San Luis Obispo City Council
June 4, 2024

City of San Luis Obispo ERF-2-R Allocation
iii. If Subrecipient has failed or refused to furnish information or cooperate with any inspection, review or audit of the Program or County’s use of Program. This includes interviews or reviews of records in any form of information storage. iv. Any payment withheld pursuant to this subsection (d) shall be promptly paid to Subrecipient upon Subrecipient’s good faith and timely correction of the condition giving rise to withholding the payment.

3. Payments: County shall, within thirty (30) days after the receipt of an approved itemized statement from Subrecipient meeting all criteria in this Agreement, pay the undisputed charges on the invoice.

If there are any disputed charges on the invoice, County shall include an explanation of the nature of the dispute with the payment for the undisputed charges. The parties shall exchange any information needed to resolve the dispute within a reasonable time.

4. Expenditure Requirements: In accordance with the California Interagency Council on Homelessness Notice of Funding Availability all ERF-2-R grant funds (100 percent) must be expended by June 30, 2026. Any funds not expended by that date shall revert to the fund of origin. (Health & Safety Code, § 50253, (e)(5).)

5. Budget Adjustments:
a. Subrecipient agrees to adhere to this budget. Requests for budget adjustments to reallocate funds among budget categories contained in Exhibit B-1 shall be requested in advance, in writing, with a showing of good cause that advances the overall purpose of the Agreement. The County of San Luis Obispo Director of Social Services (Director) or designee shall, in advance and in writing, approve and execute any budget adjustment before Subrecipient may render any services pursuant to said budget adjustments. Services rendered pursuant to any budget adjustment that has not first been requested in writing, and approved by the Director or designee in writing, shall not be payable under this Agreement or any later Agreement amendment.
b. The Board of Supervisors expressly grants to the County of San Luis Obispo Director of Social Services or designee the authority to approve said budget adjustments provided the change does not increase the maximum compensation under this Agreement or any other burden of the County under this Agreement.
c. Subject to prior review and approval of the County of San Luis Obispo Director of Social Services or designee, budget category shifts of up to twenty-five percent (25%) are allowed, so long as the Agreement total neither increases nor decreases. Budget category shifts meeting criterion shall not require a formal Agreement amendment. Budget category shifts not meeting this criterion shall require a formal Agreement amendment.

City of San Luis Obispo ERF-2-R Allocation
EXHIBIT B-1
BUDGET
ENCAMPMENT RESOLUTION FUNDING ROUND 2 (ERF-2-R) GRANT
Organization Name: City of San Luis Obispo
Project Name: Encampment Resolution Funding Program
Project Address: 3451 South Higuera Street, San Luis Obispo, CA 93401 Amount of ERF-2-R funding award: $574,109.80
Please see following page for line-item budget.

City of San Luis Obispo ERF-2-R Allocation

STREET OUREACH -
PERSONNEL COSTS OVERVIEW SALARY FTE MONTHS ERF-2-R BUDGET Parks & Recreation Parks & Recreation Ranger $64,740.00 0.5 24 $64,740.00 Parks & Recreation Parks & Recreation Ranger $56,056.00 0.5 24 $56,056.00 Public Works
Maintenance Contracts
Coordinator $76,778.00 0.05 24 $3,839.90
Public Works
Deputy Director - Maintenance
Operations $137,488.00 0.05 24 $13,748.80
SLO Police Department
Community Action Team
(CAT) Social Worker $55,167.00 0.3 24 $33,100.20
SLO Police Department
Community Action Team
(CAT) Police Officer $101,634.00 0.3 24 $60,980.40
SLO Fire Department
Mobile Crisis Unit (MCU)
Social Worker $61,787.00 0.35 24 $43,250.90
SLO Fire Department
Mobile Crisis Unit (MCU)
Firefighter / Paramedic $79,352.00 0.35 24 $55,546.40
Subtotal - Personnel
Costs $331,262.60

STREET OUTREACH

NON-PERSONNEL
COSTS UNIT RATE TIME ERF-2-R BUDGET
Public Works Temporary Restrooms 2 $1,800 24 $86,400.00 Public Works Temporary Trash Services 2 $600 24 $28,800.00 Public Works Trash & Recycling Receptacles 2 $4,772.60 1 $9,545.20 PD / Fire Technology - Devices 2 $500 1 $1,000.00
PD / Fire Technology - Monthly Service 2 $40 24 $1,920.00 Parks & Recreation Trash Removal Services 1 $1,000 24 $24,000.00 Subtotal - Non-Personnel
Costs $151,665.20

ADMINISTRATIVE
COSTS OVERVIEW SALARY FTE MONTHS ERF-2-R BUDGET
Community Development
Homelessness Response
Manager $116,688.00 0.25 24 $58,344.00
Community Development
Homelessness Response
Coordinator $65,676.00 0.25 24 $32,838.00
Subtotal - Administrative
Costs $91,182.00
TOTAL BUDGET $574,109.80

City of San Luis Obispo ERF-2-R Allocation

EXHIBIT C

INSURANCE REQUIREMENTS
ENCAMPMENT RESOLUTION FUNDING PROGRAM ROUND 2 (ERF-2-R) GRANT INSURANCE Coverage
Contractor shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by the Contractor, its agents, representatives, or employees.

MINIMUM SCOPE AND LIMIT OF INSURANCE
Coverage shall be at least as broad as:

1. Commercial General Liability (CGL): Insurance Services Office (ISO) Form CG 00 01 covering CGL on an "occurrence" basis for bodily injury and property damage, including productscompleted operations, personal injury and advertising injury, with limits no less than $1,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit.

2. Automobile Liability: ISO Form Number CA 0001 covering, Code 1 (any auto), or if Contractor has no owned autos, Code 8 (hired) and 9 (non-owned), with limit no less than $1,000,000 per accident for bodily injury and property damage. Automobile liability coverage may be included in Contractor’s general liability policy.

3. Workers' Compensation insurance as required by the State of California, with Statutory Limits, and Employer's Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease. If Contractor will provide leased employees, or, is an employee leasing or temporary staffing firm or a professional employer organization (PEO), coverage shall also include an Alternate Employer Endorsement (providing scope of coverage equivalent to ISO policy form WC 00 03 01 A) naming the County as the Alternate Employer, and the endorsement form shall be modified to provide that County will receive not less than thirty (30) days advance written notice of cancellation of this coverage provision. If applicable to Contractor’s operations, coverage also shall be arranged to satisfy the requirements of any federal workers or workmen’s compensation law or any federal occupational disease law.

If the Contractor maintains higher limits than the minimums shown above, the County requires and shall be entitled to coverage for the higher limits maintained by the contractor.

OTHER INSURANCE Provisions
The insurance policies are to contain, or be endorsed to contain the following provisions:

Additional Insured Status
The County, its officers, officials, employees, and volunteers are to be covered as insureds on the auto policy with respect to liability arising out of automobiles owned, leased, hired or borrowed by or on behalf of the Contractor; and on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Contractor including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the Contractor's insurance (at least as broad as ISO Form CG 20 10, 11 85 or both CG 20 10 and CG 23 37 forms if later revisions used).

Primary Coverage
For any claims related to this contract, the Contractor's insurance coverage shall be primary insurance as respects the County, its officers, officials, employees, and volunteers. Any insurance or self-insurance

City of San Luis Obispo ERF-2-R Allocation
maintained by the County, its officers, officials, employees, or volunteers shall be excess of the Contractor's insurance and shall not contribute with it.

Notice of Cancellation
Each insurance policy required above shall provide that coverage shall not be canceled, except with notice to the County.

Failure to Maintain Insurance
Contractor’s failure to maintain or to provide acceptable evidence that it maintains the required insurance shall constitute a material breach of the Contract, upon which the County immediately may withhold payments due to Contractor, and/or suspend or terminate this Contract. The County, at its sole discretion, may obtain damages from Contractor resulting from said breach.

Waiver of Subrogation
Contractor hereby grants to County a waiver of any right to subrogation which any insurer of said Contractor may acquire against the County by virtue of the payment of any loss under such insurance.

Contractor agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the County has received a waiver of subrogation endorsement from the insurer.

Deductibles and Self-Insured Retentions
Any deductibles or self-insured retentions must be declared to and approved by the County. The County may require the Contractor to provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention.

Acceptability of Insurers
Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:VII, unless otherwise acceptable to the County.

Claims Made Policies
If any of the required policies provide coverage on a claims-made basis:

1. The Retroactive Date must be shown and must be before the date of the contract or the beginning of contract work.

2. Insurance must be maintained and evidence of insurance must be provided for at least five (5) years after completion of the contract of work.

3. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a Retroactive Date prior to the contract effective date, the Contractor must purchase "extended reporting" coverage for a minimum of five (5) years after completion of contract work.

Separation of Insureds
All liability policies shall provide cross-liability coverage as would be afforded by the standard ISO (Insurance Services Office, Inc.) separation of insureds provision with no insured versus insured exclusions or limitations.

Verification of Coverage
Contractor shall furnish the County with original certificates and amendatory endorsements or copies of the applicable policy language effecting coverage required by this clause. All certificates and endorsements are to be received and approved by the County before work commences. However, failure to obtain the required documents prior to the work beginning shall not waive the Contractor's obligation to provide them. The County reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.

Certificates and copies of any required endorsements shall be sent to:

County of San Luis Obispo
Department of Social Services – Homeless Services Division

City of San Luis Obispo ERF-2-R Allocation
PO Box 8119
San Luis Obispo CA 93403
Subcontractors
Contractor shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein.

Special Risks or Circumstances
County reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.

City of San Luis Obispo – ERF-2-R Allocation

EXHIBIT D
ENCAMPMENT RESOLUTION FUNDING PROGRAM ROUND 2 (ERF-2-R) GRANT

PROGRAM REQUIREMENTS

1. Ineligible Costs
ERF-2-R funds shall not be used for costs associated with activities in violation, conflict, or inconsistent with HSC Sections 50250-50254, other applicable laws, the terms and conditions of this agreement, Cal ICH guidance or directives, the NOFA under which the County applied, representations contained in the County’s application, and the Purpose of the Program.

Costs shall not be used for any use or activity that is in violation, conflict, or inconsistent with the legislative intent of the authorizing statute to ensure the safety and wellness of people experiencing homelessness in encampments.

Moreover, no parties to this contract nor their agents shall directly or indirectly use ERF awards for any use or activity that is in violation, conflict, or inconsistent with the legislative intent of the authorizing statute to ensure the safety and wellness of people experiencing homelessness in encampments. ERF funded activities that cause a traumatic effect are inconsistent with ensuring the safety and wellness of people experiencing homelessness in encampments.

Cal ICH, at its sole and absolute discretion, shall make the final determination regarding the allowability of ERF expenditures.

Cal ICH and the County reserves the right to request additional clarifying information to determine the reasonableness and eligibility of all uses of the funds made available by this Agreement. If the County or Subrecipient use ERF funds to pay for ineligible activities, the County and Subrecipient shall be required to reimburse these funds to Cal ICH at an amount and timeframe determined by Cal ICH.

An expenditure which is not authorized by this Agreement, or by written approval of Cal ICH, or which cannot be adequately documented, shall be disallowed, and must be reimbursed to Cal ICH by the County and Subrecipient at an amount and timeframe determined by Cal ICH.

Program funds shall not be used to supplant existing local funds for homeless housing, assistance, prevention, or encampment resolution including site restoration or waste management.

Unless expressly approved by Cal ICH in writing reimbursements are not permitted for any Program expenditures prior to this Agreement’s date of execution.

2. Reporting Requirements
a) Timing and Format of Reports
The County and Subrecipient are required to provide Cal ICH or its agents with all data and outcomes that may inform an assessment of the funded proposal. The County and Subrecipient shall report quarterly and have one Final Work Product submitted prior to this Agreement’s termination.

City of San Luis Obispo – ERF-2-R Allocation
The quarterly reports shall be submitted on a template to be provided by Cal ICH at least 90 days prior to the first reporting deadline. Cal ICH may request interim reports as needed and will provide no less than 30 days’ notice to the County and Subrecipient. b) Required Data
The County and Subrecipient will be required to provide:
 Outreach and service path data at the anonymized, individual level;  Current housing status of persons served in the aggregate;  Status of funding as presented in the Cal ICH approved, standardized budget; and  Continued confirmation that projects receiving ERF funds are populated timely into HMIS and use Cal ICH supplied funding codes.

Cal ICH’s discretion in identifying which information shall be included in these reports is final. c) Cal ICH Usage of Reports
Pursuant to HSC Section 50254(b)(4), Council staff may use information reported directly from grantees and through statewide Homeless Data Integration System for the purposes of research and evaluation of grant performance, service pathways, and outcomes for people served.
d) Failure to Report
If the County and Subrecipient fails to provide any such report, Cal ICH may recapture any portion of the amount authorized by this Agreement with a 14-day written notification.

3. Evaluation
a) At Cal ICH’s discretion, the County and Subrecipient shall participate in a program evaluation regarding their implementation of ERF-2-R awards. To support this effort, Cal ICH will contract a third party to complete the evaluation.
b) County and Subrecipient are expected to be close partners with Cal ICH for this program evaluation and for all evaluative aspects of this Program. This means timely and accurate reporting, candid communication of success or challenges, and availability of persons, information, or materials. More specifically, the County must cooperate with Cal ICH or its designee as reasonably required to implement an evaluation plan. This includes providing or facilitating the collection of data and materials as reasonably requested by Cal ICH or its designee.
c) For the purpose of evaluation, Cal ICH or its designee may visit sites related to the project and film, tape, photograph, interview, and otherwise document the County’s and Subrecipient’s operations during normal business hours and with reasonable advance notice. Cal ICH will comply with the County’s and Subrecipient’s site visit terms during any site visits. d) County and Subrecipient should maintain active data, documents, and filings in anticipation of this evaluation. Special care should be taken to organize and preserve internal work products that guided implementation by the County or Subrecipient. e) County shall notify Cal ICH and provide copies of any reports or findings if the County conducts or commissions any third-party research or evaluation regarding their funded project. f) All terms and conditions that apply to reporting similarly apply to evaluation.

City of San Luis Obispo – ERF-2-R Allocation

4. Inspection Subrecipient and Retention of Records
a. Record Inspection
The Subrecipient agrees that County or its designee shall have the right to review, obtain, and copy all records and supporting documentation pertaining to performance under this Agreement. The Subrecipient agrees to provide County, or its designee, with any relevant information requested. The Subrecipient agrees to give County or its designee access to its premises, upon reasonable notice and during normal business hours, for the purpose of interviewing employees who might reasonably have information related to such records, and of inspecting and copying such books, records, accounts, and other materials that may be relevant to an investigation of compliance with ERG laws, Cal ICH guidance or directives, and this Agreement.

In accordance with Health and Safety Code section 50220.5, Subdivision (l), if upon inspection of records COUNTY identifies noncompliance with grant requirements COUNTY retains the right to impose a corrective action plan on the SUBRECIPIENT. b. Record Retention
The Subrecipient agrees to retain all records described in subparagraph a for a minimum period of five (5) years after the termination of this Agreement.

If any litigation, claim, negotiation, audit, monitoring, inspection or other action has been commenced before the expiration of the required record retention period, all records must be retained until completion of the action and resolution of all issues which arise from it.

5. Nondiscrimination
During the performance of this Agreement, Subrecipients shall not unlawfully discriminate, harass, or allow harassment against any employee or applicant for employment because of sex (gender), sexual orientation, gender identity, gender expression, race, color, ancestry, religion, creed, national origin (including language use restriction), pregnancy, physical disability (including HIV and AIDS), mental disability, medical condition (cancer/genetic characteristics), age (over 40), genetic information, marital status, military and veteran status, and denial of medical and family care leave or pregnancy disability leave. Subrecipients shall ensure that the evaluation and treatment of their employees and applicants for employment are free from such discrimination and harassment. Subrecipients shall comply with the provisions of California's laws against discriminatory practices relating to specific groups: the California Fair Employment and Housing Act (FEHA) (Gov. Code,
§ 12900 et seq.); the regulations promulgated thereunder (Cal. Code Regs., tit. 2, § 11000 et seq.); and the provisions of Article 9.5, Chapter 1, Part 1, Division 3, Title 2 of the Government Code (Gov. Code, §§ 11135 - 11139.5). Subrecipients shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other agreement.

6. Conflict of Interest
All Subrecipients are subject to state and federal conflict of interest laws. For instance, Health and Safety Code section 50220.5, subdivision (i) states, "For purposes of Section 1090 of the Government Code, a representative of a county serving on a board, committee, or body with the primary purpose of administering funds or making funding recommendations for applications pursuant to this chapter shall have no financial interest in any contract, program, or project voted on by the board, committee, or body on the basis of the receipt of compensation for holding public office or public employment as a representative of the county." Failure to comply with these laws, including business and financial disclosure provisions, will result in the application being rejected and any subsequent contract being declared void. Other legal action may also be taken. Additional applicable statutes include, but are not limited to, Government Code section 1090 and Public Contract Code sections 10410 and 10411.

City of San Luis Obispo – ERF-2-R Allocation
a. Current State Employees: No State officer or employee shall engage in any employment, activity, or enterprise from which the officer or employee receives compensation or has a financial interest, and which is sponsored or funded by any State County, unless the employment, activity, or enterprise is required as a condition of regular State employment.

No State officer or employee shall contract on his or her own behalf as an independent Subrecipient with any State County to provide goods or services. b. Former State Employees: For the two-year period from the date he or she left State employment, no former State officer or employee may enter into a contract in which he or she engaged in any of the negotiations, transactions, planning, arrangements, or any part of the decision-making process relevant to the contract while employed in any capacity by any State County. For the twelve-month period from the date he or she left State employment, no former State officer or employee may enter into a contract with any State County if he or she was employed by that State County in a policy-making position in the same general subject area as the proposed contract within the twelve-month period prior to his or her leaving State service.
c. Employees of the Subrecipient: Employees of the Subrecipient shall comply with all applicable provisions of law pertaining to conflicts of interest, including but not limited to any applicable conflict of interest provisions of the Political Reform Act of 197 4 (Gov. Code, § 81000 et seq.).
d. Representatives of a County: A representative of a county serving on a board, committee, or body with the primary purpose of administering funds or making funding recommendations for applications pursuant to this chapter shall have no financial interest in any contract, program, or project voted on by the board, committee, or body on the basis of the receipt of compensation for holding public office or public employment as a representative of the county.

7. Drug-Free Workplace Certification
Certification of Compliance: By signing this Agreement, Subrecipient hereby certifies, under penalty of perjury under the laws of State of California, that it will comply with the requirements of the DrugFree Workplace Act of 1990 (Gov. Code, § 8350 et seq.) and have or will provide a drug-free workplace by taking the following actions:
a. Publish a statement notifying employees and subrecipients that unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance is prohibited and specifying actions to be taken against employees, or Subrecipients for violations, as required by Government Code section 8355, subdivision (a)(1). b. Establish a Drug-Free Awareness Program, as required by Government Code section 8355, subdivision (a)(2) to inform employees, or Subrecipients about all of the following:
i. The dangers of drug abuse in the workplace;
ii. Subrecipient's policy of maintaining a drug-free workplace; iii. Any available counseling, rehabilitation, and employee assistance program; and iv. Penalties that may be imposed upon employees, and Subrecipients for drug abuse violations.
c. Provide, as required by Government Code section 8355, subdivision (a)(3), that every employee and/or subrecipient that works under this Agreement:
i. Will receive a copy of Subrecipients drug-free policy statement, and ii. Will agree to abide by terms of subrecipient's condition of employment or subcontract.

8. Child Support Compliance Act
For any Contract Agreement in excess of $100,000, the Subrecipient acknowledges in accordance with Public Contract Code 7110, that:

City of San Luis Obispo – ERF-2-R Allocation
a. The Subrecipient recognizes the importance of child and family support obligations and shall fully comply with all applicable state and federal laws relating to child and family support enforcement, including, but not limited to, disclosure of information and compliance with earnings assignment orders, as provided in Chapter 8 (commencing with section 5200) of Part 5 of Division 9 of the Family Code; and
b. The Subrecipient, to the best of its knowledge is fully complying with the earnings assignment orders of all employees and is providing the names of all new employees to the New Hire Registry maintained by the California Employment Development Department.

9. Special Conditions - Subrecipients
The Subrecipient agrees to comply with all conditions of this Agreement including the Special Terms and Conditions set forth in Section 11. These conditions shall be met to the satisfaction of County prior to disbursement of funds. The Subrecipient shall ensure that all Sub subrecipients are made aware of and agree to comply with all the conditions of this Agreement and the applicable State requirements governing the use of ERF-2-R funds. Failure to comply with these conditions may result in termination of this Agreement.
a. The Agreement between the Subrecipient and any Sub subrecipient shall require the Subrecipient and its Sub subrecipient, if any, to:
i. Perform the work in accordance with Federal, State and Local housing and building codes, as applicable.
ii. Maintain at least the minimum State-required worker's compensation for those employees who will perform the work or any part of it.
iii. Maintain, as required by law, unemployment insurance, disability insurance, and liability insurance in an amount that is reasonable to compensate any person, firm or corporation who may be injured or damaged by the Subrecipient or any Sub subrecipient in performing the Work or any part of it.
iv. Agree to include all the terms of this Agreement in each subcontract.

10. Compliance with State and Federal Laws, Rules, Guidelines and Regulations The Subrecipient agrees to comply with all state and federal laws, rules and regulations that pertain to construction, health and safety, labor, fair employment practices, environmental protection, equal opportunity, fair housing, and all other matters applicable and/or related to the ERF-2-R program, the subrecipients, and all eligible activities.

Subrecipient shall also be responsible for obtaining any and all permits, licenses, and approvals required for performing any activities under this Agreement, including those necessary to perform design, construction, or operation and maintenance of the activities. Subrecipient shall be responsible for observing and complying with any applicable federal, state, and local laws, rules or regulations affecting any such work, specifically those including, but not limited to, environmental protection, procurement, and safety laws, rules, regulations, and ordinances. Subrecipient shall provide copies of permits and approvals to County upon request.

11. Inspections
a. Subrecipient shall inspect any work performed hereunder to ensure that the work is being and has been performed in accordance with the applicable federal, state and/or local requirements, and this Agreement.
b. County reserves the right to inspect any work performed hereunder to ensure that the work is being and has been performed in accordance with the applicable federal, state and/or local requirements, and this Agreement.
c. Subrecipient agrees to require that all work that is determined based on such inspections not to conform to the applicable requirements be corrected and to withhold payments to the subrecipient until it is corrected.

City of San Luis Obispo – ERF-2-R Allocation

12. Special Terms and Conditions
Per Health and Safety Code Section 50220.5 (g), any housing-related activities funded with ERF2-R funds, including but not limited to emergency shelter, rapid-rehousing, rental assistance, transitional housing and permanent supportive housing, must be in compliance or otherwise aligned with the core components of Housing First, as described in Welfare and Institutions Code section 8255, subdivision (b). Individuals and families assisted with these funds must not be required to receive treatment or perform any other prerequisite activities as a condition for receiving shelter, housing, or other services for which these funds are used. In addition, ERF-2-R funding shall be used to adopt a Housing First approach within the entire local homelessness response system.

Including outreach and emergency shelter, short-term interventions like rapid re-housing, and longer-term interventions like supportive housing.

13. Data & Confidentiality – Use of Homeless Management Information System or Equivalent Database
a. Client Participation/Client Data Collection. Pursuant to HSC Section 50254(b)(3), during the term of this Agreement, the Subrecipient shall maintain a list of all persons receiving benefits from the program and collect all other required HMIS data elements per the most current HMIS Data Standards. The Subrecipient shall also be in compliance with the HMIS Policies and Procedures Manual. The Subrecipients shall ensure all HMIS data is complete and accurate in preparation for the year-end Annual Performance Report (APR) by no later than 30 days after grant close.
b. Data Entry and Use. The Subrecipient shall collect and enter all required data per the most current HMIS Data Standards into HMIS, pursuant to HSC Section 50254, including, but not limited to, health information, in a manner consistent with state and federal law, for tracking in the statewide Homeless Data Integration System. Each HMIS user must sign a HMIS User Agreement, as provided by the County. The Subrecipient shall only enter or upload individuals in the HMIS database that exist as clients under the Subrecipient’s jurisdiction. The Subrecipient shall not misrepresent its client base in the HMIS database by entering known, inaccurate information. The Subrecipient shall enter data into HMIS within three (3) business days of client intake and services per the San Luis Obispo CoC HMIS Data Quality Plan. Subrecipient shall comply with the data entry requirements of AB977, located at Welfare and Institutions Code section 8256(d). c. Coordinated Assessment at Entry. For projects that are required to use Coordinated Entry, subrecipients shall assess clients at the time of their entry into the program using the Coordinated Entry Assessment form and the assessment tool that has been identified in the Coordinated Entry Policies and Procedures. Subrecipient shall enter all coordinated assessment client scores into HMIS no later than three (3) business days after client program entry, unless otherwise notified by the County. d. Validation Studies. The County may periodically conduct formal validation studies of HMIS Data (the "Validation Studies"). In order to conduct the Validation Studies, staff selected by the County may review the Subrecipient's records for purposes of verifying the validity of the information reported to the County and included in the HMIS database. Individuals involved in the conducting of any such Validation Studies shall sign a confidentiality agreement requiring them to maintain the confidentiality of the Data pertaining to a particular Subrecipient client. The Subrecipient hereby authorizes the County to review the Subrecipient's records for purposes of verifying the validity of the information reported to the County.

City of San Luis Obispo – ERF-2-R Allocation
e. Data Quality. Subrecipient shall ensure all required data in HMIS meets the data quality standards as outlined in the most current CoC HMIS Data Quality Plan. f. Aggregate Data and Reports. Aggregate HMIS Data received from the Subrecipient and other agencies providing Homeless Services affiliated with the County and included in the HMIS database shall be utilized by the County to (a) produce reports regarding utilization of housing and homelessness services; (b) track program outcomes; (c) provide accountability for entities that receive funds for use in providing housing and homelessness services in the San Luis Obispo County area; and (d) identify unfilled service needs and plan for the provision of new services. From time to time, the County may publish and distribute community reports containing aggregate data from all agencies providing Homeless Services entering data into the HMIS database (the "Community Reports"). The Community Reports shall not identify specific individuals. The Subrecipient hereby authorizes the County to include the Subrecipient’s Data in the Community Reports. g. Inter-Agency Data Sharing. The HMIS program is designed to permit sharing of Data between the County’s affiliated agencies. The Subrecipient may share HMIS client-level data with other County affiliated agencies provided such sharing of Data is in accordance with the County’s standards and policies, the San Luis Obispo HMIS Policies and Procedures Manual, and the Inter-Agency Data Sharing Agreement. Notwithstanding the foregoing, the Subrecipient shall not share HMIS client-level data with any agency that has not entered into an Inter-Agency Data Sharing Agreement with the County. h. Confidentiality (HMIS). The County shall provide and maintain the Subrecipient's HMIS Data in such a way as to protect against revealing the identity of the Subrecipient's clients to unauthorized agencies, individuals, or entities. The County shall take all reasonable action that it deems necessary and appropriate to prevent unauthorized use or disclosure of the Data. The Subrecipient shall uphold relevant federal and state confidentiality regulations and laws that protect client records and the Subrecipient shall only release client records with written consent by the client, unless otherwise provided by law.
i. Point in Time Count: Subrecipient shall take an active role in the County Wide Homeless Point in Time Count. Additionally, when applicable, subrecipient shall provide demographic client emergency shelter and/or transitional housing data, as required by the US Department of Housing and Urban Development (HUD).

City of San Luis Obispo – ERF-2-R Allocation

EXHIBIT E
STANDARD AGREEMENT NUMBER 23-ERF-2-R-10004 WITH THE

CALIFORNIA INTERAGENCY COUNCIL ON HOMELESSNESS

Item 5g
Department: Community Development
Cost Center: 4008
For Agenda of: 6/4/2024
Placement: Consent
Estimated Time: N/A
FROM: Timmi Tway, Community Development Director
Prepared By: Owen Goode, Assistant Planner: David Amini, Housing Coordinator SUBJECT: AMENDMENT TO THE GARDEN STREET TERRACES AFFORDABLE

HOUSING AGREEMENT TO CONVERT ONE BELOW MARKET RATE

RENTAL UNIT TO ONE BELOW MARKET HOMEOWNERSHIP UNIT

RECOMMENDATION
Approve the Draft Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, to approve the conversion of one Below Market Rate Rental Unit to a Home Ownership Unit within the City’s Below Market Rate Housing Program,” with an option to purchase offered to the existing moderate-income tenant, for the Garden Street Terraces project

POLICY CONTEXT
Both homeownership and rental units that meet the rental or sales price standards, as established by the City and that are made available for very-low, low, and moderate income persons or households, and that are subject to deed restrictions or other instruments that ensure the housing remains affordable for a predetermined period, are considered affordable housing. The proposed action to modify an affordable housing agreement to convert a rental unit to a home-ownership unit within the City’s Below Market Rate Housing Program does not conflict with any 6th Cycle Housing Element Policies or Major City Goal for Housing and Homelessness to support housing options for all.

The continued ownership and maintenance of the subject rental unit required as part of the Garden Street Terraces project has become an undue burden on the owner, so the owner has requested to convert the unit to a below market rate homeownership unit in order to facilitate sale to an income eligible buyer. Converting the rental unit to a for sale unit would allow an income eligible buyer to reside in the home. This would help accomplish the owner’s goal of transferring title to the property as well as the City’s goal of retaining its stock of affordable housing.

