San Luis Obispo City Council
June 7, 2022

AGREEMENT
THIS AGREEMENT, made on _________________________, by and between the City of San Luis Obispo, a municipal corporation and charter city, San Luis Obispo County, California (hereinafter called the Owner) and SOUZA ENGINEERING CONTRACTING, INC. (hereinafter called the Contractor).

WITNESSETH:

That the Owner and the Contractor for the consideration stated herein agree as follows:

ARTICLE 1, SCOPE OF WORK: The Contractor shall perform everything required to be performed, shall provide and furnish all of the labor, materials, necessary tools, expendable equipment, and all utility and transportation services required to complete all the work of construction of
VERDE/LUNETA/RAMONA/BROAD SEWER REPLACEMENT, SPEC NO. 1000091 in strict compliance with the plans and specifications therefor, including any and all Addenda, adopted by the Owner, in strict compliance with the Contract Documents hereinafter enumerated.

It is agreed that said labor, materials, tools, equipment, and services shall be furnished and said work performed and completed under the direction and supervision and subject to the approval of the Owner or its authorized representatives.

ARTICLE II, CONTRACT PRICE: The Owner shall pay the Contractor as full consideration for the faithful performance of this Contract, subject to any additions or deductions as provided in the Contract Documents, the contract prices as follows:

Item
No. SS(1) Item Description Unit of Measure
Estimated
Quantity
Item Price
(in figures)
Total
(in figures)
1 7

TRAFFIC CONTROL PLAN AND
IMPLEMENTATION LS 1 $31,000.00 $31,000.00
2 77 POTHOLING LS 1 $13,000.00 $13,000.00
3 84 REPLACE TRAFFIC STRIPING &
MARKERS LS 1 $10,330.00 $10,330.00
4 7 COMPLY WITH OSHA LS 1 $65,000.00 $65,000.00
5 14

COMPLY WITH MITIGATION

MEASURES AND

ARCHAEOLOGICAL

MONITORING PLAN
LS 1 $2,000.00 $2,000.00
6 77 ABANDON SEWERLINE,
MANHOLES AND FACILITIES LS 1 $5,300.00 $5,300.00
DocuSign Envelope ID: 801298A5-3C4C-4D87-A4D5-C5560DB759E0

Item
No. SS(1) Item Description Unit of Measure
Estimated
Quantity
Item Price
(in figures)
Total
(in figures)
7 77 BYPASS PUMPING LS 1 $21,000.00 $21,000.00
8 77 RESTORATION OF PRIVATE
PROPERTY LS 1 $41,460.00 $41,460.00
9 7

COMPLY WITH NIGHT WORK
PERMIT LS 1 $7,000.00 $7,000.00
10 77 REPAIR DOUBLE BOX CULVERT IF
DAMAGE BY HDD OPERATIONS LS 1 $7,500.00 $7,500.00
11* 19 ROCK EXCAVATION CY 1000 $42.00 $42,000.00
12 77 REPLACE WATER WELL AND
COVER EA 1 $500.00 $500.00
13 5,15 REPLACE MONUMENT AND
WELL EA 4 $1,200.00 $4,800.00
14 77
INSTALL NEW 6" HDPE

SEWERLINE BY PIPE BURSTING

THROUGH EXISTING SEWERLINE
LF 174 $220.00 $38,280.00
15 77
INSTALL NEW 8" HDPE

SEWERLINE BY PIPE BURSTING

THROUGH EXISTING SEWERLINE
LF 68 $300.00 $20,400.00
16 77

REMOVE EXISTING SEWERLINE
AND INSTALL NEW 8" HDPE

SEWERLINE BY OPEN

TRENCHING
LF 911 $166.00 $151,226.00
17 77

REMOVE EXISTING SEWERLINE
AND INSTALL NEW 10" HDPE

SEWERLINE BY OPEN

TRENCHING
LF 634 $257.00 $162,938.00
18 77
INSTALL NEW 10" HPDE

SEWERLINE BY OPEN

TRENCHING
LF 441 $324.00 $142,884.00
19 (F) 77 INSTALL NEW 10" HPDE SEWERLINE BY HDD LF 30 $482.00 $14,460.00 20 77
INSTALL NEW 12" HPDE

SEWERLINE BY OPEN

TRENCHING
LF 628 $487.00 $305,836.00
21 77 INSTALL NEW MANHOLE EA 9 $19,000.00 $171,000.00
22 77 INSTALL COATING ON NEW
MANHOLE EA 9 $2,650.00 $23,850.00
23 77 REMOVE EXISTING MANHOLE EA 7 $1,200.00 $8,400.00
DocuSign Envelope ID: 801298A5-3C4C-4D87-A4D5-C5560DB759E0

Item
No. SS(1) Item Description Unit of Measure
Estimated
Quantity
Item Price
(in figures)
Total
(in figures)
24 77 REMOVE EXISTING AND INSTALL
NEW CLEANOUT EA 2 $2,200.00 $4,400.00
25 77 CONNECT EXISTING SEWER
LATERAL TO SEWER MAIN EA 33 $1,925.00 $63,525.00
26* 77 RE-GRADE SEWER LATERAL
BEYOND 5 FEET LF 10 $240.00 $2,400.00
Base Bid $1,360,489.00
27 7

TRAFFIC CONTROL PLAN AND
IMPLEMENTATION LS 1 $4,900.00 $4,900.00
28 77 POTHOLING LS 1 $1,800.00 $1,800.00
29 84 REPLACE TRAFFIC STRIPING &
MARKERS LS 1 $1,035.00 $1,035.00
30 7 COMPLY WITH OSHA LS 1 $1,000.00 $1,000.00
31 14

COMPLY WITH MITIGATION

MEASURES AND

ARCHAEOLOGICAL

MONITORING PLAN
LS 1 $300.00 $300.00
32 77 ABANDON WATERLINE, WATER
VALVES AND FACILITIES LS 1 $6,000.00 $6,000.00
33 77 8 INCH PVC WATERLINE LF 268 $161.00 $43,148.00
34 77

WATERLINE TIE IN AND

APPURTENANCES AT RAMONA
& BROAD
LS 1 $14,333.00 $14,333.00
35 77

WATERLINE TIE IN AND

APPURTENANCES AT RAMONA
& MEINECKE
LS 1 $9,700.00 $9,700.00
36 77 WATERLINE TIE IN AND
APPURTENANCES AT 55 BROAD LS 1 $8,500.00 $8,500.00
37 77 TYPE 2 WATER SERVICE TIE IN EA 1 $2,600.00 $2,600.00 38 77 REPLACE EXISTING WATER
METER BOX EA 1 $845.00 $845.00
39 77 FIRE HYDRANT EA 1 $13,000.00 $13,000.00
40 85 BLUE FIRE HYDRANT MARKER EA 1 $172.00 $172.00
Additive Alternative A $107,333.00
BID TOTAL: $ 1,467,822.00
DocuSign Envelope ID: 801298A5-3C4C-4D87-A4D5-C5560DB759E0

Payments are to be made to the Contractor in compliance with and subject to the provisions embodied in the documents made a part of this Contract.

Should any dispute arise respecting the true value of any work omitted, or of any extra work which the Contractor may be required to do, or respecting the size of any payment to the Contractor, during the performance of this Contract, said dispute shall be decided by the Owner and its decision shall be final, and conclusive.

ARTICLE III, COMPONENT PARTS OF THIS CONTRACT: The Contract consists of the following documents, all of which are as fully a part thereof as if herein set out in full, and if not attached, as if hereto attached:

1. Notice to Bidders and Information for Bidders

2. Standard Specifications and Engineering Standards

3. Special Provisions, any Addenda, Plans and Contract Change Orders

4. Caltrans Standard Specifications and Standard Plans 2015

5. Accepted Bid and Bid Bond

6. List of Subcontractors

7. Public Contract Code Sections 10285.1 Statement

8. Public Contract Code Section 10162 Questionnaire

9. Public Contract Code Section 10232 Statement

10.Labor Code Section 1725.5 Statements

11.Bidder Acknowledgements

12.Qualifications

13.Non-collusion Declaration

14.Agreement and Bonds

15.Insurance Requirements and Forms
ARTICLE IV INDEMNIFICATION: The Contractor shall indemnify, defend with legal counsel approved by City, and hold harmless City, its officers, officials, employees and volunteers from and against all liability, loss, damage, expense, cost (including without limitation reasonable legal counsel fees, expert fees and all other costs and fees of litigation) of every nature arising out of or in connection with the Contractor’s negligence, recklessness or willful misconduct in the performance of work hereunder or its failure to comply with any of its obligations contained in this Agreement, except such loss or damage which is caused by the sole or active negligence or willful misconduct of the City. Should conflict of interest principles preclude a single legal counsel from representing both the City and the Contractor, or should the City otherwise find the Contractor’s legal counsel unacceptable, then the Contractor shall reimburse the City its costs of defense, including without limitation reasonable legal counsel fees, expert fees and all other costs and fees of litigation. The Contractor shall promptly pay any final judgment rendered against the City (and its officers, officials, employees and volunteers) with respect to claims determined by a trier of fact to have been the result of the Contractor’s negligent, reckless or wrongful performance. It is expressly understood and agreed that the foregoing provisions are intended to be as broad and inclusive as is permitted by the law of the State of California and will survive termination of this Agreement.

DocuSign Envelope ID: 801298A5-3C4C-4D87-A4D5-C5560DB759E0

The Contractor obligations under this section apply regardless of whether such claim, charge, damage, demand, action, proceeding, loss, stop notice, cost, expense, judgment, civil fine or penalty, or liability was caused in part or contributed to by an Indemnitee.

However, without affecting the rights of the City under any provision of this agreement, the Contractor shall not be required to indemnify and hold harmless the City for liability attributable to the active negligence of City, provided such active negligence is determined by agreement between the parties or by the findings of a court of competent jurisdiction. In instances where the City is shown to have been actively negligent and where the City’s active negligence accounts for only a percentage of the liability involved, the obligation of the Contractor will be for that entire portion or percentage of liability not attributable to the active negligence of the City.

ARTICLE V. It is further expressly agreed by and between the parties hereto that should there be any conflict between the terms of this instrument and the bid of said Contractor, then this instrument shall control and nothing herein shall be considered as an acceptance of the said terms of said bid conflicting herewith.

IN WITNESS WHEREOF, the parties to these presents have hereunto set their hands this year and date first above written.

ATTEST: CITY OF SAN LUIS OBISPO
A Municipal Corporation

___________________________________
Teresa Purrington, City Clerk
___________________________________
Erica A. Stewart, Mayor

APPROVED AS TO FORM
________________________________
J. Christine Dietrick
City Attorney
CONTRACTOR:

Souza Engineering Contracting, Inc
dba Souza Construction
________________________________
Steve A. Souza
President
___________________________________
Lisa Elliott
Secretary, Chief Financial Officer
DocuSign Envelope ID: 801298A5-3C4C-4D87-A4D5-C5560DB759E0

Item 5g
Department: Administration
Cost Center: 1005
For Agenda of: 6/7/2022
Placement: Consent
Estimated Time: N/A
FROM: Greg Hermann, Deputy City Manager
Prepared By: Robert Hill, Sustainability & Natural Resources Official SUBJECT: DIXON RANCH CONSERVATION EASEMENT

RECOMMENDATION

1. Approve a Grant Agreement with The Land Conservancy of San Luis Obispo County in the amount of $100,000 towards the purchase of a Conservation Easement for the Dixon Ranch; and

2. Authorize the City Manager to sign the Grant Agreement and any associated escrow documents.

DISCUSSION
Background
The City of San Luis Obispo enjoys a long-standing public–private partnership with The Land Conservancy of San Obispo County (LCSLO) in furtherance of land conservation efforts within the City’s Greenbelt. Over the course of this nearly thirty-year relationship, the City has partnered on numerous planning and land protection efforts, including the Stenner Springs Natural Reserve, Maino Open Space, and Bowden Ranch Open Space acquisitions, as well as the Guidetti Ranch, Stenner Ranch, Brughelli Ranch, and O’Connor Ranch conservation easements, together with numerous other successful projects.

Funding Request
LCSLO has reached an agreement to purchase a conservation easement interest in the Dixon Ranch, located in the northeast portion of the City’s Greenbelt. On March 22, 2022, the City received a letter from LCSLO requesting consideration of funding in the amount of $100,000 towards the purchase of the Conservation Easement. LCSLO has secured a primary grant from the State of California Department of Conservation’s Sustainable Agriculture Land Conservation Program, as well as other private donations, and would have all of the necessary funding to complete the transaction should Council approve the request. The appraised value for the Conservation Easement is $1,020,000 (see Attachment A, Draft Grant Agreement, and Attachment B, LCSLO Funding Request Letter).

Item 5g
Property Description and Conservation Values
As stated in LCSLO’s letter:

The Dixon Ranch conservation easement project will protect 200 acres within the City’s Greenbelt. The property sits just above Edna Valley within a complex of longstanding agricultural lands. Dixon Ranch is a prominent part of the San Luis Obispo Greenbelt and is visible from many City vantage points and open space areas. The ranch features serpentine outcrops that support rare and endemic plants, remarkable sycamore-lined creeks, and diverse wildlife habitat. Agricultural uses include carefully managed livestock grazing and a small family orchard.

The project will also accrue climate action and climate resilience benefits through the prohibition of intensive land use changes and development on the periphery of the City, maintenance of upper watershed functions, local food production, and by preventing further encroachment into the Wildland-Urban Interface where wildfire risk is a concern.

Previous Council Action
City Council’s most recent notable action related to land protection efforts within the San Luis Obispo Greenbelt is the adoption of the Major City Goal (MCG) included with the 2021-23 Financial Plan, Climate Action, Open Space Protection, and Sustainable Transportation. The MCG states that, “Continued proactive efforts in furtherance of achieving the vision to expand and sustain the San Luis Obispo Greenbelt” (p.56) is expected. Further, MCG Strategy 4.3 states, “This Major City Goal work program affirms the City's commitment to continuing to purchase open space land interests for permanent conservation, habitat and watershed protection, and ensuring the integrity of wildlife corridors and ecosystem functions” (p. 57).

Policy Context
There are numerous policies and programs included in the Conservation and Open Space Element (2006) of the City’s General Plan. Most pertinent to this project are Program

8.7.1 (J) and (L) and Policy 9.1.1 (A):

8.7.1 Protect open space resources.

The City will take the following actions to protect open space, and will encourage individuals, organizations, and other agencies to take the same actions within their areas of responsibility and jurisdiction:

J. Improve interagency cooperation for open space acquisition, greenbelt, creeks, wetlands, and wildlife habitat protection in open space areas by coordinating with other government agencies and organizations having interest or expertise in resource protection.

L. Establish mutually respectful, long-term relationships with landowners, and conservation organizations such as land trusts, and local environmental organizations.

Item 5g

9.1.1 (A): Preserve natural and agricultural landscapes.

The City will implement the following policies and will encourage other agencies with jurisdiction to do likewise:

A. Natural and agricultural landscapes that the City has not designated for urban use shall be maintained in their current patterns of use.

Public Engagement
The Major City Goal strategy to protect open space is reflective of extensive public engagement during the 2021-23 Financial Plan process, including the Community Forum, Goal Setting Workshop, numerous survey and public input opportunities, Strategic Budget Direction, and the final adoption of the Financial Plan itself. Any member of the public may put forward either written or verbal comments to the City Council pertaining to this agenda item.

CONCURRENCE
The Community Development Department concurs with the recommended action due to the role of the proposed Conservation Easement in service of implementing the Land Use Element (2014) of the City’s General Plan.

ENVIRONMENTAL REVIEW
The recommended action to provide grant funding for the purchase of a Conservation Easement is not considered a Project under the California Environmental Quality Act.

Further, the acquisition of a Conservation Easement is categorically exempt from the provisions of the California Environmental Quality Act (CEQA) because it involves "acquisition of lands for fish and wildlife conservation purposes including (a) preservation of fish and wildlife habitat...” (CEQA Guidelines § 15313), and because it involves the "acceptance of ... easement interests in order to maintain the open space character of the area" (CEQA Guidelines § 15317).

FISCAL IMPACT
Budgeted: No Budget Year: 2021-23
Funding Identified: Yes
Fiscal Analysis:

Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund
State
Federal
Other: Capital
Outlay via LRM
$230,000 $100,000 $130,000
Total $230,000 $100,000 $130,000 N/A

Item 5g
The City Council annually approves funding for Open Space Protection through the Local Revenue Measure (LRM). The current balance of $230,000 is sufficient to cover the amount LCSLO has requested to complete the funding package and acquire the Conservation Easement. The City’s grant of funds, if approved, would represent 9.8% of the total purchase price. All ongoing costs and long-term administration of the Conservation Easement are the responsibility of LCSLO.

ALTERNATIVES
The City Council may consider alternatives, including:

1. Request additional information or clarification from staff prior to taking action on the recommendation.

2. Continue the item with specific direction if more information or discussion time is required before taking action. This is not recommended as the transaction described herein is consistent with prior City Council priorities and there are time sensitivities associated with LCSLO’s Grant Agreement term.

ATTACHMENT
A. Draft Grant Agreement
B. LCSLO Funding Request Letter dated March 22, 2022

GRANT AGREEMENT FOR

DIXON RANCH CONSERVATION EASEMENT ACQUISITION
THIS Grant Agreement (the “Agreement”) is made on ___________________________ by the CITY OF SAN LUIS OBISPO (“CITY”) and THE LAND CONSERVANCY OF SAN LUIS OBISPO COUNTY (“LAND CONSERVANCY”) who are collectively referred to as the “Parties”.

RECITALS
WHEREAS, LAND CONSERVANCY has reached an agreement with Dan and Lori Dixon to acquire a Conservation Easement interest (the “Conservation Easement”) in land commonly known as the Dixon Ranch, thereby ensuring the preservation of approximately two-hundred acres of real property (the “Property”) located within CITY’s established Greenbelt boundary, which Property is identified as San Luis Obispo County Assessor Parcel Number 044-021-016; and
WHEREAS, both CITY and LAND CONSERVANCY desire to ensure the preservation of the Property consistent with goals and policies set forth in CITY’s Conservation and Open Space Element of its General Plan pertaining to protection of wildlife corridors and contiguous habitat, as well as to protect the scenic, open space, and agricultural values of the Property in perpetuity; and
WHEREAS, the purchase price for the Conservation Easement is $1,020,000.00 pursuant to a qualified appraisal; and
WHEREAS, CITY, in consideration of a request from LAND CONSERVANCY, and of the Parties’ mutual goals and long-standing partnership in land conservation, desires to make a grant in the amount of $100,000.00 towards the purchase price of the Conservation Easement; and
WHEREAS, LAND CONSERVANCY has secured a primary grant from the State of California Department of Conservation’s Sustainable Agriculture Land Conservation Program, as well as other private donations, that will provide the remaining funds needed to complete the transaction and provide for the long-term monitoring and stewardship of the Conservation Easement; and
WHEREAS, LAND CONSERVANCY will enter into to the Conservation Easement subject to certain contractual requirements by the State of California Department of Conservation that include various protective measures to ensure that the purposes of public expenditures of funds are adhered to and carried out in perpetuity; and NOW, THEREFORE, in consideration of the promises herein and the mutual benefits accruing to the Parties, and to the general public from the acquisition of the Conservation Easement exclusively for conservation purposes as contemplated herein, CITY and LAND CONSERVANCY hereby agree as follows:

A. The Recitals herein are incorporated into and made a part of this Agreement.

B. CITY shall make a grant of funds to LAND CONSERVANCY in the amount of $100,000.00 which shall be deposited to an escrow account at First American Title Company, number 5901522, which has been established for the benefit of this transaction, upon LAND CONSERVANCY’s written request made at least 14 days in advance to do so.

C. CITY’s funds shall only be used if, and only if, all other funds are deposited to escrow and the Conservation Easement Deed that will encumber the Property is duly executed, notarized, and recorded with the San Luis Obispo County Clerk / Recorder. If the transaction is substantially delayed or does not take place for any reason whatsoever, then LAND CONSERVANCY shall cause First American Title Company to promptly return the funds to CITY.

D. LAND CONSERVANCY, or its successors and assigns, shall hold all right, privilege and interests accruing from ownership of the Conservation Easement in perpetuity.

STANDARD PROVISIONS

1. Amendments
CITY and LAND CONSERVANCY may amend this Agreement at any time provided that such amendments make specific reference to this Agreement, and are executed in writing, signed by a duly authorized representative of each organization, and approved by the City Manager. Such amendments will not invalidate this Agreement, nor relieve or release the CITY or LAND CONSERVANCY from its obligations under this Agreement, except as expressly provided in writing in any subsequent amendments.

2. Financial Assurance
CITY reserves the right to request copies of invoices, account statements, or audits of LAND CONSERVANCY’s financial records pertinent to this Agreement.

3. Civil Rights
Title VI of the Civil Rights Act of 1964
Under Title VI of the Civil Rights Act of 1964, no person will, on the grounds of race, color, creed, religion, sex or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance.

Section 109 of the Housing and Community Development Act of 1974 No person in the United States will on the grounds of race, color, creed, religion, sex or national origin be excluded from participation in, be denied benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with funds made available under this title.

Age Discrimination Act of 1975, as Amended
No person will be excluded from participation, denied program benefits, or subjected to discrimination on the basis of age under any program or activity receiving federal funding assistance. (42 U.S.C. 610 et. seq.)
Section 504 of the Rehabilitation Act of 1973, as Amended No otherwise qualified individual will, solely by reason or his or her disability, be excluded from participation (including employment), denied program benefits, or subjected to discrimination under any program or activity receiving Federal funds. (29 U.S.C. 794)
Public Law 101-336, Americans with Disabilities Act of 1990 Subject to the provisions of this title, no qualified individual with a disability will, by reason of such disability, be excluded from participation in or be denied the benefits of the services, programs, or activities of a public entity, or be subjected to discrimination by any such entity.

4. Assignability
LAND CONSERVANCY will not assign or transfer any interest in this Agreement without the prior written consent of the City.

5. Conflict of Interest
No member of the CITY’s governing body and no other public official of such locality, who exercises any functions or responsibilities in connection with the planning or carrying out of the project, will have any personal financial interest, direct or indirect, in this agreement; and LAND CONSERVANCY will take appropriate steps to assure compliance.

LAND CONSERVANCY agrees to abide by the provisions of 24 CFR 84.42 and 570.611, which includes maintaining a written code or standards of conduct that will govern the performance of its officers, employees or agents engaged in the award and administration of contracts supported by Federal funds.

6. Severability
If any provision of this Agreement is held invalid, the remainder of the Agreement will not be affected thereby, and all other parts of this Agreement will nevertheless be in full force and effect.

7. Entire Agreement
This Agreement constitutes the entire agreement between CITY and LAND CONSERVANCY for the use of funds received under this Agreement and it supersedes all prior communications and proposals, whether electronic, oral, or written between City and LAND CONSERVANCY with respect to this Agreement.

8. No Agency or Employment
LAND CONSERVANCY is solely responsible for the conduct of its activities in association with this Agreement. Nothing in this Agreement creates a formal partnership, agency, joint venture, employment, or any other type of relationship. LAND CONSERVANCY shall not represent itself as an agent of CITY for any purpose and has no authority to bind the CITY in any manner whatsoever. LAND CONSERVANCY and all of its agents, representatives, or participants in any manner in the performance of its obligations and duties hereunder, shall be employees, independent contractors, or volunteers solely of LAND CONSERVANCY. They shall not for any purpose be considered employees or agents of the CITY.

9. Indemnification
LAND CONSERVANCY agrees, to the fullest extent permitted by law, to defend, indemnify, and hold harmless CITY and its officers, directors, affiliates, employees, and agents, from and against any and all claims, liabilities, losses and expenses (including reasonable attorney’s fees) directly, indirectly, wholly or partially arising from or in connection with any act or omission of LAND CONSERVANCY, its employees or agents, in accepting the funds, in expending or applying funds, or in carrying out the project as set forth.

CITY agrees, to the fullest extent permitted by law, to defend, indemnify, and hold harmless LAND CONSERVANCY its officers, directors, affiliates, employees, and agents, from and against any and all claims, liabilities, losses and expenses (including reasonable attorney’s fees) directly, indirectly, wholly or partially arising from or in connection with any act or omission of CITY, its employees or agents, in expending or applying funds, or in carrying out the project as set forth.

10. Termination
The CITY or LAND CONSERVANCY may initiate termination of this Agreement in the event of a substantial breach of the terms of this Agreement, or in the event of gross negligence, upon ten (10) days written notice to the other Party. Said termination shall be effective thirty (30) days after receipt by certified mail of a notice of termination to the other Party.

11. Compliance with Human Relations Commission “By Laws” LAND CONSERVANCY hereby certifies and agrees that it will comply with the Human Relations Commission’s “Bylaws” which creates an environment within the City in which all persons can enjoy equal rights and opportunities regardless of race, religion, sex, national origin, sexual orientation, age, physical, mental or economic status.

12. Notices
For purposes of notice under this agreement, all notices shall be considered effective upon being sent by certified mail to the following addresses:

To CITY:

City of San Luis Obispo
919 Palm Street
San Luis Obispo, CA 93401
Attn: City Manager
To LAND CONSERVANCY:

The Land Conservancy of San Luis Obispo County
1137 Pacific Street, Suite A
San Luis Obispo, CA 93401
Attn: Executive Director
IN WITNESS WHEREOF, the Parties have executed the foregoing as of the date year first above written.

CITY OF SAN LUIS OBISPO:

By: ________________________________ Date:_____________________ Derek Johnson, City Manager
APPROVED AS TO FORM:

By:_________________________________ Date:_____________________ J. Christine Dietrick, City Attorney
THE LAND CONSERVANCY OF SAN LUIS OBISPO COUNTY:

By:_________________________________ Date:______________________ Kaila Dettman, Executive Director

March 22, 2022
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Attn: Derek Johnson, City Manager
c/o Bob Hill, Sustainability & Natural Resources Official RE: Dixon Ranch Conservation Easement
Dear Mr. Johnson,
The Land Conservancy of San Luis Obispo County (“The Land Conservancy”) respectfully requests the City Council’s consideration of $100,000 in funding toward a conservation easement on the Dixon Ranch, located on Righetti Road south of San Luis Obispo. The Dixon Ranch is part of the scenic greenbelt surrounding the City of San Luis Obispo (“City”). A conservation easement on this ranch will permanently protect a suite of scenic, agricultural, and environmental conservation values.

Project Overview
The Dixon Ranch conservation easement project will protect 200 acres within the City’s Greenbelt. The property sits just above Edna Valley within a complex of long-standing agricultural lands. Dixon Ranch is a prominent part of the southern San Luis Obispo Greenbelt and is visible from many City vantage points and open space areas. The ranch features serpentine outcrops that support rare and endemic plants, remarkable sycamore-lined creeks, and diverse wildlife habitat. Agricultural uses include carefully managed livestock grazing and a small family orchard.

The proposed conservation easement will permanently protect these scenic, environmental, and agricultural conservation values by restricting development to the current developed footprint and prohibiting future subdivision of the property. Additional restrictions will prohibit intensive land uses, activities that lead to soil erosion, unnecessary removal of native vegetation, and other perpetual land use restrictions. The outcome will be the permanent protection of the Dixon Ranch for conservation purposes as part of the scenic viewshed south of San Luis Obispo.

Support for City Goals
Protecting the Dixon Ranch will address multiple City policy goals. The City’s 2021-2023 Financial Plan includes specific, community-supported climate action and open space protection as identified in the City Council’s adopted Major City Goal. In addition, a core objective of the Conservation and Open Space Element of the City’s General Plan is to implement the Greenbelt Projection Program. Implementation of this program includes stewardship, planning, and conservation acquisitions. The Dixon Ranch conservation easement will directly support this objective by protecting 200 acres within the City’s Greenbelt.

The permanent protection of the Dixon Ranch will further support the City’s climate action goals in two key ways. First, the diverse conservation values of the property will be protected from future land use change. This will allow the ranch to adapt to climate change without additional stressors. Second, prohibiting intensive land use change, particularly subdivision and residential development, will limit exurban development opportunities within San Luis Obispo’s greenbelt. Additional protected properties within the greenbelt will prevent encroachment of the wildland urban interface near the City, encourage development closer to built areas, and prevent additional strain from exurban development, such as vehicle miles and the need for residential services. This variety of benefits directly address climate impacts to both ecosystem functions and human wellbeing due climate change, including wildfire risk, clean air and water, and maintaining existing wildlife habitat.

Finally, the proposed Dixon Ranch conservation easement would add to the long history of successful conservation partnerships between the City and The Land Conservancy. Multiple greenbelt, open space, wildlife habitat, and riparian protection projects have been completed through this partnership. This includes Bowden Ranch, Stenner Springs, Maino Open Space, and Guidetti Ranch, among many other conservation and ecosystem restoration projects in the greater City region. Dixon Ranch is an important contribution to this remarkable legacy of successful land conservation projects that happened only through the long-standing public / private partnership between the City and The Land Conservancy.

Funding, Timeline, and Long-Term Stewardship
City funding toward this conservation easement will be heavily leveraged by the California Department of Conservation’s Sustainable Agricultural Lands Conservation Program ($690,000) and private donations to The Land Conservancy specifically gifted for this project ($230,000). These two match funding sources amount to 90% of the appraised conservation easement value of $1,020,000. This easement will be fully funded and able to close before December 2022 should the City choose to contribute $100,000 representing the final “gap” needed to successfully complete this project.

