenses to minimize costs whenever feasible.
Proposed Water Rate Structure Changes
The City’s current water rate structure includes a monthly fixed service charge based on meter size and variable charges based on customer class and units of water used in increments of one hundred cubic feet (one unit = one ccf = 748 gallons). Upon examining the existing rate methodology, given the City’s water supply profile, the proposed updated rates implement a uniform consumption rate for all customer classes consistent with cost-of-service principles. Additionally, to properly pass through to customers the City’s costs of purchasing water from MWDOC, the City’s main water supplier, the proposed updated rates include a separate MWDOC monthly service charge based on meter size and a continued pass through of 184
the purchased water cost on the variable commodity component of the rate. There are no proposed changes to the recycled water rate structure.
Proposed Five-Year Potable and Recycled Water Rate Structure Schedule As described in the Water Rate Study Report, the proposed five-year potable and recycled water rate schedules are based on changes to the rate structure and methodology, the updated cost-of-service analysis, and the revenue adjustments needed to cover the City’s costs of providing water service in the five-year period. The rate schedule in this notice shows the proposed potable and recycled water rates to be implemented in March 2026 through January 2030. Note that, since the City does not currently know its cost of purchasing wholesale potable water supply from MWDOC, those costs will be billed to customers as pass-through charges, as authorized by Government Code Section 53756.
Overall annual increases in potable and recycled water rate revenues resulting from rate increases are referred to as “revenue adjustments” to meet increases in operating costs. The proposed rates identified in the rate schedule include five years of revenue adjustments, which are required to meet the debt coverage ratio as well as maintain financial sufficiency and resiliency. Fixed Water Service Charge (Section 4.3 of the Water Rate Study Report) The monthly fixed charge is based on the size of the water meter (in inches) serving a property and is calculated to recover a portion of the City’s annual fixed costs of providing water service, such as utilities, equipment, materials, billing collections, customer service, meter reading, and meter maintenance. The fixed water service charge includes a “(City Portion)” which covers costs directly incurred by the City, as well as a “MWDOC” portion which covers the fixed costs of wholesale water charged by MWDOC to the City. MWDOC fixed costs are billed to the City regardless of imported water purchases. Beginning with the annual adjustment on January 1, 2027, MWDOC fixed costs to the City will be passed through to customers as described in Section 4.3 and illustrated in Table 4-1 of the Water Rate Study. This use of a pass-through charge will enhance revenue stability for the City and reduce the City’s financial risk related to MWDOC water supply in case of decreased future water consumption. This approach will also increase fixed revenue recovery to approximately 36% and ensure for more accurate pass-throughs. Consumption Based Rate (Volumetric or Commodity Rate, Section 4.4 of the Water Rate Study Report)
The proposed updated rates implement a uniform consumption rate for all customer classes consistent with cost-of-service principles. The consumption based rate takes into account base costs (including baseline supplies, treatment, distribution, and storage, up to a level that meets the City’s baseline demands throughout the year), and they are split into two components: “MWDOC Supply Unit Cost” and “City Delivery Cost.” The MWDOC Supply Unit Cost includes potable water supplies from MWDOC, Imported Water from Metropolitan Water District, Baker Treatment Plant, and delivery to the City’s service area. The Proposed Rate Schedule table below includes MWDOC costs for FY 2026, which is shown as the same rate for 2027 through 2030; however, future MWDOC consumption based costs will be calculated as described in Section 4.4 and Table 4-13 of the Water Rate Study Report and passed through to City customers, as authorized by Government Code Section 53756. Each year, the updated per ccf cost 185
from MWDOC will replace the projected MWDOC Supply Unit Cost shown in Table 4-14 of the Water Rate Study Report (shown below) for 2027 through 2030, which will be added to the City Delivery Cost to result in a corresponding recalculation of the per ccf charge to All Customer Classes.
Consumption Rate Components ($/ccf)
3/1/2026 1/1/2027 1/1/2028 1/1/2029 1/1/2030
All Customer Classes Total
Unit Cost
$5.31 $5.50 $5.70 $5.90 $6.11
MWDOC Supply Unit Cost $4.03 $4.03 $4.03 $4.03 $4.03
City Delivery Cost: Delivery,
Conservation and Revenue
Offset
$1.28 $1.47 $1.67 $1.87 $2.08
The proposed rate schedule table below shows the current and proposed monthly water service charge by meter size.
Note: One unit of water is 100 cubic feet (ccf) or approximately 748 gallons of water. Additional detail regarding the rate components are provided in the notice and in the Water Rate Study Report at www.sanclemente.gov/water-rates.
Proposed Rate Schedule
Revenue Adjustment
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
9.5% 3.5% 3.5% 3.5% 3.5%
Monthly Fixed Water Service Charge – City Portion
Up to 1” $27.41 $27.76 $28.74 $29.75 $30.80 $31.88
1.5” $67.72 $76.67 $79.36 $82.14 $85.02 $88.00
2” $102.09 $118.60 $122.76 $127.06 $131.51 $136.12
3” $211.23 $251.37 $260.17 $269.28 $278.71 $288.47
4” $372.08 $447.03 $462.68 $478.88 $495.65 $513.00
6” $756.96 $1,124.86 $1,164.24 $1,204.99 $1,247.17 $1,290.83 Consumption Rates ($/ccf) **
Single Family
Residential
$5.11 $5.31 $5.50 $5.70 $5.90 $6.11
Multi Family
Residential
$4.92 $5.31 $5.50 $5.70 $5.90 $6.11
Commercial $4.95 $5.31 $5.50 $5.70 $5.90 $6.11
Irrigation $6.01 $5.31 $5.50 $5.70 $5.90 $6.11
Current Rates 3/1/2026 1/1/2027 1/1/2028 1/1/2029 1/1/2030 Monthly Fixed Water Service ChargeMWDOC
Pass-through from MWDOC
Up to 1” $0.00 $5.34
1.5” $0.00 $17.80
2” $0.00 $28.48
3” $0.00 $62.30
4” $0.00 $112.14
6” $0.00 $284.80
186
Recycled Water $3.29 $3.52 $3.65 $3.78 $3.92 $4.06
** Subject to Pass-through adjustments for MWDOC Supply Unit Costs summarized above.
Proposed Bill Impact
The table below is based on a monthly bill for a typical Single-Family Residential (SFR) customer with a 1" meter. For average usage of 10 ccf, the Single-Family Residential customer will see an increase of $7.69 on their monthly water bill over the first year. If approved, first year rate adjustments will go into effect March 1, 2026. Bill impacts will vary based on customer type, meter size, and water usage.
Sample Bills for Single Family Residential up to 1” meter size Line Single Family Customer
Impacts ccf Current Bill Proposed Bill Difference ($) Difference (%) 1 Low Usage 5 $52.96 $59.65 $6.69 12.6%
2 Average Usage 10 $78.51 $86.20 $7.69 9.8%
3 High Usage 20 $129.61 $139.30 $9.69 7.5%
4 Very High Usage 50 $282.91 $298.60 $15.69 5.5%
Recycled Water Rates
Recycled water is used by irrigation customers where it is available and utilized for irrigating parks, schools, golf courses, slopes and medians throughout the City. The use of recycled water is a local supply of tertiary treated wastewater and offsets the amount of imported water the City needs from MWDOC.
Currently, the City Portion of monthly fixed charges is the same for both potable and recycled water customers and the proposed rates are recommended to retain the current rate policy. However, recycled water customers will not be charged the MWDOC monthly fixed charges because they do not use MWDOC water. The recycled water consumption rate is calculated based on Section 5.4 of the Water Rate Study Report.
Proposed Rate Schedule
Revenue Adjustment
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
9.5% 3.5% 3.5% 3.5% 3.5%
Proposed Recycled Water Monthly Fixed Water Service Charge Line Monthly Fixed Water
Service Charge
Effective
3/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Up to 1" $27.76 $28.74 $29.75 $30.80 $31.88
2 1.5" $76.67 $79.36 $82.14 $85.02 $88.00
3 2" $118.60 $122.76 $127.06 $131.51 $136.12
4 3" $251.37 $260.17 $269.28 $278.71 $288.47
5 4" $447.03 $462.68 $478.88 $495.65 $513.00
6 6" $1,124.86 $1,164.24 $1,204.99 $1,247.17 $1,290.83
Proposed Recycled Water Consumption Rate
Line RW Consumption Rate
($/ccf)
Effective
3/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 All Customers $3.52 $3.65 $3.78 $3.92 $4.06
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The City is proposing five years of rate adjustments for adoption by the City Council based on financial expert analysis from Water Resources Economics. Balancing affordability with financial needs is a key consideration for developing the proposed changes to water rates. The justification and methodology for the proposed rate changes are set forth in the Water Rate Study Report that is posted at www.sanclemente.gov/water-rates.
Demand Management Rates
Demand Management Rates work to offset reduced revenues when the City is in a declared water shortage emergency. The City’s Urban Water Management Plan includes six stages of water shortages, which all require a different level of usage reduction from the City’s customers. When customers reduce their usage in each stage, the City’s rate revenues from variable charges are directly impacted. When water shortage emergencies occur, especially during more severe stages, the amount of lost revenue can significantly impact the City’s ability to meet its operating, capital, and reserve requirements.
Demand management rates are a tool for the City to effectively respond to water shortage emergencies while maintaining financial sufficiency and operational reliability. Demand management rates are designed to recover the costs of water shortages, which include loss of variable revenues and cost differences (savings) from purchased water supply changes. Demand management rates are only in effect to the extent that the City Council declares a water shortage at Level 1 through Level 6, as shown in the following table.
Proposed Demand Management Rates
Line Shortage Level Usage
Reduction
Effective
3/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Level 1 up to 10% $0.21 $0.22 $0.23 $0.24 $0.25
2 Level 2 up to 20% $0.46 $0.48 $0.50 $0.52 $0.54
3 Level 3 up to 30% $0.78 $0.81 $0.84 $0.87 $0.91
4 Level 4 up to 40% $1.21 $1.26 $1.31 $1.36 $1.41
5 Level 5 up to 50% $1.81 $1.88 $1.95 $2.02 $2.10
6 Level 6 >50% $2.71 $2.81 $2.91 $3.02 $3.13
HOW TO PARTICIPATE IN THE WATER RATE SETTING PUBLIC HEARINGS Any member of the public may submit written comments and present spoken testimony during the public hearing. However, only a property owner has a right to submit a Written Protest and/or a Written Objection as summarized below. For additional detail regarding these procedures, please see the “Water Rate Setting Procedures” posted at www.sanclemente.gov/water-rates.
HOW TO SUBMIT A WRITTEN OBJECTION OR A WRITTEN PROTEST
Any objection OR protest must: (1) be in writing identifying the name of the property owner, and the street address or other clear identification of the property subject to the rates; (2) be signed by the property owner, unless alternative proof of property owner authorization is provided to and verified by the City; and (3) comply with the relevant ADDITIONAL REQUIREMENTS for a written objection or written protest (as identified below). NOTE: As used in this Notice, the phrase "property owner" includes a tenant who is obligated to pay the water rate.
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The main differences between an objection and a protest: a) an objection has an earlier deadline for timely submission; b) an objection must include the substantive basis to claim the rates do not comply with Proposition 218 (summarized below); c) an objection must be submitted for a property owner to preserve a right to challenge the water rates in court; d) an objection may be submitted via email (with a signature sent electronically), but a protest must be submitted in paper form; and (e) the objection hearing and protest hearing occur on different dates (as described below).
ADDITIONAL REQUIREMENTS:
Timely Written OBJECTION
A timely written objection must be received by the City at a SUBMITTAL LOCATION identified below no later than January 15, 2026, at 5 p.m. A written objection must describe the reason that the owner claims a particular portion of the proposed water rates identified in this notice does not comply with a particular requirement of Proposition 218 (California Constitution Article XIII D, Section 6). A statement that the proposed rates violate Proposition 218 without an explanation as to the basis of the claim is not sufficient to constitute a valid written objection. For a summary of relevant requirements of Proposition 218, see the Water Rate Setting Procedures (particularly Section 3(c)).
ADDITIONAL REQUIREMENTS:
Timely Written PROTEST
A timely written protest must be received by the City at a SUBMITTAL LOCATION identified below prior to the close of the public testimony portion of the Public Hearing on February 17, 2026. A written protest must: (a) clearly indicate that the property owner opposes the City’s approval of the water rates, and (b) be submitted in paper form. Any non-paper form will not be accepted as a protest (such as e-mail, facsimile, or spoken protests via telephone or in person). Only one written protest will be counted for each parcel served.
SUBMITTAL LOCATIONS
Mail
San Clemente City Clerk
910 Calle Negocio, San Clemente, CA 92673
Email (for objections only; note: a written protest may NOT be submitted via email) [email protected]
In Person
San Clemente City Clerk
910 Calle Negocio, San Clemente, CA 92673
PROCEDURE FOR PUBLIC HEARING AND CONSIDERING WRITTEN OBJECTIONS AND WRITTEN PROTESTS:
Written Objections - At the public hearing on Tuesday, February 3, 2026, at 5:30 p.m., or as soon thereafter as the matter may be heard at their regular meeting, the City Council will consider all timely written objections and the City shall respond in writing to any timely written objections. The City’s responses shall explain the substantive basis for retaining or altering the proposed water rates in response to written objections, including any reason to reject requested changes. The City Council will consider all timely written objections, along with the City’s response, and determine whether clarifications or further review or deduction or abandonment of the proposed water rate increases is warranted. 189
Written Protests- At the public hearing on Tuesday, February 17, 2026, at 5:30 p.m., or as soon thereafter as the matter may be heard at their regular meeting, the City Council will consider all written protests and hear all oral comments on the proposed water rates as well as a staff presentation of the proposed rate modifications. The City Council will then close the public hearing in order to count written protests. If there is a “majority protest” (50% + 1) for the proposed modified water rates, the City may not approve those proposed rates. There is a majority protest only if the number of timely written protests exceeds one-half of the parcels served by the City. If there is not a majority protest, the City Council may then consider adoption of the proposed rates.
PRESERVING A PROPERTY OWNER’S RIGHT TO LEGALLY CHALLENGE THE PROPOSED WATER RATES:
You are hereby notified that, in order to file a judicial action or legal proceeding to challenge the proposed rates described in this Notice, you must file a timely written objection, and you must commence the action or proceeding within 120 days of the adoption of the rates by the City Council.
Failure to submit a timely written objection bars any right to challenge the proposed rates through a judicial action or proceeding. (Government Code Section 53759.1(b).) There is a 120-day statute of limitations for judicially challenging the rates set forth in this Notice that runs from the date of the City Council action to approve the rates, and any legal action is limited to the issues raised in a timely written objection. (Government Code Section 53759.) If adopted, the proposed rates will take effect beginning March 1, 2026. The reasons for the rate adjustments, the basis upon which they were calculated, and the amount of the proposed rates are described in more detail in the Water Rate Study Report posted at www.sanclemente.gov/water-rates and available through an appointment at the City Clerk's office.
To schedule an appointment or to receive a written copy of the Water Rate Study Report, please call (949) 361-8200 or send email to [email protected]
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Attachment 3
City of
San Clemente
2025 Water Rate Study
Final Report – November 2025
Prepared by: Water Resources Economics, LLC
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November 13, 2025
David Rebensdorf
Public Works Director
City of San Clemente
910 Calle Negocio
San Clemente, CA 92673
Subject: City of San Clemente Water Cost of Service and Rate Study Report Dear Mr. Rebensdorf,
Water Resources Economics, LLC (WRE) is pleased to submit this 2025 Water Cost of Service and Rate Study Report to the City of San Clemente (City). This report documents the results and recommendations of the City’s water rate study. The goal of the study was to develop a five-year schedule of water, recycled water rates, and demand management rates that will sufficiently fund the City’s water and recycled water system expenses, allow the City to meet its financial goals within the study period, and comply with cost-of-service principles.
This study utilized industry-standard rate-setting methodology in accordance with guidelines developed by the American Water Works Association and incorporates guidance provided by the City Council. Our project team has a proven track record of developing fair and equitable water rates for numerous public water agencies in California over the past 25 years. We are confident in our ability to develop sound water rates that satisfy the requirements of Proposition 218.
It has been a pleasure assisting the City, and we appreciate the support provided by yourself, the City Council, and other City staff during this study.
Sincerely,
Sanjay Gaur Hannah Phan
Founder / President Principal Consultant
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TABLE OF CONTENTS
1. Executive Summary ............................................................................................................................. 1
1.1 System Overview........................................................................................................................................ 1
1.2 Rate Study Overview.................................................................................................................................. 1
1.3 Legal Requirements.................................................................................................................................... 1
1.4 Rate-Setting Methodology......................................................................................................................... 2
1.5 Additional Information and Disclaimers .................................................................................................... 2
1.6 Current Water Rates.................................................................................................................................. 3
1.7 Financial Plan ............................................................................................................................................. 3
1.8 Cost-of-Service Analysis............................................................................................................................. 4
1.9 Proposed Potable and Recycled Water Rates............................................................................................ 5
1.10 Proposed Demand Management Rates..................................................................................................... 7
2. Financial Plan ...................................................................................................................................... 9
2.1 Financial Plan Methodology....................................................................................................................... 9
2.2 Revenues.................................................................................................................................................... 9
2.3 Operating Expenses.................................................................................................................................. 13
2.4 Debt Service ............................................................................................................................................. 15
2.5 Capital Improvement Plan ....................................................................................................................... 15
2.6 Financial Policies...................................................................................................................................... 17
2.7 Status Quo Financial Plan......................................................................................................................... 18
2.8 Proposed Financial Plan ........................................................................................................................... 25
3. Potable Water Cost-of-Service ........................................................................................................... 33
3.1 Cost-of-Service Methodology .................................................................................................................. 33
3.2 Revenue Requirement ............................................................................................................................. 33
3.3 Cost Functionalization.............................................................................................................................. 34
3.4 Cost Causation Components.................................................................................................................... 35
3.5 Equivalent Meter Units............................................................................................................................ 40
3.6 Allocation to Cost Components ............................................................................................................... 41
3.7 Unit Cost Calculation................................................................................................................................ 42
4. Potable Water Rates.......................................................................................................................... 44
4.1 Rate Design Methodology........................................................................................................................ 44
4.2 Proposed Changes to Rate Structure....................................................................................................... 44
4.3 Proposed Monthly Fixed Charges............................................................................................................ 44
4.4 Proposed Variable Charges...................................................................................................................... 46
4.5 Proposed Water Rate Schedule ............................................................................................................... 48
4.6 Customer Impacts.................................................................................................................................... 50
5. Recycled Water Cost-of-Service and Rates.......................................................................................... 51
5.1 Cost-of-Service Methodology .................................................................................................................. 51
5.2 Revenue Requirement ............................................................................................................................. 51
5.3 Proposed Monthly Fixed Service Charge ................................................................................................. 52
5.4 Proposed Consumption Rate ................................................................................................................... 52
5.5 Proposed Recycled Water Rate Schedule ................................................................................................ 53 195
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6. Demand Management Rates.............................................................................................................. 55
6.1 Rate Design Methodology........................................................................................................................ 55
6.2 Risks Related to Water Shortages............................................................................................................ 55
6.3 Proposed Demand management Rates ................................................................................................... 55
6.4 Proposed Demand management Rate Schedule ..................................................................................... 58
7. Appendices ....................................................................................................................................... 59
7.1 Financial Plan Appendices........................................................................................................................ 59
7.2 Cost-of-Service Appendices ..................................................................................................................... 69 196
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LIST OF TABLES
Table 1-1: Current Monthly Fixed Water Service Charges (Potable and Recycled)................................................ 3 Table 1-2: Current Consumption Rates................................................................................................................... 3 Table 1-3: Proposed Financial Plan Scenario .......................................................................................................... 4 Table 1-4: Current and Proposed Monthly Fixed Water Service Charge – City Portion (Potable and Recycled) .. 6 Table 1-5: Current and Proposed Monthly Fixed Water Service Charge – MWDOC (Potable) .............................. 6 Table 1-6: Current and Proposed Consumption Rates (Potable and Recycled)...................................................... 6 Table 1-7: Proposed Single Family Customer Impacts (Year 1)............................................................................... 7 Table 1-8: Proposed Demand Management Rates................................................................................................. 8 Table 2-1: Current Monthly Fixed Water Service Charge (Potable and Recycled) ............................................... 10 Table 2-2: Current Consumption Rates................................................................................................................. 10 Table 2-3: Projected Customer Accounts.............................................................................................................. 11 Table 2-4: Projected Demand Growth .................................................................................................................. 11 Table 2-5: Projected Customer Water Usage (ccf)................................................................................................ 11 Table 2-6: Calculated Rate Revenues at Current Rates......................................................................................... 12 Table 2-7: Revenue Summary ............................................................................................................................... 12 Table 2-8: Expense Inflationary Assumptions....................................................................................................... 13 Table 2-9: Calculated Potable Water Supply Costs............................................................................................... 14 Table 2-10: Operating Expenses Summary ........................................................................................................... 15 Table 2-11: Existing Debt Service .......................................................................................................................... 15 Table 2-12: Potable Water Capital Project Costs.................................................................................................. 15 Table 2-13: Recycled Water Capital Project Costs................................................................................................ 16 Table 2-14: Potable Water Capital Funding Summary.......................................................................................... 17 Table 2-15: Recycled Water Capital Funding Summary........................................................................................ 17 Table 2-16: Status Quo Financial Plan Scenario.................................................................................................... 18 Table 2-17: Projected Potable Cash Flows (Status Quo Financial Plan)................................................................ 19 Table 2-18: Projected Recycled Cash Flows (Status Quo Financial Plan).............................................................. 20 Table 2-19: Projected Potable and Recycled Fund Balances (Status Quo Financial Plan) .................................... 21 Table 2-20: Forecasted Potable and Recycled Financial Performance (Status Quo Financial Plan)..................... 22 Table 2-21: Proposed Water and Recycled Financial Plan Scenario ..................................................................... 25 Table 2-22: Projected Potable Cash Flows (Proposed Financial Plan) .................................................................. 26 Table 2-23: Projected Recycled Cash Flows (Proposed Financial Plan) ................................................................ 27 Table 2-24: Projected Potable and Recycled Fund Balances (Proposed Financial Plan)....................................... 28 Table 2-25: Forecasted Potable and Recycled Financial Performance (Proposed Financial Plan) ....................... 29 Table 3-1: FY 2025 Potable Revenue Requirement............................................................................................... 33 Table 3-2: Operating Costs by System Functions.................................................................................................. 35 Table 3-3: Capital Expenses by System Functions................................................................................................. 35 Table 3-4: System-Wide Capacity.......................................................................................................................... 36 Table 3-5: System Function Allocation to Cost Components................................................................................ 37 Table 3-6: Operating Allocation by Cost Component ........................................................................................... 38 Table 3-7: Capital Allocation by Cost Component ................................................................................................ 39 Table 3-8: Equivalent Meter Units........................................................................................................................ 40 Table 3-9: Cost-of-Service Allocation by Cost Component (General and Delivery).............................................. 41 Table 3-10: Cost-of-Service Allocation by Cost Component (Final) ...................................................................... 42 Table 3-11: Units of Service Definitions................................................................................................................ 42 Table 3-12: Unit Cost by Cost Component............................................................................................................ 43 197
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Table 4-1: MWDOC Fixed Charge Unit Cost.......................................................................................................... 45 Table 4-2: Revenue Neutral Monthly Fixed Water Service Charge – City Portion................................................ 45 Table 4-3: Revenue Neutral Monthly Fixed Water Service Charge – MWDOC..................................................... 45 Table 4-4: Proposed Monthly Fixed Water Service Charge (City Portion) After Adjustment............................... 46 Table 4-5: Proposed Monthly Fixed Water Service Charge (MWDOC) for FY 2026.............................................. 46 Table 4-6: MWDOC Variable Supply Unit Cost...................................................................................................... 47 Table 4-7: Revenue Neutral Consumption Rates.................................................................................................. 47 Table 4-8: Proposed Consumption Rates after Adjustment ................................................................................. 48 Table 4-9: Proposed Revenue Adjustments.......................................................................................................... 48 Table 4-10: Proposed Monthly Fixed Water Service Charge – City Portion ......................................................... 48 Table 4-11: Proposed Monthly Fixed Water Service Charge - MWDOC ............................................................... 49 Table 4-12: Proposed Consumption Rates............................................................................................................ 49 Table 4-13: Water Supply Unit Cost in FY 2026 .................................................................................................... 49 Table 4-14: Proposed Consumption Rates – with Water Supply Unit Cost .......................................................... 49 Table 4-15: Proposed Single Family Customer Impacts........................................................................................ 50 Table 5-1: FY 2025 Recycled Revenue Requirement............................................................................................. 51 Table 5-2: Revenue Neutral Monthly Fixed Water Service Charge....................................................................... 52 Table 5-3: Revenue Neutral Monthly Fixed Water Service Charge After Adjustment.......................................... 52 Table 5-4: Annual Fixed Service Charge Revenue Calculation .............................................................................. 52 Table 5-5: Revenue Neutral Consumption Rate.................................................................................................... 53 Table 5-6: Proposed Consumption Rate after Adjustment................................................................................... 53 Table 5-7: Proposed Recycled Water Revenue Adjustments................................................................................ 54 Table 5-8: Proposed Recycled Water Monthly Fixed Water Service Charge ........................................................ 54 Table 5-9: Proposed Recycled Water Consumption Rate ..................................................................................... 54 Table 6-1: Water Usage Reductions...................................................................................................................... 56 Table 6-2: Variable Revenue Loss by Stage........................................................................................................... 56 Table 6-3: Water Supply Cost Differences by Stage.............................................................................................. 57 Table 6-4: Demand Management Costs by Stage ................................................................................................. 57 Table 6-5: Proposed Revenue Adjustments.......................................................................................................... 58 Table 6-6: Proposed Demand Management Rates............................................................................................... 58 Table 7-1: Revenues (Detail) ................................................................................................................................. 59 Table 7-2: Expenses (Detail).................................................................................................................................. 60 Table 7-3: Operating Expenses Allocation (Detailed)............................................................................................ 69 Table 7-4: Capital Expenses (CIP) Allocation (Detailed)........................................................................................ 69 198
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LIST OF FIGURES
Figure 2-1: Potable Revenue Requirements vs. Revenues (Status Quo Financial Plan) ....................................... 23 Figure 2-2: Recycled Revenue Requirements vs. Revenues (Status Quo Financial Plan) ..................................... 23 Figure 2-3: Potable and Recycled Projected Debt Coverage (Status Quo Financial Plan) .................................... 24 Figure 2-4: Potable and Recycled Projected Fund Balances (Status Quo Financial Plan)..................................... 24 Figure 2-5: Potable Revenue Requirements vs. Revenues (Proposed Financial Plan).......................................... 30 Figure 2-6: Recycled Revenue Requirements vs. Revenues (Proposed Financial Plan)........................................ 31 Figure 2-7: Potable and Recycled Projected Debt Coverage (Proposed Financial Plan)....................................... 31 Figure 2-8: Potable and Recycled Projected Fund Balances (Proposed Financial Plan) ....................................... 32 199
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1 1. EXECUTIVE SUMMARY
1.1 SYSTEM OVERVIEW
The City of San Clemente (City) Utilities Division provides water, recycled water, sewer, storm drain, and solid waste services to a population of approximately 66,250 across 18.45 square miles in Orange County in Southern California. The City’s water system serves roughly 83% of City residents, while some residents are served by other water districts. The boundaries for customers served by the City’s water system are identified on the City’s website1. The current water rate structure consists of a monthly fixed water service charge by meter size, and a consumption rate per unit of water for each customer class. The last rate study, completed in 2017, implemented five years of rate adjustments through January 1, 2022.
1.2 RATE STUDY OVERVIEW
Public retail water agencies in California typically conduct a cost-of-service study every five years to ensure that customers are appropriately charged for water service and to reestablish the cost-of-service nexus that is required by Proposition 218. The City engaged Water Resources Economics, LLC (WRE) in 2025 to conduct a comprehensive water cost of service and rate study (collectively referred to as this Rate Study) with the following objectives:
Evaluate a five-year financial plan scenario to meet financial targets for Fiscal Year (FY) 2025 2 to FY
2030.
Conduct a cost-of-service analysis based on the most recent data and customer use characteristics. Develop a five-year potable and recycled water rate schedule from FY 2026 through FY 2030. Develop a five-year demand management rate schedule from FY 2026 to FY 2030.
1.3 LEGAL REQUIREMENTS3
Legal considerations relating to retail water rates in California focus heavily on Proposition 218, which was enacted in 1996 and is now reflected in Article XIII C and Article XIII D of the California Constitution.
Proposition 218 states that “property related fees and charges” (including retail water rates) may not exceed the proportional cost of providing the service to the customer and may not be used for any purpose other than providing said service. The practical implication is that public retail water agencies in California must demonstrate a sufficient nexus between the costs incurred by the agency to provide water service, and the rates charged to customers. The primary means by which retail water agencies address this requirement is by conducting a “cost-of-service analysis.” Proposition 218 also affects the rate adoption process by requiring agencies to hold a public hearing to adopt rates. The agency must mail public hearing notices to all customers no fewer than 45 days prior to the public hearing. The public hearing notices must clearly show all proposed rate changes, provide information on the public hearing date/time/location, and provide instructions on how customers may protest the proposed rate changes. If a majority of customers submit a protest, the proposed rate changes cannot be adopted.