DISCUSSION

Item 5g
Background
On June 1, 2010, the City Council adopted Resolution Numbers 10182 and 10183 certifying an environmental impact report and approving use permit and tentative tract map for the 1119 Garden Street property. These resolutions allowed the owner to construct and operate a mixed-use building on the property, formerly referred to as Garden Street Terraces, and were later amended by the City Council on November 1, 2011, by Resolution Number 10312 and on March 4, 2014, by Resolution Number 10504.

The project completed construction in 2021 and is comprised of 20,000 sq.ft. of retail space, 8 residential units, 64 hotel rooms, and 41 private parking spaces.

The original requirement to provide below market rate housing as a public benefit to support the approval of the project was to provide three low-income housing units, which was 9% of the 33 residential units proposed within the project. As the project was modified, and the total number of units proposed was reduced from 33 to 8, the final requirement was to provide two moderate-income rental units located off-site at the Parkwood Apartments located on Southwood Drive, exceeding 9% of the final eight residential units proposed within the project. An Affordable Housing Agreement (Agreement) was executed for the two moderate-income rental units (Attachment B).

The owner of one of the units has requested to convert the unit to a for-sale (Attachment C). The Affordable Housing Agreement recorded on the property requires approval by the decision-making body that approved the project (per Section 5.7 of the original Affordable Housing Agreement) to approve any major modifications to the Agreement. In this case, the City Council was the approving body for the project, and therefore, the request to amend the Agreement is before the Council for consideration.

The unit to be converted is currently occupied by an eligible renter who has been duly qualified by the City’s affordable housing administrator. In order to help secure housing stability for this renter and upon confirmation of eligibility, the City intends to offer a first right of option to purchase the property to the tenant, who has expressed interest in and ability to purchase the home. In the event that the current tenant is no longer eligible to purchase the home or would like to pursue other housing opportunities, the tenant shall have the option to reside in the unit for the remainder of the lease agreement or for at least 90 days, whichever is greater. The first right of option to purchase the property by the tenant will be included in the amended Agreement.

The other unit subject to the Agreement has been previously sold and continues to be maintained as a moderate income rental unit. Under this proposed amendment, one unit would maintain its status as a rental unit and the other would be converted to an ownership unit.

Previous Council Action
City Council approved the final design for the Garden Street Terraces Project on March 4, 2014, by Resolution Number 10504.

Item 5g
Public Engagement
Members of the Public will have an opportunity to provide public comment prior to or during the City Council meeting.

CONCURRENCE
The Community Development Director concurs with the recommended action.

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

FISCAL IMPACT
Budgeted: N/A Budget Year: 2023-24
Funding Identified: N/A
Fiscal Analysis:

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

Total $0 $0 $0 $0
The conversion of this unit type will not impact the City fiscally.

ALTERNATIVES

1. Council could decide to not approve the conversion of the rental unit to a homeownership unit. This action is not recommended by staff because converting the unit to an ownership unit provides flexibility for the owner and promotes upward mobility for the current renter or prospective buyer. This alternative would result in no change to the property and the owner would be required to continue to maintain the home as a Below Market Rate rental unit, compliant with the City’s standards. The owner may continue to pursue selling the unit, but it would still maintain its status as a rental unit.

2. Council could approve the conversion of the rental unit to a homeownership unit but not approve the first right of option to purchase to the existing tenant.

This action is not recommended by staff because the current tenant has expressed interest in purchasing the unit with the condition that they are deemed an eligible buyer per the City’s Below Market Rate Housing Standards. Approving this alternative could create a challenge for the current tenant in pursuing other housing opportunities.

Item 5g

ATTACHMENTS
A - Draft Resolution approving the Conversion of one Below Market Rate Rental Unit to a Home Ownership Unit
B - Recorded Below Market Rate Housing Agreement
C - Garden Street SLO Partners Conversion Request

R ______
RESOLUTION NO. _____ (2024 SERIES)

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

OBISPO, CALIFORNIA, TO APPROVE THE CONVERSION OF ONE

BELOW MARKET RATE RENTAL UNIT TO A HOME OWNERSHIP UNIT
WITHIN THE CITY’S BELOW MARKET RATE HOUSING PROGRAM
WHEREAS, on March 4, 2014, the City Council approved Resolution Number 10504, to allow for the construction and operation of a mixed-use building located at 1119 Garden Street, referred to as Garden Street Terraces, and WHEREAS, the project approval included a public benefit provision to provide 2 Moderate-Income rental units located off-site, and
WHEREAS, an Affordable Housing Restriction Agreement and Declaration of Restrictive Covenants was entered into on March 26, 2018 (the “Agreement”), to deed restrict 2 Moderate-Income rental units, and
WHEREAS, the owner has requested to convert one of the units to an ownership unit so that it may be sold to an eligible buyer subject to the City’s Below Market Rate Housing Standards and Purchase Guidelines, and
WHEREAS, the City Council of the City of San Luis Obispo conducted review of the request on June 4, 2024, as a consent agenda item and has duly considered all evidence and recommendations by staff.

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

SECTION 1. Determination. The City Council finds and determines that the request is consistent with implementing the City’s Housing Element and Major City Goals to expand housing opportunities for all and approves of the conversion, subject to the following conditions:

1. The Agreement shall be amended to convert one moderate-income rental unit to an ownership unit and shall be deed restricted for no less than 45 years upon sale to an eligible buyer.

2. The home shall not be sold until the amendment to the Agreement, in a form satisfactory to the Community Development Director, is executed by all parties.

The Community Development Director is authorized to execute the amendment, and any other agreements necessary to carry out the purposes of this request, on behalf of the City.

3. In order to ensure housing stability for the existing tenant and upon confirmation of eligibility for the City’s below market rate homeownership program, the existing tenant shall be offered a first option to purchase the unit. Facilitation of this option shall be the responsibility of the Community Development Director or their designee.

Resolution No. _____ (2024 Series) Page 2
R ______

4. In the event that the existing tenant is not an eligible buyer or decides not to purchase the home, they shall be entitled to reside in the unit for the remainder of the lease agreement or reside in the unit for 90 days after approval of this resolution, whichever is date is later.

5. The eligible buyer of the homeownership unit shall execute a Promissory Note, which shall be secured by a Deed of Trust in favor of the City. The Promissory Note shall include provisions restricting the occupancy, resale, and refinancing of the unit.

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 _______________ 2024. ___________________________
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

Garden Street SLO Partners, LP
505 Bath St
Santa Barbara, CA 93101
Garden Street SLO Partners, LP
505 Bath St
Santa Barbara, CA 93101
November 21, 2023
Owen Goode
Community Development
919 Palm Street
San Luis Obispo, CA 93401
Dear Owen:

Our unit at 1023 Southwood Dr Unit C, San Luis Obispo, CA 93401 is currently deed restricted moderate “rental”. We have attempted to sell this unit for more than 2 years. We have toured more than 50 groups though it. We have been under contract several times, but ultimately no one has followed through to complete the purchase. The unit is in Parkwood Village, which is a great community. We performed a complete remodel of the unit when we purchased the unit in 2018. Other units within the same complex have sold quickly. The issue keeps coming back to the rental deed restriction.

We are asking the City to change the designation from “rental” to “owner occupied”. We are not requesting a change in restriction level just simply in type. In fact, the current tenant would like to purchase the unit- a true move up opportunity.

We have been working with City staff since September 2021 on better understanding the restriction and the process to change it. We have been informed that this would need to go to City Council. We were recently made aware that when proposing a new project in San Luis Obispo, the developer can choose between rental and owner occupied – something that we didn’t realize when we signed the Affordable Housing Restriction Agreement in 2018. We are hoping we can be granted this same opportunity now.

We appreciate your consideration of our request.

Kind Regards,
Garden Street SLO Partners, LP
Patrick Smith
Partner
DocuSign Envelope ID: 32330DDE-31B7-45FC-95E5-809E4E56E34C

Item 5h
Department: Utilities
Cost Center: 6004
For Agenda of: 6/4/2024
Placement: Consent
Estimated Time: NA
FROM: Aaron Floyd, Utilities Director
Prepared By: Nick Teague, Water Resources Program Manager SUBJECT: AUTHORIZATION TO SUBMIT AN APPLICATION FOR WATERSMART

GRANT FOR ADVANCED METER INFRASTRUCTURE (AMI) WATER
METERS

RECOMMENDATION
Adopt a Draft Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, approving the application for grant funding for the WaterSMART Water and Energy Efficiency Program for purchase and implementation of advanced metering infrastructure.”

POLICY CONTEXT
This project would address major city goals associated with climate action, as the project would reduce the number of vehicle trips required when turning water on and off for new customers and when investigating high water use. Climate action goals would also be addressed due to the new technology decreasing the volume of water lost due to water leaks. Reductions in water leaks results in less energy demand to pump and treat water and wastewater.

Additionally, the implementation of Advanced Meter Infrastructure (AMI) would contribute to major city goals related to economic resiliency and fiscal sustainability by reducing utility and customer costs for water wasted due to leaks or overirrigation.

DISCUSSION
The City currently uses a contract meter reading company to read meters between the 3rd and 10th day of each month. Incidences of late delivery of these services over the past two years have led to staff proposing that the City begin migrating water meter reading from contract operations to an Advanced Metering Infrastructure (AMI) system.

AMI systems allow water consumption data to be collected by digital water meters and transmitted to an online portal through a low-frequency cellular transmission device commonly referred to as a radio. In 2017 the City entered into a contract with Badger Meter Inc. after an RFP process for a 5-year term.

Item 5h
In 2022 a contract amendment was approved with Badger Meter Inc. to include AMI radios and extend the contract for three additional years. This project will require increases in the City’s budget for purchasing water meters, radios, and AMI-compatible meter box lids, as well as two full-time contract (3-year in duration) meter and radio installation positions, who will work alongside Water Distribution staff to expedite water meter replacement and radio installations. The AMI project will be recommended to Council for funding as part of the 2024-25 budget supplement process. To assist with expenditures, staff is also beginning to seek grant opportunities.

Following installation of AMI on a meter, water customers can create an account providing access to a web-based and/or app-based portal. The portal provides access to real-time water-use data and allows customers to set alerts for abnormal use or potential leaks.

The real-time water-use data can help customers understand their water-use patterns and identify opportunities to use water more efficiently. Whereas, the alerts can help customers stop and resolve issues before they are typically discovered during the City’s current monthly meter reading – saving both the customer and the City time and money.

WaterSMART Water and Energy Efficiency Grant
The WaterSMART Water and Energy grant program is administered by the U.S. Bureau of Reclamation (USBR). Through WaterSMART, the USBR leverages Federal and nonFederal funding to work cooperatively with States, Tribes, and local entities as they plan for and implement actions to increase water supply sustainability through investments in existing infrastructure and attention to local water conflicts. Five million dollars ($5,000,000) per application is available for the current round of funding and the program requires a 50% match utilizing local funds. Staff recommend applying for up to $2,764,707.64 to fund contract staff who will conduct AMI installation, the purchase and installation of AMI-compatible water meters, radios, and meter box lids and software upgrades.

The City’s proposed timeline for delivery of the AMI project would begin in July 2024, in alignment with the City’s 2024-25 budget adoption, and full implementation is anticipated to take three years. WaterSMART grants are scheduled to be awarded in August 2025, about one year into the three-year project. Due to this misalignment of project start time and grant awards, the City will not likely be eligible for reimbursement for the full AMI project cost. However, staff are requesting authorization to apply for the complete amount in case the grant allows for reimbursement for previously completed work. Staff do not recommend delaying the implementation of AMI pending the outcome of the grant application, since the WaterSMART grant is a highly competitive grant solicitation and the need for AMI is immediate. If staff discovers that previously completed work is not eligible for reimbursement, the grant application will be submitted for a lesser amount, comparable to the expenses estimated for the final two years of the project.

Item 5h
Previous Council or Advisory Body Action
On May 2, 2017, the City Council adopted a City standard for water meters and approved the release of an RFP for the annual purchase of water meters. As part of the staff report, staff recommended that the selected meter vendor produce water meters that are compatible with remote reading devices, thus ensuring that meters installed since 2017 are AMI-compatible.

Public Engagement
The City is currently conducting a 100-meter AMI pilot study where staff are gathering statistics regarding use and user feedback to better understand how the program may benefit customers. Staff have received hundreds of requests for AMI water meters over the past five years. Requests have generally come from customers who have experienced water leaks who had AMI water metering in their previous residences in other cities.

CONCURRENCE
The Utilities Department, Finance Department, and City Administration have reviewed this authorization request and concur with its contents.

ENVIRONMENTAL REVIEW
The application for a WaterSMART grant is not a "project" under the California Environmental Quality Act (CEQA), because the action does not involve any commitment to a specific project which may result in a potentially significant physical impact on the environment, as contemplated by Title 14, California Code of Regulations, Section 15378.

Implementation of the AMI project will be categorically exempt from CEQA pursuant to Section 15301 (Existing Facilities) of the CEQA Guidelines as installation of AMI on City meters constitutes operation, repair, or minor alteration of existing public mechanical equipment involving no expansion of existing use of the meters.

FISCAL IMPACT
Budgeted: No Budget Year: 2023-24
Funding Identified: No
Fiscal Analysis:

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

Total $0 $0 $0 $0

Item 5h
There is no fiscal impact associated with this recommended action. Submission of grant applications does not obligate or commit the City to accept grant agreements from any agency but allows this phase of the grant application process to begin. Staff will return to Council for approval before entering any grant agreement.

The City is seeking approval to kick-off the AMI water meter replacement project during the 2024-25 Supplemental Budget. Should the City be awarded a grant to offset project costs, the total project cost could be reduced by as much as $2,764,708. Given the competitive nature of the grant solicitation, and the fact that the grant may be awarded after project construction has begun, staff anticipate that a lesser amount may be awarded if the City is selected to receive grant funding for this project.

AMI Grant Financing Information
Staffing Costs $167,670
Software Upgrade Costs $5,512
Setup and Training Fees $2,625
Meter Boxes, Radios, and Water Meters $5,353,607
Total AMI Project Costs $5,529,415
Maximum Possible Grant Award (50% of Project Cost) $2,764,707

ALTERNATIVES

1. The City Council could decide to deny authorization to apply for grant funding.

This alternative is not recommended because this grant would provide supplemental funding to a project that will be proposed as part of the budget supplement process.

Utilizing grant funding will result in cost savings for the City.

2. The City Council could direct staff to delay the start of the AMI Meter project.

Staff do not recommend this action since the WaterSMART grant is highly competitive and the initiation of the AMI project is a high priority for the Utilities Department.

Delaying the implementation of the AMI project could result in delays in collection of water and sewer revenue.

ATTACHMENTS
A - Draft Resolution authorizing submittal of a Water SMART Water and Energy Efficiency Grant

R ______
RESOLUTION NO. _____ (2024 SERIES)

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

OBISPO, CALIFORNIA, APPROVING THE APPLICATION FOR GRANT

FUNDING FOR THE WATERSMART WATER AND ENERGY

EFFICIENCY PROGRAM FOR PURCHASE AND IMPLEMENTATION OF

ADVANCED METERING INFRASTRUCTURE
WHEREAS, Congress has authorized the WaterSMART grant program, which is administered by the United States Bureau of Reclamation, with $5 million available per project; and
WHEREAS, the WaterSMART grant leverages Federal and non-Federal funding to work cooperatively with States, Tribes, and local entities as they plan for and implement actions to increase water supply sustainability through investments in existing infrastructure and attention to local water conflicts; and WHEREAS, Advanced Metering Infrastructure (AMI) systems allow water consumption data to be collected by digital water meters and transmitted to an online portal through a low-frequency cellular transmission device, which will allow staff and community members more visibility and accuracy of water meter reads, will result in improved leak detection and water budgeting, and will result in a more consistent meter read schedule, more accessible water use data, and, consequently, more predictable bills for customers.

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

Resolution No. _____ (2024 Series) Page 2
R ______
SECTION 1. Authorizes staff to prepare and submit an application for the WaterSMART Water and Energy Efficiency grant program.

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 _______________ 2024. ___________________________
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

City of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: June 4, 2024
TO: Mayor and Council
FROM: Matt Horn, Public Works Director
Prepared by: Madeline Kacsinta, Capital Improvement Program Admin. Manager VIA: Whitney McDonald, Interim City Manager
SUBJECT: ITEM 5I - 2024-25 ROAD MAINTENANCE RECOVERY ACT (SB1)

FUNDING AND PROJECTS
Staff received the following question, regarding the 2024-25 Road Maintenance Recovery Act (SB1) funding and the project planned to utilize those funds. The question is shown below with staff’s response shown in italics:
1) In reviewing the attachments for this item, it appears that the text of the resolution (Attachment A) does not match the map (Attachment B). Please clarify the scope of work for the 2024 Roadway Sealing Project.

All roadways included in the 2024 Roadway Sealing Project are included in bold on Attachment B, Page 193 of the packet. This scope of work is identical to what Council approved and authorized staff to advertise for construction bids at the May 21, 2024 Council Meeting. Item 5i programs funding for a portion of the work included in the 2024 Roadway Sealing Project, but not the entire project. The 2024 Roadway Sealing Project is estimated to cost approximately $6.7M and this SB1 Funding is approximately $1.2M. This staff report does not modify the scope of work included in the 2024 Roadway Sealing Project but only provides the necessary location information to the California Transportation Commission (CTC) for tracking purposes.

Item 5i
1 “Local Streets and Roads - Projected Revenues.” California City Finance, http://californiacityfinance.com/LSRcicoSummaryFy24Fy25.pdf Department: Public Works
Cost Center: 5001
For Agenda of: 6/4/2024
Placement: Consent
Estimated Time: N/A
FROM: Matt Horn, Public Works Director
Prepared By: Madeline Kacsinta, Capital Improvement Program Administrative Manager SUBJECT: 2024-25 ROAD MAINTENANCE RECOVERY ACT (SB1) FUNDING AND

PROJECTS

RECOMMENDATION
Adopt a Draft Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, adopting a list of projects for Fiscal Year 2024-25 funded by SB 1: The Road Repair and Accountability Act of 2017.”
Background
On April 28, 2017, the Governor signed Senate Bill 1 (SB1) (Beall, Chapter 5, Statutes of 2017), which is known as the Road Maintenance and Rehabilitation Act of 2017 (RMRA). RMRA/SB1 addresses basic road maintenance, rehabilitation, and critical safety needs on both the state highway and local roadway systems. RMRA provides funding by charging:

1. An additional 12 cents per gallon on the gasoline excise tax effective November 1, 2017.

2. An additional 20 cents per gallon on the diesel fuel excise tax effective November 2, 2017.

3. An additional vehicle registration tax called the “Transportation Improvement Fee” with rates based on the value of the motor vehicle effective January 1, 2018.

4. An additional $100 vehicle registration tax on zero emissions vehicles model year 2020 or later effective July 1, 2020.

Based on the latest forecasts (January 2024), the City is estimated to receive approximately $1,223,008 of RMRA funding in FY 2024-251. RMRA funds are programmed into the financial plan to help fund eligible Capital Improvement Plan (CIP) projects. The California Transportation Commission (CTC) has published guidelines for programming and reporting on the use of RMRA funds. Annually on July 1st, the City must submit a project list to the CTC for the coming year and each September 30th, the City must submit a project expenditure report. This report and City Council Resolution (Attachment A) completes the City’s obligation for RMRA fund programming for Fiscal Year 2024-25.

Item 5i
Recommended Use of 2024-25 RMRA/SB1 Funding
2024 Roadway Sealing Project
The 2024 Roadway Sealing Project, planned to start construction in summer of 2024, is part of the City’s ongoing pavement management plan, which alternates between maintenance of neighborhood streets in even years, and maintenance and repair of arterial streets in odd years. This approach is intended to promote equity between residential and commercial areas and spread the benefits to the entire community.

The 2024 Roadway Sealing project concentrates on maintenance and striping on the streets outlined in Attachment B primarily on the North and East neighborhoods of the City. Key locations include Johnson Avenue, the Toro Street Neighborhood, the Mill Street Neighborhood, and the University Neighborhoods including Grand Avenue.

In addition to roadway maintenance, the 2024 Roadway Sealing project will incorporate various street modifications outlined in the Active Transportation Plan (ATP), aimed at bolstering safety and mobility for all road users. These strategies encompass design elements specifically crafted to enhance pedestrian crossing safety, augment separation between bicyclists and motor vehicle traffic, and implement measures to mitigate traffic intensity and lower speeds on select streets.

The project is expected to begin construction in the summer of 2024 utilizing SB1 funding in Fiscal Year 2024-25 as adopted in the 2023-25 Financial Plan.

The recommendation in this report establishes a project list for the FY 2024-25. The establishment of this project list does not commit these RMRA funds. Council could, at any point prior to expenditure, change funding priorities or project allocations based upon changes in economic conditions that could impact SB1 revenue. Any project list changes would be communicated to the CTC via the annual expenditure report in September each year. The below table indicates the total SB1 funding contribution to be used for the 2024 Roadway Sealing project. Council received a separate staff report at the May 21, 2024 meeting requesting authorization to advertise the project, which included total costs and general fund contributions to the work beyond the allocated SB 1 funds identified below.

RMRA SB 1 Project List for FY 2024-25
2024 Roadway Sealing $1,223,008
Estimated SB 1 2024-25 Funding Amount $1,223,008
Previous Council or Advisory Body Action
At the May 21, 2024, City Council meeting, staff received Council authorization to advertise the 2024 Roadway Sealing project.

Item 5i
Policy Context
This action and the associated resolution are required by the CTC for the use of RMRA funds. The proposed projects are consistent with the proposed 2023-25 Financial Plan and Major City Goals.

Public Engagement
Public engagement is ongoing for the summer paving project proposed to be funded by SB1 funds. In addition, the project was presented to the City’s Active Transportation Committee (ATC) three times during project development: in fall 2023 to provide input on preliminary scope of improvements; in February 2024 to review 90% design drawings; and again in April 2024 to provide final input on Grand Avenue designs. The public has an opportunity to comment on this item at or before the Council meeting.

CONCURRENCE
There is concurrence from the Finance Department and Capital Improvement Plan Review Committee through its review and approval of the 2023-2025 Financial Plan.

ENVIRONMENTAL REVIEW
The Project qualifies for an Exemption to the California Environmental Quality Act pursuant to State CEQA Guidelines Sections 15301(Existing Facilities) because the Project consists of the repair and maintenance of existing roadways, and minimally disruptive surface improvements within an existing built urban environment (pavement markings sign posts, etc.). A Notice of Exemption will be filed through the Community Development Department upon Council approval of the project.

FISCAL IMPACT
Budgeted: Yes Budget Year: 2024-25
Funding Identified: Yes
Fiscal Analysis:

Funding Sources
Total
Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund $ $ $ $
State
Federal
Other: RMRA/SB1 $1,223,008* $1,223,008 $0
Total $1,223,008 $1,223,008 $0
*This is a forecast number and is subject to change

Item 5i

ALTERNATIVES

1. The City Council could deny adoption of the resolution to fund these Capital Improvement Plan projects using RMRA funds. This is not recommended as the projects are eligible for RMRA funding. These projects improve critical safety needs, maintain existing infrastructure, and further the City’s transportation multi-modal and climate action goals.

2. The City Council could deny adoption of the resolution to fund the 2024 Roadway Sealing Project using RMRA funds, and direct staff to return with an alternative project to fund with RMRA funds. This is not recommended as the Roadway Stealing Project was approved for advertisement at the May 21st City Council meeting utilizing RMRA as a funding source.

ATTACHMENTS
A - Draft Resolution adopting the list of projects to receive 2024-25 RMRA Funding B - 2024 Roadway Sealing Project Map

R ______
RESOLUTION NO. _____ (2024 SERIES)

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

OBISPO, CALIFORNIA, ADOPTING A LIST OF PROJECTS FOR FISCAL YEAR 2024-25 FUNDED BY SB 1: THE ROAD REPAIR AND
ACCOUNTABILITY ACT OF 2017
WHEREAS, Senate Bill 1 (SB 1), the Road Repair and Accountability Act of 2017 (Chapter 5, Statutes of 2017) was passed by the Legislature and Signed into law by the Governor in April 2017 to address the significant multi-modal transportation funding shortfalls statewide; and
WHEREAS, SB 1 includes accountability and transparency provisions that will ensure residents are aware of the projects proposed for funding in our community and which projects have been completed each fiscal year; and WHEREAS, the City must adopt by resolution a list of projects proposed to receive fiscal year funding from the Road Maintenance and Rehabilitation Account (RMRA), created by SB 1, which must include a description and the location of each proposed project, a proposed schedule for the project’s completion, and the estimated useful life of the improvement; and
WHEREAS, the City will receive an estimated $1,223,008 in RMRA funding in Fiscal Year 2024-25 from SB 1; and
WHEREAS, this is the eighth year in which the City is receiving SB 1 funding and will enable the City to continue essential road maintenance and rehabilitation projects, safety improvements, and increasing access and mobility options for the traveling public that would not have otherwise been possible without SB 1; and WHEREAS, the City has undergone a robust public process to ensure public input into the community’s transportation priorities, and budgeting process that has been adopted by City Council that includes a full listing of Capital Improvements Plan projects and funding sources including SB-1; and
WHEREAS, the City used a Pavement Management System and other goals such as the complete streets elements and bicycle and pedestrian safety to develop the SB 1 project list to ensure revenues are being used on the most high-priority and cost-effective projects that also meet the community’s priorities for transportation investment; and WHEREAS, the funding from SB 1 will help the City maintain and rehabilitate streets/roads, sidewalks, and add active transportation infrastructure throughout the City this year and similar projects into the future; and

Resolution No. _____ (2024 Series) Page 2
R ______
WHEREAS, the 2021 California Statewide Local Streets and Roads Needs Assessment found that the City/County’s streets and roads are in an “at lower risk” condition and this revenue will help us increase the overall quality of the City’s road system and over the next decade will bring streets and roads into a “good” condition; and WHEREAS, the SB 1 project list and overall investment in the City’s streets and roads infrastructure with a focus on basic maintenance and safety, investing in complete streets infrastructure and active transportation projects, and using cutting-edge technology, materials and practices, will have significant positive co-benefits statewide.

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

SECTION 1. The foregoing recitals are true and correct.

SECTION 2. The following project will be funded in-part with Fiscal Year 2024- 25 RMRA revenues:

Project Title: 2024 Roadway Sealing Project
Project Description: 2024 Roadway Sealing work consistent with Pavement Maintenance Plan
Project Location:
a. Johnson Avenue
b. Toro Street Neighborhood
c. Mill Street Neighborhood
d. University Neighborhood
e. Highland Drive between Patricia Drive and Santa Rosa Street f. Patricia Drive between Twin Ridge Drive and Highland Drive g. Jeffrey Drive between Highland Drive and Westmont Avenue h. Rancho Drive between Westmont Avenue and Rancho Drive cul-de-sac i. Westmont Avenue between Patricia Drive and Jeffrey Drive j. Broad Street between Mission and Lincoln Streets
The project’s Additive Alternatives A include pavement maintenance, striping, curb ramps, and storm drain infrastructure to the following streets, respectively:
k. Grand Avenue
Estimated Project Schedule: Start July 2024 — Completion December 2024 Estimated Project Useful Life: 20 years

Resolution No. _____ (2024 Series) Page 3
R ______
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 _______________ 2024. ___________________________
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

PUBLIC WORKS DEPARTMENT
919 Palm Street, San Luis Obispo, CA 93401
Roadway Sealing 2024
Location Map
N
Roadways included as part of the 2024
Roadway Sealing Project Page 201 of 448

Item 5j
Department: Public Works
Cost Center: 5101
For Agenda of: 6/4/2024
Placement: Consent
Estimated Time: N/A
FROM: Matt Horn, Public Works Director
Prepared By: Jennifer Rice, Deputy Director of Mobility Services SUBJECT: SECOND READING AND ADOPTION OF ORDINANCE NO. 1735 (2024 SERIES) AMENDING CHAPTER 52 OF THE MUNICIPAL CODE
(PARKING RATES)

RECOMMENDATION
Adopt Ordinance No. 1735 (2024 Series) entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, amending Title 10, Chapter 52 (Parking Meters and Parking Payment Centers), of the Municipal Code Modifying Hourly Parking Rates On-Street and In Surface Parking Lots.”

POLICY CONTEXT
Section 4.141 of the General Plan’s Land Use Element (LUE) addresses parking for the Downtown area. The policy states that the City must ensure there is a diversity of parking opportunities and any major increases in parking supply should take the form of structures located on the perimeter of the commercial core.

The Parking Services program of the Public Works Department offers a variety of hourly rates and permits to provide access to on-street, surface lot, and structured parking facilities for use by employees, businesses, and visitors of the Downtown area. The City recently began construction on the fourth public parking structure, the Cultural Arts District Parking Structure (CADPS), in alignment with the City’s goals for Downtown parking and access.

Section 13.1.2 of the General Plan’s Circulation Element (CE) states that the City shall manage curb parking downtown to encourage short-term use and that parking programs shall be financially self‐supporting.

Parking Services actively manages curb parking through time-limited parking and strategically located commercial and passenger loading zones. Limited timed parking onstreet in the core of Downtown encourages use of off-street facilities for long-term parking needs. Parking Services is also responsible for maintaining the long-term fiscal health of the Parking Fund and ensuring that all obligations and financial policies are met.