Once acquired, the conservation easement will be held and stewarded by The Land Conservancy. The permanent conservation of the property will be realized through a perpetual commitment to annual monitoring of the easement and, if required, enforcement of easement terms. Funding for this perpetual stewardship commitment will be donated by the landowner at the time of close and will be held in The Land Conservancy’s dedicated Easement Stewardship and Defense account.

Thank you for your consideration of this funding request to protect a key property within the City Greenbelt. Maps and photos of the Dixon Ranch have been included below. Please contact Kyle Walsh, Conservation Director at 805-544-9096 or [email protected] with any questions or to request additional information.

Sincerely,
Kyle Walsh
Conservation Director

Photos

Item 5h
Department: Public Works
Cost Center: 5201
For Agenda of: 6/7/2022
Placement: Consent
Estimated Time: N/A
FROM: Matt Horn, Public Works Director
Prepared By: Austin O’Dell, Transit Manager
SUBJECT: AUTHORIZATION TO ACCEPT COMPETITIVE GRANT AWARD FROM

THE AMERICAN RESCUE PLAN ACT AND TO APPLY FOR OTHER

LOCAL, STATE, AND FEDERAL GRANTS FOR THE TRANSIT

PROGRAM

RECOMMENDATION

1. Accept an award of American Rescue Plan Grant Funding in the amount of $12,385,511; and

2. Authorize the City Manager or his designee to file, execute, and fulfill any related grant applications, certifications, assurances, forms, agreements, and associated documents on behalf of the City of San Luis Obispo; and

3. Authorize the Public Works Director to apply for local, state, and federal grants that benefit the City’s Transit Program through June 30, 2023.

DISCUSSION
In September 2021, the Federal Transit Administration (FTA) issued a Notice of Funding Opportunity available through the American Rescue Plan Act. The FTA announced the availability of more than $2.2 Billion for operating program funding to assist transit agencies nationwide. The applications for this competitive grant program were due on November 8, 2021.

Due to the limited timeframe from the grant announcement and grant applications being due, the Public Works Department submitted an application on behalf of the City for consideration by FTA in October 2021. Based on the nationwide competitive nature of this funding, success was not assured but the benefits of being considered for this funding were profound. Staff did not anticipate an award of this magnitude but are pleased that the FTA realized the benefit to the City’s Transit Program. The City was notified of the grant award in the amount of $12,385,511 on March 4, 2022.

These grant funds are provided to cover one hundred percent of the operational cost of the City’s transit program for three consecutive years of operations. The City can use other dedicated transit funds (Transportation Development Act, FTA 5307) towards the purchase of zero emission buses and significantly relieve the City of financial burden of the expense of transitioning to a zero-emission bus fleet.

Item 5h
Future Transit Grants
During the next year, during this unprecedented time of grant opportunity, Staff is requesting approval to apply for future funding opportunities that will benefit the City’s transit program. These funding opportunities are released with short deadlines that sometimes do not align with the time necessary to both prepare the grant application and obtain concurrence from the City Council.

With the anticipation of additional funding opportunities from the state and Federal Transit Administration, this request is timely and will allow staff the time necessary to prepare the most competitive grant application possible. In applying for these grants, staff will be primarily focusing on funding opportunities for bus replacements, electric vehicle charging infrastructure, transit facility maintenance, bus stop improvements, digital bus information at bus stops, and enhanced service and reduced headways (increased frequency of service at a given bus stop).

Policy Context
Financial Management Manual Policy 740 requires that the City Council approve grant applications greater than or equal to $5,000. Staff is requesting approval to apply for future transit grants that will allow staff to meet grant deadlines and for the City to compete for funding that will benefit the City’s Transit Program.

Public Engagement
This is an administrative item, so no outside public engagement was completed. Public comment can be provided to the City Council through written correspondence prior to the meeting and through public testimony at the meeting.

CONCURRENCE
This proposed action has been reviewed by the Finance Department, City Attorney and City Administration and Congressman’s Carbajal office. Further, this project is consistent with the City’s adopted 2021-23 Financial Plan, Climate Action Plan, 2017-22 Short Range Transit Plan, the regions SLO Regional Zero Emission Bus Plan and the state’s Innovative Clean Transit Rule.

ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.

FISCAL IMPACT
Budgeted: No Budget Year: 2021-2022
Funding Identified: Yes

Item 5h
Fiscal Analysis:

Funding Sources
Total
Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
Federal Discretionary $0 $12,385,551
Other:

Total $0 $12,385,551
The funding provided through the American Rescue Plan Act will allow the City to cover operating expenditure for SLO Transit for three years and free other funding to expand the City’s fleet of electric buses and related infrastructure.

ALTERNATIVES
Deny authorization request for the grant application. This is not recommended as this will stifle the transit program the ability to utilize current transit funding to purchase zero emission buses to achieve the statement mandate.

ATTACHMENTS
A - Draft Resolution allowing approval for Public Works to apply for future funding opportunities

R ______
RESOLUTION NO. _____ (2022 SERIES)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS

OBISPO, CALIFORNIA, AUTHORIZING THE DIRECTOR OF PUBLIC

WORKS TO APPLY FOR FUTURE FUNDING OPPORTUNITIES THAT
BENEFIT THE CITY’S TRANSIT PROGRAM, FILE, EXECUTE, AND

FULLFILL ANY RELATED GRANT APPLICATIONS, CERTIFICATIONS,

ASSURANCES, FORMS, AGREEMENTS AND ASSOCIATED

DOCUMENTS ON BEHALF OF THE CITY OF SAN LUS OBISPO
WHEREAS, the City of San Luis Obispo operates the San Luis Obispo (SLO) Transit system; and
WHEREAS, the City of San Luis Obispo is an eligible applicant for the local, state, and federal grants for transit operating and capital grant; and WHEREAS, the City of San Luis Obispo’s Financial Management Manual Section 740 requires the City Council to approve all grant applications in excess of $5,000; and WHEREAS, there is inadequate time to submit grant applications for funding opportunities from local, state, and federal agencies.

Resolution No. _____ (2022 Series) Page 2
R ______
NOW, THEREFORE, BE IT RESOLVED that the City if San Luis Obispo City Council does hereby:

1. Authorize the Director of Public Works to apply for future funding opportunities that benefit the City’s transit program, file grant applications, certifications, assurances, forms, agreements, and associated documents on behalf of the City.

Upon motion of _______________________, seconded by
_______________________, and on the following roll call vote:

AYES:

NOES:

ABSENT:

The foregoing resolution was adopted this _____ day of _____________________ 2022. ___________________________
Mayor Erica A. Stewart
ATTEST:
_________________________
Teresa Purington
City Clerk
APPROVED AS TO FORM:
__________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ___________________________
Teresa Purrington
City Clerk

Item 5i
Department: Fire
Cost Center: 8503
For Agenda of: 6/7/2022
Placement: Consent
Estimated Time: N/A
FROM: Keith Aggson, Fire Chief
Prepared By: Rodger Maggio, Fire Marshal Chief Building Official SUBJECT: AUTHORIZATION TO CONTINUE THE COLLECTION OF MULTIDWELLING PROPERTY FIRE AND LIFE SAFETY INSPECTION FEES

RECOMMENDATION
Adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, authorizing the San Luis Obispo County Auditor to collect fees for 2022-23 Fire and Life Safety Inspections of Multi-Dwelling Properties containing three or more dwelling units on the Secured Property Tax Roll pursuant to California Government Section 54988, Et Seq.”

DISCUSSION
Background
In May 2005, the City Council approved a cost recovery program for State-mandated fire and life safety inspections for multi-dwelling properties with three or more units. In June 2017, the Council approved a change on how fees for apartment buildings, hotels/motels, and sorority/fraternity inspections are calculated. This change is reflected in Exhibit A to the Resolution (Attachment A). The result was an increase from approximately $194,000 per year in gross revenue to approximately $260,000 at the time of change in the fee schedule. Since the adoption of the new fee schedule, revenue under this program has increased to $325,000 for fiscal year 2021-22 due to the increase in the number of units for each category and the annual Consumer Price Index (CPI) adjustment to the fee. Staff is not recommending any further changes in the fees for 2022-23, however, the County requires an annual resolution adopted by the Council authorizing the continued collection of those fees on the property tax roll. Staff is recommending that the fee collection continue to be done through the secured property tax role in 2022-23 and is requesting that Council adopt the required resolution to authorize that collection.

Policy Context
California Health & Safety Code Section 13146. 2(b) authorizes cities to charge property owners to recover the reasonable costs of providing these annual inspections. As part of this program, on June 7, 2005, the Council adopted Ordinance No. 1472 authorizing the collection of annual fees for these inspections through the secured County property tax roll as the most cost-efficient method for fee collection (City Municipal Code Section

3.50.01(c)).

Item 5i
Public Engagement
This item is on the agenda for the June 7, 2022, City Council meeting and will follow all required postings and notifications. The public will have the opportunity to provide comment on this item at or before the meeting.

ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.

FISCAL IMPACT
Budgeted: Yes Budget Year: 2022-23
Funding Identified: N/A
The Finance Department will work with the County of San Luis Obispo to place the fees on the annual tax rolls.

Fiscal Analysis:

Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund N/A N/A N/A N/A
State
Federal
Fees
Other:

Total N/A N/A N/A N/A
In fiscal year 2021-22, the City is scheduled to collect roughly $325,000 in multi-dwelling property fire and life safety inspection fees. As of May 9, 2022, the City had collected $297,859 with the remaining amount expected to be posted in the near future as the deadline to pay property taxes was April 10, 2022 and tax payments are now delinquent.

Projected revenue for fiscal year 2022-23 is expected to increase due to the increased number of multi-dwelling properties within the City and applicable CPI increases which stood at 7.9% at the end of April.

Item 5i

ALTERNATIVES
Do not adopt the Resolution and go to a less cost-effective billing system by the Finance Department. This is not recommended as it would be counter to fiscal sustainability.

ATTACHMENTS
A - Draft Resolution authorizing collection of fees for 2022-23 Fire and Life Safety Inspections

R ______
RESOLUTION NO. _____ (2022 SERIES)

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS

OBISPO, CALIFORNIA, AUTHORIZING THE SAN LUIS OBISPO
COUNTY AUDITOR TO COLLECT FEES FOR 2022-23 FIRE AND LIFE

SAFETY INSPECTIONS OF MULTI-DWELLING PROPERTIES

CONTAINING THREE OR MORE DWELLING UNITS ON THE SECURED

PROPERTY TAX ROLL PURSUANT TO CALIFORNIA GOVERNMENT
SECTION 54988, ET SEQ.

WHEREAS, the City of San Luis Obispo is required by California Health & Safety Code Section 17921 annually to inspect multi-dwelling properties containing three or more dwelling units, including apartments, certain residential condominiums, hotels, motels, lodging houses and congregate residences; and
WHEREAS, California Health & Safety Code Section 13146.2 authorizes cities to charge property owners in recovering the reasonable costs of providing these annual inspections; and
WHEREAS, in accordance with this policy, the Council adopted Resolution Nos. 9799 (2006 Series) and 10790 (2017 Series) updating the master fee schedule, as specifically set forth in “Exhibit A” hereto, and authorizing the collection of these fees on the secured property tax roll; and
WHEREAS, the Council desires to continue collection of these fees on the secured property tax roll for 2022-23.

NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows/or that:

SECTION 1. Pursuant to California Health & Safety Code Section 13146.2(b) and Municipal Code Section 3.50, the Council hereby authorizes and directs that Fire and Life Safety Inspection fees shall be collected on the secured property tax roll by the San Luis Obispo County Auditor-Controller for fiscal year 2022-23. A listing of fees by assessor’s parcel number shall be provided to the County Auditor-Controller for collection on the 2022-23 secured property tax roll in accordance with their schedule and data format requirements, pursuant to California Government Code 54988, et seq.

Resolution No. _____ (2022 Series) Page 2
R ______
SECTION 2. Resolution Number 11256 (2021 Series) is hereby repealed and superseded to the extent inconsistent herewith.

Upon motion of Council Member ___________, seconded by Council Member ___________, and on the following roll call vote:

AYES:

NOES:

ABSENT:

The foregoing resolution was adopted this _____ day of _______________ 2022. ___________________________
Mayor Erica A. Stewart
ATTEST:
______________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
______________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ______________________. ___________________________
Teresa Purrington
City Clerk

Resolution No. _____ (2022 Series) Page 3
R ______

EXHIBIT A
Multi-Dwelling Fire and Life Safety Inspection Fee Schedule Administrative Fee
Processing per facility $93.54
Each Additional Owner $11.10
Apartment Houses
Up to 10 Units $374.17
11- 20 Units $561.26
21- 50 Units $748.35
51- 100 Units $935.43
101- 200 Units $1,496.69
Every additional 100 $374.17
Units over 200
Condominiums
Up to 10 Units $374.17
11- 20 Units $561.26
21- 50 Units $748.35
51- 500 Units $1,122.52
Fees are waived for units that are built, owned and managed by the San Luis Obispo Housing Authority, other governmental agencies or not-for-profit housing organizations.

Hotels, Motels, Lodging Houses, Bed & Breakfast Facilities, Youth Hostel Facilities, Senior Facilities, Sororities, Fraternities and Other Congregate Residences 1 - 20 units $374.17 per year per facility
21 - 50 units $561.26 per year per facility
51-100 units $935.43 per year per facility
101-200 units $1,496.69 per year per facility
Sorority, Fraternity,
Congregate house $748.35
These fees are applicable to all multi-dwelling units in the City based on the following definitions as set forth in the 2016 California Building Code, Chapter 2: Definitions and Abbreviations, Section 202 and Chapter 3, Section 310.

Apartment house is any building, or portion thereof, which contains three or more dwelling units, including R-2 residential condominiums.

Resolution No. _____ (2022 Series) Page 4
R ______
Congregate residences are any building or portion thereof that contains facilities for living, sleeping and sanitation, as required by this code, and may include facilities for eating and cooking, for occupancy by other than a family. A congregate residence may be a shelter, convent, monastery, dormitory, fraternity, or sorority house, but does not include jails, hospitals, nursing homes, hotels, or lodging houses.

Dwelling unit is any building or portion thereof that contains living facilities, including provisions for sleeping, eating, cooking and sanitation, as required by this code, for not more than one family, or a congregate residence for ten or less persons.

Hotel is any building containing six or more guest rooms intended or designed to be use, or which are used, rented, or hired out to be occupied, or which are occupied for sleeping purposes by guests.

Lodging house is any building or portion thereof containing not more than five guest rooms where rent is paid in money, goods, labor or otherwise. (A lodging house includes bed & breakfast facilities and hostels but excludes single family dwellings).

Motel shall mean the same as hotel as defined in this code.

Item 5j
Department: Administration
Cost Center: 4006
For Agenda of: 6/7/2022
Placement: Consent
Estimated Time: N/A
FROM: Greg Hermann, Deputy City Manager
Prepared By: Chris Read, Sustainability Manager; Marina Varano, Sustainability Intern SUBJECT: APPROVE GRANT SUBMITTAL AND AWARD AGREEMENT FOR FLEET

ELECTRIFICATION INFRASTRUCTURE ROADMAP

RECOMMENDATION
Approve the Grant Submittal and accept Grant Award Agreement between Central Coast Community Energy (“CCCE”) and the City of San Luis Obispo for $70,000 to support the Fleet Electrification Infrastructure Roadmap.

DISCUSSION
Background
City of San Luis Obispo Lead by Example Plan
The municipal Lead by Example plan, adopted in 2021, sets the City on a trajectory to achieve carbon neutral government operations by 2030. The City has a key role to play in implementing innovative climate actions that reduce greenhouse gas emissions across City operations and lead the way for other organizations and community members.

Fossil fuel consumption in fleet vehicles is the second-largest contributor to annual municipal greenhouse gas emissions, contributing approximately 39% of overall emissions. The City’s Lead by Example plan establishes a goal to eliminate fossil fuel use in its vehicle and equipment fleet. Under this goal, the City aims to achieve 100% allelectric light duty vehicles, 50% zero emissions medium and heavy-duty fleet, 100% allelectric transit fleet, and 100% all-electric equipment.

The City’s Current Fleet Electrification Status
In the 2021-23 Financial Plan, the City Council adopted budget includes $120,000 for design and construction of electric vehicle chargers in year one, and an additional $100,000 in year two. The Capital Improvement Program identifies an additional $100,000 per year in program years three through five. The City is currently in design phase for the first set of projects at the Corporation Yard, Utilities Office, and Parks and Recreation Office. The three projects will include an estimated 8 charging heads and will support the approximately eight electric vehicles that are currently on order (note that the entire light duty fleet contains approximately 100 vehicles).

Item 5j
The next set of chargers will become increasingly complicated and involve challenging technical decisions. The City has identified planning the next four years of EV infrastructure in advance of design and construction funding as a high value activity to facilitate the transition away from fossil fuel vehicles. Currently, charging infrastructure prioritization, initial site engineering, cost estimates, onsite energy management strategies, and need of infrastructure in relationship to fleet transitions remain critical unknown information.

The City has already contracted with expert vendors (Glumac and Optony) to develop a facility decarbonization roadmap. That project originally had a fleet electrification infrastructure roadmap included in the scope of work as an optional task. However, that task was removed due to funding limitations. Should Council move forward with staff’s recommendation, the funding would amend the existing Purchase Order with Glumac and Optony and work could begin almost immediately.

Central Coast Community Energy
Central Coast Community Energy (“CCCE”) has supported transportation electrification throughout the region through a number of transportation energy programs. City staff was made aware of an opportunity to secure the financial support needed to meet the City’s fleet electrification goals and submitted a grant application to CCCE’s Electrification Education Grant Program. As a result, the City was awarded $70,000 in grant funding from CCCE to support the creation of the Fleet Electrification Infrastructure Roadmap.

Due to timing limitations, staff were not able to obtain approval prior to submittal and are now seeking retroactive approval for the grant application, which includes the following tasks:
 Task 1. Kick-Off, Data Collection, and Development of Current and Projected Fleet Database
 Task 2. Fleet Electrification Analysis (e.g., electric vehicle suitability by fleet use type, total cost of ownership projections, projected energy needs and related emissions reductions estimates, etc.).
 Task 3. Charging Infrastructure Needs Assessment and Roadmap  Task 4. Regional Capacity Building and Knowledge Transfer Previous Council or Advisory Body Action
The topic of fleet electrification has been presented to Council on numerous occasions including:
 August 18, 2020 – The City adopted the Climate Action Plan for Community Recovery, which included the goal of carbon neutrality by 2035 and a “Lead by Example” goal of carbon neutral government operations by 2030.  May 18, 2021 – Staff provided a Climate Action Plan update to Council, which included an update on carbon neutral municipal operations.

Item 5j
 June 1, 2021 - Council adopted the 2021-23 Financial Plan with the Climate Action Major City Goal that included funding to rapidly electrify the City’s buildings and facilities.
 July 12, 2021 – Council adopted the Lead by Example Plan that outlined goals for the City to take climate action and called for fleet electrification.

Policy Context
As mentioned above, the information presented in this report is grounded in standing policy, including:
 Resolution 11159 (2020 Series), which includes the goal of carbon neutrality by 2035 and a “Lead by Example” goal of carbon neutral government operations by 2030.
 Resolution 11263 (2021 Series), in which the City adopts the 2030 sector specific goal: “The City eliminates fossil fuel use in vehicle and equipment fleet.”
 Financial Management Plan Section 740 (Grant Management Policy) assigns City Council with the responsibility for approving all grant applications in excess of $5,000.

Public Engagement
The fleet electrification goals in the Lead by Example plan and the budgeted charger deployment projects in the Capital Improvement Plan were both vetted and approved through public process and subsequent Council approval. The items were on publicly noticed agendas at both meetings and deliberation was informed by public comment.

CONCURRENCE
Public Works staff concurs with this report.

ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) does not apply to the recommended action in this report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.

FISCAL IMPACT
Budgeted: No Budget Year: 2021-22
Funding Identified: Yes

Item 5j
Fiscal Analysis:

Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ $ $ $
State
Federal
Fees
Other: $70,000
Total $70,000 $ $ $
The “total budget available” figure of $70,000 refers to the grant award from CCCE and would be used to hire a consultant to complete the Fleet Electrification Infrastructure Roadmap. The City expects to contribute an additional $10,000 in in-kind staff time to support the successful execution of this grant agreement. The “in-kind” staff time would come from already budgeted time reserved in support of electric vehicle infrastructure deployment and does not require additional funding.

ALTERNATIVES
Council could deny the grant submittal and award agreement with Central Coast Community Energy. Under this alternative, the Fleet Electrification Infrastructure Roadmap would not be completed, and staff would need to do ad hoc planning on a yearby-year basis. Staff does not recommend this alternative.

ATTACHMENTS
A - Central Coast Community Energy Grant Agreement and Scope of Work

1 PLANNING, IMPLEMENTATION, AND INNOVATION GRANT AGREEMENT

BETWEEN CENTRAL COAST COMMUNITY ENERGY AND THE CITY OF SAN LUIS OBISPO

This Grant Award Agreement (“Agreement”) is made on _______________________________ by and between CENTRAL COAST COMMUNITY ENERGY (“CCCE”) and the City of San Luis Obispo (hereinafter “GRANTEE”). CCCE and GRANTEE may be individually referred to herein as “Party” or collectively as “Parties.”
WHEREAS: CCCE’s Fiscal Year 2021 - 2022 (FY 2021/22) Operating Budget allocated funds for the Planning, Implementation, and Innovation Grant Program to support CCCE Member Agency projects and programs and promote electrification.

WHEREAS: CCCE agrees to provide a one-time grant award in the amount of Seventy Thousand Dollars ($70,000.00) (the “Grant Amount”) subject to the terms and conditions of this Agreement.

WHEREAS: The purpose of this Agreement is to establish the terms and conditions for CCCE to provide GRANTEE with funding to implement the Project.

WHEREAS: Although CCCE will be providing financial assistance to GRANTEE to support the Project, CCCE will not take an active role or retain substantial control of the Project.

Therefore, this Agreement is characterized as a funding agreement rather than a cooperative agreement.

WHEREAS: GRANTEE understands that the Planning, Implementation, and Innovation Grant Program funds derive from retail electricity transactions, which may fluctuate. CCCE’s funding commitment to Planning, Implementation, and Innovation Grant Program projects, including this Project, is subject to these fluctuations, which may impact funding availability for this Project.

WHEREAS: The foregoing recitals are hereby acknowledged to be true and accurate and are incorporated into this Agreement.

THEREFORE: In consideration of the mutual covenants and conditions set forth in this Agreement, the Parties agree as follows:

1. PROJECT IMPLEMENTATION

1.1. CCCE shall provide funding from the Planning, Implementation, and Innovation Grant Program to Grantee to support the Fleet Electrification Infrastructure Roadmap project as set forth in Exhibit A of this Agreement.

1.2. The “Effective Date” of this Agreement is ________________________.

2 1.3. The GRANTEE agrees to complete the Project according to the Project Schedule included in Exhibit D.

1.4. This Agreement was awarded to GRANTEE based on the application submitted by GRANTEE with the intention that the awarded funds would be used to implement the Project as described in the Scope of Work set forth in Exhibit A. Any substantive deviation from GRANTEE’s Scope of Work during project implementation may require reevaluation or result in loss of funding. If GRANTEE knows or should have known that substantive changes to the Project will occur or have occurred, GRANTEE will immediately notify CCCE in writing. CCCE will then determine whether the Project is still consistent with the overall objectives of the grant program and whether the changes would have negatively affected the Project ranking during the competitive grant evaluation process. CCCE reserves the right to have grant funding withheld from GRANTEE, or refunded to CCCE, due to GRANTEE’s failure to satisfactorily complete the Project or due to substantive changes to the Project.

1.5. GRANTEE agrees to notify and/or assist CCCE of/with any media and community outreach efforts, including presentations to community groups, other agencies, and elected officials and/or community events related to the Project. Press materials shall be provided to CCCE staff for review before they are distributed. CCCE name, abbreviation, and/or logo(s) should be included in press materials and other project collateral based on CCCE usage guidelines provided by CCCE, but may never be included in such documents without advance approval from CCCE.

2. CHANGES IN PERFORMANCE

2.1. GRANTEE agrees to notify CCCE immediately, in writing, of any change in local law, conditions (including its legal, financial, or technical capacity), or any other event that may adversely affect the GRANTEE’s ability to perform the Project in accordance with the terms of the Agreement. The GRANTEE also agrees to notify CCCE immediately, in writing, of any current or prospective dispute, breach, default, or litigation arising from GRANTEE’s performance under this Agreement that may adversely affect CCCE; and agrees to inform CCCE, also in writing, before naming CCCE as a party to litigation for any reason, in any forum.

3. GRANT AWARD PROVISIONS

3.1. The maximum amount payable under this Agreement by CCCE, in accordance with Exhibit B, not exceed Seventy Thousand Dollars ($70,000.00) (the “Grant Amount”).

3.2. It is acknowledged and agreed that the Grant Amount is a ceiling and that CCCE shall only reimburse the allowable costs of services rendered in accordance with Exhibit A and as authorized by CCCE.

3 3.3. GRANTEE shall be solely responsible for, and agrees to fund any additional funding requirements, expenses, costs, fees, taxes, or incidentals of any kind above the Grant Amount that are associated in any way with the Project.

4. PROJECT PERIOD

4.1. The Project has been approved from the Effective Date until [CCCE to insert date], unless sooner terminated pursuant to the terms of this Agreement. This Agreement is of no force or effect until signed by both the GRANTEE and CCCE, with CCCE’s execution to be last in time. GRANTEE must make all reasonable efforts to commence work under this Agreement as soon as possible after the execution date of this letter, time is of the essence.

5. SCOPE OF SERVICES AND ADDITIONAL PROVISIONS

5.1. The following attached exhibits are incorporated herein by reference and constitute a part of this Agreement:

1. Exhibit A: Scope of Work

2. Exhibit B: Payment Terms

3. Exhibit C: Budget

4. Exhibit D: Schedule

6. RELATIONSHIP of PARTIES

6.1. The parties acknowledge and agree that nothing in this Agreement creates any employment or principal-agent relationship of any kind between the Parties.

6.2. Project Managers

6.2.1. CCCE Project Manager: Tony Pastore; [email protected]

6.2.2. GRANTEE Project Manager: Chris Read, [email protected]

7. PROHIBITION OF FALSE OR FRAUDULENT STATEMENTS OR CLAIMS

7.1. The GRANTEE acknowledges and agrees that by executing the Agreement for the Project, the GRANTEE certifies or affirms the truthfulness and accuracy of each statement it has made, it makes, or it may make in connection with the Project, including, but not limited to, the GRANTEE’s application, progress reports and invoices.

4 8. PAYMENTS

8.1. The method of payment for this Agreement will be based upon eligible expenses as set forth in Exhibit B.

8.2. GRANTEE is required to submit invoices as set forth in Exhibit B.

9. TERMINATION

9.1. During the term of this Agreement, CCCE may terminate the Agreement for any reason by giving written notice of termination to the GRANTEE at least thirty (30) days prior to the effective date of termination. Such notice shall set forth the effective date of termination. In the event of such termination, the amount payable under this Agreement shall be reduced in proportion to the services provided prior to the date of termination.

10. INSURANCE REQUIREMENTS

10.1. Prior to commencement of this Agreement, the GRANTEE shall provide a “Certificate of Insurance” certifying that coverage as required herein has been obtained. Individual endorsements executed by the insurance carrier shall accompany the certificate. In addition, the GRANTEE upon request shall provide a certified copy of the policy or policies. This verification of coverage shall be sent to CCCE.

10.2.Without limiting GRANTEE’s duty to defend and indemnify, GRANTEE shall maintain in effect throughout the term of this Agreement a policy or policies of insurance with the following minimum limits of liability:

10.2.1. Commercial General Liability Insurance, including but not limited to premises and operations, including coverage for Bodily Injury and Property Damage, Personal Injury, Contractual Liability, Broad form Property Damage, Independent Contractors, Products and Completed Operations, and cross-liability with a combined single limit for Bodily Injury and Property Damage of not less than $500,000 per occurrence, and $1,000,000 in the aggregate.

10.2.2. Business Automobile Liability Insurance, covering all motor vehicles, including owned, leased, non-owned, and hired vehicles, used in providing services under this Agreement, with a combined single limit for Bodily Injury and Property Damage of not less than $500,000 per occurrence.

10.2.3. Workers’ Compensation Insurance, if GRANTEE employs others in the performance of this Agreement, in accordance with California Labor Code section 3700.

5 10.3.Unless otherwise specified by this Agreement, all such insurance shall be written on an occurrence basis, or, if the policy is not written on an occurrence basis, such policy with the coverage required herein shall continue in effect for a period of three years following the date GRANTEE completes its performance of services under this Agreement.

10.4. Commercial general liability and automobile liability policies shall provide an endorsement naming CCCE, its Directors, Board members, officers, agents, and employees as Additional Insureds with respect to liability arising out of the GRANTEE’S work, including ongoing and completed operations, and shall further provide that such insurance is primary insurance to any insurance or self-insurance maintained by CCCE and that the insurance of the Additional Insureds shall not be called upon to contribute to a loss covered by the GRANTEE’s insurance.