1 www.sanclemente.gov/water-rates
2 FY 2026 is the year starting July 1, 2025 and ending June 30, 2026. 3 Although this section is named “Legal Requirements” and discusses Proposition 218 and 26, WRE is not a law firm and does not provide legal advice.
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2 For comparison, although water connection and capacity fees are not the subject of this Study, they are not subject to the same legal requirements under Proposition 218. Rather, they are subject to the limitations of Proposition 26, which was approved by voters in 2010 and amended provisions of Article XIII A and Article XIII C of the California Constitution. Proposition 26 defines what types of charges are considered a “tax” (which is subject to a two-thirds voter approval) and are not considered as such. Based on the definitions provided by Proposition 26, “a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government conferring the benefit or granting the privilege” and “a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product” are not considered “taxes.” As such, water connection and capacity fees are not taxes and do not require two-thirds voter approval; provided that, the calculation of connection and capacity fees must follow cost-of-service principles to prove that the fees charged do not exceed the reasonable costs of connecting new customers to the City’s existing water system. Additionally, connection and capacity fees are subject to procedural requirements under the Mitigation Fee Act (see California Government Code Section 66013).
1.4 RATE-SETTING METHODOLOGY
This study was conducted using industry-standard methodology outlined by the American Water Works Association (AWWA) in its Manual of Water Supply Practices M1: Principles of Water Rates, Fees and Charges, Seventh Edition (M1 Manual). The rate study process includes the following steps:
1. Financial Plan: Annual revenues and expenses are projected over the rate-setting period to determine the magnitude of rate increases needed to maintain financial sufficiency. Financial policies, such as reserve targets, are also evaluated and updated if necessary.
2. Cost-of-Service Analysis: Costs are allocated to customers in proportion to use of and burden on the water system. The overall goal is to establish a robust nexus between the costs incurred by an agency and the rates charged to customers, as required by Proposition 218.
3. Rate Design: The existing rate structure is evaluated, and potential changes are identified. A multi-year proposed rate schedule is then calculated directly from the results of the financial plan and cost-ofservice analysis.
4. Rate Study Documentation: A rate study report is developed to document the proposed rate development process. This provides transparency and enhances legal defensibility in light of Proposition 218 requirements. This document serves as the report for this rate study.
1.5 ADDITIONAL INFORMATION AND DISCLAIMERS
This report summarizes the data, analyses, processes, and results of the City’s water cost of service and rate study. Some important information to keep in mind when reading the report includes the following:
All study projections are based on the best available data as of June 2025. All table values are rounded to the nearest digit shown unless stated otherwise. However, all calculations are based on precise values. Attempting to manually recreate the calculations described in this report from the values displayed in tables may therefore produce slightly different results. All current and proposed rates and charges in this report are shown on a monthly basis. 201
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3 1.6 CURRENT WATER RATES
The City’s current water rates include monthly fixed meter charges based on meter sizes and variable charges based on customer class and units of water in hundred cubic feet (ccf). The consumption rates have two components: the water supply charge and the City distribution charge. The water supply charge is the same for all potable water customers.
Table 1-1 and Table 1-2 show the current monthly fixed water service charges and consumption rates, respectively.
Table 1-1: Current Monthly Fixed Water Service Charges (Potable and Recycled) Line Monthly Fixed Water Service Charge
(Potable and Recycled)
As of
1/1/2022
1 Up to 1" $27.41
2 1.5" $67.72
3 2" $102.09
4 3" $211.23
5 4" $372.08
6 6" $756.96
Table 1-2: Current Consumption Rates
Line Consumption Rates ($/ccf) As of
1/1/2022
1 Single Family Residential $5.11
2 Water Supply Charge $2.94
3 City Distribution Charge $2.17
4 Multi Family Residential $4.92
5 Water Supply Charge $2.94
6 City Distribution Charge $1.98
7 Commercial $4.95
8 Water Supply Charge $2.94
9 City Distribution Charge $2.01
10 Irrigation $6.01
11 Water Supply Charge $2.94
12 City Distribution Charge $3.07
13 Non-Potable Irrigation $3.29
1.7 FINANCIAL PLAN
WRE worked closely with City staff and City Council to determine the financial plan scenario that best suits the City’s needs. The results and recommendations of the potable and recycled water rate study are driven by the City’s financial performance, input from City staff, and feedback and direction from City Council.
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4 FACTORS AFFECTING FINANCIAL PERFORMANCE
The potable and recycled water funds are both under the water enterprise fund, even though their costs are separated, and their financial performance is evaluated together. The potable and recycled water system’s financial performance is driven by the ability of the current potable and recycled water rates to meet the City’s funding needs. To maintain financial sufficiency, potable and recycled water rates must fully fund operations and maintenance (O&M) costs, capital improvement plan (CIP) expenditures, and any relevant financial policies, which typically include target reserve balances and debt coverage.
The key factors affecting financial performance include:
Debt Coverage Requirements: The City’s existing annual debt service payment is approximately $900k in each year of the study period, and the City is required to meet an annual debt coverage requirement of 110% each year. This means that the City’s net operating revenue (operating revenue less operating expenses) must be at least 110% greater than its annual debt service. Without any revenue adjustments, the City is not expected to meet its debt coverage requirements starting in FY 2026. Substantial Capital Investment Needs Over the Next Five Years: The cost of planned capital projects over the next five years (FY 2026 through FY 2030) is approximately $21 million, accounting for inflation of project costs over time.
Reserve Policy Targets: The City’s current reserve policy includes targets for operating, capital projects, and debt service reserves. The reserve policy in place allows the City to maintain cash on hand to meet short-term cash flow requirements and to execute CIP projects.
PROPOSED REVENUE ADJUSTMENTS AND DEBT ISSUANCES
Overall annual increases in potable and recycled water rate revenues resulting from rate increases are referred to as “revenue adjustments.” WRE worked with City Council and City staff to determine the most appropriate financial plan scenario, which is shown in Table 1-3.
The proposed financial plan scenario includes five years of revenue adjustments, which are required to meet the debt coverage ratio as well as maintain financial sufficiency and resiliency.
Table 1-3: Proposed Financial Plan Scenario
Line Fiscal Year Effective
Date
Revenue Adjustments
(Potable and Recycled)
1 FY 2026 2/1/2026 9.5%
2 FY 2027 1/1/2027 3.5%
3 FY 2028 1/1/2028 3.5%
4 FY 2029 1/1/2029 3.5%
5 FY 2030 1/1/2030 3.5%
1.8 COST-OF-SERVICE ANALYSIS
A cost-of-service analysis is a technical process used to determine the cost of providing potable and recycled water service to the City’s customers based on each customer’s use of and burden on the water system.
Although the financial performance of each service is evaluated together, the cost-of-service analysis is done separately for potable and recycled water service to ensure that customers only pay for costs associated with the specific service they receive. The cost-of-service analysis is the basis of the nexus between the costs 203
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5 incurred by the utility to provide potable and recycled water service, and the potable and recycled water rates charged to customers, which is a requirement of Proposition 218.
COST-OF-SERVICE METHODOLOGY
The cost-of-service methodology is based on industry standards set forth by AWWA in its M1 Manual; this rate study utilizes the base-extra capacity method. The overall goal of the cost-of-service analysis is to develop “unit costs,” which provide the basis from which proposed rates are directly calculated from. Note that although the study period spans five years, the cost-of-service analysis is limited to a single representative year referred to as the “test year.” The test year in this study is FY 2025. The key steps in conducting a potable and recycled water cost-of-service analysis are outlined below:
Revenue Requirement Determination: The total rate revenue requirement for the test year is determined based on the results of the proposed financial plan and divided into primary subcomponents (operating, capital, etc.). Cost Functionalization: Operating and capital costs are evaluated and assigned to “functional categories” in the potable and recycled water system (e.g., customer service, water supply, distribution, etc.). This provides a proportional breakdown of system costs by functional category. Revenue Requirement Allocation to Cost Causation Components: Functionalized costs are allocated to “cost causation components” (e.g., water supply, delivery, conservation, etc.), which is used to attribute customers’ use of the system to the costs incurred by the City. Unit Cost Development: The rate revenue requirement allocation for each individual cost causation component is divided by the appropriate units of service to establish unit costs for the test year. Unit costs provide the basis from which proposed rates are calculated.
1.9 PROPOSED POTABLE AND RECYCLED WATER RATES
WRE worked closely with the City Council and City staff to determine the most appropriate water rate structure that meets the City’s needs.
PROPOSED RATE STRUCTURE CHANGES
The main objective was to conduct a comprehensive cost-of-service analysis while maintaining as much of the current rate structures as possible to minimize customer impacts.
The City’s current water rate structure includes a monthly service charge based on meter size and a uniform consumption rate per ccf that varies by customer class. After examining the existing rate methodology, given the City’s water supply profile, WRE recommends the City implement a uniform consumption rate for all customer classes to be more consistent with cost-of-service principles. Additionally, to properly pass through Municipal Water District of Orange County (MWDOC)’s cost, who is the City’s main water supplier, WRE recommends the City implement a separate MWDOC monthly service charge based on meter size and pass through supply costs to the variable rate.
WRE proposes no changes to the recycled water rate structure. 204
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6 PROPOSED FIVE-YEAR POTABLE AND RECYCLED WATER RATE SCHEDULE The proposed five-year potable and recycled water rate schedules in this section are based on the proposed rate structure and methodology changes, the updated cost-of-service analysis, and the proposed revenue adjustments in the five-year period. The rate schedule shows the proposed potable and recycled water rates to be implemented in February 2026 through January 2030. Note that MWDOC potable water supply costs will be billed to customers as pass-through charges. The proposed rates shown for these years may differ depending on changes to MWDOC rates; based on the pass-through provision of MWDOC water supply costs, any additional MWDOC costs will not require an additional Proposition 218 noticing process to be passed through to the City’s customers.
Table 1-4, Table 1-5, and Table 1-6 show the current and proposed City monthly fixed charges for potable water customers, MWDOC monthly fixed charges for potable water customers, variable charges for potable water customers, including MWDOC supply and City costs, monthly fixed charges for recycled water customers, as well as variable charges for recycled water customers, respectively.
Table 1-4: Current and Proposed Monthly Fixed Water Service Charge – City Portion (Potable and Recycled)
Line
Monthly Fixed Water Service
Charge - City Portion (Potable
and Recycled)
As of
1/1/2022
Effective
2/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Up to 1" $27.41 $27.76 $28.74 $29.75 $30.80 $31.88
2 1.5" $67.72 $76.67 $79.36 $82.14 $85.02 $88.00
3 2" $102.09 $118.60 $122.76 $127.06 $131.51 $136.12
4 3" $211.23 $251.37 $260.17 $269.28 $278.71 $288.47
5 4" $372.08 $447.03 $462.68 $478.88 $495.65 $513.00
6 6" $756.96 $1,124.86 $1,164.24 $1,204.99 $1,247.17 $1,290.83 Table 1-5: Current and Proposed Monthly Fixed Water Service Charge – MWDOC (Potable) Line Monthly Fixed Water Service
Charge - MWDOC (Potable )
Effective
2/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Up to 1" $5.34
Pass-Through Going Forward
2 1.5" $17.80
3 2" $28.48
4 3" $62.30
5 4" $112.14
6 6" $284.80
Table 1-6: Current and Proposed Consumption Rates (Potable and Recycled) Line Consumption Rates ($/ccf)
(Potable and Recycled)
As of
1/1/2022
Effective
2/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Single Family Residential $5.11 $5.31 $5.50 $5.70 $5.90 $6.11 2 Multi Family Residential $4.92 $5.31 $5.50 $5.70 $5.90 $6.11 3 Commercial $4.95 $5.31 $5.50 $5.70 $5.90 $6.11
4 Irrigation $6.01 $5.31 $5.50 $5.70 $5.90 $6.11
5 Recycled Water $3.29 $3.52 $3.65 $3.78 $3.92 $4.06
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7 CUSTOMER IMPACTS
WRE evaluated the impacts to the Single Family customer class based on the proposed potable water rates for FY 2026.
Table 1-7 shows the proposed impacts for a Single Family customer with up to 1” meter (the most common meter size within this class) at various levels of monthly usage. For the average Residential customer that uses 10 ccf of water every month, the monthly impact will be $7.69 or 9.8%, which reflects the impact of the costof-service analysis, and the 9.5% revenue adjustment applied to FY 2026 rates.
Table 1-7: Proposed Single Family Customer Impacts (Year 1) Line Single Family
Customer Impacts ccf Current Bill Proposed Bill
Difference
($)
Difference
(%)
1 Low Usage 5 $52.96 $59.65 $6.69 12.6%
2 Average Usage 10 $78.51 $86.20 $7.69 9.8%
3 High Usage 20 $129.61 $139.30 $9.69 7.5%
4 Very High Usage 50 $282.91 $298.60 $15.69 5.5%
1.10 PROPOSED DEMAND MANAGEMENT RATES
The City’s 2020 Urban Water Management Plan (UWMP) consists of six stages of demand management, which all require different levels of usage reduction by the City’s customers. When customers reduce their usage at each stage, the City’s rate revenues from variable charges are directly impacted.
Demand management rates are a tool for the City to effectively respond to water shortage emergencies while maintaining financial sufficiency and operational reliability. These rates are designed to recover the costs of supply reduction, which include the loss of variable revenues and any difference (savings) in water supply costs. These rates are explained in section 6 of this report. 206
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8 Table 1-8 shows the proposed demand management rates in each stage for the five-year period, which are incremental charges in addition to the City variable charges shown in Table 1-6 for all usage. 207
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9 Table 1-8: Proposed Demand Management Rates
Line Shortage Level Usage
Reduction
Effective
2/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Level 1 up to 10% $0.21 $0.22 $0.23 $0.24 $0.25
2 Level 2 up to 20% $0.46 $0.48 $0.50 $0.52 $0.54
3 Level 3 up to 30% $0.78 $0.81 $0.84 $0.87 $0.91
4 Level 4 up to 40% $1.21 $1.26 $1.31 $1.36 $1.41
5 Level 5 up to 50% $1.81 $1.88 $1.95 $2.02 $2.10
6 Level 6 >50% $2.71 $2.81 $2.91 $3.02 $3.13
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10 2. FINANCIAL PLAN
2.1 FINANCIAL PLAN METHODOLOGY
The purpose of a financial plan is to project revenues, expenses, cash flows, reserve balances, and debt coverage over a multi-year period to assess financial sufficiency and performance and to determine the amount of required rate revenue. For this study, the planning period is from FY 2026 through FY 2030; data for FY 2025 are shown when needed to represent actual or budgeted data inputs. The key steps in developing a financial plan for a potable and recycled water enterprise are below:
Revenue Projections: Annual revenues from rates and other miscellaneous sources are projected over the planning period. Rate revenues are projected based on current rates to establish baseline revenues from which the need for additional rate increases can be evaluated. Expense Projections: Annual expenses are projected over the study period, including O&M expenses, debt service, and CIP costs. CIP funding options (grants, debt, etc.) are also evaluated as part of the financial plan.
Financial Policy Evaluation: Key financial policies include debt coverage requirements and reserve targets. Debt coverage requirements are typically explicitly stated in official agreements on outstanding debt issuances. Reserve targets are typically set by an agency’s elected officials and may need to be periodically evaluated and updated.
Status Quo Financial Plan Projections: Cash flow, reserve balances, and debt coverage are projected over the study period in the absence of additional rate increases (this scenario is called the “status quo”). Projected reserve balances and debt coverage are then compared to the agency’s financial policy requirements and targets. The status quo financial plan provides a baseline to evaluate the need for rate increases.
Proposed Financial Plan Projections: The magnitude and timing of annual proposed revenue increases over the study period are evaluated and determined based on the agency’s financial policies, financial performance, and policy objectives. Proposed rate increases (referred to as “revenue adjustments”) should generate sufficient revenue to recover the agency’s expenses, maintain adequate reserves, and meet all debt coverage requirements. The proposed financial plan determines the total annual rate revenue requirement over the study period.
2.2 REVENUES
CURRENT WATER RATES
The City’s current water rates include monthly fixed meter charges based on meter sizes and variable charges based on customer class and units of water in hundred cubic feet (ccf). The consumption rates have two components: the water supply charge and the City distribution charge. The water supply charge is the same for all potable water customers.
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11 Table 2-1 and Table 2-2 show the current monthly fixed water service charges and consumption rates, respectively.
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12 Table 2-1: Current Monthly Fixed Water Service Charge (Potable and Recycled) Line Monthly Fixed Water Service Charge
(Potable and Recycled)
As of
1/1/2022
1 Up to 1" $27.41
2 1.5" $67.72
3 2" $102.09
4 3" $211.23
5 4" $372.08
6 6" $756.96
Table 2-2: Current Consumption Rates
Line Consumption Rates ($/ccf) As of
1/1/2022
1 Single Family Residential $5.11
2 Water Supply Charge $2.94
3 City Distribution Charge $2.17
4 Multi Family Residential $4.92
5 Water Supply Charge $2.94
6 City Distribution Charge $1.98
7 Commercial $4.95
8 Water Supply Charge $2.94
9 City Distribution Charge $2.01
10 Irrigation $6.01
11 Water Supply Charge $2.94
12 City Distribution Charge $3.07
13 Non-Potable Irrigation $3.29
CUSTOMER ACCOUNTS AND USAGE
This section details the customer accounts and water usage for all years of the study, which are referred to as the units of service. Units of service represent the quantity of billing units that are subject to the City’s potable and recycled water rates and charges.
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13 Table 2-3 shows the projected number of meters for all customers for the study period. City staff provided actual data for FY 2025. Growth in the City is highly variable and the timeline in which growth occurs can vary significantly from planning documents. WRE worked with City staff to determine the most appropriate estimates for customer accounts. Based on the City’s adopted FY 2026 budget, the City is projecting a 3.5% increase in customer accounts in FY 2026 compared to FY 2025. The number of accounts for FY 2027 through FY 2030 is assumed to be the same as FY 2026. The number of metered connections is the unit of service for the City’s monthly fixed charges.
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14 Table 2-3: Projected Customer Accounts
Line Customer Accounts FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Potable Water
2 Up to 1" 15,081 15,615 15,615 15,615 15,615 15,615
3 1.5" 315 326 326 326 326 326
4 2" 762 789 789 789 789 789
5 3" 21 22 22 22 22 22
6 4" 18 19 19 19 19 19
7 6" 10 10 10 10 10 10
8 Total 16,208 16,782 16,782 16,782 16,782 16,782
9 10 Recycled Water
11 Up to 1" 1 1 1 1 1 1
12 1.5" 2 2 2 2 2 2
13 2" 115 119 119 119 119 119
14 3" 7 8 8 8 8 8
15 4" 1 1 1 1 1 1
16 6" 6 6 6 6 6 6
17 Total 132 136 136 136 136 136
Table 2-4 shows the water demand growth assumptions for the study period. WRE worked with City staff to determine the most appropriate estimates for annual water usage. Based on the City’s adopted FY 2026 budget, the City is projecting a 2% potable water usage decrease in FY 2026 compared to FY 2025. Consumption for FY 2027 through FY 2030 is assumed to be the same as FY 2026.
Table 2-4: Projected Demand Growth
Line Demand Growth FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Potable -2% 0% 0% 0% 0%
2 Non-Potable 10% 0% 0% 0% 0%
Table 2-5 shows the projected potable and recycled water usage for each customer class based on the demand growth assumptions (Table 2-4). City staff provided actual water usage for FY 2025.
Table 2-5: Projected Customer Water Usage (ccf)
Line Water Consumption (ccf) FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Single Family Residential 1,485,734 1,460,466 1,460,466 1,460,466 1,460,466 1,460,466 2 Multi Family Residential 458,565 450,767 450,767 450,767 450,767 450,767 3 Commercial 277,248 272,532 272,532 272,532 272,532 272,532 4 Irrigation 435,612 428,203 428,203 428,203 428,203 428,203 5 Non-Potable Irrigation 339,774 373,417 373,417 373,417 373,417 373,417 6 Total 2,996,933 2,985,385 2,985,385 2,985,385 2,985,385 2,985,385 213
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15 REVENUES FROM CURRENT RATES
Table 2-6 shows the calculated potable and recycled water rate revenues for the study period based on the current rates and the projected units of service. The monthly fixed charge revenue for potable water customers (Line 2) is calculated by multiplying the effective monthly fixed charges (Table 2-1) by the projected potable water meter connections (
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16 Table 2-3) for twelve billing periods. The monthly fixed charge revenue for recycled water customers (Line 3) is calculated by multiplying the effective monthly fixed charges (Table 2-1) by the projected recycled water meter connections (
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17 Table 2-3) for twelve billing periods.
The variable charge revenue for each customer class (Lines 5-9) is calculated by multiplying the effective combined variable charges (Table 2-2) by the projected water usage (Table 2-5) in each year.
Table 2-6: Calculated Rate Revenues at Current Rates
Line Calculated Rate Revenues FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Fixed Charge Revenue $6,594,065 $6,827,557 $6,827,557 $6,827,557 $6,827,557 $6,827,557 2 Potable Water $6,378,290 $6,604,141 $6,604,141 $6,604,141 $6,604,141 $6,604,141 3 Recycled Water $215,775 $223,416 $223,416 $223,416 $223,416 $223,416 4 Consumption Revenue $13,838,644 $13,603,287 $13,603,287 $13,603,287 $13,603,287 $13,603,287 5 Single Family Residential $7,592,099 $7,462,979 $7,462,979 $7,462,979 $7,462,979 $7,462,979 6 Multi Family Residential $2,256,142 $2,217,771 $2,217,771 $2,217,771 $2,217,771 $2,217,771 7 Commercial $1,372,376 $1,349,035 $1,349,035 $1,349,035 $1,349,035 $1,349,035 8 Irrigation $2,618,027 $2,573,501 $2,573,501 $2,573,501 $2,573,501 $2,573,501 9 Non-Potable Irrigation $1,117,857 $1,228,543 $1,228,543 $1,228,543 $1,228,543 $1,228,543 10 11 Total Rate Revenue $21,550,566 $21,659,387 $21,659,387 $21,659,387 $21,659,387 $21,659,387
REVENUE SUMMARY
Table 2-7 shows the summary of projected revenues for the study period. City staff provided actual revenues for FY 2025 and budgeted revenues for FY 2026; all other years are projected based on the relevant assumptions or calculations. Total potable and recycled water rate revenues (Lines 1-3) are equal to total calculated rate revenues (Table 2-6, Line 11). The sum of potable water rate revenues (Lines 2 and 3) and recycled water rate revenues (Line 1) is equal to potable and recycled water rate revenues at current rates (Line 11). Other Revenue (Line 4) is not inflated for future years. Interest Earnings (Line 5) is calculated based on ending fund balances and an assumed 2.5% interest rate. A breakdown of revenues by potable and recycled water funds is available in the Appendix (Table 7-1).
Table 2-7: Revenue Summary
Line Revenues FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Effluent Water Sales $1,117,857 $1,228,543 $1,228,543 $1,228,543 $1,228,543 $1,228,543 2 Metered Water Sales $13,838,644 $13,603,287 $13,603,287 $13,603,287 $13,603,287 $13,603,287 3 Fixed Water Service
Charge
$6,594,065 $6,827,557 $6,827,557 $6,827,557 $6,827,557 $6,827,557 4 Other Revenue $1,863,050 $2,055,340 $2,055,340 $2,055,340 $2,055,340 $2,055,340 5 Interest Earnings $811,420 $750,000 $523,452 $486,150 $452,052 $430,554 6 Total $24,225,036 $24,464,727 $24,238,179 $24,200,877 $24,166,779 $24,145,281
2.3 OPERATING EXPENSES
INFLATIONARY ASSUMPTIONS
WRE worked with City staff to determine the annual inflationary assumptions to apply to the City’s O&M expense budget. City staff provided actual O&M expenses for FY 2025, budgeted expenses for FY 2026, and additional expenses expected during the study period; all other years are projected based on the inflationary assumptions shown in Table 2-8.
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18 Table 2-8: Expense Inflationary Assumptions
Line Inflationary Assumptions FY 2027 FY 2028 FY 2029 FY 2030 1 General 3.0% 3.0% 3.0% 3.0%
2 Salaries 7.0% 7.0% 7.0% 7.0%
3 Benefits 10.0% 10.0% 10.0% 10.0%
4 Chemicals 8.0% 8.0% 8.0% 8.0%
5 Utilities 4.0% 4.0% 4.0% 4.0%
6 Capital 4.0% 4.0% 4.0% 4.0%
7 General (High) 5.0% 5.0% 5.0% 5.0%
POTABLE WATER SUPPLY COSTS
The City’s main source of potable supply is imported water from Metropolitan Water District of Orange County (MWDOC). The cost of purchasing water from MWDOC represents a significant portion, approximately 54%, of the City’s O&M expenses in FY 2025, and can vary depending on water demand each year and the projected fixed and variable rates of MWDOC water.
The annual imported water cost includes an annual fixed charge and variable charge per ccf of imported water.
MWDOC rates are set based on the calendar year4(CY) so costs are converted to FY basis for projection purposes.
4 One calendar year runs from January 1st – December 31st .
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19 Table 2-9 shows the calculated MWDOC water supply costs for the study period accounting for these factors.
The City provided the purchased water amount for both untreated and treated water for FY 2025 (Lines 1-8).
Since there is no demand growth projected for the study period, WRE assumes the same water purchases for FY 2026 through FY 2030.
City staff provided MWDOC fixed and variable charges for CY 2024 through CY 2026, adjusted for the fiscal year. Future years are assumed to be passed through to customers. Total MWDOC water costs for each year (Line 32) are calculated by multiplying total water purchases (Lines 1-8) by the corresponding variable charges (Lines 17-21), plus the annual fixed charges (Lines 11-14). These charges are determined by MWDOC on an annual basis.
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20 Table 2-9: Calculated Potable Water Supply Costs
Line Water Purchase Cost FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 MWDOC Purchase Water
2 Untreated Purchase (AF) 1,101 1,101 1,101 1,101 1,101 1,101 3 Jul - Dec 536 536 536 536 536 536
4 Jan - Jun 565 565 565 565 565 565
5 Treated Purchase (AF) 5,997 5,997 5,997 5,997 5,997 5,997 6 Jul - Dec 3,407 3,407 3,407 3,407 3,407 3,407
7 Jan - Jun 2,590 2,590 2,590 2,590 2,590 2,590
8 Total MWDOC Purchase
Water (AF) 7,098 7,098 7,098 7,098 7,098 7,098
9 10 MWDOC Rates
11 Readiness-to-Serve Charge $767,479 $877,002 $877,002 $877,002 $877,002 $877,002 12 Capacity Charge $223,453 $233,961 $233,961 $233,961 $233,961 $233,961 13 Retail Meter Charge $14.75 $15.25 $15.25 $15.25 $15.25 $15.25 14 Choice Services Charge $39,301 $35,346 $35,346 $35,346 $35,346 $35,346 15 16 Untreated Full Service
17 Jul - Dec $903 $912 $984 $984 $984 $984
18 Jan - Jun $912 $984 $984 $984 $984 $984
19 Treated Full Service
20 Jul - Dec $1,256 $1,395 $1,528 $1,528 $1,528 $1,528
21 Jan - Jun $1,395 $1,528 $1,528 $1,528 $1,528 $1,528
22 23 MWDOC Calculated Cost
24 Readiness-to-Serve Charge $767,479 $877,002 $877,002 $877,002 $877,002 $877,002 25 Capacity Charge $223,453 $233,961 $233,961 $233,961 $233,961 $233,961 26 Retail Meter Charge $239,068 $255,925 $255,925 $255,925 $255,925 $255,925 27 Choice Services Charge $39,301 $35,346 $35,346 $35,346 $35,346 $35,346 28 29 Untreated Cost $999,563 $1,045,094 $1,083,679 $1,083,679 $1,083,679 $1,083,679 30 Treated Cost $7,892,256 $8,710,298 $9,163,416 $9,163,416 $9,163,416 $9,163,416 31 32 Total MWDOC Cost $10,161,120 $11,157,627 $11,649,329 $11,649,329 $11,649,329 $11,649,329 33 Fixed Cost $1,230,001 $1,366,888 $1,366,888 $1,366,888 $1,366,888 $1,366,888 34 Choice Services Charge $39,301 $35,346 $35,346 $35,346 $35,346 $35,346 35 Variable Cost $8,891,818 $9,755,393 $10,247,095 $10,247,095 $10,247,095 $10,247,095
OPERATING EXPENSE SUMMARY
Table 2-10 shows the summary of O&M expenses for the study period. City staff provided actual expenses for FY 2025 and budgeted expenses for FY 2026; expenses for other years are projections. Purchased water expenses (Line 3) include MWDOC expenses from
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21 Table 2-9 (Line 32) plus additional water purchases from Trabuco Canyon Water District. The City’s Water Reclamation Plant provides treated wastewater to secondary standards as the supply source for Recycled Water. Costs for further treatment of the wastewater from secondary to tertiary level for distribution for irrigation purposes is funded by the Water Fund. All other expenses are inflated based on the assumptions in Table 2-8. Detailed operating expense projections by potable and recycled water funds are included in the Appendix (Table 7-2).