Appropriately set hourly parking rates and permit fees ensure the fund can meet these obligations and policies.

Item 5j
Economic Resiliency, Cultural Diversity, and Fiscal Sustainability is a Major City Goal as identified in the adopted 2023-25 Financial Plan. Parking Services plays a critical role in fostering a vibrant local economy by effectively managing parking demand and access to Downtown. The Parking Fund must also maintain fiscally responsible and sustainable operations as indicated in the General Plan CE Section 13.1.2.

DISCUSSION
Background
On May 14, 2024, the City Council introduced Ordinance No. 1735 (2024 Series), amending Title 10 Chapter 52 of the Municipal Code to remove the parking rate increase planned for July 1, 2025, and reduce on-street and surface lot parking rates. This Ordinance implements Option B presented the draft Parking Rate Study completed by the City’s retained consultant, Dixon Resources Unlimited, and presented as part of the public hearing conducted on May 14, 2024. Following discussion of the rate study and the options presented in it, the four present Councilmembers unanimously approved the introduction of the ordinance and adoption of a resolution to implement reduced rates in the City’s parking structures, reduced parking pass rates for the structures, and reduced validation costs. Council also provided direction to staff to implement additional operational changes to the City’s parking services, including:
 Increase the time limit for on-street parking in the Downtown Core from 2 to 3 hours;
 Reduce to a single payment app;
 Develop a program to offer additional promotional discounts offerings;  Update signage to improve the user experience;
 Transition to a consistent pay-at-exit gated systems at all structures; and  Develop a validation program and short duration on-street parking to facilitate attendance at public meetings, minor governmental needs, and library access.

Ordinance Summary
The proposed Ordinance (Attachment A) amends Title 10 Chapter 52 of the Municipal Code to remove the parking rate increase planned for July 1, 2025, and reduce on-street and surface lot parking rates. The City’s downtown on-street parking spaces consists of two different paid parking zones, one primarily within the core of the downtown and a second primarily on the fringe of downtown. Each zone has a specific paid parking rate.

On June 21, 2022, the City Council approved multiple hourly rate increases for the onstreet areas and municipal parking lots effective January 2, 2023, July 1, 2023, and July 1, 2025. which were deemed necessary to offset the construction costs and corresponding debt service repayment for the new Cultural Arts District public parking structure and to maintain a fiscally solvent Parking Fund. Consistent with the 2024 Parking Rate Study, the proposed ordinance removes the future July 1, 2025, rate increase.

Item 5j
Additionally, the proposed ordinance includes a reduction of on-street hourly rates from $4 to $2.75 for the core zone, and from $3 to $2.25 for the fringe areas.

Finally, the proposed ordinance also removes tier-based parking rates, consistent with recommendations from the 2024 Parking Rate Study, as they are difficult to communicate and understand and there remains uncertainty around the ability of existing technologies to support implementation.

If adopted, the proposed ordinance will become effective on July 8, 2024.

Previous Council Action
 On June 21, 2022, the City Council adopted Ordinance No. 1714 (2022 Series) approving multiple hourly rate increases for the on-street areas and municipal parking lots effective January 2, 2023, July 1, 2023, and July 1, 2025 which were deemed necessary to offset the construction costs and corresponding debt service repayment for the new Cultural Arts District public parking structure in order to maintain a fiscally solvent Parking Fund
 On November 7, 2023, the City Council approved a Request for Proposals to complete a Parking Rate Study. Action items also included adopting Resolution No. 11456 authorizing free parking in the structures for the first hour each day, all day on Sundays, and during the holiday parade, from November 23, 2023 to June 30, 2025. Additional direction included that staff bring back an ordinance to forego the on-street parking rate increase originally planned for July 1, 2025.  On May 14, 2024, the City Council introduced Ordinance No. 1735 (2024 Series), amending Title 10 Chapter 52 of the Municipal Code to remove the parking rate increase planned for July 1, 2025, and reduce on-street and surface lot parking rates. Action also included adoption of Resolution 11493 reducing the rates for the City’s parking structures and parking permits. Additionally, Council directed staff to implement program and operational changes including:
o Reducing to one mobile payment app
o Expand on-street core time limits from 2 to 3 hours
o Validation program enhancements
o Update signs improving user experience incorporating changes o Promotional discounts thru single vendor app
o Transition to updated gated system for all structures Public Engagement
In accordance with the City’s noticing requirements for proposing amendments to the Municipal Code, a legal ad was published in The New Times on May 4, 2024, 10 days prior to introduction of the ordinance and an additional legal ad will be published on May 30, 2024, 5 days prior to final adoption. Additionally, contents of the ads will be published to the City’s website, with e-notifications sent to subscribers of City News. The public will have an opportunity to provide public comment in writing prior to the meeting or as public comment during the meeting. The Council Agenda Report for the May 14, 2024 Special Meeting discusses the extensive community outreach and engagement efforts completed as part of the parking rate study.

Item 5j

CONCURRENCE
The City’s Attorney’s Office and Finance Department concur with staff’s recommendation.

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: 2024-25
Funding Identified: N/A
Fiscal Analysis:

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

Total $N/A $N/A $N/A $N/A
Table 1 below identifies the total potential revenue, expenditures, and changes in financial position for the approved rates as forecasted by Dixon’s financial modeling tool. The expenditures shown were provided by the City to Dixon and includes budget changes and requests prepared for the FY 2024-25 Supplemental Budget Review. The expenditures include reduced capital costs for parking structure asset maintenance projects presented to Council at the November 7, 2023 meeting.

The forecast indicates a sustainable Parking Fund. Recommended program and operational changes are not included in these forecasts as they are assumed to have a minor or minimal financial impacts. Operational and rate changes will be closely monitored and reported to Council as part of the City’s existing financial reporting process.

Table 1: Fiscal Impacts of Council Approved On-Street Rates FY 2024-25 FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
Revenues $ 9,991,861 $ 9,977,861 $ 10,874,136 $ 10,875,403 $ 10,898,258 Expenditures $ 9,985,220 $ 9,859,172 $ 10,529,442 $ 10,118,384 $ 10,565,902 Change in
Financial Position $ 6,641 $ 118,690 $ 344,694 $ 757,018 $ 332,356

Item 5j

ALTERNATIVES

1. Modify the ordinance as proposed. The City Council may modify the ordinance before adoption. Depending on the type of changes proposed, modification of the ordinance may require reintroduction and then adoption during subsequent public hearings, which will delay implementation of the ordinance.

2. Do not adopt the ordinance. This action is not recommended by staff because community input from the Rate Study clearly indicates an immediate need to implement further parking rate and program changes to promote economic activity downtown.

ATTACHMENTS
A - Ordinance No. 1735 (2024 Series)

O 1735
ORDINANCE NO. 1735 (2024 SERIES)

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

HOURLY PARKING RATES ON-STREET AND IN SURFACE PARKING
LOTS
WHEREAS, Policy 13.1.2 of the Circulation Element of the General Plan states that the City parking programs shall be financially self-supporting; and WHEREAS, parking rates are used as a tool to effectively manage parking demand for both on-street and off-street public parking areas; and WHEREAS, on June 21, 2022, the City Council adopted Ordinance No. 1714 (2022 Series) approving multiple hourly rate increases for the on-street areas and municipal parking lots effective January 2, 2023, July 1, 2023, and July 1, 2025 which were deemed necessary to offset the construction costs and corresponding debt service repayment for the new Cultural Arts District public parking structure in order to maintain a fiscally solvent Parking Fund; and
WHEREAS, on February 21, 2023, the City Council directed staff to return with a Request for Proposals (RFP) to conduct a parking rate study to evaluate the City’s Parking program rates and fees and to develop parking priorities and recommendations to help address community and downtown parking concerns; and WHEREAS, on November 7, 2023, the City Council authorized release of a Request for Proposals (RFP) to conduct a parking rate study; and WHEREAS, the parking rate study recommendations include reducing hourly parking rates on-street and in municipal parking lots along with other recommended changes to address the community and downtown parking concerns; and WHEREAS, the City Council of the City of San Luis Obispo conducted a public hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California, on May 14, 2024, to consider parking rate and fee options to address the public’s concerns while also maintaining a fiscally solvent Parking Fund including recommended changes to Title 10, Chapter 52 of the Municipal Code.

NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo as follows:

SECTION 1. Section 10.52.010 (Paid Parking zone - Rates) of the San Luis Obispo Municipal Code is hereby amended as follows:

Ordinance No. 1735 (2024 Series) Page 2
O 1735

10.52.010 Paid Parking zone—Rates.

A. Within the area enclosed by a solid line on the parking rate zone map (Exhibit A) the parking of vehicles on streets or in municipal parking lots may be controlled and regulated with the aid of parking meters as defined in section

10.04.110 and/or parking payment centers as defined in section 10.04.120.

B. Within the cross-hatched area designated on the parking rate zones map (Exhibit A) the base rate for parking meters on streets or in municipal parking lots shall be two dollars and twenty-five cents per hour effective July 8, 2024.

C. Within the grey-shaded area designated on the parking rate zones map (Exhibit A), the base rate for parking meters on streets or in municipal lots shall be two dollars and seventy-five cents per hour effective July 8, 2024.

D. The Public Works Director may periodically adjust the hourly parking rates on any block or set of blocks within the areas designated on the parking rate zones map (Exhibit A) during the time of operation as detailed in section

10.52.020 up to and including 120% of the effective hourly rate based on the observed occupancy. Hourly parking rates shall be adjusted not more than every 30 days.
(Ord. 1714 § 1 (Exh. A), 2022; Ord. 1699 § 2, 2021: Ord. 1683 § 1 (Exhs.

A, B), 2020: Ord. 1635 § 1 (Exhs. A, B), 2017: Ord. 1620 § 1 (Exh. A), 2015; Ord. 1568 § 1, 2011: Ord. 1552 § 2, 2010; Ord. 1532 § 2, 2009; Ord. 1492 § 1, 2006: Ord. 1233 § 1, 1993: Ord. 1194 § 1, 1991: Ord. 1099 § 1, 1987:
prior code § 3213)
SECTION 2. Severability. If any subdivision, paragraph, sentence, clause, or phrase of this ordinance is, for any reason, held to be invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the validity or enforcement of the remaining portions of this ordinance, or any other provisions of the city' s rules and regulations. It is the city' s express intent that each remaining portion would have been adopted irrespective of the fact that any one or more subdivisions, paragraphs, sentences, clauses, or phrases be declared invalid or unenforceable.

SECTION 3. Environmental Determination. These amendments to Title 10 Chapter 52 of the City of San Luis Obispo Municipal Code do not constitute a “Project” under California Environmental Quality Act (CEQA) Guidelines Sec. 15378.

Ordinance No. 1735 (2024 Series) Page 3
O 1735
SECTION 4. A summary of this ordinance, together with the names of Council members voting for and against, shall be published at least five (5) days prior to its final passage, in The New Times, a newspaper published and circulated in this City. This ordinance shall go into effect at the expiration of thirty (30) days after its final passage.

INTRODUCED on the 14th day of May 2024, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the ____ day of ____, 2024, on the following vote:

AYES:

NOES:

ABSENT:
___________________________
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

Ordinance No. 1735 (2024 Series) Page 4
O 1735
Exhibit A

Item 5k
Department: Administration
Cost Center: 1005
For Agenda of: 6/4/2024
Placement: Consent
Estimated Time: N/A
FROM: Greg Hermann, Deputy City Manager
Timmi Tway, Community Development Director
Prepared By: Chris Read, Sustainability Manager
Michael Loew, Chief Building Official
SUBJECT: SECOND READING OF ORDINANCE NO. 1736 (2024 SERIES) TO

ADOPT THE ENERGY EFFICIENT RENOVATIONS POLICY

RECOMMENDATION

1. Adopt Ordinance No. 1736 (2024 Series) entitled, “An Ordinance of the City Council of the City of San Luis Obispo, California, adopting Local Amendments to Part 6 of the Building Construction and Fire Prevention Code, 2023” approving the Energy Efficient Renovations Policy for major residential additions and alterations; and

2. Direct staff to submit the approved local amendments and accompanying required submittal forms and information to the California Energy Commission to initiate the local amendments to California Energy Code review and approval process.

POLICY CONTEXT
 Land Use Element of the General Plan:
o Policy 9.4 (Climate Action Plan) - The City shall maintain and implement its Climate Action Plan to reduce community and municipal greenhouse gas (“GHG”) emissions consistent with State laws and objectives. o Policy 9.7 (Sustainable Design) - The City shall promote and, where appropriate, require sustainable building practices that consume less energy, water and other resources, facilitate natural ventilation, use daylight effectively, and are healthy, safe, comfortable, and durable.
 Conservation and Open Space Element of the General Plan:
o Policy 2.2.1 (Atmospheric Change) - City actions shall seek to minimize undesirable climate changes and deterioration of the atmosphere’s protective functions that result from the release of carbon dioxide and other substances. o Goal 4.2 (Sustainable energy use) - Increase use of sustainable energy sources such as solar, wind and thermal energy, and reduce reliance on nonsustainable energy sources to the extent possible with available technology and resources.

Item 5k
 Climate Adaptation and Safety Element of the General Plan:
o Policy HE-4.3 (Green and Healthy Buildings) - The City shall support fuel switching retrofits (from fossil fuel to high-efficiency electric appliances), energy efficiency retrofits, and distributed energy resources as low-carbon solutions to create safe, cool, and healthy buildings and consider programs and projects that support these retrofits as critical to maintaining community safety and to supporting disaster preparedness.
 Resolution 11159 (2020 Series) adopted the Climate Action Plan for Community Recovery with the goal of community carbon neutrality by 2035 and a sub-goal of 50 percent reduction in emissions from existing buildings by 2030.  Resolution No. 11381 (2022 Series) reaffirmed these goals and created a work program for fiscal years 2023-27, including Green Buildings Action 2.1.E, which directs staff to, “Develop an equitable framework for requiring electrification retrofits and develop cost effective building electrification policies for additions and alterations.”  2023-25 Financial Plan Climate Action Major City Goal action 4.1.i directs staff to conduct a study session, and pending Council direction, develop an equitable framework for cost-effective building electrification retrofit policies, with an initial focus on additions and alterations, as called for by CAP Green Buildings Task 2.1.E. Staff conducted the study session on December 4, 2023 and received strategic direction to return with an additions and alterations policy in 2024.

DISCUSSION
Background
On May 21, 2024, the City Council voted 3-1 (Council Member Pease recused) to introduce Ordinance No. 1736, which provides local amendments (also referred to as a “reach code”) to the California Energy Code for the purpose of reducing energy use and reducing greenhouse gas emissions in major additions and alterations to single family residential buildings in support of the City’s climate action goals. The Ordinance is provided as Attachment A.

Public Resources Code Section 25402.1(h)(2) and Section 10-106 of the Building Energy Efficiency Standards establish a process that allows local adoption of energy standards that are more stringent than the statewide standards. Under this process, the California Energy Commission requires any local amendments to the California Energy Code that affect energy use in regulated buildings to be cost effective and use less energy than the standard requirements. At the May 21, 2024 meeting, Council found the amendments proposed in the Ordinance to reduce energy and to be cost effective.1 These findings were based on cost effectiveness studies conducted by the California Energy Codes and Standards Statewide Utility Program (Attachment B).

1 The May 21, 2024 Council Agenda Report is available at: https://pubslocity.escribemeetings.com/filestream.ashx?DocumentId=13442

Item 5k
Previous Council or Advisory Body Action
Previous Council Action is described in detail in the May 21, 2024 Council Agenda Report.

The ordinance proposed for adoption was introduced at the City Council meeting on May 21, 2024.

Public Engagement
The City conducted a public engagement process as outlined in the May 21, 2024 Council Agenda Report.

CONCURRENCE
Staff from Administration, Community Development, and the City Attorney’s Office concur with this report.

ENVIRONMENTAL REVIEW
Staff’s recommendations are found to be exempt from CEQA under the general rule, 15061(b)(3), because it can be seen with certainty that the provisions contained herein would not have the potential for causing a significant effect on the environment. Further, this ordinance is also exempt from CEQA under the categorical exemptions in Section 15308 of the CEQA Guidelines in that the proposed ordinance would institute regulatory requirements intended to protect the environment and natural resources.

FISCAL IMPACT
Budgeted: Yes Budget Year: 2023-24
Funding Identified: Yes
Fiscal Analysis:

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

Total $ $ $ $
The reach code requirements will be implemented through the building permit review process. There may be costs associated with training staff and providing additional support to the community during the implementation of this program. If implementation of this program impacts time required to review permit plans, then fees for review of building permit plans may increase to absorb the cost, but any impacts are expected to be marginal. Some of this additional work can be directly supported by the 3C-REN Energy Code Coach Program, which provides technical support for code interpretation. Funded under the auspices of the California Public Utilities Commission, Energy Code Coach is free to the user and can be accessed at no cost by project applicants and City staff.

Item 5k

ALTERNATIVES

1. Council could request more information, suggest changes, or request that the proposed local amendments to the California Energy Code be presented for adoption at a later date. Should Council pursue this alternative, staff requests specific direction and feedback.

2. Council could request that the local amendments to the California Energy Code be modified. Should Council pursue this alternative, the modified amendments would need to be brought before Council again to be reintroduced prior to a second additional meeting where it could be adopted.

3. Council could take no action and direct staff to pursue other initiatives. This action is not recommended by staff because it is inconsistent the City’s climate action goals and prior Council direction and adopted policy. Should Council pursue this alternative, staff requests specific further direction.

ATTACHMENTS
A - Ordinance No. 1736 (2024 Series)
B - 2024 Single Family Cost-Effectiveness Study

O 1736
ORDINANCE NO. 1736 (2024 SERIES)

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, ADOPTING LOCAL AMENDMENTS TO PART 6

OF THE BUILDING CONSTRUCTION AND FIRE PREVENTION CODE,
2023
WHEREAS, greenhouse gas accumulation in the atmosphere as the result of human activity is the primary cause of the global climate crisis; and WHEREAS, in California alone, the initial impacts of climate change have resulted in unprecedented disasters with tremendous human, economic, and environmental costs and;
WHEREAS, the Intergovernmental Panel on Climate Change estimates that global emissions need to be reduced by 45 percent from 2010 levels by 2030, and 100 percent by 2050 to prevent global catastrophe; and
WHEREAS, the State of California enacted Assembly Bill (AB) 1279 to require statewide carbon neutrality "as soon as possible," but no later than 2045; and WHEREAS, City of San Luis Obispo residents and businesses have repeatedly identified climate action as a top community priority; and WHEREAS, Resolution 11159 (2020 Series) adopts the City of San Luis Obispo Climate Action Plan for Community Recovery, which includes a communitywide goal of carbon neutrality by 2035 and sector specific goal of reducing emissions from existing buildings by half by 2030; and
WHEREAS, Resolution 11381 (2022 Series) reaffirmed these communitywide and sector specific goals; and
WHEREAS, the inventoried greenhouse gas emissions in the City of San Luis Obispo come from a variety of sources, primarily transportation and energy use in buildings and facilities; and
WHEREAS, in order to achieve carbon neutrality, existing sources of greenhouse gas emissions need to be substantially reduced or eliminated; and WHEREAS, Public Resources Code Section 25402.1 (h)(2) allows local agencies to adopt local amendments that are cost-effective and that result in buildings that use less energy than would otherwise be required by the California Energy Code; and

Ordinance No. 1736 (2024 Series) Page 2
O 1736
WHEREAS, the California Energy Codes and Standards Statewide Utility Program, has determined specific modifications to the 2022 State Energy Code for each climate zone that are cost-effective; and that such modifications will result in designs that consume less energy than they would under the 2022 State Energy Code; and WHEREAS, staff has reviewed the “2022 Code Cycle: Custom Cost Effectiveness Analysis - City of San Luis Obispo” existing building cost-effectiveness study, and finds it sufficient to illustrate compliance with the requirements set forth under California Administrative Code Chapter 10-106; and
WHEREAS, based on these studies, the City finds the proposed local amendments to the 2022 California Energy Code to be cost-effective and consume less energy than permitted by Title 24, Part 6; and
WHEREAS, the 2022 California Energy Code offers compliance options that were established through the public rulemaking process of the code update; and WHEREAS, the Council expressly declares that the proposed amendments to the Energy Code are reasonably necessary because of local climatic, topological, and geological conditions; and
WHEREAS, the requirements specified in this Ordinance were reviewed via public comment and through a publicly noticed public hearing process.

NOW, THEREFORE, BE IT ORDAINED by the Council of the City of San Luis Obispo as follows:

SECTION 1. Purpose. It is the purpose and intent of this Ordinance to establish standards for single-family residential retrofits including major additions and alterations that exceed minimum 2022 Title 24 Part 6 requirements.

SECTION 2. Adoption. The local amendments to Part 6 of the City of San Luis Obispo Building Construction and Fire Prevention Code, 2023 (SLOMC Section

15.02.060) as specified in Exhibit A, are hereby adopted by the City of San Luis Obispo to be codified under Chapter 15.02.060 and Chapter 15.04.065. The Council hereby adopts the recitals herein as separate and additional findings of fact in support of adoption of the ordinance.

SECTION 3. Severability. If any word, phrase sentence part, section, subsection or other portion of this amendment or any application thereof to any person or circumstance is declared void, unconstitutional, or invalid for any reason, then such word, phrase, sentence, part, section, subsection, or other portion, or the prescribed application thereof, shall be severable, and the remaining provisions of this amendment, and all applications thereof, not having been declared void, unconstitutional or invalid, shall remain in full force and effect.

Ordinance No. 1736 (2024 Series) Page 3
O 1736
SECTION 5. Findings. The City Council finds that each of the changes or modifications to measures referred to therein are reasonably necessary because of local climatic, geological, or topographical conditions in the area encompassed by the boundaries of the City of San Luis Obispo, and the City Council adopts the following findings in support of local necessity for the changes or modifications:

1. San Luis Obispo is situated along a wildland-urban interface and has been identified as a Community at Risk from wildfire and is extremely vulnerable to wildfires and firestorms, and human activities releasing greenhouse gases into the atmosphere cause increases in worldwide average temperature, drought conditions, vegetative fuel, and length of fire seasons- contributing to the likelihood and consequences of fire.

2. The City of San Luis Obispo is situated at the base of a watershed of the Santa Lucia Mountains and flooding of San Luis, Chorro, Stenner, Old Garden, and Brizzolara Creeks results in conditions rendering fire department vehicular traffic unduly burdensome or impossible, as witnessed in major floods that occurred in 1952, 1961, 1969, 1973, 1978, 1982, 1995, and 2023. Furthermore, flood conditions described above create the potential for overcoming the ability of the fire department to aid or assist in fire control, evacuations, rescues and other emergency task demands inherent in such situations. The resulting overburdening of fire department personnel may cause a substantial or total lack of protection against fire for the buildings and structures located in the City of San Luis Obispo. The afore-described conditions support the imposition of fire protection requirements greater than those set forth in the California State Building Standards Code and support the imposition of more restrictive requirements than set forth in the California Energy Code for the purpose of reducing the City's contributions to Greenhouse Gas Emissions resulting in a warming climate and related severe weather events.

3. The aforementioned flood and rain events result in conditions wherein stormwater can inundate the wastewater treatment system as witnessed in major floods that occurred in 1952, 1961, 1969, 1973, 1978, 1982, and 1995.

Furthermore, rain events and flood conditions described above create a condition referred to as Inflow and Infiltration (I/I) that allow rain and flood waters to flow and/or seep into the wastewater system and overcome the ability of the wastewater collection system and Water Reclamation Facility (WRF) to convey and treat sewage. The resulting overburdening of the wastewater system can result in threats to public health, public and private property and water quality and violations and fines from the State of California, the Environmental Protection Agency (EPA) or others. To the extent that climate change has the potential to make these conditions worse, more restrictive Energy Code requirements to achieve reduced greenhouse gas emissions are necessary.

Ordinance No. 1736 (2024 Series) Page 4
O 1736

4. Seasonal climatic conditions during the late summer and fall create numerous serious difficulties in the control and protection against fire situations in the City of San Luis Obispo. The hot, dry weather in combination with Santa Lucia (offshore) winds frequently results in wildland fires in the brush-covered slopes on the Santa Lucia Mountains, San Luis Mountain, and the Irish Hills areas of the City of San Luis Obispo. The aforementioned areas surround the City.

When a fire occurs in said areas, such as occurred in 1985 when the Los Pilitas fire burned six days and entered the City and damaged many structures, the entirety of local fire department personnel is required to control, monitor, fight and protect against such fire situations in an effort to protect life and preserve property and watershed land. The same climatic conditions may result in the concurrent occurrence of one or more fires in the more populated areas of the City without adequate fire department personnel to protect against and control such a situation. Therefore, the above-described findings support the imposition of measures to increase the efficiency of existing buildings in the City to reduce greenhouse gas emissions.

5. Failure to address and substantially reduce greenhouse gas emissions creates an increased risk to the health, safety, and welfare of City residents.

6. The standards imposed by this Ordinance are necessary because of local climatic, geological, or topographical conditions evidenced above and are costeffective, as supported by the “2022 Code Cycle: Custom Cost Effectiveness Analysis - City of San Luis Obispo” cost effectiveness study prepared by the California Energy Codes and Standards Statewide Utility Program. Specifically, the City finds that there are at least five cost effective measure packages:
 Package 1, installing the efficiency measure of R-30 Floor Insulation would save energy relative to the base code and would achieve a benefit to cost ratio of 1.4 on an on-bill basis.
 Package 2, installing the efficiency measure of R-19 Floor Insulation would save energy relative to the base code and would achieve a benefit to cost ratio of 1.4 on an on-bill basis.
 Package 3 to installing a Heat Pump Water Heater (HPWH), would save energy relative to the base code and would achieve a benefit to cost ratio of 1.6 on a “Long-term System Cost” (LSC basis).
 Package 4, Heat Pump Space Heater, would save energy relative to the base code and would achieve a benefit to cost ratio of 4.2 on an LSC basis.  Package 5 to install PV + Electric Ready Pre-Wiring would save energy relative to the base code and would achieve a benefit to cost ratio of 1.4 on an on-bill basis.

Ordinance No. 1736 (2024 Series) Page 5
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SECTION 6. CEQA. This ordinance is categorically exempt from CEQA because it is an action taken by a regulatory agency for the purpose of protecting the environment (CEQA Guidelines Section 15308). In addition, this ordinance is exempt from CEQA under the general rule, 15061(b)(3), on the grounds that these standards are more stringent than the State energy standards, there are no reasonably foreseeable adverse impacts, and there is no possibility that the activity in question may have a significant effect on the environment. The following findings are made in support of these determinations:

1. The purpose of the implementation of a Reach Code is to reduce the amount of greenhouse gas emissions in the City of San Luis Obispo that are produced from buildings.

2. The Reach Code approval process requires that the City determines that the local standards will require buildings to use no more energy than current statewide requirements. Furthermore, the California Energy Commission approval process requires that the City make the findings as part of its approval process. Therefore, the Reach Code standards can only go into effect if they protect the environment by making buildings more efficient.

SECTION 7. Violations. Violation of the requirements of this Ordinance shall be considered, at the City’s election, an infraction of the City of San Luis Obispo Municipal Code punishable by all sanctions prescribed in Chapter 1.12, or an administrative violation punishable as provided under Chapter 1.24.

SECTION 8. Effective Date. Pending approval by the California Energy Commission, this Ordinance shall be effective on January 1, 2025.

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SECTION 9. Ordinance Summary. A summary of this ordinance, together with the names of Council members voting for and against, shall be published at least five (5) days prior to its final passage, in The New Times, a newspaper published and circulated in this City. This ordinance shall go into effect at the expiration of thirty (30) days after its final passage.

INTRODUCED on the 21st day of May 2024, AND FINALLY ADOPTED by the Council of the City of San Luis Obispo on the ____ day of ______, 2024, on the following vote:

AYES:

NOES:

ABSENT:
___________________________
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

Ordinance No. 1736 (2024 Series) Page 7
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Exhibit A
Section 15.02.060
Amend Section 15.020.060 to read as follows:

The City of San Luis Obispo hereby adopts the 2022 California Energy Code as Part 6 of the San Luis Obispo Building Construction and Fire Prevention Code, 2023. Except as otherwise provided herein, or as later amended in Section

15.04.060 and 15.04.065, or affected by San Luis Obispo Health and Safety Code Chapter 8.11, Part 6 of the San Luis Obispo Building Construction and Fire Prevention Code, 2023, shall be as published in the California Energy Code, 2022 Edition, and as copyrighted by the California Building Standards Commission, California Code of Regulations, Title 24, Part 6, including all of its tables, indices, appendices, addenda and footnotes. Said California Energy Code is hereby referred to and by such reference is incorporated herein as if fully set forth.

Section 15.04.065
AMENDMENTS – ENERGY STANDARDS – ADDITIONS AND ALTERATIONS A. Adoption of Codes and Applicability
The effective date of this ordinance shall be January 1, 2025 and is applicable to existing single family residential buildings. The amendments contained in

15.04.065 do not apply to repairs to buildings.

B. Add the following definitions to Subchapter 1, Section 100.1(b):

MAJOR ADDITION is any change to an existing building that increases conditioned floor area by 500 or more square feet in a one-year period.