11. INDEMNIFICATION

11.1.GRANTEE shall indemnify, defend, and hold harmless CCCE, its Directors, Board members, officers, agents and employees from any claim, liability, loss, injury, or damage arising out of, or in connection with, performance of this Agreement by GRANTEE and/or its agents, employees, or subcontractors, excepting only loss, injury or damage caused by the sole negligence or willful misconduct of personnel employed by CCCE. It is the intent of the parties to this Agreement to provide the broadest possible coverage for CCCE. GRANTEE shall reimburse CCCE for all costs, attorneys’ fees, expenses, and liabilities incurred with respect to any litigation in which the GRANTEE is obligated to indemnify, defend, and hold harmless CCCE under this Agreement.

12. NON-DISCRIMINATION

12.1.During the performance of this Agreement, GRANTEE, and its subcontractors, shall not unlawfully discriminate against any person because of race, religious creed, color, sex, national origin, ancestry, physical disability, mental disability, medical condition, marital status, age (over 40), or sexual orientation, either in GRANTEE’s employment practices or in the furnishing of services to recipients. GRANTEE shall ensure that the evaluation and treatment of its employees and GRANTEEs for employment and all persons receiving and requesting services are free of such discrimination. GRANTEE and any subcontractors shall, in the performance of this Agreement, fully comply with all federal, state, and local laws and regulations which prohibit discrimination. The provision of services primarily or exclusively to such target population as may be designated in this Agreement shall not be deemed to be prohibited discrimination.

6 13. NOTICES

13.1.Notices required under this Agreement shall be delivered personally or by first-class, postage pre-paid mail to CCCE and GRANTEE’S contract administrators at the addresses listed below:

Central Coast Community Energy City of San Luis Obispo
Chief Financial Officer Sustainability Manager, City Administration 70 Garden Court, Suite 300 990 Palm Street
Monterey, CA 93940 San Luis Obispo, CA 93401

14. MISCELLANEOUS PROVISIONS

14.1. Conflict of Interest. GRANTEE represents that it presently has no interest and agrees not to acquire any interest during the term of this Agreement, which would directly, or indirectly conflict in any manner or to any degree with the full and complete performance of the services required to be rendered under this Agreement.

14.2.Amendment. This Agreement may be amended or modified only by an instrument in writing signed by CCCE and the GRANTEE.

14.3.Disputes. GRANTEE shall continue to perform under this Agreement during any dispute.

14.4. Compliance with Applicable Law. The parties shall comply with all applicable federal, state, and local laws and regulations in performing this Agreement.

14.5.Governing Law. This Agreement shall be governed by and interpreted under the laws of the State of California.

14.6.Non-exclusive Agreement. This Agreement is non-exclusive and both CCCE and GRANTEE expressly reserve the right to contract with other entities for the same or similar services.

14.7. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute the same Agreement.

14.8.Authority. Any individual executing this Agreement on behalf of CCCE, or the GRANTEE represents and warrants hereby that he or she has the requisite authority to enter into this Agreement on behalf of such party and bind the party to the terms and conditions of this Agreement.

7 SIGNATURE OF THE PARTIES:

CITY OF SAN LUIS OBISPO CENTRAL COAST COMMUNITY ENERGY
BY: BY:

Name, Title Tom Habashi, CEO
Date: Date:

VENDOR Approved as to Form
BY: BY:

Name, Title Brian Kimball, General Counsel
Date: Date:

Approved as to Financial Terms

BY:

Jaya Bajpai, Chief Financial Officer
Date:

8 Exhibit A: Scope of Work
To Agreement by and between
Central Coast Community Energy, hereafter referred to as “CCCE” and
City of San Luis Obispo, hereafter referred to as “GRANTEE”

1. Scope of Work. GRANTEE shall provide services to support CCCE’s mission and goals, as set forth in this scope of work:

Task 1. Kick-Off, Data Collection, and Development of Current and Projected Fleet Database
Deliverables: comprehensive fleet database with average use (time, function, and mileage), downtime, location, and expected replacement years Task 2. Fleet Electrification Analysis (e.g., electric vehicle suitability by fleet use type, total cost of ownership projections, projected energy needs and related emissions reductions estimates, etc.).

Deliverables: draft summary identifying potential EV replacement options for each vehicle in the City’s fleet, assessing viability of each option and total cost of ownership comparison, and calculating expected emissions reductions.

Task 3. Charging Infrastructure Needs Assessment and Roadmap Deliverables: proposed locations for chargers in 2025 and 2030 sufficient for light duty fleet transition, load growth estimates by site, charger solutions for each site, electrical infrastructure assessments by site, and conceptual site layouts and capital cost estimates for total charger needs. An additional 70 hours of technical services will be reserved for initial design work to ensure near term projects will be as close to “shovel ready” as feasible.

Task 4. Regional Capacity Building and Knowledge Transfer Deliverables: The City will provide a five-to-ten minute “project update” at each of the CCCE Member Agency Transportation Electrification Working Group meetings, plus a final presentation at completion of Scope. The City will also prepare for and facilitate two meetings with CCCE Member Agency Fleet Managers and related stakeholders to further support capacity building. The City will also share project deliverables with CCCE Member Agencies via links to webpage for downloadable versions of work products.

2. Reporting. As a condition of this Award, GRANTEE is required to submit a mid-term and final report. Each report will provide a brief description of activities performed under this agreement. All deliverables identified in Section 1 above must be completed and presented to CCCE before or accompanied with the Final Report.

Mid Term Report Due: MONTH DATE, YEAR
Final Report Due: MONTH DATE, YEAR

9 Exhibit B: Payment Terms
CCCE shall provide payments to GRANTEE, as outlined below, for a total amount not to exceed seventy thousand dollars ($70,000.00) for the performance of all tasks necessary for or incidental to the performance of work as set forth in Exhibit A: Scope of Work (“Project”). GRANTEE’s compensation for services rendered shall be based on the following rates or in accordance with the following terms:
1) Method of Payment.
a. Invoices shall be submitted once every other month for eligible expenses incurred for work performed in implementing the Project during the period identified in the particular invoice.
b. Invoices will be sent electronically to the following email addresses:
a. [email protected]
b. [email protected]
c. [email protected]
c. Invoices shall be submitted in the standard template provided by CCCE. d. Invoices must be itemized based on the categories (i.e., tasks) specified in Exhibit A. The amount claimed for salaries/wages/consultant fees must include a calculation formula (i.e., hours or days worked times the hourly or daily rate = the total amount claimed).
e. Supporting documentation for costs (e.g. receipts, copies of checks) must be provided as an attachment to the invoice for all non-labor costs included in the invoice.
f. CCCE reserves the right to request additionalsupporting documentation, including but not limited to staff timecards/timesheets.
g. CCCE will notify GRANTEE, in a timely manner when, upon review of an Invoice, CCCE determines that any portion or portions of the costs claimed are not eligible costs or are not supported by documentation or receipts acceptable to CCCE.

GRANTEE may, within thirty (30) calendar days of the date of receipt of such notice, submit additional documentation to CCCE to cure such deficiency(ies). If GRANTEE fails to submit adequate documentation curing the deficiency(ies), CCCE will adjust the pending invoice by the amount of ineligible or unapproved costs. h. CCCE shall certify the invoice for payment in either the amount requested, or in such other amount as CCCE determines is due in conformity with this Agreement. i. CCCE will issue a reimbursement check via US mail or make electronic payment via ACH within 45 days of GRANTEE satisfactorily completing the invoicing process.

10 2) Eligible Expenses. Reimbursable Eligible Expenses under this grant include those reasonable and necessary to complete the Project in accordance with the Agreement, and shall include:
 Staff time spent working directly on approved project  Marketing
 Outreach
 Supplies/materials
 Other direct project and program related expenses
3) Ineligible Expenses The following types of expenses are not reimbursable under this grant program:
 Travel
 Overhead
 Other indirect project expenses
 Costs incurred prior to this Agreement

11 Exhibit C: Budget
Agreement by and between
Central Coast Community Energy, hereafter referred to as “CCCE” and
CITY OF SAN LUIS OBISPO, hereafter referred to as “GRANTEE” Anticipated Expenses
# units
(hours of
staff time)
Unit Cost
($) 3CE
Other
Funding
Sources
TOTAL
Consultant Services (Optony, Inc.) --
Task 1. Kick-Off, Data Collection, and
Development of Current and
Projected Fleet Database $10,500 $10,500
Task 2. Fleet Electrification Analysis $15,000 $15,000
Task 3. Charging Infrastructure
Needs Assessment and Roadmap $34,500 $34,500
Task 4. Regional Capacity Building
and Knowledge Transfer $10,000 $10,000
City of San Luis Obispo Staff Time
(in-kind) 80 $120 $9,600
80 $0 $0 $79,600

12 Exhibit D: Schedule
To Agreement by and between
Central Coast Community Energy, hereafter referred to as “CCCE” and
CITY OF SAN LUIS OBISPO, hereafter referred to as “GRANTEE” Timeline described by month number after effective agreement date, which is currently unknown.

Task 1. Kick-Off, Data Collection, and Development of Current and Projected Fleet Database Months 1 and 2
Task 2. Fleet Electrification Analysis Months 2-4
Task 3. Charging Infrastructure Needs Assessment and Roadmap Months 2-6 Task 4. Regional Capacity Building and Knowledge Transfer Months 5 and 6

City of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: June 7, 2022
TO: Mayor and Council
FROM: Shelly Stanwyck, Assistant City Manager
VIA: Derek Johnson, City Manager
SUBJECT: Staff Agenda Correspondence for Item 5k - AUTHORIZATION TO SIGN LEASE AGREEMENT FOR 994 MILL STREET, SUITE 200
Purpose of this Agenda Correspondence – Omitted Exhibit A The purpose of this Agenda Correspondence is to provide Exhibit A (Floorplan), which was omitted from Attachment A (Lease Agreement for 994 Mill Street, Suite #200), for review at the June 7, 2022 Council Meeting under Agenda Item 5k – Authorization to Sign Lease Agreement for 994 Mill Street, Suite 200.

Please find this document attached.

Exhibit A - Floorplan

Item 5k
Department: Community Services Group
Cost Center: 1009
For Agenda of: 6/7/2022
Placement: Consent
Estimated Time: N/A
FROM: Shelly Stanwyck, Assistant City Manager
Prepared By: Rebecca Bernstorff, Business Services and Administrative Manager Brendan Pringle, Administrative Analyst
SUBJECT: AUTHORIZATION TO SIGN LEASE AGREEMENT FOR 994 MILL STREET, SUITE #200

RECOMMENDATION
Approve and authorize the City Manager to execute a lease for office space at 994 Mill Street, Suite #200, between the City of San Luis Obispo and Osos Land Co., LLC. to be used by the Human Resources Department.

DISCUSSION
Background
Currently, City of San Luis Obispo staff to office space and facility ratios are surpassing effective capacity levels even when accounting for remote work, and as a result, additional, temporary office space is being requested to facilitate department work groups to be located together whenever possible. Following mid-year approval of funds for office space needs across departments, an informal space needs assessment was conducted, and various leasing options were explored as well as modifications to existing facilities.

Leasing office space will create the necessary, temporary opportunity to relieve workforce capacity issues across various departments, including: Administration/IT, City Attorney’s Office, Human Resources, Community Development, and Public Works.

In order to accomplish space optimization for City staff, the Community Services Group requests approval of the lease of 3,522 square feet of office space located at 994 Mill Street, Suite #200, on the second floor of the building, directly across the street from the backside of City Hall, initially accommodating approximately 12 employees (Attachment A). The space will be available to accommodate additional employees should future staff in City facilities be displaced due to office renovation projects.

The office space is in great condition and will require minimal changes or additional maintenance; providing for a welcoming environment. The office space also has an additional common use conference room for use by the Human Resources Department, which will allow it to continue supporting the City team and hiring for future staff.

Item 5k
Lease Information
The proposed initial lease term is three years and would begin on July 1, 2022, with two, one-year options to extend for a maximum of two years (five years total). This term provides the City time to plan for future office needs, which may include the reuse of the current SLO Repertory space and its return for future civic uses, including office space.

Funding for the lease was approved as part of the 2021-22 Mid-Year budget process for FY 2022-23 ($197,040) and FY 2023-24 ($182,928). IT cabling is an initial immediate requirement for relocation to ensure connectivity to the City network and is estimated to cost approximately $30,000. This funding has been identified in base budget savings for this Fiscal Year 21-22. Lease funding for outer years will be requested and considered as a part of the appropriate budget processes.

ENVIRONMENTAL REVIEW
Pursuant to the California Environmental Quality Act (CEQA), it can be seen with certainty that there is no possibility that the proposed lease will have any effect on the environment (General Rule Exemption CEQA Guidelines Sec. 15061(b)(3)).

FISCAL IMPACT
Budgeted: Yes Budget Year: FY 2022-23, FY 2023-24
Funding Identified: Yes
Fiscal Analysis:

Funding Sources
Total
Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $379,968 $0* $0
State
Federal
Fees
Other:

Total $379,968 $0 $0
*No new funding is being requested.

Staff has negotiated a cost of $10,037.70 per month for the 3,522 square foot lease space ($2.85 per square foot) which includes utilities and common area janitorial. Total cost for lease space would be $120,452.40 in 2022-23, $124,065.97 in 2023-24, and $127,787.95 in 2024-25. The annual lease amount will increase 3% in the second and third years of the lease. The total cost to span from FY 2022 to FY 2025 is approximately $372,306.32.

This total cost will be covered with the funds allocated through a significant operating budget change that was approved at FY 2021-22 Mid-Year Review. Should the City pursue the option to extend, the lease amount would increase by 3% at the beginning of each option period and annually thereafter.

Item 5k
Sq.

Ft
Price/Sq.

Ft
Monthly
Rent
Annual Rent
(Assumes
3% Annual
Increase)
City
Approved
Budget at
Mid-Year
End of Year
Budget
Balance
FY 22-23 Year 1 3,522 $2.85 $10,037.70 $120,452.40 $197,040 $76,587.60 FY 23-24 Year 2 3,522 $2.85 $10,338.83 $124,065.97 $182,928 $58,862.03 FY 24-25 Year 3 3,522 $2.85 $10,649.00 $127,787.95 $0
$372,306.32 $379,968

ALTERNATIVES
Deny or Defer Lease Agreement. The City Council may decide to not approve this lease and continue the status quo. Denial of the request will continue the current situation where staff are required to share space in “bullpen” configurations within the office at 919 Palm Street and other office spaces, which impacts their ability to be productive and attentive to departmental priorities. In the future, shared space is part of the plan for accommodating more staff within the 919 Palm Street office, however, those shared spaces will be supported by additional private workspaces, collaboration spaces, and other features that enable an employee to be productive during all phases of the workday.

ATTACHMENTS
A – Lease Agreement for 994 Mill Street, Suite #200
B – Exhibit A – Floor Plan

1 COMMERCIAL LEASE

1. PARTIES.

This Lease is made and entered into on ______________________________ by and between OSOS LAND CO., LLC, a California limited liability company (hereinafter referred to as "Landlord") and the City of San Luis Obispo (hereinafter referred to as "Tenant").

2. PREMISES.

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord on the terms and conditions herein set forth, an approximately 3522 rentable square foot portion of the second floor of the building and other improvements located thereon, situated in the City of San Luis Obispo, County of San Luis Obispo, State of California, described as 994 Mill Street, Suite # 200, San Luis Obispo, CA 93401, and the nonexclusive use of common hallways, stairs, shower, restrooms and elevator. Said real property and building is called the "Premises." The Premises are described further in the floorplan attached as Exhibit “A” hereto. Tenant accepts the Premises "as is", except that Landlord shall deliver the Premises in a professional office condition with all systems in good operating order.

Tenant shall have the right to use 11 parking spaces.

3. TERM.

The term of this Lease shall be for three (3) years commencing on July 1, 2022, but Tenant may occupy the Premises in June rent free upon the vacancy of the prior tenant.

Tenant shall start rent payments on July 1, 2022. Tenant shall have the right to extend this Lease two (2) times for one (1) year each time, for a total of two (2) years, as set forth in Paragraph 36. The lease rate shall be increased by three percent (3%) at the beginning of the option period and annually thereafter.

4. RENT.

Starting July 1, 2022 Tenant shall pay to Landlord as rent for the Premises, including private space with restrooms, and the proportionate share of common hallways, stairs, and elevator, the amount of $10,037.70 per month, payable in advance on the first day of each month during the term of this Lease. The initial rent shall be adjusted annually by three percent (3%). Rent shall be payable without notice or demand and without any deduction, off-set, or abatement in lawful money of the United States to the Landlord at the address stated herein for notices or to such other persons or such other places as the Landlord may designate to Tenant in writing.

2 If the rent is not adjusted at the time for said adjustment as provided herein, Tenant shall continue to pay the Monthly Rent established for the prior period until such adjustment is made, at which time Tenant shall promptly pay to Landlord any deficiency and shall henceforth pay at the adjusted rate of rent. Rents shall be direct deposited to Account Number 4501060961, Routing No 322285781 at Pacific Premier Bank, 545 12th Street, Paso Robles, CA 93446.

5. SECURITY DEPOSIT.

A security deposit is not required.

6. USE.

Tenant shall use the Premises exclusively for City business purposes, such as offices and conferences and for no other purpose without the Landlord's prior written consent.

Tenant shall not do, bring or keep anything in or about the Premises that will cause a cancellation of any insurance covering the Premises or the building in which the Premises are located. If the rate of any insurance carried by the Landlord is increased as a result of Tenant's use, Tenant shall pay to Landlord within ten (10) days after written demand from Landlord, the amount of any such increase. Tenant shall comply with all laws concerning the Premises or Tenant's use of the Premises, including without limitation, the obligation at Tenant's cost to alter, maintain, or restore the Premises in compliance and conformity with all laws relating to the condition, use, or occupancy of the Premises by Tenant during the term of this Lease. Tenant shall not use or permit the use of the Premises in any manner that will tend to create waste or a nuisance or, if there shall be more than one tenant of the building containing the Premises, which shall unreasonably disturb any other tenant.

Tenant hereby accepts the Premises in its condition existing as of the date that Tenant possesses the Premises, subject to all applicable zoning, municipal, county and state laws, ordinances, regulations governing or regulating the use of the Premises and accepts this Lease subject thereto and to all matters disclosed thereby. Tenant hereby acknowledges that neither the Landlord nor the Landlord's agent has made any representation or warranty to Tenant as to the suitability of the Premises for the conduct of Tenant's business.

7. TAXES.

A. Real Property Taxes.

Landlord shall pay all real property taxes and general assessments levied and assessed against the Premises during the term of this Lease.

3 B. Personal Property Taxes.

Tenant shall pay prior to the delinquency all taxes assessed against and levied upon the trade fixtures, furnishings, equipment and other personal property of Tenant contained in the Premises. Tenant shall endeavor to cause such trade fixtures, furnishings and equipment and all other personal property to be assessed and billed separately from the property of the Landlord. If any of Tenant's said personal property shall be assessed with Landlord's property, Tenant shall pay to Landlord the taxes attributable to Tenant within ten (10) days after receipt of a written statement from Landlord setting forth the taxes applicable to Tenant's property.

8. UTILITIES
Landlord shall pay all water, sewer, gas, heat, light, power and garbage services supplied to the Premises together with any taxes thereon. Tenant shall pay all telephone and internet services.

9. MAINTENANCE AND REPAIRS
A. Landlord's Obligations.

Except as provided in Article 12, and except for damage caused by any negligent or intentional act or omission of Tenant, Tenant's agents, employees, or invitees, Landlord at its sole cost and expense shall keep in good condition and repair the foundations, exterior walls, and exterior roof of the Premises. Landlord shall also maintain, except for minor repairs, the unexposed electrical, plumbing and sewage systems including, without limitation, those portions of the systems lying outside the Premises; window frames, gutters and down spouts on the building, all sidewalks, landscaping and other improvements that are a part of the Premises or of which the Premises are a part. The Landlord shall be responsible for all major repairs to the heating, ventilating and air-conditioning (HVAC) systems servicing the Premises. Landlord shall resurface and restripe the parking area on or adjacent to the Premises when necessary. Landlord shall have thirty (30) days after notice from Tenant to commence to perform its obligations under this Article 9, except that Landlord shall perform its obligations immediately if the nature of the problem presents a hazard or emergency situation. If the Landlord does not perform its obligations within the time limit set forth in this paragraph, Tenant can perform said obligations and shall have the right to be reimbursed for the amount that Tenant actually expends in the performance of Landlord's obligations. If Landlord does not reimburse Tenant within thirty (30) days after demand from Tenant, Tenant's sole remedy shall be to institute suit against the Landlord, and Tenant shall not have the right to withhold from future rent the sums Tenant has expended. Lastly, Tenant is within its rights to deduct rent if the situation presents a true emergency and

4 repairs are not performed by Landlord according to the time frame outlined above.

B. Tenant's Obligations.

Subject to the provisions of Subparagraph A. above and Article 12, Tenant at Tenant's sole cost and expense shall keep in good order, condition and repair the Premises and every part thereof including, without limitation, all Tenant's personal property, fixtures, signs, store fronts, plate glass, show windows, doors, interior walls, interior ceiling, light bulbs, and lighting facilities. Tenant shall also be responsible for minor repairs to indoor plumbing and electrical systems and shall maintain a proportionate share of the HVAC systems servicing the Premises. Routine maintenance of the HVAC systems shall be performed by Knecht's Plumbing & Heating, unless otherwise agreed to by the parties to this lease.

Tenant shall be responsible for janitorial services, including a proportionate share of the care and maintenance of the premises, second floor commons areas and restrooms and the elevator and first floor elevator lobby.

If Tenant fails to perform Tenant's obligations as stated herein, Landlord may at its option (but shall not be required to), enter the Premises, after ten (10) days prior written notice to Tenants, put the same in good order, condition and repair, and the costs thereof together with interest thereon at the rate of ten percent (10%) per annum shall become due and payable as additional rental to Landlord together with Tenant's next rental installment.

10. ALTERATIONS AND ADDITIONS.

Except for routine alterations such as wall decorations, bookshelves and other common interior improvements that will not alter the exterior appearance of the building or impair the structural integrity of the walls and building, Tenant shall not, without the Landlord's prior written consent, make any alterations, improvements or additions in or about the Premises (including but not limited to window coverings). As a condition to giving any such consent, the Landlord may require the Tenant to remove any such alterations, improvements, or additions at the expiration of the term, and to restore the Premises to their prior condition by giving Tenant thirty (30) days written notice prior to the expiration of the term that Landlord requires Tenant to remove any such alterations, improvements or additions that Tenant has made to the Premises. If Landlord so elects, Tenant at its sole cost shall restore the Premises to the condition designated by Landlord in its election before the last day of the term of the Lease.

Before commencing any work relating to the alterations, additions, or improvements affecting the Premises, Tenant shall notify Landlord in writing of any and all actual or anticipated mechanic's liens, materialmen liens, or any other liens. In any event, Tenant shall pay, when due, all claims for labor and materials furnished to or for Tenant at or for use in the Premises. Tenant shall not permit any mechanic's liens or materialmen's liens to be levied against the Premises for any labor or material furnished to Tenant or claimed to have been furnished to Tenant or Tenant's agents or contractors in connection with work of

5 any character performed or claimed to have been performed on the Premises by or at the direction of Tenant.

Unless the Landlord requires their removal as set forth above, all alterations, improvements or additions which are made on the Premises by the Tenant shall become the property of the Landlord and remain upon and be surrendered with the Premises at the expiration of the term. Notwithstanding the provisions of this paragraph, Tenant's trade fixtures, furniture, equipment and other machinery, other than that which is affixed to the Premises so that it cannot be removed without material or structural damage to the Premises, shall remain the property of the Tenant and be removed by Tenant at the expiration of the term of this lease.

11. INSURANCE; INDEMNITY.

A. Fire Insurance.

Landlord at its cost shall maintain during the term of this Lease on the Premises a policy or policies of standard fire and extended coverage insurance to the extent of at least ninety percent (90%) of full replacement value thereof.

Tenant at its cost shall maintain during the term of this Lease on all its personal property, Tenant's improvements, and alterations in or about the Premises, a policy of standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements, to the extent of their full replacement value. The proceeds from any such policy shall be used by Tenant for the replacement of personal property or the restoration of Tenant's improvements or alterations.

B. Liability Insurance.

Tenant at its sole cost and expense shall maintain during the term of this Lease public liability and property damage insurance with a single combined liability limit of five hundred thousand dollars ($500,000.00), and property damage limits of not less than one hundred thousand dollars ($100,000.00), insuring against all liability of Tenant and its authorized representatives arising out of and in connection with Tenant's use or occupancy of the Premises. Both public liability insurance and property damage insurance shall insure performance by Tenant of the indemnity provisions in Subparagraph D below, but the limits of such insurance shall not, however, limit the liability of Tenant hereunder. Both Landlord and Tenant shall be named as additional insureds, and the policies shall contain cross-liability endorsements. If Tenant shall fail to procure and maintain such insurance the Landlord may, but shall not be required to, procure and maintain same at the expense of Tenant and the cost thereof, together with interest thereon at the rate of ten percent (10%) per annum, shall become due and payable as additional rental to Landlord together with Tenant's next rental installment.

6 C. Waiver of Subrogation.

Tenant and Landlord each waives any and all rights of recovery against the other, or against the officers, employees, agents, and representatives of the other, for loss of or damage to such waiving party or its property or the property of others under its control, where such loss or damage is insured against under any insurance policy in force at the time of such loss or damage. Each party shall cause each insurance policy obtained by it hereunder to provide that the insurance company waives all right of recovery by way of subrogation against either party in connection with any damage covered by any such policy.

D. Hold Harmless.

Except in cases of Landlord’s willful or grossly negligent conduct, Tenant shall indemnify and hold Landlord harmless from and against any and all claims arising from Tenant's use or occupancy of the Premises or from the conduct of its business or from any activity, work, or things which may be permitted or suffered by Tenant in or about the Premises including all damage, costs, attorney's fees, expenses and liabilities incurred in the defense of any claim or action or proceeding arising therefrom. Except for Landlord's willful or grossly negligent conduct, Tenant hereby assumes all risk of damage to property or injury to person in or about the Premises from any cause, and Tenant hereby waives all claims in respect thereof against Landlord.

E. Exemption of Landlord from Liability.

Except in cases of Landlord’s willful or grossly negligent conduct, Tenant hereby agrees that Landlord shall not be liable for any injury to Tenant's business or loss of income therefrom or for damage to the goods, wares, merchandise, or other property of Tenant, Tenant's employees, invitees, customers or any other person in or about the Premises; nor shall Landlord be liable for injury to the person of Tenant, Tenant's employees, agents, contractors, or invitees, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air-conditioning, or lighting fixtures, or from any other cause, whether such damage results from conditions arising upon the Premises or upon other portions of the building in which the Premises are a part, or from any other sources or places. Landlord shall not be liable to Tenant for any damages arising from any act or neglect of any other tenant, if any, of the building in which the Premises are located.

7 12. DAMAGE OR DESTRUCTION.

A. Damage Insured.

If, during the term of this Lease, the Premises and/or the building and other improvements in which the Premises are located are totally or partially destroyed rendering the Premises totally or partially inaccessible or unusable, and such damage or destruction was caused by a casualty covered under an insurance policy required to be maintained hereunder, Landlord shall restore the Premises and/or the building and other improvements in which the Premises are located into substantially the same condition as they were in immediately before such damage or destruction, provided that the restoration can be made under the existing laws and can be completed within one hundred twenty (120) working days after the date of such destruction or damage. Such destruction or damage shall not terminate this Lease.

If the restoration cannot be made in said 120-day period, then within fifteen (15) days after the parties hereto determine that the restoration cannot be made in the time stated in this paragraph, Tenant may terminate this Lease immediately by giving notice to Landlord and the Lease will be deemed cancelled as of the date of such damage or destruction. If Tenant fails to terminate this Lease and the restoration is permitted under the existing laws, Landlord, at its option, may terminate this Lease or restore the Premises and/or any other improvements in which the Premises are located within a reasonable time and this Lease shall continue in full force and effect. If the existing laws do not permit the restoration, either party can terminate this Lease immediately by giving notice to the other party.

Notwithstanding the above, if the Tenant is the insuring party and if the insurance proceeds received by Landlord are not sufficient to effect such repair, Landlord shall give notice to Tenant of the amount required in addition to the insurance proceeds to effect such repair. Tenant may, at Tenant's option, contribute the required amount, but upon failure to do so within thirty (30) days following such notice, Landlord's sole remedy shall be, at Landlord's option and with no liability to Tenant, to cancel and terminate this Lease. If Tenant shall contribute such amount to Landlord within said thirty (30) day period, Landlord shall make such repairs as soon as reasonably possible and this Lease shall continue in full force and effect. Tenant shall in no event have any right to reimbursement for any amount so contributed.