Table 2-10: Operating Expenses Summary
Line Expenses FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Water Administration $1,758,510 $2,281,800 $2,384,188 $2,492,452 $2,607,008 $2,728,306 2 Water Production $2,313,400 $3,157,138 $3,300,973 $3,453,207 $3,614,443 $3,785,335 3 Purchased Water $10,895,590 $11,900,240 $12,299,150 $12,331,641 $12,365,757 $12,401,578 4 Transmission/Distribution $3,506,990 $4,680,630 $4,947,083 $5,231,758 $5,536,067 $5,861,543 5 Water Conservation $269,470 $502,970 $524,894 $548,043 $572,502 $598,364 6 Water Reclamation $1,349,520 $1,766,370 $1,868,588 $1,977,794 $2,094,522 $2,219,351 7 Total $20,093,480 $24,289,148 $25,324,876 $26,034,894 $26,790,299 $27,594,477
2.4 DEBT SERVICE
Table 2-11 shows the City’s existing annual debt service for the study period. The City has existing debt service payments on one outstanding loan totaling approximately $900k each year.
Table 2-11: Existing Debt Service
Line Debt Service FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Recycled SRF Loan $900,602 $900,602 $900,602 $900,602 $900,602 $900,602
2.5 CAPITAL IMPROVEMENT PLAN
CAPITAL IMPROVEMENT PROJECTS
Table 2-12 and Table 2-13 show the City’s potable and recycled water planned CIP, respectively; project costs are inflated based on the Capital factor (Table 2-8, Line 6). The total 6-year CIP cost is $23.4 million for potable water and $449k for recycled water.
Table 2-12: Potable Water Capital Project Costs
Line Potable Capital Projects
(Inflated) FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 AC Pipe Replacement
Northwest 308 Zone $82,095 $4,705,277 $0 $0 $0 $0
2 Blanco Pump Station
Rehabilitation $0 $520,000 $0 $0 $0 $0
3 Calle Real Pump Station
Rehabilitation $4,372 $3,120,000 $0 $0 $0 $0
4 Calle Vallarta PRS $0 $364,000 $0 $0 $0 $0
5 Cathodic Protection
System Improvements $31,124 $208,035 $0 $0 $0 $0
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22 6
City-wide Copper Service
Replacements $0 $520,000 $0 $0 $0 $0
7 Costero Risco PRS
Rehabilitation $20,831 $694,887 $0 $0 $0 $0
8 Dead End Water System
Improvements $40,536 $9,843 $0 $0 $0 $0
9 El Levante PRS
Rehabilitation $10,266 $353,324 $0 $0 $0 $0
10 JRWSS Agency Projects5 $720,283 $1,179,641 $1,317,565 $1,765,732 $1,182,642 $849,456 11 Major Street Maintenance
Program $0 $0 $0 $0 $0 $0
12 Meter Replacements $96,303 $66,245 $108,160 $112,486 $134,534 $139,915 13 Pico Booster Pump Station
Pump Replacement $55,997 $0 $0 $0 $0 $0
14 Pico/Presidio DIP
Replacement (Albertsons) $847,086 $580,657 $0 $0 $0 $0
15 Pump Station & Reservoir
Pavement Rehab $87,000 $4,128 $0 $0 $0 $0
16 Reata Pump Station
Rehabilitation $370 $82,663 $0 $0 $0 $0
17 Reservoir 5A Replacement $29,219 $114,537 $0 $0 $0 $0 18 Reservoir No 4 Exterior
Coating $221,617 $0 $0 $0 $0 $0
19 Sodium Hypochlorite Tank
Replacement $51,578 ($37,823) $0 $0 $0 $0
20 Valve Replacement
Program $96,153 $138,483 $0 $0 $0 $0
21 Water Distribution Insert
Valve Program $0 $31,200 $0 $0 $0 $0
22 Water System Air-Vac
Replacement Program $0 $26,000 $0 $0 $0 $0
23 Water System
Rehabilitation $358,199 $251,473 $378,560 $393,702 $409,450 $425,829 24 Well Water Quality System
Improvement $27,022 $474,680 $0 $0 $0 $0
25 Total $2,780,051 $13,407,249 $1,804,285 $2,271,921 $1,726,626 $1,415,199 26 27 CIP Execution Rate 100% 100% 100% 100% 100% 100%
28 Executed Capital Projects $2,780,051 $13,407,249 $1,804,285 $2,271,921 $1,726,626 $1,415,199 Table 2-13: Recycled Water Capital Project Costs
Line Recycled Capital Projects
(Inflated) FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Recycled Water Storage Bay
Rehab $0 $208,000 $0 $0 $0 $0
2 Recycled Water Alum Chem
System Replace $15,480 $225,557 $0 $0 $0 $0
3 Total $15,480 $433,557 $0 $0 $0 $0
5 JWRSS stands for Joint Regional Water Supply System
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23 4
5 CIP Execution Rate 100% 100% 100% 100% 100% 100%
6 Executed Capital Projects $15,480 $433,557 $0 $0 $0 $0
CAPITAL EXPENSE SUMMARY
Table 2-14 and Table 2-15 show the potable water and recycled water capital funding sources, respectively.
Debt funded CIP (Line 2) pertains to all CIP that is funded by any proposed debt issuances. All other project costs will be funded by grants (Line 1) or water rates and reserves (Line 3).
Table 2-14: Potable Water Capital Funding Summary
Line Potable Capital
Financing Plan FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Grant Funded $66,250 $0 $0 $0 $0 $0
2 Debt Funded $0 $0 $0 $0 $0 $0
3 Rate Funded $2,713,801 $13,407,249 $1,804,285 $2,271,921 $1,726,626 $1,415,199 4 Total $2,780,051 $13,407,249 $1,804,285 $2,271,921 $1,726,626 $1,415,199 Table 2-15: Recycled Water Capital Funding Summary
Line Recycled Capital
Financing Plan FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Grant Funded $0 $0 $0 $0 $0 $0
2 Debt Funded $0 $0 $0 $0 $0 $0
3 Rate Funded $15,480 $433,557 $0 $0 $0 $0
4 Total $15,480 $433,557 $0 $0 $0 $0
2.6 FINANCIAL POLICIES
RESERVE POLICY
The City’s reserve policy maintains cash on hand to meet short-term cash imbalances, execute CIP projects, and for emergencies. The City currently has an adopted reserve policy6that consists of an emergency reserve, which is recommended to protect funds during periods of economic downturn, other unanticipated expenses, or emergency expenses that could not be reasonable foreseen, with a target equal to 12% of annual operating expenses, a depreciation reserve target equal to three years of CIP, and a debt service reserve equal to one year of debt service. The reserve target for the study period ranges from approximately $9.4 to $21.8 million in the City’s reserve funds.
WRE proposes that the City modifies its reserve policy to the following to be more in line with industry standards:
Operating Reserve: 25% of annual operating expenses to cover unexpected expenses or seasonal fluctuations
Capital Projects Reserve: 5-year rolling average of annual CIP to fund unexpected capital expenses that may arise
6 The City’s current reserve policy is defined within the City’s 2024-25 & 2025-26 Biennial Budget under Fiscal Policy 222
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24 Emergency Reserve: $2 million, which is the cost of replacing a major asset in case of failure during an emergency
Debt Service Reserve: one year of debt service per debt agreement
DEBT COVERAGE REQUIREMENT
The City’s debt coverage requirement is 110% of annual debt service. To meet coverage requirements, net operating revenues (revenues less operating expenses) must be 110% or more of annual debt service.
2.7 STATUS QUO FINANCIAL PLAN
STATUS QUO FINANCIAL PLAN SCENARIO
Table 2-16 shows the status quo financial plan scenario, which assumes no revenue adjustments and no proposed debt issuances. This scenario is used to evaluate the ability of the current potable and recycled water rates to meet the City’s financial targets and to determine the need for revenue adjustments.
Table 2-16: Status Quo Financial Plan Scenario
Line Fiscal Year Effective
Date
Revenue Adjustments
(Potable and Recycled)
1 FY 2026 2/1/2026 0.0%
2 FY 2027 1/1/2027 0.0%
3 FY 2028 1/1/2028 0.0%
4 FY 2029 1/1/2029 0.0%
5 FY 2030 1/1/2030 0.0%
STATUS QUO CASH FLOW PROJECTIONS
Table 2-17 and Table 2-18 show the cash flow projections for the status quo financial plan for potable water and recycled water funds, respectively. Revenues7(Lines 1-7) are from Table 2-7. Operating expenses (Lines 9- 15) are from Table 2-10. Net operating revenue (Line 17) is equal to the difference between total revenues (Line 7) and total expenses (Line 15). Debt service (Lines 19-22) is from Table 2-11. Rate funded CIP (Line 25) is calculated from total CIP (Table 2-14, Line 3, and Table 2-15, Line 3). The status quo scenario assumes no new debt; all CIP is expected to be rate or grant funded. Net cash flow (Line 28) is equal to the net operating revenue (Line 17) less debt service (Line 22) and rate funded CIP (Line 26). Grant proceeds, debt proceeds, grant funded CIP and debt funded CIP are not included in the cash flow projections.
The net operating revenue in this scenario is negative starting at the end of FY 2027 for potable and FY 2026 for recycled water funds, meaning that the City’s current revenues are not sufficient to fund its operating expenses. The net cash flow in the status quo scenario is negative for all years of the planning period, meaning that the City’s current revenues are not sufficient to fund its debt service and annual CIP.
7 Interest income (Line 6) is different in the status quo financial plan scenario because it is based on projected fund balances. The status quo scenario results in lower fund balances; therefore, the City has less interest income. Table 2-7 shows the interest income for the proposed financial plan scenario. 223
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25 Table 2-17: Projected Potable Cash Flows (Status Quo Financial Plan) Line Potable Cash Flow Projections FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Revenues
2 Rate Revenues at Existing Rates $20,216,934 $20,207,428 $20,207,428 $20,207,428 $20,207,428 $20,207,428 3 Revenue Adjustments $0 $0 $0 $0 $0 $0
4 Miscellaneous Revenues $249,420 $282,000 $282,000 $282,000 $282,000 $282,000 5 All Other Revenues $1,411,740 $1,597,640 $1,597,640 $1,597,640 $1,597,640 $1,597,640 6 Interest Income $811,420 $750,000 $470,842 $359,849 $228,734 $85,555 7 Subtotal - Revenues $22,689,514 $22,837,068 $22,557,910 $22,446,917 $22,315,802 $22,172,624 8 9 Operating Expenses
10 Water Administration $1,758,510 $2,281,800 $2,384,188 $2,492,452 $2,607,008 $2,728,306 11 Water Production $2,313,400 $3,157,138 $3,300,973 $3,453,207 $3,614,443 $3,785,335 12 Purchased Water $10,895,590 $11,900,240 $12,299,150 $12,331,641 $12,365,757 $12,401,578 13 Transmission/Distribution $3,506,990 $4,680,630 $4,947,083 $5,231,758 $5,536,067 $5,861,543 14 Water Conservation $269,470 $502,970 $524,894 $548,043 $572,502 $598,364 15 Subtotal - Operating Expenses $18,743,960 $22,522,778 $23,456,288 $24,057,100 $24,695,777 $25,375,125 16 17 Net Revenue $3,945,554 $314,290 ($898,378) ($1,610,183) ($2,379,975) ($3,202,502) 18 19 Debt Service
20 Existing Debt $0 $0 $0 $0 $0 $0
21 Proposed Debt $0 $0 $0 $0 $0 $0
22 Subtotal - Debt Service $0 $0 $0 $0 $0 $0
23 24 Capital Projects
25 Rate Funded CIP $2,713,801 $13,407,249 $1,804,285 $2,271,921 $1,726,626 $1,415,199 26 Subtotal - Capital Projects $2,713,801 $13,407,249 $1,804,285 $2,271,921 $1,726,626 $1,415,199 27 28 Net Cash Flow $1,231,752 ($13,092,959) ($2,702,663) ($3,882,104) ($4,106,601) ($4,617,701) 224
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26 Table 2-18: Projected Recycled Cash Flows (Status Quo Financial Plan) Line Recycled Cash Flow Projections FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Revenues
2 Rate Revenues at Existing Rates $1,333,632 $1,451,959 $1,451,959 $1,451,959 $1,451,959 $1,451,959 3 Revenue Adjustments $0 $0 $0 $0 $0 $0
4 SMWD RW Sale Revenue $0 $0 $0 $0 $0 $0
5 Other Governmental Revenues $125,080 $169,000 $169,000 $169,000 $169,000 $169,000 6 Subtotal - Revenues $1,458,712 $1,620,959 $1,620,959 $1,620,959 $1,620,959 $1,620,959 7 8 Operating Expenses
9 Water Reclamation $1,349,520 $1,766,370 $1,868,588 $1,977,794 $2,094,522 $2,219,351 10 MF/RO Additional Cost $0 $0 $0 $0 $0 $0
11 Subtotal - Operating Expenses $1,349,520 $1,766,370 $1,868,588 $1,977,794 $2,094,522 $2,219,351 12 13 Net Revenue $109,192 ($145,411) ($247,629) ($356,835) ($473,563) ($598,393) 14 15 Debt Service
16 Existing Debt $900,602 $900,602 $900,602 $900,602 $900,602 $900,602 17 MF/RO Debt $0 $0 $0 $0 $0 $0
18 Proposed Debt $0 $0 $0 $0 $0 $0
19 Subtotal - Debt Service $900,602 $900,602 $900,602 $900,602 $900,602 $900,602 20 21 Capital Projects
22 Rate Funded CIP $15,480 $433,557 $0 $0 $0 $0
23 Subtotal - Capital Projects $15,480 $433,557 $0 $0 $0 $0 24 25 Net Cash Flow ($806,890) ($1,479,571) ($1,148,231) ($1,257,437) ($1,374,166) ($1,498,995) 225
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27 STATUS QUO FUND BALANCE PROJECTIONS
Table 2-19 shows the fund balance projections for the status quo financial plan. Based on the sources (revenues) and uses (operating expenses, debt service, and capital expenditures) of funds, the City’s fund balances will be negative by the end of FY 2030. At the end of the study period, the City’s fund balances will be approximately -$494,000 in FY 2030, from a starting balance of approximately $34.3 million in FY 2025. This represents a net loss of approximately $34.8 million in six years.
Table 2-19: Projected Potable and Recycled Fund Balances (Status Quo Financial Plan) Line Fund Balance Projections FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Combined Beginning Fund Balance $34,292,690 $34,717,552 $20,093,944 $16,243,049 $11,103,508 $5,622,741 2 3 Sources of Funds
4 Rate Revenues $21,550,566 $21,659,387 $21,659,387 $21,659,387 $21,659,387 $21,659,387 5 Revenue Adjustments $0 $0 $0 $0 $0 $0
6 Non-Rate Revenues $1,786,240 $2,048,640 $2,048,640 $2,048,640 $2,048,640 $2,048,640 7 Grant Proceeds $66,250 $0 $0 $0 $0 $0
8 Debt Proceeds $0 $0 $0 $0 $0 $0
9 Interest Income $811,420 $698,922 $470,842 $359,849 $228,734 $85,555 10 Subtotal - Sources of Funds $24,214,476 $24,406,949 $24,178,869 $24,067,876 $23,936,761 $23,793,582 11 12 Uses of Funds
13 Operating Expenses $20,093,480 $24,289,148 $25,324,876 $26,034,894 $26,790,299 $27,594,477 14 Debt Service $900,602 $900,602 $900,602 $900,602 $900,602 $900,602 15 Grant Funded CIP $66,250 $0 $0 $0 $0 $0
16 Debt Funded CIP $0 $0 $0 $0 $0 $0
17 Rate Funded CIP $2,729,281 $13,840,806 $1,804,285 $2,271,921 $1,726,626 $1,415,199 18 Subtotal - Uses of Funds $23,789,614 $39,030,557 $28,029,763 $29,207,417 $29,417,528 $29,910,279 19 20 Ending Balances $34,717,552 $20,093,944 $16,243,049 $11,103,508 $5,622,741 ($493,955) 226
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28 STATUS QUO FINANCIAL PERFORMANCE
The City’s financial performance is evaluated based on the reserve targets and debt coverage requirements, as shown in Table 2-20. Under the status quo financial plan, the City will not meet its debt coverage requirements from FY 2026 to FY 2030 and will not meet its existing reserves target in FY 2026, FY 2029 and FY 2030. The City will not meet the recommended reserves target starting in FY 2028.
Table 2-20: Forecasted Potable and Recycled Financial Performance (Status Quo Financial Plan) Line Financial Performance FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Existing Reserve Targets
2 Emergency Reserve $2,411,218 $2,914,698 $3,038,985 $3,124,187 $3,214,836 $3,311,337 3 Depreciation Reserve $18,440,623 $17,917,012 $5,802,832 $5,413,746 $5,413,746 $5,413,746 4 Debt Service Reserve $900,602 $900,602 $900,602 $900,602 $900,602 $900,602 5 Combined Reserve Target $21,752,443 $21,732,313 $9,742,420 $9,438,536 $9,529,185 $9,625,686 6 Combined Reserves $34,717,552 $20,093,944 $16,243,049 $11,103,508 $5,622,741 ($493,955) 7 Meets Target? Yes No Yes Yes No No
8 9 Recommended Reserve Targets
10 Operating Reserve Target $5,023,370 $6,072,287 $6,331,219 $6,508,724 $6,697,575 $6,898,619 11 Capital Projects Reserve Target $4,487,834 $4,211,768 $4,211,768 $4,211,768 $4,211,768 $4,211,768 12 Emergency Reserve Target $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 13 Debt Service Reserve $900,602 $900,602 $900,602 $900,602 $900,602 $900,602 14 Combined Reserve Target $12,411,806 $13,184,657 $13,443,589 $13,621,094 $13,809,945 $14,010,989 15 Combined Reserves $34,717,552 $20,093,944 $16,243,049 $11,103,508 $5,622,741 ($493,955) 16 Meets Target? Yes Yes Yes No No No
17 18 Debt Coverage Target
19 Required Debt Coverage 110% 110% 110% 110% 110% 110% 20 Calculated Debt Coverage 450% 19% -127% -218% -317% -422% 21 Meets Target? Yes No No No No No
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29 Figure 2-1 and Figure 2-2 show the comparison of revenues and the revenue requirement for the status quo scenario for potable and recycled water funds, respectively. The stacked bars represent the revenue requirements, or costs: light blue for O&M expenses, dark blue for debt service, and green for rate funded CIP.
The City will not be adding to its reserves (grey bars) in this scenario. The current revenue, shown as a solid line, is lower than the revenue requirements, meaning that revenues are insufficient to fund necessary costs.
Figure 2-1: Potable Revenue Requirements vs. Revenues (Status Quo Financial Plan) Figure 2-2: Recycled Revenue Requirements vs. Revenues (Status Quo Financial Plan) This may cause the City to be in technical default.
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30 Figure 2-3 shows the debt coverage projections in the status quo financial plan. The required debt coverage (dashed black line) is equal to 110%. The City is expected to not meet its debt coverage requirements starting in FY 2026, indicated by the alert coverage (red circles). This may cause the City to be in technical default.
Figure 2-3: Potable and Recycled Projected Debt Coverage (Status Quo Financial Plan) Figure 2-4 shows the fund balance projections in the status quo financial plan. The City’s ending balance (green bars) will not meet the existing reserve targets (solid line) beginning in FY 2029 and will not meet the recommended reserve targets (dashed line) beginning in FY 2028.
Figure 2-4: Potable and Recycled Projected Fund Balances (Status Quo Financial Plan) 229
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31 2.8 PROPOSED FINANCIAL PLAN
PROPOSED FINANCIAL PLAN SCENARIO
The proposed financial plan includes five years of revenue adjustments, shown in Table 2-21. These adjustments are needed to meet the City’s debt coverage requirements and were developed based on input from City staff and the City Council. The first year increase of 9.5% is due to the coverage ratio requirement.
Without this increase, the City may be in technical default since the net revenue is not 110% of the annual debt service.
Table 2-21: Proposed Water and Recycled Financial Plan Scenario Line Fiscal Year Effective
Date
Revenue Adjustments
(Potable and Recycled)
1 FY 2026 2/1/2026 9.5%
2 FY 2027 1/1/2027 3.5%
3 FY 2028 1/1/2028 3.5%
4 FY 2029 1/1/2029 3.5%
5 FY 2030 1/1/2030 3.5%
PROPOSED CASH FLOW PROJECTIONS
Table 2-22 and Table 2-23 show the cash flow projections for the proposed financial plan for potable water and recycled water funds, respectively. Revenues (Lines 1-7) are from Table 2-7. Revenue adjustments (Line 3) are from Table 2-21. Operating expenses (Lines 9-15) are from Table 2-10. Net operating revenue (Line 17 and Line 13) is equal to the difference between total revenues (Line 7 and Line 6) and total expenses (Line 15 and Line 11). Debt service (Lines 19-22 and Lines 15-19) is from Table 2-11. Rate funded CIP (Line 25 and Line 23) is calculated from total CIP (Table 2-14, Line 3, and Table 2-15, Line 3). The status quo scenario assumes no new debt; all CIP is expected to be rate or grant funded. Net cash flow (Line 28 and Line 25) is equal to the net operating revenue (Line 17 and Line 13) less debt service (Line 22 Line 19) and rate funded CIP (Line 26 and Line 23). Grant proceeds, debt proceeds, grant funded CIP and debt funded CIP are not included in the cash flow projections.
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32 Table 2-22: Projected Potable Cash Flows (Proposed Financial Plan) Line Potable Cash Flow Projections FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Revenues
2 Rate Revenues at Existing Rates $20,216,934 $20,207,428 $20,207,428 $20,207,428 $20,207,428 $20,207,428 3 Revenue Adjustments $0 $799,877 $2,306,931 $3,094,933 $3,910,516 $4,754,644 4 Miscellaneous Revenues $249,420 $282,000 $282,000 $282,000 $282,000 $282,000 5 All Other Revenues $1,411,740 $1,597,640 $1,597,640 $1,597,640 $1,597,640 $1,597,640 6 Interest Income $811,420 $750,000 $523,452 $486,150 $452,052 $430,554 7 Subtotal - Revenues $22,689,514 $23,636,945 $24,917,451 $25,668,151 $26,449,636 $27,272,266 8 9 Operating Expenses
10 Water Administration $1,758,510 $2,281,800 $2,384,188 $2,492,452 $2,607,008 $2,728,306 11 Water Production $2,313,400 $3,157,138 $3,300,973 $3,453,207 $3,614,443 $3,785,335 12 Purchased Water $10,895,590 $11,900,240 $12,299,150 $12,331,641 $12,365,757 $12,401,578 13 Transmission/Distribution $3,506,990 $4,680,630 $4,947,083 $5,231,758 $5,536,067 $5,861,543 14 Water Conservation $269,470 $502,970 $524,894 $548,043 $572,502 $598,364 15 Subtotal - Operating Expenses $18,743,960 $22,522,778 $23,456,288 $24,057,100 $24,695,777 $25,375,125 16 17 Net Revenue $3,945,554 $1,114,167 $1,461,163 $1,611,050 $1,753,859 $1,897,140 18 19 Debt Service
20 Existing Debt $0 $0 $0 $0 $0 $0
21 Proposed Debt $0 $0 $0 $0 $0 $0
22 Subtotal - Debt Service $0 $0 $0 $0 $0 $0
23 24 Capital Projects
25 Rate Funded CIP $2,713,801 $13,407,249 $1,804,285 $2,271,921 $1,726,626 $1,415,199 26 Subtotal - Capital Projects $2,713,801 $13,407,249 $1,804,285 $2,271,921 $1,726,626 $1,415,199 27 28 Net Cash Flow $1,231,752 ($12,293,082) ($343,122) ($660,870) $27,233 $481,941 231
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33 Table 2-23: Projected Recycled Cash Flows (Proposed Financial Plan) Line Recycled Cash Flow Projections FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Revenues
2 Rate Revenues at Existing Rates $1,333,632 $1,451,959 $1,451,959 $1,451,959 $1,451,959 $1,451,959 3 Revenue Adjustments $0 $57,473 $165,759 $222,379 $280,981 $341,634 4 SMWD RW Sale Revenue $0 $0 $0 $0 $0 $0
5 Other Governmental Revenues $125,080 $169,000 $169,000 $169,000 $169,000 $169,000 6 Subtotal - Revenues $1,458,712 $1,678,432 $1,786,718 $1,843,338 $1,901,940 $1,962,593 7 8 Operating Expenses
9 Water Reclamation $1,349,520 $1,766,370 $1,868,588 $1,977,794 $2,094,522 $2,219,351 10 MF/RO Additional Cost $0 $0 $0 $0 $0 $0
11 Subtotal - Operating Expenses $1,349,520 $1,766,370 $1,868,588 $1,977,794 $2,094,522 $2,219,351 12 13 Net Revenue $109,192 ($87,938) ($81,870) ($134,455) ($192,582) ($256,758) 14 15 Debt Service
16 Existing Debt $900,602 $900,602 $900,602 $900,602 $900,602 $900,602 17 MF/RO Debt $0 $0 $0 $0 $0 $0
18 Proposed Debt $0 $0 $0 $0 $0 $0
19 Subtotal - Debt Service $900,602 $900,602 $900,602 $900,602 $900,602 $900,602 20 21 Capital Projects
22 Rate Funded CIP $15,480 $433,557 $0 $0 $0 $0
23 Subtotal - Capital Projects $15,480 $433,557 $0 $0 $0 $0 24 25 Net Cash Flow ($806,890) ($1,422,097) ($982,472) ($1,035,058) ($1,093,184) ($1,157,361) 232
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34 PROPOSED FUND BALANCE PROJECTIONS
Table 2-24 shows the fund balance projections for the proposed financial plan. Based on the sources (revenues, revenue adjustments) and uses (operating expenses, debt service, and capital expenditures) of funds, the City’s fund balances will be approximately $16.2 million at the end of the study.
Table 2-24: Projected Potable and Recycled Fund Balances (Proposed Financial Plan) Line Fund Balance Projections FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Combined Beginning Fund Balance $34,292,690 $34,717,552 $20,962,012 $19,636,417 $17,940,489 $16,874,537 2 3 Sources of Funds
4 Rate Revenues $21,550,566 $21,659,387 $21,659,387 $21,659,387 $21,659,387 $21,659,387 5 Revenue Adjustments $0 $857,351 $2,472,690 $3,317,312 $4,191,497 $5,096,278 6 Non-Rate Revenues $1,786,240 $2,048,640 $2,048,640 $2,048,640 $2,048,640 $2,048,640 7 Grant Proceeds $66,250 $0 $0 $0 $0 $0
8 Debt Proceeds $0 $0 $0 $0 $0 $0
9 Interest Income $811,420 $709,639 $523,452 $486,150 $452,052 $430,554 10 Subtotal - Sources of Funds $24,214,476 $25,275,017 $26,704,169 $27,511,489 $28,351,576 $29,234,859 11 12 Uses of Funds
13 Operating Expenses $20,093,480 $24,289,148 $25,324,876 $26,034,894 $26,790,299 $27,594,477 14 Debt Service $900,602 $900,602 $900,602 $900,602 $900,602 $900,602 15 Grant Funded CIP $66,250 $0 $0 $0 $0 $0
16 Debt Funded CIP $0 $0 $0 $0 $0 $0
17 Rate Funded CIP $2,729,281 $13,840,806 $1,804,285 $2,271,921 $1,726,626 $1,415,199 18 Subtotal - Uses of Funds $23,789,614 $39,030,557 $28,029,763 $29,207,417 $29,417,528 $29,910,279 19 20 Ending Balances $34,717,552 $20,962,012 $19,636,417 $17,940,489 $16,874,537 $16,199,117
PROPOSED FINANCIAL PERFORMANCE
Table 2-25 shows the forecasted financial performance for the proposed financial plan. Under this plan, the City will meet its reserve targets and debt coverage requirements in all years of the study.
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35 Table 2-25: Forecasted Potable and Recycled Financial Performance (Proposed Financial Plan) Line Financial Performance FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Existing Reserve Targets
2 Emergency Reserve $2,411,218 $2,914,698 $3,038,985 $3,124,187 $3,214,836 $3,311,337 3 Depreciation Reserve $18,440,623 $17,917,012 $5,802,832 $5,413,746 $5,413,746 $5,413,746 4 Debt Service Reserve $900,602 $900,602 $900,602 $900,602 $900,602 $900,602 5 Combined Reserve Target $21,752,443 $21,732,313 $9,742,420 $9,438,536 $9,529,185 $9,625,686 6 Combined Reserves $34,717,552 $20,962,012 $19,636,417 $17,940,489 $16,874,537 $16,199,117 7 Meets Target? Yes No Yes Yes Yes Yes
8 9 Recommended Reserve Targets
10 Operating Reserve Target $5,023,370 $6,072,287 $6,331,219 $6,508,724 $6,697,575 $6,898,619 11 Capital Projects Reserve Target $4,487,834 $4,211,768 $4,211,768 $4,211,768 $4,211,768 $4,211,768 12 Emergency Reserve Target $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 13 Debt Service Reserve $900,602 $900,602 $900,602 $900,602 $900,602 $900,602 14 Combined Reserve Target $12,411,806 $13,184,657 $13,443,589 $13,621,094 $13,809,945 $14,010,989 15 Combined Reserves $34,717,552 $20,962,012 $19,636,417 $17,940,489 $16,874,537 $16,199,117 16 Meets Target? Yes Yes Yes Yes Yes Yes
17 18 Debt Coverage Target
19 Required Debt Coverage 110% 110% 110% 110% 110% 110% 20 Calculated Debt Coverage 450% 114% 153% 164% 173% 182% 21 Meets Target? Yes Yes Yes Yes Yes Yes
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36 Figure 2-5 shows the comparison of revenues and the revenue requirement for the proposed scenario for the potable water fund. The stacked bars represent the revenue requirements, or costs: light blue for O&M expenses, dark blue for debt service, and green for rate funded CIP. The City will be adding to its reserves (grey bars) starting in FY 2030 in this scenario. The current revenue, shown as a solid line, is lower than the revenue requirements. The proposed revenue, shown as a dotted line, will equal the revenue requirements by FY 2029, meaning that the City’s revenues are able to sufficiently fund its expenses by FY 2029.