MAJOR ALTERATION is any construction or renovation to an existing structure other than a repair or alteration whose work area covers 500 or more square feet in a one-year period. A project that consists only of roof and/or window replacement is not considered a Major Alteration.

WORK AREA That portion or portions of a building consisting of all reconfigured spaces as indicated on the construction documents. Work area excludes other portions of the building where incidental work entailed by the intended work must be performed and portions of the building where work not initially intended by the owner is specifically required by this code.

C. Amend Section 150.0 SINGLE-FAMILY RESIDENTIAL BUILDINGS – MANDATORY FEATURES AND DEVICES to read as follows:

Single-family residential buildings shall comply with the applicable requirements of Sections 150.0(a) through 150.0(w).

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D. Add new Section 150(w) to read as follows:
(w) Mandatory Requirements for Existing Building Additions and Alterations.

Existing Building Additions and Alterations shall meet the requirements of Items 1 through 4 below, as applicable:

1. Major addition. Any Major Addition shall install a set of measures from the Measure Menu Table, Table 150.0-I to achieve a total score that is equal to or greater than 8. In addition, all mandatory measures listed in Table 150.0-I shall be installed. Measure verification shall be explicitly included as an addendum to the Certificate of Compliance to be filed pursuant to 2022 Title 24 Section 10-103. Installed measures shall meet the specifications in Table 150.0-J.

2. Major alteration. Any major alteration shall install a set of measures from the Measure Menu Table, Table 150.0-I to achieve a total score that is equal to or greater than 8. In addition, all mandatory measures listed in Table 150.0-I shall be installed. Measure verification shall be explicitly included as an addendum to the Certificate of Compliance to be filed pursuant to 2022 Title 24 Section 10-103. Installed measures shall meet the specifications in Table 150.0-J.

3. Combination major addition and alteration. Any project that includes an addition and alteration that has a work area equal to or greater than 500 square feet shall install a set of measures from the Measure Menu Table, Table 150.0-I to achieve a total score that is equal to or greater than 8. In addition, all mandatory measures listed in Table 150.0-I shall be installed. Measure verification shall be explicitly included as an addendum to the Certificate of Compliance to be filed pursuant to 2022 Title 24 Section 10-103. Installed measures shall meet the specifications in Table 150.0-J.

4. Electric Readiness. Any major addition, major alteration, or combination major addition and alteration that includes a new electrical panel and electrical service upgrade to 200A or more shall include electric readiness components per 150.0(n)1(A)-(B) and 150.0(t) Exception 1 to Section 150.0(w): The project is the result of a repair as defined by Title 24 Part 2 Section 202.

Exception 2 to Section 150.0(w): If compliance costs exceed 10% of total project valuation, or due to conditions specific to the project, it is technically infeasible to achieve compliance through any available set of measures, the applicant may request an exemption as set forth below. In applying for an exemption, the burden is on the applicant to show hardship or infeasibility.

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(1) Application. Based on the following, the applicant shall identify in writing the specific requirements of the standards for compliance that the project is unable to achieve and the circumstances that make it a hardship or infeasible for the project to comply with this chapter. The applicant may not petition for relief from any requirement of the 2022 California Energy Code (Title 24, Part 6) and referenced standards, or the 2022 California Green Building Standards (Title 24, Part 11) of the California Building Standards Code. Circumstances that constitute hardship or infeasibility shall include one of the following:
i. That the cost of achieving compliance is disproportionate to the overall cost of the project (i.e., compliance exceeds 10% of total project cost);
ii. That it is technically infeasible to achieve compliance through any available set of measures.
iii. That strict compliance with these standards would create or maintain a hazardous condition(s) and present a life safety risk to the occupants.
(2) Granting of exemption. If the chief building official determines that it is a hardship or infeasible for the applicant to fully meet the requirements of this chapter and that granting the requested exemption will not cause the building to fail to comply with the 2022 California Energy Code (Title 24, Part 6) and referenced standards, or the 2022 California Green Building Standards (Title 24, Part 11) of the California Building Standards Code, the chief building official shall determine the minimum feasible threshold of compliance reasonably achievable for the project. If an exemption is granted, the applicant shall be required to comply with this chapter in all other respects and shall be required to achieve the threshold of compliance determined to be achievable by the chief building official. (3) Denial of exemption. If the chief building official determines that it is reasonably possible for the applicant to fully meet the requirements of this chapter, the request shall be denied, and the applicant shall be notified of the decision in writing. The project and compliance documentation shall be modified to comply with the standards for compliance.
(4) Appeal. Any aggrieved applicant or person may appeal the determination of the chief building official regarding the granting or denial of an exemption or compliance with any other provision of this chapter. An appeal of a determination of the chief building official shall be filed in writing.

Exception 3 to Section 150.0(w): If the dwelling unit has previously installed measures from the Measure Menu, Table 150.0-I, and compliance can be demonstrated to the building official, then these measures shall not be required to be newly installed.

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Exception 4 to Section 150.0(w): The applicant may request an exemption to any requirements of this chapter which would impair the historic integrity of any building listed on a local, state, or federal register of historic structures, as determined by the chief building official and as regulated by the California Historic Building Code (Title 24, Part 8). In making a determination of exemption, the chief building official may require the submittal of an evaluation by an architectural historian or similar expert.

Exception 5 to Section 150.0(w): An alteration that consists solely of seismic safety improvements.

Exception 6 to Section 150.0(w): An alteration that consists solely of roof and/or window projects.

Exception 7 to Section 150.0(w): When an addition or alteration results in the creation of a new residential unit, the square footage of that unit shall not be counted towards the 500 square foot “Major” addition, alteration, or addition and alteration threshold.

D. Add new Table 150.0-I to read as follows:

Table 150.0-I: Measure Menu
Measures
Target Score
8 E1 - LED lamps and Exterior Photocells Mandatory
E2 - Water Heating Package 1
E3 - Air Sealing 1
E4 - R-49 Attic Insulation 2
E5 - Duct Sealing 2
E6 - New Ducts + Duct Sealing 4
E7 - Windows 3
E8 - R-19 Floor Insulation 8
E9 - R-30 Floor Insulation 10
E10 - Heat Pump Water Heater (HPWH) 12
E11 - Heat Pump Space Heater 11
ER1 - Solar PV + Electric Ready Pre-Wire 13
Note: the measures in the Measure Menu table shall conform to the specifications in Table 150.0-J

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E. Add new Table 150.0-J to read as follows:

Table 150.0-J: Measure Specifications
ID Measure Specification
Energy Efficiency Measures
E1 Lighting Measures – Replace all interior and exterior screw-in incandescent, halogen, and compact fluorescent lamps with LED lamps.

Install photocell controls on all exterior lighting luminaires consistent with current Title 24 requirements for new single family residential buildings. Alternative means of exterior lighting timing controls, including smart home devices, may be approved.

E2 Water Heating Package: Add exterior insulation meeting a minimum of R-6 to existing storage water heaters. Insulate all accessible hot water pipes with pipe insulation a minimum of ¾ inch thick. This includes insulating the supply pipe leaving the water heater, piping to faucets underneath sinks, and accessible pipes in attic spaces or crawlspaces. Upgrade fittings in sinks and showers to meet current California Green Building Standards Code (Title 24, Part 11) Section 4.303 water efficiency requirements. Water heaters 20 gallons or less, or water heaters that are not able to add exterior insulation may not take credit for this measure.

E3 Air Sealing: Seal all accessible cracks, holes, and gaps in the building envelope at walls, floors, and ceilings. Pay special attention to penetrations including plumbing, electrical, and mechanical vents, recessed can light luminaires, and windows. Weather-strip doors if not already present. Compliance shall be demonstrated with blower door testing conducted by a certified HERS Rater no more than three years prior to the permit application date that either: a) shows at least a 30 percent reduction from pre-retrofit conditions; or b) shows that the number of air changes per hour at 50 Pascals pressure difference (ACH50) does not exceed ten for Pre-1978 vintage buildings, seven for 1978 to 1991 vintage buildings and five for 1992-2010 vintage buildings. If combustion appliances are located within the pressure boundary of the building, conduct a combustion safety test by a professional certified by the Building Performance Institute in accordance with the ANSI/BPI-1200-S-2017 Standard Practice for Basic Analysis of Buildings, the Whole House Combustion Appliance Safety Test Procedure for the Comfortable Home Rebates Program 2020 or the California Community Services and Development Combustion Appliance Safety Testing Protocol.

E4 R-49 Attic Insulation: Attic insulation shall be installed to achieve a weighted assembly U-factor of 0.020 or insulation installed at the ceiling level shall have a thermal resistance of R-49 or greater for the insulation alone. Recessed downlight luminaires in the ceiling shall be covered with insulation to the same depth as the rest of the ceiling. Luminaires not rated for insulation contact must be replaced or fitted with a fire-proof cover that allows for insulation to be installed directly over the cover. In buildings where existing R30 is present and existing recessed downlight luminaires are not rated for insulation contact, insulation is not required to be installed over the luminaires.

E5 Duct Sealing: Air seal all space conditioning ductwork to meet the requirements of the 2022 Title 24 Section 150.2(b)1E. The duct system must be tested by a HERS Rater no more than three years prior to the alteration or addition permit application date to verify the duct sealing and confirm that the requirements have been met. This measure may not be combined with the New Ducts and Duct Sealing measure in this Table. Buildings without ductwork or where the ducts are in conditioned space may not take credit for this measure.

E6 New Ducts and Duct Sealing: Replace existing space conditioning ductwork with new R-8 ducts that meet the requirements of 2022 Title 24 Section 150.0(m)11. This measure may not be combined with the Duct Sealing measure in this Table. To qualify, a preexisting measure must have been installed no more than three years before the alteration or addition permit application date.

E7 Windows: Replace at least 50% of existing windows with high performance windows with an area-weighted average U-factor no greater than 0.30.

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E8 R-19 Floor Insulation: Raised-floors shall be insulated such that the floor assembly has an assembly U-factor equal to or less than U0.037, or shall be insulated between wood framing with insulation having an R-value equal to or greater than R-19.

E9 R-30 Floor Insulation: Raised-floors shall be insulated such that the floor assembly has an assembly U-factor equal to or less than U0.028, or shall be insulated between wood framing with insulation having an R-value equal to or greater than R-30.

E10 Heat Pump Water Heater (HPWH): Replace existing electric resistance or natural gas storage water heater with a heat pump water heater.

E11 Heat Pump Space Heater: Replace all existing gas and electric resistance space heating systems with an electric-only heat pump system.

Solar PV and Electric-Readiness Measures
ER1 PV and Electric Ready Pre-Wire: Install a solar PV system that meets the requirements of 2022 Title 24 Section 150.1(c)14.

In addition to the solar PV system, Include electric readiness components per 150.0(n)1(A)-(B) and 150.0(t) and one of:

A. Energy Storage Systems (ESS) Ready, as specified in Section 150.0(s), or B. EV Charger Ready as specified in the California Green Building Code, Title 24, Part 11, Section A4.106.8.1,which otherwise applies to new construction.

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F. Modify Section 150.2(a) ENERGY EFFICIENCY STANDARDS FOR ADDITIONS AND ALTERATIONS TO EXISTING SINGLE FAMILY RESIDENTIAL BUILDINGS to read as follows:

Additions. Additions to existing single-family residential buildings shall meet the requirements of Sections 110.0 through 110.9, Sections 150.0(a) through (n), (p), (q), (w) and either Section 150.2(a)1 or 2.

G. Modify Section 150.2(b) ENERGY EFFICIENCY STANDARDS FOR ADDITIONS AND ALTERATIONS TO EXISTING SINGLE FAMILY RESIDENTIAL BUILDINGS to read as follows:

Alterations. Alterations to existing single-family residential buildings or alterations in conjunction with a change in building occupancy to a single-family residential occupancy shall meet either Item 1 or 2 below.

1. Prescriptive approach. The altered component and any newly installed equipment serving the alteration shall meet the applicable requirements of Sections 110.0 through 110.9 and all applicable requirements of Sections 150.0(a) through (l), 150.0(m)1 through 150.0 (m)10, 150.0(p) through (q), and 150.0(w); and

2. Performance approach. The altered component(s) and any newly installed equipment serving the alteration shall meet the applicable requirements of Subsections A, B, and C below.
a. The altered components shall meet the applicable requirements of Sections 110.0 through 110.9, Sections 150.0(a) through (l), Sections 150.0(m)1 through 150.0 (m)10, Sections 150.0(p) through (q), and Section 150.0(w). Entirely new or complete replacement mechanical ventilation systems as these terms are used in Section 150.2(b)1L, shall comply with the requirements in Section 150.2(b)1L. Altered mechanical ventilation systems shall comply with the requirements of Section 150.2(b)1M. Entirely new or complete replacement space-conditioning systems, and entirely new or complete replacement duct systems, as these terms are used in Sections 150.2(b)1C and 150.2(b)1Diia, shall comply with the requirements of Sections 150.0(m)12 and 150.0(m)13.

Prepared by:

Frontier Energy, Inc
Misti Bruceri & Associates, LLC
Prepared for:

Kelly Cunningham, Codes and Standards Program, Pacific Gas and Electric Last modified: 2024/3/15
Revision: 1.0

Cost-Effectiveness Analysis: Central Coast Community Energy Legal Notice
This report was prepared by Pacific Gas and Electric Company and funded by the California utility customers under the auspices of the California Public Utilities Commission.

Copyright 2024, Pacific Gas and Electric Company. All rights reserved, except that this document may be used, copied, and distributed without modification.

Neither PG&E nor any of its employees makes any warranty, express or implied; or assumes any legal liability or responsibility for the accuracy, completeness or usefulness of any data, information, method, product, policy or process disclosed in this document; or represents that its use will not infringe any privately-owned rights including, but not limited to, patents, trademarks or copyrights.

Acronym List
3CE – Central Coast Community Energy
B/C – Benefit-to-Cost Ratio
CBECC - California Building Energy Code Compliance
CBSC - California Building Standards Commission
CEC - California Energy Commission
CZ – Climate Zone
GHG - Greenhouse Gas
IOU – Investor-Owned Utility
POU – Publicly Owned Utility
PG&E – Pacific Gas & Electric (utility)
SCE – Southern California Edison (utility)
SCG – Southern California Gas (utility)
SDG&E – San Diego Gas & Electric (utility)
SLO – San Luis Obispo
kWh – Kilowatt Hour
NPV – Net Present Value
PV - Solar Photovoltaic
TDV - Time Dependent Valuation
Title 24 – California Code of Regulations Title 24, Part 6 2022 CODE CYCLE:

Custom Cost Effectiveness Analysis:

Central Coast Community Energy
Last modified: 2022/11/03
Revision: 1.0

Cost-Effectiveness Analysis: Central Coast Community Energy

TABLE OF CONTENTS
1 Introduction................................................................................................................................................................5 2 Methodology and Assumptions...............................................................................................................................6

2.1 Reach Codes ........................................................................................................................................................................ 6

2.1.1 Benefits......................................................................................................................................................................... 6

2.1.2 Costs............................................................................................................................................................................. 6

2.1.3 Metrics .......................................................................................................................................................................... 6

2.1.4 Utility Rates................................................................................................................................................................... 7

2.2 Greenhouse Gas Emissions ................................................................................................................................................. 7 3 Prototype Designs and Measure Packages............................................................................................................8

3.1 Prototype Characteristics...................................................................................................................................................... 8 4 Results......................................................................................................................................................................10

4.1 Pre-1978 Vintage................................................................................................................................................................ 11

4.2 1978-1991 Vintage.............................................................................................................................................................. 14

4.3 1992-2010 Vintage.............................................................................................................................................................. 17

4.4 Sensitivities......................................................................................................................................................................... 20 5 Summary ..................................................................................................................................................................21 6 References ...............................................................................................................................................................23 7 Appendices ..............................................................................................................................................................24

7.1 Map of California Climate Zones......................................................................................................................................... 24

7.2 Utility Rate Schedules......................................................................................................................................................... 25

7.2.1 Central Coast Community Energy – Electricity ........................................................................................................... 25

7.2.2 SoCalGas – Gas ......................................................................................................................................................... 31

7.2.3 Fuel Escalation Rates ................................................................................................................................................. 32

LIST OF TABLES
Table 1. Utility Tariffs for San Luis Obispo............................................................................................................................................ 7 Table 2: Residential Prototype Characteristics ..................................................................................................................................... 8 Table 3. Efficiency Characteristics for Three Vintage Cases ................................................................................................................ 9 Table 4: E-TOU-C Rate HPSH Single Family Cost-Effectiveness Summary Pre-1978 ...................................................................... 11 Table 5: E-TOU-C Rate HPWH Single Family Cost-Effectiveness Summary Pre-1978 ..................................................................... 11 Table 6: E-TOU-C Rate Envelope and Duct Measures Single Family Cost-Effectiveness Summary Pre-1978 ................................. 12 Table 7: E-Elec Rate Solar PV Single Family Cost-Effectiveness Summary Pre-1978 ...................................................................... 12 Table 8: E-Elec Rate HPSH Single Family Cost-Effectiveness Summary Pre-1978........................................................................... 13 Table 9: E-Elec Rate HPWH Single Family Cost-Effectiveness Summary Pre-1978.......................................................................... 13 Table 10: E-TOU-C Rate HPSH Single Family Cost-Effectiveness Summary 1978-1991.................................................................. 14 Table 11: E-TOU-C Rate HPWH Single Family Cost-Effectiveness Summary 1978-1991................................................................. 14

Cost-Effectiveness Analysis: Central Coast Community Energy Table 12: E-TOU-C Rate Envelope and Duct Measures Single Family Cost-Effectiveness Summary 1978-1991............................. 15 Table 13: E-Elec Rate Solar PV Single Family Cost-Effectiveness Summary 1978-1991.................................................................. 15 Table 14: E-Elec Rate HPSH Single Family Cost-Effectiveness Summary 1978-1991 ...................................................................... 16 Table 15: E-Elec Rate HPWH Single Family Cost-Effectiveness Summary 1978-1991 ..................................................................... 16 Table 16: E-TOU-C Rate HPSH Single Family Cost-Effectiveness Summary 1992-2010.................................................................. 17 Table 17: E-TOU-C Rate HPWH Single Family Cost-Effectiveness Summary 1992-2010................................................................. 17 Table 18: E-TOU-C Rate Envelope and Duct Measures Single Family Cost-Effectiveness Summary 1992-2010............................. 18 Table 19: E-Elec Rate Solar PV Single Family Cost-Effectiveness Summary 1992-2010.................................................................. 18 Table 20: E-Elec Rate HPSH Single Family Cost-Effectiveness Summary 1992-2010 ...................................................................... 19 Table 21: E-Elec Rate HPWH Single Family Cost-Effectiveness Summary 1992-2010 ..................................................................... 19 Table 22. Sensitivity Analysis Results for On-Bill NPV ....................................................................................................................... 20 Table 23. Electric Panel Upgrade Sensitivity [Pre-1978] .................................................................................................................... 20 Table 24: Comparison of 3CE and PG&E’s E-TOU-C Rates.............................................................................................................. 25 Table 25: Comparison of 3CE and PG&E’s E-Elec Rates .................................................................................................................. 25 Table 26: SoCalGas Monthly Gas Rate ($/therm) .............................................................................................................................. 31 Table 27: Real Utility Rate Escalation Rate Assumptions, CPUC En Banc and 2022 TDV Basis ...................................................... 32 Table 28: Real Utility Rate Escalation Rate Assumptions, 2025 LSC Basis ....................................................................................... 33

LIST OF FIGURES
Figure 1. Map of California climate zones........................................................................................................................................... 24

Cost-Effectiveness Analysis: Central Coast Community Energy 5 California Energy Codes & Standards | A statewide utility program 2024-03-15 1 Introduction
The California Codes and Standards (C&S) Reach Codes program provides technical support to local governments considering adopting a local ordinance (reach code) intended to support meeting local and/or statewide energy efficiency and greenhouse gas reduction goals. The program facilitates adoption and implementation of the code when requested by local jurisdictions by providing resources such as cost-effectiveness studies, model language, sample findings, and other supporting documentation.

The California Building Energy Efficiency Standards Title 24, Part 6 (Title 24) (CEC, 2019) is maintained and updated every three years by two state agencies: the California Energy Commission (the Energy Commission) and the Building Standards Commission (BSC). In addition to enforcing the code, local jurisdictions have the authority to adopt local energy efficiency ordinances—or reach codes—that exceed the minimum standards defined by Title 24 (as established by Public Resources Code Section 25402.1(h)2 and Section 10-106 of the Building Energy Efficiency Standards). Local jurisdictions must demonstrate that the requirements of the proposed ordinance are cost-effective and do not result in buildings consuming more energy than is permitted by Title 24. In addition, the jurisdiction must obtain approval from the Energy Commission and file the ordinance with the BSC for the ordinance to be legally enforceable.

This report is an addendum to the 2022 Single Family Retrofit Cost-effectiveness Study (Statewide Reach Codes Team, 2024) modified to accurately represent local conditions for San Luis Obispo (SLO) in California Climate Zone 5 and Central Coast Community Energy’s (3CE’s) service territory. The study analyzes cost-effective measure upgrades in existing single family buildings that exceed the minimum state requirements, the 2022 Building Energy Efficiency Standards, effective January 1, 2023. Local jurisdictions in California may consider adopting local energy ordinances to achieve energy savings beyond what will be accomplished by enforcing building efficiency requirements that apply statewide. This report was developed in coordination with the California Statewide Investor-Owned Utilities (IOUs) Codes and Standards Program, key consultants, and engaged cities—collectively known as the Statewide Reach Codes Team.

The methodology, prototype characteristics, and measure packages are retained from the main study referenced above except for the energy costs are calculated using local 3CE utility rates. Measure packages include upgrades in existing single family buildings that exceed the minimum state requirements. It evaluates efficiency measures such as adding insulation, replacing windows, and duct upgrades, fuel substitution measures that upgrade space heating and water heating to heat pumps, and solar photovoltaics (PV). A 1,665 square foot single family home prototype with an attached garage was evaluated in this study.

Local jurisdictions may also adopt ordinances that amend different Parts of the California Building Standards Code or may elect to amend other state or municipal codes. The decision regarding which code to amend will determine the specific requirements that must be followed for an ordinance to be legally enforceable. Although a cost-effectiveness study is only required to amend Part 6 of the CA Building Code, it is important to understand the economic impacts of any policy decision. This study documents the estimated costs, benefits, energy impacts and greenhouse gas emission reductions that may result from implementing an ordinance based on the results to help residents, local leadership, and other stakeholders make informed policy decisions.

Model ordinance language and other resources are posted on the C&S Reach Codes Program website at LocalEnergyCodes.com. Local jurisdictions that are considering adopting an ordinance may contact the program for further technical support at [email protected].

Cost-Effectiveness Analysis: Central Coast Community Energy 6 California Energy Codes & Standards | A statewide utility program 2024-03-15 2 Methodology and Assumptions

2.1 Reach Codes
This section describes the approach to calculating cost-effectiveness including benefits, costs, metrics, and utility rate selection.

2.1.1 Benefits
This analysis used two different metrics to assess the cost-effectiveness of the proposed upgrades. Both methodologies require estimating and quantifying the incremental costs and energy savings associated with each energy efficiency measure. The main difference between the methodologies is the way they value energy impacts:
• On-Bill: Customer-based lifecycle cost approach that values energy based upon estimated site energy usage and customer on-bill savings using electricity and natural gas utility rate schedules over a 30-year duration, accounting for a three percent discount rate and energy cost inflation per Appendix 7.2.3. • Long-term Systemwide Cost (LSC): Formerly known as Time Dependent Valuation (TDV) energy cost savings, LSC reflects the Energy Commission’s current LCC methodology, which is intended to capture the total value or cost of energy use over 30 years. This method accounts for the hourly cost of marginal generation, transmission and distribution, fuel, capacity, losses, and cap-and-trade-based CO2 emissions (California Energy Commission, 2023). This is the methodology used by the Energy Commission in evaluating costeffectiveness for efficiency measures in the 2025 Energy Code.

The Reach Codes Team performed energy simulations using the 2025 research version of the Residential California Building Energy Code Compliance software (CBECC).

2.1.2 Costs
The Reach Codes Team assessed the incremental costs and savings of the energy packages over the lifecycle of 30 years. Incremental costs represent the equipment, installation, replacement, and maintenance costs of the proposed measure relative to the 2022 Title 24 Standards minimum requirements or standard industry practices. The Reach Codes Team obtained measure costs from a contractor survey conducted in the summer of 2023.

2.1.3 Metrics
Cost-effectiveness is presented using net present value (NPV) and benefit-to-cost (B/C) ratio metrics. • NPV: The Reach Codes Team uses net savings (NPV benefits minus NPV costs) as the cost-effectiveness metric. If the net savings of a measure or package is positive, it is considered cost effective. Negative net savings represent net costs to the consumer. A measure that has negative energy cost benefits (energy cost increase) can still be cost effective if the costs to implement the measure are even more negative (i.e., construction and maintenance cost savings).
• B/C Ratio: Ratio of the present value of all benefits to the present value of all costs over 30 years (NPV benefits divided by NPV costs). The criteria for cost-effectiveness is a B/C greater than 1.0. A value of one indicates the savings over the life of the measure are equivalent to the incremental cost of that measure. A value greater than one represents a positive return on investment.

Improving the energy performance of a building often requires an initial investment. In most cases the benefit is represented by annual on-bill utility or LSC savings, and the cost by incremental first cost and replacement costs.

However, some packages result in initial construction cost savings (negative incremental cost), and either energy cost savings (positive benefits), or increased energy costs (negative benefits). In cases where both construction costs and energy-related savings are negative, the construction cost savings are treated as the benefit while the increased energy costs are the cost. In cases where a measure or package is cost-effective immediately (i.e., upfront

Cost-Effectiveness Analysis: Central Coast Community Energy 7 California Energy Codes & Standards | A statewide utility program 2024-03-15 construction cost savings and lifetime energy cost savings), B/C ratio cost-effectiveness is represented by “>1”.

Because of these situations, NPV savings are also reported, which, in these cases, are positive values.

2.1.4 Utility Rates
Table 1 summarizes the utility tariffs applied in this analysis. The standard tariff was applied in most cases. Homes with a heat pump service space or water heating in IOU territory are eligible for either the electrification or the standard tariff. In these cases, results are provided using both tariff options. The Net Billing Tariff (NBT) tariff was applied to homes with onsite generation (PV systems).

For a more detailed breakdown of the rates selected refer to Appendix 7.2 Utility Rate Schedules.

Table 1. Utility Tariffs for San Luis Obispo
Electric / Gas
Utility
Standard
Electric Tariff
Electrification
Tariffs
Tariffs
Required
Under NBT
Natural
Gas
Tariff
3CE / SoCalGas E-TOU Option C E-ELEC E-ELEC GR
The Reach Code Team applied the recently approved net billing tariff (NBT) rules for PV systems. NBT, also known as NEM-3, is the successor tariff to NEM 2.0. The rate paid for electricity exported to the grid is much lower under NBT than under NEM 2.0. The hourly export rates applied in this study were obtained from analysis conducted by Energy and Environmental Economics (E3) for the California Public Utilities Commission as part of the NEM revisit. 1 These
hourly export rates vary for each major IOU and by year, the 2024 export rate projections were used for this analysis.

Utility rates are assumed to escalate over time according to the assumptions from the CPUC 2021 En Banc hearings on utility costs through 2030 (California Public Utilities Commission, 2021a). Escalation rates through the remainder of the 30-year evaluation period are based on the escalation rate assumptions within the 2022 TDV factors. A second set of escalation rates were also evaluated to demonstrate the impact that utility cost changes have on costeffectiveness over time. This utility rate escalation sensitivity analysis, presented in Section 4.4 Sensitivities, was based on those used within the 2025 LSC factors (LSC replaces TDV in the 2025 code cycle) which assumed steep increases in gas rates in the latter half of the analysis period. Appendix 7.2.3 and the main 2022 Single Family Retrofit Cost-effectiveness Study (Statewide Reach Codes Team, 2024) for details.

2.2 Greenhouse Gas Emissions
The analysis uses the greenhouse gas (GHG) emissions estimates built-in to CBECC-Res. There are 8760 hourly multipliers accounting for time dependent energy use and carbon emissions based on source emissions, including renewable portfolio standard projections. Natural gas fugitive emissions, which are shown to be substantial, are not included. There are two strings of multipliers—one for Northern California climate zones, and another for Southern California climate zones.2
1 https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/demand-side-management/customer-generation/nem-revisit/net-billingtariff 2 CBECC-Res multipliers are the same for CZs 1-5 and 11-13 (presumed to be Northern California), while there is another set of multipliers for CZs 6-10 and 14-16 (assumed to be Southern California).

Cost-Effectiveness Analysis: Central Coast Community Energy 8 California Energy Codes & Standards | A statewide utility program 2024-03-15 3 Prototype Designs and Measure Packages

3.1 Prototype Characteristics
The Energy Commission defines building prototypes which it uses to evaluate the cost-effectiveness of proposed changes to Title 24 requirements. Average home size has steadily increased over time, 3 and the Energy Commission single family new construction prototypes are larger than many existing single family homes across California. For this analysis, a 1,665 square foot prototype was evaluated. Table 2 describes the basic characteristics of the single family prototype. Additions are not evaluated in this analysis as they are already addressed in Section 150.2 of Title 24, Part

6. The CEC has proposed significant changes to the 2025 Energy Code that would remove the allowance of gas space heating and water heating equipment for additions and instead require additions to follow the same space heating and water heating equipment requirements as new construction (California Energy Commission, 2023).