B. Damage Uninsured.

8 In the event that the Premises are damaged or destroyed by a casualty which is not covered by the fire and extended coverage insurance which is required to be carried by the party designated in Article 11.A above, then Landlord shall restore the same; provided that if the damage or destruction is to an extent greater than ten percent (10%) of the then replacement cost of the improvements on the Premises (exclusive of Tenant's trade fixtures and equipment and exclusive of foundations and footings), then Landlord may elect not to restore and to terminate this Lease. Landlord must give to Tenant written notice of its intention not to restore within thirty (30) days from the date of such damage or destruction and, if not given, Landlord shall be deemed to have elected to restore and, in such event, shall repair any damage as soon as reasonably possible. In the event that Landlord elects to give such notice of Landlord's intention to cancel and terminate this Lease, Tenant shall have the right, within ten (10) days after receipt of such notice, to give written notice to Landlord of Tenant's intention to repair such damage at Tenant's expense, without reimbursement from Landlord, in which event the Lease shall continue in full force and effect and Tenant shall proceed to make such repairs as soon as reasonably possible. If the Tenant does not give such notice within such 10-day period, this Lease shall be cancelled and be deemed terminated as of the date of the occurrence of such damage or destruction.

C. Damage Near the End of the Term.

If the Premises are totally or partially destroyed or damaged during the last twelve (12) months of the term of this Lease, Landlord may, at Landlord's option, cancel and terminate this Lease as of the date of the cause of such damage by given written notice to Tenant of Landlord's election to do within thirty (30) days after the date of the occurrence of such damage; provided, however, that, if the damage or destruction occurs within the last twelve (12) months of the term and if within fifteen (15) days after the date of such damage or destruction Tenant exercises any option to extend the term provided herein, Landlord shall restore the Premises if obligated to do so as provided in subparagraph A or B above.

D. Abatement of Rent.

If the Premises are partially or totally destroyed or damaged and Landlord or Tenant repairs or restores them pursuant to the provisions of this Article 12, the rent payable hereunder for the period during which such damage, repair or restoration continues shall be abated in proportion to the degree to which Tenant's reasonable use of the Premises is impaired. Except for the abatement of rent, if any, Tenant shall have no claim against Landlord for any damages suffered by reason of any such damage, destruction, repair or restoration.

9 E. Trade Fixtures and Equipment.

If the Landlord is required or elects to restore the Premises as provided in this Article, Landlord shall not be required to restore Tenant's improvements, trade fixtures, equipment or alterations made by Tenant, such excluded items being the sole responsibility of Tenant to restore hereunder.

F. Total Destruction of Multitenant Building.

If the Premises are a part of a multitenant building and there is destruction to the Premises and/or the building of which the Premises are a part that exceeds fifty percent (50%) of the then replacement value of the Premises and/or the building in which the Premises are a part from any cause whether or not covered by the insurance described in Article 11 above, Landlord may, at its option, elect to terminate this lease (whether or not the Premises are destroyed) so long as Landlord terminates the leases of all other tenants in the building of which the Premises are a part, effective as of the date of such damage or destruction.

13. CONDEMNATION.

If the Premises or any portion thereof are taken by the power of eminent domain, or sold by Landlord under the threat of exercise of said power (all of which is herein referred to as "condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever occurs first. If more than twenty percent (20%) of the floor area of any buildings on the Premises, or more than twenty percent (20%) of the land area of the Premises not covered with buildings, is taken by condemnation, either Landlord or Tenant may terminate this Lease as of the date the condemning authority takes possession by notice in writing of such election within twenty (20) days after Landlord shall have notified Tenant of such taking or, in the absence of such notice, then within twenty (20) days after the condemning authority shall have taken possession.

If this Lease is not terminated by either Landlord or Tenant as provided hereinabove, then it shall remain in full force and effect as to the portion of the Premises remaining, provided that the rental shall be reduced in proportion to the floor area of the buildings taken within the Premises as bears to the total floor area of all buildings located on the Premises. In the event this Lease is not so terminated, then Landlord agrees at Landlord's sole cost and expense, to as soon as reasonably possible restore the Premises to a complete unit of like quality and character as existed prior to the condemnation.

All awards for the taking of any part of the Premises or any payment made under the threat of the exercise of the power of eminent domain shall be the property of the Landlord, whether made as compensation for the diminution of the value of the leasehold or for the

10 taking of the fee or as severance damages; provided, however, that Tenant shall be entitled to any award for loss of or damage to Tenant's trade fixtures and removable personal property.

Each party hereby waives the provisions of Code of Civil Procedure 1265.130 allowing either party to petition the Superior Court to terminate this Lease in the event of a partial taking of the Premises.

Rent shall be abated or reduced during the period from the date of taking until the completion of restoration by Landlord, but all other obligations of Tenant under this Lease shall remain in full force and effect. The abatement or reduction of the rent shall be based on the extent to which the restoration interferes with Tenant's use of the Premises.

14. ASSIGNMENT AND SUBLETTING.

Tenant shall not voluntarily or by operation of law assign, transfer, sublet, mortgage, or otherwise transfer or encumber all or any part of Tenant's interest in this Lease or in the Premises without Landlord's prior written consent which consent shall not be unreasonably withheld. Any attempted assignment, transfer, mortgage, encumbrance, or subletting without such consent shall be void and shall constitute a breach of this Lease. If Tenant is a corporation, any sale, merger, acquisition, consolidation or other reorganization of Tenant, shall not be deemed a voluntary assignment.

Regardless of Landlord's consent, no subletting or assignment shall release Tenant of Tenant's obligation to pay the rent and to perform all other obligations to be performed by Tenant hereunder for the term of this Lease. The acceptance of rent by Landlord from any other person shall not be deemed a waiver by Landlord of any provisions hereof.

Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting.

15. DEFAULT.

A. Events of Default.

The occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Tenant:
(1) Failure to pay rent when due, if the failure continues for five (5) days after written notice has been given to Tenant.
(2) Abandonment and vacation of the Premises (failure to occupy the Premises for fourteen (14) consecutive days shall be deemed an abandonment and vacation).
(3) Failure to perform any other provision of this Lease if the failure to perform is not cured within thirty (30) days after written notice thereof has been given to Tenant by Landlord. If the default cannot reasonably be cured within said thirty (30) day period, Tenant shall not

11 be in default under this Lease if Tenant commences to cure the default within the thirty (30) day period and diligently prosecutes the same to completion.
(4) The making by Tenant of any general assignment, or general arrangement for the benefit of creditors; the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy unless the same is dismissed within sixty (60) days; the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the premises or of Tenant's interest in the Lease, where possession is not restored to Tenant within thirty (30) days; or the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in the Lease, where such seizure is not discharged within thirty (30) days.

Notices given under this paragraph shall specify the alleged default and the applicable lease provisions, and shall demand that Tenant perform the provisions of this Lease or pay the rent that is in arrears as the case may be, within the applicable period of time. No such notice shall be deemed a forfeiture or a termination of this Lease unless Landlord so elects in the notice.

B. Landlord's Remedies.

The Landlord shall have the following remedies if Tenant commits a default under this Lease and fails to cure it after notice and a reasonable cure period. These remedies are not exclusive but are cumulative and in addition to any remedies now or hereafter allowed by law.
i. Landlord can continue this Lease in full force and effect, and the Lease will continue in effect so long as Landlord does not terminate Tenant's right to possession, and the Landlord shall have the right to collect rent when due. During the period that Tenant is in default, Landlord can enter the Premises and relet them, or any part of them, to third parties for Tenant's account. Tenant shall be liable immediately to the Landlord for all costs the Landlord incurs in reletting the Premises, including, without limitation, brokers' commissions, expenses of remodeling the Premises required by the reletting, and like costs. Reletting can be for a period shorter or longer than the remaining term of this Lease. Tenant shall pay to Landlord the rent due under this Lease on the dates the rent is due, less the rent Landlord receives from any reletting. No act by Landlord allowed by this paragraph shall terminate this Lease unless Landlord notifies Tenant that Landlord elects to terminate this Lease. After Tenant's default and for so long as Landlord has not terminated Tenant's right to possession of the Premises, if Tenant obtains Landlord's consent, Tenant shall have the right to assume or sublet its

12 interest in the Lease, but Tenant shall not be released from liability.

Landlord's consent to the proposed assignment or subletting shall not be unreasonably withheld.
ii. If Landlord elects to relet the premises as provided in this paragraph, any rent that Landlord receives from such reletting shall apply first to the payment of any indebtedness from Tenant to Landlord other than the rent due from Tenant to Landlord; secondly, to all costs, including maintenance, incurred by Landlord in such reletting; and third, to any rent due and unpaid under this Lease. After deducting the payments referred to in this paragraph, any sum remaining from the rent Landlord receives from such reletting shall be held by Landlord and applied in payment of future rent as rent becomes due under this Lease. In no event shall Tenant be entitled to any excess rent received by Landlord. If, on the date rent is due under this Lease, the rent received from the reletting is less than the rent due on that date, Tenant shall pay to Landlord, in addition to the remaining rent due, all costs, including maintenance, that Landlord shall have incurred in reletting that remain after applying the rent received from the reletting as provided in this paragraph.
iii. Landlord can, at its option, terminate Tenant's right to possession of the Premises at any time. No act by Landlord other than giving written notice to Tenant shall terminate this Lease. Acts of maintenance, efforts to relet the Premises, or the appointment of a receiver on Landlord's initiative to protect Landlord's interest in this Lease shall not constitute a termination of Tenant's right to possession. In the event of such termination, Landlord has the right to recover from Tenant:
(1) The worth, at the time of the award, of the unpaid rent that had been earned at the time of the termination of this Lease; (2) The worth, at the time of the award, of the amount by which the unpaid rent that would have been earned after the date of the termination of this Lease until the time of the award exceeds the amount of the loss of rent that Tenant proves could have been reasonably avoided;
(3) The worth, at the time of the award, of the amount by which the unpaid rent for the balance of the term after the time of the award exceeds the amount of the loss of rent that Tenant proves could have been reasonably avoided; and
(4) Any other amount, including court costs, necessary to compensate Landlord for all detriment proximately caused by Tenant's default.

13 "The worth at the time of the award," as used in (1) and (2) of this paragraph is to be computed by allowing interest at the maximum rate an individual is permitted by law to charge. "The worth at the time of the award" as referred to in (3) of this paragraph is to be computed by discounting the amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of the award, plus one percent (1%).
iv. If Tenant is in default under the terms of this Lease, Landlord shall have the additional right to have a receiver appointed to collect rent and conduct Tenant's business. Neither the filing of a petition for the appointment of a receiver nor the appointment itself shall constitute an election by Landlord to terminate this Lease.
v. Landlord at any time after Tenant commits a default, can cure the default at Tenant's cost and expense. If Landlord at any time, by reason of Tenant's default, pays any sum or does any act that requires the payment of any sum, the sum paid by Landlord shall be due immediately from Tenant to Landlord at the time the sum is paid, and if paid at a later date shall bear interest at the maximum rate an individual is permitted by law to charge from the date the sum is paid by Landlord until Landlord is reimbursed by Tenant. The sum, together with interest thereon, shall be considered additional rent.

16. SIGNS.

Tenant shall have the right to place a sign upon the Premises with Landlord's written consent and in conformity with other signs on the Premises and in accordance with any requirements or restrictions imposed by the City of San Luis Obispo. This right shall specifically include the right to place a sign within the building at or about the suite or suites being occupied by the tenant.

17. EARLY POSSESSION.

In the event that the Landlord shall permit Tenant to occupy the Premises prior to the commencement date of the term of this Lease, such occupancy shall be subject to all the provisions of this Lease, except for rent. Said early possession shall not advance the termination date of this Lease.

18. SUBORDINATION.

This Lease, at Landlord's option, shall be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation for security now or hereafter placed upon the real property of which the Premises are a part and to any and all advances made on the security thereof and to all renewal, modifications, and extensions thereof.

14 Notwithstanding any such subordination, Tenant's right to quiet possession of the Premises shall not be disturbed if Tenant is not in default and so long as Tenant shall pay the rent and observe and perform all the other provisions of this Lease, unless this Lease is otherwise terminated pursuant to its terms. If any mortgagee, trustee, or ground lessor shall elect to have this Lease prior to the lien of its mortgage or deed of trust or ground lease, and shall give written notice thereof to Tenant, this Lease shall be deemed prior to such mortgage, deed of trust or ground lease, whether this Lease is dated prior to or subsequent to the date of such mortgage, deed of trust or ground lease, or the date of recording thereof. Tenant agrees to execute any documents required to effect such subordination or to make this Lease prior to the lien of any mortgage, deed of trust, or ground lease, as the case may be, and failing to do so within ten (10) days after written demand from Landlord does hereby make, constitute and irrevocably appoint Landlord as Tenant's attorney in fact and in Tenant's name, place and stead to do so.

19. SURRENDER.

On the last day of the term hereof, or on any sooner termination, Tenant shall surrender the Premises to Landlord in good condition, broom clean, ordinary wear and tear excepted. Tenant shall repair any damage to the Premises occasioned by its use thereof, or by the removal of Tenant's trade fixtures, furnishings and equipment which repair shall include the patching and filling of holes and repair of structural damage. Tenant shall remove all of its personal property and fixtures on the Premises prior to the expiration of the term of this Lease and if required by Landlord pursuant to Article 10.A above any alterations, improvements or additions made by Tenant to the Premises. If Tenant fails to surrender the Premises to Landlord on the expiration of the Lease required by this paragraph, Tenant shall hold Landlord harmless from all damages resulting from Tenant's failure to vacate the Premises, including, without limitation, claims made by any succeeding tenant resulting from Tenant's failure to surrender the Premises.

20. HOLDING OVER.

If the Tenant, with the Landlord's consent, remains in possession of the Premises after the expiration or termination of the term of this Lease, such possession by Tenant shall be deemed to be a tenancy from month-to-month at a rental in the amount of the last monthly rental plus all other charges payable hereunder, upon all the provisions of this Lease applicable to month-to-month tenancy.

21. BINDING ON SUCCESSORS AND ASSIGNS.

The terms, conditions and covenants of this Lease shall be binding upon and shall inure to the benefit of each of the parties hereto, their heirs, personal representatives, successors and assigns.

15 22. NOTICES.

Whenever under this Lease a provision is made for any demand, notice or declaration of any kind, it shall be in writing and served either personally or sent by registered or certified United States mail, postage prepaid, addressed at the addresses as set forth below:

TO LANDLORD AT: Osos Land Co.

P.O. Box 106
Shandon, California 93461
Attn: Steve Sinton
TO TENANT AT: City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Attn:

Such notice shall be deemed to be received within forty-eight (48) hours from the time of mailing, if mailed as provided for in this paragraph.

23. LANDLORD'S RIGHT TO INSPECTIONS.

Landlord and Landlord's agent shall have the right to enter the Premises with permission, or without permission upon twenty-four (24) hours telephone notice, at reasonable times for the purposes of inspecting same, showing the same to prospective purchasers or lenders, and making such alterations, repairs, improvements or additions to the Premises or to the building of which the Premises are a part as Landlord may deem necessary or desirable. Landlord may at any time place on or about the Premises any ordinary "For Sale" signs and Landlord may at any time during the last one hundred twenty (120) days of the term of this Lease place on or about the Premises any ordinary "For Sale" or "For Lease" signs, all without rebate of rent or liability to Tenant.

24. CHOICE OF LAW.

This Lease shall be governed by the laws of California.

25. ATTORNEY'S FEES.

If either Landlord or Tenant becomes a party to any litigation or arbitration concerning this Lease, the Premises, or the building or other improvements in which the Premises are located, by reason of any act or omission of the other party or its authorized representatives, and not by reason of any act or omission of the party that becomes a party to that litigation or any act or omission of its authorized representatives, the party that

16 causes the other party to become involved in the litigation shall be liable to that party for reasonable attorney's fees and court costs incurred by it in the litigation.

If either party commences an action against the other party arising out of or in connection with this Lease, the prevailing party shall be entitled to have and recover from the losing party reasonable attorney's fees and costs of suit actually incurred.

26. LANDLORD'S LIABILITY.

The term "Landlord" as used in this Lease shall mean only the owner or owners at the time in question of the fee title or a Lessee's interest in a ground lease of the Premises, and in the event of any transfer of such title or interest, Landlord herein named (and in case of any subsequent transfers to the then successor) shall be relieved from and after the date of such transfer of all liability in respect to Landlord's obligations thereafter to be performed. The obligations contained in this Lease to be performed by Landlord shall be binding upon the Landlord's successors and assigns, only during their respective periods of ownership.

27. WAIVERS.

No waiver by Landlord of any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Tenant of the same or any other provision. Landlord's consent to or approval of any act shall not be deemed to render unnecessary the obtaining of Landlord's consent to or approval of any subsequent act by Tenant. The acceptance of rent hereunder by Landlord shall not be a waiver of any preceding breach by Tenant of any provision hereof, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of its acceptance of such rent.

28. INCORPORATION OF PRIOR AGREEMENTS.

This Lease contains all agreements of the parties with respect to any matter mentioned herein. No prior agreement or understanding pertaining to any such matter shall be effective. This Lease may be modified only in writing, and signed by the parties in interest at the time of such modification.

29. TIME.

Time is of the essence of this Lease.

30. SMOKING
This shall be a no-smoking building and no smoking shall be allowed in or on the premises (including but not limited to all balconies).

31. SEVERABILITY.

17 The unenforceability, invalidity, or illegality of any provision of this Lease shall not render the other provisions hereof unenforceable, invalid or illegal.

32. ESTOPPEL CERTIFICATES.

Each party, within ten (10) days after notice from the other party, shall execute and deliver to the other party a certificate stating that this Lease is unmodified and in full force and effect, or in full force and effect as modified, and stating the modification. The certificate shall also state the amount of minimum monthly rent, the dates to which rent has been paid in advance, and the amount of any security deposit or prepaid rent, if any, as well as acknowledging that there are not, to that party's knowledge, any uncured defaults on the part of the other party, or specifying such defaults, if any, which are claimed. Failure to deliver such a certificate within the ten (10) day period shall be conclusive upon the party failing to deliver the certificate to the benefit of the party requesting the certificate that this Lease is in full force and effect, that there are no uncured defaults hereunder, and has not been modified except as may be represented by the party requesting the certificate.

33. COVENANTS AND CONDITIONS.

Each provision of this Lease performable by Tenant shall be deemed both a covenant and a condition.

34. SINGULAR AND PLURAL.

When required by the context of this Lease, the singular shall include the plural.

35. JOINT AND SEVERAL OBLIGATIONS.
"Party" shall mean Landlord and Tenant; and if more than one person or entity is the Landlord or Tenant, the obligations imposed on that party shall be joint and several.

36. OPTION TO EXTEND.

Tenant shall have an option to extend the term of this Lease two times under the same terms and conditions herein contained, with the exception of the minimum monthly rent, for a period of one (1) year each time, for a total of two (2) years. This option granted to Tenant in this Lease is personal to Tenant and may not be exercised or be assigned, voluntarily or involuntarily, by or to any person or entity other than Tenant. Tenant shall have no right to exercise this option, notwithstanding any provision in this Lease to the contrary, during any time that Tenant is in default of this Lease, or if Landlord gives to Tenant three (3) or more notices of default under paragraph 15, whether or not the defaults are cured. Tenant shall deliver to Landlord written notice of its election to exercise this option at least ninety (90) days prior to the expiration of the preceding term hereof. The lease rate shall be adjusted by three percent (3%) at the beginning of the option period and annually thereafter. The option term shall be subject to the same terms and conditions as this lease, unless modified by the mutual consent of the parties hereto.

18 The parties hereto have executed this Lease on the date first below written.

LANDLORD: TENANT:

OSOS LAND CO. CITY OF SAN LUIS OBISPO
By: By:

Stephen Sinton, Managing Member Derek Johnson, City Manager_________ Date: ____________________________ Date: ____________________________

19 EXHIBIT A
Floorplan

Exhibit A - Floorplan

Item 5l
Department: Information Technology
Cost Center: 1101
For Agenda of: 6/7/2022
Placement: Consent
Estimated Time: N/A
FROM: Greg Hermann, Deputy City Manager
Prepared By: Miguel Guardado, Information Technology Manager SUBJECT: AWARD CONTRACT FOR ENTERPRISE STORAGE SERVER

REPLACEMENT

RECOMMENDATION

1. Award a contract and authorize a purchase order for Ahead in the amount of $350,139.16 for the purchase and installation of new enterprise storage (Dell PowerStore storage solution) and five years of 24/7 support; and

2. Waive formal bids and authorize use of State of California Enterprise Technology Contract #1-19-70-19D-2 to procure this purchase from Ahead, as allowed under

3.24.060 E. of the City of San Luis Obispo Municipal Code.

DISCUSSION
Background
In July 2017, Information Technology upgraded its primary data storage equipment to continue supporting on-premise systems such as EnerGov, Laserfiche, Cityworks and Springbrook Utility billing systems all of which are key systems that support the delivery of core services to the public. There was also an upgrade to equipment to support Police Department operations and record keeping, which are critical to public and officer safety.

The equipment consisted of Dell Compellent primary data storage equipment, which is located at the Emergency Communications Center at Fire Station 1. Following best practices, there are also secondary storage systems at the San Luis Obispo County datacenter. Data is continually updated to the secondary storage system for disaster recovery purposes.

Current Storage Status
This Council Agenda Report is requesting authorization to purchase new storage equipment including controllers and drive shelves to replace the current equipment, which has reached its end of life. The expected lifespan of this equipment is five years and the current warranties for the controllers and shelves will expire on August 31, 2022. Using equipment past this date means that support and/or repair will not be available if they fail which could mean that services provided by these systems would not available.

Item 5l
This equipment purchase covers equipment for both the City and Police Department systems. The City is required to maintain separate Police Department storage due to Department of Justice requirements.

Although many applications now rely on cloud based storage, on-premise storage is required for all systems that contain public safety related information and is more cost effective and/or best practice for certain department systems to retain operational control and recovery.

Previous Council or Advisory Body Action
The current enterprise storage equipment was approved for purchase as part of the Consent Agenda at the Regular City Council meeting on July 18, 2017. The Council Agenda report may be viewed here:
https://opengov.slocity.org/WebLink/DocView.aspx?id=66664&dbid=0&repo=CityClerk.

Policy Context
Waiving formal bids and authorizing the use of State of California Enterprise Technology Contract# 1-19-70-19D-2 to procure this purchase from Ahead is consistent with City Purchasing Policy, Section 204: No-Bid Purchasing, and Municipal Code Section

3.24.060E, which permits staff to dispense with bidding requirements, “When the purchase will be made cooperatively with one, or more, other units of government, or from a local dealer within the city limits that can provide the same brand, model and configuration of item(s) identified in the cooperative purchase agreement(s) at or below the cooperative purchasing net cost within the same terms and conditions.” Public Engagement
This is an administrative item, so no outside public engagement was completed. Public comment can be provided to the City Council through written correspondence prior to the meeting and through public testimony at the meeting.

CONCURRENCE
The Police Department concurs with the recommendations.

ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended actions in this report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.

FISCAL IMPACT
Budgeted: Yes Budget Year: 2022-23
Funding Identified: Yes

Item 5l
Fiscal Analysis:

Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ $ $ $
State
Federal
Fees
Parking Fund $2,036 $2,036
Transit Fund $2,036 $2,036
Water Fund $8,146 $8,146
Sewer Fund $8,146 $8,146
LRM $323,136 $323,136
IT Completed
Projects
$22,671.03 $6,639.16 $16,031.87
Other:

Total $ $350,139.16 $16,031.87 $
The 2021-23 Financial Plan identified $343,500 in funding for this Capital Improvement Project (Project #1000074-06 City SAN and 1000074-18 PD SAN). In addition, staff is recommending a transfer of $6,639.16 from the IT Replacement Fund Completed Projects Account to fund the remainder of the project. The IT completed projects account currently has a balance of $22,671.03 to support this request of $6,639.16.

ALTERNATIVES
Deny awarding project. Staff does not recommend this alternative. The existing equipment is nearing the end of the expected five-year life cycle. If replacement is delayed and equipment fails, the City runs the risks of critical services not being available to the public and staff.

ATTACHMENTS
A - Quote from Ahead for Dell PowerStore Equipment with 5-year Warranty and Support B - Enterprise Technology Contract with Ahead

Ahead, Inc. which will do business in the state of California as Kovarus, Inc. Date:

Quote #
Expiration Date:

Account Manager:

Prepared By:

Ship To Email:City of San Luis Obispo Phone:879 Morro StreetSan Luis Obispo CA 93401 Contract Number:

Contract Expiration
DELL MSRP Date:

Link
SB/DVBE Summary %:

Line # Segment ID #
Dept.

Requested
OEM
Services
Proprietary
Service Model # Description Qty List Price Disc Unit Price Ext. Price MSRP page number
(verification that your
department reviewed
this quote)
Hardware
1 D2‐120 N N 210‐AXXJ PowerStore 500T Customer Rack 4 $12,700.00 74.00% $3,302.00 $13,208.00 2 D2‐120 N N 370‐AFXQ 192GB Appliance DIMM 96GB Per Node 4 $6,828.00 74.00% $1,775.28 $7,101.123 D2‐120 N N 400‐BGGM P1 25X2.5 NVME SED SSD 3.84TB 40 $14,591.00 74.00% $3,793.66 $151,746.404 D2‐120 N N 406‐BBOO 25GBE OPTICAL 4 PORT CARD PAIR 4 $2,286.00 74.00% $594.36 $2,377.44 5 D2‐120 N N 565‐BBJN 10GBASE‐T 4 PORT IO MODULE PAIR 4 $3,240.00 74.00% $842.40 $3,369.60 6 D2‐120 N N 407‐BCGF 10GBE OPTICAL SFP PAIR 8 $412.00 74.00% $107.12 $856.967 D2‐120 N N 450‐AKHM 1450 WATT POWER SUPPLY PAIR 4 $2,104.00 74.00% $547.04 $2,188.16 8 D2‐120 N N 470‐ADUJ 3M OM4 FIBRE CABLE QTY2 16 $816.00 74.00% $212.16 $3,394.569 D2‐120 N N 343‐BBMR BASE UNIT CONFIG KIT 4 $0.00 0.00% $0.00 $0.00 Software
10 D2‐121 N N 210‐ATXO AppSync for PowerStore 4 $0.00 0.00% $0.00 $0.00 11 D2‐121 N N 528‐BYHF AppSync Str Pk for PowerStore=CB 4 $0.00 0.00% $0.00 $0.0012 D2‐121 N N 528‐BTZK PowerStore Base SW 4 $0.00 0.00% $0.00 $0.00 13 D2‐121 N N 379‐BDPD ISG Product (info) 4 $0.00 0.00% $0.00 $0.00 Professional Services
14 D2‐124 N N 847‐9656 ProDeploy Plus for PowerStore 5XX T 4 $5,437.00 15.00% $4,621.45 $18,485.80 15 D2‐124 N N 812‐4019 ProDeploy Plus Training Credits 800 Redeem at education.dellemc.com Expires 1Yr from Order 4 $800.00 15.00% $680.00 $2,720.00 16 D2‐124 N N 839‐7078 Edu Serv‐Dell Tech PowerStore Implementation and Administration Classroom and Vroom 5Da 4 $5,500.00 15.00% $4,675.00 $18,700.00 Warranty/Support
17 D2‐125 N N 828‐5734 ProSupport Plus Mission Critical for AppSync Starter Pack Software Support Maintenance 5 Yea 4 $0.00 0.00% $0.00 $0.00 18 D2‐125 N N 828‐5778 ProSupport Plus Mission Critical for AppSync Starter Pack Software Support Contract 5 Years ‐  4 $0.00 0.00% $0.00 $0.0019 D2‐125 N N 847‐9520 3 Years ProSupport and Mission Critical 4 Hour Onsite Service ‐ 60.00 MNTHS 4 $355.38 65.00% $124.38 $497.52 20 D2‐125 N N 847‐9557 Prosupport Plus and Mission Critical 4‐Hour 7x24 Onsite Service with Emergency Dispatch 1 Ye 4 $989.00 65.00% $346.15 $1,384.60 21 D2‐125 N N 847‐9560 Prosupport Plus and Mission Critical 4‐Hour 7x24 Onsite Service with Emergency Dispatch 4 Ye 4 $4,266.00 65.00% $1,493.10 $5,972.4022 D2‐125 N N 847‐9566 Prosupport Plus and Mission Critical 7x24 Technical Support and Assistance 5 Years ‐ 60.00 MN 4 $9,700.00 65.00% $3,395.00 $13,580.0023 D2‐125 N N 951‐2015 Thank you for choosing Dell ProSupport Plus. For tech support visit //www.dell.com/contactde 4 $0.01 100.00% $0.00 $0.0024 D2‐125 N N 955‐9041 Dell Hardware Limited Warranty Plus On Site Service Extended Year ‐ 60.00 MNTHS 4 $0.00 0.00% $0.00 $0.0025 D2‐125 N N 828‐4829 ProSupport Plus: Mission Critical 4‐Hour 7x24 On‐Site Low Capacity SSD Add‐On 5 Years ‐ 60.00 40 $5,264.63 65.00% $1,842.62 $73,704.80 26 D2‐125 N N 847‐9512 Keep Your Hard Drive for Enterprise 5 Years ‐ 60.00 MNTHS 4 $2,305.56 65.00% $806.95 $3,227.80 27 D2‐125 N N 848‐3664 Keep Your Hard Drive for Enterprise Low Capacity SSD Add‐On 5 Years ‐ 60.00 MNTHS 40 $811.63 65.00% $284.07 $11,362.8028 D2‐125 N N 822‐3179 Partner Success Program Management ‐ 60.00 MNTHS 4 $100.00 65.00% $35.00 $140.00 Sub Total: $334,017.96
Tax: 8.750% $16,121.20
Grand Total: $350,139.16
City of San Luis Obispo 650‐231‐4240
Sales Proposal
5/5/2022
2000 Crow Canyon Place, #250 AHD2022155819 ‐ 5San Ramon, CA  94583 7/5/2022 Bob JamiesonMonica Varela
Bill To [email protected] Palm Street
1‐19‐70‐19D‐23/31/2023
San Luis Obispo CA 93401
5/5/2022http://ftpbox.us.dell.com/slg/weekly/dellpricereport.pdf0% Notes: Payment terms are Net 45 days. F.O.B. Destination Freight Prepaid.  Kovarus utilizes the Commercial Useful Function (CUF) of Castro International Consulting (CIC) for both DVBE as well as Certified California Small Business (Ref#: 1744407). For further information, please contact your Kovarus representative.