Figure 2-5: Potable Revenue Requirements vs. Revenues (Proposed Financial Plan) 235
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37 Figure 2-6 shows the comparison of revenues and the revenue requirement for the proposed scenario for the recycled water fund. In this scenario, recycled water revenues are insufficient to fund its expenses in all years of the planning period.
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38 Figure 2-6: Recycled Revenue Requirements vs. Revenues (Proposed Financial Plan) Figure 2-7 shows the debt coverage projections in the proposed financial plan. The required debt coverage (dashed black line) is equal to 110%. The City is expected to meet its debt coverage requirements for all years of this scenario.
Figure 2-7: Potable and Recycled Projected Debt Coverage (Proposed Financial Plan) Figure 2-8 shows the fund balance projections in the proposed financial plan. The City’s ending balance (green bars) will meet the recommended reserve targets (dashed line) in all years of this scenario and will meet the existing reserve targets (solid line) in all years except FY 2026 of this scenario. 237
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39 Figure 2-8: Potable and Recycled Projected Fund Balances (Proposed Financial Plan) 238
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40 3. POTABLE WATER COST-OF-SERVICE
3.1 COST-OF-SERVICE METHODOLOGY
A cost-of-service analysis was conducted to allocate the proposed FY 2025 rate revenue requirement to customers in proportion to use of and burden on the City’s potable water system. The overall goal of the costof-service analysis is to develop “unit costs,” which provide the basis from which proposed rates are directly calculated from. Note that although the study period spans five years, the cost-of-service analysis is limited to a single representative year referred to as the “test year.” The test year in this study is FY 2025.
The cost-of-service analysis is “revenue neutral,” meaning that the resulting cost-of-service based rates collect the same amount of revenue as the City expects to collect in FY 2025. The revenue neutral unit costs determine revenue neutral rates, which are then adjusted based on the proposed financial plan increases to arrive at the proposed potable water rates for five years. All values presented in this section pertain to FY 2025 and are revenue neutral unless stated otherwise.
The key steps in conducting a water cost-of-service analysis are outlined below:
Revenue Requirement Determination: The total rate revenue requirement for the test year is determined based on the results of the proposed financial plan and divided into primary subcomponents (operating, capital, etc.). Cost Functionalization: Operating and capital costs are evaluated and assigned to “functional categories” in the water system (e.g., customer service, supply, distribution, etc.). This provides a proportional breakdown of system costs by functional category. Revenue Requirement Allocation to Cost Causation Components: Functionalized costs are allocated to “cost causation components” (e.g., water supply, base delivery, max day, etc.), which is used to attribute customers’ use of the system to the costs incurred by the City. Unit Cost Development: The rate revenue requirement allocation for each individual cost causation component is divided by the appropriate units of service to establish unit costs for the test year. Unit costs provide the basis from which proposed rates are calculated.
3.2 REVENUE REQUIREMENT
The total rate revenue requirement for the test year, FY 2025, is based on the financial plan projections (Table 2-22) and is allocated between the Operating, Capital, and Revenue Offset components, as shown in Table 3-1.
The Operating revenue requirement consists of operating expenses (Line 2; from Table 2-22, Line 15) and interest income (Line 10; from Table 2-22, Line 6). The Capital revenue requirement includes debt service (Line 3; from Table 2-22, Line 22), rate funded CIP (Line 4; from Table 2-22, Line 26), and adjustments for cash from reserves (Line 14; from Table 2-22, Line 28). The Revenue Offset revenue requirement reduces the overall revenue requirement by the miscellaneous non-rate revenues (Line 8; from Table 2-22, Line 4), and other nonrate revenues (Line 9; from Table 2-22, Line 5) . The total revenue requirement (Line 18) is equal to the amount of rate revenue collected in FY 2025 (Table 2-22, Line 2).
Table 3-1: FY 2025 Potable Revenue Requirement
Line FY 2025 Revenue Requirement Operating Capital Rev. Offset Total 239
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41 1 Revenue Requirements
2 Operating Expenses $18,743,960 $18,743,960
3 Debt Service $0 $0
4 Rate Funded CIP $2,713,801 $2,713,801
5 Subtotal - Revenue Requirements $18,743,960 $2,713,801 $0 $21,457,761 6 7 Revenue Offsets
8 Miscellaneous Revenues ($249,420) ($249,420)
9 All Other Revenues ($1,411,740) ($1,411,740)
10 Interest Income ($811,420) ($811,420)
11 Subtotal - Revenue Offsets ($811,420) $0 ($1,661,160) ($2,472,580) 12 13 Adjustments
14 Cash to/(from) Reserves $1,231,752 $1,231,752
15 Revenue Adjustment Annualization $0
16 Subtotal - Adjustments $0 $1,231,752 $0 $1,231,752
17 18 Total - Revenue Requirement $17,932,540 $3,945,554 ($1,661,160) $20,216,934
3.3 COST FUNCTIONALIZATION
FUNCTIONAL CATEGORY DEFINITIONS
After determining the revenue requirement, the next step in the cost-of-service analysis is to allocate the City’s costs into various functional categories. These categories represent the main functions of the City’s water system and include:
Meter Maintenance: costs of meter maintenance and replacement Customer Service: costs related to customer service and billing Water Supply: costs related to acquiring water from MWDOC Pumping: costs relating to pumping water to higher elevations Storage: costs related to water storage facilities (such as reservoirs and tanks) Transmission and Distribution (T&D): costs related to the transmission and distribution of water through the City’s water system
Conservation: costs related to the City’s water conservation program General: costs that are not directly attributable to any other functional category Revenue Offset: miscellaneous revenues that are not generated by specific customer classes or for payment of services provided by the City; these revenues can be used to offset rates at the City’s discretion under Proposition 218 requirements
OPERATING COST FUNCTIONALIZATION
WRE worked closely with City staff to evaluate and allocate the operating expenses for FY 2025 (Table 2-10) to the most closely associated functional categories within the water system, as shown in Table 3-2. The detailed allocation of the operating costs to the functional categories is included in the Appendix (Table 7-3).
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42 Table 3-2: Operating Costs by System Functions
Line Cost Function Operating
Expenses Percent of Total
1 Meter Maintenance $0 0.0%
2 Customer Service $1,230,957 6.6%
3 Water Supply $10,895,590 58.1%
4 Pumping $1,156,700 6.2%
5 Storage $1,156,700 6.2%
6 Transmission & Distribution $3,506,990 18.7%
7 Conservation $269,470 1.4%
8 General $527,553 2.8%
9 Revenue Offset $0 0.0%
10 Total $18,743,960 100.0%
CAPITAL ASSET FUNCTIONALIZATION
WRE worked with City staff to evaluate and allocate the City’s current capital expenses to the most closely associated functional categories within the water system, as shown in Table 3-3. The detailed allocation of the current capital expenses to the functional categories is included in the Appendix (Table 7-4).
Table 3-3: Capital Expenses by System Functions
Line Cost Function Capital Expenses (CIP) Percent of
Total
1 Meter Maintenance $657,643 2.8%
2 Customer Service $0 0.0%
3 Water Supply $501,702 2.1%
4 Pumping $6,654,452 28.4%
5 Storage $470,257 2.0%
6 Transmission & Distribution $15,070,900 64.4%
7 Treatment $0 0.0%
8 Conservation $0 0.0%
9 General $50,379 0.2%
10 Revenue Offset $0 0.0%
11 Total $23,405,332 100.0%
3.4 COST CAUSATION COMPONENTS
COST COMPONENT DEFINITIONS
While the functional categories represent the costs of system functions, cost causation components represent the reasons for why and how those costs are incurred within the system (thus, cost causation). Cost causation components will be referred to as cost components in this report. The next step of the cost-of-service analysis is to allocate the Operating, Capital, and Revenue Offsets in the functional categories between the cost components, most of which directly correspond to a single functional category.
The cost components in this study include the following:
Meter: directly corresponds to the Meter Maintenance functional category 241
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43 Customer: directly corresponds to the Customer Service functional category Water Supply: directly corresponds to the Water Supply functional category Delivery: costs associated with delivering and distributing water to customers Conservation: directly corresponds to the Conservation functional category Revenue Offset: directly corresponds to the Revenue Offset functional category General: directly corresponds to the General functional category
SYSTEM-WIDE MAXIMUM CAPACITY FACTORS
System-wide maximum capacity factors for the City’s water system, shown in Table 3-4, are used to allocate costs associated with the Pumping, Storage, and Transmission & Distribution (T&D) functional categories to the Base, Max Day, and Max Hour cost components. Maximum capacity factors represent the ratio of maximum to average water demand over the course of one year for the entire system. This provides a basis to identify costs incurred to provide water service during average demand conditions and to provide additional capacity during maximum demand conditions.
City staff provided the average day, maximum day, and maximum hour demand capacity factors, which are normalized based on average day demand (meaning that the average day demand is always equal to
1.00).
The percentage allocations to the Base, Max Day, and Max Hour cost components based on the average day, maximum day, and maximum demand capacity factors are calculated as follows:
• Average day demand is allocated entirely to Base
• Max day demand is allocated proportionately to Base8 and Max Day9 • Max hour demand is allocated proportionately to Base10, Max Day11, and Max Hour12 • Average of max day/ hour is the average of max day demand and max hour demand Table 3-4: System-Wide Capacity
Line System-Wide Capacity Factor Capacity
Factor Base Max Day Max Hour Total
1 Average Day Demand 1.00 100% 0% 0% 100%
2 Max Day Demand 1.80 56% 44% 0% 100%
3 Max Hour Demand 2.70 37% 30% 33% 100%
4 Average of Max Day/Hour 46% 37% 17% 100%
8 1.00/1.80 = 56.0%
9 (1.80-1.00)/1.80 = 44.0%
10 1.00/2.70 = 37.0%
11 (1.80-1.00)/2.70 = 30.0%
12 (2.70-1.80)/2.70 = 33.0%
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44 COST COMPONENT ALLOCATION FACTORS
Table 3-5 shows the factors used to allocate the functionalized costs to the cost components. For the cost components that directly correlate to a functional category (Meter, Customer, Water Supply, Conservation, Revenue Offset, and General), the functionalized costs are allocated entirely to the matching cost component. Pumping and Storage are sized based on maximum day demand and are allocated to Base and Extra Capacity cost components (Table 3-4, Line 2). T&D is sized based on the average of max day/ hour demand and is allocated to the Base and Extra Capacity cost components where Extra Capacity is equal to the sum of max day and max hour cost components (Table 3-4, Line 4).
Table 3-5: System Function Allocation to Cost Components Line Cost Function Meter Customer Water
Supply Base Extra Capacity Conservation Rev. Offset General Total 1 Meter Maintenance 100% 0% 0% 0% 0% 0% 0% 0% 100%
2 Customer Service 0% 100% 0% 0% 0% 0% 0% 0% 100%
3 Water Supply 0% 0% 100% 0% 0% 0% 0% 0% 100%
4 Pumping 0% 0% 0% 56% 44% 0% 0% 0% 100%
5 Storage 0% 0% 0% 56% 44% 0% 0% 0% 100%
6 Transmission &
Distribution 0% 0% 0% 46% 54% 0% 0% 0% 100%
7 Conservation 0% 0% 0% 0% 0% 100% 0% 0% 100%
8 General 0% 0% 0% 0% 0% 0% 0% 100% 100%
9 Revenue Offset 0% 0% 0% 0% 0% 0% 100% 0% 100%
OPERATING COST COMPONENT ALLOCATION
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45 Table 3-6 shows the operating cost allocation by cost component. The functionalized operating expenses from Table 3-2 are allocated based on the cost component allocation factors in Table 3-5. The operating allocation (Line 11) is derived from the total operating expenses by cost component (Line 10) and represents the proportion of the Operating revenue requirement that will be allocated to each cost component. 244
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46 Table 3-6: Operating Allocation by Cost Component
Line Operating Expenses Meter Customer Water
Supply Base Extra Capacity
ConservationRev.
Offset General Total
1 Meter Maintenance $0 $0 $0 $0 $0 $0 $0 $0 $0
2 Customer Service $0 $1,230,957 $0 $0 $0 $0 $0 $0 $1,230,957 3 Water Supply $0 $0 $10,895,590 $0 $0 $0 $0 $0 $10,895,590 4 Pumping $0 $0 $0 $642,611 $514,089 $0 $0 $0 $1,156,700 5 Storage $0 $0 $0 $642,611 $514,089 $0 $0 $0 $1,156,700 6 Transmission &
Distribution $0 $0 $0 $1,623,606 $1,883,384 $0 $0 $0 $3,506,990 7 Conservation $0 $0 $0 $0 $0 $269,470 $0 $0 $269,470
8 General $0 $0 $0 $0 $0 $0 $0 $527,553 $527,553
9 Revenue Offset $0 $0 $0 $0 $0 $0 $0 $0 $0
10 Total - Operating $0 $1,230,957 $10,895,590 $2,908,829 $2,911,561 $269,470 $0 $527,553 $18,743,960 11 Operating Cost
Allocation 0.0% 6.6% 58.1% 15.5% 15.5% 1.4% 0.0% 2.8% 100.0%
CAPITAL COST COMPONENT ALLOCATION
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47 Table 3-7 shows the capital cost allocation by cost component. The functionalized capital expenses from Table 3-3 are allocated based on the cost component allocation factors in Table 3-5. The capital allocation (Line 11) is derived from the total capital expenses by cost component (Line 10) and represents the proportion of the Capital revenue requirement that will be allocated to each cost component. 246
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48 Table 3-7: Capital Allocation by Cost Component
Line Capital Expenses (CIP) Meter Customer Water
Supply Base Extra Capacity
ConservationRev.
Offset General Total
1 Meter Maintenance $657,643 $0 $0 $0 $0 $0 $0 $0 $657,643 2 Customer Service $0 $0 $0 $0 $0 $0 $0 $0 $0
3 Water Supply $0 $0 $501,702 $0 $0 $0 $0 $0 $501,702
4 Pumping $0 $0 $0 $3,696,918 $2,957,534 $0 $0 $0 $6,654,452 5 Storage $0 $0 $0 $261,254 $209,003 $0 $0 $0 $470,257
6 Transmission &
Distribution $0 $0 $0 $6,977,269 $8,093,632 $0 $0 $0 $15,070,900 7 Conservation $0 $0 $0 $0 $0 $0 $0 $0 $0
8 General $0 $0 $0 $0 $0 $0 $0 $50,379 $50,379
9 Revenue Offset $0 $0 $0 $0 $0 $0 $0 $0 $0
10 Total - Capital $657,643 $0 $501,702 $10,935,440 $11,260,169 $0 $0 $50,379 $23,405,332 11 Capital Cost Allocation 2.8% 0.0% 2.1% 46.7% 48.1% 0.0% 0.0% 0.2% 100.0% 247
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49 3.5 EQUIVALENT METER UNITS
The costs for certain system functions are based on the capacity requirements related to that function. For example, meter-related costs are allocated based on meter capacity, which is defined by the safe maximum operating capacity of each meter size. This section describes and defines capacity requirements and allocations relating to water meters, private fire lines, customer water usage, and fire protection.
Costs related to meter capacity increase based on meter size. Therefore, equivalent meter units are calculated to provide a basis from which to allocate costs in proportion to meter size. Equivalent meter calculations are shown in Table 3-8.
Equivalent meters are calculated based on meter capacity ratios, which represent the safe operating capacity of a water meter relative to the base meter size. For this study, the base meter size is a 1” meter, which is the most common meter size in the City’s system. Capacity in gallons per minute (gpm) is derived from the AWWA M1 Manual. The meter ratio for a 1 1/2” meter is 3.33, which means that the capacity of a 1 1/2” meter is 3.33 times that of a 1” meter.
The number of meters in each meter size is from
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50 Table 2-3. Equivalent meters are calculated by multiplying the meter counts by the meter ratio in each size.
The number of bills are equal to the number of meters multiplied by 12.
Table 3-8: Equivalent Meter Units
Line Meter Size Safe Operating
Capacity (gpm) Meter Ratio Number of Meters
Equivalent
Meters
Number of
Bills
1 Up to 1"13 30 1.00 15,081 15,081 180,971
2 1.5" 100 3.33 315 1,050 3,779
3 2" 160 5.33 762 4,066 9,149
4 3" 350 11.67 21 247 254
5 4" 630 21.00 18 387 221
6 6" 1,600 53.33 10 540 122
7 Total 16,208 21,371 194,496
13 The default meter size is 1” and has been upsized from 3/4” to reflect fire flow requirements. Meter ratio is based on a 3/4” flow rate.
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51 3.6 ALLOCATION TO COST COMPONENTS
PRELIMINARY COST-OF-SERVICE ALLOCATION AND GENERAL REALLOCATION Table 3-9 shows the preliminary cost-of-service allocation prior to any adjustments and the adjusted cost-of-service allocations after the General cost reallocation. The Operating costs (Line 1) are equal to the total Operating revenue requirements (Table 3-1, Line 18) allocated to each cost component based on the Operating allocation (Table 3-6 , Line 11). The Capital costs (Line 2) are equal to the total Capital revenue requirements (Table 3-1, Line 18) allocated to each cost component based on the Capital allocation ( 250
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52 Table 3-7, Line 11). The Revenue Offsets (Line 3) are equal to the total Revenue Offset requirements (Table 3-1, Line 18). Note that the total cost-ofservice (Line 4) is equal to the total rate revenue requirement for FY 2025 (Table 3-1, Line 18).
The next step is to reallocate General costs (Line 5) based on the proportion of costs in each cost component (except General and Revenue Offset, which is restricted to specific revenues only) in the preliminary allocation. The total revenue requirement (Line 6) stays the same after the General cost reallocation.
The final step is to reallocate the Extra Capacity cost component to the Meter cost component to maintain the current fixed revenue recovery. The Extra Capacity cost represents the fixed cost of the system that relates to providing extra capacity for customers. For example, the size of the distribution system is dependent on the total capacity of the customer demands.
Table 3-9: Cost-of-Service Allocation by Cost Component (General and Delivery) Line Revenue
Requirement Meter Customer Water Supply Base Extra Capacity Conservation Rev. Offset General Total 1 Operating Costs $0 $1,177,669 $10,423,923 $2,782,906 $2,785,521 $257,805 $0 $504,715 $17,932,540 2 Capital Costs $110,862 $0 $84,574 $1,843,442 $1,898,183 $0 $0 $8,493 $3,945,554 3 Revenue Offsets ($1,661,160) ($1,661,160)
4 Total - COS (Initial) $110,862 $1,177,669 $10,508,498 $4,626,348 $4,683,704 $257,805 ($1,661,160) $513,208 $20,216,934 5 General Cost
Allocation $2,663 $28,289 $252,426 $111,130 $112,508 $6,193 ($513,208) $0 6 Total - COS (General) $113,525 $1,205,958 $10,760,923 $4,737,478 $4,796,211 $263,997 ($1,661,160) $0 $20,216,934 7 Reallocation to Meter
Charge $4,796,211 ($4,796,211) $0
8 Total - COS (Final) $4,909,736 $1,205,958 $10,760,923 $4,737,478 $0 $263,997 ($1,661,160) $0 $20,216,934 251
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53 FINAL COST-OF-SERVICE ALLOCATION
Table 3-10 shows the final cost-of-service allocation based on the adjustments for General and Extra Capacity from the prior report tables. The Meter and Customer components add up to approximately 30% of the total costs. The Delivery cost component is the sum of the Base and Extra Capacity components in Table 3-9.
Table 3-10: Cost-of-Service Allocation by Cost Component (Final) Line Cost Component Final Allocation
1 Meter $4,909,736
2 Customer $1,205,958
3 Water Supply $10,760,923
4 Delivery $4,737,478
5 Conservation $263,997
6 Rev. Offset ($1,661,160)
7 Total $20,216,934
3.7 UNIT COST CALCULATION
UNITS OF SERVICE DEFINITIONS
The appropriate units of service are then established for each cost component based on cost causation, which is shown in Table 3-11. Cost components to be recovered by the fixed charges are assigned units of service based on the number of equivalent meters (Table 3-8) and customers (sum of meter counts from Table 3-8).
Cost components to be recovered by the consumption charges are assigned units based on annual usage in ccf.
Table 3-11: Units of Service Definitions
Line Cost Component Units of Service Definition Units of Service Units
1 Meter Equivalent meters x 12 mo. 256,452 equiv. meter 2 Customer Meter count x 12 mo. 194,496 bills
3 Water Supply Annual usage in ccf 2,657,159 ccf
4 Delivery Annual usage in ccf 2,657,159 ccf
5 Conservation Annual usage in ccf 2,657,159 ccf
6 Rev. Offset Annual usage in ccf 2,657,159 ccf
UNIT COST BY COST COMPONENT
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54 Table 3-12 shows the calculation of unit costs by each cost component. The final cost-of-service allocation (Table 3-10) is divided by the units of service (Table 3-11) for each cost component to derive the unit cost.
These unit costs will determine the cost-of-service by customer class. 253
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55 Table 3-12: Unit Cost by Cost Component
Line Cost Component Final
Allocation
Units of
Service Unit Cost Units
1 Meter $4,909,736 256,452 $19.14 equiv. meter
2 Customer $1,205,958 194,496 $6.20 bills
3 Water Supply $10,760,923 2,657,159 $4.05 ccf
4 Delivery $4,737,478 2,657,159 $1.78 ccf
5 Conservation $263,997 2,657,159 $0.10 ccf
6 Rev. Offset ($1,661,160) 2,657,159 ($0.63) ccf
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56 4. POTABLE WATER RATES
4.1 RATE DESIGN METHODOLOGY
A five-year proposed water rate schedule was developed based on the results of the proposed financial plan and cost-of-service analysis. The key steps in developing the proposed rate schedule are outlined below:
Rate Structure Evaluation: The existing rate structure is evaluated, and any proposed changes are identified. Proposed rate structure changes are typically intended to address specific policy objectives or to improve legal defensibility.
Test Year Rate Development: Rates are calculated for the proposed rate structure for the cost-ofservice test year (FY 2025). Rate calculations directly incorporate the unit costs developed in the costof-service analysis. The test year rates are revenue neutral, then are increased based on the proposed financial plan revenue adjustments. Although total rate revenues in the first year of adjustments (FY 2026) are designed to increase by the proposed revenue adjustment percentage (9.5% in FY 2026), the proposed percentage increase to each rate/charge varies due to the updated cost-of-service allocations.
Five-Year Rate Schedule Development: Proposed rates for the full five-year period are calculated by increasing the cost-of-service rates by the proposed annual revenue adjustment percentages from the proposed financial plan.
4.2 PROPOSED CHANGES TO RATE STRUCTURE
The main objective of the rate study was to conduct a comprehensive cost-of-service analysis while maintaining as much of the current water rate structure as possible to minimize customer impacts. The City’s current rate structure includes monthly fixed meter charges based on meter sizes and variable charges based on customer class and units of water in ccf. The consumption rates have two components: the water supply charge and the City distribution charge. The water supply charge is the same for all potable water customers.
After examining the existing rate methodology, given the City’s water supply profile, WRE recommends the City implement a uniform consumption rate for all customer classes to be more consistent with cost-of-service principles. Additionally, WRE recommends recovering MWDOC fixed costs in the City’s monthly fixed charges, thus increasing financial and rate stability for the City and allowing for more accurate passthrough of MWD costs.
4.3 PROPOSED MONTHLY FIXED CHARGES
MWDOC FIXED SUPPLY COST
Table 4-1 shows the calculation of MWDOC fixed charge unit cost. MWDOC fixed costs are billed to the City regardless of imported water purchases. The total MWDOC fixed charge is equal to the MWDOC fixed charge in FY 2025 (Line 1; from
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57 Table 2-9, Line 33). Based on input from City staff and City Council, the City will collect 100% of MWDOC fixed costs (Line 2) on the monthly fixed charges. This will enhance revenue stability for the City and reduce the City’s financial risk related to MWDOC water supply in case of decreased future water consumption. This change will also increase fixed revenue recovery to approximately 36% and ensure for more accurate passthrough of MWDOC costs.
The total MWDOC fixed charge cost (Line 3) is calculated by multiplying the MWDOC fixed cost in FY 2025 (Line 1) by the percentage of MWDOC fixed costs to be recovered by fixed charges (Line 2). The unit cost (Line 5) is calculated by dividing the total cost (Line 3) by the units of service for meters (Line 4; from Table 3-11, Line 1).
Table 4-1: MWDOC Fixed Charge Unit Cost
Line MWDOC Fixed Charge Value
1 MWDOC Total Fixed Charge $1,230,001
2 Reallocated to Meter Charges 100%
3 Reallocated MWDOC Fixed Charge $1,230,001
4 Equivalent meters 256,452
5 Unit cost ($/equiv. meter) $4.80
REVENUE NEUTRAL RATES
Table 4-2 shows the revenue neutral monthly fixed charge calculations. The Meter and Customer unit costs are from
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58 Table 3-12 (Lines 1-2). Table 4-3 shows the MWDOC Fixed Charge calculation. The MWDOC unit cost is from Table 4-1 (Line 5). Meter and MWDOC Fixed Charge unit costs are multiplied by the meter capacity ratio; Customer costs do not vary based on meter size and thus are the same for all meter sizes. The revenue neutral rate represents the cost-of-service analysis for FY 2025 but does not include the proposed revenue adjustments for the first year of rates in FY 2026.
Table 4-2: Revenue Neutral Monthly Fixed Water Service Charge – City Portion Line Meter Size Meter Ratio Meter
Charge
Customer
Charge
Revenue Neutral
Rate
1 Up to 1" 1.00 $19.14 $6.20 $25.35
2 1.5" 3.33 $63.82 $6.20 $70.02
3 2" 5.33 $102.11 $6.20 $108.31
4 3" 11.67 $223.36 $6.20 $229.56
5 4" 21.00 $402.04 $6.20 $408.24
6 6" 53.33 $1,021.06 $6.20 $1,027.26
Table 4-3: Revenue Neutral Monthly Fixed Water Service Charge – MWDOC Line Meter Size Meter Ratio MWDOC Fixed
Charge
Revenue
Neutral Rate
1 Up to 1” 1.00 $4.80 $4.80
2 1.5” 3.33 $15.99 $15.99
3 2” 5.33 $25.58 $25.58
4 3” 11.67 $55.96 $55.96
5 4” 21.00 $100.72 $100.72
6 6” 53.33 $255.80 $255.80
PROPOSED RATES WITH ADJUSTMENT
Table 4-4 shows the proposed City monthly fixed charges for FY 2026 based on the revenue neutral rate (Table 4-2) adjusted by the proposed revenue adjustment of 9.5% in the first year (Table 2-21) and rounded up to the nearest cent.
Table 4-4: Proposed Monthly Fixed Water Service Charge (City Portion) After Adjustment Line Meter Size Revenue
Neutral Rate
Proposed FY 2026
Rate (w/ 9.5% Adj.)
Current
Rate
Difference
($)
Difference
(%)
1 Up to 1" $25.35 $27.76 $27.41 $0.35 1.3%
2 1.5" $70.02 $76.67 $67.72 $8.95 13.2%
3 2" $108.31 $118.60 $102.09 $16.51 16.2%
4 3" $229.56 $251.37 $211.23 $40.14 19.0%
5 4" $408.24 $447.03 $372.08 $74.95 20.1%
6 6" $1,027.26 $1,124.86 $756.96 $367.90 48.6%
Table 4-5 shows the proposed MWDOC monthly fixed charges based on the fixed charges from Table 2-9, Line 33 divided by the equivalent meters from Table 4-1, Line 4.
Table 4-5: Proposed Monthly Fixed Water Service Charge (MWDOC) for FY 2026 257
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59 Line Meter Size Revenue
Neutral Rate
Proposed FY 2026
Rate
Current
Rate
1 Up to 1" $4.80 $5.34 $0.00
2 1.5" $15.99 $17.80 $0.00
3 2" $25.58 $28.48 $0.00
4 3" $55.96 $62.30 $0.00
5 4" $100.72 $112.14 $0.00
6 6" $255.80 $284.80 $0.00
4.4 PROPOSED VARIABLE CHARGES
The variable charge calculations include the MWDOC Variable Supply, Delivery, Conservation, and Revenue Offset components, which are detailed in this section.