Table 2: Residential Prototype Characteristics
Specification
Existing Conditioned Floor Area 1,665 ft2
Num. of Stories 1
Num. of Bedrooms 3
Window-to-Floor Area Ratio 13%
Attached Garage 2-car garage
Three building vintages were evaluated to determine sensitivity of existing building performance on costeffectiveness of upgrades. For example, it is widely recognized that adding attic insulation in an older home with no insulation is cost-effective, however, newer homes will likely have existing attic insulation reducing the costeffectiveness of an incremental addition of insulation. The building characteristics for each vintage were determined based on either prescriptive requirements from Title 24 that were in effect or standard construction practice during that time period. Homes built under 2001 Title 24 are subject to prescriptive envelope code requirements very similar to homes built under the 2005 code cycle, which was in effect until January 1, 2010.

Table 3 summarizes the assumptions for each of the three vintages. Additionally, the analysis assumed the following features when modeling the prototype buildings. Efficiencies were defined by year of the most recent equipment replacement based on standard equipment lifetimes.
• Individual space conditioning and water heating systems, one per single family building. • Split-system air conditioner with natural gas furnace. • Scenarios with an existing natural gas wall furnace without AC were also evaluated. • Small storage natural gas water heater.
• Scenarios with an existing electric resistance storage water heater were also evaluated. • Gas cooktop, oven, and clothes dryer.

The methodology applied in the analyses begins with a design that matches the specifications as described in Table 3 for each of the three vintages. Prospective energy efficiency measures were modeled to determine the projected energy performance and utility cost impacts relative to the baseline vintage. In some cases, where logical, measures were packaged together.
3 https://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf

Cost-Effectiveness Analysis: Central Coast Community Energy 9 California Energy Codes & Standards | A statewide utility program 2024-03-15 Table 3. Efficiency Characteristics for Three Vintage Cases Building Component Efficiency
Feature
Vintage Case
Pre-1978 1978-1991 1992-2010
Envelope
Exterior Walls 2x4, 16-inch on center wood frame,
R-0a
2x4 16 inch on center wood frame,
R-11
2x4 16 inch on center wood frame,
R-13
Foundation Type & Insulation Uninsulated slab (CZ 2-15) Raised floor, R-0 (CZ 1 & 16)
Uninsulated slab (CZ 2-15)
Raised floor, R-0 (CZ 1 & 16)
Uninsulated slab (CZ 2-15)
Raised floor, R-19 (CZ 1 & 16)
Ceiling Insulation & Attic Type
Vented attic, R-5 @ ceiling level for CZ
6 & 7,
Vented attic, R-11 @ ceiling level
(all other CZs)
Vented attic, R-19 @ ceiling level Vented attic, R-30 @ ceiling level Roofing Material & Color Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Asphalt shingles, dark
(0.10 reflectance, 0.85 emittance)
Radiant Barrier No No No
Window Type: U-factor/SHGCb Metal, single pane: 1.16/0.76 Metal, dual pane: 0.79/0.70 Vinyl, dual pane Low-E: 0.55/0.40 House Infiltration at 50 Pascals 15 ACH50 10 ACH50 7 ACH50 HVAC Equipment
Heating Efficiency 78 AFUE (assumes 2 replacements) 78 AFUE (assumes 1 replacement) 78 AFUE Cooling Efficiency 10 SEER (assumes 2 replacements) 10 SEER (assumes 1 replacement) 13 SEER, 11 EER Duct Location & Details Attic, R-2.1, 30% leakage at 25 Pa Attic, R-2.1, 25% leakage at 25 Pa Attic, R-4.2, 15% leakage at 25 Pa Whole Building Mechanical
Ventilation None None None
Water Heating Equipment
Water Heater Efficiency 0.575 Energy Factor (assumes 2
replacements)

0.575 Energy Factor (assumes 1
replacement) 0.575 Energy Factor
Water Heater Type 40-gallon gas storage 40-gallon gas storage 40-gallon gas storage Pipe Insulation None None None
Hot Water Fixtures Standard, non-low flow Standard, non-low flow Standard, non-low flow a Pre-1978 wall modeled with R-5 cavity insulation to better align wall system performance with monitored field data and not overestimate energy use. b Window type selections were made based on conversations with window industry expert, Ken Nittler. If a technology was entering the market during the time period (e.g., Low-E during 1992-2010 or dual-pane during 1978-1991) that technology was included in the analysis. This provides a conservative assumption for overall building performance and additional measures may be cost-effective for buildings with lower performing windows, for example buildings with metal single pane windows in the 1978-1991 vintage.

Cost-Effectiveness Analysis: Central Coast Community Energy 10 California Energy Codes & Standards | A statewide utility program 2024-03-15 4 Results
The primary objective of the evaluation is to identify cost-effective energy upgrade measures and packages for existing single family buildings, to support the design of local ordinances requiring upgrades, which may be triggered by different events, such as at the time of a significant remodel or at burnout of mechanical equipment. In this report, the 1992-2010 vintage is shown for the equipment measures because it is the most conservative case (lowest loads), while the pre-1978 vintage is shown for the envelope and duct measures because some of those measures only apply to the pre-1978 vintage. A full dataset of all results can be downloaded at https://localenergycodes.com/content/resources. Results alongside policy options can also be explored using the Cost-effectiveness Explorer at https://explorer.localenergycodes.com/.

The following describes which results are presented in the tables in this section. See the main 2022 Single Family Retrofit Cost-Effectiveness Study (Statewide Reach Codes Team, 2024) for details of the measures. • Table 4 through Table 6 show the cost-effective results for the pre-1978 vintage for heat pump space heaters (HPSHs) including dual fuel heat pumps (DFHPs), heat pump water heaters (HPWHs) and envelope and duct measures, respectively, for E-TOU-C rate.
• Table 7 through Table 9 show the cost-effective results for the pre-1978 vintage for PV, HPSH, and HPWH, upgrade measures, respectively, for E-Elec rate.
• Table 10 through Table 12 show the cost-effective results for the 1978-1991 vintage for heat pump space heaters, heat pump water heaters and envelope and duct measures, respectively, for E-TOU-C rate. • Table 13 through Table 15 show the cost-effective results for the 1978-1991 vintage for PV, HPSH, and HPWH upgrade measures, respectively, for E-Elec rate.
• Table 16 through Table 18 show the cost-effective results for the 1992-2010 vintage for heat pump space heaters, heat pump water heaters and envelope and duct measures, respectively, for E-TOU-C rate. • Table 19 through Table 21 show the cost-effective results for the 1992-2010 vintage for PV, HPSH, and HPWH upgrade measures, respectively, for E-Elec rate.

Cost-Effectiveness Analysis: Central Coast Community Energy 11 California Energy Codes & Standards | A statewide utility program 2024-03-15

4.1 Pre-1978 Vintage
Table 4: E-TOU-C Rate HPSH Single Family Cost-Effectiveness Summary Pre-1978 Table 5: E-TOU-C Rate HPWH Single Family Cost-Effectiveness Summary Pre-1978 Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
DFHP Existing Furnace (1,774) 209 0.93 14,840 8.07 ($255) ($2,963) $2,349 $1,008 0.00 ($3,971) 8.25 $7,306 DFHP New Furnace (1,783) 204 0.90 14,281 7.78 ($270) ($3,392) $7,200 $8,708 0.00 ($12,101) 1.11 $993 HPSH (Std Efficiency) (2,265) 233 0.98 15,584 8.38 ($430) ($6,680) $1,020 $1,618 0.00 ($8,298) 5.88 $7,900 HPSH (High Efficiency) (1,855) 233 1.05 16,982 9.13 ($252) ($2,619) $3,951 $6,430 0.00 ($9,049) 1.98 $6,319 Ducted MSHP (1,847) 233 1.05 17,011 9.15 ($249) ($2,536) $1,442 $2,951 0.00 ($5,487) 4.35 $9,880 Ductless MSHP (Std Efficiency) (1,667) 208 0.94 15,070 8.18 ($227) ($2,436) $8,826 $14,274 0.00 ($16,709) 0.89 ($1,536) Ductless MSHP (High Efficiency) (589) 208 1.12 18,747 10.19 $233 $8,061 $12,410 $20,158 0.40 ($12,097) 1.06 $1,171 Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
240V Fed. Min. HPWH (1,391) 171 0.87 12,314 7.80 ($330) ($5,167) $4,332 $6,554 0.00 ($11,721) 1.65 $4,252 240V Market Std. NEEA HPWH (1,076) 171 0.90 13,414 8.21 ($179) ($1,725) $5,193 $7,967 0.00 ($9,692) 1.64 $5,136 240V Market Std. NEEA HPWH + DR (967) 171 0.92 13,789 8.43 ($124) ($461) $5,193 $7,967 0.00 ($8,428) 1.80 $6,335 120V Market Std. NEEA HPWH (935) 172 0.93 13,960 8.47 ($107) ($75) $2,893 $4,273 0.00 ($4,348) 3.41 $10,296 240V Fed. Min. HPWH (Exterior Closet) (1,424) 169 0.85 12,036 7.66 ($349) ($5,628) $4,751 $6,973 0.00 ($12,601) 1.49 $3,384 240V Fed. Min. HPWH (Interior Closet) (1,158) 128 0.65 8,836 5.87 ($307) ($5,248) $4,413 $6,634 0.00 ($11,883) 1.12 $792 240V Fed. Min. HPWH (Interior Closet,
ducted) (1,354) 180 0.93 13,396 8.39 ($296) ($4,254) $5,492 $7,714 0.00 ($11,967) 1.60 $4,591

Cost-Effectiveness Analysis: Central Coast Community Energy 12 California Energy Codes & Standards | A statewide utility program 2024-03-15 Table 6: E-TOU-C Rate Envelope and Duct Measures Single Family Cost-Effectiveness Summary Pre-1978 Table 7: E-Elec Rate Solar PV Single Family Cost-Effectiveness Summary Pre-1978 Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
30% Air Sealing 15 15 0.09 1,575 0.86 $53 $1,533 $4,684 $4,684 0.33 ($3,151) 0.43 ($2,686) New Ducts: R-6 133 49 0.30 5,328 2.86 $162 $4,430 $4,808 $4,808 0.92 ($379) 1.48 $2,301 New Ducts: R-8 137 51 0.32 5,601 3.02 $169 $4,634 $6,311 $6,311 0.73 ($1,677) 1.18 $1,148 Duct Sealing: 10% 50 32 0.19 3,355 1.83 $89 $2,515 $2,590 $2,590 0.97 ($75) 1.69 $1,789 Wall Insulation: R-13 56 49 0.29 5,054 2.74 $126 $3,603 $2,950 $2,950 1.22 $653 2.19 $3,510 Attic Insulation: R-38 67 36 0.22 3,802 2.05 $106 $2,969 $6,762 $6,762 0.44 ($3,793) 0.74 ($1,784) Attic Insulation: R-49 75 39 0.24 4,154 2.23 $116 $3,252 $7,446 $7,446 0.44 ($4,194) 0.73 ($2,001) R-19 Raised Floor Insulation 4 87 0.52 8,759 4.83 $178 $5,370 $3,633 $3,633 1.48 $1,737 3.02 $7,356 R-30 Raised Floor Insulation (3) 100 0.59 9,945 5.49 $198 $6,011 $4,113 $4,113 1.46 $1,898 3.03 $8,342 Cool Roof (0.20 Ref) (at roof
replacement) 11 (13) (0.07) (1,242) (0.67) ($20) ($657) $893 $1,203 0.00 ($1,860) 0.00 ($2,685) Cool Roof (0.25 Ref) (at roof
replacement) 14 (19) (0.11) (1,898) (1.03) ($32) ($1,031) $1,786 $2,407 0.00 ($3,438) 0.00 ($4,688) Window Upgrade: 0.28 vs 0.30 U-factor 89 28 0.17 3,068 1.64 $101 $2,718 $11,871 $11,871 0.23 ($9,154) 0.35 ($7,742) Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
3kW PV 3,854 0 0.11 13,150 1.22 $510 $11,627 $9,608 $11,574 1.00 $52 0.72 ($3,283)

Cost-Effectiveness Analysis: Central Coast Community Energy 13 California Energy Codes & Standards | A statewide utility program 2024-03-15 Table 8: E-Elec Rate HPSH Single Family Cost-Effectiveness Summary Pre-1978 Table 9: E-Elec Rate HPWH Single Family Cost-Effectiveness Summary Pre-1978 Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
DFHP Existing Furnace (1,774) 209 0.93 14,840 8.07 ($393) ($6,112) $2,349 $1,008 0.00 ($7,120) 8.25 $7,306 DFHP New Furnace (1,783) 204 0.90 14,281 7.78 ($408) ($6,528) $7,200 $8,708 0.00 ($15,236) 1.11 $993 HPSH (Std Efficiency) (2,265) 233 0.98 15,584 8.38 ($531) ($8,970) $1,020 $1,618 0.00 ($10,588) 5.88 $7,900 HPSH (High Efficiency) (1,855) 233 1.05 16,982 9.13 ($382) ($5,584) $3,951 $6,430 0.00 ($12,014) 1.98 $6,319 Ducted MSHP (1,847) 233 1.05 17,011 9.15 ($380) ($5,518) $1,442 $2,951 0.00 ($8,470) 4.35 $9,880 Ductless MSHP (Std Efficiency) (1,667) 208 0.94 15,070 8.18 ($388) ($6,096) $8,826 $14,274 0.00 ($20,369) 0.89 ($1,536) Ductless MSHP (High Efficiency) (589) 208 1.12 18,747 10.19 $3 $2,804 $12,410 $20,158 0.14 ($17,354) 1.06 $1,171 HPSH + 3kW PV 2,688 233 1.12 32,485 9.94 $207 $7,845 $10,628 $13,192 0.59 ($5,347) 1.43 $5,633 Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
240V Fed. Min. HPWH (1,391) 171 0.87 12,314 7.80 ($349) ($5,604) $4,332 $6,554 0.00 ($12,158) 1.65 $4,252 240V Market Std. NEEA HPWH (1,076) 171 0.90 13,414 8.21 ($224) ($2,739) $5,193 $7,967 0.00 ($10,706) 1.64 $5,136 240V Market Std. NEEA HPWH + DR (967) 171 0.92 13,789 8.43 ($173) ($1,591) $5,193 $7,967 0.00 ($9,558) 1.80 $6,335 120V Market Std. NEEA HPWH (935) 172 0.93 13,960 8.47 ($160) ($1,290) $2,893 $4,273 0.00 ($5,562) 3.41 $10,296 240V Fed. Min. HPWH (Exterior Closet) (1,424) 169 0.85 12,036 7.66 ($366) ($6,007) $4,751 $6,973 0.00 ($12,980) 1.49 $3,384 240V Fed. Min. HPWH (Interior Closet) (1,158) 128 0.65 8,836 5.87 ($345) ($6,111) $4,413 $6,634 0.00 ($12,745) 1.12 $792 240V Fed. Min. HPWH (Interior Closet,
ducted) (1,354) 180 0.93 13,396 8.39 ($318) ($4,763) $5,492 $7,714 0.00 ($12,477) 1.60 $4,591 240V Fed. Min. HPWH + 3kW PV 3,562 171 1.00 29,215 9.36 $518 $14,166 $13,940 $18,128 0.78 ($3,962) 1.22 $3,933

Cost-Effectiveness Analysis: Central Coast Community Energy 14 California Energy Codes & Standards | A statewide utility program 2024-03-15

4.2 1978-1991 Vintage
Table 10: E-TOU-C Rate HPSH Single Family Cost-Effectiveness Summary 1978-1991 Table 11: E-TOU-C Rate HPWH Single Family Cost-Effectiveness Summary 1978-1991 Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
DFHP Existing Furnace (1,277) 150 0.67 10,672 5.76 ($165) ($1,818) $2,349 $1,008 0.00 ($2,826) 5.88 $4,914 DFHP New Furnace (1,283) 147 0.64 10,271 5.54 ($175) ($2,099) $7,200 $8,708 0.00 ($10,807) 0.80 ($1,776) HPSH (Std Efficiency) (1,644) 169 0.71 11,279 6.01 ($294) ($4,530) $1,020 $1,618 0.00 ($6,148) 4.21 $5,192 HPSH (High Efficiency) (1,348) 169 0.76 12,291 6.57 ($167) ($1,626) $3,951 $6,430 0.00 ($8,056) 1.43 $2,761 Ducted MSHP (1,341) 169 0.76 12,314 6.58 ($164) ($1,561) $1,442 $2,951 0.00 ($4,512) 3.13 $6,289 Ductless MSHP (Std Efficiency) (1,152) 143 0.65 10,417 5.61 ($133) ($1,208) $8,826 $14,274 0.00 ($15,481) 0.61 ($5,499) Ductless MSHP (High Efficiency) (407) 143 0.77 12,957 7.06 $179 $5,910 $12,410 $20,158 0.29 ($14,248) 0.73 ($5,390) Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
240V Fed. Min. HPWH (1,391) 170 0.86 12,273 7.77 ($352) ($5,840) $4,332 $6,554 0.00 ($12,394) 1.64 $4,202 240V Market Std. NEEA HPWH (1,077) 170 0.90 13,361 8.17 ($202) ($2,421) $5,193 $7,967 0.00 ($10,388) 1.64 $5,087 240V Market Std. NEEA HPWH + DR (967) 170 0.92 13,738 8.39 ($147) ($1,149) $5,193 $7,967 0.00 ($9,116) 1.79 $6,285 120V Market Std. NEEA HPWH (935) 171 0.92 13,893 8.43 ($130) ($774) $2,893 $4,273 0.00 ($5,047) 3.39 $10,213 240V Fed. Min. HPWH (Exterior Closet) (1,424) 169 0.85 12,036 7.66 ($371) ($6,272) $4,751 $6,973 0.00 ($13,245) 1.49 $3,384 240V Fed. Min. HPWH (Interior Closet) (1,162) 130 0.67 9,069 6.00 ($316) ($5,511) $4,413 $6,634 0.00 ($12,145) 1.16 $1,058 240V Fed. Min. HPWH (Interior Closet,
ducted) (1,355) 180 0.93 13,367 8.37 ($320) ($4,987) $5,492 $7,714 0.00 ($12,701) 1.59 $4,541

Cost-Effectiveness Analysis: Central Coast Community Energy 15 California Energy Codes & Standards | A statewide utility program 2024-03-15 Table 12: E-TOU-C Rate Envelope and Duct Measures Single Family Cost-Effectiveness Summary 1978-1991 Table 13: E-Elec Rate Solar PV Single Family Cost-Effectiveness Summary 1978-1991 Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
30% Air Sealing 7 9 0.06 950 0.51 $34 $997 $4,684 $4,684 0.21 ($3,687) 0.26 ($3,452) New Ducts: R-6 90 33 0.20 3,565 1.93 $104 $2,827 $4,808 $4,808 0.59 ($1,982) 1.00 ($13) New Ducts: R-8 93 35 0.22 3,807 2.05 $109 $2,993 $6,311 $6,311 0.47 ($3,318) 0.81 ($1,200) Duct Sealing: 10% 65 16 0.10 1,810 0.98 $60 $1,607 $2,590 $2,590 0.62 ($982) 0.97 ($75) Attic Insulation: R-38 26 13 0.08 1,425 0.77 $39 $1,084 $2,555 $2,555 0.42 ($1,472) 0.73 ($691) Attic Insulation: R-49 33 17 0.10 1,770 0.95 $49 $1,346 $3,612 $3,612 0.37 ($2,265) 0.65 ($1,264) R-19 Raised Floor Insulation (75) 47 0.27 4,479 2.55 $50 $1,804 $3,633 $3,633 0.50 ($1,829) 1.51 $1,862 R-30 Raised Floor Insulation (79) 59 0.34 5,623 3.18 $69 $2,391 $4,113 $4,113 0.58 ($1,721) 1.68 $2,797 Cool Roof (0.20 Ref) (at roof
replacement) 7 (9) (0.05) (874) (0.47) ($14) ($465) $893 $1,203 0.00 ($1,668) 0.00 ($2,236) Cool Roof (0.25 Ref) (at roof
replacement) 9 (14) (0.08) (1,335) (0.73) ($23) ($726) $1,786 $2,407 0.00 ($3,132) 0.00 ($4,005) Window Upgrade: 0.28 vs 0.30 U-factor 56 26 0.16 2,796 1.51 $78 $2,144 $11,871 $11,871 0.18 ($9,727) 0.31 ($8,175) Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
3kW PV 3,733 0 0.10 12,736 1.18 $564 $12,855 $9,608 $11,574 1.11 $1,281 0.70 ($3,432)

Cost-Effectiveness Analysis: Central Coast Community Energy 16 California Energy Codes & Standards | A statewide utility program 2024-03-15 Table 14: E-Elec Rate HPSH Single Family Cost-Effectiveness Summary 1978-1991 Table 15: E-Elec Rate HPWH Single Family Cost-Effectiveness Summary 1978-1991 Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
DFHP Existing Furnace (1,277) 150 0.67 10,672 5.76 ($265) ($4,090) $2,349 $1,008 0.00 ($5,098) 5.88 $4,914 DFHP New Furnace (1,283) 147 0.64 10,271 5.54 ($275) ($4,364) $7,200 $8,708 0.00 ($13,072) 0.80 ($1,776) HPSH (Std Efficiency) (1,644) 169 0.71 11,279 6.01 ($367) ($6,181) $1,020 $1,618 0.00 ($7,799) 4.21 $5,192 HPSH (High Efficiency) (1,348) 169 0.76 12,291 6.57 ($259) ($3,733) $3,951 $6,430 0.00 ($10,162) 1.43 $2,761 Ducted MSHP (1,341) 169 0.76 12,314 6.58 ($257) ($3,679) $1,442 $2,951 0.00 ($6,631) 3.13 $6,289 Ductless MSHP (Std Efficiency) (1,152) 143 0.65 10,417 5.61 ($251) ($3,900) $8,826 $14,274 0.00 ($18,174) 0.61 ($5,499) Ductless MSHP (High Efficiency) (407) 143 0.77 12,957 7.06 $18 $2,227 $12,410 $20,158 0.11 ($17,931) 0.73 ($5,390) HPSH + 3kW PV 3,309 169 0.85 28,180 7.57 $361 $10,401 $10,628 $13,192 0.79 ($2,791) 1.21 $2,758 Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
240V Fed. Min. HPWH (1,391) 170 0.86 12,273 7.77 ($381) ($6,493) $4,332 $6,554 0.00 ($13,047) 1.64 $4,202 240V Market Std. NEEA HPWH (1,077) 170 0.90 13,361 8.17 ($179) ($1,898) $5,193 $7,967 0.00 ($9,865) 1.64 $5,087 240V Market Std. NEEA HPWH + DR (967) 170 0.92 13,738 8.39 ($129) ($743) $5,193 $7,967 0.00 ($8,710) 1.79 $6,285 120V Market Std. NEEA HPWH (935) 171 0.92 13,893 8.43 ($116) ($452) $2,893 $4,273 0.00 ($4,725) 3.39 $10,213 240V Fed. Min. HPWH (Exterior Closet) (1,424) 169 0.85 12,036 7.66 ($320) ($5,117) $4,751 $6,973 0.00 ($12,090) 1.49 $3,384 240V Fed. Min. HPWH (Interior Closet) (1,162) 130 0.67 9,069 6.00 ($286) ($4,830) $4,413 $6,634 0.00 ($11,464) 1.16 $1,058 240V Fed. Min. HPWH (Interior Closet,
ducted) (1,355) 180 0.93 13,367 8.37 ($275) ($3,961) $5,492 $7,714 0.00 ($11,675) 1.59 $4,541 240V Fed. Min. HPWH + 3kW PV 3,562 170 1.00 29,174 9.33 $558 $14,917 $13,940 $18,128 0.82 ($3,211) 1.21 $3,800

Cost-Effectiveness Analysis: Central Coast Community Energy 17 California Energy Codes & Standards | A statewide utility program 2024-03-15

4.3 1992-2010 Vintage
Table 16: E-TOU-C Rate HPSH Single Family Cost-Effectiveness Summary 1992-2010 Table 17: E-TOU-C Rate HPWH Single Family Cost-Effectiveness Summary 1992-2010 Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
DFHP Existing Furnace (1,130) 136 0.61 9,784 5.34 ($130) ($1,209) $2,349 $1,008 0.00 ($2,217) 5.65 $4,692 DFHP New Furnace (1,134) 133 0.59 9,426 5.14 ($138) ($1,437) $7,200 $8,708 0.00 ($10,145) 0.76 ($2,098) HPSH (Std Efficiency) (1,439) 151 0.65 10,216 5.51 ($239) ($3,515) $1,020 $1,618 0.00 ($5,133) 4.00 $4,859 HPSH (High Efficiency) (1,181) 151 0.69 11,096 5.98 ($129) ($1,004) $3,951 $6,430 0.00 ($7,434) 1.32 $2,078 Ducted MSHP (1,173) 151 0.69 11,126 6.00 ($125) ($919) $1,442 $2,951 0.00 ($3,870) 2.91 $5,623 Ductless MSHP (Std Efficiency) (1,025) 133 0.61 9,762 5.31 ($98) ($540) $8,826 $14,274 0.00 ($14,814) 0.59 ($5,782) Ductless MSHP (High Efficiency) (388) 133 0.71 11,935 6.50 $166 $5,465 $12,410 $20,158 0.27 ($14,693) 0.67 ($6,588) Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
240V Fed. Min. HPWH (1,392) 170 0.86 12,259 7.77 ($358) ($6,017) $4,332 $6,554 0.00 ($12,570) 1.64 $4,186 240V Market Std. NEEA HPWH (1,077) 170 0.90 13,347 8.17 ($208) ($2,590) $5,193 $7,967 0.00 ($10,557) 1.63 $5,053 240V Market Std. NEEA HPWH + DR (968) 170 0.92 13,724 8.39 ($152) ($1,319) $5,193 $7,967 0.00 ($9,286) 1.79 $6,269 120V Market Std. NEEA HPWH (935) 171 0.92 13,876 8.42 ($136) ($941) $2,893 $4,273 0.00 ($5,213) 3.39 $10,196 240V Fed. Min. HPWH (Exterior Closet) (1,424) 169 0.85 12,036 7.66 ($376) ($6,432) $4,751 $6,973 0.00 ($13,405) 1.49 $3,384 240V Fed. Min. HPWH (Interior Closet) (1,181) 130 0.66 8,979 5.96 ($331) ($5,899) $4,413 $6,634 0.00 ($12,534) 1.14 $941 240V Fed. Min. HPWH (Interior Closet,
ducted) (1,357) 180 0.93 13,354 8.37 ($327) ($5,187) $5,492 $7,714 0.00 ($12,900) 1.59 $4,524

Cost-Effectiveness Analysis: Central Coast Community Energy 18 California Energy Codes & Standards | A statewide utility program 2024-03-15 Table 18: E-TOU-C Rate Envelope and Duct Measures Single Family Cost-Effectiveness Summary 1992-2010 Table 19: E-Elec Rate Solar PV Single Family Cost-Effectiveness Summary 1992-2010 Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
30% Air Sealing 4 6 0.04 613 0.33 $25 $729 $4,684 $4,684 0.16 ($3,955) 0.17 ($3,901) New Ducts: R-6 49 11 0.07 1,267 0.68 $42 $1,109 $4,808 $4,808 0.23 ($3,700) 0.37 ($3,043) New Ducts: R-8 53 14 0.09 1,530 0.82 $48 $1,282 $6,311 $6,311 0.20 ($5,029) 0.33 ($4,213) Duct Sealing: 10% 6 5 0.03 523 0.28 $12 $346 $1,400 $1,400 0.25 ($1,054) 0.49 ($718) Attic Insulation: R-38 4 3 0.02 335 0.18 $8 $227 $1,781 $1,781 0.13 ($1,554) 0.25 ($1,332) Attic Insulation: R-49 9 6 0.04 628 0.34 $15 $433 $1,827 $1,827 0.24 ($1,395) 0.46 ($978) Cool Roof (0.20 Ref) (at roof
replacement) 0 (7) (0.04) (718) (0.39) ($14) ($413) $893 $1,203 0.00 ($1,616) 0.00 ($2,069) Cool Roof (0.25 Ref) (at roof
replacement) (1) (11) (0.06) (1,096) (0.60) ($21) ($636) $1,786 $2,407 0.00 ($3,043) 0.00 ($3,722) Window Upgrade: 0.28 vs 0.30 U-factor 32 39 0.23 3,968 2.15 $84 $2,423 $11,871 $11,871 0.20 ($9,449) 0.42 ($6,826) Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
3kW PV 3,654 0 0.10 12,468 1.15 $475 $10,820 $9,608 $11,574 0.93 ($754) 0.70 ($3,499)

Cost-Effectiveness Analysis: Central Coast Community Energy 19 California Energy Codes & Standards | A statewide utility program 2024-03-15 Table 20: E-Elec Rate HPSH Single Family Cost-Effectiveness Summary 1992-2010 Table 21: E-Elec Rate HPWH Single Family Cost-Effectiveness Summary 1992-2010 Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
DFHP Existing Furnace (1,130) 136 0.61 9,784 5.34 ($321) ($5,572) $2,349 $1,008 0.00 ($6,580) 5.65 $4,692 DFHP New Furnace (1,134) 133 0.59 9,426 5.14 ($329) ($5,794) $7,200 $8,708 0.00 ($14,503) 0.76 ($2,098) HPSH (Std Efficiency) (1,439) 151 0.65 10,216 5.51 ($407) ($7,359) $1,020 $1,618 0.00 ($8,977) 4.00 $4,859 HPSH (High Efficiency) (1,181) 151 0.69 11,096 5.98 ($314) ($5,234) $3,951 $6,430 0.00 ($11,663) 1.32 $2,078 Ducted MSHP (1,173) 151 0.69 11,126 6.00 ($311) ($5,162) $1,442 $2,951 0.00 ($8,113) 2.91 $5,623 Ductless MSHP (Std Efficiency) (1,025) 133 0.61 9,762 5.31 ($141) ($1,533) $8,826 $14,274 0.00 ($15,807) 0.59 ($5,782) Ductless MSHP (High Efficiency) (388) 133 0.71 11,935 6.50 $89 $3,706 $12,410 $20,158 0.18 ($16,452) 0.67 ($6,588) HPSH + 3kW PV 3,514 151 0.78 27,117 7.07 $323 $9,292 $10,628 $13,192 0.70 ($3,900) 1.19 $2,475 Case
Annual
Elec
Savings
(kWh)
Annual
Gas
Savings
(therms)
Average
Annual
GHG
Reductions
(metric
tons)
Annual
Site
Energy
(kBtu)
Annual
Source
Energy
(kBtu/ft2)
Utility Cost Savings Incremental Cost On-Bill 2025 LSC
First Year Lifecycle
(2022$)
First
Year
Lifecycle
(2022$)
B/C
Ratio NPV B/C Ratio NPV
240V Fed. Min. HPWH (1,392) 170 0.86 12,259 7.77 ($393) ($6,807) $4,332 $6,554 0.00 ($13,361) 1.64 $4,186 240V Market Std. NEEA HPWH (1,077) 170 0.90 13,347 8.17 ($268) ($3,956) $5,193 $7,967 0.00 ($11,923) 1.63 $5,053 240V Market Std. NEEA HPWH + DR (968) 170 0.92 13,724 8.39 ($217) ($2,801) $5,193 $7,967 0.00 ($10,769) 1.79 $6,269 120V Market Std. NEEA HPWH (935) 171 0.92 13,876 8.42 ($205) ($2,508) $2,893 $4,273 0.00 ($6,781) 3.39 $10,196 240V Fed. Min. HPWH (Exterior Closet) (1,424) 169 0.85 12,036 7.66 ($408) ($7,166) $4,751 $6,973 0.00 ($14,139) 1.49 $3,384 240V Fed. Min. HPWH (Interior Closet) (1,181) 130 0.66 8,979 5.96 ($383) ($7,073) $4,413 $6,634 0.00 ($13,708) 1.14 $941 240V Fed. Min. HPWH (Interior Closet,
ducted) (1,357) 180 0.93 13,354 8.37 ($365) ($6,044) $5,492 $7,714 0.00 ($13,757) 1.59 $4,524 240V Fed. Min. HPWH + 3kW PV 3,562 170 1.00 29,160 9.33 $468 $12,827 $13,940 $18,128 0.71 ($5,301) 1.21 $3,767

Cost-Effectiveness Analysis: Central Coast Community Energy 20 California Energy Codes & Standards | A statewide utility program 2024-03-15

4.4 Sensitivities
Table 22 shows the On-Bill NPV results of Climate Zone 5 with 3CE utility rates and the impacts of escalation rates for select cases. The “Standard Results” in Table 22 assumes the escalation rates used in the analysis presented elsewhere in this report. Table 23 shows the impact of electrical panel upgrades. The “Standard Results” in Table 23 does not assume a panel upgrade is required. Both cases in Table 23 are based on the escalation rates used in the analysis presented elsewhere in this report.