For quote refresh/updates, please reach out to: ► Monica Varela | [email protected] |O: 650.231.4240 x1041 | F: 800.556.8035◄ Group: Storage
Category: All Flash Array* ‐ Mid

Department of General Services
Procurement Division
707 Third Street, 2nd Floor
West Sacramento, CA 95605-2811
State of California

STATEWIDE CONTRACT

USER INSTRUCTIONS
All changes to most recent Supplem ent are in bold red italic. Additi ons ar e enclosed in asterisks, *, and deleti ons are enclosed in br ackets, [].

MANDATORY
*Supplement 4
(Incorporates Supplements 1 – 4) *
ISSUE AND EFFECTIVE DATE: 4/26/2021
CONTRACT NUMBER: 1-19-70-19D-2
DESCRIPTION: Enterprise Technology
(Data Center Equipment)
Dell/EMC - OEM
CONTRACTOR: *Ahead, Inc. dba Kovarus, Inc.*
CONTRACT TERM: April 1, 2019 through *March 31, 2023*
STATE CONTRACT ADMINISTRATOR: Sarah Samaan
916-375-4432
[email protected]
The contract user instructions, products, and pricing are included herein. All purchase documents issued under this contract incorporate the contract terms and applicable California General Provisions:

IT General Provisions, rev 09/05/2014
(http://www.documents.dgs.ca.gov/dgs/fmc/gs/pd/pd_401IT.pdf) Cal eProcure link: www.caleprocure.ca.gov

ORDER PLACEMENT INFORMATION
Mailing Address:
*Ahead, Inc. dba Kovarus,
Inc.*
1303 J Street, Suite 410
Sacramento, CA 95814
Fax/Email:

Fax: (800) 783-8997
Email: *KOV[email protected]*
Contact Information:
*Ahead, Inc. dbs Kovarus,
Inc.

Monica Varela
Phone: (650) 231-4240
X1041
Email:
[email protected]*
Contractor Website: http://www.kovarus.com/StateofCA
OEM MSRP: Dell: http://ftpbox.us.dell.com/slg/weekly/dellpricereport.pdf EMC:
https://www.emc.com/slg/monthly/EMCpricereport.pdf

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 2 4/27/2021
User Instructions
All changes to most recent Supplement are in bold red italic. Additions are enclosed in asterisks; deletions are enclosed in brackets.

SUMMARY OF CHANGES
Supplement
Number Description/Articles Supplement
Date
*4* *Subject contract for Enterprise Technology is hereby modified to reflect the following changes:
 Front Page: Extend contract. Contractor name has
been changed. Contact information updated.
 Article 1: Contractor name has been changed.
 Article 2: Update language and Contractor name.
 Article 10: Contact email address updated.
 Article 12: Update language.
 Article 18: Order Placement info updated. Contact
email address changed.
 Article 31: Contractor name updated. Contact email
address changed.
 Article 38: Seller permit information updated
 Attachment 1: Contractor name changed. *
*4/27/2021*
3 Subject contract for Enterprise Technology is hereby modified to reflect the following changes:
 Effective January 31, 2020, the DGS-PD will no longer be approving quotes for Statewide Mandatory Contracts.

Ordering agencies will still be responsible for reviewing their quotes and ensuring that they are purchasing within the scope of the contract.
 Article 2: Update language and contractor name.
 Article 7: Update language.
 Article 8: Update language.
 Article 17: Update Language.
 Article 19: Update language.
 Attachment 2 - Quote Review – Instructions and Sample Quote, Supplement 3: Updated language.
02/13/2020
2 Subject contract for Enterprise Technology is hereby modified to reflect the following changes:
 Front Page: Update Contractor link.
 Article 2: Update language.
 Article 6: Update language.
 Article 7: Update OEM and language.
 Article 17: Update language.
 Article 22: Article # correction.
10/17/2019

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 3 4/27/2021
User Instructions
Supplement
Number Description/Articles Supplement
Date
 Article 32: Article # correction.
 Article 33: Article # correction.
 Article 34: Article # correction.
 Article 47: Update Contractor Link.
 Article 48: Add attachment.
1  Subject contract for Enterprise Technology is hereby modified to reflect the following changes:
 Front page: Add IT GSPD link.
 Front page: Update Contract Administrator.
 Article 2: Add quote timeframes.
 Article 7: Update language.
 Article 8: Update language.
 Article 31: Update Contract Administrator.
05/22/2019
N/A Original Contract Posted 04/01/2019
All other terms and conditions remain the same.

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 4 4/27/2021
User Instructions Page 434 of 682

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 5 4/27/2021
User Instructions

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 6 4/27/2021
User Instructions
SCOPE
The State’s contract with *Ahead, Inc. dba Kovarus, Inc.* (Contractor) provides Dell/EMC - Enterprise Technology at contracted pricing to the State of California and local governmental agencies in accordance with the requirements of Contract # 1-19-70-19D-2.

The Contractor shall supply the entire portfolio of products as identified in the contract and will be the primary point of contact for data collection, reporting, and distribution of Dell/EMC - Enterprise Technology to the State.

The contract term is for three (3) years with an option to extend the contract for two (2) additional one (1) year periods or portion thereof. The terms, conditions, and prices for the contract extension option shall be by mutual agreement between the Contractor and the State. If a mutual agreement cannot be met the contract may be terminated at the end of the current contract term.

CONTRACT USAGE/RULES
A. State Departments
 The use of this contract is mandatoryfor all State of California departments for hardware purchases only. *All other products and* Network Security are not mandatory.
 The use of the Enterprise Technology contracts is mandatory for all State of California departments for hardware purchase only. Network Security is not mandatory.
 All quotes must be in MS Excel format. If a Statement of Work (SOW) is required (any quote with Professional services), it must be created by the ordering agency and added to their procurement file.
 It is the responsibility of the Department to review quotes. Review includes accuracy against the MSRP, correct discounts, correct product, etc. Instructions are provided on Attachment 2, Quote Review – Instructions and Sample Quote.  Departments may choose any OEM silo offered, however, it is highly recommended that the ordering department receive quotes from multiple Contractors within an OEM silo to ensure the best price for the State solution, while still meeting the needs of the department.
 Contract discounts are the minimum discount the Contractor is required to offer.

Contractors may offer a better discount than the contract offers.  Contractors have two (2) business days to respond to a quote request. Contact the State Contract Administrator if a Contractor does not respond to your quote request.

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 7 4/27/2021
User Instructions
 The OEM contract choices are:

B. Arista Networks Cisco
1-19-70-19A Enterprise
Networking
Solutions, Inc.
1-19-70-19B-1 NWN Corporation
1-19-70-19B-2 Presidio
Networked
Solutions Group

Commvault Dell/EMC
1-19-70-19C-1 Presidio
Networked
Solutions Group
1-19-70-19D-1 Technology
Integration Group
1-19-70-19C-2 Impex
Technologies,
Inc.
1-19-70-19D-2 *Ahead, Inc.
dba* Kovarus,
Inc.
1-19-70-19C-3 Insight Public
Sector

Extreme Networks F5
1-19-70-19E-1 EYEP Solutions
(SB)
1-19-70-19F CDWGovernment LLC
1-19-70-19E-2 Enterprise
Networking
Solutions, Inc.

Fortinet HPE
1-19-70-19G-1 SLED IT
Solutions, Inc.
(SB)
1-19-70-19H-1 Entisys360
1-19-70-19G-2 EYEP Solutions
(SB)
1-19-70-19H-2 NWN Corporation
1-19-70-19G-3 Golden Star
Technology
1-19-70-19H-3 CDWGovernment LLC

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 8 4/27/2021
User Instructions
IBM Juniper
1-19-70-19I Direct Support
Systems
1-19-70-19J-1 Castro
International
Consulting
(SB/DVBE)
1-19-70-19J-2 Dynamic Systems
1-19-70-19J-3 InterVision
Systems
Lenovo Luminex
1-19-70-19K Enterprise
Networking
Solutions, Inc.
1-19-70-19L Entisys 360
NetApp Nutanix
1-19-70-19M Enterprise
Networking
Solutions, Inc.
1-19-70-19N-1 Roundstone
Solutions (SB)
1-19-70-19N-2 Presidio
Networked
Solutions Group
1-19-70-19N-3 Insight Public
Sector
Oracle Palo Alto Networks
1-19-70-19O Dynamic
Systems
1-19-70-19P Enterprise
Networking
Solutions, Inc.

Pure Storage Rubrik
1-19-70-19Q-1 HSB Solutions,
Inc.
1-19-70-19R Enterprise
Networking
Solutions, Inc.
1-19-70-19Q-2 NTT America,
Inc. [Solutions,
Inc.]

1-19-70-19Q-3 Teranomic
StorageCraft
1-19-70-19S Entisys 360

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 9 4/27/2021
User Instructions
 All contracts listed in the table above can be viewed at The State Leveragd Procurement Agreement search page
(https://www.caleprocure.ca.gov/pages/LPASearch/lpa-search.aspx)  State departments must adhere to all applicable State laws, regulations, policies, best practices, and purchasing authority requirements, e.g., California Codes, Code of Regulations, State Administrative Manual, Management Memos, and State Contracting Manual Volume 3, as applicable.
 Prior to placing orders against this contract, State departments must have been granted IT purchasing authority by the Department of General Services, Procurement Division (DGS-PD) for the use of this statewide contract. State departments that have not been granted purchasing authority by DGS-PD for the use of the State’s statewide contracts may contact DGS-PD’s Purchasing Authority Management Section by e-mail at [email protected].
 State departments must have a Department of General Services (DGS) agency billing code prior to placing orders against this contract. Ordering departments may contact their Purchasing Authority contact or their department’s fiscal office to obtain this information.

B. Local Governmental Agencies
 Local governmental agency use of this contract is optional.  Local government agencies are defined in Public Contract Code Chapter 2, Section 10298 (a) (b) and 10299 (b); this includes the California State Universities (CSU) and University of California (UC) systems, K-12 schools and community colleges empowered to expend public funds for the acquisition of products While the State makes this contract available to local governmental agencies, each local governmental agency should determine whether this contract is consistent with its procurement policies and regulations.
 Local governmental agencies shall have the same rights and privileges as State departments under the terms of this contract. Any local governmental agencies desiring to participate shall be required to adhere to the same responsibilities as do State departments and have no authority to amend, modify or change any condition of the contract.
 A DGS issued billing code is not required for local governmental agencies to place orders against this contract.

C. Unless otherwise specified within this document, the term “ordering agencies” will refer to all State departments and/or local governmental agencies eligible to utilize this contract. Ordering and/or usage instructions exclusive to State departments or local governmental agencies shall be identified within each article.

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 10 4/27/2021
User Instructions

DGS ADMINISTRATIVE FEES
A. State Departments
The DGS will bill each State department an administrative fee for use of this statewide contract. The administrative fee should NOT be included in the order total, nor remitted before an invoice is received from DGS.

Current fees are available online in the Price Book & Directory of Services (https://www.dgs.ca.gov/OFS/Price-Book) (go to Price Book Download and click on Purchasing under Procurement Division).

B. Local Governmental Agencies
For all local government agency transactions issued against the contract, the Contractor is required to remit the DGS-PD an Incentive Fee of an amount equal to

1.25 percent of the total purchase order amount excluding taxes and freight. This Incentive Fee shall not be included in the local governmental agency’s purchase price, nor invoiced or charged to the local governmental agency. All prices quoted to local governmental agencies shall reflect State contract pricing, including any and all applicable discounts, and shall include no other add-on fees.

SB/DVBE OFF-RAMP PROVISION
There is no SB/DVBE off ramp associated with this contract.

EXEMPT PURCHASES
The purchase of any Enterprise Technology other than that included in the contracted OEM’s catalogs requires an approved exemption from the State Contract Administrator.

Please refer to Justification for Purchase Outside a Statewide Contract https://www.dgs.ca.gov/-/media/Divisions/PD/Acquisitions/Statewide-Contracts/CMU-12- 01-
JustificationForm.pdf?la=en&hash=C8701858497AAC3669A707153277C70BD200E737 for information and the required justification forms regarding the exemption process.

These special exemption purchases must be documented within the individual procurement file and will be acquired under the department-approved IT purchasing authority guidelines stated in the SCM Volume 3.

PROBLEM RESOLUTION/SUPPLIER PERFORMANCE
Ordering agencies and/or Contractor shall inform the State Contract Administrator of any technical or contractual difficulties encountered during contract performance in a timely manner. This includes and is not limited to informal disputes, supplier performance, outstanding deliveries, etc. The ordering agency should include all relevant information and/or documentation (e.g., purchase documents).

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 11 4/27/2021
User Instructions

CONTRACT ITEMS
This contract includes a complete catalog of all Dell/EMC Enterprise Technology.

Enterprise Technology includes equipment in a Data Center and equipment that can interface with a Data Center (e.g., servers, storage, converged & hyper-converged systems, on-campus networking, fabric). Hardware is the main focus for this contract.

Software, accessories, and services will be ancillary and support the hardware. Installation and professional services cannot be purchased as a stand-alone from this contract unless being purchased for the purpose of warranty/support services.

This contract does not include the following items:
1) Cloud Services including acquisitions structured as managed on-site services 2) Storage as a Service, an architecture model by which a provider allows a customer to rent or lease storage space on the provider's hardware infrastructure on a subscription basis.
3) Telecommunications hardware and services
4) PC Goods
5) Wireless phone and internet service
6) Managed Print Services
7) Printers, Tablets, Cellular Phone Equipment
8) Off-campus networking
9) Public Works
This contract is percentage-off the OEM List Price (MSRP). The URL to the OEM List Price (MSRP) is listed on the cover of these User Instructions. Discounts for each type of technology can be found on Attachment 1, Contract Discounts.

Ordering agencies can purchase anything for a data center that is not included within the non-contract items listed above (items 1 through 9) but all items must be in the MSRP to be approved. Actual prices not in the MSRP must be justifiable with either attachments or additional tabs explaining the baseline price. All calculations must be shown.

INSTALLATION, PROFESSIONAL SERVICES, WARRANTY/SUPPORT,

SUBSCRIPTIONS/LICENSES, AND PRE-WORK CONSULTATION
These items are available on this contract with the purchase of hardware unless otherwise stated below:
 Any Professional Services/Pre-Work Consultation must have a SOW accompany the quote. Training is considered a Professional Service; however, if the quote has only training for the professional services sub-category, then a SOW is not required.  Subscriptions/licenses are available for purchase. Discounts shall be the same as the hardware/software discount that the subscription/license is being purchased for.  Warranty/Support, Subscriptions, and Licenses can be purchased as a stand-alone.

All other services must support a hardware purchase (cannot be purchased as a standalone) unless being purchased for the purpose of warranty/support services.

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 12 4/27/2021
User Instructions
 Warranty/support, subscriptions and/or licenses shall be executed prior to their start date.

SPECIFICATIONS
There are no specifications for this contract.

CUSTOMER SERVICE
The Contractor will have a customer service unit that is dedicated to this contract. The customer service unit provides office and personnel resources for responding to inquiries, including telephone and email coverage weekdays during the hours of 8:00 a.m. - 5:00 p.m., PT.

The customer service unit shall be staffed with individuals that:
 Are trained in the requirements of this contract
 Have the authority to take administrative action to correct problems that may occur  Are designated for training and general customer service follow-up Contact Phone Email
Monica Varela
Work: (650) 231-
4240 x 1041
Mobile: (714) 791-
1775 *[email protected] *

ELECTRONIC CATALOG/CONTRACT WEBSITE CONTENTS
A contract website specific to this Statewide Contract for Dell/EMC Enterprise Technology is available and contains the following data elements at a miniumum:

 Contract-specific discounts
 Warranty Information
 SB/DVBE participation information
 Quote generation/instructions on how to receive a quote  Contractor’s customer service contact information
 Publically-available OEM price list URL’s (current and archives) The URL is listed on the front cover of this User Instructions.

OFFER FORMAT
The Contractor shall provide an offer to ordering agencies in an MS Excel spreadsheet format. [Purchases from this contract may not take place without the written authorization of the State’s Contract Administrator.]

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 13 4/27/2021
User Instructions
The authorization process requires submission of the Contractor’s offer format spreadsheet which must include the following data elements:
 Contractor letterhead
 Offer/Quote “prepared by” name and contact information  Offer/Quote number
 Date of Offer/Quote
 Expiration of Offer/Quote (no less than sixty (60) calendar days)  Ordering agency name
 Ordering agency contact person
 Contract number
 Contract expiration date
 Link to OEM Price List (MSRP)
 Group/Category Sub-headers
 Segment ID
 Service Proprietary/Not Proprietary
 Quantity
 Description of Item
 Manufacturer’s Part Number/SKU
 OEM Price List (MSRP)/Index Price
 Contract Discount and Unit Price
 Extended Price (Quantity x Contract Price)
 Energy Star® certification (if applicable)

PRODUCT SUBSTITUTIONS/DISCONTINUED ITEMS
Product substitution shall be in accordance with of the General Provisions, Section 15, “Substitutions”. Under no circumstance is the Contractor permitted to make substitutions with non-contract items or unauthorized products without approval from the State Contract Administrator and/or the ordering agency.

PROMOTIONAL PRICING
During special pricing promotions, the Contractor shall offer ordering agencies purchasers the promotional pricing or the discount percentage off list, whichever is lower.

The Contractor shall notify the State Contract Administrator of all promotional pricing changes. Notification shall include at a minimum:
 Promotion start/end dates
 Models, products, and services included in the promotion  Promotional pricing
Promotional pricing shall not be cause for a permanent change in pricing. Promotional pricing shall not be cause for Contractor refresh.

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 14 4/27/2021
User Instructions
Promotional items shall come with all benefits of the statewide contract terms and conditions and shall include all provisions such as warranty and delivery.

STATE AGENCY INFORMATION TECHNOLOGY CERTFICATION REQUIREMENT This requirement does not apply to local government agencies.

For State departments, a signed certification of compliance with state information technology (IT) policies is required for all IT acquisitions of hardware, software, and services that cost $5,000 or more. The policy and required format is provided in SAM Section 4819.41.

PURCHASE EXECUTION
A. State Departments
1) Std. 65 Purchase Documents
State departments not transacting in FI$CAL must use the Purchasing Authority Purchase Order (Std. 65) for purchase execution. An electronic version of the Std. 65 is available at the Office of State Publishing web site (https://www.dgsapps.dgs.ca.gov/osp/StatewideFormsWeb/Forms.aspx) (select STD Forms).

All Purchasing Authority Purchase Orders (Std. 65) must contain the following:
 Agency Order Number (Purchase Order Number)
 Ordering Agency Name
 Agency Billing Code
 Purchasing Authority Number
 Leveraged Procurement Number (Contract Number)
 Supplier Information (Contact Name, Address, Phone Number, Fax Number, E-mail)
 Contract Line-Item number
 Quantity
 Unit of Measure
 Commodity Code Number
 Product Description
 Unit Price
 Extension Price
2) FI$CAL Purchase Documents
State departments transacting in FI$CAL will follow the FI$CAL procurement and contracting procedures.
3) Blanket Orders
The use of blanket purchase orders against this statewide contract is not allowed.

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 15 4/27/2021
User Instructions
B. Local Governmental Agencies
Local governmental agencies may use their own purchase document for purchase execution. The purchase documents must include the same data elements as listed above (Exception: Purchasing Authority Number and Billing Code which are used by State departments only).

MINIMUM ORDER
There is no minimum order for hardware or accessories for the resulting contract.

Services (professional services, installation, training, pre-work consultation) shall not be stand-alone purchases from this contract unless being purchased for the purpose of warranty/support services.

ORDERING PROCEDURE
Ordering agencies are to submit appropriate purchase documents directly to the Contractor via one of the following ordering methods:
 U.S. Mail
 Facsimile
 Email
The Contractor’s Order Placement Information is as follows:

ORDER PLACEMENT INFORMATION
U.S. Mail:
*Ahead, Inc. dba
Kovarus, Inc.*
1303 J street, Suite 410,
Sacramento, CA 95814
Facsimile:
(800) 783-8997
Email:
*KOV[email protected]
*
When using any of the ordering methods specified above, all State departments must conform to proper State procedures.

ORDER ACCEPTANCE
The Contractor shall accept orders from any ordering agency. The Contractor shall not accept purchase documents for this contract that:
 Are incomplete
 Contain non-contract items
 Contain non-contract terms and conditions
The Contractor must not refuse to accept orders from any ordering agency for any other reason without written authorization from the State Contract Administrator.

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 16 4/27/2021
User Instructions

ORDER RECEIPT CONFIRMATION
The Contractor will provide ordering agencies with an email or facsimile order receipt confirmation within forty-eight (48) hours of receipt of purchase document. The Order Receipt Confirmation shall include the following information:
 Ordering Agency Name
 Agency Order Number (Purchase Order Number)
 Contractor’s Order Number
 Description of Goods
 Total Cost
 Anticipated Delivery Date
 Identification of any Out of Stock/Discontinued Items

OUT OF STOCK REMEDY
Upon receipt of an order acknowledgment identifying out of stock items, the ordering agencies shall have the following options:
 Request a back order
 Cancel the item from the order with no penalty
The Contractor will provide notification to the ordering agencies regarding out-of-stock items which have been back ordered.

Under no circumstance is the Contractor permitted to make substitutions with non-contract items or unauthorized products.

DISCONTINUED ITEM REMEDY
Upon receipt of an order acknowledgment identifying discontinued items, the ordering agencies shall have the following options:
 Amend purchase document to reflect State-approved substitute item (Article 13, Product Substitutions/Discontinued Items)
 Cancel the item from the order
Under no circumstance is the Contractor permitted to make substitutions with non-contract items or unauthorized products without approval from the State Contract Administrator.

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 17 4/27/2021
User Instructions

DELIVERY SCHEDULES
Delivery for orders placed against this contract shall be in accordance with the following:

A. Locations
Deliveries are to be made (statewide) to the location specified on the individual purchase order, which may include, but not limited to inside buildings, high-rise office buildings, and receiving docks.

B. Schedule
Delivery of ordered product shall be completed in full within thirty (30) calendar days after receipt of an order (ARO) unless otherwise agreed to in writing by the ordering agency. Since receiving hours for each ordering agency will vary by facility, it will be the Contractor’s responsibility to check with each customer to inquire regarding their specific delivery hours and drop locations before the delivery occurs.

The Contractor must notify the ordering agency within twelve (12) hours of scheduled delivery time (as soon as the Contractor has been made aware; no longer than four (4) hours before delivery) if delivery cannot be made within the time frame specified on the order.

Contractor is requested to make deliveries in Los Angeles County, Orange County, San Bernardino Metropolitan Area, and San Diego Metropolitan Area during off-peak hours. Off-peak hours are Monday through Friday, 10:00 AM to 4:00 PM.

C. Security Requirements
Deliveries may be made to locations inside secure institutional grounds (such as the California State Prisons) that require prior clearances to be made for delivery drivers.

Since security clearance procedures for each facility may vary, it will be the Contractor’s responsibility for contacting the secure location for security clearance procedures, hours of operation for deliveries and service, dress code, and other rules of delivery.

EMERGENCY/EXPEDITED ORDERS
Emergency/Expedited orders do not apply to this contract.

FREE ON BOARD (F.O.B.) DESTINATION
All prices are F.O.B. destination; freight prepaid by the Contractor, to the ordering agency’s receiving point. Responsibility and liability for loss or damage for all orders will remain with the Contractor until final inspection and acceptance, when all responsibility will pass to the ordering agency, except the responsibility for latent defects, fraud, and the warranty obligations.

Special Delivery charges may occur. These charges must be described in detail by the Contractor (either in the purchase order or in the SOW) and MUST BE pre-approved by the State Contract Administrator.

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 18 4/27/2021
User Instructions

PALLETS
Unless otherwise specified on the ordering agency’s purchase order document, standard commercially available pallet sizes should be used. All pallets shall be of sturdy construction and adequate condition to assure delivery of the goods without damage to the goods or safety hazards.

Exchange pallets may be available; however, the State assumes no responsibility for the availability to exchange pallets. Delivery drivers shall not remove more pallets from the location than delivering at time of delivery.

SHIPPED ORDERS
All shipments shall be in accordance with the General Provisions, Section 12, “Packing and Shipment”.

PACKING SLIP
Packing slip requirements shall be in accordance with the General Provisions, Section 12, “Packing and Shipment”.

Any back-ordered or out of stock items shall be identified on the packing slip as well as the availability date of unfilled and partial shipment.

PACKING LABEL
A packing label will also be included with each order shipped and include the following items, visible on the outside of the box:
 Ordering agency name
 Delivery address, unit, and/or floor
 Department and floor
 Ordering agency contact name
 Ordering agency telephone number

INSPECTION AND ACCEPTANCE
Inspection and acceptance shall be in accordance with the General Provisions, Section 16, Inspection, Acceptance and Rejection.

CONTRACT ADMINISTRATION
Both the State and the Contractor have assigned contract administrators as the single points of contact for problem resolution and related contract issues.

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 19 4/27/2021
User Instructions
Administrator
Information DGS-PD *Ahead, Inc. dba Kovarus, Inc. *
Contact
Name:

Sarah Samaan Scott Wiele, Director, Public
Sector
Telephone: (916) 375-4432 (916) 262-7450
Facsimile: (916) 375-4613 N/A
Email: [email protected] *KOV[email protected] *
Address: DGS/Procurement Division
Attn: Sarah Samaan
707 Third Street, 2nd Floor, MS
201
West Sacramento, CA 95605
Ahead, Inc. dba Kovarus, Inc.

Attn: Scott Wiele
1303 J Street, Suite 410
Sacramento, CA 95814

RETURN POLICY
Contractor will accept all products for return if returned prior to acceptance by the State in accordance with Article 30, Inspection and Acceptance. Contractor shall offer a credit or refund in accordance with Article 33, Credit Policy. Contractor may impose a Restocking Fee per Article 34, Restocking Fees.

Note: Products returned should be in the packaging as delivered and include all documentation. Lost or damaged packaging materials and/or documentation shall be supplied by the Contractor. The Contractor shall not charge for these materials in excess of the Contractor’s cost or the 15 percent Restocking Fee, whichever is lower. The Contractor shall provide the State Contract Administrator and/or ordering department a copy of the Contractor’s material cost, if requested, within ten (10) days of request.

All returns shall be picked up within seven (7) working days of notification. Notification is defined as notice in writing, by facsimile or e-mail. Shipping or freight costs for returned items that were shipped in error, defective or freight-damaged shall be paid by the Contractor.

Exceptions to the Return Policy’s date of acceptance can be negotiated for an individual SOW with the approval of the Department, Contractor, and the State Contract Administrator.

CREDIT POLICY
The Contractor shall offer a credit/refund for the following items:
 Items shipped in error
 Items that are returned within thirty (30) calendar days of delivery  Defective or freight-damaged items

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 20 4/27/2021
User Instructions
All other items returned in accordance with Article 32, Return Policy, shall receive credit or refund, less any applicable restocking fees in accordance with Article 34, Restocking Fees.

In all cases, the ordering agency shall have the option of taking an exchange, receiving a credit, or receiving a refund.

The Contractor will be responsible for the credit/refund or replacement of all products, including those covered by manufacturer warranties as stated in accordance with Article 39, Warranty. Contractor cannot require the ordering agency to deal directly with the manufacturer.

RESTOCKING FEES
The Contractor will not impose a restocking fee on the ordering agency for the following situations:
 Items returned that were damaged upon receipt
 Incorrect items shipped
 Items that are returned within thirty (30) calendar days of delivery  Items that are returned, but exchanged for other items within thirty (30) calendar days Re-stocking fees for all other reasons shall be 10 percent of the value of the items to be re-stocked.

The packaging and documentation provisions in accordance with Article 32, Return Policy, shall apply to re-stocked items.

The Contractor will not be required to accept returns more than sixty (60) days after delivery. The ordering agency will be responsible for return transportation costs to the Contractor if so, accepted after sixty (60) days after delivery.

INVOICING
Ordering agencies may require separate invoicing, as specified by each ordering agency.

Invoices will contain the following information:
 Contractor’s name, address, and telephone number
 Leveraged Procurement Agreement Number (Contract Number)  Agency order number (purchase order number)
 Item and commodity code number
 Quantity purchased
 Contract price and extension
 State sales and/or use tax
 Prompt payment discounts/cash discounts, if applicable  Totals for each order

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 21 4/27/2021
User Instructions

PAYMENT
A. Terms
Payment terms for this contract are net forty-five (45) days. Payment will be made in accordance with the provisions of the California Prompt Payment Act, Government Code Section 927, et seq. Unless expressly exempted by statute, the Act requires State departments to pay properly submitted, undisputed invoices not more than fortyfive (45) days after the date of acceptance of goods, performance of services, or receipt of an undisputed invoice, whichever is later.