MWDOC VARIABLE SUPPLY COST
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60 Table 4-6 shows the calculation of MWDOC variable supply unit cost. The total MWDOC water supply cost (Line 1) is equal to the cost-of-service allocation to the Water Supply cost components ( 259
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61 Table 3-12, Line 3). The portion of cost recovered by fixed charges (Line 2) is from Table 4-1 (Line 3). The net MWDOC variable cost (Line 3) is calculated by subtracting the MWDOC cost recovered by fixed charges (Line 2) from the total MWDOC water supply cost (Line 1). The unit cost (Line 5) is calculated by dividing the net MWDOC variable cost (Line 3) by units of service for water supply (Line 4; from 260
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62 Table 3-12, Line 3). The MWDOC variable supply unit cost is charged to all customer classes equally. 261
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63 Table 4-6: MWDOC Variable Supply Unit Cost
Line FY 2025
1 Total Water Supply Cost $10,760,923
2 Less Reallocated to Fixed Meter Charges ($1,230,001)
3 Net Water Supply Cost $9,530,923
4 Total Consumption (ccf) 2,657,159
5 Water Supply Unit Cost ($/ccf) $3.59
DELIVERY COST
The Delivery unit cost of $1.78 per ccf is from
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64 Table 3-12 (Line 4) and is charged to all customer classes equally.
CONSERVATION COST
The Conservation unit cost of $0.10 per ccf is from
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65 Table 3-12 (Line 5) and is charged to all customer classes equally.
REVENUE OFFSET
The Revenue Offset unit cost is a credit of of $0.63 per ccf is from 264
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66 Table 3-12 (Line 6) and is offsetting rates for all customer classes equally.
REVENUE NEUTRAL RATES
Table 4-7 shows the revenue neutral variable charges for all classes, based on the MWDOC Variable Supply unit cost from
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67 Table 4-6, Delivery, Conservation, and Revenue Offset unit costs. The revenue neutral rate represents the costof-service analysis for FY 2025 but does not include the proposed revenue adjustments for the first year of rates in FY 2026.
Table 4-7: Revenue Neutral Consumption Rates
Line Customer Class Annual Use
(ccf)
Water
Supply Delivery Conservation Revenue Offset
Revenue
Neutral Rate
1 Single Family Residential 1,485,734 $3.59 $1.78 $0.10 ($0.63) $4.84 2 Multi Family Residential 458,565 $3.59 $1.78 $0.10 ($0.63) $4.84 3 Commercial 277,248 $3.59 $1.78 $0.10 ($0.63) $4.84
4 Irrigation 435,612 $3.59 $1.78 $0.10 ($0.63) $4.84
PROPOSED RATES WITH ADJUSTMENT
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68 Table 4-8 shows the proposed variable charges for FY 2026 based on the revenue neutral rate (Table 4-7) adjusted by the proposed revenue adjustment of 9.5% in the first year (Table 2-21) and rounded up to the nearest cent.
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69 Table 4-8: Proposed Consumption Rates after Adjustment Line Customer Class Revenue
Neutral Rate
Proposed FY 2026
Rate (w/ 9.5% Adj.)
Current
Rate
Difference
($)
Difference
(%)
1 Single Family Residential $4.84 $5.31 $5.11 $0.20 3.9% 2 Multi Family Residential $4.84 $5.31 $4.92 $0.39 7.9% 3 Commercial $4.84 $5.31 $4.95 $0.36 7.3%
4 Irrigation $4.84 $5.31 $6.01 ($0.70) -11.6%
4.5 PROPOSED WATER RATE SCHEDULE
PROPOSED FIVE-YEAR REVENUE ADJUSTMENTS
Table 4-9 shows the revenue adjustments for the five-year period and their effective date based on the proposed financial plan (Table 2-21).
Table 4-9: Proposed Revenue Adjustments
Line Fiscal Year Effective
Date
Revenue Adjustments
(Potable and Recycled)
1 FY 2026 2/1/2026 9.5%
2 FY 2027 1/1/2027 3.5%
3 FY 2028 1/1/2028 3.5%
4 FY 2029 1/1/2029 3.5%
5 FY 2030 1/1/2030 3.5%
PROPOSED FIVE-YEAR POTABLE WATER RATE SCHEDULE
The proposed five-year potable water rate schedules are based on the proposed rate methodology changes, the updated cost-of-service analysis, and the proposed revenue adjustments (Table 4-9) in the five-year period. The proposed rates for FY 2027, FY 2028, FY 2029 and FY 2030 were calculated by increasing the FY 2026 rates by the revenue adjustments, rounded up to the nearest cent. Table 4-10, 268
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70 Table 4-11, and Table 4-12 show the proposed monthly fixed charges, including both City and MWDOC components, respectively, and consumption charges. The City will pass-through any MWDOC rate increases starting in 1/1/2027.
Table 4-10: Proposed Monthly Fixed Water Service Charge – City Portion Line Monthly Fixed Water Service Charge -
City Portion (Potable and Recycled)
Effective
2/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Up to 1" $27.76 $28.74 $29.75 $30.80 $31.88
2 1.5" $76.67 $79.36 $82.14 $85.02 $88.00
3 2" $118.60 $122.76 $127.06 $131.51 $136.12
4 3" $251.37 $260.17 $269.28 $278.71 $288.47
5 4" $447.03 $462.68 $478.88 $495.65 $513.00
6 6" $1,124.86 $1,164.24 $1,204.99 $1,247.17 $1,290.83
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71 Table 4-11: Proposed Monthly Fixed Water Service Charge - MWDOC Line Monthly Fixed Water Service
Charge - MWDOC (Potable )
Effective
2/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Up to 1" $5.34
Pass-Through Going Forward
2 1.5" $17.80
3 2" $28.48
4 3" $62.30
5 4" $112.14
6 6" $284.80
Table 4-12: Proposed Consumption Rates
Line Consumption Rates ($/ ccf) Effective
2/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Single Family Residential $5.31 $5.50 $5.70 $5.90 $6.11 2 Multi Family Residential $5.31 $5.50 $5.70 $5.90 $6.11 3 Commercial $5.31 $5.50 $5.70 $5.90 $6.11
4 Irrigation $5.31 $5.50 $5.70 $5.90 $6.11
Table 4-13 shows the formula to calculate future MWDOC cost pass-through, starting in 1/1/2027. This calculation mirrors that of Table 4-6. Line 1 shows the projected total water supply cost in FY 2026 (from Table 2-10, Line 3). Line 2 shows the projected fixed meter charges to be collected in FY 2026 (from Table 2-9, Line 33). Line 3 is the net water supply cost. Line 4 is the projected potable water consumption in FY 2026 (from Table 2-5, Lines 1-4). The unit cost (Line 5) is calculated by dividing the net MWDOC variable cost (Line 3) by units of service for water supply (Line 4).
Table 4-13: Water Supply Unit Cost in FY 2026
Line FY 2026
1 Total Water Supply Cost $11,900,240
2 Less Reallocated to Fixed Meter Charges ($1,366,888)
3 Net Water Supply Cost $10,533,352
4 Total Consumption (ccf) 2,611,968
5 Water Supply Unit Cost ($/ccf) $4.03
Table 4-14 shows the assumed water supply unit cost for the planning period. Any future increases in MWDOC cost will be pass-through to the customers using the same calculation to derive the $4.03 per ccf unit cost.
Table 4-14: Proposed Consumption Rates – with Water Supply Unit Cost Line Consumption Rates ($/ ccf) Effective
2/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 All Customer Classes $5.31 $5.50 $5.70 $5.90 $6.11
2 Water Supply Unit Cost $4.03 $4.03 $4.03 $4.03 $4.03
3 City Delivery Cost $1.28 $1.47 $1.67 $1.87 $2.08
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72 4.6 CUSTOMER IMPACTS
SINGLE FAMILY CUSTOMER IMPACTS
Table 4-15 shows the proposed impacts for a Single Family customer with up to 1” meter (the most common meter size within this class) at various levels of monthly usage. For the average Residential customer that uses 10 ccf of water every month, the monthly impact will be $7.69 or 9.8%, which reflects the impact of the costof-service analysis, and the 9.5% revenue adjustment applied to FY 2026 rates.
Table 4-15: Proposed Single Family Customer Impacts
Line Single Family Customer
Impacts ccf Current Bill Proposed Bill Difference ($) Difference (%) 1 Low Usage 5 $52.96 $59.65 $6.69 12.6%
2 Average Usage 10 $78.51 $86.20 $7.69 9.8%
3 High Usage 20 $129.61 $139.30 $9.69 7.5%
4 Very High Usage 50 $282.91 $298.60 $15.69 5.5%
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73 5. RECYCLED WATER COST-OF-SERVICE AND RATES
5.1 COST-OF-SERVICE METHODOLOGY
The cost-of-service methodology used for the recycled water system is the same as for the potable water system. The cost-of-service analysis is “revenue neutral,” meaning that the resulting cost-of-service based rates collect the same amount of revenue as the City expects to collect in FY 2025. The revenue neutral unit costs determine revenue neutral rates, which are then adjusted based on the proposed financial plan increases to arrive at the proposed recycled water rates for five years. All values presented in this section pertain to FY 2025 and are revenue neutral unless stated otherwise.
5.2 REVENUE REQUIREMENT
The total rate revenue requirement for the test year, FY 2025, is based on the financial plan projections (Table 2-23) and is allocated between the Operating, Capital, and Revenue Offset components, as shown in Table 5-1.
The Operating revenue requirement consists of operating expenses (Line 2; from Table 2-23, Line 11). The Capital revenue requirement includes debt service (Line 3; from Table 2-23, Line 19), rate funded CIP(Line 4; from Table 2-23, Line 23), and adjustments for cash from reserves (Line 14; from Table 2-23, Line 25). The Revenue Offset revenue requirement reduces the overall revenue requirement by the miscellaneous non-rate revenues (Lines 8-10; from Table 2-23, Lines 4-5). The total revenue requirement (Line 18) is equal to the amount of rate revenue collected in FY 2025 (Table 2-23, Line 2).
Table 5-1: FY 2025 Recycled Revenue Requirement
Line FY 2025 Revenue Requirement Operating Capital Rev. Offset Total 1 Revenue Requirements
2 Operating Expenses $1,349,520 $1,349,520
3 Debt Service $900,602 $900,602
4 Rate Funded CIP $15,480 $15,480
5 Subtotal - Revenue Requirements $1,349,520 $916,082 $0 $2,265,602 6 7 Revenue Offsets
8 Miscellaneous Revenues ($125,080) ($125,080)
9 All Other Revenues $0 $0
10 Interest Income $0 $0
11 Subtotal - Revenue Offsets $0 $0 ($125,080) $0
12 13 Adjustments
14 Cash to/(from) Reserves ($806,890) ($806,890)
15 Revenue Adjustment Annualization $0
16 Subtotal - Adjustments $0 ($806,890) $0 ($806,890)
17 18 Total - Revenue Requirement $1,349,520 $109,192 ($125,080) $1,333,632 272
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74 5.3 PROPOSED MONTHLY FIXED SERVICE CHARGE
Currently, the City charges the same monthly fixed charges to both potable and recycled water customers. To avoid disruptions to customers’ rates WRE proposed that the City retains the current rate policy. Thus, recycled water customers will be charged the same monthly fixed charges as potable water customers.
However, recycled water customers will not be charged the MWDOC monthly fixed charges because they do not use MWDOC water.
Table 5-2 shows the revenue neutral monthly fixed water service charge. The revenue neutral rate represents the cost-of-service analysis for FY 2025 but does not include the proposed revenue adjustments for the first year of rates in FY 2026.
Table 5-2: Revenue Neutral Monthly Fixed Water Service Charge Line Meter Size Meter Ratio Meter
Charge
Customer
Charge
Revenue
Neutral Rate
1 Up to 1" 1.00 $19.14 $6.20 $25.35
2 1.5" 3.33 $63.82 $6.20 $70.02
3 2" 5.33 $102.11 $6.20 $108.31
4 3" 11.67 $223.36 $6.20 $229.56
5 4" 21.00 $402.04 $6.20 $408.24
6 6" 53.33 $1,021.06 $6.20 $1,027.26
Table 5-3 shows the proposed monthly fixed charges for FY 2026 based on the revenue neutral rate (Table 5-2) adjusted by the proposed revenue adjustment of 9.5% in the first year (Table 2-21) and rounded up to the nearest cent.
Table 5-3: Revenue Neutral Monthly Fixed Water Service Charge After Adjustment Line Meter Size Revenue
Neutral Rate
Proposed FY 2026
Rate (w/ 9.5% Adj.)
Current
Rate
Difference
($)
Difference
(%)
1 Up to 1" $25.35 $27.76 $27.41 $0.35 1.3%
2 1.5" $70.02 $76.67 $67.72 $8.95 13.2%
3 2" $108.31 $118.60 $102.09 $16.51 16.2%
4 3" $229.56 $251.37 $211.23 $40.14 19.0%
5 4" $408.24 $447.03 $372.08 $74.95 20.1%
6 6" $1,027.26 $1,124.86 $756.96 $367.90 48.6%
5.4 PROPOSED CONSUMPTION RATE
The recycled water consumption rate is calculated by dividing the net revenue requirement, after subtracting the fixed monthly charge revenue from the total revenue requirement by the total recycled water usage.
Table 5-4 shows the total recycled water fixed revenue calculation. The annual fixed charge revenue is calculated by multiplying the revenue neutral rate (from Table 5-2) by the number of meters (from 273
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75 Table 2-3) times 12 months.
Table 5-4: Annual Fixed Service Charge Revenue Calculation Line Meter Size Revenue
Neutral Rate
Number of
Meters
Annual Fixed Charge
Revenue
1 Up to 1" $25.35 1 $280
2 1.5" $70.02 2 $1,547
3 2" $108.31 115 $149,594
4 3" $229.56 7 $20,292
5 4" $408.24 1 $4,511
6 6" $1,027.26 6 $68,105
7 Total $244,330
Table 5-5 shows the revenue neutral recycled water consumption rate calculation. First, the fixed charge revenue (Line 3; from Table 5-4, Line 7) is subtracted from the total revenue requirement (Line 1; from Table 5-1, Line 18) to arrive at the net revenue requirement (Line 4). The net revenue requirement (Line 4) is divided by the total recycled water usage (Line 5, from Table 2-5) to arrive at the recycled water consumption rate per ccf. The revenue neutral rate represents the cost-of-service analysis for FY 2025 but does not include the proposed revenue adjustments for the first year of rates in FY 2026.
Table 5-5: Revenue Neutral Consumption Rate
Line Revenue Neutral Consumption Rate FY 2025
1 Total Revenue Requirement $1,333,632
2 3 Less: Fixed Charge Revenue ($244,330)
4 Net Revenue Requirement $1,089,303
5 6 Total RW Usage (ccf) 339,774
7 8 RW Consumption Rate ($/ccf) $3.21
Table 5-6 shows the proposed variable charges for FY 2026 based on the revenue neutral rate (Table 5-5) adjusted by the proposed revenue adjustment of 9.5% in the first year (Table 2-21) and rounded up to the nearest cent.
Table 5-6: Proposed Consumption Rate after Adjustment
Line Class Revenue
Neutral Rate
Proposed FY 2026
Rate (w/ 9.5% Adj.)
Current
Rate
Difference
($)
Difference
(%)
1 Recycled Water $3.21 $3.52 $3.29 $0.23 7.0%
5.5 PROPOSED RECYCLED WATER RATE SCHEDULE
PROPOSED FIVE-YEAR REVENUE ADJUSTMENTS
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76 Table 5-7 shows the revenue adjustments for the five-year period and their effective date based on the proposed financial plan (Table 2-21).
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77 Table 5-7: Proposed Recycled Water Revenue Adjustments Line Fiscal Year Effective
Date
Revenue Adjustments
(Potable and Recycled)
1 FY 2026 2/1/2026 9.5%
2 FY 2027 1/1/2027 3.5%
3 FY 2028 1/1/2028 3.5%
4 FY 2029 1/1/2029 3.5%
5 FY 2030 1/1/2030 3.5%
PROPOSED FIVE-YEAR RECYCLED WATER RATE SCHEDULE
The proposed five-year recycled water rate schedules are based on the proposed rate methodology changes, the updated cost-of-service analysis, and the proposed revenue adjustments ( 276
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78 Table 5-7) in the five-year period. The proposed rates for FY 2027, FY 2028, FY 2029 and FY 2030 were calculated by increasing the FY 2026 rates by the revenue adjustments, rounded up to the nearest cent. Table 5-8 and Table 5-9 show the proposed recycled water monthly fixed charges and consumption rate, respectively.
Table 5-8: Proposed Recycled Water Monthly Fixed Water Service Charge Line Monthly Fixed Water
Service Charge
Effective
2/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Up to 1" $27.76 $28.74 $29.75 $30.80 $31.88
2 1.5" $76.67 $79.36 $82.14 $85.02 $88.00
3 2" $118.60 $122.76 $127.06 $131.51 $136.12
4 3" $251.37 $260.17 $269.28 $278.71 $288.47
5 4" $447.03 $462.68 $478.88 $495.65 $513.00
6 6" $1,124.86 $1,164.24 $1,204.99 $1,247.17 $1,290.83
Table 5-9: Proposed Recycled Water Consumption Rate
Line RW Consumption Rate
($/ccf)
Effective
2/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 All Customers $3.52 $3.65 $3.78 $3.92 $4.06
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79 6. DEMAND MANAGEMENT RATES
6.1 RATE DESIGN METHODOLOGY
In addition to the base water rates developed in the prior sections of the report, demand management rates were developed to be implemented during water shortage emergencies. The key steps in determining the demand management rates are as follows:
Evaluate Financial Risks: The City faces revenue risks when government-mandated usage cutbacks reduce the City’s variable charge revenues.
Determine Cost Impact: The cost impact is dependent upon the water shortage condition. Constrained water supply results in higher costs to purchase water for the City to meet its customer demand.
Demand management emergencies result in lost revenues from variable charges when customers use less water.
Calculate Demand Management Rates: The resulting cost impact is then used to calculate demand management rates, to be implemented during shortage emergencies and which vary based on stages (from the City’s 2020 Urban Water Management Plan (UWMP)).
6.2 RISKS RELATED TO WATER SHORTAGES
WATER SHORTAGE EMERGENCIES
The City’s UMWP includes six stages of water shortages, which all require a different level of usage reduction from the City’s customers. When customers reduce their usage in each stage, the City’s rate revenues from variable charges are directly impacted. When water shortage emergencies occur, especially during more severe stages, the amount of lost revenue can significantly impact the City’s ability to meet its operating, capital, and reserve requirements.
Demand management rates are a tool for the City to effectively respond to water shortage emergencies while maintaining financial sufficiency and operational reliability. Demand management rates are designed to recover the costs of water shortages, which include loss of variable revenues and cost differences (savings) from purchased water supply changes.
6.3 PROPOSED DEMAND MANAGEMENT RATES
USAGE REDUCTIONS BY WATER SHORTAGE STAGE
Table 6-1 shows the projected water usage reductions in each water shortage stage by customer class (Line 5).
The total usage reduction (Line 1) for each stage is based on the City’s UWMP. The total usage reduction in each stage is applied to the total usage for each customer class equally. For example, in Stage 1, Single Family, Multi-Family, Commercial/ Industrial, and Potable Irrigation are expected to reduce their class usage by 10%. 278
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80 Table 6-1: Water Usage Reductions
Line Demand Management Rates Normal Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 1 Usage Reduction 0% up to 10% up to 20% up to 30% up to 40% up to 50% >50% 2 3 Total Water Consumption (ccf) 2,611,968 2,611,968 2,611,968 2,611,968 2,611,968 2,611,968 2,611,968 4 Required Reduction 0% 10% 20% 30% 40% 50% 60%
5 Reduction in Water Consumption (ccf) 0 261,197 522,394 783,590 1,044,787 1,305,984 1,567,181
VARIABLE REVENUE LOSS
Table 6-2 shows the estimated variable revenue loss by stage based on the proposed variable charges for FY 2026 (from Table 4-12). The proposed FY 2026 variable charge (Line 2) is multiplied by the estimated reduction in usage in each stage (Table 6-1, Line 5) to determine the reduction in rate revenue by stage (Line 3).
Table 6-2: Variable Revenue Loss by Stage
Line Variable Revenue Loss Normal Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 1 Reduction in Water Consumption (ccf) 0 261,197 522,394 783,590 1,044,787 1,305,984 1,567,181 2 Proposed Water Rate FY 2026 $5.31 $5.31 $5.31 $5.31 $5.31 $5.31 $5.31 3 Reduction in Rate Revenue $0 $1,386,955 $2,773,910 $4,160,865 $5,547,819 $6,934,774 $8,321,729
WATER SUPPLY COST SAVINGS
Table 6-3 shows the calculation of water supply costs for each stage. The water supply cost differences in this section do not assume an increase to the MWDOC variable cost of water.
The total reduction in consumption in each stage (Line 1) is from Table 6-1 (Line 5). The MWDOC variable charge (Line 2; from 279
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81 Table 2-9, Lines 20-21) is the FY 2026 rate. The MWDOC variable cost savings (Line 4) is calculated by multiplying the reduction in consumption (Line 1) by the MWDOC variable charge (Line 3). The City will see cost savings in each stage since MWDOC represents 100% of the City’s water supply.
Note that the water supply cost differences do not assume any change to MWDOC variable costs; demand management rates are designed to recover the costs of each stage, with all other costs being equal.
Table 6-3: Water Supply Cost Differences by Stage
Line Water Purchase Cost Savings Normal Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 1 Reduction in Water Consumption (ccf) 0 261,197 522,394 783,590 1,044,787 1,305,984 1,567,181 2 MWDOC Variable Rate ($/AF) $1,528 $1,528 $1,528 $1,528 $1,528 $1,528 $1,528 3 MWDOC Variable Rate ($/ccf) $3.51 $3.51 $3.51 $3.51 $3.51 $3.51 $3.51 4 Total Savings $0 ($916,227) ($1,832,455) ($2,748,682) ($3,664,910) ($4,581,137) ($5,497,365)
DEMAND MANAGEMENT COSTS
Table 6-4 shows the water shortage costs by stage, which includes the variable revenue loss (Table 6-2) and supply cost savings (Table 6-3). The total cost of each water shortage stage (Line 3) represents the costs that the proposed demand management rates are designed to recover. Revised water consumption (Line 5) is from Table 6-1 (difference between Line 3 and Line 5). The unit cost for each stage (Line 7) is calculated by dividing the total demand management costs (Line 3) by the potable water usage (Line 5) in each stage.
Table 6-4: Demand Management Costs by Stage
Line Demand Management Costs Normal Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 1 Reduction in Rate Revenue $0 $1,386,955 $2,773,910 $4,160,865 $5,547,819 $6,934,774 $8,321,729 2 Savings in Water Purchase Cost $0 ($916,227) ($1,832,455) ($2,748,682) ($3,664,910) ($4,581,137) ($5,497,365) 3 Total Costs $0 $470,727 $941,455 $1,412,182 $1,882,910 $2,353,637 $2,824,365 4 5 Revised Water Consumption (ccf) 2,611,968 2,350,771 2,089,574 1,828,377 1,567,181 1,305,984 1,044,787 6 7 Demand Management Rate ($/ccf) $0.00 $0.21 $0.46 $0.78 $1.21 $1.81 $2.71 280
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82 6.4 PROPOSED DEMAND MANAGEMENT RATE SCHEDULE
PROPOSED FIVE-YEAR REVENUE ADJUSTMENTS
Table 6-5 shows the revenue adjustments for the five-year period and their effective date based on the proposed financial plan (Table 2-21).
Table 6-5: Proposed Revenue Adjustments
Line Fiscal Year Effective
Date
Revenue Adjustments
(Potable and Recycled)
1 FY 2026 2/1/2026 9.5%
2 FY 2027 1/1/2027 3.5%
3 FY 2028 1/1/2028 3.5%
4 FY 2029 1/1/2029 3.5%
5 FY 2030 1/1/2030 3.5%
PROPOSED FIVE-YEAR WATER SHORTAGE RATE SCHEDULE
Table 6-6 shows the proposed demand management rates in each stage for the five-year period, which are incremental charges in addition to the variable charges shown in Table 4-12. The proposed rates for FY 2027, FY 2028, FY 2029 and FY 2030 were calculated by increasing the FY 2026 rates by the revenue adjustments, rounded up to the nearest cent.