Table 22. Sensitivity Analysis Results for On-Bill NPV
Measure Vintage Standard
Results
2025 LSC
Escalation
DFHP Existing Furnace 1992-2010 ($2,217) $1,935
DFHP New Furnace 1992-2010 ($10,145) ($6,117)
HPSH (Std Efficiency) 1992-2010 ($5,133) ($669)
HPSH (High Efficiency) 1992-2010 ($7,434) ($2,838)
Ducted MSHP 1992-2010 ($3,870) $730
HPSH + 3kW PV 1992-2010 ($3,900) $1,238
240V Fed. Min. HPWH 1992-2010 ($12,570) ($8,539)
240V Market Std. NEEA HPWH 1992-2010 ($10,557) ($6,946) 240V Market Std. NEEA HPWH + DR 1992-2010 ($9,286) ($5,730) 120V Market Std. NEEA HPWH 1992-2010 ($5,213) ($1,715)
240V Fed. Min. HPWH (Exterior Closet) 1992-2010 ($13,405) ($9,369) 240V Fed. Min. HPWH (Interior Closet) 1992-2010 ($12,534) ($10,102) 240V Fed. Min. HPWH (Interior Closet, ducted) 1992-2010 ($12,900) ($8,604) 240V Fed. Min. HPWH + 3kW PV 1992-2010 ($5,301) $554
30% Air Sealing Pre-1978 ($3,151) ($2,262)
R-6 Ducts Pre-1978 ($379) $1,649
R-8 Ducts Pre-1978 ($1,677) $457
10% Duct Sealing Pre-1978 ($75) $1,230
R-13 Wall Insulation Pre-1978 $653 $2,616
R-38 Attic Insulation Pre-1978 ($3,793) ($2,317)
R-49 Attic Insulation Pre-1978 ($4,194) ($2,582)
R-30 Raised Floor Insulation Pre-1978 $1,898 $5,830
Cool Roof (0.20 Ref) (at roof replacement) Pre-1978 ($1,860) ($2,356) Table 23. Electric Panel Upgrade Sensitivity [Pre-1978]

Measure
Standard Results Electric Panel Upgrade
On-Bill NPV LSC NPV On-Bill NPV LSC NPV
HPSH (Std Efficiency) ($8,298) $7,900 ($13,368) $5,120
240V Fed. Min. HPWH ($11,721) $4,252 ($14,600) $1,472

Cost-Effectiveness Analysis: Central Coast Community Energy 21 California Energy Codes & Standards | A statewide utility program 2024-03-15 5 Summary
This analysis evaluated the feasibility and cost-effectiveness of retrofit measures in California existing homes built before 2010. The Statewide Reach Codes Team used both On-Bill and LSC-based LCC approaches to evaluate costeffectiveness and quantify the energy cost savings associated with energy efficiency measures compared to the incremental costs associated with the measures.

Conclusions and Discussion:

1. Heat pump space heating: HPSHs were found to be LSC cost-effective in most cases, but not On-Bill costeffective in any case. Cost-effectiveness for the ductless MSHP cases was poorer and was found to be LSC cost-effective for only the pre-1978 vintage for high efficiency equipment. a. Challenges to On-Bill cost-effectiveness include higher first costs and higher first-year utility costs due to higher electricity tariffs relative to gas tariffs.
b. Ductless MSHPs, evaluated for homes with existing ductless systems, have a high incremental cost because they are a more sophisticated system than the base model of a wall furnace with a window AC unit. However, the ductless MSHP would provide greater comfort benefits if properly installed to directly condition all habitable spaces (as is required under the VCHP compliance credit as evaluated in this study) which may be an incentive for a homeowner to upgrade their system. c. Higher efficiency equipment lowered utility costs in all cases and improved cost-effectiveness in many cases, particularly with a ducted MSHP.

2. Heat pump water heating: All the HPWH measures were LSC cost-effective but were not On-Bill cost-effective for all three vintages. The HPWH measures share many of the same challenges as the HPSH measures to achieving cost-effectiveness including high first costs and utility rates and assumptions. a. Various HPWH locations were also explored, however there are some factors outside of costeffectiveness that should also be considered. i. HPWHs in the conditioned space can provide benefits such as free-cooling during the summer, reduced tank losses, and shorter pipe lengths, and in some cases show improved cost-effectiveness over garage located HPWHs. However, there are various design considerations such as noise, comfort concerns, and condensate removal. Ducting the inlet and exhaust air resolves comfort concerns but adds costs and complexity. Split heat pump water heaters address these concerns, but currently there are limited products on the market and there is a cost premium relative to the packaged products. ii. Since HPWHs extract heat from the air and transfer it to water in the storage tank, they must have adequate ventilation to operate properly. Otherwise, the space cools down over time, impacting the HPWH operating efficiency. This is not a problem with garage installations but needs to be considered for water heaters located in interior or exterior closets. For the 2025 Title 24 code the CEC is proposing that all HPWH installations meet mandatory ventilation requirements (California Energy Commission, 2023).

3. Envelope measures: Improving envelope performance can be very cost-effective in older homes. However, none of the envelope measures were found to be cost-effective in homes built 1978 and later. In addition to reducing utility costs these measures provide many other benefits such as improving occupant comfort and satisfaction and increasing a home’s ability to maintain temperatures during extreme weather events and power outages. Below is a discussion of the results of specific measures for the pre-1978 vintage. a. Adding new ducts with R-6, R-8 or duct sealing to 10% showed to be cost effective based on LSC only. b. Adding attic insulation was not cost effective based on either metric. c. Wall insulation showed to be cost effective On-Bill and on LSC. d. Adding R-19 or R-30 floor insulation was cost-effective On-Bill and on LSC. e. Upgrading to a cool roof at roof replacement with 0.2 or 0.25 solar reflectance was shown to not be cost effective. This is expected in Climate Zone 5 where heating loads dominate since cool roofs increase heating energy use by reducing solar heat gain through the roof and attic.

Cost-Effectiveness Analysis: Central Coast Community Energy 22 California Energy Codes & Standards | A statewide utility program 2024-03-15 f. Replacing old single pane windows with new high-performance windows has a very high cost and is typically not done for energy savings alone. However, energy savings showed to be substantial, even though it is not cost-effective.

4. The contractor surveys revealed overall higher heat pump costs than what has been found in previous analyses. This could be due to incentive availability raising demand for heat pumps and thereby increasing the price. This price increase may be temporary and may come down once the market stabilizes.

5. Table 22 shows how escalation rate assumptions will impact cost-effectiveness. a. If gas tariffs are assumed to increase substantially over time, in-line with the escalation assumption from the 2025 LSC development, cost-effectiveness substantially improves for the heat pump measures as well as envelope and duct measures over the 30-year analysis period and many cases become cost-effective that were not found to be cost-effective under the CPUC / 2022 TDV escalation scenario. There is much uncertainty surrounding future tariff structures as well as escalation values.

While it’s clear that gas rates will increase, how much and how quickly is not known. Future electricity tariff structures are expected to evolve over time, and the CPUC has an active proceeding to adopt an income-graduated fixed charge that benefits low-income customers and supports electrification measures for all customers.4 The CPUC will decide in mid-2024 and the new rates are expected to be in place later that year or in 2025. While the anticipated impact of this rate change is lower volumetric electricity rates, the rate design is not finalized. While lower volumetric electricity rates provide many benefits, it also will make building efficiency measures harder to justify as costeffective due to lower utility bill cost savings.

6. Under NBT, utility cost savings for PV are substantially less than what they were under prior net energy metering rules (NEM 2.0); However, savings are sufficient to be On-Bill cost-effective for vintages pre-1978 and 1978-1991.
a. Combining a heat pump with PV allows the additional electricity required by the heat pump to be offset by the PV system while also increasing on-site utilization of PV generation rather than exporting the electricity back to the grid at a low rate. b. While not evaluated coupling PV with battery systems can be very advantageous under NBT increasing utility cost savings because of improved on-site utilization of PV generation and fewer exports to the grid.
4 https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/demand-response-dr/demand-flexibilityrulemaking

Cost-Effectiveness Analysis: Central Coast Community Energy 23 California Energy Codes & Standards | A statewide utility program 2024-03-15 6 References
California Energy Commission. (2023). 2025 Energy code Hourly Factors. Retrieved from https://www.energy.ca.gov/files/2025-energy-code-hourly-factors California Energy Commission. (2023). Draft 2025 Energy Code Express Terms. Retrieved from https://efiling.energy.ca.gov/GetDocument.aspx?tn=252915&DocumentContentId=88051 California Public Utilities Commission. (2021a). Utility Costs and Affordability of the Grid of the Future: An Evaluation of Electric Costs, Rates, and Equity Issues Pursuant to P.U. Code Section 913.1. Retrieved from https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/office-of-governmental-affairsdivision/reports/2021/senate-bill-695-report-2021-and-en-banc-whitepaper_final_04302021.pdf Statewide Reach Codes Team. (2024). 2022 Cost-Effectiveness Study: Existing Single Family Building Upgrades.

Prepared by Frontier Energy. . Retrieved from Not yet published

Cost-Effectiveness Analysis: Central Coast Community Energy 24 California Energy Codes & Standards | A statewide utility program 2024-03-15 7 Appendices

7.1 Map of California Climate Zones
Climate zone geographical boundaries are depicted in Figure 1. The map in Figure 1 along with a zip-code search directory is available at: https://ww2.energy.ca.gov/maps/renewable/building_climate_zones.html Figure 1. Map of California climate zones.

Cost-Effectiveness Analysis: Central Coast Community Energy 25 California Energy Codes & Standards | A statewide utility program 2024-03-15

7.2 Utility Rate Schedules
The Reach Codes Team used 3CE electricity and SoCalGas gas tariffs detailed below to determine the On-Bill savings for each package.

7.2.1 Central Coast Community Energy – Electricity
Following are the 3CE tariffs applied in this study. The E-TOU-C and E-Elec rate was applied to PG&E territory T, climate zone 5.5 Table 24 and Table 25 provide a comparison of the generation rates and total effective rates comparing 3CE and PG&E’s standard E-TOU-C rate and electric E-Elec rate.

The 2019 PCIA charge was used based on feedback from SLO staff.

Table 24: Comparison of 3CE and PG&E’s E-TOU-C Rates
PG&E/3CE Comparison Summer
Peak
Summer
Part-Peak
Summer
Off-Peak
Winter
Peak
Winter
Part-Peak
Winter
Off-Peak
PG&E Bundled Generation
Rate ($/kWh) (No PCIA
Charge)
$0.22387 0 $0.16043 $0.17528 0 $0.15025
3CE Bundled Generation Rate
($/kWh) (No PCIA Charge) $0.22422 0 $0.09322 $0.18422 0 $0.10022 Bundled Generation Rate %
Difference (0.2%) 0 42% (5%) 0 33%
PG&E Total Rate ($/kWh) $0.61806 0 $0.53462 $0.51536 0 $0.48701 3CE Total Rate ($/kWh) $0.61794 0 $0.46694 $0.52383 0 $0.43651 Total Rate % Difference .02% 0 13% (2%) 0 10%
Table 25: Comparison of 3CE and PG&E’s E-Elec Rates
PG&E/3CE Comparison Summer
Peak
Summer
Part-Peak
Summer
Off-Peak
Winter
Peak
Winter
Part-Peak
Winter
Off-Peak
PG&E Bundled Generation
Rate ($/kWh) (No PCIA
Charge)
$0.30550 $0.20639 $0.16129 $0.14337 $0.12340 $0.11005
3CE Bundled Generation Rate
($/kWh) (No PCIA Charge) $0.22422 $0.11122 $0.09022 $0.18422 $0.11222 $0.09922 Bundled Generation Rate %
Difference 27% 46% 44% (28%) 9% 10%
PG&E Total Rate ($/kWh) $0.63580 $0.47392 $0.41724 $0.40429 $0.38220 $0.36834 3CE Total Rate ($/kWh) $0.55405 $0.37828 $0.34570 $0.44467 $0.37055 $0.35704 Total Rate % Difference 13% 20% 17% (10%) 3% 3%
5ELEC_SCHEDS_E-TOU-C.pdf (pge.com)
ELEC_SCHEDS_E-ELEC.pdf (pge.com)

Cost-Effectiveness Analysis: Central Coast Community Energy 26 California Energy Codes & Standards | A statewide utility program 2024-03-15

Cost-Effectiveness Analysis: Central Coast Community Energy 27 California Energy Codes & Standards | A statewide utility program 2024-03-15

Cost-Effectiveness Analysis: Central Coast Community Energy 28 California Energy Codes & Standards | A statewide utility program 2024-03-15

Cost-Effectiveness Analysis: Central Coast Community Energy 29 California Energy Codes & Standards | A statewide utility program 2024-03-15

Cost-Effectiveness Analysis: Central Coast Community Energy 30 California Energy Codes & Standards | A statewide utility program 2024-03-15

Cost-Effectiveness Analysis: Central Coast Community Energy 31 California Energy Codes & Standards | A statewide utility program 2024-03-15

7.2.2 SoCalGas – Gas
The SoCalGas monthly gas rate in $/therm applied in this analysis is shown in Table 26. The gas rates were developed based on the latest available gas rate for February 2024 and a curve to reflect how natural gas prices fluctuate with seasonal supply and demand. The seasonal curve was estimated from SoCalGas’s monthly residential tariffs between 2014 and 2023. 12-month curves were created from monthly gas rates for each of the ten years. The ten annual curves were then averaged to arrive at an average normalized annual curve. Long-term historical natural gas rate data was only available for SoCalGas’ procurement charges.6 The baseline and excess transmission charges were found to be consistent over the course of a year and applied for the entire year based on February 2024 rates. The costs presented in Table 26 were then derived by establishing the February baseline and excess rates from the latest 2024 tariff as a reference point, and then using the normalized curve to estimate the cost for the remaining months relative to the February rates.

Table 26: SoCalGas Monthly Gas Rate ($/therm)
Month Total Charge
Baseline Excess
Jan $1.73685 $2.16346
Feb $1.46941 $1.89602
Mar $1.40304 $1.82965
Apr $1.33281 $1.75942
May $1.35857 $1.78518
June $1.40441 $1.83102
July $1.42375 $1.85036
Aug $1.48077 $1.90738
Sept $1.42813 $1.85474
Oct $1.39955 $1.82616
Nov $1.44858 $1.87519
Dec $1.53152 $1.95813
6 The SoCalGas procurement and transmission charges were obtained from the following site:
https://www.socalgas.com/for-your-business/energy-market-services/gas-prices RES2023.xlsx (live.com)

Cost-Effectiveness Analysis: Central Coast Community Energy 32 California Energy Codes & Standards | A statewide utility program 2024-03-15

7.2.3 Fuel Escalation Rates
The average annual escalation rates in Table 27 were used in this study. The electricity and natural gas rates are based on assumptions from the CPUC 2021 En Banc hearings on utility costs through 2030 (California Public Utilities Commission, 2021a). Escalation rates through the remainder of the 30-year evaluation period are based on the escalation rate assumptions within the 2022 TDV factors. No data was available to estimate electricity escalation rates for 3CE, therefore electricity escalation rates for PG&E and statewide natural gas escalation rates were applied.

Table 28 presents the average annual escalation rates used in the utility rate escalation sensitivity analysis shown in Section 4.4. Rates were applied for the same 30-year period and are based on the escalation rate assumptions within the 2025 LSC factors from 2027 through 2053.7 These rates were developed for electricity use statewide (not utilityspecific) and assume steep increases in gas rates in the latter half of the analysis period. Data was not available for the years 2024, 2025, and 2026 and so the CPUC En Banc assumptions were applied for those years using the average rate across the three IOUs for statewide electricity escalation.

Table 27: Real Utility Rate Escalation Rate Assumptions, CPUC En Banc and 2022 TDV Basis 7https://www.energy.ca.gov/files/2025-energy-code-hourly-factors. (California Energy Commission, 2023). Actual escalation factors were provided by consultants E3.

Year
Statewide Natural
Gas Average Rate
(%/year, real)
PG&E Electric
Average Rate
(%/year, real)
2024 4.6% 1.8%
2025 4.6% 1.8%
2026 4.6% 1.8%
2027 4.6% 1.8%
2028 4.6% 1.8%
2029 4.6% 1.8%
2030 4.6% 1.8%
2031 2.0% 0.6%
2032 2.4% 0.6%
2033 2.1% 0.6%
2034 1.9% 0.6%
2035 1.9% 0.6%
2036 1.8% 0.6%
2037 1.7% 0.6%
2038 1.6% 0.6%
2039 2.1% 0.6%
2040 1.6% 0.6%
2041 2.2% 0.6%
2042 2.2% 0.6%
2043 2.3% 0.6%
2044 2.4% 0.6%
2045 2.5% 0.6%
2046 1.5% 0.6%
2047 1.3% 0.6%
2048 1.6% 0.6%
2049 1.3% 0.6%
2050 1.5% 0.6%
2051 1.8% 0.6%
2052 1.8% 0.6%
2053 1.8% 0.6%

Cost-Effectiveness Analysis: Central Coast Community Energy 33 California Energy Codes & Standards | A statewide utility program 2024-03-15 Table 28: Real Utility Rate Escalation Rate Assumptions, 2025 LSC Basis Year
Statewide Natural
Gas Residential
Average Rate
(%/year, real)
Statewide
Electricity
Residential
Average Rate
(%/year, real)
2024 4.6% 2.1%
2025 4.6% 2.1%
2026 4.6% 2.1%
2027 4.2% 0.6%
2028 3.2% 1.9%
2029 3.6% 1.6%
2030 6.6% 1.3%
2031 6.7% 1.0%
2032 7.7% 1.2%
2033 8.2% 1.1%
2034 8.2% 1.1%
2035 8.2% 0.9%
2036 8.2% 1.1%
2037 8.2% 1.1%
2038 8.2% 1.0%
2039 8.2% 1.1%
2040 8.2% 1.1%
2041 8.2% 1.1%
2042 8.2% 1.1%
2043 8.2% 1.1%
2044 8.2% 1.1%
2045 8.2% 1.1%
2046 8.2% 1.1%
2047 3.1% 1.1%
2048 -0.5% 1.1%
2049 -0.6% 1.1%
2050 -0.5% 1.1%
2051 -0.6% 1.1%
2052 -0.6% 1.1%
2053 -0.6% 1.1%

Cost-Effectiveness Analysis: Central Coast Community Energy 34 California Energy Codes & Standards | A statewide utility program 2024-03-15 Get In Touch
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City of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
(
DATE: June 4, 2024
TO: Mayor and Council
FROM: Rick Scott, Police Chief
VIA: Whitney McDonald, Interim City Manager
SUBJECT: ITEM 5l – FY 2024-25 GRANT APPLICATIONS FOR THE ALCOHOLIC

BEVERAGE CONTROL, OFFICE OF TRAFFIC SAFETY, DEPARTMENT

OF JUSTICE COMMUNITY ORIENTED POLICING AND DEPARTMENT

OF JUSTICE TOBACCO GRANT PROGRAM
Staff received the following questions regarding the grant application to the Department of Justice Community of Oriented Policing Services, included in Item 5l on the June 4, 2024, City Council meeting agenda. The questions are below with staff’s response shown in italics:
1) If we are applying for two new positions to support CAT, does that mean we are planning to expand to 4 CAT teams, when we have (in recent history) had two CAT Teams?
a. If so, would this mean, that if successful at obtaining the grant, we would also need to secure 2 more behavioral health staff to complete 2 new teams?
b. If so, have these new positions (and their costs) been budgeted in our forecasts? (as well as new BH staff positions?)
The Police Department is currently engaged in a contracted and broad-based staffing study of all police operations and personnel. The results of this study are expected to be available to the department this fall (2024) and are not currently included in the supplemental budget or budget forecasts.

Given the growth in the community and continued increases in calls for service, additional police officers are expected to be part of the recommendations from the consultant group working on the study and to be presented to Council for review at a later date. This year, President Biden’s administration boosted the Community of Oriented Policing Services (COPS) grant funding by an additional $334 million to combat the significant loss of police sworn staff across the country. Focus areas include community outreach services, similar to our Community Action Team (CAT) team.

Item 5l. F 2024-25 PD Grant Applications Page 2
Applying for this grant will not obligate the City to accept the funds at this time, but merely places us in the process to take advantage of the influx of federal funds while police staffing is a national priority. The decision to actually accept COPS funding and increase staffing will only occur by Council’s decision after the results of the staffing study have been brought before Council with the department’s recommendations. However, if we choose to not apply, we may not have an opportunity again that aligns with our study, department needs, or with national priorities.

While the current CAT team is comprised of “two” officers and two social case managers, the second police officer position was never filled full time nor was the department granted a staff increase to fill the team. This position was attempted to be filled with current staffing awaiting the aforenoted study, but due to continued staffing challenges in Patrol, this position was not able to be filled. If awarded the grant, the current CAT officer will be reallocated into patrol needs and the grant would be proposed to, for the first time, truly fund two full-time positions dedicated completely to the CAT team. Each of these officers would be partnered with either an existing social case manager or a County Licensed Psych Tech if the proposed County contract is approved. If the grant is approved, CAT would only consist of two teams of two, just as we currently have approved. There are no immediate increases expected to County Behavioral Health or contracted outreach workers. 2) Why is the estimated cost the same each year? Does this account for COLAs and step increases?
The step increases mentioned were built into the figures, starting at Step 1 and going to Step 3. The “yearly” amount shown in the chart are a simple average per year cost breakdown and a more detailed budget will be created and presented showing the exact portions of the costs should we advance in the process and recommend acceptance to Council at that time. We believe the match cost estimates are accurate based on the information we have at this time.

Item 5l. F 2024-25 PD Grant Applications Page 3
3) If successful, would the grant provide $244,460 over three years, but commit the city to $557,677 over the same period and then we would assume the full costs of the new officers after the three-year period, correct? If awarded and accepted, the COPS grant could provide up to a 75% (or a maximum of $125,000 per position spanning a period of three years) and a diminishingi portion of officer salary over a three-year period, at which time the City would agree to an ongoing cost to fully fund the positions for those officers hired.

The breakdown shown in the chart is an estimated cost share based on the information provided from the COPS grant and our internal personnel costs. i Per the Grant guidelines, grantees must assume a progressively larger share of the cost of the grant with local funds over the 3-year period, which in turn results in a decrease in Federal funds each year.

Item 5l
Department: 9
Cost Center: 8001
For Agenda of: 6/4/2024
Placement: Consent
Estimated Time: N/A
FROM: Rick Scott, Police Chief
Prepared By: Melissa Ellsworth, Senior Business Analyst SUBJECT: FY 2024-25 GRANT APPLICATIONS FOR THE ALCOHOLIC BEVERAGE

CONTROL, OFFICE OF TRAFFIC SAFETY, DEPARTMENT OF JUSTICE

COMMUNITY ORIENTED POLICING AND DEPARTMENT OF JUSTICE

TOBACCO GRANT PROGRAM

RECOMMENDATION

1. Adopt a Draft Resolution entitled, “Resolution Authorizing Grant Application for Funding from the Department of Alcoholic Beverage Control”,

2. Authorize staff to submit grant applications to the following agencies:
a. FY 2024-25 Department of Alcoholic Beverage Control in the amount of $93,154. b. FY 2024-25 Office of Traffic Safety in the amount of $185,100. c. FY 2024-25 Department of Justice Office of Community Oriented Policing Services in an amount not to exceed $250,000 with a City match of approximately $558,000. d. FY 2024-25 Department of Justice Tobacco Grant Program in an amount not to exceed $60,000.

3. If the grants are awarded, authorize the City Manager or a designee to execute grant related documents and authorize the Finance Director to make the necessary budget adjustments upon the award of the grant.

POLICY CONTEXT
The recommended actions are consistent with the City of San Luis Obispo’s Financial Management Manual, Section 740 - Grant Management Policy. The policy states that Council must approve all grant applications in excess of $5,000 and delegates receipt and contract execution to the City Manager.

DISCUSSION
California Department of Alcoholic Beverage Control
The mission of the Department of Alcoholic Beverage Control (ABC) is to provide the highest level of service and public safety to the people of the State through licensing, education and enforcement. The ABC awards grants to local law enforcement agencies to work toward eliminating crime and public nuisance problems associated with problematic alcoholic beverage outlets. If awarded, grant funds will be used for officer overtime related to

Item 5l
enforcement operations and training programs for retail licensees. The department typically applies for funding annually and has been receiving funds (intermittently) for well over fifteen years. The grant application was submitted on April 1, 2024, and if Council denies this request the application can be withdrawn or the award can be declined.

California Office of Traffic Safety
The California Office of Traffic Safety (OTS) provides grant funding to agencies each year aimed to prevent deaths and injuries on roadways through special enforcement and public awareness efforts. Grant funds help the City’s efforts to improve traffic safety and quality of life in the community.

The department has been awarded funding from the Office of Traffic Safety for over twenty years. OTS grant funding has enabled the Police Department to conduct numerous operations specifically focused on alcohol or drug impaired drivers. For FY 2024-25, an application was submitted for grant funding in the amount of $185,100. If awarded, grant funds will be used for overtime costs associated with the following activities: DUI Checkpoints, DUI Saturation Patrols, Traffic Enforcement, Distracted Driving, and Pedestrian and Bicycle Enforcement. If Council denies this request, the application can be withdrawn.

Department of Justice, Office of Community Oriented Policing Services The goal of the Office of Community Oriented Policing (COPS Office) is to advance public safety through community policing by funding additional full-time career law enforcement positions to meet community policing strategies. The FY 2024-25 COPS Hiring Program provides funding to local law enforcement agencies to hire or rehire additional law enforcement officers to increase community policing capacity efforts.