B. CAL-Card Use
State departments may use the CAL-Card for the payment of invoices. Use of the CAL-Card requires the execution of a Purchasing Authority Purchase Order (Std. 65) in accordance with Article 16, Purchase Execution and must include all required documentation applicable to the purchase.

The CAL-Card is a payment mechanism, not a procurement approach and, therefore, does not relieve State departments from adhering to all procurement laws, regulations, policies, procedures, and best practices, including those discussed in the State Contracting Manual (SCM) Volume 3. This includes but is not limited to the application of all sales and use tax laws, rules, and policies as applicable to the purchase.

C. State Financial Marketplace
State departments reserve the right to select the form of payment for all procurements, be it either an outright purchase with payment rendered directly by the State, or a financing/lease-purchase or operating lease via the State Financial Marketplace (GS $Mart and/or Lease $Mart). If payment is via the financial marketplace, the Contractor will invoice the State department and the State department will approve the invoice and the selected Lender/Lessor for all product listed on the State's procurement document will pay the Contractor on behalf of the State.

D. Payee Data Record
Each State department’s accounting office must have a copy of the Contractor’s Payee Data Record (Std. 204) in order to process payments. State departments should forward a copy of the Std. 204 to their accounting offices. Without the Std. 204, payment may be unnecessarily delayed. State departments should contact the Contractor for copies of the Payee Data Record.

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 22 4/27/2021
User Instructions

CAL-CARD INVOICING
All CAL-Card invoices are to be processed separately from other payment methods and include the elements identified in Article 35, Invoicing. CAL-Card invoices shall be submitted to the CAL-Card account holder. The total invoice amount for each CAL-Card order must reflect a zero (0) balance due or credit, if applicable, and state “paid by CALCard”.

This website contains additional information regarding DGS-PD’s CAL-Card program (https://www.dgs.ca.gov/PD/Services/Page-Content/Procurement-Division-Services-ListFolder/Enroll-in-CAL-Card-Program-for-Government-Entities).

CALIFORNIA SELLER’S PERMIT
The California seller permit number for the Contractor is listed below. Ordering Agencies can verify that permits are currently valid at The California Tax and Fee Administration (CDTFA) webpage (www.cdtfa.ca.gov). State departments must adhere to the file documentation identified in the State Contracting Manual, Volume 3.

Contractor Name Seller Permit #
*Ahead, Inc.* *235270272*

WARRANTY
The Contractor must honor all standard manufacturers’ warranties and guarantees from the date of acceptance on all products offered as part of this contract (excluding 3rd party software). The Contractor shall bear all material and labor costs and freight for repair of equipment defects and failure.

During the manufacturers’ warranty period, the Contractor must:
 Honor all manufacturers’ warranties and guarantees on all products offered through the contract.
 Continue to provide warranty service after contract termination until expiration of warranties for products that have been sold under the contract.  Provide all labor, parts, and travel necessary to keep the products in good operating condition and preserve its operating efficiency in accordance with its technical specifications.
 Pay any necessary shipment and insurance costs.

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 23 4/27/2021
User Instructions
The warranty services listed shall include all products, software and firmware maintenance costs and costs of labor, parts, travel, factory overhaul, rehabilitation, shipping, transportation, and substitute products (if offered) as necessary. If it is necessary to remove any products from an Ordering Agency’s location where on-site warranty is specified, the Contractor will provide substitute products (if offered) at the time of removal.

Substitute products (if offered) will be comparable to or better than the products removed.

In instances where it is necessary for the Contractor to return the products to the factory, the Contractor will be responsible for all costs of the products from the time it leaves the Ordering Agency’s site until it is returned to the site in good operating condition.

Only new standard parts or parts equal in performance to new parts will be used in effecting repairs. Parts that have been replaced will become the property of the Contractor except in instances where the State chooses to keep the hard drives. Replacement parts installed will become the property of the Ordering Agency.

All operating system software and firmware will be considered an integral component of the equipment and the Contractor will respond to all requests for warranty service for any failure.

Warranty services during the warranty period will not include electrical work external to the products, the furnishing of supplies, or adding or removing accessories, attachments, or other devices not provided under this contract. Warranty services also will not include repair of damage resulting from transportation by the Ordering Agency’s between State and/or local sites or from accident unless the accident is caused by negligent or intentional acts or omissions of Contractor or its agents.

In the event of system failure or damage caused by the Contractor or its product, the Contractor agrees to use its commercially reasonable efforts to assist in restoring the system to operational capacity provided that the Contractor’s products are under warranty or a continuous maintenance agreement.

Additional warranties and support will be offered for purchase from the OEM’s catalog.

The warranty/support agreements shall include warranty/support service after contract expiration until the expiration of the warranty/support agreement.

Software/Firmware: At no additional cost, the Contractor must provide the State with software/firmware updates for the length of the support agreement purchased.

QUALITY ASSURANCE GUARANTEES
The Contractor shall represent and warrant that Enterprise Technology products provided shall be free from defects in material and workmanship, given normal use and care, over the period of the manufacturer warranty. The terms of this contract will supersede any language to the contrary on purchase orders, invoices, or other sources. Contractors must use new products, parts, and components for all new equipment purchased by the State.

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 24 4/27/2021
User Instructions
Contractors may use parts that are equal in performance to new parts for warranty replacement repair parts only as long as it does not violate manufacturers’ warranty.

EQUIPMENT REPLACEMENT DURING WARRANTY
If the product provided fails to perform in accordance with technical specifications and functional descriptions contained or referenced in the contract agreement and is subject to warranty response three (3) or more times during any ninety (90) day period, the Contractor will upon the ordering agency’s request, replace the product at no price. The replacement product(s) will be delivered no later than fifteen (15) working days after the ordering agency’s request is received by the Contractor. Replacement goods cannot be used, refurbished, or recycled, and must be of equal or greater value.

PRINCIPAL PERIOD OF MAINTENANCE
The Contractor must provide warranty in accordance with the following Principal Period of Maintenance (PPM) times after notification from an ordering agency of a problem with any of the goods included in this contract.
 Metropolitan Areas shall be 8x5x8 NBD onsite – Eight (8) hours, typically 8:00 am to 5:00 pm, Pacific Time, five (5) days a week, Monday through Friday, eight (8) hour Next Business Day onsite response time in metropolitan areas, excluding State holidays.
 Non-Metropolitan Areas shall be 8x5x2 (two (2) hour call back response time, excluding State holidays.) Remediation shall be underway within forty-eight (48) hours.

Metropolitan Areas
Counties
 San Diego
 Orange
 Riverside
 Los Angeles
 San Francisco
 Alameda
 Sacramento
 Santa Clara
 San Bernardino
 Yolo
 Solano
 Contra Costa
 San Mateo
Cities
 Redding
 Stockton
 Bakersfield
 Ventura
 Tracy
 San Quentin
 Santa Rosa
 Santa Barbara
 Frontera
 Fresno

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 25 4/27/2021
User Instructions

RECYCLED CONTENT
State departments are required to report purchases in many product categories. While this contract does not contain any reportable products at this time, Departments may request the Contractor to validate that their purchase does not contain any recycled content.

SB/DVBE PARTICIPATION
The Small Business (SB) and Disabled Veteran Business Enterprise (DVBE) certifications and percentages for the Contractor and subcontractor(s) are listed below. State departments can verify that the certifications are currently valid at The State of California Certifications webpage (https://caleprocure.ca.gov/pages/PublicSearch/suppliersearch.aspx).

Name
Prime or
Subcontract
or
OSDS
Certification
#
SB
Percent
(%)
DVBE
Percent
(%)
Castro International
Consulting, Inc.

Subcontract
or
1744407
Determined per order –
read below
State departments must identify subcontractors on individual purchase documents whenever subcontractors have been identified.

Individual orders may have no applicable participation or may have participation greater than that of the total contract commitment. Ordering agencies must verify the participation amount with the Contractor. The exact participation percentage levels for each purchase order will be determined on an order-by-order basis in cooperation with the Contractor prior to submittal of a Purchasing Authority Purchase Order (STD 65).

Any irregularities or concerns regarding prime or SB/DVBE subcontractor responsibilities are to be immediately documented and reported to the State Contract Administrator for further investigation. Information provided to the State Contract Administrator includes, but is not limited to:
 Copy of executed purchase document
 Value-added service description
 Work performance issue or concern
 Department contact name, email, and phone number
Departments should keep track of their SB/DVBE participation levels on orders. However, departments may request a monthly report from the Contractor which will provide the SB/DVBE participation levels on purchase orders.

STATE OF CALIFORNIA

DEPARTMENT OF GENERAL SERVICES

PROCUREMENT DIVISION
Contract (Mandatory) 1-19-70-19D-2 - Supplement 4
Contract User Instructions
Contract 1-19-70-19D-2 Page 26 4/27/2021
User Instructions

BIDDER DECLARATION/COMMERCIALLY USEFUL FUNCTION (CUF)
The DGS-PD, as the awarding department, has assessed the Contractor and subcontractor certifications and CUF during the solicitation evaluation process.

Consequently, when executing purchase documents pursuant to this contract, it is not necessary for State departments operating under statewide contract purchasing authority to request the completion of a Bidder Declaration document or perform additional CUF analysis. The State department should make a notation of this within their procurement file.

Exception: It is the responsibility of ordering departments to confirm CUF when valueadded services are acquired by an ordering department and performed by certified SB/DVBE subcontractors consistent with commitments identified in the table above.

TRADE-IN
Before any Trade-In can occur, ordering agencies must obtain approval for discarding their IT equipment from the DGS Surplus Property and Reutilization Program. In accordance with the State Administrative Manual (SAM), Chapter 5900, Information TechnologyDisposal of IT Equipment, each agency must explore the reutilization of surplus IT equipment prior to requesting approval for recycling or attempting to use the equipment as a credit toward the purchase of new equipment.

This contract offers a Trade-In service for similar equipment, including other OEM equipment. This Trade-In service is for non-working equipment. It is not mandatory that the ordering agency use the Trade-In service offered. The equipment returned as part of the Trade-In service shall be environmentally responsibly managed. To the greatest extent feasible, the equipment is to be refurbished for resale or recycled.

ELECTRONIC WASTE RECYCLING
The Contractor will comply with the Electronic Waste Recycling Act of 2003 requiring retailers to collect a recycling fee from consumers on covered electronic devices, starting January 1, 2005. California Public Resources Code Section 42463(f) defines a "covered electronic device" as a video display device containing a screen greater than four inches measured diagonally. The fees must be shown on all purchase orders. See the code identified above for more information and exceptions to this definition or go to CDTFA Tax Rates - Special Taxes and Fees (https://www.cdtfa.ca.gov/taxes-and-fees/tax-ratesstfd.htm) for a breakdown of the fees.

ATTACHMENTS
Attachment 1 – Contract Discounts, Rev. 4/27/2021
Attachment 2 - Quote Review – Instructions and Sample Quote, Supplement 3

City of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: June 7, 2022
TO: Mayor and Council
FROM: Natalie Harnett, Principal Budget Analyst
Matt Horn, Director of Public Works
VIA: Derek Johnson, City Manager
SUBJECT: Staff Agenda Correspondence Item 6a – 2022-23 SUPPLEMENTAL BUDGET
The purpose of this agenda correspondence is to answer questions that staff received and correct a clerical error in one of the tables included in Attachment A – 2022-23 Supplemental Budget.

Response to Non- Parking Related Question:

1. Why is Climate Action Major City Goal Task 4.3f labeled as “Removed”? (Packet Pg. 612; Budget Document Pg 135, line 253)
“Update the existing Cerro San Luis Natural Reserve Conservation Plan (2005), including a contemporary natural resources inventory, mapping, policy review, and identification of land stewardship needs and priorities” Staff response: Staff originally planned to update the Conservation Plan to address any potential inconsistencies between the Council's Winter Evening Hours of Use program (i.e., night hiking) but upon further review, the existing Conservation Plan does not address hours of use or other day-to-day operational matters.

Correction to Attachment A – 2022-23 Supplemental Budget The table on Budget Document Page 72 has an error. As outlined on Budget Document pages 69 and 85, staff recommend deferring the budget for Project# 90742 – Storm Drain Replacement – Woodbridge Runoff ($175,000). The table in the Local Revenue Measure section shows the $175,000 being removed from the wrong project. The final budget document published on the City’s website will be updated to reflect the changes.

Existing “Local Revenue Measure Table – Lines 32 & 33” (Budget Document Pg. 72):

Staff Correspondence – FY2022-23 Supplemental Budget Page 2 Corrected “Local Revenue Measure Table – Lines 32 & 33” (Budget Document Pg. 72):

CORRECTION to Memo on Item 6a
Staff noted the second table on Page 3 of the Friday, June 3, 2022 Memo on Item 6a should be corrected to more accurately reflect changes from the 2021-23 Financial Plan then proposed rates to the currently proposed rates. Below this table better illustrates the proposed changes to the projected change.

Parking
Rate
2021-23
Financial
Plan then
Proposed
Rates to be
Effective
July 1, 2023
Currently
Proposed
Rates to be
effective
Jan. 2, 2023
Currently
Proposed
Rates to be
effective
July 1, 2023
2021-23
Financial
Plan then
Proposed
Rates to
be
Effective
July 1,
2025
Currently
Proposed
2022-23
Rates to be
effective
July 1, 2025
On-Street and Lots
Tier 1 $2.50 $2.00 $4.00 $3.00 $5.00
Tier 2 $2.50 $2.00 $4.00 $3.00 $5.00
Tier 3 $1.50 $1.50 $3.00 $2.00 $3.00
Parking Structures
Hourly/
Daily Max
$1.75/$7.00 $1.50/$6.00 $3.00/$12.00 $2.00/$8.00 $3.00/$12.00 Response to further Parking Fund Questions.

1. I am concerned about the parking fund’s financial situation. On page 48 the statement is made that “Without these rate increases, the parking Fund will not be able to build the new Cultural Arts District Parking Structure.” Is this literally true? Are there no options to rubber stamping all of these rate increases? To be more precise, the statement should have read, without additional revenues, the Parking Fund will be unable to meet the debt ratio requirements, maintenance of existing and new assets (all four structures and their infrastructure), and operational expenditures at the required levels to finance the new structure. Without a healthy fund with revenues in excess of expenditures (to meet future maintenance needs) the City will not be able to debt finance the structure. One other issue to note, the General Plan requires the Parking Fund to be self-sufficient and not a drain on the General Fund See General Plan Policy 13.1.2. Furthermore, the Council’s adopted Fiscal Policies, page 544 of the 2021-23 Financial Plan, Section A states:

Staff Correspondence – FY2022-23 Supplemental Budget Page 3 Water, Sewer, and Parking. The City will set fees and rates at levels which fully cover the total direct and indirect costs – including operations, capital outlay, and debt service of the following enterprise programs:
water, sewer, and parking.

2. What impact does slowing down the construction timeline for the Cultural Arts District Parking Structure have?
It will most likely increase costs, negatively impact the SLO Rep project, and the nine unit housing complex commonly referred to as the liner building. All projects will be delayed, and costs will increase for all projects.

3. What is the dollar amount that would be gained by eliminating the free first hour?
Council’s approval of the elimination of the free hour of parking with the adoption of the 2021-23 Financial Plan results in approximately $700,000 in added revenues in 2022-23 and $1.45 million ongoing when the parking rates are increased in 2023-24.

4. How much revenues would be gained by charging for parking on Sunday mornings?
Expanding paid parking options on Sundays which currently begin at 1:00 pm to start charging at 9:00 am would currently generate $31,000 annually. This would increase to $62,000 in 2023 if the proposed rate structure is adopted.

5. What aspects of the parking structure construction could be funded by nonparking fund resources? As noted above the City’s General Plan polices provide that the Parking Fund should be self-sufficient. The City could monetize the liner building, the affordable housing site, and recover proceeds to offset debt, but at this time it is unknown what the number would be, and the margins are anticipated to be small.

6. Could the General Fund assume the debt for the new structure as it did for 919 Palm? (p 56).

The General Fund only pays for the non-parking fund portion of the 919 Palm debt, which associated with the Community Development and Public Works departments office space. The rest is paid for by the Parking Fund.

Staff Correspondence – FY2022-23 Supplemental Budget Page 4

7. Could CIP capital reserves (such as from the deferred Taft roundabout, etc.) be used to fund any aspect of the new parking garage so as to reduce the construction loan amount?
Using General Fund dollars to subsidize Parking Fund debt would be a change from past precedent and would be inconsistent with the General Plan and adopted Fiscal Policies noted above. In the case of the Taft Roundabout, it is deferred for 2023-24 and further deferral of that project would impact traffic safety.

8. What is the dollar amount the Parking Fund lost due to COVID related impacts?
Approximately $4 million.

9. Could some of the $9.9 ARPA money in the Infrastructure Investment Fund be used to reimburse the Parking Fund for COVID related revenue losses and then be devoted to construction of the new parking structure? Yes. All or a portion of the funds could be used. The majority of the funding has been appropriated to the Prado Road Bridge which is a mitigation project and the funds would need to be backfilled and would likely mean, based on the funding of projects to meet mitigations and other City commitments, that park, bicycle, and pedestrian projects that are more discretionary would need to be deferred or the City would need to roll in additional debt into the Prado Road Overpass, thus inflating the debt service costs and otherwise reducing annual available funding for discretionary projects. The most logical source would be to use all or a portion of the ARPA funding with recommendations from the Ad-Hoc committee ($1.54 million).

Council Agenda Correspondence
DATE: June 3, 2022
TO: Mayor and Council
FROM: Matt Horn, Director of Public Works
Gaven Hussey, Parking Program Manager
VIA: Derek Johnson, City Manager
SUBJECT: Staff Agenda Correspondence Item 6.a - ADOPTION OF THE FISCAL YEAR 2022- 23

SUPPLEMENTAL BUDGET
Question: What is the Purpose of this Council Correspondence ? The purpose of this correspondence is to respond to questions and comments provided by Downtown SLO and Council in preparation for the Parking Fund review at the June 7, 2022, Council Meeting, Agenda item 6a, Adoption of the Fiscal Year 2022- 23 Supplemental Budget.

Question: How does the Parking Program Work in SLO?
The City’ s Parking Program is an enterprise fund (See General Plan Policy 13.1.2), which means it is a business” that is self -funded and not reliant on the City’ s General Fund. It does not receive revenues from taxes or revenues as its operations, maintenance, improvements, and staffing are all funded by rates and in -lieu fees.

Question: Why is staff recommending to Council that it raise parking rates now? New rates are being proposed to have a healthy parking fund and enough capital to finance and build the new Cultural Arts Parking Structure . The application for debt financin g must be submitted by December 2022 ( based on current construction schedule) and the fund must be “ healthy” to secure the debt.

Basically, Proof of ability to cover annual debt service MUST be in place by time of loan application submittal.

Question: Why is the Cultural Arts Parking Structure Needed? It is needed to address existing and future parking demands. As described and illustrated in the vision document, the City’ s Downtown Concept Plan, the downtown is planned to be the cultural hub of the City with adequate off -street structured parking that facilitates a pedestrian friendly , mixed- use, cultural, historic, artistic, and business center. The Cultural Arts District Parking Structure is needed to support existing and new parking demand s as imagined in the Downtown Concept Plan and will support parking needs of an increased arts district and the future home of the SLO Rep Theatre as well as additional housing with the liner building.

Question: What Role did the Parking Fund Play in the Pandemic?

Cultural Arts District Memorandum # 2 Page 2
With the March 2020 shutdown due to the COVID- 19 pandemic, the Parking Fund directly supported local businesses. Specifically, it did not collect over $4 million in revenue ( over a two- year period) because of the immediate need to support downtown businesses. This support included free parking, the parklet program, and deferred rate increases which have resulted in less funding for the construction of the Cultural Art District Parking Structure and for ongoing maintenance and repairs to existing parking infrastructure.

Question: So, the Parking Fund has lost revenues while costs are going up at an unprecedented rate ? Yes. Although the Parking Fund has been preparing for the fourth parking structure for many years by collecting parking rates and fees and saving up $13.9 million for this project (“ working capital”), the revenue losses are amplified by cost increases and increasing interest rates . A “triple whammy”.

Question: Why Has the Cost of the Cultural Arts Parking Structure Gone Up and What is the cost? As with all construction ( a global trend) the estimated costs for the new structure have gone up significantly ( currently estimated on June 3, 2022, to be $53 million, but the actual cost will only be known after the project is bid and still could go up ) – something that all sectors of the economy are experiencing with construction projects. Monthly, it continues to rise. Since the most recent estimate by the design team, costs have gone up by 11.8% or $4.7 million as the construction price index has been escalating due to the cost of money going up, the cost of materials going up, and labor shortages. Furthermore, complex projects in a historic district that require sign ificant excavations require significant construction contingencies for unknown unknowns.

Question: Is the Parking Structure being paid for with a loan or cash? Both. The Parking Fund will be paying for Phases 1a and 1b ( power line relocations and site clearing and demolition) of the project with the cash reserves it has created for this project ( working capital), and it must seek debt financing for Phase 2 (actual construction of the structure).

Question: What is required to receive debt finance proceeds for Phase 2 the actual construction? A healthy fund that has a balanced budget and a revenue to expenditures ratio of 130% or larger each year. Because the Fund has lost revenues to support the economic stability of downtown for several years, along with inflation, and rising construction costs , the fund is falling short of meeting its debt service ratio coverage making it difficult to secure financing withou t “corrections” to this ratio. To meet the required debt service ratio the Parking Fund must increase its revenues in 2023. The Parking Fund must also have , by policy, a fund reserve of 20% of operating expenditures to pay for emergency issues.

Question: What are the proposed revenue increases?
Elimination of free hour in the Parking Structures ( previously approved by Council) beginning July 1st, 2022.

Expansion of paid parking in Upper Monterey and the Railroad Square parking lots (previously approved by Council). Another proposed on- street rate increases as follows in Table P6 from the budget.

Cultural Arts District Memorandum # 2 Page 3
Proposed Parking Hourly
Rates
Current Parking
Rate
Effective
Jan 2, 2023
Effective
July 1, 2023
Effective
July 1, 2025
1 On-Street and Lots
2 Tier 1 (Super Core) $ 2.00 $ 2.00 $ 4.00 $ 5.00
3 Tier 2 (Core) $ 1.75 $ 2.00 $ 4.00 $ 5.00
4 Tier 3 (Outlying Areas) $ 1.25 $ 1.50 $ 3.00 $ 3.00
5 Parking Structure s
6 Hourly $ 1.50 $ 1.50 $ 3.00 $ 3.00
Question: What were the City’ s previously forecasted rate increases vs the rates that are proposed now?
Prior to receiving the most recent projections for lost revenues, construction costs, and interest rates, staff had projected a 78% increase to on -street paid parking in FY 2023 and a 33% increase again FY 2025.

Off street paid parking was projected to 33% increase FY 2023, with no increases beyond. Previous forecasted fees are shown in the table below . The parking rates that are requested to be changed from the forecasted amounts are shown in bold and the current requested rate is in parenthesis after the previously forecasted rate.

Previously Forecasted
Parking Hourly Rates
Current Parking
Rate
Effective
Jan 2, 2023
Effective
July 1, 2023
Effective
July 1, 2025
1 On-Street and Lots
2 Tier 1 (Super Core) $ 2.00 $ 2.00 $ 4.00 $ 5.00
3 Tier 2 (Core) $ 1.75 $ 2.00 $ 4.00 $ 5.00
4 Tier 3 (Outlying Areas)

1.25 $ 1.50

2.50 3.00) $ 3.00
5 Parking Structures
6 Hourly

1.50 2.00

1.50)

2.00 3.00)

2.00 3.00)

Cultural Arts District Memorandum # 2 Page 4
Question: What is the impact of not implementing the previously approved elimination of 60 minutes of free parking in the parking structure?
At current parking structure rates, that is lost revenues upwards of $700,000. After July 1, 2023 assuming new parking structure rates are adopted, the lost revenue is estimated at $1.4M. As noted above the Parking Fund needs added revenues to pay for the new parking structure so another revenue source would need to be found.

Question: How would the Parking Fund balance its budget with the loss of $700, 000 in revenues if it were to keep an hour free in the Parking Structures ?
Simply, increase other revenues and orreduce operational costs. Notably operational cost reductions will have impacts to the cleanliness and safety of the structures and reduce the ability of the program to continue to modernize and improve customer service. For example , the following changes would result in more revenues and lowered ope rational costs (and service provided).

1. Reduce Safety Expenditures. Eliminate the annual $ 238, 000 contribution of Parking Funds that pay for two police officers that focus efforts on the safety and security of the downtown core .

2. Reduce Contract Services focused on security and cleanliness. Reduce service contracts which includes parking structure security and landscaping services for a total savings of $178, 000 per year.

3. Increase Rates. With the operational savings noted in numbers one and two above ( a total of 416,000) rates would have to be increased beyond what has been proposed to achieve an additional $ 284,000 revenues. For instance , this would equate to a $5/ hour rate in Tiers 1 and 2 effective in FY2023- 24.

4. ARPA Funding. Consider using a portion of the existing appropriated ( i.e. Prado Road Bridge) or proposed appropriations ( i.e. Affordable Housing, Broadband) to offset revenue loss from 60 minutes of unpaid parking.

The elimination of the free hour of parking, previously approved, was included in the Parking Fund forecast because the alternative s have ramifications which would negatively impact the safety, security and cleanline ss of parking facilities and impact downtown businesses in excess of parking rate increases proposed.

It has been suggested that other jurisdictions such as Santa Barbara provide the first 60 -75 minutes “ free”.

The facts are that in many instances of “free” parking, a Business Improvement District is subsidizes these costs. It is also important to state that the parking garages in Santa Barbara were financed and built with Redevelopment Funds and hence the capital costs are not largely incorporated into the overall rate structure.

Question: Why don’ t you implement surge pricing instead? Currently the program is modernizing operations to allow for surge -based pricing and to be more customer friendly. Staff’ sresearch of other agencies that have implemented surge -based pricing indicates a nominal revenue increase. Adopting these rates now does not preclude other rate changes in the future such as surge pricing as long as the city produces the equivalent level of revenue.

Question: Why don’ t you have the General Fund or ARPA pay for this?

Cultural Arts District Memorandum # 2 Page 5
Both the forecasted General Fund and ARPA fund revenues for the next several years have been previously programmed to other projects and services by previous budget actions. If the Parking Fund were to be subsidized by the General Fund or ARPA funds an expenditure ( either staffing or a project) must be eliminated or reduced in scale .

For instance , if $8.7M were allocated to the Parking Fund to offset cost increases and revenue loss of the Parking Fund that would mean that the City could not construct the Prado Creek Bridge Project, which in turn would mean that the City would lose approximately $ 6M in grant funds that are programmed to that proje ct. Most of the transportation projects that are being funded are the City’ s “ fair share” under AB 1600 and are the majority are related to mitigation measures or meeting General Plan policies. If unfunded, it could have a domino effect of impacting the City’ s obligations under AB 1600, General Plan Policies, etc.

Other program areas in the General Fund could also be reduce d to cover this cost. Depending on the area of reduction, it would mean adjustments to levels of service for safety, security, maintenance , and/ or recreational benefits instead of parking users paying for parking facilities.

Question: What is the cost of each parklet, or put another way how much revenue is lost from each parklet and how many are there, and what is the total annual cost to the parking fund at this time ? Parking revenue lost per parklet varies based on location the parklet occupies. This can range between 3,500 - $ 7,500 based on location and meter rate . Currently there are 50 spaces occupied by parklets and an additional 16 spaces that have been transitioned to passenger loading zones. The total annual lost revenue at this time is estimated at $264,000 a year.

Question: Has the Downtown “ recovered”, how do sales taxes revenues which are a proxy for economic activity compared to pre- pandemic periods?
The following graphs show the sales tax rates for the Downtown geographic area. The graphs show that through 2021, sales taxes as a proxy for overall economic activity have recovered to pre -pandemic levels. 1st quarter 2022 sales tax levels are 26% above previous pre -pandemic levels (Q1 2019).

Hotel Occupancy levels have nearly returned to pre -pandemic levels after accounting for a nearly 12% increase in the number of rooms. Average Daily Rates have risen significantly upward as demand for the SLO” experience has soared which suggests elasticity in terms of overall demand. Domestic tourism is at 107% of pre -pandemic levels in the Downtown. Once international tourism returns, Staff will be monitoring the impact on both room rates and sales tax.

Cultural Arts District Memorandum # 2 Page 6
Question: I heard this would be cheaper if the Cultural Arts Parking Structure were a private sector project, should the city have someone else build this?
The State of California and the City of San Luis Obispo’ s Charter regulate how City projects can be delivered. If the new parking structure is built using City funds, which is the current plan, or if the new parking structure is built on City owned property, which it will be , then the project must follow State and local requirements. This process includes hiring qualified professionals to develop the plans , publicly bidding the project to all contractors that wish to build the project and award ing a construction contract to the lowest responsive bid submitted by a responsible contractor ( as defined by State law). All City construction projects pay prevailing wage as this is a state requirement.

In all practicality, there is no pathway for the private sector to build the parking structure on that site .

Even if the City were to sell the property to a private entity to build a parking structure, the property must be offered for affordable housing first with no guarantee that a parking structure would be built after someone takes possession of it .