Table 6-6: Proposed Demand Management Rates
Line Shortage Level Usage
Reduction
Effective
2/1/2026
Effective
1/1/2027
Effective
1/1/2028
Effective
1/1/2029
Effective
1/1/2030
1 Level 1 up to 10% $0.21 $0.22 $0.23 $0.24 $0.25
2 Level 2 up to 20% $0.46 $0.48 $0.50 $0.52 $0.54
3 Level 3 up to 30% $0.78 $0.81 $0.84 $0.87 $0.91
4 Level 4 up to 40% $1.21 $1.26 $1.31 $1.36 $1.41
5 Level 5 up to 50% $1.81 $1.88 $1.95 $2.02 $2.10
6 Level 6 >50% $2.71 $2.81 $2.91 $3.02 $3.13
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83 7. APPENDICES
7.1 FINANCIAL PLAN APPENDICES
Table 7-1: Revenues (Detail)
Line Revenues (Detailed) Number FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Nonbusiness Licenses & Permits 32300
2 Water Acreage Fees 32375 $10,560 $6,700 $6,700 $6,700 $6,700 $6,700 3 4 State Grants 33400
5 Other State Grant 33490 $66,250 $0 $0 $0 $0 $0
6 7 Other Governmental Revenues 33900
8 M.W.D. Reclaimed Water Credit 33910 $125,080 $169,000 $169,000 $169,000 $169,000 $169,000 9 SMWD - Recycled Water System 33921 $0 $0 $0 $0 $0 $0
10 11 General Govt Service Charges 34100
12 Late Payment Charges 34180 $0 $200,000 $200,000 $200,000 $200,000 $200,000 13 14 Health Service Charges 34400
15 Effluent Water Sales 34430 $1,117,857 $1,228,543 $1,228,543 $1,228,543 $1,228,543 $1,228,543 16 17 Water Service Charges 34800
18 Metered Water Sales 34810 $13,838,644 $13,603,287 $13,603,287 $13,603,287 $13,603,287 $13,603,287 19 Fixed Water Service Charge 34811 $6,594,065 $6,827,557 $6,827,557 $6,827,557 $6,827,557 $6,827,557 20 Hydrant Meter Water Sales 34815 $59,240 $25,000 $25,000 $25,000 $25,000 $25,000 21 Water Application Fee 34818 $40,120 $65,000 $65,000 $65,000 $65,000 $65,000 22 Backflow Testing Admin Fees 34826 $46,910 $46,000 $46,000 $46,000 $46,000 $46,000 23 Hydrant Meter Rentals 34830 $23,890 $26,000 $26,000 $26,000 $26,000 $26,000 24 Turn On/Reconnection Fee 34835 $3,270 $20,000 $20,000 $20,000 $20,000 $20,000 25 Water Posting Fee 34836 $5,400 $69,000 $69,000 $69,000 $69,000 $69,000 26 Meter Installation Fees 34840 $70,590 $30,000 $30,000 $30,000 $30,000 $30,000 27 Exemption Application Fees 34850 $0 $1,000 $1,000 $1,000 $1,000 $1,000 282
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84 28
29 Interest Earnings 36100
30 Investment Earnings 36110 $811,420 $750,000 $523,452 $486,150 $452,052 $430,554 31 32 Other Revenues 36800
33 Work Orders 36810 $0 $2,000 $2,000 $2,000 $2,000 $2,000 34 Miscellaneous Income 36850 $11,740 $13,000 $13,000 $13,000 $13,000 $13,000 35 Other Agency (JRWSS) Revenue 36858 $1,400,000 $1,382,640 $1,382,640 $1,382,640 $1,382,640 $1,382,640 36 37 Total Revenues $24,225,036 $24,464,727 $24,238,179 $24,200,877 $24,166,779 $24,145,281 Table 7-2: Expenses (Detail)
Line Expenses (Detailed) Number FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 WATER ADMINISTRATION
2 Personnel 41000 $488,860 $685,210 $739,424 $798,059 $861,485 $930,107 3 Salaries, Regular Full Time 41010 $304,830 $458,780 $490,895 $525,257 $562,025 $601,367 4 Premium Overtime - Regular 41320 $120 $1,000 $1,070 $1,145 $1,225 $1,311 5 Accrued Leave Payoff 41350 $12,560 $12,620 $13,503 $14,449 $15,460 $16,542 6 Assignment Pay 41460 $110 $0 $0 $0 $0 $0
7 Auto Allowance 41530 $1,930 $4,200 $4,494 $4,809 $5,145 $5,505 8 Phone Allowance 41535 $0 $290 $310 $332 $355 $380
9 Bilingual Pay 41715 $210 $0 $0 $0 $0 $0
10 FICA 41951 $17,790 $25,160 $27,676 $30,444 $33,488 $36,837 11 Medicare 41954 $4,630 $6,660 $7,326 $8,059 $8,864 $9,751 12 State Disability Insurance 41957 $3,650 $5,710 $6,281 $6,909 $7,600 $8,360 13 A.D.& D. Insurance 41958 $60 $90 $99 $109 $120 $132
14 Long Term Disability Insurance 41959 $1,150 $1,220 $1,342 $1,476 $1,624 $1,786 15 State Unemployment Insurance 41961 $680 $1,010 $1,111 $1,222 $1,344 $1,479 16 Workers Compensation Ins. 41963 $8,630 $9,190 $10,109 $11,120 $12,232 $13,455 17 Life Insurance 41965 $950 $1,000 $1,100 $1,210 $1,331 $1,464 18 Medical Insurance 41967 $53,310 $62,580 $68,838 $75,722 $83,294 $91,623 283
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Water Resources Economics
85 19 San Clemente Retirement Prem. 41975 $29,920 $45,330 $49,863 $54,849 $60,334 $66,368 20 Retirement Premium (Legacy) 41976 $22,530 $19,730 $21,703 $23,873 $26,261 $28,887 21 Retirement Prem-Calpers (UAL) 41977 $22,860 $24,140 $26,554 $29,209 $32,130 $35,343 22 Deferred Compensation 41981 $2,940 $6,500 $7,150 $7,865 $8,652 $9,517 23 24 Supplies 42000 $19,280 $21,070 $21,702 $22,353 $23,024 $23,714 25 Office Supplies 42010 $3,230 $4,260 $4,388 $4,519 $4,655 $4,795 26 Postage 42030 $680 $750 $773 $796 $820 $844
27 Data Processing Supplies 42050 $1,230 $2,130 $2,194 $2,260 $2,328 $2,397 28 Medical Supplies 42130 $580 $700 $721 $743 $765 $788 29 Office Furniture/Equipment (Non-Cap) 42380 $890 $1,600 $1,648 $1,697 $1,748 $1,801 30 Clothing And Uniforms 42410 $9,930 $9,500 $9,785 $10,079 $10,381 $10,692 31 Other Operating Supplies 42490 $2,740 $2,130 $2,194 $2,260 $2,328 $2,397 32 33 Contractual Services 43000 $513,330 $672,090 $692,478 $713,487 $735,136 $757,444 34 Printing And Binding 43050 $660 $13,500 $13,905 $14,322 $14,752 $15,194 35 Travel And Training 43060 $4,840 $5,070 $5,222 $5,379 $5,540 $5,706 36 Property Insurance 43120 $106,440 $133,000 $136,990 $141,100 $145,333 $149,693 37 Electricity 43330 $27,110 $22,570 $23,473 $24,412 $25,388 $26,404 38 Water 43340 $3,270 $4,840 $4,985 $5,135 $5,289 $5,447 39 Maintenance Of Buildings 43410 $0 $2,250 $2,318 $2,387 $2,459 $2,532 40 Maintenance Of Improvements 43420 $0 $1,120 $1,154 $1,188 $1,224 $1,261 41 Maint. Of Computer Software 43456 $44,590 $68,020 $70,061 $72,162 $74,327 $76,557 42 Contracted Custodial Services 43480 $18,720 $29,030 $29,901 $30,798 $31,722 $32,674 43 Answering Service 43565 $3,110 $5,370 $5,531 $5,697 $5,868 $6,044 44 Other Legal Services 43640 $0 $17,250 $17,768 $18,301 $18,850 $19,415 45 Other Professional Services 43690 $39,700 $26,100 $26,883 $27,689 $28,520 $29,376 46 Rental Of Uniforms 43750 $4,880 $8,580 $8,837 $9,103 $9,376 $9,657 47 Other Contractual Services 43890 $260,010 $335,390 $345,452 $355,815 $366,490 $377,484 48 49 Other Charges 44000 $88,910 $95,670 $98,590 $101,600 $104,702 $107,899 50 Dues And Subscriptions 44110 $1,340 $7,840 $8,075 $8,317 $8,567 $8,824 51 Licenses And Permits 44260 $83,400 $82,830 $85,315 $87,874 $90,511 $93,226 284
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Water Resources Economics
86 52 Depreciation 44800 $4,170 $5,000 $5,200 $5,408 $5,624 $5,849 53 54 Interdepartmental Charges 46000 $648,130 $807,760 $831,993 $856,953 $882,661 $909,141 55 Insurance Charges 46030 $434,150 $520,980 $536,609 $552,708 $569,289 $586,368 56 Postage Charges 46050 $3,650 $4,380 $4,511 $4,647 $4,786 $4,930 57 Duplicating Charges 46060 $2,390 $2,870 $2,956 $3,045 $3,136 $3,230 58 Information Technology Charges 46080 $52,080 $62,500 $64,375 $66,306 $68,295 $70,344 59 Communications Charges 46110 $15,290 $18,350 $18,901 $19,468 $20,052 $20,653 60 Fleet Rental Charges 46130 $14,920 $17,900 $18,437 $18,990 $19,560 $20,147 61 Charges From Weed Abatement 46320 $0 $25,000 $25,750 $26,523 $27,318 $28,138 62 General Fund Overhead Charges 46510 $125,650 $155,780 $160,453 $165,267 $170,225 $175,332 63 64 WATER PRODUCTION
65 Personnel 41000 $809,870 $932,820 $1,007,458 $1,088,255 $1,175,734 $1,270,468 66 Salaries, Regular Full Time 41010 $394,680 $518,760 $555,073 $593,928 $635,503 $679,989 67 Regular Overtime 41310 $0 $250 $268 $286 $306 $328
68 Premium Overtime - Regular 41320 $100,900 $70,000 $74,900 $80,143 $85,753 $91,756 69 Accrued Leave Payoff 41350 $8,200 $10,700 $11,449 $12,250 $13,108 $14,026 70 Assignment Pay 41460 $23,430 $21,760 $23,283 $24,913 $26,657 $28,523 71 FICA 41951 $32,120 $31,710 $34,881 $38,369 $42,206 $46,427 72 Medicare 41954 $7,520 $7,380 $8,118 $8,930 $9,823 $10,805 73 State Disability Insurance 41957 $5,950 $5,710 $6,281 $6,909 $7,600 $8,360 74 A.D.& D. Insurance 41958 $70 $90 $99 $109 $120 $132
75 Long Term Disability Insurance 41959 $1,410 $1,760 $1,936 $2,130 $2,343 $2,577 76 State Unemployment Insurance 41961 $1,140 $1,140 $1,254 $1,379 $1,517 $1,669 77 Workers Compensation Ins. 41963 $23,160 $23,310 $25,641 $28,205 $31,026 $34,128 78 Life Insurance 41965 $880 $1,070 $1,177 $1,295 $1,424 $1,567 79 Medical Insurance 41967 $85,680 $106,750 $117,425 $129,168 $142,084 $156,293 80 San Clemente Retirement Prem. 41975 $38,730 $51,250 $56,375 $62,013 $68,214 $75,035 81 Retirement Premium (Legacy) 41976 $53,450 $46,810 $51,491 $56,640 $62,304 $68,535 82 Retirement Prem-Calpers (UAL) 41977 $32,550 $34,370 $37,807 $41,588 $45,746 $50,321 83 84 Supplies 42000 $11,021,340 $12,082,930 $12,488,960 $12,528,916 $12,570,862 $12,614,902 285
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Water Resources Economics
87 85 Chemical Supplies 42150 $14,680 $32,790 $35,413 $38,246 $41,306 $44,610 86 Laboratory Supplies 42170 $23,400 $27,720 $28,552 $29,408 $30,290 $31,199 87 Protective Supplies 42280 $8,010 $8,960 $9,229 $9,506 $9,791 $10,085 88 Educational Material 42360 $850 $1,340 $1,380 $1,422 $1,464 $1,508 89 Small Tools And Equipment 42390 $12,640 $10,660 $10,980 $11,309 $11,648 $11,998 90 Other Operating Supplies 42490 $55,670 $51,220 $52,757 $54,339 $55,969 $57,649 91 Other Maintenance Supplies 42590 $10,500 $50,000 $51,500 $53,045 $54,636 $56,275 92 Purchased Water 42610 $10,895,590 $11,900,240 $12,299,150 $12,331,641 $12,365,757 $12,401,578 93 94 Contractual Services 43000 $1,112,250 $1,712,618 $1,764,825 $1,818,630 $1,874,085 $1,931,239 95 Travel And Training 43060 $2,790 $5,020 $5,171 $5,326 $5,485 $5,650 96 Electricity 43330 $17,260 $82,800 $86,112 $89,556 $93,139 $96,864 97 Refuse Collection Service 43350 $0 $5,150 $5,305 $5,464 $5,628 $5,796 98 Maintenance Of Auto Equipment 43440 $110 $5,150 $5,305 $5,464 $5,628 $5,796 99 Maintenance Of Operating Equip 43450 $34,250 $36,980 $38,089 $39,232 $40,409 $41,621 100 Maint. Of Other Facilities 43470 $1,018,670 $1,468,498 $1,512,553 $1,557,930 $1,604,667 $1,652,807 101 Other Professional Services 43690 $2,360 $8,760 $9,023 $9,293 $9,572 $9,859 102 Rental Of Equipment 43730 $0 $7,000 $7,210 $7,426 $7,649 $7,879 103 Other Contractual Services 43890 $36,810 $93,260 $96,058 $98,940 $101,908 $104,965 104
105 Other Charges 44000 $5,810 $17,350 $17,871 $18,407 $18,959 $19,528 106 Dues And Subscriptions 44110 $360 $2,350 $2,421 $2,493 $2,568 $2,645 107 Licenses And Permits 44260 $5,450 $15,000 $15,450 $15,914 $16,391 $16,883 108
109 Interdepartmental Charges 46000 $259,720 $311,660 $321,010 $330,640 $340,559 $350,776 110 Information Technology Charges 46080 $60,100 $72,120 $74,284 $76,512 $78,807 $81,172 111 Fleet Rental Charges 46130 $48,260 $57,910 $59,647 $61,437 $63,280 $65,178 112 General Fund Overhead Charges 46510 $151,360 $181,630 $187,079 $192,691 $198,472 $204,426 113
114 TRANSMISSION/DISTRIBUTION
115 Personnel 41000 $1,858,750 $2,267,480 $2,448,076 $2,643,502 $2,855,013 $3,083,976 116 Salaries, Regular Full Time 41010 $961,980 $1,286,220 $1,376,255 $1,472,593 $1,575,675 $1,685,972 117 Premium Overtime - Regular 41320 $196,530 $180,000 $192,600 $206,082 $220,508 $235,943 286
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88 118 Accrued Leave Payoff 41350 $8,230 $14,250 $15,248 $16,315 $17,457 $18,679 119 Assignment Pay 41460 $0 $0 $0 $0 $0 $0
120 FICA 41951 $51,870 $57,920 $61,974 $66,313 $70,954 $75,921 121 Medicare 41954 $74,670 $79,260 $87,186 $95,905 $105,495 $116,045 122 State Disability Insurance 41957 $17,470 $18,450 $20,295 $22,325 $24,557 $27,013 123 A.D.& D. Insurance 41958 $13,910 $14,150 $15,565 $17,122 $18,834 $20,717 124 Long Term Disability Insurance 41959 $180 $230 $253 $278 $306 $337 125 State Unemployment Insurance 41961 $3,060 $3,980 $4,378 $4,816 $5,297 $5,827 126 Workers Compensation Ins. 41963 $2,660 $2,830 $3,113 $3,424 $3,767 $4,143 127 Life Insurance 41965 $56,060 $61,720 $67,892 $74,681 $82,149 $90,364 128 Medical Insurance 41967 $2,390 $2,930 $3,223 $3,545 $3,900 $4,290 129 San Clemente Retirement Prem. 41975 $161,780 $215,540 $237,094 $260,803 $286,884 $315,572 130 Retirement Premium (Legacy) 41976 $94,350 $127,080 $139,788 $153,767 $169,143 $186,058 131 Retirement Prem-Calpers (UAL) 41977 $125,700 $110,080 $121,088 $133,197 $146,516 $161,168 132
133 Supplies 42000 $392,510 $503,610 $525,671 $548,950 $573,528 $599,491 134 Chemical Supplies 42150 $40,190 $139,050 $150,174 $162,188 $175,163 $189,176 135 Protective Supplies 42280 $8,360 $11,730 $12,082 $12,444 $12,818 $13,202 136 Educational Material 42360 $850 $1,130 $1,164 $1,199 $1,235 $1,272 137 Small Tools And Equipment 42390 $19,570 $17,060 $17,572 $18,099 $18,642 $19,201 138 Other Operating Supplies 42490 $158,050 $169,950 $175,049 $180,300 $185,709 $191,280 139 Water Meter Purchase 42495 $0 $2,140 $2,204 $2,270 $2,338 $2,409 140 Painting Supplies 42530 $900 $5,550 $5,717 $5,888 $6,065 $6,247 141 Other Maintenance Supplies 42590 $164,590 $157,000 $161,710 $166,561 $171,558 $176,705 142
143 Contractual Services 43000 $725,060 $1,262,450 $1,306,834 $1,352,809 $1,400,434 $1,449,770 144 Travel And Training 43060 $6,730 $10,300 $10,609 $10,927 $11,255 $11,593 145 Electricity 43330 $523,260 $651,000 $677,040 $704,122 $732,286 $761,578 146 Refuse Collection Service 43350 $0 $72,100 $74,263 $76,491 $78,786 $81,149 147 Landfill Fees 43370 $0 $1,500 $1,545 $1,591 $1,639 $1,688 148 Maintenance Of Landscaping 43425 $28,700 $27,980 $28,819 $29,684 $30,575 $31,492 149 Maintenance Of Auto Equipment 43440 $4,480 $5,870 $6,046 $6,227 $6,414 $6,607 150 Maintenance Of Operating Equip 43450 $4,530 $85,800 $88,374 $91,025 $93,756 $96,569 287
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Water Resources Economics
89 151 Maint. Of Other Facilities 43470 $590 $8,530 $8,786 $9,049 $9,321 $9,601 152 Other Professional Services 43690 $25,450 $80,270 $82,678 $85,158 $87,713 $90,345 153 Rental Of Equipment 43730 $11,960 $15,000 $15,450 $15,914 $16,391 $16,883 154 Other Contractual Services 43890 $119,360 $304,100 $313,223 $322,620 $332,298 $342,267 155
156 Other Charges 44000 $1,880 $12,550 $12,927 $13,314 $13,714 $14,125 157 Dues And Subscriptions 44110 $710 $3,740 $3,852 $3,968 $4,087 $4,209 158 Property Taxes 44210 $40 $60 $62 $64 $66 $68
159 Licenses And Permits 44260 $1,130 $8,750 $9,013 $9,283 $9,561 $9,848 160
161 Interdepartmental Charges 46000 $528,790 $634,540 $653,576 $673,183 $693,379 $714,180 162 Information Technology Charges 46080 $92,150 $110,580 $113,897 $117,314 $120,834 $124,459 163 Communications Charges 46110 $1,940 $2,330 $2,400 $2,472 $2,546 $2,622 164 Fleet Rental Charges 46130 $184,730 $221,670 $228,320 $235,170 $242,225 $249,492 165 General Fund Overhead Charges 46510 $249,970 $299,960 $308,959 $318,228 $327,774 $337,608 166
167 WATER CONSERVATION
168 Personnel 41000 $118,310 $139,220 $150,232 $162,141 $175,023 $188,960 169 Salaries, Regular Full Time 41010 $76,280 $93,910 $100,484 $107,518 $115,044 $123,097 170 Premium Overtime - Regular 41320 $3,270 $3,050 $3,264 $3,492 $3,736 $3,998 171 Accrued Leave Payoff 41350 $0 $50 $54 $57 $61 $66
172 FICA 41951 $4,890 $5,810 $6,391 $7,030 $7,733 $8,506 173 Medicare 41954 $1,140 $1,350 $1,485 $1,634 $1,797 $1,977 174 State Disability Insurance 41957 $910 $1,030 $1,133 $1,246 $1,371 $1,508 175 A.D.& D. Insurance 41958 $10 $20 $22 $24 $27 $29
176 Long Term Disability Insurance 41959 $210 $0 $0 $0 $0 $0 177 State Unemployment Insurance 41961 $180 $210 $231 $254 $280 $307 178 Workers Compensation Ins. 41963 $1,180 $1,410 $1,551 $1,706 $1,877 $2,064 179 Life Insurance 41965 $160 $170 $187 $206 $226 $249
180 Medical Insurance 41967 $7,990 $9,040 $9,944 $10,938 $12,032 $13,235 181 San Clemente Retirement Prem. 41975 $7,490 $9,280 $10,208 $11,229 $12,352 $13,587 182 Retirement Premium (Legacy) 41976 $8,420 $7,370 $8,107 $8,918 $9,809 $10,790 183 Retirement Prem-Calpers (UAL) 41977 $6,180 $6,520 $7,172 $7,889 $8,678 $9,546 288
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Water Resources Economics
90 184
185 Supplies 42000 $6,560 $5,450 $5,614 $5,782 $5,955 $6,134 186 Office Supplies 42010 $290 $540 $556 $573 $590 $608 187 Clothing And Uniforms 42410 $0 $0 $0 $0 $0 $0
188 Other Operating Supplies 42490 $6,270 $4,910 $5,057 $5,209 $5,365 $5,526 189
190 Contractual Services 43000 $71,260 $228,740 $235,602 $242,670 $249,950 $257,449 191 Printing And Binding 43050 $1,660 $4,270 $4,398 $4,530 $4,666 $4,806 192 Travel And Training 43060 $3,120 $3,580 $3,687 $3,798 $3,912 $4,029 193 Other Professional Services 43690 $10,120 $50,250 $51,758 $53,310 $54,910 $56,557 194 Other Contractual Services 43890 $56,360 $170,640 $175,759 $181,032 $186,463 $192,057 195
196 Other Charges 44000 $18,350 $63,570 $65,477 $67,441 $69,465 $71,549 197 Dues And Subscriptions 44110 $2,980 $2,960 $3,049 $3,140 $3,234 $3,332 198 Water Use Efficiency Rebate Program 44785 $10,370 $55,610 $57,278 $58,997 $60,767 $62,590 199 Environmental Sustainability Grant 44786 $5,000 $5,000 $5,150 $5,305 $5,464 $5,628 200
201 Interdepartmental Charges 46000 $54,990 $65,990 $67,970 $70,009 $72,109 $74,272 202 Information Technology Charges 46080 $12,020 $14,420 $14,853 $15,298 $15,757 $16,230 203 Communications Charges 46110 $0 $0 $0 $0 $0 $0
204 Fleet Rental Charges 46130 $16,130 $19,360 $19,941 $20,539 $21,155 $21,790 205 General Fund Overhead Charges 46510 $26,840 $32,210 $33,176 $34,172 $35,197 $36,253 206
207 WATER RECLAMATION
208 Personnel 41000 $533,940 $664,160 $716,829 $773,803 $835,445 $902,150 209 Salaries, Regular Full Time 41010 $303,660 $403,540 $431,788 $462,013 $494,354 $528,959 210 Regular Overtime 41310 $0 $1,200 $1,284 $1,374 $1,470 $1,573 211 Premium Overtime - Regular 41320 $42,860 $35,000 $37,450 $40,072 $42,877 $45,878 212 Accrued Leave Payoff 41350 $4,190 $3,430 $3,670 $3,927 $4,202 $4,496 213 Education Incentive Pay 41410 $40 $50 $54 $57 $61 $66 214 Assignment Pay 41460 $12,740 $15,000 $16,050 $17,174 $18,376 $19,662 215 Phone Allowance 41535 $50 $50 $55 $61 $67 $73
216 Educational Reimbursement 41710 $0 $8,660 $9,526 $10,479 $11,526 $12,679 289
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91 217 FICA 41951 $22,060 $24,810 $27,291 $30,020 $33,022 $36,324 218 Medicare 41954 $5,170 $5,770 $6,347 $6,982 $7,680 $8,448 219 State Disability Insurance 41957 $4,130 $4,440 $4,884 $5,372 $5,910 $6,501 220 A.D.& D. Insurance 41958 $50 $70 $77 $85 $93 $102
221 Long Term Disability Insurance 41959 $1,040 $1,310 $1,441 $1,585 $1,744 $1,918 222 State Unemployment Insurance 41961 $790 $890 $979 $1,077 $1,185 $1,303 223 Workers Compensation Ins. 41963 $16,190 $17,900 $19,690 $21,659 $23,825 $26,207 224 Life Insurance 41965 $750 $830 $913 $1,004 $1,105 $1,215 225 Medical Insurance 41967 $52,680 $65,180 $71,698 $78,868 $86,755 $95,430 226 San Clemente Retirement Prem. 41975 $29,850 $39,870 $43,857 $48,243 $53,067 $58,374 227 Retirement Premium (Legacy) 41976 $20,180 $17,670 $19,437 $21,381 $23,519 $25,871 228 Retirement Prem-Calpers (UAL) 41977 $17,510 $18,490 $20,339 $22,373 $24,610 $27,071 229
230 Supplies 42000 $290,130 $363,030 $387,362 $413,500 $441,583 $471,763 231 Office Supplies 42010 $140 $320 $330 $339 $350 $360 232 Chemical Supplies 42150 $221,750 $268,830 $290,336 $313,563 $338,648 $365,740 233 Laboratory Supplies 42170 $7,320 $12,740 $13,122 $13,516 $13,921 $14,339 234 Protective Supplies 42280 $0 $2,400 $2,472 $2,546 $2,623 $2,701 235 Small Tools And Equipment 42390 $1,100 $8,840 $9,105 $9,378 $9,660 $9,949 236 Other Operating Supplies 42490 $22,480 $37,900 $39,037 $40,208 $41,414 $42,657 237 Other Maintenance Supplies 42590 $37,340 $32,000 $32,960 $33,949 $34,967 $36,016 238
239 Contractual Services 43000 $413,840 $601,320 $622,400 $644,234 $666,850 $690,276 240 Travel And Training 43060 $1,490 $4,480 $4,614 $4,753 $4,895 $5,042 241 Electricity 43330 $327,350 $304,060 $316,222 $328,871 $342,026 $355,707 242 Refuse Collection Service 43350 $0 $10,300 $10,609 $10,927 $11,255 $11,593 243 Maintenance Of Auto Equipment 43440 $0 $400 $412 $424 $437 $450 244 Maintenance Of Operating Equip 43450 $35,200 $42,820 $44,105 $45,428 $46,791 $48,194 245 Other Professional Services 43690 $25,130 $70,320 $72,430 $74,602 $76,841 $79,146 246 Developers Reimbursements 43691 $0 $50,000 $51,500 $53,045 $54,636 $56,275 247 Rental Of Equipment 43730 $8,450 $6,000 $6,180 $6,365 $6,556 $6,753 248 Other Contractual Services 43890 $16,220 $112,940 $116,328 $119,818 $123,413 $127,115 249
290
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92 250 Other Charges 44000 $34,050 $44,790 $46,134 $47,518 $48,943 $50,412 251 Dues And Subscriptions 44110 $160 $0 $0 $0 $0 $0
252 Licenses And Permits 44260 $33,890 $44,790 $46,134 $47,518 $48,943 $50,412 253
254 Interdepartmental Charges 46000 $77,560 $93,070 $95,862 $98,738 $101,700 $104,751 255 Information Technology Charges 46080 $8,020 $9,620 $9,909 $10,206 $10,512 $10,827 256 Communications Charges 46110 $30 $40 $41 $42 $44 $45 257 Fleet Rental Charges 46130 $13,620 $16,340 $16,830 $17,335 $17,855 $18,391 258 General Fund Overhead Charges 46510 $55,890 $67,070 $69,082 $71,155 $73,289 $75,488 259
260 TOTAL EXPENSES $20,093,480 $24,289,148 $25,324,876 $26,034,894 $26,790,299 $27,594,477 291
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93 7.2 COST-OF-SERVICE APPENDICES
Table 7-3: Operating Expenses Allocation (Detailed)
Line Expense Category FY 2025 Meter
Maint.
Customer
Service
Water
Supply Pumping Storage T&D Fire Protection
Conservation General Rev.
Offset Total
1 Water Administration $1,758,510 0% 70% 0% 0% 0% 0% 0% 0% 30% 0% 100% 2 Water Production $2,313,400 0% 0% 0% 50% 50% 0% 0% 0% 0% 0% 100% 3 Purchased Water $10,895,590 0% 0% 100% 0% 0% 0% 0% 0% 0% 0% 100% 4 Transmission/Distribution $3,506,990 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 100% 5 Water Conservation $269,470 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 100% Table 7-4: Capital Expenses (CIP) Allocation (Detailed) Line CIP Allocation Total CIP Allocation
1 AC Pipe Replacement Northwest 308 Zone $4,787,372 Transmission & Distribution 2 Blanco Pump Station Rehabilitation $520,000 Pumping
3 Calle Real Pump Station Rehabilitation $3,124,372 Pumping 4 Calle Vallarta PRS $364,000 Pumping
5 Cathodic Protection System Improvements $239,159 Transmission & Distribution 6 City-wide Copper Service Replacements $520,000 Transmission & Distribution 7 Costero Risco PRS Rehabilitation $715,717 Pumping
8 Dead End Water System Improvements $50,379 General
9 El Levante PRS Rehabilitation $363,589 Pumping
10 JRWSS Agency Projects $7,015,319 Transmission & Distribution 11 Major Street Maintenance Program $0 General
12 Meter Replacements $657,643 Meter Maintenance
13 Pico Booster Pump Station Pump Replacement $55,997 Pumping 14 Pico/Presidio DIP Replacement (Albertsons) $1,427,743 Pumping 15 Pump Station & Reservoir Pavement Rehab $91,128 Storage 16 Reata Pump Station Rehabilitation $83,033 Pumping
17 Recycled Water Storage Bay Rehab $208,000 Excluded
18 Recycled Water Alum Chem System Replacement $241,037 Excluded 19 Reservoir 5A Replacement $143,756 Storage
292
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94 20 Reservoir No 4 Exterior Coating $221,617 Storage
21 Sodium Hypochlorite Tank Replacement $13,755 Storage 22 Valve Replacement Program $234,636 Transmission & Distribution 23 Water Distribution Insert Valve Program $31,200 Transmission & Distribution 24 Water System Air-Vac Replacement Program $26,000 Transmission & Distribution 25 Water System Rehabilitation $2,217,213 Transmission & Distribution 26 Well Water Quality System Improvement $501,702 Water Supply 293
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San Clemente, California
www.san-clemente.org
AGENDA REPORT
CITY OF SAN CLEMENTE
CITY COUNCIL MEETING
CITY OF SAN CLEMENTE 1
Meeting Date: November 18, 2025 Agenda Item: 9B.
Submitted By: Finance and Administrative Services
Prepared By: Brian Brower, Assistant City Manager
Subject:
..titl e
CONSIDERATION OF A RESOLUTION AUTHORIZING THE CITY MANAGER TO
NEGOTIATE, FINALIZE AND EXECUTE A LEASE AGREEMENT WITH THE DEPARTMENT
OF HOMELAND SECURITY CUSTOMS AND BORDER PROTECTION AGENCY FOR THE INSTALLATION AND OPERATION OF A MARITIME SURVEILLANCE SYSTEM ON CITYOWNED LAND AT THE RESERVOIR 5 COMMUNICATIONS SITE (APN 690-502-16 AND 690- 502-12), AND FINDING THE ACTIONS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT ..body
Fiscal Impact:
Proposed payments from the lease amount to $120/year in revenue for the City for a twenty-year term.
Summary:
Staff is seeking direction from the City Council regarding the opportunity to enter into a site lease agreement with the Department of Homeland Security Customs and Border Protection Agency (CBP) for the purpose of installing and operating a maritime surveillance system at the Reservoir 5 Communications Site. The draft resolution would authorize the City Manager to complete negotiations with CBP based on key terms and finalize and execute a long-term lease agreement.
Background:
At the February 4, 2025 meeting of the City Council, staff was given direction to communicate with CBP to gauge interest and feasibility in placing ocean-facing surveillance cameras within the City of San Clemente (City) to better protect public health and safety concerns arising out of illegal vessel landing activities along the local shoreline.
Over the following months, City staff participated in multiple meetings with CBP staff, including site visits to the Maritime Coordination Center (MCC) in Long Beach, CA, as well as exploring various locations within the City. At the MCC, City staff received a demonstration of the capabilities of a maritime surveillance system, while the site visits within San Clemente were focused on the elevated location at the Avenida Salvador Reservoir 5 Communications Site and various locations along the beach.
CBP representatives have presented the opportunity to implement a maritime surveillance system located at a high vantage point in San Clemente to observe vessel activity off the coast. This system includes a wide base, tall mast, and a collection of equipment including radar, camera, sensor, and communication hardware.
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Meeting Date: November 18, 2025 Agenda Item: 9B.
CITY OF SAN CLEMENTE 2
CBP has also expressed interest in additional shorter-range surveillance installations located near the shoreline, ideally on the pier or along the coastal bluff, which are still being explored.
However, the agreement being proposed in Resolution No. 25-180 relates only to the specific location at the Reservoir 5 Communications Site, which is shown in Figure 1 below:
Figure 1 - General Site Lease Location
Discussion:
CBP has indicated that constructing and installing the proposed maritime surveillance system is a costly endeavor, with an initial investment well in excess of $1,000,000. To ensure the ongoing sustainability of the system, they require a lease agreement to ensure long-term access and use of the site. A sample lease provided by CBP is attached to this report as Attachment 1 - Exhibit A. CBP has indicated that the terms in this sample lease would need to be changed for the actual agreement, but the key terms would be as follows.