The COPS Hiring Program will cover up to 75% of the entry level salary and limited benefits for each approved position for a period of 3-years (within a 5-year period of performance).

There is a minimum cost share of 25% and the maximum federal share per position is $125,000 over the 3-year period (not per year, spanning the 3-year period). Agencies must retain each funded position for a minimum of 12 months following the 3-years of funding.

Absorbing the positions through attrition is not allowed, and the grant funded positions must be retained and funded through the City’s General Fund.

The department is submitting an application to fund and hire two police officers that will be associated with the Community Action Team with a selected grant focus area of policebased response to persons in crisis.

Currently, the City’s match has not been identified or approved for FY 2024-25. If the grant is awarded, staff would return to Council in FY 2024-25 to request approval to accept the grant and request to add two police officer FTE positions (which would be net new).

Additionally, the department is slated to begin a staffing study in June 2024 and staff is anticipating the results of the study to coincide with the grant award announcements.

In FY 2024-25, if staff’s request for the match amount and the additional positions is denied by Council, and the grant is awarded, staff can decline the award.

Item 5l

Item 5l
Department of Justice Tobacco Grant Program
The Department of Justice has made grant funding available to support local enforcement efforts to reduce illegal retail sales and marketing of tobacco products to minors and youth.

Grant priorities include enforcement of state tobacco laws and local ordinances, compliance checks and inspections, retailer education and education for enforcement officers. If awarded, grant funds will be used for officer overtime and equipment needed to address these priorities.

Public Engagement
This item is on the agenda for the June 4, 2024, City Council meeting and will follow all required postings and notifications. The public may have an opportunity to comment on this item at or before the meeting.

CONCURRENCE
The Director of Finance concurs with staff’s recommendations.

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 Section 15378.

FISCAL IMPACT
Budgeted: No Budget Year: 2024-25
Funding Identified: No
Fiscal Analysis:

Funding Sources
Total
Budget /
Grant
Requested
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
DOJ – COPS Hiring Program:

General Fund Share Estimate1 557,677 298,700
Total General Fund Request 557,677 298,700
Alcoholic Beverage Control 93,134
Office of Traffic Safety 185,100
DOJ - COPS Hiring Program 250,000
DOJ - Tobacco Program2 60,000
Total Grant Request 588,234

1 General Fund share only applies to the COPS Hiring Program grant over a 3-year period and annual ongoing cost shown is an estimate to retain the two officer positions (Step 4) after the grant period has ended.
2 Tobacco Program grant request is an estimate as staff is still working on the application.

Item 5l
As stated above, matching funds are only required under the COPS Hiring Grant. The grant requires at least a 25% cash match and grantee must assume a progressively larger share of the cost each year. The chart below outlines estimated General Fund obligations by Fiscal Year and estimated grant funding over the 3-year period for two police officers.

COPS Hiring Grant – City Share and Grant Funds
Estimated Cost Breakdown for Two Officers

CITY MATCH GRANT - FEDERAL FUNDS
Year 1
FY 24-25
Year 2 (+1%)3
FY 25-26
Year 3 (+1%)
FY 26-27
Year 1
FY 24-25
Year 2
FY 25-26
Year 3
FY 26-27 TOTAL
Year 1
(FY 24-25) $184,046 $83,333 $267,379
Year 2
(FY 25-26) $185,886 $81,493 $267,379
Year 3
(FY 26-27) $187,745 $79,634 $267,379
Total City General Fund: $557,677 Total Grant: $244,460 $802,137

ALTERNATIVES
Do not submit grant applications or decline funding. This alternative is not recommended. These grants provide funding for specialized equipment purchases and overtime for targeted education and enforcement opportunities. Without grant funds the department would not be able to carry out these types of programs which increase safety in our community.

ATTACHMENT
A - Draft Resolution authorizing grant applications for funding through the Alcoholic Beverage Control

3 Grantees must assume a progressively larger share of the cost of the grant with local funds over the 3 yr. period. Local match increases and Federal share decreases each year.

R _____
RESOLUTION NO. _____ (2024 SERIES)

A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS

OBISPO, CALIFORNIA, AUTHORIZING GRANT APPLICATIONS FOR

FUNDING PROVIDED THROUGH THE DEPARTMENT OF ALCOHOLIC

BEVERAGE CONTROL TO INCREASE EDUCATION AND

ENFORCEMENT PROGRAMS FOCUSING ON UNDERAGE DRINKING

AND RETAIL ALCOHOL OUTLETS AND AUTHORIZING THE CITY

MANAGER TO EXECUTE ALL RELATED GRANT DOCUMENTS
WHEREAS, the San Luis Obispo Police Department (the “Police Department”) through the City of San Luis Obispo desires to undertake programs to increase education and enforcement to focus on regulating retail alcohol outlets in the community; and WHEREAS, the Police Department submitted a grant through the Alcohol Policing Partnership (APP) administered by the Department of Alcoholic Beverage Control (ABC) in April 2024 to conduct education and compliance activities related to local businesses that hold alcohol licenses; and
WHEREAS, in May 2024, the Police Department will be notified of the ABC grant award in an amount not to exceed $94,000; and
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows:

SECTION 1. The Chief of Police or their designee is hereby authorized to submit grant applications consistent with program requirements to pursue an Alcohol Policing Partnership grant administered by ABC, including the Police Department's April 2024 application.

SECTION 2. The Interim City Manager of the City of San Luis Obispo or their designee is authorized to execute all grant related documents, including the State of California Standard Agreement, any extensions or amendments thereof, and any subsequent contract with the State in relation to the APP grant administered by ABC.

SECTION 3. The Finance Director is authorized to make the necessary budget adjustments upon the award of the grant.

SECTION 4. The City agrees that any liability arising out of the performance of this contract, including civil court actions for damages, shall be the responsibility of the grant recipient and the authorizing agency and acknowledges that the State of California and ABC disclaim responsibility for any such liability.

SECTION 5. Grant funds received hereunder shall not be used to supplant expenditures controlled by this body.

Resolution No. _____ (2024 Series) Page 2
R ______
SECTION 6. This award is not subject to local hiring freezes.

Upon motion of __________________, seconded by___________________, and on the following roll call vote:

AYES:

NOES:

ABSENT:

The foregoing resolution was adopted this ______day of _____________2024. __________________________
Mayor Erica 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

City of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: June 4, 2024
TO: Mayor and Council
FROM: Timmi Tway, Community Development Director
Prepared By: Luke Schwartz, Transportation Manager
VIA: Whitney McDonald, Interim City Manager
SUBJECT: ITEM 5M – INITIATION OF DETACHMENT APPLICATION TO MODIFY

CITY LIMIT BOUNDARY ON SLACK STREET
The following memorandum provides City staff responses, shown in italics, to questions received from a Council member regarding the initiation of an application to modify the City limit boundary on Slack Street. Staff determined it would be helpful to provide this memo to all Council Members and the public, as the responses offer clarification regarding the future street improvements proposed on Slack Street. 1) What are the anticipated impacts to Grand Avenue/Slack Street that would result from the requested detachment?
The requested detachment itself is not anticipated to result in any substantive impacts to the buildout of Slack Street or the Grand Avenue/Slack Street intersection. The detachment will adjust the City Limit to the back of sidewalk to define a clear delineation between the public street and Cal Poly’s private property, once Cal Poly receives approval from the City Council at a future meeting to abandon a portion of the Slack Street right-of-way. The housing project will include frontage improvements that will widen Slack Street to City Engineering Standards, including the addition of sidewalks and ADA-compliant curb ramp upgrades at the northeast corner of the Grand/Slack intersection. The 25 feet of right-of-way proposed for abandonment and detachment is not needed for buildout of Slack Street or the future intersection to current engineering standards.

The City’s General Plan Circulation Element identifies future plans to reconstruct the Grand/Slack intersection as a single-lane roundabout; however, this improvement is not proposed as part of Cal Poly’s 33-unit housing development, nor is there a clear City policy impact that would trigger the need to advance the roundabout at this time. The intersection currently operates well within the City’s traffic operations policy thresholds, there are no reported collisions at this intersection in the past five-year period, and this intersection has not been identified as a high-collision location in the City’s past Traffic Safety Reports. The Cal Poly housing development site plan has been designed to ensure that adequate setbacks are provided as to not preclude future construction of a roundabout.

Item 5m. Initiation of Detachment Application to modify City limit boundary on Slack Street Page 2 While not part of the housing development or related frontage improvements, it should be noted that the City has plans to advance complete street improvements on Grand Avenue as part of the 2024 Roadway Sealing project, if favorable bids are received within budget. Planned improvements include striping revisions, protected bike lanes, pedestrian median refuges, and corner radius tightening at the Grand/Slack intersection, designed with the intent to reduce exposure and improve comfort for pedestrians and cyclists crossing the Grand/Slack intersection. While Cal Poly is not constructing these improvements, the university has issued an encroachment permit to allow the City to install the portions of these intersection improvements that overlap with current Cal Poly right-of-way. 2) The west side of Slack Street (across Grand) appears to be similar to what is being proposed on the east side (similar sidewalk width, drive-lane width, parking on south side but not the north Cal Poly side). Is this correct? Improvements to the east side of Slack Street in front of the Vista Meadows faculty housing project would include two 10-foot travel lanes, a 5-foot sidewalk with 4- foot landscaped parkway, along with curb and gutter. Existing on-street parking would remain on the south side of Slack Street. Overhead utilities on the northerly frontage would be undergrounded within the public improvements. The resulting street width is 28 feet curb-to-curb.

In comparison, the existing segment of Slack Street west of Grand Avenue ranges from approximately 40 to 47 feet curb-to-curb, and includes two 10-foot travel lanes, a center turn lane (near Teach Elementary & Pacheco Way), on-street parking on the south side of the street, and bike lanes in both directions.

Item 5m. Initiation of Detachment Application to modify City limit boundary on Slack Street Page 3 3) Will Cal Poly be providing traffic calming on the east side of Slack to contain the speeds of vehicular traffic, similar to what was needed on the west side across Grand?
Traffic calming (speed humps) was installed on Slack Street west of Grand Avenue several years ago in conjunction with a City-led Neighborhood Traffic Management (NTM) project, in response to an application filed by local residents requesting measures to reduce illegal speeding near Teach Elementary School. The City has not received any NTM applications for Slack Street east of Grand Avenue and Cal Poly’s current frontage improvement plans do not include any proposed traffic calming measures. The Slack Street width east of Grand Avenue will be 28 feet curb-to-curb, 15-20 feet narrower than Slack Street west of Grand Avenue, which generally invites less potential for illegal speeding. If the Council wishes to preemptively address potential illegal speeding concerns, it would be within their discretion to recommend a condition of approval requiring traffic calming features, such as speed humps or other elements as approved by the City Public Works and Fire Departments, to be included with Cal Poly’s public improvement plans on Slack Street as a condition of detachment and right-of-way abandonment. 4) The initiation report identifies “next steps” in the process, including a Planning Commission hearing and then an additional hearing at City Council. Can Council request that this goes before the Active Transportation Committee (ATC) as well?
It is certainly within the Council’s discretion to direct staff to take this item to the City’s Active Transportation Committee for consideration. This was not originally planned, as the proposed action (revision of City Limit and future right-of-way abandonment) does not appear to include any Active Transportation project or policy implications that would typically fall under the purview of the ATC. The City’s adopted Active Transportation Plan identifies the existing bike lanes on Slack Street west of Grand Avenue to remain and calls for protected bike lanes on Grand Avenue as a future Tier 2 (moderate priority) project, which are being partially implemented as part of the 2024 Roadway Sealing project referenced above. The Active Transportation Plan does not identify any specific pedestrian or bicycle improvements projects on Slack Street east of Grand or at the Grand/Slack intersection itself. As currently proposed, Cal Poly’s housing development and related frontage improvements would not appear to conflict with any adopted City plans or policies related to active transportation.

As a point of clarification, the City’s involvement with the 33-unit Vista Meadows faculty housing development is only related to the right-of-way and City limit line.

Cal Poly must obtain an encroachment permit through the City to install improvements in the right-of-way. The requests for modification of the City limit line and abandonment of 25-feet of unused right-of-way are discretionary applications that can include conditions of approval; however, the City’s purview is limited to only the right-of-way itself. California State University is the lead agency

Item 5m. Initiation of Detachment Application to modify City limit boundary on Slack Street Page 4 for the environmental review, entitlements, and permits for the 33 housing units and onsite improvements. Based on the environmental review completed by Cal Poly (https://afd.calpoly.edu/facilities/planning-capital-projects/ceqa/), the project will be adding 18 peak hour trips to the Slack/Grand intersection. The 33 units at Vista Meadows do not trigger installation of the Slack/Grand roundabout at this time based on CEQA; however, future build out on the Cal Poly campus could trigger roundabout construction in the future. While the Slack/Grand roundabout is identified in the City’s General Plan Circulation Element, there is no current funding for construction of the roundabout. As a superior agency constructing housing outside of the City’s jurisdiction, Cal Poly will not be contributing to the City’s TIF program and is not required to pay impact fees towards funding the Slack/Grand roundabout.

Item 5m
Department: Community Development
Cost Center: 4008
For Agenda of: 6/4/2024
Placement: Consent
Estimated Time: N/A
FROM: Timmi Tway, Community Development Director
Prepared By: Callie Taylor, Associate Planner
SUBJECT: INITIATION OF DETACHMENT APPLICATION TO MODIFY CITY LIMIT BOUNDARY ON SLACK STREET EAST OF GRAND AVE. TO

ACCOMMODATE CAL POLY FACULTY AND STAFF HOUSING

PROJECT, VISTA MEADOWS, AND OTHER CLEAN-UP AREAS AS

NEEDED TO CORRECT CAL POLY HISTORICAL BOUNDARY CROS

RECOMMENDATION
Authorize staff to proceed with processing a Detachment Application to modify the City limit boundary on Slack Street east of Grand Avenue to accommodate a new Cal Poly faculty and staff housing development known as Vista Meadows, as well as other City limit clean-up areas as needed to correct historical boundary crossings around Cal Poly, for future submittal to LAFCO after City process and required hearings.

REPORT-IN-BRIEF
Applications have been submitted by Cal Poly University (Cal Poly) requesting right-ofway abandonment on Slack Street and a corresponding modification to the City limit line in order to accommodate a faculty and staff housing project on the Cal Poly campus. Cal Poly is planning to construct a 33-unit single-family housing development at the northeasterly corner of Slack Street and Grand Avenue. The housing units would take access from Slack Street with 14 individual driveways and two internal streets entering the Cal Poly property from Slack Street.

The existing right-of-way on Slack Street is 70 feet in width; however, existing street improvements are located on only the southern half of the right-of-way with approximately 22 feet of existing pavement and some intermittent sidewalks. Cal Poly is proposing to improve the northern portion of the right-of-way to build out two travel lanes and a 5-foot sidewalk with landscaped parkway on the north side to extend public improvements to a minimum of 37-feet in width. Cal Poly is requesting that the City abandon the remaining 25 feet of right-of-way beyond the back of the northern sidewalk to allow development of housing in this area.

Item 5m
City boundary limits, which define the City’s jurisdictional area, currently coincide with the location of the existing right-of-way boundary at the northern edge of Slack Street. A modification to the City limit boundary is proposed in conjunction with the street abandonment. Cal Poly proposes to construct residential units at this location, which would cross the jurisdictional boundary if the boundary is not modified. A Detachment application, which is the reverse of an Annexation, has been submitted by Cal Poly University to modify the City limit boundary to coincide with the back of the new sidewalk and proposed right-of-way edge on the northern side of Slack Street. The existing and proposed right-of-way and City limits are shown in Figure 1 below.

Figure 1. Existing and Proposed right-of-way and City Limits on Slack Street The City limit boundary is included in the General Plan, and therefore, applications to modify the City limit are referred to City Council for initiation and early consideration prior to staff processing the application, similar to a request to amend the City’s General Plan (Municipal Code Section 17.130.020). If Council approves staff’s recommendation to proceed with the Detachment application, staff would then process the application through the standard steps required for a Detachment, including subsequent public hearings as outlined in this report.

POLICY CONTEXT
Why is this coming to City Council?
Amendments to the General Plan and/or City limits require orderly processing consistent with the overall goals of the City’s planning program and requirements of California State law. Municipal Code Section 17.130.020 specifies that if an application to amend the General Plan is submitted, the Community Development Director shall have the authority, prior to processing the application, to forward any such application to the City Council for early policy consideration to allow Council to determine whether the proposed amendment is consistent with overall policy direction in the General Plan. Council may direct the Director to either process the application or reject the application as inconsistent with overall General Plan policy direction.

Existing edge of right-of-way
and City limit boundary
Proposed edge of right-ofway and City limit boundary
Existing edge of pavement

Item 5m
On May 6, 2024, the City received an application from Cal Poly for a proposed Detachment to modify the City limit boundary on Slack Street between Grand Avenue to just past Henderson Avenue, which requires an amendment to the City limit boundary as identified in the General Plan. The proposed City limit boundary would match the new right-of-way location proposed with Cal Poly’s street abandonment application.

Staff is seeking City Council direction to proceed with the Detachment application. If Council approves staff’s recommendation to proceed, staff would then process the application through the standard steps required for a Detachment, as identified in Municipal Code Chapter 2.44 and California Government Code Section 56654, including:
1) development review by City staff and surveyor, 2) Planning Commission public hearing for recommendation, 3) City Council public hearing for consideration of a resolution of intent, and 4) submittal to San Luis Obispo Local Agency Formation Commission (LAFCO). The Government Code provides that LAFCO proceedings for detachment of territory may be initiated by resolution of the affected local agency (Government Code 56654(a)). Thus, at a future public hearing, Council would consider adopting a resolution supporting detachment and requesting LAFCO’s initiation of the process. The current request for City Council initiation of the Detachment application does not constitute approval of the request and only begins the required process for the Detachment.

DISCUSSION
Background
The Cal Poly 2035 Campus Master Plan was initiated in 2019 and was approved by the CSU Board of Trustees in May 2020 along with a Final Environmental Impact Report (EIR). The Campus Master Plan is a long-range planning document that guides the development and use of the University’s 1,321-acre main campus. It addresses all aspects of future physical development and land use on the campus to accommodate growth in student enrollment and in fulfillment of Cal Poly’s academic mission, and includes Guiding Principles which provide overarching direction, much like the City’s General Plan Goals and Policies.

The Campus Master Plan that was approved in 2020 identified and envisioned faculty/staff housing at the corner of Slack and Grand with up to 380 faculty/staff residential units, within two large multi-family buildings, plus 7,000 square feet of retail space, and approximately 525 parking spaces. The on-site buildings were intended to be five stories (approximately 60 feet) in height, with little or no setback from the adjacent streets. Last year, the housing development was substantially revised by Cal Poly and reduced in density to address site constraints and other feasibility concerns, and in consideration of the adjacent single-family residential uses across Slack Street within the City of San Luis Obispo. The project is now proposed to provide 33 single-family twostory homes with a community garden and other recreational amenities within a modified project configuration that is approximately 8.5 acres in size.

Item 5m
Addendum #1 to the Final Environmental Impact Report was prepared in February 2024 for the current Slack and Grand faculty/staff housing project, known as Vista Meadows, and a Notice of Determination was filed. The complete environmental analysis, including project plans and project description, and the complete 2035 Cal Poly Campus Master Plan can be viewed on the Cal Poly website: https://afd.calpoly.edu/facilities/planningcapital-projects/ceqa/ Cal Poly is located outside City limits within the County of San Luis Obispo. The City of San Luis Obispo was a commenting agency on the Campus Master Plan and EIR, but does not have jurisdiction over the university. The State of California is a superior agency, which acts as the lead agency for CEQA and issues its own permits through the State architect for development on-site, rather than obtaining permits through the County of San Luis Obispo.

While Cal Poly is located outside of City limits, the City of San Luis Obispo has jurisdiction of Slack Street, which is a City right-of-way within City limit boundaries. In order to build frontage improvements within the City right-of-way, Cal Poly must obtain an encroachment permit from the City. Cal Poly is proposing to construct 14 homes on the Slack Street frontage at the lower portion of the property in order to minimize grading uphill. Cal Poly has submitted a street abandonment application to the City to request abandonment of approximately 25-feet of the right-of-way in order to construct the homes at the proposed location. A modification to the City limit boundary is needed in order to avoid having residential units that cross an existing jurisdictional boundary. Construction of residential units at the proposed location would avoid heavily sloped areas of the site to the north to minimize grading impacts, and would provide much needed faculty housing on campus to meet the goals of both the Cal Poly’s Campus Master Plan and the City’s General Plan. City street frontage on Slack Street would be improved to current standards by Cal Poly as part of the housing development.

The City’s contracting surveyor and Cal Poly’s surveyor (RRM) have completed historical research to confirm the location of the existing right-of-way and City limit boundary. Both surveyors are in agreement that the City right-of-way and City limit line are co-located at the northern edge of Slack Street, as identified on the 1887 Phillips Addition map which subdivided the area. A 1948 City of San Luis Obispo Council Ordinance (#304) annexed this area into the City, and specifically identifies the “northerly boundary line of Slack Street being as shown and delineated on the map of the Phillips Addition as recorded and filed August 27, 1902, in Volume A, page 162 of San Luis Obispo County Records…” Both surveyors have concluded that the City limit boundary and the existing City right-ofway east of Grand Avenue is the northerly right-of-way line of Slack Street, as shown on both B/MB/90 and A/MB/162, 35-feet north of the original centerline.

Item 5m
Project Description
Site Data
Location Slack St. and Grand Ave.

Parcel Size 8.35 acres
General Plan
and Zoning
Outside City limits and rightof-way
Site Condition Vacant, sloped
Surrounding
Uses
North: Cal Poly
South: R-1, single-family
East: County
West: Cal Poly
Cal Poly is planning to construct a 33-unit single-family housing development on the lower portion of an 8.5-acre parcel at north easterly corner of Slack Street and Grand Avenue.

The units are proposed as two-story, detached 1,900 square foot residences with supporting amenities for Cal Poly faculty and staff, including open space, a community garden, trails, and other recreational features. Fourteen (14) of the proposed residences are proposed to be constructed along the north side of Slack Street between Grand Avenue and Henderson Avenue and would be accessed by individual driveways directly from Slack Street. A 5-foot sidewalk and landscaped parkway would be constructed along the northerly development frontage on Slack Street. Access to the remainder of the residential development would be provided by two internal streets intersecting Slack Street directly in line with City streets Henderson Avenue and Graves Avenue to the south. Parking for residents would be entirely accommodated within the project site, with parking for two cars per residence (66 in total) within the ground floor of each residence with additional visitor parking provided in two surface parking lots along the extension of Henderson Avenue. The conceptual development plan is provided in Figure 2 below.

The proposed Cal Poly faculty and staff housing development would be developed at a density comparable to that of adjacent single-family housing located across Slack Street within the City of San Luis Obispo to fit with the existing neighborhood context. The proposed circulation network for the project site is intended to be compatible with existing adjacent circulation patterns in the area and intended to minimize project-related vehicular traffic on local residential streets, including Grand Avenue and Slack Street. The project objectives, as identified by the University, are to promote and enhance faculty and staff retention and recruitment by offering quality residential housing at attainable rates; to strengthen the Cal Poly-San Luis Obispo community connection; and to reduce faculty and staff commutes (i.e., vehicle miles traveled, or VMT), associated greenhouse gas (GHG) emissions, and impacts on neighborhood traffic.

Cal Poly
Faculty Housing

Item 5m
Figure 2. Vista Meadows, Cal Poly Faculty and Staff Housing Conceptual Development Plan Slack Street is currently improved on only the southern half of the right-of-way, providing access to residential lots within the City of San Luis Obispo with approximately 22-feet of existing pavement and some intermittent sidewalks. The existing Slack Street right-ofway is 70 feet in width, with the northern portion currently unimproved. Cal Poly is proposing to improve the northern portion of the right-of-way to build out two 10-foot travel lanes and a 5-foot sidewalk with 4-foot landscaped parkway, along with curb and gutter.

Existing on-street parking would remain on the south side of Slack Street. Overhead utilities on the northerly frontage would be undergrounded with the public improvements.

Proposed public improvements for build-out of Slack Street are shown in Figure 3.

The City has received a street abandonment application from Cal Poly to request the City to vacate 25 feet of the unimproved remaining right-of-way beyond the back of the northern edge of sidewalk to allow development of housing in this area. The full 70-foot width of existing right-of-way is not needed for public improvements. Construction of residential units is proposed here at the lower slope of the property in order to minimize grading impacts at the top of the sloped Cal Poly property.

Figure 3. Proposed Frontage Improvements on Slack Street

Item 5m
City limits, which define the City’s jurisdictional area, currently coincide with the location of the existing right-of-way boundary at the northern edge of Slack Street. A modification to the City limit boundary is proposed in conjunction with the street abandonment. Cal Poly proposes to construct residential units at this location, which would cross the jurisdictional boundary if the boundary is not modified. A Detachment application, which is the reverse of an Annexation, has been submitted by Cal Poly University to modify the City limit boundary by 25-feet to coincide with the proposed right-of-way location at the back of the new sidewalk on the northern side of Slack Street. The existing and proposed right-of-way and City limits are shown in Figure 1 above.

Frontage improvements and undergrounding of utilities, as well as the associated street abandonment and modification to the City limit line, are proposed on Slack Street only in the area directly fronting the new faculty and staff housing development. This is proposed on Slack Street between Grand Avenue to just past Henderson Avenue. The remaining 120-feet of Slack Street past Henderson would remain as existing, with no proposed changes to existing right-of-way or City limits beyond the Cal Poly development. The new faculty housing project will be served by water and sewer provided by Cal Poly through existing agreements with the City of San Luis Obispo and will utilize pipelines and connections that will be extended through the campus.

Additional Areas for Boundary and Right-of-way Modification City staff and Cal Poly have identified additional areas along the edge of Cal Poly as candidates for clean-up to correct City limit boundary crossings and right-of-way encroachments from past development. An area of Cal Poly off Hathway near Mott gym is built within City limits but is owned by Cal Poly and previously developed with campus improvements. This area is being considered for inclusion with the current Detachment application to correct
historical boundary lines if
time and resources permit
processing with the current
application.

City staff has initiated
preliminary discussions with
LAFCO regarding the
Detachment application and
other potential boundary
clean-up areas. LAFCO staff
is supportive of the proposal
to process a Detachment
application to create
jurisdictional boundaries that
coincide with development
limits.

Figure 4. Additional City limit boundary for clean-up consideration; Slack Street and Hathway Existing City limit boundary

Item 5m
Consistency with Community Goals and General Plan Goal, Policies, and Programs Staff has provided a preliminary analysis of the proposed amendment’s consistency with the General Plan and the City’s Major City Goals. Additional analysis and consideration would be included as part of a full project analysis if Council provides direction to staff to move forward with processing the Detachment application. 2023-25 Major City Goals
Housing and Homelessness has been identified as one of the 2023-25 Major City Goals.

As such, the 2023-25 Financial plan includes efforts to support housing development.

One of the stated objectives of the Cal Poly Vista Meadows project is to promote and enhance faculty and staff retention and recruitment by offering quality residential housing at attainable rates. The construction of new staff housing on Cal Poly land helps to implement and facilitate the City Council goal of providing housing to residents and employees. By abandoning a portion of the unused right-of-way and modifying the City limit line, the City can support construction of these housing units at the lower elevation of the property, thereby minimizing environmental impacts of grading further up on the hillside.

General Plan Goals, Policies and Programs
Land Use Element Policies 1.12.2, 2.6.1, and 2.6.5 and Housing Element Polices 8.3 and

8.6 are related to providing student and campus housing for Cal Poly.  Land Use Element Policy 1.12.2: Cal Poly. …The City shall encourage Cal Poly to provide additional on-campus housing, enhanced transit service, and other measures to minimize impacts of campus commuting and enrollment. Cal Poly should actively engage the community during updates or amendments to the Campus Master Plan and fully mitigate impacts to the City, including environmental and quality of life impacts to nearby neighborhoods.
 Land Use Element Policy 2.6.1. Cal Poly. The City shall encourage Cal Poly to build housing on campus for all of its students, to the extent feasible. On-campus housing should be expanded at least as fast as enrollment increases.

Consideration shall be given for housing for faculty and staff as student enrollment increases.
 Land Use Element Policy 2.6.4. Location. The City shall encourage the development of housing likely to attract faculty, staff, and students to locate close to Cal Poly. The City shall work with Cal Poly to facilitate faculty and staff owning or renting housing in adjacent neighborhoods.
 Housing Element Policy 8.3 Encourage Cal Poly University to continue to develop on-campus student housing to meet existing and future needs and to lessen pressure on City housing supply and transportation systems.  Housing Element Policy 8.6 Encourage Cal Poly University to develop and maintain faculty and staff housing, consistent with the General Plan.

Item 5m
The proposed Cal Poly applications for street abandonment and Detachment will facilitate on-campus housing consistent with these goals listed above. The development will include improvements to the adjacent City street, which will have a positive impact on the adjacent neighborhood, improving walkability and vehicular safety in the area. Although not counted toward meeting the City’s RHNA allocation because it is located just outside City limits, housing developed by Cal Poly University on and adjacent to the campus on State land will continue to help meet the City’s housing needs.