The City’ s newest parking structure is the 919 Palm Parking Structure. This structure was built by a private party and purchased by the City in 2005- 06 ( per an approved Guaranteed Maximum Price contract that was part of a larger Public Private partnership in Downto wn). The 919 Palm Parking Structure has 192 public parking spaces, and the one level of the structure is devoted to office space . The project cost was approximately $ 17.5M of which $ 10.2M was apportioned to the parking fund for the public parking and the remainder for office space paid for by the General Fund . The cost per privately constructed parking space was $ 53,125. For reference, using cost of construction escalation factors as published by the California Department of General Services to calculate what those cost would be in today’ sdollars indicate that these parking spaces would cost $108,160 in today’ s dollars for private construction work and if we 200, 000
400, 000
600, 000
800, 000
2016 2017 2018 2019 2020 2021
Downtown Area: Quarterly
Q1 Q2 Q3 Q4
500,000
1,000, 000
1,500, 000
2,000, 000
2,500, 000
2016 2017 2018 2019 2020 2021
Downtown Area: Annual

Cultural Arts District Memorandum # 2 Page 7
project those costs into the future similar to the Cultural Arts District Parking Struct ure the cost would roughly be $130,873.

The Cultural Arts District Parking Structure is estimated to cost $53.3M when the project is released for bid next year. This is an estimate and market forces will drive the actual cos t, even with best efforts to project costs in a volatile construction environment. The Cultural Arts District Parking Structure will have 403 parking spaces which equates to roughly $ 132,258. These per space costs are full costs that incorporate the indirect benefits for preparing the site ready for affordable housing and SLO Rep Site construction.

Comparing parking structure project s and adjusting for past and future construction cost is not an applesto-apples comparison or an exact science much like comparing other parking structure projects to the Cultural Arts District Parking Structure . Comparing private and public construction is not a similar comparison either in that both processes bring value to the community. Private construction has fewer regulatory burdens to comply with and is not required to pay prevailing wage . Public construction projects complete projects for the community, need to comply with regulatory requirements, and typically provide more pay and compensation for the workers thatbuild those projects.

Question: How does changing parking rates fund the new Cultural Arts District Parking Structure? Adjusting parking rates ensures the Parking Fund can meet the current and projected debt requirements and continue with ongoing safety, operational, and infrastructure improvements. In order to accomplish this, parking revenue must be increased $ 5 million in 2023 and an additional $ 1 million in 2025. The anticipated annual debt service for the construction loan is anticipated to be $3.7 million a year and the Parking Fund cannot obtain the debt funding or support the debt service payments in addition to the operational costs of maintaining existing facilities.

The charts below show the composition of revenue increases by parking rate type. On street parking revenue makeup, the largest amount of new revenues followed by implementation of charging for the first hour of parking in the parking structures. Parking structure rate increases continue to be an important component of the funding plan and the expansion of paid parking on Monterey Street provides the lowest value amount of revenue.

Question: What is driving the increase revenue needs for the Cultural Arts District Parking Structure? 50%
22%
25%
3%
2023
On Street Off Stret 60 min PS Expansion
19% 56%
22%
3%
2025
On Street Off Street 60 min PS Expansion

Cultural Arts District Memorandum # 2 Page 8
The three primary factors for the increased cost of the Cultural Arts District Parking Structure are lost revenue, increased construction costs, and inflation. As previously discussed , the parking fund deferred revenue in the amount of over $4 million during the pandemic. This requires the Parking Fund to take on 4 million more in debt. As of the writing of this memo, the cost of construction increases further raise costs by another $4.7 million ( and growing monthly). Finally, and the largest factor in cost at the writing of the memo, is inflation. With rising interest rates , the cost of debt services is projected to increase from 3% to 5%, this results in an increase over the 30-year life of the debt of approximately $ 23.2million.

Question: What are you doing to address people who don’t pay when the structures are not staffed? Staff estimates approximately $ 60, 000 - $ 75, 000 annually in lost revenues from uncaptured parking transaction due to staffing shortages. Primarily these impacts occur durin g later evening hours. Currently structure operations align with on- street paid parking hours with the exception of charging for overnight parking. With the implementation of gateless parking at the structures currently planned for Fall 2023 the issue caused by limited staffing will be eliminated as there will be automated processes in place.

Question: If more people park further out where there is not a parking district what will that impact be?
If downtown customers and employees opt to park beyond paid parking , as many currently do , staff expect the adjacent residential areas to consider forming parking districts. Many of the areas that could see additional impacts to parking have already approached Parking Services pre -pandemic to form districts.

Question: How is the Parking Fund managed operationally and what is it doing to provide customer service and communications?
Parking Services focuses on providing a safe and convenient parking experience. In recent years the program has worked to modernize operations. This modernization provides additional payment options 72%
15%
13%
Increased Cost for CADPS
Inflation Increased Construction Cost Lost Revenue

Cultural Arts District Memorandum # 2 Page 9
that customers can utilize. Further planned improvements such as gateless parking at the structures and virtual permits will provide options that the Program has not been able to offer due to limitations with technology.

Question: What is the communications plan about these increases? As noted above, the majority of the rate increases would occur in 2023. Staff have developed key messaging around the proposed rate increases and begun outreach with community partners. JPW Communications was contracted to assist with additional messaging and outreach. Staff have also reached out to local media outlets to provide information on the necessity of the rate increases and the benefit the Cultural Arts District Parking Structure will serve to the community. Print and social media will be used over the next several years to communicate rate changes, holiday offerings, and technological improvements to parking systems in addition to staff completing direct outreach with community partners, local businesses, and local media.

As parking services is critically important to the downtown core, staff is aware that the Downtown SLO Parking and Access Committee is coming back into service and staff will be regularly attending these meetings to support and inform this committee’ s work.

Question: What are the actuals/ projections of revenue for this fiscal yea r-to-date? Are parking revenues over or under budget? In this document, we see the actuals from last year, but not revenues this year - to-date.

The table below shows the Revised budget for FY2022 that was adopted as part of the Mid -Year budget review in February 2022. The Year to Date ( YTD) column shows revenue collected through the end of March 2022 and the Projected End of Year ( EOY) is what staff anticipates will be collected by the end of the FY 2022.

Question: How much has been brought in from parking fees since the 6-9 pm enforcement hours have been implemented?

PARKING FUND LONG-TERM FORECAST

ACTUAL REVISED YTD

PROJECTED
EOY
BUDGET
2020- 21 2021- 22 2021- 22 2021- 22 2022- 23

REVENUES
Service Charges
Parking Meter Revenues 1,265, 085 1,940, 900 1,580, 900 2,050, 900 2,268, 500 Parking Structure Collections 347, 873 835, 300 687, 600 892, 000 2,030, 950 Long- Term Parking Revenues 483, 346 547, 800 584, 100 757, 800 844, 900 Lease Revenues 497, 879 459, 200 439, 800 479, 800 487, 800 Parking In-Lieu Fees 10,691 20,600 500 700 20,600
Total Services Charges 2,604, 874 3,803, 800 3,292, 900 4,181, 200 5,652, 800 Fines & Forfeitures 718, 173 717, 800 804, 700 1,043, 900 793, 500 Interest on Investment 3,559 75, 600 - - 62, 000
Other Revenues 22,000 14,100 3,200 4,300 25,000
TOTAL REVENUES 3,348, 606 4,611, 300 4,100, 800 5,229, 400 6,533, 300

Cultural Arts District Memorandum # 2 Page 10
Hourly parking fees collected between 6pm to 9pm total $ 225, 100 as of June 1, 2022. The collected amount is gross and does not reflect charges applied by the vendor or merchant processing fe es. Citation revenue from expansion of enforcement hours to 9pm is $ 123, 285. This amount is gross and does not reflect State and County surcharges transferred by the City for each citation issued.

Question: Is there a breakdown of how much revenue incentiv e programs are bringing? (i.e ., how much is collected in 10-hour permits, how much from PROX cards, chaser tickets, etc.) Incentive Program Revenue (July 1, 2021 to May 31, 2022) 10- hour meter permits $ 247, 800
Proxcard $ 261,400
Chaser tickets $ 47,500
Question: What are the fines and forfeitures YTD? We work closely with Parking Services on Thursday night, and we have observed a dramatic uptick in ticketing and towing before the Farmers’ Market. We have also heard anecdotal reports that confusion around kiosk adoption/ app utilization has led to tickets. Are those numbers coming in as expected or above? Paid citation revenue through the end of May is $1.15M. This amount is gross and does not include State and County surcharges transferred by the city for each citation paid. Surcharges this fiscal year equate to approximately $ 324,600. Net revenue, so far, is approximately $ 828,100 which is more than the revised budget amount adopted at Mid -Year in February 2022. The delay in hiring additional enforcement staff has resulted in an increase in citation issuance since Mid -Year budget adoption. Citation issuance resulting from confusion with kiosk operations are being addressed through the citation review process and are not reflected in the budget or in revenue collected. Most citations as a result of customers transitioning to the new system have been largely waived if requested.

Question: Will the revenue coming in from the new paid parking areas ( upper Monterey and Railroad Square) be put toward the Downtown Parking Fund and assist with the shortfall needed for the bond to be issued? Or will those revenues be kept separately to attend to improvements and maintenance in those areas?
All revenue collected from new paid parking areas will be deposited into the Parking Enterprise Fund and can be used for the purchase, installation, maintenance, repair, payment, and related expenses to the operation of the City’ s parking assets and infrastructure.

Question: In this document, there is an assumption that parking revenue will return to pre -pandemic levels. How can we assume parking revenue to return to pre -pandemic levels when rates will increase, and incentives will go away? Last year when the decision was made to remove the first hour free in the structures, this was also under the assumption that parking utilization would return to normal levels, and they have not. We also assumed that we would be in a different stage of recovery, not in another COVID surge.

Parking revenues have rebounded post -COVID pandemic quicker than originally anticipated when the 2021- 23 Financial Plan was adopted. Parking revenue trends indicate strong recovery from the pandemic.

Cultural Arts District Memorandum # 2 Page 11
On- street paid parking hours has increased 4% compared to FY 2018- 19 after accounting for the expansion of enforcement hours from 6pm to 9pm.

Question: What is the overall utilization of the structures if it has not returned to pre -pandemic levels? The parking structure utilization between 9am to 9pm is approximately 58- 65% with a 90% utilization rate during Farmer’ s Market. This is consistent with pre -COVID pandemic levels of utilization for the parking structures.

On- street utilization in the downtown core is higher, about 4% higher, than pre -COVID pandemic levels.

On- street parking utilization is tracked differently than parking structure s and is measured by paid hours.

Question: How much of the structures are used for City employee parking versus customer/ public parking? Are city employees required to pay for parking? There are 88 Proxcards issued to City employees all of which are paid to the Parking Fund by the General Fund or an Enterprise Fun d. Other employees not issued Proxcards park in designated lots not owned or managed by the Parking Fund.

City of San Luis Obispo, Council Memorandum Council Agenda Correspondence DATE: May 31, 2022
TO: Mayor and Council
FROM: Matt Horn, Director of Public Works
Gaven Hussey, Parking Program Manager
VIA: Derek Johnson, City Manager
SUBJECT: Staff Agenda Correspondence Item 6.a - ADOPTION OF THE FISCAL YEAR 2022-23 SUPPLEMENTAL BUDGET
Purpose of this Agenda Correspondence- Parking Rate Focus The purpose of this Agenda Correspondence is to provide some additional details and background about the status of the Cultural Arts District Parking Structure, new cost estimates, and the impact of the construction and financial markets which have prompted staff to make a recommendation for adjusted parking rates beyond those forecasted in June 2021 as part of the 2021-23 Financial Plan (pages 339 through 342).

Each section of this memo covers crucial decision points and the footnotes that supports each section provide historic or other technical details or considerations. Furthermore, the purpose is to answer some initial questions received and provide additional details about the proposed adjustments to parking rates recommended for adoption on June 7, 2022, so that the Parking Fund can support the construction of the Cultural Arts District Parking Structure (at Palm and Nipomo Streets). Advancing the construction of the Cultural Arts District Parking Structure is a key Capital Improvement Project in the City’s adopted 2021-2023 Financial Plan and the Major City Goal Economic Recovery, Resiliency and Fiscal Sustainability1.

Why is the Cultural Arts District Parking Structure Needed Now? The Cultural Arts District Parking Structure is a high priority project for both the Parking Fund and the City to be able to provide adequate off-street parking to the community as well as create the necessary infrastructure for future implementation of the Downtown Concept Plan including space for the future SLO Rep Theatre. Parking utilization has seen a steady increase returning to similar pre-pandemic levels of operation with structures experiencing capacity issues Thursday through Saturday evenings. Specifically, all three of the City’s current parking structures exceed 85 percent2 occupation during these times and close on Thursday evenings when capacity is 1 Supplemental Budget Pg. 128
2 85% occupancy is generally considered in the parking industry to be a saturation point that parking supply is impacted that can has a negative perception on the availability of parking and a point that new parking supplies are needed to meet demand.

Cultural Arts District Memorandum Page 2
exceeded. On June 21, 2022, Council will consider authorizing staff to advertise for construction bids for the first phase3 of work for the Cultural Arts District Parking Structure.

What is the connection between parking rates, the pandemic, and the Cultural Arts District Parking Structure?
The City’s Downtown Concept Plan incorporates the community’s vision for downtown and guides both public and private actions and investment through 2042. Better parking that is easily accessible is key to promoting an inclusive and easy-to-navigate downtown. At the same time, the city is seeking to expand cultural,
historical, and artistic
opportunities, including enhancing
the downtown Cultural Arts
District.

Since the early 2000s4, the
Community and city have been
working on this fourth structure.

During this time, the Parking Fund
purposely conserved revenues to
build up working capital funds to
reduce future debt impacts arising
from the construction of the
Cultural Art’s District Parking
Structure. This was done using rate
adjustments and careful
programming of ongoing operating
expenses.

This strategy was a highly effective long-term strategy which allowed the Parking Fund to buildup it’s unreserved working capital to roughly $13.9 Million. With the March 2020 shutdown due to the COVID-19 pandemic, the Parking Fund deferred revenue in the approximate amount of $4 Million through fee deferrals, incentives, and other initiatives to support the urgent and immediate needs for downtown businesses. As noted in the Budget (page 48) variables have caused these increases to be greater than forecasted to Council with the adoption of the 2021-22 Budget. Those variables include unprecedented cost increases in the construction industry, increased costs for borrowing money, and the need to demonstrate to funding entities the City’s plans for maintenance and preservation of existing assets5.
3 Phase 1A PG&E Relocation – Project Design is 90% complete. Phase 1A expected to advertise for construction in Summer 2022, with construction work on this phase beginning Fall 2022. Phase 1B Site Clearing and Demolition – Project is at the 95% design completion level. Staff will be applying for reviews for building permits for Phase 1B in the Spring of 2022. Construction is scheduled to begin Spring 2023. 4 A simple search of the City’s website shows over 390 results for “Palm Nipomo” parking that dates back to the early 2000’s with dozens of hearings on the project.
5 The City has historically under invested in parking structure maintenance and deferred maintenance issues need to be addressed to preserve life of the existing three assets and to modernize equipment to match customer needs and maximize technological integration.

Cultural Arts District Memorandum Page 3
Why Do Rate Adjustments Need to Be Approved in June 2022? To secure debt financing for the Cultural Arts District Parking Structure before the vertical construction of Phase 2 requires proof of an approved long term rate structure that will ensure financing and other operational obligations are achieved. The bottom line is that the conclusion based on the analysis of variables is that it is necessary to increase parking rates in 2023 and 2025 to demonstrate to future finance lenders that the Parking Fund has an approved and long-term rate strategy to be able to continually fund the long-term debt and operations that will be taken on to construct the Cultural Arts District Parking Structure. Some important information related the Parking Fund’s ability to fund the Cultural Arts District Parking Structure, necessary rate adjustments, and the need to move this project forward include:

What are the Rate Adjustments Proposed and How do they Compare Locally? Staff have previously conveyed to Council with the 2021-23 Financial Plan, the 2021-22 MidYear update, and now with the 2021-22 Budget Supplement that rate adjustments are necessary to ensure the Parking Fund’s health, ability to support existing and future debt obligations, required infrastructure improvements and safety upgrades, while continuing to modernize the program.

With these forecasted rates, Council also approved the elimination of the first hour of free parking in the parking structures with the 2021-23 Financial Plan (see page 340) beginning in fiscal year 2022-23. Without these rate adjustments, the Parking Fund will not be able to build the new Cultural Arts District Parking Structure.

Table 1 below details the proposed rate adjustments and effective dates for on-street and surface parking lots. Table 2 below details the proposed rate adjustments and effective dates for the public Parking Fund lost over $4 million
to support downtown during the
pandemic
Construction is immient for City
and its community partner SLO
Rep
March 28, 2022 Received revised
project cost estimate based upon
current market conditions and
forecasted out to time of
construction resulting in increased
cost for parking structure
Construction cost increases of
27% between January 2021 to
May 2022 and expected to
continue to increase
May 10, 2022 Forecasted interest
rates for debt financing adjusted
to reflect inflationary trends
Bond Counsel advise staff to have
debt ratio at a minimum of 130%
Rate adjustments are needed to
meet debt ratios and must be
approved prior to debt issuance
Majority of rate adjustments take
effect in July 2023

Cultural Arts District Memorandum Page 4
parking structures. Table 3 compares local rates which shows that the City’s current parking rates are $1.02 below the average parking rate for on-street parking and $1.40 below the current average parking rate for parking structure parking rates. After the July 2023 parking rates are in place, the city will slightly exceed the average parking rate for on-street but will be $0.75 below the average current parking structure rates assuming other areas do not increase parking rates. As indicated in the Budget Supplement (page 48) staff is aware that both Cal Poly and Paso Robles are considering rate adjustments.

Table 1 below shows the
proposed parking rate
adjustments that are
recommended as part of the 2022-
23 Budget Supplement. As a
reminder, parking rate
adjustments were forecasted to
Council in the 2021-23 Financial
Plan (see page 342) but are
required to be revised due to
inflation and cost of construction
increases.

Table 1: Proposed Street Parking Rates and Effective Dates Proposed Parking Hourly Rates Current Parking Rate Effective Jan 2, 2023
Effective
July 1, 2023
Effective
July 1, 2025
1 On-Street and Lots
2 Tier 1 (Super Core) $2.00 $2.00 $4.00 $5.00
3 Tier 2 (Core) $1.75 $2.00 $4.00 $5.00
4 Tier 3 (Outlying Areas) $1.25 $1.50 $3.00 $3.00
Table 2: Proposed Parking Structure Rates and Effective Dates Proposed Parking Structure Rates Current Parking Rate Effective July 1, 2023 1 Parking Structures
2 Hourly $1.50 $3.00
3 Max Daily $6.00 $12.00
4 Lost Ticket $6.00 $12.00

Cultural Arts District Memorandum Page 5
What is next for communications with the Community?
Staff are focused on the following efforts to communicate about these rate changes.

1. Targeted outreach using local media, print and digital platforms in addition to City accounts on proposed changes between May 27th and June 7th.

2. Ongoing efforts such as in person meetings and publications for community partners to address the concerns of downtown businesses and customers.

3. Expanded outreach on the Cultural Arts District Parking Structure and community benefits of this resource.

4. Using consultant communication services to aid staff over the next year with a consistent and comprehensive messaging on parking rate changes, program enhancements, and the Cultural Arts District Parking Structure construction.

Alternatives to adjusting parking rates.

1. Do not adjust parking rates per staff recommendation: If Council chooses to not increase parking rates or adjust parking rates at a lower amount this would effectively halt the city from constructing the Cultural Arts District Parking Structure. The parking rates as proposed are necessary to both secure and service the debt funding required to construct the parking structure.

2. Council could direct staff to reduce the cost of the parking structure: If Council directed staff to look at reducing the cost of the parking structure that would require that Council use Parking Fund working capital to hire a consultant to audit the design for ways to decrease cost. This audit is commonly referred to as Value Engineering.

This will likely take approximately 12 months to complete as it is necessary to prepare a Request for Proposal, have Council approve the Request for Proposal to advertise, review proposals and select the desired consultant, the time necessary for the consultant to review the project plans and make recommendations to staff, and the time necessary for the City’s design consultant to update the plans for construction.

Since January 2021 through May 2022, California has seen a 27% increase in construction cost which equates to approximately 1.58% per month. Assuming that the construction climate near future is much like the recent past, that would require the City to find in excess Table 3: Comparable Agency Rates w/ Proposed Rates
Average Parking
Hourly Rate
Current
Parking Rate
Effective
January 2, 2023
Effective
July 1, 2023
Effective July
1, 2025
1 On-Street
2 San Luis Obispo $1.63 $1.75 $3.50 $4.00
3 Cal Poly $2.50 --- --- ---
4 Pismo Beach $5.50 --- --- ---
5 Paso Robles $1.00 --- --- ---
6 Parking Structures
7 San Luis Obispo $1.50 $1.50 $3.00 $3.00
8 Cal Poly $2.50 --- --- ---
9 Pismo Beach $5.00 --- --- ---

Cultural Arts District Memorandum Page 6
of $10 million in construction cost savings prior to realizing any fiscal benefits and the consultants will most likely recommend the removal of environmental sustainable and community amenity/benefit features of the garage such as 1) solar panels and electrical vehicle charging, 2) aesthetic detailing, 3) frontage and site readiness costs for the SLOREP building6, 4) frontage and site readiness for affordable housing development area7 and 5) rooftop community viewing areas8. Staff’s does not recommend this alternative as costs would likely increase during the redesign phase and the structure would provide less benefit to the community.

3. Council could direct staff to explore other avenues and defer construction to same date in the future: Any direction that defers construction of the Cultural Arts District Parking Structure to a later date in the future will likely increase the overall cost of the parking structures construction.
6 Cost estimates are anticipated to be over a million dollars 7 The assumption is that the City would not seek to recover any of these costs, or the land costs associated with development affordable housing and the Council could direct Staff to recover all or some of these costs to defray the costs to the parking fund visa vi the Affordable Housing Fund. 8 The rooftop viewing area requires the structure to be built to a different load bearing standard which is approximately 25% above the traditional costs for supporting vehicles.

Item 6a
Department: Finance
Cost Center: 2002
For Agenda of: 6/7/2022
Placement: Public Hearing
Estimated Time: 120 minutes
FROM: Derek Johnson, City Manager
Brigitte Elke, Finance Director
Prepared By: Natalie Harnett, Principal Budget Analyst
SUBJECT: ADOPTION OF THE 2022-23 SUPPLEMENTAL BUDGET

RECOMMENDATION

1. Adopt a Resolution entitled, “A Resolution of the Council of the City of San Luis Obispo, California, approving the Fiscal Year 2022-23 Budget” as presented; and

2. Adopt a Resolution entitled, “A Resolution of the Council of the City of San Luis Obispo, California, approving the allocation of $13,564,467 in State & Local Fiscal Recovery Funds in accordance with the U.S. Treasury Final Rule” including $1,564,467, as recommended by the Council Ad-Hoc Committee; and

3. Introduce an Ordinance entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, amending Title 10, Chapter 52 (Parking Meters), of the San Luis Obispo Municipal Code” modifying the on-street and surface parking lot hourly rates and establishing paid parking in the upper Monterey Street area; and

4. Adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, establishing parking rates for the City’s parking structures”; and

5. Adopt a Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, approving modifications to the Parking Citation Penalty Schedule.”

DISCUSSION

REPORT-IN-BRIEF
This report and attached documents present the 2021-23 Financial Plan Supplemental Budget which is the official budget appropriation for the second year of the Financial Plan.

The Supplemental Budget focuses on changes in financial position and needed adjustment to the approved second year budget. Unlike in past years, Council adjusted the approved budget with the 2021-22 Mid-year Review – these adjustments are reflected the budget presented in this report.

The report details the use of the $1.5 million as recommended by the Council Ad-Hoc Committee.

Item 6a
Lastly, the report also brings forward recommendations to modify the on-street and surface parking lot hourly rates and established paid parking in the upper Monterey Street area. It also recommends establishing new parking rates for the City’s structures and modifying the Parking Citation Penalty Schedule. These changes are being recommended because of the significant escalation in projected costs of the Cultural Arts District Parking Structure and the need for rate increases to meet the required debt service obligation and maintain a balanced budget.

Background
Per the City Charter, Article XIII, Section 802, the City Council must appropriate a budget for the upcoming fiscal year by July 1st. The City’s budget policy allows for a two-year budget to be adopted. However, the appropriation of funding is only given for one fiscal year, necessitating an annual budget hearing for subsequent appropriation.

Consistent with the City’s two-year budgetary process, the 2022-23 Budget presented for adoption was prepared using the adopted 2021-23 Financial Plan as its foundation.

However, unlike a typical budget cycle, the City’s fiscal forecast changed so drastically after initial adoption in June 2021 that Council adopted changes to the 2021-22 as well as the 2022-23 budget with the Mid-year Review on February 15, 2022. These adjustments are now incorporated in the Financial Plan Supplement and long-term forecasts (Attachment A).

Mid-year Adjustments
Over the first half of FY 2021-22, the City experienced a surge of economic activity that corresponded with the lifting of COVID-19 lockdowns and stimulative fiscal and monetary policy. Given the positive revenue trends, Council approved mid-year requests for immediate action and resource allocation for one-time efforts as well as ongoing needs to position the City in a place of proactive engagement. With this action, the Council also allocated approximately $2 million in additional budget for 2022-23, which have now been included in the Supplemental Budget presented here. The Mid-Year Council actions also authorized an additional payment of $10.2 million from the General Fund and $2.2 million from the enterprise funds, which will put the City back on track with its schedule to pay down the pension obligation over 20 years.

Compensation Adjustments
The increases in General Fund revenue forecasts also allowed Council to quickly address compensation shortfalls identified with the 2021 Benchmark Compensation Report for Luis Obispo City Employees’ Association (SLOCEA) and Unrepresented Management and Confidential Bargaining Units. On February 1, 2022, the Council approved negotiation parameters for equity adjustments and cost of living increases are now included in the 2022-23 Supplemental Budget.

Item 6a
Overall Financial Forecast
All of the City’s Major Funds are in a good fiscal condition and are balanced throughout the five-year forecast with the need to make some changes to parking rates to fund planned capital expenditures and related debt service. Current assumptions are cautiously optimistic, and the forecast does not assume a recession only a cool-down of current economic activity. The impacts of high inflation on the City’s forecast are still unclear and one of the looming concerns is that the cost of providing services will outpace revenue growth in the near future.

Changes with the 2022-23 Supplemental Budget
Operating Budgets: Given the significant Mid-year adjustments, there are only a handful of Significant Operating Budget Changes (SOBCs) included in the recommended budget.

The General Fund operating budget increased mainly due to the addition of a Capital Maintenance Supervisor position and a new Solid Waste program position. Both positions are offset by revenue and do not impact the bottom-line General Fund balance. The Enterprise Funds increased their budgets to account for the rise in costs of chemicals, utilities, and supplies. A breakdown of all SOBCs can be found in Attachment A.

Table 1: Significant Operating Budget Changes
One-time Ongoing
General Fund $ (48,775) $ 412,156
Water Fund $ 115,980 $ 864,290
Sewer Fund $ 24,480 $ 246,287
Parking Fund $ 44,800 $ 81,825
Total $ 136,485 $ 1,604,558
Capital Improvement Program (CIP)
There are several CIP changes proposed that reflect changes identified at the mid-year review or to address urgent needs. General Fund changes are reflective of cost increases and staffing constraints. Following an analysis and prioritization exercise, several projects are recommended for deferral to 2023-25 as they are either not “shovel” ready, or added grant funds are being sought, or they can be paused until staff resources are available and design or other consulting services are ready to deliver the project. Deferred projects will remain on the five-year CIP list and return to Council for funding with the 2023-25 Financial Plan. Deferred project funds are in turn recommended to be used for cost increases for the Summer 2022 roadway sealing project and to fund the capital reserve which is in place to keep projects moving given the volatile bidding climate. As staff anticipates with the global economic conditions impacting costs of goods and services it is important to bring the Capital Reserve to policy levels so that it may be applied to construction projects in 2022-23. Historically, after significant cost increases, price increases have tended to stabilize and absent a recession or huge construction slow down, costs don’t return to previous levels, the increases simply flatten out.