Summary of Key Lease Terms:
Location on Reservoir 5 Communications Site
20-year term, with (2) five-year extensions
$10 per month rent
City to pay electrical costs
CBP to pay for equipment and installation costs
CBP and City staff to agree on facility dimensions, design and placement The City has various lease agreements for communications equipment at the Reservoir 5 Communications site and throughout the City with different entities, including commercial, utility, non-profit and governmental parties. There are a small number of tenants at the Reservoir 5 Communications site whose facilities provide a clear public benefit or address public health and safety concerns and, because of those public benefits, do not pay any fees. These groups 296
Meeting Date: November 18, 2025 Agenda Item: 9B.
CITY OF SAN CLEMENTE 3
include the Orange County 800mHz system (OCFA, OCSD, and SC public Safety communications), and the South Orange County Volunteer Radio group (RACES). Proposed payments from the lease to CBP amount to $120/year, which is anticipated to offset the expense of electricity over the life of the agreement.
The system(s) being proposed would be owned, operated, maintained and controlled solely by the federal government, with no shared system access provided to City staff or local law enforcement. However, CBP staff has indicated that certain information gathered by the system, such as identification of a vessel in distress, could be shared with local authorities and a “surveillance cone” would be employed to prevent any areas within residential communities from being surveilled (i.e., the system would be singularly focused on offshore activities).
Pursuant to the Final Updated Surplus Land Act (SLA) Guidelines, dated August 1, 2024, the leasing of the small section of the property as proposed is for agency use (i.e., public health and safety) and does not constitute a disposition of public land, and therefore the requirements of the SLA are not applicable to the proposed agreement.
Council Options:
Adopt Resolution No. 25-180, authorizing the City Manager to negotiate, finalize and execute a lease agreement with CBP for a maritime surveillance system with the terms summarized above.
Modify and Adopt Resolution No. 25-180.
Direct staff to negotiate and finalize a draft lease agreement with CBP and return the form of the agreement to the City Council for review and approval. Direct staff to discontinue coordination with CBP for placement of a maritime surveillance system within the City.
Continue the item for further information or direction.
Environmental Review/Analysis:
The proposed action is categorically exempt from the California Environmental Quality Act (CEQA) under Class 3, Section 15303 of the state CEQA Guidelines (14 CCR 15303) because it consists of the construction and location of a new, small facility or structure on an existing communications site with no direct or foreseeable indirect significant impact on the environment.
Recommended Actions:
Staff Recommendation ..recommendation
STAFF RECOMMENDS that the City Council adopt Resolution No. 25-180, which will:
1. Determine that the actions are categorically exempt from the California Environmental Quality Act (CEQA) under Class 3, Section 15303 of the state CEQA Guidelines (14 CCR 15303); and 297
Meeting Date: November 18, 2025 Agenda Item: 9B.
CITY OF SAN CLEMENTE 4
2. Authorize the City Manager to negotiate, finalize and execute a lease agreement with the Department of Homeland Security Customs and Border Protection Agency (CBP) for the purpose of installing and operating a maritime surveillance system at the Reservoir 5 Communications Site based on the following key terms:
a. 20-year term, with (2) five-year extensions
b. $10 per month rent
c. City to pay electrical costs
d. CBP to pay for equipment and installation costs
e. CBP and City staff to agree on facility dimensions, design and placement ..end
Attachment:
1. Resolution No. 25-180
2. Sample Lease Agreement
Notification:
None.
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Attachment 1
RESOLUTION NO. 25-180
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SAN CLEMENTE, CALIFORNIA, AUTHORIZING THE CITY
MANAGER TO NEGOTIATE, FINALIZE AND EXECUTE A
LEASE AGREEMENT WITH THE DEPARTMENT OF
HOMELAND SECURITY CUSTOMS AND BORDER
PROTECTION AGENCY FOR THE INSTALLATION AND
OPERATION OF A MARITIME SURVEILLANCE SYSTEM ON
CITY-OWNED LAND AT THE RESERVOIR 5
COMMUNICATIONS SITE (APNS 690-502-16 AND 690-502-
12), AND FINDING THE ACTIONS EXEMPT FROM THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT
WHEREAS, at the February 4, 2025 meeting of the City Council, staff was given direction to communicate with the Department of Homeland Security Customs and Border Protection Agency (CBP) to gauge interest and feasibility in placing ocean-facing surveillance cameras within the City of San Clemente (City) to better address public health and safety concerns arising out of illegal vessel landing activities along the local shoreline; and
WHEREAS, over the following months, City staff participated in multiple meetings with CBP staff, including site visits to the Maritime Coordination Center (MCC) in Long Beach, CA, as well as exploring various locations within the City; and WHEREAS, CBP representatives have presented the opportunity to implement a maritime surveillance system located at a high vantage point in San Clemente to observe vessel activity off the coast; and
WHEREAS, CBP has indicated that constructing and installing the proposed maritime surveillance system will require a lease agreement to ensure long-term access and use of the site; and
WHEREAS, the system(s) being proposed would be owned, operated, maintained and controlled solely by the federal government; and
WHEREAS, there is a clear and unquantifiable public benefit to the residents of San Clemente for the proposed maritime surveillance system; and WHEREAS, the proposed lease agreement is for the public health and safety, which is in the best interest of City and the public and constitutes an agency use of the property.
NOW, THEREFORE, the City Council of the City of San Clemente does hereby find, determine and resolve as follows:
SECTION 1. The above recitals are true and correct and incorporated herein fully by reference as findings.
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Resolution No. 25-180 Page 2
SECTION 2. Based on the record as whole, the action is hereby determined to be categorically exempt from the California Environmental Quality Act (CEQA) under Class 3, Section 15303 of the state CEQA Guidelines (14 CCR 15303) because it consists of the construction and location of a new, small facility or structure on an existing communications site with no direct or foreseeable indirect significant impact on the environment.
SECTION 3. The City Manager, or the City Manager's designee, is hereby authorized and directed to negotiate, finalize and execute a lease agreement with the Department of Homeland Security Customs and Border Protection Agency (CBP) for the purpose of installing and operating a maritime surveillance system at the Reservoir 5 Communications Site (APNs 690-502-16 and 690-502-12) based on the following key terms:
a. 20-year term, with (2) five-year extensions
b. $10 per month rent
c. City to pay electrical costs
d. CBP to pay for equipment and installation costs
e. CBP and City staff to agree on facility dimensions, design and placement SECTION 4. The City Manager, or the City Manager's designee, is hereby authorized and directed to carry out any and all additional other and further actions as are necessary and proper to accomplish the purpose and intent of this resolution, including, but not limited to executing such documents as are necessary and proper to effectuate the installation of a maritime surveillance system at the Reservoir 5 Communications Site.
SECTION 5. The City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.
PASSED AND ADOPTED this _____ day of ____________________, _______.
ATTEST:
___________________________ __________________________
City Clerk of the City of Steve Knoblock, Mayor of the
San Clemente, California City of San Clemente, California 300
Resolution No. 25-180 Page 3
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) §
CITY OF SAN CLEMENTE )
I, LAURA CAMPAGNOLO, City Clerk of the City of San Clemente, California, do hereby certify that Resolution No. 25-180 was adopted at a regular meeting of the City Council of the City of San Clemente held on the _______ day of _______________________, _________, by the following vote:
AYES:
NOES:
ABSENT:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Clemente, California, this _____ day of _________________, ________. __________________________
CITY CLERK of the City of
San Clemente, California
Approved as to form:
____________________________
Elizabeth A. Mitchell, City Attorney
301
Exhibit A
Lease #
LEASE
BETWEEN
U.S. CUSTOMS AND BORDER PROTECTION, AS LESSEE
AND
_________________, AS LESSOR
THIS LEASE, which is entered into under the authority of 8 U.S.C. § 1103(b), is made and entered into upon the date of U.S. government signature written below, by and between _____________, an individual, whose interest in the property hereinafter described is that of fee simple owner, hereinafter called the “Lessor,” and the United States of America, by and through U.S. Customs and Border Protection, who together with their agents, representatives, employees, contractors and subcontractors, shall collectively hereinafter be called “Lessee.”
WITNESSETH: The parties hereto covenant and agree as follows:
WHEREAS, Lessee seeks to lease certain real property, together with a right of access thereto, that is owned by Lessor in the County of __________, State of _________; WHEREAS, Lessor is willing to lease said property to Lessee; and WHEREAS, the purpose of this Lease is to allow Lessee to deploy, construct, operate, maintain, repair and remove a relocatable tower site.
NOW THEREFORE, for and in consideration of the mutual covenants and agreements set forth in this Lease, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lessor and Lessee agree as follows:
1. Site. Lessor is the fee simple owner of the property that is the subject of this Lease, identified in the __ County property records as permanent parcel number_______ (the “Property”). The site consists of a portion of the Property totaling approximately 10,000 sq. ft. (100’ x 100’) in area to be used for a relocatable tower site, as depicted on Exhibit A, attached hereto and incorporated herein by reference (the “Site”). The approximate relevant coordinates for the Site are: Latitude __________ and Longitude ________ (XXX-XXX-XX-SiteName).
2. Permitted Use. During the term of this Lease, Lessee shall have exclusive (except as otherwise provided herein) use of the Site to deploy, construct, operate, maintain, repair and remove a relocatable surveillance tower system (the “Permitted Use”).
U.S. Customs and
Border Protection
302
2 Lessor ____ Lessee _____
The Site will be substantially similar to that depicted on the generic Exhibits B-1 and B-2, each attached hereto and made a part hereof. The work that may be performed at the Site is described in Exhibit C, attached hereto and incorporated herein by reference. Unless otherwise agreed to by the parties, any and all improvements, equipment, or property that are placed upon the Site by Lessee shall remain the property of Lessee and upon the expiration or earlier termination of this Lease shall be removed by Lessee in accordance with the terms of this Lease. The Permitted Use also includes, but is not limited to, the following activities: (a) entering the Property to maintain, repair and/or improve existing private roadways, including, but not limited to, the private roadways or portions thereof depicted on Exhibit A hereof; (b) removing hazards (to include replacing or modifying fences, gates or other items that obstruct or impede access to existing private roadways and maintenance, repair and/or improvement of the existing private roadways), graveling, grading, removing debris, filling in potholes, controlling drainage, controlling vegetation, and correcting weather-related damage to private roadway surfaces; (c) performing site surveys, site assessments, test borings, and other such exploratory work related to such road maintenance, repair and/or improvement, (d) access for, and temporary storage of, the equipment, materials and supplies necessary for the aforesaid activities, provided that said temporary storage shall be allowed only for so long as the Property is being used for the Permitted Use and that no permanent storage will be allowed; and (e) access for the purpose of accessing and performing work on adjacent properties. Nothing herein contained shall be construed as requiring Lessee to perform any of the aforementioned repairs, maintenance or improvements and all such work shall be at Lessee’s sole discretion.
Lessee acknowledges that additional environmental studies may be required prior to performing the aforementioned activities. No hazardous materials shall be permitted on the Site.
3. Access to the Site. Lessor hereby agrees that Lessee’s right of access to the Site, which is leased to Lessee as a part of this Lease, shall be exercised in accordance with the following terms and conditions. Lessee shall be permitted to access and use those portions of Lessor’s Property that are necessary for Lessee’s access to the Site described herein 24-hours per day, 7-days-per-week. Lessee’s right of access shall extend and apply to its employees, agents, and contractors.
4. Term. The initial term of this Lease shall commence on the date of U.S. government signature written below (the “Lease Commencement Date”) and end on September 30, 2045. The initial term shall be followed by two (2) five (5)-year renewal options commencing on October 1, 2045, and October 1, 2050. The renewal options shall run solely in favor of the Lessee, provided adequate funds are available from Congress for the payment of rentals. Renewal is within the sole discretion of the Lessee and may be accomplished only if Lessee provides Lessor written notice of its intent to exercise its option to renew the Lease at least sixty (60) days prior to the expiration of any term (the “Lease Expiration Date”). All terms and conditions of this Lease shall remain the same during the Term unless otherwise provided herein.
303
3 Lessor ____ Lessee _____
5. Payment. Lessee shall pay Lessor rent in the amount of One hundred Dollars ($120.00) per year or Ten Dollars ($10.00) per month, prorated for any partial months. Rent shall be payable in arrears and will be due on the first workday of each month. If the Lease Commencement Date falls after the 15th day of the month, the initial rental payment shall be due on the first workday of the second month following the Lease Commencement Date. If rent is not received within five days of the date due, then Lessee shall pay interest in accordance with the Prompt Payment Act, 31 U.S.C. § 3901, et seq.
6. Utilities. Lessor agrees to allow Lessee access to preexisting utility services, to include tie-in and junctions to carry out the Permitted Use. Payment for utility services utilized are covered under Lesse rent Payment. Lessee is responsible for obtaining additional utility services that Lessee deems necessary beyond preexisting services to carry out the Permitted Use. Lessor agrees to take whatever actions are reasonably necessary to accommodate or facilitate Lessee’s acquisition of any additional utility services that are required for Lessee to carry out the Permitted Use at the Site.
7. Real Estate Taxes. Lessor shall be responsible for the real estate taxes attributable to the Site.
8. Termination.
(a) The Lessee may terminate this Lease for any reason during any term by giving at least a sixty (60) days prior written notice to the Lessor. No rent shall accrue after the effective date of termination. The Lease shall be terminated if funds are not made available for the continuation of the Lease in a fiscal year covered by the Lease. In such case, the parties agree that Lessee’s termination costs shall be limited to the rental amount that Lessee would otherwise be required to pay pursuant to Paragraph 5 of this Lease during the 60-day notice period. (b) Lessor may terminate this Lease upon Lessee’s failure to cure any breach of the terms of this Lease for more than sixty (60) days after written notice thereof from Lessor. Said notice shall be computed commencing with the date of mailing.
9. Limitation on Use. The Site may only be used by Lessee for the Permitted Use. In turn, Lessor agrees that it shall not take any action that will interfere with Lessee’s Permitted Use of the Site.
10. Maintenance and Repairs. Lessee agrees that it shall be solely responsible for the maintenance, repair, and upkeep for any and all improvements, equipment, or other property it places upon the Site.
11. Non-Interference. Lessor shall not allow any condition to exist that would cause a conflict or be allowed to cause interference, failure, or interruption with the 304
4 Lessor ____ Lessee _____
Permitted Use, including the frequency or modulation of Lessee’s equipment on or near the tower at any time. Lessee shall give Lessor written notice of any interference, failure or interruption under this provision, and Lessor shall have thirty (30) days to cure the condition causing the interference, failure or interruption.
12. Compliance with Applicable Law. Lessee will comply with all federal, state, and local laws that are applicable to the Permitted Use on the Site; provided that nothing in this Lease shall be construed as a waiver of any sovereign immunity of the United States Government.
13. Removal of Lessee’s Property. Upon the expiration or earlier termination of this Lease, Lessee shall remove any improvements, equipment, or other property placed upon the Site by Lessee. Beyond the removal of Lessee’s improvements, equipment, or property from the Site, Lessor shall have no right to require that Lessee restore the Site upon the expiration or termination of the Lease and waives all claims against the Lessee for waste, damages, or restoration arising from or related to Lessee’s Permitted Use of the Site during the term of the Lease (including any extensions thereof).
14. Sublease and Assignment. Lessee may not sublet any part of the Site, nor may Lessee assign all or any part of its rights or interests in this Lease. Lessor agrees that it will not sell the Site, or any portion thereof, unless the potential purchaser agrees to be bound by the terms of this Lease. Should Lessor sell the Property, Lessor will notify the Lessee within thirty (30) days of closing of the new owner’s contact information. Lessee may not recognize an assignment of this Lease unless such assignment satisfies the requirements of the Assignment of Claims Act (31 U.S.C. § 3727 and 41 U.S.C. § 6305), and federal regulations found at 48 C.F.R. §§ 32.800 – 32.806.
15. Successors Bound. This Lease shall bind, and inure to the benefit of, the parties hereto and their respective heirs, executors, administrators, and successors, and assigns.
16. Non-Waiver. The failure of either party to insist, in any one or more instances, upon the strict performance of any one or more of the obligations of this Lease, or to exercise any election herein contained, shall not be construed as a waiver or relinquishment for the future of the performance of such one or more obligations of this Lease or of the right to exercise such election, but the Lease shall continue and remain in full force and effect with respect to any subsequent breach, act or omission.
17. Integrated Agreement and Modifications in Writing. This Lease and any exhibits hereto, upon execution, contains the entire agreement of the parties and no prior written or oral agreement, express or implied, shall be admissible to contradict 305
5 Lessor ____ Lessee _____
the provisions of this Lease. No alteration or variation of this Lease shall be valid unless made in writing and signed by the parties hereto.
18. Alterations. In carrying out the Permitted Use, Lessee shall have the right during any term of this Lease to make modifications to any improvements or equipment that are placed upon on the Site, to erect or place new improvements or equipment upon the Site, and to place signs upon the Site, provided, however, that Lessee shall consult with Lessor and obtain Lessor’s prior written approval regarding the placement of new improvements or equipment on the Site if the new improvements or equipment are substantially different than the existing improvements or equipment on the Site. Lessor shall not unreasonably withhold, condition or delay its approval of new improvements that Lessee deems necessary to the Permitted Use. In the event that the Lessee desires to materially change the Permitted Use, Lessee shall obtain Lessor’s prior written permission.
19. Availability of Appropriations. In accordance with 31 U.S.C § 1341, 41 U.S.C. § 6301, and federal law, Lessee’s obligations under this Lease are contingent upon the availability of appropriated funds from which payment for contract purposes can be made. The continuation of this Lease each fiscal year (October 1 – September 30) is dependent on the availability of funds for this purpose and the Lease shall be terminated, in accordance with Paragraph 8(a) above, if funds are not made available to continue the Lease in subsequent fiscal years. Nothing in this Lease shall be construed as implying that Congress will, at a later date, appropriate funds sufficient to meet rent payments.
20. No Waiver of Sovereign Immunity. Nothing herein shall require Lessee to perform any act, or to not act, i.e., an omission, in a manner, that would constitute a violation of law or federal fiscal policy. Lessor further acknowledges that no employee or contractor of the United States Government has the authority in law or the ability in fact to waive certain government rights, e.g., rights relating to or involving the sovereign immunity of the United States or rights pertaining to personal property. Nothing herein shall be construed as a waiver of the sovereign immunity of the United States.
21. Holdover. Should Lessee holdover after the expiration of the Term, or any extension thereof, such tenancy shall be from month-to-month on all terms, covenants, conditions, and conditions of this Lease, provided adequate appropriations are provided by Congress for the payment of rent.
22. Governing Law. This Lease is governed by federal law.
23. Disputes. This Lease is subject to and governed by the Contract Disputes Act, 41 U.S.C. § 7101, et seq.
24. Condition of the Site. Notwithstanding anything herein to the contrary, Lessee agrees that it is familiar with the condition of the Site and warrants that it has made 306
6 Lessor ____ Lessee _____
its own inspection of the Site and agrees that the foregoing is suitable to carry out the Permitted Use.
25. No Presumption Against Drafting Party. All parties have had the opportunity to draft, review and edit the language of this Lease, and thus no presumption for or against any party arising out of the drafting of all or any part of this Lease shall be applied in any action relating to, connected with, or involving this Lease.
26. Authority. Lessor covenants and represents that it is the lawful owner of the Property. By his or her execution hereof, each of the persons signing on behalf of the parties hereto hereby represents and warrants that each is fully authorized to act and execute this Lease on behalf of their respective party.
27. Quiet Enjoyment. So long as Lessee is not in default under this Lease, Lessee shall, subject to the terms of this Lease, at all times during the term or any extensions thereof, have peaceful and quiet enjoyment of the Site against any person or persons claiming by, through or under Lessor.
28. Counterparts. This Lease may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument.
29. Severability. Whenever possible, each provision of this Lease shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Lease shall be determined by a court of competent jurisdiction to be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision and the remaining provisions of this Lease.
30. No Effect on Statutory Authority. Lessor acknowledges and agrees that nothing set forth herein shall be construed as having any effect or placing any limit on any statutory authority Lessee may have to access lands for purposes of patrolling the border and enforcing federal law.
31. Federal Tort Claims Act. If the death of or injury to any person, or loss of or damage to any real or personal property of any person, is caused by Lessee, the liability, if any, of Lessee shall be determined in accordance with applicable law, including applicable provisions of the Federal Tort Claims Act (28 U.S.C. §§ 2671 – 2680, as amended). Lessee’s liability under this clause is subject to the availability of appropriations for such payment, and nothing contained herein may be considered as implying that Congress will at a later date appropriate funds sufficient to meet any deficiencies.
32. Notices. All notices or other communications hereunder shall be in writing and shall be deemed duly given when delivered (or attempted delivery of the same is refused or cannot be affected at the last address of which notice has been provided 307
7 Lessor ____ Lessee _____
pursuant to this Section) via messenger or nationally recognized overnight courier service, or United States Mail, postage prepaid, certified, return receipt requested.
If intended for Lessor, notices shall be addressed to:
Name:
Address:
Phone:
E-mail:
If intended for the Lessee, notices shall be addressed to:
U.S. Customs and Border Protection
ATTN: Land Lease Administrator
USBP PMOD, 6.5E STOP 1039
1300 Pennsylvania Avenue NW
Washington, D.C. 20229
With copy sent to:
Assistant Chief Patrol Agent
Strategic Planning Branch
U.S. Border Patrol
San Diego Sector Headquarters
2411 Boswell Rd.
Chula Vista CA, 91914
Phone: (619)216-4000
or to such other place and with such other copies as either party may designate as to itself by written notice to the others.
33. Headings. Section headings herein are included herein for the convenience of reference only and shall not constitute part of this Lease for any other purpose. [SIGNATURE PAGE(S) TO FOLLOW]
308
8 Lessor ____ Lessee _____
COUNTERPART SIGNATURE PAGE TO LEASE
IN WITNESS WHEREOF, the Lessor and Lessee have caused this Lease to be executed as of the date last written below.
Lessor:
By: ______________________________________
Printed Name:_________________________________
Date: _______________________
309
9 Lessor ____ Lessee _____
COUNTERPART SIGNATURE PAGE TO LEASE
IN WITNESS WHEREOF, the Lessor and Lessee have caused this Lease to be executed as of the date last written below.
Lessee:
U.S. Customs and Border Protection
By:
Paul Enriquez
Acquisition Program Manager
U.S. Border Patrol Program Management Office Directorate U.S. Border Patrol
U.S. Customs and Border Protection
Department of Homeland Security
Date: ________________________
310
910 Calle Negocio
2nd Floor
San Clemente, California
www.san-clemente.org
AGENDA REPORT
CITY OF SAN CLEMENTE
CITY COUNCIL MEETING
CITY OF SAN CLEMENTE 1
Meeting Date: November 18, 2025 Agenda Item: 10A.
Submitted By: Community Development
Prepared By: David Carrillo, Associate Planner
Subject:
..titl e
CONSIDERATION OF A RESOLUTION APPROVING A PARKING AGREEMENT BETWEEN HAPPY ..body COFFEE CLUB AND THE CITY OF SAN CLEMENTE
Fiscal Impact:
The subject parking agreement (Agreement), if approved, would result in $2,160 of annual revenue to the City.
Summary:
On July 18, 2024, the Zoning Administrator reviewed a request by Happy Coffee Club (Happy Coffee) for outdoor beer and wine service at a café located at 114 Avenida Victoria. The proposal also included a request for additional café seating requiring an off-site parking agreement to meet the City’s parking requirements. The Zoning Administrator approved the requested Minor Conditional Use Permit (MCUP 24-057) requiring the execution of a parking agreement with the City to satisfy the San Clemente Municipal Code (SCMC) requirement for off-street parking to provide such seating. Without a parking agreement, the café is limited to 16 indoor seats and eight outdoor seats. The staff report, meeting minutes, and adopted resolution related to this July 18, 2024 Zoning Administrator action are provided as Attachments 2, 3, and 4, respectively.
To provide the additional seating in compliance with the conditions of approval associated with MCUP 24-057, Happy Coffee proposes to obtain the use of additional parking spaces through execution of the Agreement (Appendix 1 of Exhibit A of Attachment 1) between the City and Happy Coffee for use of 4 parking spaces at a City-owned parking lot located at 118 Avenida Rosa, which is utilized by the Dorothy Visser Senior Center under a lease with the City. Execution of the Agreement would allow the café to operate with a maximum seat count of 32 indoor seats and 16 outdoor seats, doubling their current seating limits.
Background:
The project is located at 114 Avenida Victoria, in the Mixed Use 3.1 Zoning District and Architectural Overlay District (MU3.1-A). The project site is developed with a commercial building, previously occupied by La Tiendita, a restaurant and market, that operated from 1993 through 2019. Happy Coffee acquired the property in 2023, and opened a café restaurant in October 2025. Exterior improvements at the subject building were approved in June 2024, which included a remodel of the existing rear outdoor patio, to bring the patio closer to the building’s Spanish architecture. The rear patio is covered and mostly enclosed but is not a conditioned interior space. The exterior improvements also included the addition of bicycle parking, and the removal of one parking space to accommodate an accessible-parking space per Americans with Disabilities Act (ADA) requirements. Per the SCMC, a parking credit is given for a parking space 311
Meeting Date: November 18, 2025 Agenda Item: 10A.
CITY OF SAN CLEMENTE 2
removed due to ADA requirements. Therefore, the credit of one parking space plus three on-site parking spaces (including the new ADA parking space) equals four parking spaces for the benefit of the business operations at the property. The approved plans indicate that the business would maintain access to the parking spaces at the rear of the building, accessed by a driveway that is legal non-conforming due to its narrowness.
Since the subject property receives credit for four parking spaces, Happy Coffee can operate with 16 indoor seats and eight outdoor seats. However, Happy Coffee desires to operate with 32 indoor seats and 16 outdoor seats. In order for Happy Coffee to provide the desired amount of indoor and outdoor seating, four additional parking spaces are required. It is not feasible to provide additional parking spaces on-site due to the limited space of the property.
To support the increase in seating, the Zoning Administrator approved the use of additional seating upon execution of the Agreement to license the use of four off-site parking spaces on a City-owned parking lot, with 25 parking spaces, located at 118 Avenida Rosa. This parking lot is occupied by a senior care services center, Dorothy Visser Senior Center, which operates Monday through Friday, from 8:30 a.m. to 4:00 p.m., under a lease agreement (Appendix 2 of Exhibit A of Attachment 1) with the City. The four off-site parking spaces would allow Happy Coffee to satisfy parking requirements for the increased seating, during times that the Dorothy Visser Senior Center is closed. The Zoning Administrator conditioned the approval upon the applicant entering into the Agreement with the City for exclusive use of four parking spaces outside of the senior center hours or operation. Therefore, the senior center will continue to operate with full access to the 25 parking spaces.
Although approval from the senior center is not required, Planning staff requested input from the senior center to ensure staff addresses concerns related to the Agreement. The senior center supports the Agreement with conditions that require signage to ensure the parking lot only remains accessible to customers of the senior center and Happy Coffee during respective hours.
The Agreement requires signage to be installed, subject to approval by the Community Development Director, which would indicate that the subject parking spaces are for exclusive use of Happy Coffee customers or employees during designated hours as indicated within the Agreement.
Staff utilized a parking license agreement template that has been used by other businesses, including Chabad Jewish Center, Los Molinos Brewery, OC Tavern, and La Ventura Event Center, to meet a portion of their off-street parking requirement through a parking agreement with the City. Due to the subject site’s constraints as well as the proximity of available on and off-street public parking, staff supports the requested Agreement to support Happy Coffee’s increased seating.
Public Comment and Code Enforcement Action:
At the November 4, 2025 City Council meeting, members of the public spoke during the Oral Communications portion of the meeting to voice concerns about the current use of the property.
These concerns were specifically related to the use of the rear parking area for non-parking purposes and the subsequent impact of the business’s patrons utilizing private parking areas on neighboring commercial properties.
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Meeting Date: November 18, 2025 Agenda Item: 10A.
CITY OF SAN CLEMENTE 3
The City’s Code Compliance Division also received similar complaints in October, and has initiated a Code Compliance Case (CE2025-0643) to address the non-compliant parking situation. Through the investigation of this case, staff has also become aware of the business’s use of the rear parking area for unpermitted special events, and will be addressing that issue with the business, as well.
Due to these concerns, staff has included in the proposed Resolution Section 3, which states:
“The execution of the Parking Agreement shall not occur until the current use of the property is conducted in compliance with all applicable laws and local ordinances. Future non-compliance related to the use of the business’s required on-site parking shall be grounds for the City to initiate revocation of the Parking Agreement, in addition to any other grounds for early termination stipulated in the Parking Agreement.”
Environmental Review/Analysis:
On July 18, 2024, through the adoption of Resolution No. ZA 24-012, the Zoning Administrator determined that the project, including the parking required by it, is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15301 (Class 1: Existing Facilities) because the project is limited to on-site service of beer and wine at an existing commercial building, and an off-site parking agreement. Approving the Agreement is within the scope of the previous CEQA determination, and there are no new or more severe environmental impacts that would warrant supplementing or revisiting the previous determination.
Council Options:
Adopt Resolution No. 25-181, which would approve, and authorize the City Manager to execute a parking agreement between Happy Coffee Club and the City of San Clemente. Deny Resolution No. 25-181.
Direct staff to provide additional information.