Item 6a
The FY 2022-23 Supplement does not recommend an overhaul of the adopted Capital Improvement Plan. However, staff is recommending the establishment of a few new projects to address emergent needs, as well as budget changes to several existing projects. For detailed changes, see Section 7 in Attachment A. New projects are summarized in the table below and were reviewed by the Planning Commission at its Meeting of May 25th for General Plan Conformity:

Fund Table 2: New CIP Projects* 2022-23 Budget
Parking Installation of Pay Stations in the Railroad Square $ 66,200 Parking Installation of Pay Stations on Upper Monterey $ 122,000 Public Safety Equipment
Fund Fire Department Extractors $ 135,000
Sewer Chorro-Palm to Monterey Pipeline Replacement $ 60,000 Transit Tenant Improvements at 1260 Chorro $ 250,000
Water Johnson-Iris to Bishop Pipeline Replacement $ 180,000 Water Recycled Water System Retrofits $ 200,000
Water Water Treatment Plan Major Facility Maintenance $ 245,000 Total New Projects $ 1,258,200
*Some new projects are offset by decreases in other project budgets. See report for detail. 2022-23 Budget Document – Attachment A
The attached document gives greater detail on the City’s financial condition, updated revenue and expenditure trends, and assumptions for FY 2022-23. The report is organized as follows:

Section 1: City Manager Message
Section 2: Changes from Financial Plan & ARPA Appropriations Section 3: Consolidated Financials
Section 4: Budget Detail
Section 5: Local Revenue Measure
Section 6: Debt
Section 7: Capital Improvement Plan
Section 8: Major City Goals
Section 9: Department Updates
Section 10: Appropriation Limit
State & Local Fiscal Recovery Funds – American Rescue Plan Act (ARPA) – Attachment D
On March 1, 2022, the City Council received a presentation regarding the applicable uses of State and Local Fiscal Recovery Funds provided through the American Rescue Plan Act. The staff recommendation incorporated the City’s Major City Goals objective for the $4,664,467 that had not been allocated with the 2022-23 Financial Plan. At that meeting, the Council approved the following action:

Item 6a
1) $1 million to be appropriated to the Infrastructure Investment fund for a total allocation of $9.9 million. 2) $100,000 to augment the Human Relations Commission’s Grant-In-Aid cycle for grants in support of non-profit organizations. 3) Allocate $2 million to affordable housing that targets extremely low & very low income and/or homeless persons most impacted by COVID-19. 4) $1,564,467 to be reviewed by a Council ad-hoc committee for most appropriate use in accordance with City Major City Goals and objectives.

The Council ad-hoc committee was staffed by Mayor Stewart and Councilmember Shoresman. The committee met on three separate occasions and the details of this meetings and options analyzed are included as Attachment C.

March 21, 2022: The ad-hoc committee received a brief overview of the American Rescue Plan Act and the Council action to-date; funding option under the U.S. Treasury Final Rule; the timeline for adoption of applicable uses with the Financial Plan Supplement; and next steps.

The ad-hoc committee requested to receive additional information on broadband coverage in San Luis Obispo and research on other jurisdictions’ approach to premium pay for essential employees.

April 20, 2022: The ad-hoc committee had received information on broadband coverage and possible options to provide premium pay for those impacted by COVID-19 . 20 cities responded of which five did not provide premium pay, three were considering the option, and 12 provided some form of pay mainly to their city essential employees. Only two jurisdictions provided premium pay to grocers and pharmacy workers. Further research confirmed that they are thus far the only cities taking this approach.

The ad-hoc committee requested to receive additional information regarding the complexities in administering programs in Oxnard and Port Hueneme that advanced pay for Grocery Workers. On April 27, 2022, the ad-hoc committee received information gathered from the Finance Director in Oxnard which showed that the programs in Port Hueneme mirrored the Oxnard approach, albeit at a much smaller scale.

After consideration of the information and discussion, the ad-hoc committee recommends that the City adopt the following use of the $1,564,467 of State and Local Fiscal Recovery Funds:
a. $600,000 toward a broadband study and subsequent implementation of recommended action.
b. $964,467 toward affordable housing that targets extremely low & very low income and/or homeless persons most impacted by COVID-19

Item 6a
Insurance Fund
The Insurance Fund serves to pay the City’s annual premiums for liability, workers’ compensation, special events, volunteer, and property insurance needed to protect the City and to manage fluctuations in claims-related expenses.

The City has received notification that its required contribution for 2022-23 will be higher than the amount adopted with the 2021-23 Financial Plan. The increase in insurance costs this year is attributable 3 factors: 1) There were some high-cost claims within the membership pool to which the City belongs and shares expenses; 2) increases in payroll and the number of employees also increased exposure and associated costs; 3) a recent appraisal increased the valuation of the City’s properties and costs to insure them.

In order to keep within the adopted transfer to the fund, available fund balance will be used to cover the change in cost for 2022-23. The Fund balance is currently $1,757,013; sufficient to cover the increase of $314,000. However, the City’s fiscal policies under Section 7. Fund Balance and Reserves (F) stipulate that the reserve will be based on a 75% confidence level of the previous five-year average claims experience, which amounts to approximately $1,500,000. The use of fund balance will leave 1,443,013 which dips slightly below the policy required level. The approach will be to replenish the 75% reserve levels as part of the 2023-25 Financial Plan to ensure the levels are appropriately funded and adequate for foreseeable and reasonable risk exposure.

Appropriation Limit
Under Article XIII B of the California Constitution, the City is required to calculate and adopt an appropriation limit to guide the budget appropriations. The limit restricts appropriations from tax revenues by State and local governments. Under its provisions, no local agency can appropriate proceeds of taxes in excess of its “appropriation limit”.

The recommended budget for fiscal year 2022-23 remains within those limits. The City is approximately $20 million below the appropriations or Gann limit as shown in Budget Report Section 10.

Table 3: FY 2022-23 Appropriation Limit
Appropriations Limit 2021-22 $79,470,558
Consumer Price Index 7.50%
Population Factor: County Population Growth 0.28%
Compounded Percentage Factor (multiplicative not additive) 1.025% Appropriations Limit 2022-23 $85,666,375
Appropriations Subject to Limit $65,610,162
Appropriation amount under/(over) Limit $20,056,213

Item 6a
Amendments to Title 10 of the Municipal Code (Attachment E) Discussed in greater detail in the Parking Fund review is the identified need for the parking services program (which funds operations through rates and fees) to increase parking hourly rates. The need for Parking rate increases have been discussed in 1) 2021-23 Financial Plan (where Council approved paid parking in the upper Monterey Area beginning in 2022-23), 2) Mid-Year 2021-22 Financial Plan, and again in this 3) 2021-22 Budget Supplement. During the pandemic rates were not increased, although they should have been.

As foreshadowed for several years, the assistance the Fund provided to local businesses during the pandemic (lost revenues given free parking, free parklet use, and expanded loading zones) combined with costs associated with building the fourth parking structure, the Cultural Arts District Parking Structure (located at Palm and Nipomo Streets) and the debt associated with this require rate increases beginning in 2022-23.

Unfortunately, the drastic escalation in projected costs for the Cultural Arts District Parking Structure require significant rate increases to meet the required debt service obligation and maintain a balanced budget. The proposed rate increases were calculated by forecasting the Parking Program’s operating expenditures, debt service, and parking demand over the next five fiscal years, and looking at other local “parking districts” (Cal Poly, Pismo Beach and Paso Robles). Notably San Luis Obispo is certainly not the most expensive today nor following the proposed increases. Based on these factors, increases are necessary to meet the 130% revenue to expenditure debt service ratio as required by prospective lenders for the Cultural Arts District Parking Structure construction costs.

Table 4 below details the proposed rate increases and effective dates for on-street and surface parking lots. Staff is recommending an introduction of an Ordinance (Attachment E) modifying the Municipal Code to include the proposed on-street and surface parking lot rate increases effective January 2, 2023 and July 1st in 2023 and 2025. The proposed rate increase to Tier 2, if approved is, will not be implemented until January 2, 2023. Staff intend to utilize the time between adoption and implementation to communicate all rate increases and expansions to paid parking areas.

Table 4: Proposed
Parking Hourly Rates
Current
Parking Rate
Effective
Jan 2,
2023
Effective
July 1,
2023
Effective
July 1,
2025
1 On-Street and Lots
2 Tier 1 (Super Core) $2.00 $2.00 $4.00 $5.00
3 Tier 2 (Core) $1.75 $2.00 4.00 $5.00
4 Tier 3 (Outlying Areas) $1.25 $1.50 $3.00 $3.00

Item 6a
Figure 1 – Map showing locations of Tiered Parking Rates Establishing Parking Structure Rates (Attachment F)
Similar to the discussion above regarding the proposed on-street and surface parking lot rate increases, an increase in parking structure rates is also necessary to meet the debt service obligations for construction of the new parking structure while maintaining a balanced Parking Fund. Staff is, therefore, also recommending the adoption of a Resolution (Attachment F) establishing parking structure rates effective on July 1st, 2023.

The Resolution does include the removal of the first free hour of parking as previously approved by Council in June 2021 as part of the 2021-23 Financial Plan adoption. Table 5 below details the proposed rates for the public parking structures. Without rate increases to the on-street, lot, and structure rates; the Parking Fund will not be able to support the additional debt obligation for the escalated costs of the Cultural Arts District Parking Structure.

There is a strong need for the Parking Fund to implement previously Council approved reduction of free parking at the parking structures and the adoption of rate increases previously foreshadowed for Council and the Community while maintaining the hours of operation approved by Council with the 2021-23 Financial Plan. The need for Parking rate increases have been discussed in 1) 2021-23 Financial Plan, 2) Mid-Year 2021-22 Financial Plan, and again in this 3) 2021-22 Budget Supplement.

Item 6a
Table 5: Proposed
Parking Structure Rates
Current
Parking Rate
Effective
July 1,
2023
1 Parking Structures
2 Hourly $1.50 $3.00
3 Max Daily $6.00 $12.00
4 Lost Ticket $6.00 $12.00
Modifying Parking Citation Penalty Schedule (Attachment G) Staff is also recommending the adoption of a Resolution (Attachment G) modifying the parking citation penalty schedule increasing fine amounts for three different parking violations (expired parking session, parking within an intersection, and parking on roadside of vehicle). Parking fines are meant to be high enough to deter unwanted behavior and the fine amounts for the violations listed in the Resolution are no longer effective at deterring said behavior, so staff is recommending an increase effective July 1 st, 2022.

Previous Council or Advisory Body Action
The 2021-23 Financial Plan was adopted by Council on June 1, 2021, and Mid-year changes were approved by Council on February 15, 2022. The Local Revenue Measure (LRM) Budget allocations for 2022-23 were presented to the Citizens’ Revenue Enhancement Oversight Commission (REOC) on May 12, 2022. After that meeting, as discussed previously in this report, bids were received for the Summer Paving project highlighting cost increases and staffing constraints which led to a prioritization exercise and recommended focused project deferrals to the 2023-25 Financial Plan. Staff has communicated this emergent need and planned approach to the REOC. The proposed budget remains in line with the LRM priorities.

Policy Context
Although the City adopts a two-year Financial Plan, the budget (also known as appropriations) is adopted annually under this process. Pursuant to Section 804 of the City Charter, the City Council must adopt the 2022-23 Budget by June 30, 2022 in order for the appropriations to be in place when the 2022-23 fiscal year begins on July 1, 2022.

This action is accomplished by Resolution and a Budget Resolution is provided as Attachment B to this report.

Public Engagement
Public comment on the item can be provided to the City Council through written correspondence prior to the meeting and through public testimony at the meeting. The 2022-23 Supplemental Budget (Attachment B) was posted on the City’s website for public review on May 25, 2022.

CONCURRENCE
All departments participated in the development of the 2022-23 Supplemental Budget and concur with the information and budgets presented in the financial plan.

Item 6a

ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378.

FISCAL IMPACT
The 2022-23 Financial Plan Supplement and Budget appropriates the budget required for the City organization to deliver its work programs and services. It is balanced between revenues and expenditures and retains its operating reserve levels as set by policy. The following budget levels are being appropriated:
*Includes ARPA allocation as recommended by the ARPA ad-hoc subcommittee.

Table C1: Total Revenue by
Fund (in thousands)
2020-21
Actual
2021-22
Budget
2022-23
Original
Budget
2022-23
Revised
Budget
% Change from
Original 2022-23
Budget
1 Tax & Franchise Revenue $70,896 $87,092 $84,379 $90,156 7% 2 Service Charges & Other Revenue
3 General Fund $16,749 $19,937 $19,369 $20,194 4%
4 Water Fund $29,435 $26,224 $21,534 $26,980 25%
5 Sewer Fund $21,784 $23,885 $21,058 $20,836 -1%
6 Parking Fund $3,349 $4,611 $6,494 $6,533 1%
7 Transit Fund $7,243 $7,707 $4,950 $11,133 125%
8 Assessment Revenue $1,631 $1,689 $1,812 $2,002 10%
9 10 Proceeds from Debt Financing
11 Water Fund $11,030 $3,270 - -
12 Sewer Fund $20,212 $89,916 $4,865 $427 -91%
13 Total $182,329 $264,331 $169,326 $178,261 5%
Table C2: Total Expenditures by
Fund (in thousands)
2020-21
Actual
2021-22
Budget
2022-23
Original
Budget
2022-23
Revised
Budget
% Change from
Original 2022-23
Budget
1 General Fund* $ 79,125 $ 101,731 $ 103,621 $ 108,614 5% 2 Business Activities
3 Water Fund $ 31,396 $ 39,679 $ 27,632 $ 28,340 3%
4 Sewer Fund $ 48,754 $ 123,584 $ 24,367 $ 18,125 -26%
5 Parking Fund $ 4,837 $ 7,125 $ 11,520 $ 14,347 25%
6 Transit Fund $ 5,857 $ 8,293 $ 4,895 $ 8,027 64%
7 Special Revenue
8 Tourism Assessment $ 1,027 $ 1,640 $ 1,582 $ 1,577 0% 9 Downtown Assessment $ 249 $ 245 $ 275 $ 275 0%
10 Total $ 171,244 $ 282,297 $ 173,893 $ 179,304 3%

Item 6a

ALTERNATIVES
Do not adopt the budget and give direction to the City Manager on desired changes and budget reallocations. The item would have to be continued to June 21, 2022, as the Council is required to adopt a budget by July 1, 2022.

ATTACHMENTS
A – 2022-23 Supplemental Budget
B – Draft Resolution – Budget Appropriations
C – Draft Resolution – American Rescue Plan Act (ARPA)
D – Draft Ordinance – Amending Title 10 Chapter 52 of the Municipal Code E – Draft Resolution – Amending Parking Fee Rates
F – Draft Resolution – Amending Parking Citation Schedule

Financial Plan
Supplement
2021-23
2022-23 Adopted BudgetPage 491 of 682
2021-23 Financial Plan
ADOPTED SUPPLEMENTAL BUDGET 2022-23
June 2022
ERICA A. STEWART, MAYOR

CARLYN CHRISTIANSON, VICE MAYOR

ANDY PEASE, COUNCIL MEMBER

JAN MARX, COUNCIL MEMBER

MICHELLE SHORESMAN, COUNCIL MEMBER

DEREK JOHNSON, CITY MANAGER
Preface
The City of San Luis Obispo follows a nationally recognized twoyear Financial Plan process. The Financial Plan links goals and objectives with resources needed to accomplish them. 2022-23 marks the second year of the City’s 2021-23 Financial Plan. This Supplemental Budget focuses on changes in financial position and an updated fiscal forecast. Council approval is required for each year of the budget cycle in order to appropriate the funding. For complete budget information and details on Budget Process, Major City Goals, Department Objectives, the Capital Improvement Plan, and City policies, please review the full 2021- 23 Financial Plan located HERE.

Budget Document Pg. 2

Table of Contents (hyperlinked)
Section 1: Intro
City Manager Message 4
Section 2: Changes from Financial Plan Adoption
ARPA Details
Mid-year Approved Budget Changes
8 10
Section 3: Consolidated Financials
Total Revenue/Expenditures
Reserve Levels
Transfers
13 14
15 Section 4: Fund Overviews/ Detailed Financials
General Fund
Special Revenue & Other Funds
Enterprise Funds: Water & Sewer
Enterprise Fund: Parking Fund
Enterprise Fund: Transit Fund
16 32
33 48
61 Section 5: Local Revenue Measure 68
Section 6: Debt Service 77
Section 7: Capital Improvement Plan 78
Section 8: Major City Goals
Economic Recovery, Resiliency & Fiscal Sustainability
Diversity, Equity, Inclusion
Housing and Homelessness
Climate Action, Open Space & Sustainability
111
114
117
122
Section 9: Department Updates
Admin/IT
City Attorney
Community Development Department
Finance
Fire
Human Resources
Parks & Recreation
Police
Public Works
Utilities
141
144
146
148
149
151
153
156
158
160
Section 10: Appropriation Limit 161
Budget Document Pg. 3

City Manager Message
Section 1: City Manager Message
It is my pleasure to present the 2022-23 supplemental budget that is consistent with the adopted 2021-23 Financial Plan and augmented with important investments for emergent community and organizational needs.

The adopted budget was generated through the Council approved strategic budgeting approach and allocated additional resources to Major City Goals to address the community’s economic recovery, further invests in sustainability efforts to combat climate change, and invests in community livability through citywide improvements. The lens of Diversity, Equity, and Inclusion has been incorporated into every aspect of the City’s work and we look forward to making further progress on making San Luis Obispo a welcoming and inclusive place.

Going into the 2021-23 Financial Plan, the City maintained a cautious outlook in light of the worldwide pandemic and associated economic activities. However, with new challenges on the horizon, the forecasts have been updated based on the current economic landscape. With new revenue from the passage of Measure G, the effect of the Fiscal Health Response Plan, and the awarded allocation of ARPA funding to cover lost revenue during the pandemic, the City will enter the new fiscal year in a positive and optimistic financial position. At the 2021-22 Mid-year Review, the Council approved budget changes that immediately addressed the needs of the community and utilized available resources without delay. This is why the supplemental budget contains very few additional changes and continues to strategic trajectory of allocating resources towards the five Major City Goals.

Even at this time, the worldwide pandemic brought on by the COVID-19 virus is still being monitored and the City is poised to adjust as needed. The lessons learned from the pandemic will be with us forever and yet we find ourselves preparing for new challenges with hyperinflation, labor and supply chain shortages, and related cost increases .
2021-22 in Review
In so many ways, the 2021-22 Fiscal Year was an anomaly due to the COVID-19 pandemic that influenced the City’s fiscal affairs and the variety of services needed to assist with the recovery in addition to providing all its regular programs and projects. By the time we were halfway 2021, the City experienced a surge of economic activity that corresponded with the lifting of lockdowns and stimulative fiscal and monetary policy. Given the positive revenue trends, Council approved mid-year requests for immediate action and resource allocation for one-time efforts as well as ongoing needs to position the City in a place of proactive engagement. With this action, the Council also allocated approximately $2 million in additional budget for 2022-23, which are included in the Supplemental Budget presented here. The $2 million appropriation was part of other Council actions that authorized a total pre-payment of $10.2 million from the General Fund and $2.2 million from the enterprise funds, which will put the City back on track with its schedule to pay down the pension obligation over 20 years.

Though another turbulent year, 2021-22 saw many accomplishments and improvements for and around the community such as:

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City Manager Message
• Expansion of childcare services to serve all five City school sites (C.L. Smith, Hawthorn, Pacheco, Sinsheimer, and Bishop’s Peak)
• Opening of Miossi Open Space and upgrades to existing trails throughout the City’s Open Space • Completion of an outdoor fitness court at Emerson Park as part of a National Fitness Campaign grant
• Completion of the summer downtown paving project
• Lighting and landscape improvements at Mission Plaza
• Continued efforts toward the restoration of Laguna Lake through a two-week dredging project • Completion of the Railroad Safety Trail project
• Addition of staff positions to deliver on the adopted Capital Improvement Plan, which has grown in size, scope, and complexity due to voters’ passage of Measure G-20 • Completion of the 2021 Benchmark Compensation Study
• Successfully recruited for and promoted 165 employees, equivalent to 35% of the City’s headcount
• Implemented the Mobile Crisis Unit
• Expanded Fire Technical Rescue Team Membership from three to six • Welcomed the City’s first Diversity, Equity, and Inclusion (DEI) Manager who will continue to advance DEI priority initiatives in the City organization and community. • Led the second year of the Buy Local Bonus program resulting in $868,522 in direct local spending from 4,400 shoppers at 120 unique, local businesses during the holiday season, a 19% increase from the previous year.
• Adoption of Lead by Example: A Plan for Carbon Neutral Municipal Operations. The plan will enable the City to achieve carbon neutral municipal operations by 2030. • Received the GFOA Distinguished Budget Presentation Award for the 2021-23 Financial Plan and the GFOA Certificate of Achievement for Excellence in Financial Reporting. • Transitioned Downtown Bike Patrol Team to E-Bikes which will help increase mobility and contribute to the City’s Climate Action Major City Goal 2022-23 Budget Highlights
Into the Future with focus and determination
As adopted in June 2021, the second year of the Financial Plan provides investments into Council adopted strategic initiatives and 74 established service programs while maintaining a carefully balanced budget.

These ambitious work plans continue to bring new challenges. Several of the challenges that the City addresses with the second-year budget are
some of the most pernicious issues facing
society, but the solutions are neither easy nor
inexpensive. In order to make progress and
achieve meaningful outcomes, the
organization must stay focused and
disciplined.

Workforce – the Great Reshuffle
First dubbed the “Great Resignation” is now more accurately labeled the “Great Reshuffle”. Globally, millions of people are reconsidering and reconfiguring their careers and lives and leveraging the current Budget Document Pg. 5

City Manager Message
labor market to find opportunities and positionsthat fit with their desired lifestyle. The City is not immune from this phenomenon and has seen record number of transitions.

The City of San Luis Obispo is committed to provide competitive compensation to continue to attract and retain talented, qualified, and experienced employees who provide the high-quality public services the community requires and expects. In order to do so, the City will need to prioritize competitive compensation.

To that end, the City Council received and filed the 2021 Benchmark Compensation Report for the San Luis Obispo City Employees’ Association (SLOCEA) and Unrepresented Management and Confidential Bargaining Units on February 1, 2022. Immediate action was taken to address compensation shortfalls found by the report on April 19, 2022 for confidential and unrepresented management. As of the writing of this message, the City is currently meeting with represented labor partners on the potential wage and benefit increases identified in the benchmark study.

The increases in General Fund revenue forecasts allowed Council to quickly address this need and the Council approved negotiation parameters for equity adjustments and cost of living increases are now included in the 2022-23 Supplemental Budget. Moving forward, the City will need to be flexible and creative in order to attract and retain well-qualified employees. More broadly, there is a need regionwide for a concerted strategy to attract and retain employees and the absence of an effective strategy likely portends less than optimum growth and, in the case of the City, struggles to meet service demands.

Investment into the Community
The City’s ongoing services have been developed over many years with the input from the community, resulting in programs that provide the envisioned quality of life in San Luis Obispo. After years of “tightening the belt” to face challenges and pension obligations head-on, the 2021-23 Financial Plan allowed the City to allocate much needed resources back into ongoing services, programs, and infrastructure and this effort continues with the Financial Plan Supplement and 2022-23 budget.

Capital
While the City has made significant progress on delivering capital projects, it is constrained by unprecedented conditions that are affecting the entire nation. These obstacles include labor market shortages, significant construction activity in our area due to Federal stimulus monies (increasing local competition for design, inspection, and construction services), supply chain issues, and inflation.

While the construction phase of projects is often the community’s first view of the improvements that are being made, it is really the result of months and sometimes years of planning, outreach, study, and design work that must be completed prior to making visible progress on a project. In light of this, the City must ensure that operating resources are right sized to deliver projects and continue meaningful progress for the community in the maintenance and improvements to its infrastructure.

American Rescue Plan Act & the State and Local Fiscal Recovery Fund The State and Local Fiscal Recovery Funds allocated through the American Rescue Plan Act provided much needed fiscal relieve to state, county, and municipal governments. The City stands to receive $13.5 million from the fund that it will use to backfill its Infrastructure Investment Fund to advance critical capital projects, invest in affordable housing and homelessness, as well as fast and reliable broadband access for Budget Document Pg. 6

City Manager Message
the entire community. Page 8 in the 2022-23 Budget Supplement document provides additional detail regarding the funding and the Council’s decision making regarding its use.

CalPERS
With the $12.4 million catch-up payment to CalPERS made in March 2022, the forecast maintains its prepandemic commitment to address the long-term pension liability by making additional investments each year. In July 2021, CalPERs reported a 21.3% net return on investments for the 12-month period that ended June 30, 2021. Under the Funding Risk Mitigation Policy, approved by the CalPERS Board of Administration in 2015, the double-digit return triggered a reduction in the discount rate used to calculate employer and Public Employees’ Pension Reform Act (PEPRA) members contributions. The discount rate, or assumed rate of return, has now dropped from 7% to 6.8% on ongoing basis. The lowering of the discount rate will increase both employee and employer normal cost and also influence the unfunded liability. However, the double-digit gains should largely mitigate the impact of the lower discount rate on the unfunded liability. The City’s commitment to annually pay additional contributions will serve the organization in the long run.

Long Term Outlook and the Path Ahead
In many ways, the 2022-23 Supplemental Budget will mark a transition period for the City organization.

The 2021-23 Financial Plan restored the work postponed by the pandemic and allowed the City to reinvest in its core services and important Major City Goal efforts and strategic initiatives. The next several years will concentrate on transforming the City’s role as an attractive employer and finding a balance between the delivery of service and programs and capital programs.

Due to the current economic and geo-political circumstances, uncertainty continues to be the one certainty in economic forecasting. However, the updated long-term forecast considers many of the current trends and conditions and remains balanced but this and future Councils will need to be mindful that expansion of programs or new programs will likely require tradeoffs. The City will need to remain agile and cautious as it moves through this challenging economic and fiscal climate. As we embark on another year of this “strange routine”, we will need to remain focused and committed to making San Luis Obispo the kind of resilient, dynamic, and sustainable community we want to live and thrive in and advance the key initiatives and tasks the Council set forth in the City’s Major City Goals.

With gratitude,
Derek Johnson
City Manager
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Changes from Financial Plan
Section 2: Significant Changes from the Financial Plan Adoption American Rescue Plan Act & the State and Local Fiscal Recovery Fund The 2021 American Rescue Plan Act provided much needed fiscal relief to State and local governments through the State and Local Fiscal Recovery Fund. From the $350 billion allocated, the City of San Luis Obispo will receive $13,564,467. The second tranche of the payment is expected in July 2022. The 2021- 23 adopted Financial Plan considered $8.9 million in receipts that coincided with the revenue loss the City experienced in 2020. The City Council approved using the funding to backfill capital projectsthat were put on hold and to assist with any unforeseen developments in the construction environment. The funding was therefore placed in the Infrastructure Investment Fund for flexibility in addressing adverse circumstances.

The U.S. Treasury’s Final Rule released in January 2022, provided final guidance to governments as to the use of the funding under four separate categories. It also clarified that cities can use a flat amount of $10 million for revenue loss without further proof or calculation of loss.

Not all of the categories are applicable to a municipal corporation such as San Luis Obispo, but on March 1, 2022, the City Council received a presentation regarding the applicable use and a staff recommendation that incorporated the City’s Major City Goals objective for the $4,664,467 that had not been allocated with the Financial Plan. Council Agenda Report - March 1, 2022 At that meeting, the Council approved the following action:

1. $1 million to go toward the Infrastructure Investment fund for a total allocation of $9.9 million.

2. $100,000 to augment the Human Relations Commission’s grant-in-aid cycle for grants in support of non-profit organizations.

3. Allocate $2 million to affordable housing that targets extremely low & very low income and/or homeless persons most impacted by COVID-19.

4. $1,564,467 to be reviewed by a Council ad-hoc committee for most appropriate use in accordance with City Major City Goals and objectives.

The Council ad-hoc committee was staffed by Mayor Stewart and Councilmember Shoresman. The committee met on three separate occasions.

March 21, 2022: The ad-hoc committee received a brief overview of the American Rescue Plan Act and the Council action to-date; funding option under the U.S. Treasury Final Rule; the timeline for adoption of applicable uses with the Financial Plan Supplement; and next steps.

The ad-hoc committee requested to receive additional information on broadband coverage in San Luis Obispo and research on other jurisdictions’ approach to premium pay for essential employees.

April 20, 2022: The ad-hoc committee received information on broadband coverage within the City of SLO as well as information on efforts in other jurisdictions and possible investment options. They also received information staff had gathered from cities through a California Cities list serve request on premium pay for essential workers. 20 cities responded to an inquiry, of which five did not provide premium pay, three Budget Document Pg. 8

Changes from Financial Plan
are considering the option, and 12 provided some form of pay mainly to their city essential employees.

Only two jurisdictions (Oxnard and Port Hueneme) provided premium pay to grocers and pharmacy workers. Further research confirmed that they are, thus far the only cities taking this approach.

The ad-hoc committee requested to receive additional information regarding the complexities in administering the program in Oxnard and Port Hueneme. As background, Oxnard appropriated $2.5 million and each worker was eligible for up to $1,000 in payment. The City of Port Hueneme appropriated nearly $175,000 and workers were also eligible for $1,000 payments.

April 27, 2022: The ad-hoc committee received information gathered from the Finance Director in Oxnard.

The program in Port Hueneme mirrored the Oxnard approach, albeit at a much smaller scale.

After consideration of the information and discussion, the ad-hoc committee recommended that the City adopt the following use of the $1,564,467 million of State and Local Fiscal Recovery Funds:

1. $600,000 to improve the broadband coverage in San Luis Obispo a. $100,000 for a digital fiber strategic plan and the remaining $500,000 to leverage state and grant funding with the goal of advancing more digital fiber in the City with an emphasis on closing the equity gap.

2. $964,467 toward affordable housing for at-risk population or very low to extremely low-income classes most impacted by Covid-19.

Final Allocation of State & Local Fiscal Recovery Funding included in the 2022-23 Supplemental Budget
Revenue Loss -
$10 million
$9.9 million to the
Infrastrucutre Invement
Fund
$100,000 for grants to
health & human services
programs/projects via the
HRC grants-in-aid
program
$3,564,467 million
tied to Final Rule
$2,964,467 for Affordable
Housing (low and very low
income)
$600,000 for

1. Citywide broadband
study

2. Implementation of
findings.

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