Environmental Review/Analysis:
On July 18, 2024, through the adoption of Resolution No. ZA 24-012, the Zoning Administrator determined that the project, including the parking required by it, is categorically exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15301 (Class 1: Existing Facilities) because the project is limited to on-site service of beer and wine at an existing commercial building, and an off-site parking agreement. Approving the Agreement is within the scope of the previous CEQA determination, and there are no new or more severe environmental impacts that would warrant supplementing or revisiting the previous determination.
Recommended Actions:
Staff Recommendation ..recommendation
STAFF RECOMMENDS the City Council adopt Resolution No. 25-181, which would approve, and authorize the City Manager to execute a parking agreement between Happy Coffee Club and the City of San Clemente, included as Exhibit A to the proposed Resolution (Attachment 1) for an initial annual license fee of $2,160 and an initial term of five years with one five-year option exercisable in the City Manager’s discretion.
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Meeting Date: November 18, 2025 Agenda Item: 10A.
CITY OF SAN CLEMENTE 4
..endAttachment:
1. Resolution No. 25-181
Exhibit A - Parking Agreement
Appendix 1 – Parking Layout Plan
Appendix 2 – AgeWell Lease at Dorothy Visser Senior Center
2. Zoning Administrator Staff Report, dated July 18, 2024
3. Zoning Administrator Meeting Minutes, dated July 18, 2024
4. Adopted Resolution No. ZA 24-012, approving MCUP 24-057 Notification:
Happy Coffee Club.
314
Attachment 1
RESOLUTION NO. 25-181
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
SAN CLEMENTE, CALIFORNIA, APPROVING A PARKING
AGREEMENT WITH HAPPY COFFEE CLUB, LOCATED AT
114 AVENIDA VICTORIA, FOR THE EXCLUSIVE USE OF
FOUR PARKING SPACES AT THE DOROTHY VISSER
SENIOR CENTER PARKING LOT, LOCATED AT 118
AVENIDA ROSA, MONDAYS THROUGH FRIDAYS
BETWEEN 4 PM AND 9 PM AND ON SATURDAYS AND
SUNDAYS BETWEEN 6 AM AND 9 PM, AND AUTHORIZING
THE CITY MANAGER TO EXECUTE THE AGREEMENT
WHEREAS, on July 18, 2024, the Zoning Administrator reviewed a request by Happy Coffee Club for outdoor beer and wine service at a café located at 114 Avenida Victoria. The proposal also included a request for additional café seating requiring an offsite parking agreement to meet the City’s parking requirements; and WHEREAS, the Zoning Administrator’s approval of the entitlements were partially contingent upon the execution of a parking agreement with the City to satisfy the Municipal Code’s requirements for off-street parking to allow for the requested increase in café seating; and
WHEREAS, pursuant to City policy 901-1, the City delegates the authority to engage in negotiations with current and prospective tenants for City-owned property to the City Manager; and
WHEREAS, the City owns the subject property at 118 Avenida Rosa, San Clemente, California 92672 (Dorothy Visser Senior Center); and WHEREAS, pursuant to Section 102(i)(2)(A) of the Final Updated Surplus Land Act (SLA) Guidelines, dated August 1, 2024, the exclusive licensing of a portion of the property outside of the times when the Dorothy Visser Senior Center is open, pursuant to the proposed Parking Agreement, does not constitute a disposition of public land, and therefore the requirements of the Surplus Lands Act are not applicable; and WHEREAS, City staff has reviewed the proposed Parking Agreement and finds it to be beneficial to the City, in that the Parking Agreement provides for public benefits and purposes in the form of continued community opportunities for use, and the monthly rent amounts are consistent with a fair market value of the property based on the timeframe when the parking would be utilized by Happy Coffee Club.
NOW THEREFORE, the City Council of the City of San Clemente does hereby find, determine and resolve as follows:
315
Resolution No. 25-181 Page 2
SECTION 1. The above recitals are true and correct and incorporated herein fully by reference.
SECTION 2. That the Parking Agreement with Happy Coffee Club is hereby approved for an initial term of five years with one five-year extension exercisable in the City Manager’s discretion.
SECTION 3. The execution of the Parking Agreement shall not occur until the current use of the property is conducted in compliance with all applicable laws and local ordinances. Future non-compliance related to the use of the business’s required on-site parking shall be grounds for the City to initiate revocation of the Parking Agreement, in addition to any other grounds for early termination stipulated in the Parking Agreement.
SECTION 4. That the City Manager, or the City Manager's designee, is hereby authorized and directed to execute the Parking Agreement in a form substantially similar to that presented to the City Council on November 18, 2025.
SECTION 5. That the City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.
PASSED AND ADOPTED this ___ day of _____________________, ____.
ATTEST:
City Clerk of the City of Steve Knoblock, Mayor of the
San Clemente, California City of Clemente, California
316
Resolution No. 25-181 Page 3
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) §
CITY OF SAN CLEMENTE )
I, LAURA CAMPAGNOLO, City Clerk of the City of San Clemente, California, do hereby certify that Resolution No. 25-181 was adopted at a regular meeting of the City Council of the City of San Clemente held on the _______ day of _______________________, 2025, by the following vote:
AYES:
NOES:
ABSENT:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Clemente, California, this _____ day of _________________, ________. __________________________
CITY CLERK of the City of
San Clemente, California
Approved as to form:
____________________________
Elizabeth A. Mitchell, City Attorney
317
Exhibit A
PARKING AGREEMENT
This PARKING AGREEMENT (the “Agreement”) is dated for reference purposes as of the ____ day of ___________, 2025, and is being entered into by and between the CITY OF SAN CLEMENTE, a California municipal corporation (“City”), and the HAPPY COFFEE CLUB LLC, a California limited liability company with its principle place of business at 114 Avenida Victoria, San Clemente, California 92672 (“Happy Coffee Club”) (with City and Happy Coffee Club hereinafter being individually referred to individually as a “Party” and collectively as the “Parties”).
R E C I T A L S:
A. Happy Coffee Club is the tenant of that certain real property commonly known as 114 Avenida Victoria, in the City of San Clemente, County of Orange, California (the “Property”).
Happy Coffee Club operations include use of the Property as a coffee shop with beer and wine service (“Facility”). Pursuant to applicable provisions of the San Clemente Municipal Code, Happy Coffee Club must have a total of eight (8) off-street parking spaces to operate the Facility on the Property with the proposed floor plan and seating count of 32 indoor seats and 16 outdoor.
The Property currently provides three (3) onsite spaces plus one parking space credit due to the improvement of one State-required handicapped parking space that resulted in a loss of one parking space, and no offsite spaces, resulting in a deficiency of four (4) off-street parking spaces.
B. On July 18, 2024, the Zoning Administrator approved Minor Conditional Use Permit (MCUP) 24-057, via adoption of Resolution No. ZA 24-012, to allow outdoor beer and wine service at the Facility, conditioned upon, among other things, an off-site parking agreement between the City and the Facility for the use of parking spaces at a City-owned parking lot located at 118 Avenida Rosa. This approval was conditioned upon the Parties entering into an exclusive license agreement for four (4) off-street parking spaces at the parking lot at the Dorothy Visser Senior Center at 118 Avenida Rosa, in the City of San Clemente, County of Orange, California 92672 (the “Dorothy Visser Parking Lot”), during the hours of 4 p.m. until 9 p.m., Mondays through Fridays; and 6 a.m. until 9 p.m. on Saturdays and Sundays to satisfy the off-street parking requirement in accordance with Section 17.64.120 of City’s Municipal Code.
C. The City owns fee title to the Dorothy Visser Parking Lot. The Dorothy Visser Parking Lot is located within 200 feet of the Property and has a sufficient number of parking spaces to serve the needs of Happy Coffee Club, without impairing the primary use of the parking lot for senior care services provided Monday through Friday, from 8:30 a.m. to 4 p.m. at the Dorothy Visser Senior Center. See Exhibit B for the lease between the City and the senior center.
D. The Parties desire to enter into this Agreement for the purpose of providing Happy Coffee Club with an exclusive license for the use of four (4) parking spaces in the Dorothy Visser Parking Lot, during the hours of 4 p.m. until 9 p.m., Mondays through Fridays; and 6 a.m. until 9 p.m. on Saturdays and Sundays, to satisfy the off-street parking requirements set forth in the San Clemente Municipal Code and in order for Happy Coffee Club to operates the Facility on the Property with a maximum of 32 indoor seats and 16 outdoor seats, all in accordance with and subject to the terms and conditions set forth in this Agreement. 318
C O V E N A N T S
Based upon the foregoing Recitals, which are incorporated fully into this Agreement by this reference, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by both Parties, the City and Happy Coffee Club hereby agree as follows:
1. Grant of License. During the Term (as defined and described in Sections 2 and 3 below) of this Agreement, the City hereby grants to Happy Coffee Club and its customers and invitees of the Facility a revocable, non-transferable, exclusive license (“License”) to utilize up to four (4) vehicular parking spaces (the “Parking Spaces”) in the portion of the Dorothy Visser Parking Lot depicted in Exhibit “A”, which is attached hereto and incorporated herein fully by this reference, which license shall include a right of vehicular and pedestrian ingress and egress between the Parking Spaces and the adjacent public streets and rights-of-way. Said license shall be limited to the hours of 4 p.m. until 9 p.m., Mondays through Fridays; and 6 a.m. until 9 p.m. on Saturdays and Sundays. The Happy Coffee Club shall separately apply for Special Event or Activity permit(s) for nonstandard activities that increase use of the Facility or generate additional parking demand, or if the Parking Spaces are needed outside the foregoing licensed hours.
2. Term. Subject to Section 3 of this Agreement, the initial term of the License shall commence upon the approval of the final building permit related to the tenant improvement of the Facility, upon the date that Code Compliance Case CE25-0643 is deemed closed and the business has achieved compliance with on-site parking requirements, or upon the date of execution of this document, whichever occurs last (the “Commencement Date”), and shall continue thereafter for an initial term of five (5) years. Subject to Section 3 of this Agreement, Happy Coffee Club shall have the right to extend the initial term of the License for one (1) successive term of five (5) years.
The option shall be deemed to have been exercised (and the term of the License so extended) unless Happy Coffee Club delivers a written notice to City at least thirty (30) days prior to the end of the then-current term of its intent to not extend the License. The initial term of the License as extended pursuant to such options (and subject to Section 3) is referred to herein as the “Term.”
3. Termination. Notwithstanding Section 2, the Term of the License and this Agreement automatically shall terminate if Happy Coffee Club (or successor or assignee approved in writing in advance by the City) does not maintain in effect a valid conditional use permit or other legally required permit or permits to operate the Facility or if Happy Coffee Club discontinues operation of the Facility for a period of six (6) consecutive months. In addition, and notwithstanding Section 2, this Agreement and the License may be terminated as follows: (i) Happy Coffee Club may terminate the License sixty (60) days after it delivers written notice to City of its intent to terminate, provided that Happy Coffee Club is terminating operation of the Facility as well; (ii) the City Council of City has the right by a majority vote of its membership that is eligible and qualified to vote on the issue to terminate the License and this Agreement upon a determination by the City Council that it desires to devote the Parking Spaces to a different public use or there is an occurrence of non-compliance related to the use of the business’s required onsite parking at 114 Avenida Victoria; (iii) the City Manager has the right to terminate the License and this Agreement upon failure of Happy Coffee Club to timely remit the License Payment following notice and an opportunity to cure of at least ten (10) days; and (iv) either Party may terminate the License and this Agreement and any and all rights or obligations that exist hereunder if a court of law finds that the License or this Agreement is not valid and enforceable. The Parties 319
agree that in the event the License and this Agreement are terminated pursuant to this Section 3, neither Party shall have any further rights or liabilities to the other with respect to the period of time after the effective date of the termination.
4. License Payment. Happy Coffee Club shall remit to the City an initial license fee of Two Thousand, One Hundred Sixty Dollars ($2,160.00) per year, with the first payment due within thirty (30) days of the Commencement Date (“License Payment”). On each successive anniversary date of the Commencement Date, the License Payment shall be increased in accordance with the percentage increase in the Consumer Price Index, All Items, published by the United States Department of Labor for the smallest geographical area within which the City of San Clemente is located (the “CPI Index”) (or such index is discontinued, such substitute index as is most closely comparable thereto), and with said percentage increase being based upon the percentage increase in the CPI Index between the date that is fifteen (15) months prior to the applicable License Payment adjustment date and the CPI Index on the date that is three (3) months prior to the applicable License Payment adjustment. The first License Payment shall be paid in advance on the Commencement Date (as to the first License Payment), and each License Payment thereafter shall be paid on each anniversary of the Commencement Date. Payments shall be made in U.S. dollars. Checks or money orders shall be made out to the “City of San Clemente.” If any License Payment or any other sum due the City is not received by City within ten (10) days after the date it is due, Happy Coffee Club shall be deemed delinquent in its License Payment and a late charge of one and one-half percent (1.5%) of the delinquent amount, plus the sum of Fifty Dollars ($50.00), shall become immediately due and payable to City. An additional charge of one and one-half percent (1.5%) of such delinquent License Payment (excluding late charges) shall be added for each additional calendar month (or portion thereof) that the delinquent sum remains unpaid. The Parties hereby acknowledge and agree that such late charges do not represent and shall not be deemed to be an interest payment, but that such late charges represent a fair and reasonable estimate of the costs and expenses that City will incur by reason of Happy Coffee Club’s late payment. City’s acceptance of any delinquent License Payment or late charge shall in no way constitute a waiver of Happy Coffee Club’s default with respect to such overdue and delinquent payment, or in any way impair, prevent, or restrict City from exercising any of its rights or remedies set forth in this Agreement or otherwise provided at law.
5. Acceptability of the Parking Spaces. The Parking Spaces have been determined to conform to current City of San Clemente standards for parking spaces, and Happy Coffee Club accepts them “AS IS” and agrees to maintain the Parking Spaces in a manner that meets City standards.
6. Exclusive Use of the Parking Spaces. The Parking Spaces will be available to the public for purposes related to the Happy Coffee Club use. Happy Coffee Club shall post signage on the Parking Spaces indicating that the Parking Spaces are for the exclusive use of Happy Coffee Club customers or employees during the business operating hours specified in Section 1 above and restricting use of the Parking Spaces by other members of the public. Signage shall be submitted to and approved by the Community Development Director prior to purchase and installation. 320
7. City’s Reservations. City reserves physical and legal control over the Parking Spaces. As part of that control, the City reserves the right to temporarily, and at no cost to the City, take the Parking Spaces out of service for any purpose, including maintenance, repair, or restriping. City also reserves the right to designate any or all of the Parking Spaces as handicapped spaces. Additionally, City reserves the right to change the configuration of the Parking Spaces and the drive aisles providing access to the Parking Spaces at City’s sole and absolute discretion; provided, however, if City takes an action during the Term of this Agreement that results in the permanent reduction in the number of Parking Spaces in a manner that affects the location, configuration, or availability of the parking spaces indicated within Exhibit A, City shall be required to act reasonably to amend the area subject to the License to include an additional number of Parking Spaces sufficient to replace the number of Parking Spaces removed from the area subject to the License as of the date this Agreement is being executed.
Further, City reserves the right to require amendments to this Agreement in the event that the use or hours of operation of the Dorothy Visser Senior Center, or any subsequent primary tenant on the Property, change in a manner that reduces or otherwise affects Happy Coffee Club’s use of the Parking Spaces.
In addition, City reserves the right to require that Happy Coffee Club require its employees to utilize the Parking Spaces during the hours that the License is in effect in order to provide a greater number of convenient visitor parking spaces on the Property.
8. Maintenance. Happy Coffee Club, at its sole cost and expense, shall maintain the Parking Spaces in a safe and clean condition, and shall be responsible for any damage committed to the Parking Spaces by Happy Coffee Club members and invitees. Such maintenance shall include removing all trash and debris from the Parking Spaces, cleaning any spilled liquids or other substances from the Parking Spaces, removing any abandoned or non-operable vehicles parked within the License area, and providing such security personnel as may be needed to ensure the safety of Happy Coffee Club members and invitees using the Parking Spaces. Happy Coffee Club shall be responsible for all repairs to the Parking Spaces, including asphalt sealing and restriping, reasonably determined to be necessary by City.
9. Indemnity. Happy Coffee Club shall protect, defend (with counsel acceptable to City), indemnify, and hold harmless City and City’s officers, employees, agents, and representatives (collectively, the “City Parties”), and each of them, jointly and severally, against and from any and all claims, demands, causes of action, damages, costs, expenses, losses, and liabilities, at law and in equity, of every kind or nature whatsoever, including attorneys’ fees and expert witness fees, including, without limitation, injury to or death of any person or persons and damage to or destruction of any property, threatened, brought, or instituted, arising out of, or in any manner directly or indirectly connected with the entry upon, or the engagement of any activities on, near or in route to or from the Parking Spaces or the Property by any Happy Coffee Club employees or invitees, including, without limitation:
a) any damage to the Parking Spaces or the Property and any liability to any third party incurred by reason of any acts or omissions, or any commission of any negligent or tortious acts by Happy Coffee Club customers or invitees in connection with the activities permitted or required by this Agreement; 321
b) any mechanics’ or materialmens’ liens, claims, demands, actions or suits arising (directly or indirectly) from (i) the performance of the activities permitted or required by this Agreement, or (ii) the activities of Happy Coffee Club customers or invitees on or relating to the Parking Spaces (including, without limitation, any claims by any such customers or invitees); and c) any costs of removing Happy Coffee Club property or the property of any of its employees, customers or invitees from the Parking Spaces or the Property after the last to expire of the Term or the earlier termination of this Agreement.
The foregoing obligations shall not apply to claims, liabilities, or losses arising out of the sole active negligence or willful misconduct of City.
10. Insurance. Prior to the Commencement Date and during the entire Term, Happy Coffee Club shall furnish or cause to be furnished to City, duplicate originals of policies and endorsements, or appropriate certificates thereof, of commercial general liability insurance with coverage at least as broad as Insurance Services Office form CG 00 01, in an amount not less than $2,000,000 per occurrence, $4,000,000 general aggregate, for bodily injury, personal injury, and property damage. The policy must include contractual liability that has not been amended. Any endorsement restricting standard ISO “insured contract” language will not be accepted. The City may require Happy Coffee Club to increase coverage limits at intervals not more frequent than once every two (2) years during the Term, with the amount of increased coverage determined by City in its reasonable discretion, taking into consideration City’s practice and standards in the industry generally. In addition, all such insurance:
a) shall be primary insurance and not contributory with any other insurance City or any City official, employee, or agent may have;
b) shall name the City and its officials, employees, and agents as additional insureds and contain no special limitations on the scope of protection afforded to City and City officials, employees, and agents;
c) shall be “date of occurrence” and not “claims made” insurance; d) shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability; e) shall provide that the policy shall not be cancelled or not renewed by the insurer or Happy Coffee Club unless there is a minimum of thirty (30) days prior written notice to City;
f) shall be endorsed to include a waiver of subrogation rights against City and City’s officials, employees, and agents;
g) shall not require Happy Coffee Club to meet a deductible or self-insured retention amount of more than Ten Thousand Dollars ($10,000) unless approved in writing by City in its reasonable discretion; and
h) shall be from a company or companies with a current A.M. Best's rating of no less than A- VII and authorized to transact business of insurance in the State of California, or otherwise allowed to place insurance through surplus line brokers under applicable provisions of the California Insurance Code or any federal law.
11. Notices. All notices, documents, correspondence, and communications concerning this Agreement shall be addressed as set forth in this clause, or as the Parties may 322
hereafter designate by written notice, and shall be personally delivered or sent through the United States mail, first class, postage prepaid. Any mailed notice shall be deemed served or delivered forty-eight (48) hours after mailing. Either Party may change the address for notices by giving the other Party at least ten (10) calendar days prior written notice of the new address.
Notwithstanding the above, either Party may also provide notices, documents, correspondence, or such other communications to the other by personal delivery or facsimile and, so given, shall be deemed to have been given upon receipt.
To Happy Coffee Club LLC: Cameron Houle
114 Avenida Victoria
San Clemente, CA 92672
To City: City of San Clemente
910 Calle Negocio
San Clemente, CA 92673
Attention: City Clerk
12. Assignability. The License shall not be assignable except to an authorized successor of Happy Coffee Club’s right to operate the Facility on the Property. All assignments require prior approval in writing by the City Manager. Attempted assignments not approved in writing in advance shall automatically terminate this Agreement.
13. Miscellaneous.
(a) Authority. Each person executing this Agreement on behalf of a Party represents and warrants to the other Party that he or she has the authority to execute this Agreement on behalf of its principal and shall indemnify the other Party should such representation or warranty prove false.
(b) Attorney’s Fees. In the event either Party hereto brings suit to enforce the terms of this Agreement or on account of breach hereof, the Party not prevailing in such suit shall pay all reasonable costs and expenses incurred by the other Party in such suit, including, without limitation, court costs, attorney’s fees, and expert witness fees.
(c) Entire Agreement. This Agreement sets forth the entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior discussions, negotiations, understandings, and agreements relating thereto. (d) Amendments. This Agreement may not be modified except by written instrument signed by each of the Parties hereto.
(e) Counterparts/Electronic Signatures. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same agreement. This Agreement may be signed electronically with the same force and effect as original ink signatures. (f) Litigation Matters. The Superior Court of the State of California in the County 323
of Orange shall have the exclusive jurisdiction of any litigation between the Parties arising out of this Agreement. This Agreement shall be governed by, and construed under, the internal laws of the State of California without regard to conflict of law principles. Happy Coffee Club waives any rights under California Code of Civil Procedure section 394.
(g) Time of Essence. Time is of the essence in the performance of this Agreement. (h) No Property Interest Conveyed. Happy Coffee Club acknowledges and agrees that this Agreement grants Happy Coffee Club a revocable, non-exclusive license to enter upon and use real property and does not convey a leasehold or any other interest in real property.
IN WITNESS WHEREOF, the undersigned Parties have executed this Agreement to be effective as of the Commencement Date.
CITY OF SAN CLEMENTE
By:
Andy Hall, City Manager
ATTEST:
By:
Laura Campagnolo, City Clerk
APPROVED AS TO FORM:
By:
Elizabeth A. Mitchell, City Attorney
Happy Coffee Club LLC
By:
Cameron Houle, Manager/Member
By:
Shelby Houle, Manager/Member
324
Exhibit A
Appendix “1”
DEPICTION OF THE PARKING SPACES
Four (4) exclusive spaces within the Dorothy Visser Senior Center parking lot on Mondays through Fridays, from 4 p.m. until 9 p.m.; and on Saturdays and Sundays, from 6 a.m. until 9 p.m.
325
Appendix “2”
LEASE AGREEMENT BETWEEN THE CITY AND AGE WELL
326
LEASE AND OPERATING AGREEMENT
{!,,of;~s· ~ 2.-1-08
l.\-ur 5 ... 5
This LEASE AND OPERA TJNO AGREEMENT ("Agreement") is made and cnte:-cd into as of this~ day of FISIMJ.>ll(.!', 2008, by and between the CITY OF SAN CLEMENTE, a municipal corporation of the State of California ("City"), and SOUTH COUNTY SENIOR SERVICES, INC., a California nonprofit corporation ("Seniors"). City and Seniors are hereinafter sometimes referred to collectively as the "Parties" and individually as a "Party." A. City is the owner in fee of that certain real property consisting of approximately
0.735 acres of land area located in the City of San Clemente, County of Orange, State of California, which real property is more particularly described in the legal description attached hereto as Exhibit "A" (the "Site").
B. City contemplates constructing on the Site an approximately 16.000 square foot building (the ''Building"). City anticipates that approximately 8,000 square feet of the Building will be developed and operated as a community center offering programs and services specifically for senior citizens and other uses as expressly provided in this Agreement (the "Senior Facility"). City anticipates that the remainder of the Building (the "Fire Station Facility") will be developed and operated as a fire station.
C. City and Seniors desire to enter into this Agreement to provide for the following:
(i) City's lease to Seniors, and Seniors' lease from City, of the Senior Facility; (ii) Seniors' use of the Senior Facility for the purpose of operating a senior citizens' community center along with other incidental and related uses; (iii) City's temporary use of the Senior Facility as an Emergency Operations Center ("EOC") in accordance with City procedures in the event of a disaster; and (iv) the rights and obligations of City and Seniors with respect to such matters, all as more particularly described herein.
D. On or about the date the Parties are entering into this Agreement, City and Seniors are entering into that certain "Project Funding Agreement" that sets forth the Parties' respective rights and obligations concerning the design, financing, and construction of the Senior Facility.
COVENANTS
Based upon the foregoing Recitals, which are incorporated into this Agreement by reference. and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by both Parties, City and Seniors hereby agree as fo !lows:
I. Lease of Leased PropertJ:'. and Rent.
J. I Leased Property. City hereby agree~ to lease to Seniors and Seniors hereby agrees to lease from City the portion of the Site and all landscaping, improvements, and structures to be constructed thereon that will be used as and for the Senior Facility and all Jointly Used FF&E (as defined below} to be located within the Senior Facility (collectively, the "Leased Property"), for the Term, and upon the tem1s and conditions set forth in this Agreement. In addition, City hereby grants to Seniors for the Term, and upon the terms and conditions set forth 69J.'D6226t'•Ollie
1060l 1. I.I a0l.'14it18
327
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in this Agreement, a license and right of use in, on, over and through the Site in parking areas and common areas designated by City ("Parking Areas") for pedestrian and vehicular ingress, egress, access and parking purposes to use the number of parking spaces required by any applicable governmental authority in order for the Leased Property to be in compliance with all laws governing the use and operation of the Leased Property as of the Commencement Date. As of the date of this Agreement, the plans and specifications for the Building, the Senior Facility, the Fire Station Facility, and the balance of the improvements proposed to be developed on the Site have not been finalized, but the Parties have agreed to the conceptual site plan, preliminary fioor layouts, and overall size of the Building envelope and the Senior Facility (the "Conceptual Sile Plans"). Upon City's and Seniors' approval of the "Final Site Plans," as provided in Section 2.1 of the Project Funding Agreement, the Parties shall prepare a depiction of the property that will serve as the Leased Property and attach said depiction to this Agreement as Exhibit "B," which will then be incorporated by this reference.
1.2 Rent. Seniors shall pay to City as rent for the Leased Property the sum of One Dollar ($ 1.00) per year, based upon the City's fiscal year (July 1 through June 30). Rent shall be payable annually in arrears, no later than June 30 for each then-current fiscal year. Rent shall be paid pursuant to Section 11 of this Agreement.
2. Term.
2.1 Commencement !lnd Duration. Subject to the possibility of earlier tennination as provided for herein and in the Project Funding Agreement, the tenn of this Agreement (the "Term") shall be for a period of forty (40) years, commencing on the date that City delivers possession of the Leased Property to Seniors, which shall in no event be earlier than fourteen (14) days nor later than thirty (30) days following the completion of construction of the Leased Property and the Building by City in accordance with the provisions of the Project funding Agreement (the "Commencement Date"). Seniors acknowledges and understands that as of the date of this Agreement the proposed development of the Site is in the planning stages and City does not warrant or represent to Seniors that the Senior Facility, the Fire Station facility, or any other improvement will be constructed on the Site or constructed by a specific date; provided, however, that nothing contained herein shall serve to modify or amend in any manner the terms of the Project funding Agreement.
2.2 Right to Tcnninate. City and Seniors shall each have the right to terminate this Agreement in accordance with the Project Funding Agreement in the event that a Termination Contingency, as defined in Section 6 of the Project Funding Agreement, occurs.
Upon the terminating Party's election to terminate this Agreement and delivery of the notice of termination as provided for in the Project Funding Agreement, this Agreement shall tcnninate and ndthcr Party shall have any further rights or obligations hereunder. Not by way of limitation of the foregoing, City shall have the right to unilaterally continue with the development and use of the Site in accordance with the Final Site Plans or such other plans as may be prepared and approved by City if this Agreement and the Project Funding Agreement are terminated as a result of the occurrence of a Termination Contingency and City performs its remaining obligations to Seniors on account of such termination in accordance with the Project Funding Agreement. 69!106l266..0l06
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3. Use of Leased Property.
3.1 Type of Use. Seniors shall use the Leased Property for the purpose of operating a community center offering programs and services specifically for senior citizens (and other related and incidental uses), including without limitation the programs listed in Exhibit "C" attached hereto and incorporated by reference (the "Permitted Uses"). and for no other purpose, except as may be approved by City pursuant to Section 3.7 below; provided, however, that Seniors' obligation to provide the programs listed on Exhibit "C" is expressly conditioned on Seniors' receipt of adequate third-party funding for the provision of such programs, and provided, further, that in the event Seniors fails to open and operate the Leased Property for Permitted Uses for six (6) consecutive months or more solely because Seniors fails to obtain adequate third~party funding therefore from any lawful source (and not because of casualty losses, repairs, maintenance and the like), the City shall have the right to termin.:ne this Agreement eighteen (18) days after delivery to Seniors of a notice of belief of abandonment of the Leased Property, if Seniors has failed to resume operations as authorized herein within the eighteen (18) day period. Such right of termination shall be City's sole remedy on account of Senior's failure to open and operate the Leased Property for Permitted Uses for six (6) consecutive months or more because of Senior's failure to obtain adequate third-party funding therefore. Seniors shall use no more than twenty percent (20%) of the square footage of the Leased Property for office space.