Next Steps
Staff is seeking City Council direction on whether to proceed with the Detachment application. This early consideration referral to Council by the Community Development Director is an opportunity for the Council to provide input on the proposed right-of-way abandonment and City limit modification. If Council approves staff’s recommendation to proceed with the Detachment application, staff would then process the application through the standard steps required for a Detachment, including:

1.) Development review by City staff and surveyor

2.) Planning Commission public hearing for recommendation

3.) City Council public hearing for consideration of a resolution of intent

4.) Submittal to LAFCO
City Council initiation of the Detachment application does not constitute approval of the request and only begins the required process for the Detachment.

Public Engagement
This item is on the Council Agenda for consideration of initiation of the application on June 4, 2024, and staff has provided all required notifications. The public has an opportunity to comment on this item at or before the meeting. Additional public hearings and legal notices would be provided for Planning Commission and City Council meetings as part of the process for consideration of the street abandonment and Detachment applications if the Council authorizes staff to proceed with processing the applications.

CONCURRENCE
This staff report was reviewed and approved by the Community Development Department, Finance Department, City Attorney, and City Administration.

ENVIRONMENTAL REVIEW
The California Environmental Quality Act does not apply to the recommended action in this report because the initiation action and Council referral for early consideration does not constitute a “Project” under CEQA Guidelines Sec. 15378. If the application moves forward, the project would be subject to the appropriate environmental review as required per the California Environmental Quality Act (CEQA).

Item 5m
California State University is the lead agency for the environmental review of the faculty/staff housing project. In May 2020, the California State University (CSU) Board of Trustees San Luis Obispo certified an EIR for the 2035 Campus Master Plan (State Clearinghouse No. 2016101003). Addendum #1 to the Final Environmental Impact Report was prepared and approved by the California State University on February 14, 2024 for the Slack and Grand faculty/staff housing project, and a Notice of Determination was filed.

The project plans, including proposed right-of-way improvements, were analyzed under the EIR Addendum, which demonstrated in the substantive analysis that the proposed revised project would not result in new significant impacts or a substantial increase in the severity of significant impacts identified in the Campus Master Plan EIR. All applicable mitigation measures identified in the Campus Master Plan EIR and included in the adopted Mitigation Monitoring and Reporting Program are part of the project and are listed in the EIR Addendum. The complete environmental analysis can be viewed on the Cal Poly website: https://afd.calpoly.edu/facilities/planning-capital-projects/ceqa/

FISCAL IMPACT
Budgeted: N/A Budget Year: 2023-25
Funding Identified: N/A
Fiscal Analysis:

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

Total $0 $0 $0 $0
There will be no net fiscal impact related to initiating the proposed project. The applicant is required to fund the review and processing of the proposed applications, including the encroachment permit, street abandonment, and Detachment and any associated analysis. The Detachment application is paid on a deposit basis, and City staff and consultants log hours required to process the applications, including processing of any future City limit modification through LAFCO.

Item 5m

ALTERNATIVES

1. Direct staff to move forward with the proposed Detachment Application and associated street abandonment, but with direction to staff and the applicant on Council desired revisions to the proposed public improvements or City limit location.

2. Direct staff to not move forward with the proposed Detachment application. This alternative is not recommended as it would create residential units that cross a jurisdictional boundary (City limit line) and thereby may prohibit the construction of housing units at the proposed location in the area at the bottom of the hillside where grading impacts can be minimized.

ATTACHMENTS
A - Conceptual Site Plan, Cal Poly Vista Meadows Faculty and Staff Housing B - Legal Depiction of Area Proposed for Abandonment and City Limit Modification

Ascent Introduction
California Polytechnic State University, San Luis Obispo Slack and Grand Faculty/Staff Housing Project EIR Addendum 1-15Source: Produced by RRM Design Group in 2023; Adapted by Ascent, Inc. in 2023. Figure 1-7 Conceptual Site Plan

EXHIBIT "A-1"

LEGAL DEPICTION
11/20/2023

City of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: June 4, 2024
TO: Mayor and Council
FROM: Emily Jackson, Finance Director
VIA: Whitney McDonald, Interim City Manager
SUBJECT: ITEM 6a - ADOPTION OF THE FY 2024-25 SUPPLEMENTAL BUDGET Staff received the following additional questions, regarding the FY 2024-25 Supplemental Budget. Questions related to the request from SLO REP were addressed in a separate agenda correspondence provided to Council on June 3. The questions are below with staff’s response shown in italics:
1) Table 4a.2 shows that General Fund staffing costs in FY 2024-25 are budgeted to increase by $1.5 million compared to what was projected in the 2023-25 Financial Plan. What is driving this increase?
The primary driver of staffing cost increase compared to the Financial Plan is the required payment to CalPERS to paydown unfunded pension liabilities, which is $1.3 million higher than what was initially projected for FY 2024-25 in the 2023-25 Financial Plan. Significant Operating Budget Change recommendations add $0.4 million to the Staffing budget. The impact of these items is partially offset by $0.2 million in expected savings due to typically observed turnover and benefits elections.
2) Tables 4b.1 and 4b.2 show budgeted expenditures for the Avila Ranch and San Luis Ranch Community Facilities Districts (CFDs). What do each of the expenditure line items fund?
Below is a detailed line-item budget for each CFD.

Total Budget $ 512,770.39 Annual Budget $ 1,309,883.00
Debt Service Payment - Principal $ 175,000.00
Authorized Services Budget $ 466,147.27 Debt Service Payment - Interest $ 775,200.00 CFD Administration - Consultant Fee $ 6,945.75 City Staff Costs $ 26,530.00 CFD Administration - City Staff $ 8,054.25 CFD Administration - Consultant Fee $ 8,103.00 Fire Protection $ 84,480.80 Trustee Fees $ 2,200.00
Police Protection $ 131,414.58 Other Authorized Uses (pay as you go) $ 322,850.00 Maintenance $ 59,341.89
Other Contract Services $ 45,910.00
City Water Service $ 25,000.00
City Sewer Service $ 15,000.00
Electric Service $ 25,000.00
Solid Waste Service $ 15,000.00
Other Utility Service $ 25,000.00
Other Misc Materials & Supplies $ 25,000.00
Authorized Infrastructure/ Facilities Budget $ 46,623.12 Reserve Fund $ 46,623.12
Avila Ranch CFD Budget Line Details San Luis Ranch CFD 2023-25 Financial Plan

Item 6a. Adoption of the FY 2024-25 Supplemental Budget Page 2 (Note: For the San Luis Ranch CFD, the Debt Service payments are related to bond proceeds which will be used towards the Prado Interchange project. PayAs-You-Go revenue is split 50/50 between the City and Developer, which provides reimbursement for costs of acquisition, construction, and improvements of Authorized Facilities. Pay-As-You-Go is calculated by the CFD Administrator and is the amount remaining after annual costs are subtracted from special tax revenues. City Staff Costs support a portion of the City’s cost for administering the San Luis Ranch CFD.)
3) Table 5.1 shows total Local Revenue Measure (LRM) expenditures of $31,855,000. Where does this number come from, and can we reasonably expect to receive this much in LRM in FY 2024-25?
Staff forecast $31,855,000 in LRM receipts based on the advice of our long-time sales tax consultant. The models underlying this forecast include assumptions for year-over-year growth in revenue by industry group and are adjusted for anomalies and new business openings and closures.

Staff have reviewed the forecast assumptions and are confident that we can reasonably expect to receive these funds. We do caution that the forecast makes no prediction of a change in economic conditions, and should a recession occur during the fiscal year, we may not realize the budgeted revenue amount. 4) The Supplemental Budget recommends additional funding from various sources for the North Chorro Greenway project. What is the total amount recommend by source and what is driving the need for additional funding for this project?
Table 7.1 shows the total funding going to the North Chorro Greenway Project, including $150,000 from the CIP Completed Projects Account and $225,000 from LRM. The need for funding is related to the unanticipated need to remove two large eucalyptus trees within the Highway 101 right of way, additional construction management services, and higher costs related to public art for the remaining project components under the Highway 101 overpass.
5) Table 6.1 current debt issuances. What are the issuances budgeted in the Debt Service Fund for?
The Debt Service Fund’s obligations represent debt issuance for General Fund capital projects, including:
 2012 lease revenue refunding bonds - refunding of prior bonds which were issued to purchase property and build athletic fields, purchase property for police station expansion, and purchase Downtown Plan properties.  2014 lease revenue bonds - Los Osos Valley Road overpass  2018 lease revenue refunding bonds - refunding prior bonds which were issued to construct several high priority capital improvement projects and to finance the costs of acquisition and construction of public parking facilities, and the public safety communications and emergency operations center project

Item 6a. Adoption of the FY 2024-25 Supplemental Budget Page 3 6) The Capital Improvement Plan true-up includes additional funding for the Mid-Higuera Bypass project. Are there any attempts to get more Zone 9 funding for this project?
The Mid-Higuera Bypass project includes additional Water Fund contributions to the to the project to address the necessary relocation work of water infrastructure.

Some cost increases related to silt removal or vegetation thinning are Zone 9 eligible for additional reimbursement in compliance with the City/County Zone 9 funding agreement. The next opportunity to request additional Zone 9 funding for items covered by the agreement is in Fall 2024, if funding is granted it would be appropriated in July 2025. Staff intends to request additional funding from Zone 9 at that time.
7) The Capital Improve Plan true-up includes additional funding for the Salinas Reservoir Transfer of Ownership Plan. What is the intent of this project? The Salinas Reservoir Transfer of Ownership Plan is also referred to as the Salinas Reservoir Feasibility Study. This work is intended to identify the measures that would be required to transfer the Salinas Dam from federal jurisdiction (from the Army Corps of Engineers) to the City of San Luis Obispo or County of San Luis Obispo, which would result in the dam falling under California Department of Safety of Dams (DSOD) jurisdiction. This project is also identified under the City’s Legislative Platform. If approved, this project will have costs shared between the City of San Luis Obispo ($700,000), County of San Luis Obispo ($700,000), and State of California, through Assembly Bill 102 ($500,000). 8) What is the difference between Smart Water Meters (also called AMI) and Flume water meters?
Flume water meters are manufactured by a private company for the purposes of creating remote sensing equipment that can attach to the outside of older positive displacement water meters. The Flume device allows individual properties owners who have purchased / installed these devices to see their water consumption and use patterns. As the City transitions to newer water meter technologies, staff are proposing to install Smart Water Meters to all meters in the City over a three year period. An AMI system would also allow the City to achieve water meter reads in a timely manner as they would not need to be manually read, and allow for quicker customer response when changing account holders. These devices would allow for the users to see their own water use patterns as well as allow City staff to immediately be notified in the event of water leaks - the Flume system does not allow the City to receive usage data.

City of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: June 4, 2024
TO: Mayor and Council
FROM: Emily Jackson, Finance Director
Greg Hermann, Interim Assistant City Manager
VIA: Whitney McDonald, Interim City Manager
SUBJECT: ITEM 6a - ADOPTION OF THE FY 2024-25 SUPPLEMENTAL BUDGET Staff received the following questions, regarding the request from SLO REP. The questions are below with staff’s response shown in italics:
1) What was the original one-time City support for the Performing Arts Center and what is the current ongoing support?
According to information provided by the Performing Arts Center (PAC), total costs for construction of the PAC were $30 million in 1996 and the City contribution at that time was $5 million. The City makes an ongoing commitment to fund a portion of operational costs per a set formula in the operating agreement with Cal Poly and the Foundation for the Performing Arts Center. The contribution for Fiscal Year 2023-24 was $334,269. The City also sits on various PAC subcommittees and has two voting members on the Central Coast Performing Arts Center Commission. 2) When does SLO REP plan to start construction and what is the expected duration?
SLO REP is planning to construct a building on the same property and directly adjacent to the City’s Cultural Arts District Parking Structure which is currently under construction with a planned completion date of January 2026. SLO REP has stated that the expected start of construction is January 2026 upon completion of the structure and is expected to last 18 months.
3) When would City funds be needed by SLO REP to fund construction, and could that cost be split over multiple years?
In the current grant agreement with SLO REP, the funding distribution timing from the City to SLO REP was stipulated as the last dollars spent to fund construction costs. Meaning that all other SLO REP construction contributions from the funding campaign are to be expended prior to City funds being used for the project. Given the expected timing of construction and associated spending, City funds are not anticipated to be needed until early 2027.

ITEM # 6.a ADOPTION OF THE FY 2024-25 SUPPLEMENTAL BUDGET Page 2 That would mean the Council would have the opportunity to identify funding sources at subsequent Mid-year budget updates or with development of the 2025- 27 Financial Plan.
4) What amount of one-time funding is typically available as a part of the year end report process and what commitments are already in place for that funding?
In a strong economy, the City generally ends the year with both operating savings and over-realized revenue, leaving an unassigned balance for potential one-time funding use. In the last three years this unassigned General Fund balance has averaged over $7 million, driven largely by macroeconomic factors including elevated employee turnover causing staffing savings, increased consumer spending benefiting sales tax and transient occupancy tax revenues, and market conditions lifting property tax revenues. These factors may not present or of the same magnitude in the current fiscal year.

To the extent that year-end undesignated fund balance is a result of operating budget savings, City fiscal policy allows flexibility for departments to carry over unspent budget to the second year of the financial plan, which reduces the amount of available year-end unassigned General Fund balance. At this time, staff have identified a number of potential uses for unassigned FY 2023-24 fund balance:

1. In the FY 2024-25 Supplemental Budget process, General Fund departments requested $2.2 million in Significant Operating Budget Changes. Because the General Fund operating reserve was utilized to fund Winter 2023 storm repairs and the forecast suggests deficits beginning in FY 2026-27, departments were asked to defer their requests to consideration as part of development of the 2025-27 Financial Plan or propose to use carryover from current year savings if available, to fund onetime requests in FY 2024-25. Many departments therefore have plans for year-end fund balance derived from budget savings to address current Major City Goal work programs as well as core service needs.

2. Council approved allocation of $4 million of FY 2022-23 unassigned fund balance to repay a portion of the funding pulled from the Infrastructure Investment Fund (IIF) to purchase 1166 Higuera. As indicated in the FY 2023-24 Mid-Year Budget Report, staff is planning to recommend allocation of FY 2023-24 unassigned fund balance to repay the IIF the remaining $845,000, contingent upon availability of funding.
5) Should Council choose to fund this request, what options are available for funding the SLO REP request?
The Council may direct staff to:

ITEM # 6.a ADOPTION OF THE FY 2024-25 SUPPLEMENTAL BUDGET Page 3 a. Fund all or part of the request by designating a portion of Infrastructure Investment Fund for the Prado Bridge project to support SLO REP theater construction. Staff would then return to Council in September (upon completion of the unaudited year-end report) with an amended grant agreement. Staff would also recommend that the Council prioritize backfilling the funding for the Prado Bridge project using any one-time funds available as a part of the Mid-year budget update in February 2025. The tradeoff would be limited or no additional funding for other one-time needs.

If sufficient one-time funds are not available, Council would need to consider reducing funding elsewhere in the capital budget or providing funding through subsequent Mid-year budget updates or the development of the 2025-27 Financial Plan to ensure that sufficient funding exists to move forward with construction of the Prado Bridge project in late Fall 2025. b. Create a new project for the 2025-27 Financial Plan Capital Improvement Plan budget to fund all or part of the request to support SLO REP Theatre construction. Staff would then return to Council in September with an amended grant agreement. Tradeoffs for other projects that would not receive funding would be determined as a part of the 2025-27 Financial Plan development process.
c. Prepare proposed amendments to the grant agreement with SLO REP for consideration in September, with funding for the request, or some portion of this request from one budget action or across several different budgets that Council will have before them for consideration prior to funding being necessary for SLO REP construction needs. Based upon the anticipated start of construction and duration of construction for the SLO REP Theatre, Council will have the following budget opportunities:
i. 2024-25 Mid-Year,
ii. 2025-27 Financial Plan,
iii. 2025-26 Mid-Year, and
iv. 2026-27 Budget Supplement
Typically, both Mid-Year and Budget Supplements processes are intended to represent minor course corrections throughout the fiscal years to align more exacting information of revenue received and expenditures as well as available resources with emergent needs. Tradeoffs in funding could be considered with each budget opportunity, including consideration of available year-end funding and needs for funding for the Prado Bridge project.

Item 6a
Department: Finance
Cost Center: 2002
For Agenda of: 6/4/2024
Placement: Public Hearing
Estimated Time: 120 minutes
FROM: Emily Jackson, Finance Director
Prepared By: Riley Kuhn, Principal Budget Analyst
SUBJECT: ADOPTION OF THE FY 2024-25 SUPPLEMENTAL BUDGET

RECOMMENDATION
Adopt a Draft Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, approving the Fiscal Year 2024-25 Budget” and approve the allocations as stated in the Supplemental Budget document.

POLICY CONTEXT
Pursuant to Sections 802 and 804 of the City Charter, City Council must adopt the FY 2024-25 budget by June 30, 2024, in order for the appropriations to be in place when the 2024-25 fiscal year begins. This action is accomplished by resolution, which is provided as Attachment B to this report.

DISCUSSION
Background
The report’s focus is on the General Fund and each of the City’s enterprise funds. The Supplemental Budget report also includes an update on departmental performance measures, Major City Goals, and the Capital Improvement Plan. The report, included as Attachment A, includes the following sections:

Section 1. City Manager Message: In this section, the Interim City Manager provides a high-level overview of the City’s accomplishments in the current year and a look forward at the next fiscal year.

Section 2. Changes Since Financial Plan: This section includes a summary of Significant Operating Budget Change recommendations.

Section 3. Consolidated Financials: This section includes high level financial tables for the City’s General Fund and Enterprise Funds combined. This view is important as the rest of the document focuses on each fund in isolation.

Item 6a
Section 4. Fund Overviews: This section includes line-item detail for each fund and commentary from fund managers. It also includes long-term forecasts for each fund which are a critical tool used to evaluate the availability of ongoing funding.

Section 5. Local Revenue Measure: This section provides an overview of the Local Revenue Measure and how it is used to fund critical City projects and operations.

Section 6. Debt Service: This section lists all outstanding borrowings as of the end of the current fiscal year and the projected debt service costs for FY 2024-25.

Section 7. Capital Improvement Plan: This section details the Capital Improvements staff expect to fund in the next fiscal year. It also includes discussion of the program trueup, where staff critically evaluate projects to allocate funding most efficiently.

Section 8. Major City Goals: Staff provide an update on Major City Goal tasks as of the end of the current fiscal year.

Section 9. Department Updates: Each department provides a writeup on their current year program accomplishments and performance measures.

Section 10. Appropriation Limit: The City’s appropriation limit is based on the Gann Spending Limit Initiative, a State constitutional amendment. This section includes a calculation to validate that the Supplemental Budget is within constitutional limits.

Attachment C. Housing Matrix: During the May 7th Fiscal Year 2023-24 Third Quarter Budget Review and Fiscal Year 2024-25 Supplemental Budget Preview item, the City Council received correspondence from the Chamber of Commerce and a group of local architects and developers in response to a matrix of opportunities for provision of housing that staff had assembled following a study session on housing needs and opportunities held on March 5, 2024. Attachment C includes staff’s response describing which of these ideas could be accommodated within the existing work program and which cannot, with a revised version of the matrix of housing opportunities reflecting staff’s recommendations.

CONCURRENCE
The Revenue Enhancement Oversight Commission reviewed the proposed allocations of Local Revenue Measure funds on May 23, 2024, and concurs with staff’s recommendations.

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 Section 15378.

FISCAL IMPACT
Budgeted: Yes Budget Year: 2024-25
Funding Identified: Yes
Fiscal Analysis:

Table 1. Consolidated Revenue
Table 2. Consolidated Expenditures
FY 2022-23
Actuals
FY 2023-24
Mid-year
Budget
FY 2024-25
Financial Plan
Budget
FY 2024-25
Supplemental
Budget Change % Change
1 Tax & Franchise Revenue $ 99,842,239 $ 99,643,156 $ 100,701,662 $ 103,548,018 $ 2,846,356 3% 2 Fee & Other Revenue
3 General Fund 16,568,200 15,240,933 18,823,448 23,278,097 4,454,649 24% 4 Water Fund 29,259,996 31,906,659 30,011,625 32,871,625 2,860,000 10% 5 Sewer Fund 45,686,183 49,788,242 36,398,900 36,398,900 - 0% 6 Parking Fund 7,957,191 56,700,994 10,412,624 9,991,861 (420,763) -4% 7 Transit Fund 5,715,762 11,754,973 11,964,525 17,059,186 5,094,661 43% 8 Assessment Revenue 2,478,792 2,416,200 2,464,516 2,398,151 (66,365) -3% 9 Total $ 207,508,362 $ 267,451,157 $ 210,777,299 $ 225,545,838 $14,768,538 7% FY 2022-23
Actuals
FY 2023-24
Mid-year
Budget
FY 2024-25
Financial Plan
Budget
FY 2024-25
Supplemental
Budget Change % Change
1 General Fund $ 112,789,648 $ 125,306,563 $120,958,660 $122,027,928 $ 1,069,268 1% 2 Business Activities
3 Water Fund 23,952,257 55,052,266 28,441,479 35,144,934 6,703,455 24% 4 Sewer Fund 43,934,895 63,763,698 25,618,489 28,151,584 2,533,095 10% 5 Parking Fund 7,272,763 67,198,514 10,230,346 10,055,657 (174,689) -2% 6 Transit Fund 6,354,792 10,846,599 9,614,849 17,222,202 7,607,353 79% 7 Special Revenue
8 Tourism Assessment $ 2,209,268 $ 2,140,800 $ 2,183,616 $ 2,117,251 $ (66,365) -3% 9 Downtown Assessment 269,523 275,400 280,900 280,900 - 0% 10 Total $ 196,783,147 $ 324,583,841 $197,328,339 $215,000,457 $16,602,849 9%

Item 6a

ALTERNATIVES
The Council could direct staff to not implement the proposed budget change recommendations and give direction to the Interim City Manager on desired changes and budget reallocations. Under this action, the item would have to return to Council before June 30
th as budget adoption is required by City charter.

ATTACHMENTS
A - Fiscal Year 2024-25 Supplemental Budget
B - Draft Resolution – Budget Appropriations
C - Housing Matrix

Financial Plan
Supplement
2023-25
FY 2024-25 Supplemental Budget Page 309 of 448
2023-25 Financial Plan
FY 2024-25 SUPPLEMENTAL
BUDGET
June 2024
ERICA A. STEWART, MAYOR

ANDY PEASE, VICE MAYOR

JAN MARX, COUNCIL MEMBER

MICHELLE SHORESMAN, COUNCIL MEMBER

EMILY FRANCIS, COUNCIL MEMBER

WHITNEY MCDONALD, INTERIM 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. 2024-25 marks the second year of the City’s 2023-25 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 2023-25 Financial Plan located HERE.

Table of Contents
Section 1: Intro
City Manager Message 4
Section 2: Changes from Financial Plan Adoption
13 Mid‐year Approved Budget Changes
Significant Operating Budget Changes
Section 3: Consolidated Financials
Total Revenue/Expenditures
Reserve Levels
Transfers
Section 4: Fund Overviews/ Detailed Financials
General Fund
Special Revenue & Other Funds
Enterprise Funds: Water & Sewer
Enterprise Fund: Transit Fund
Enterprise Fund: Parking Fund
Section 5: Local Revenue Measure 47
Section 6: Debt Service 52
Section 7: Capital Improvement Plan 53
104
Section 8: Major City Goals
Section 9: Department Updates
Admin/IT
City Attorney
Community Development Department
Finance
Fire
Human Resources
Parks & Recreation
Police
Public Works
Utilities
Section 10: Appropriation Limit 126
Budget Page 3
12 8
28 16
42 31
39 73
89 93
96 102
122
106
108
115
117
13 8

City Manager Message
SecƟon 1: City Manager Message
It is my pleasure to present the 2024‐25 Supplemental Budget. This budget is consistent with the adopted 2023‐25 Financial Plan and augmented with important investments for emergent community and organizaƟonal needs. Consistent with prior years, the 2023‐25 Financial Plan was developed following an extensive public engagement process to inform the Council’s adopƟon of Major City Goals, which largely represent a conƟnuaƟon of the goals established in the prior Financial Plan and enable staff to maintain a long‐term focus on iniƟaƟves that bring about sustained systemic change.

Fiscal Year 2023‐24 in Review
In many ways, FY 2023‐24 can be characterized as a turning point for the City, as we are acƟvely implemenƟng a number of programs and projects that we have been planning for over the last several years; and in April 2024 the City bid farewell to long‐Ɵme City Manager, Derek Johnson, who returned to his hometown to serve as the County ExecuƟve Officer for the County of Marin.  Despite significant added workload due to the Winter 2023 Storms and ongoing economic turbulence, we were able to make progress on a number of important iniƟaƟves, including:
 Purchasing two addiƟonal electric busses, bringing the City’s fleet of electric busses to eight.  ConƟnuing to work with the Federal Emergency Management Agency (FEMA) and California Office of Emergency Services (CalOES) to document and submit over $17 million 2023 Winter storm related costs for consideraƟon of reimbursement.
 SupporƟng the ongoing build out of the San Luis Ranch and Avila Ranch developments, in addiƟon to other smaller residenƟal developments throughout the city.  Launching local business support programs like ‘Buy Local Bonus’ to fuel the local economy.  Providing grant funding for childcare faciliƟes.
 Working with a consultant to idenƟfy opportuniƟes to reduce parking rates in the downtown to address community concerns while sustaining the Parking program.  Reduced rates were adopted by Council on May 14, 2024, and will go into effect on July 8, 2024.  Launching ‘Resilient SLO’ to build local and regional capacity to adapt and build resilience to climate change impacts.
 Obtaining $400,000 in grant funding through the federal Department of Energy’s Buildings UP! Program to provide planning, community engagement, and property owner support for clean energy projects that focus on low income and disadvantages communiƟes.  Expanding homeless services, including enhanced City Homelessness Response Team coordinaƟon, distribuƟon of updated pocket guides to help homeless individuals navigate services, direct outreach to downtown businesses with Community Services Officers, helping to fund the expansion of the safe parking program at 40 Prado, supporƟng development of supporƟve housing projects, and streamlining encampment clean ups.  SupporƟng the County in its development of the Welcome Home Village project to provide interim and permanent supporƟve housing for up to 80 unhoused individuals, beginning with those who are encamped along the Bob Jones Bike Trail in the City.  Achieving State designaƟon as a Prohousing jurisdicƟon in February 2024.  SupporƟng development of below market rate housing unitsincluding the opening of Broad Street Place and start of construcƟon on the Maxine Lewis and Bridge Street Apartment projects.

Budget Page 4

City Manager Message
 Securing $47 million of financing at an aƩracƟve rate to fund construcƟon of the Cultural Arts District Parking Structure, which began construcƟon in November 2023.  Refunding prior bondsto reduce debtservice payments and free up City assetsto support planned future lease revenue bond financing for upcoming large scale capital projects.  UpdaƟng the Economic Development Strategic Plan to promote, encourage, and enhance an economic environment that is dynamic and resilient with a focus on sustainable and equitable policies, programs, and processes.
 Developing and adopƟng the City’s first DEI Strategic Plan.  Holding annual community events, including the September Scramble, Boo Bash, Leprechaun Lost, and Spring Fling, and also coordinaƟng five Monday Meetups, Super Rec Saturdays, as well as providing ongoing support to special events at the Jack House.  NegoƟaƟng successor agreements with the Police Staff Officers’ AssociaƟon and InternaƟonal AssociaƟon of Firefighters, Local 3523.
 UpdaƟng the community partnership agreement with San Luis Obispo Museum of Art for art installaƟons throughout Downtown and for major CIP projects such as the new roadway roundabouts.
 HosƟng a “Community Academy,” which offered 30 community members the opportunity to learn about City operaƟons, community issues, and how to get involved.  And, compleƟng several significant capital projects, including:
o Railroad safety trail fencing
o Santa Rosa at Monterey intersecƟon improvements
o Calle Joaquin liŌ staƟon replacement
o 2022 roadway sealing
o Repairs to City infrastructure damaged in the 2023 Winter storms including: San Luis Drive, San Luis Obispo Creek bank stabilizaƟon, Old Garden creek repairs, and significant debris clearing at the Marsh Street Bridge and along Prefumo Creek. o Phase 1 of the Cultural Arts District Parking Structure project to prepare the site for construcƟon
o Whale Rock Dam maintenance‐spillway undertrain repairs. 2024‐25 Budget Highlights
One major focus of the FY 2024‐25 budget is a true‐up to the Capital Improvement Plan (CIP). Due to larger inflaƟonary, labor market, and demand pressures within the construcƟon industry, the City has seen significant increasesin construcƟon costsfor its capital projects. In orderto ensure that the City can deliver CIP projects within its available resources, the FY 2024‐25 CIP has been adjusted to reallocate capital project funding to the projects that will be ready to move forward in the new fiscal year. While this is not a reprioriƟzaƟon of projects, it enables projects that would otherwise be ready to begin construcƟon in FY 2024‐25 to move forward with sufficient funding.

Staff  is also recommending minimal Significant OperaƟng Budget Changes (SOBCs) to support criƟcal needs or address mandates in FY 2024‐25. Departments submiƩed $2.2 million worth of requests for funding from the General Fund and the Financial Plan Steering CommiƩee carefully considered each request, resulƟng in a recommended allocaƟon of $485,057 of new General Fund dollars in FY 2024‐25.

Of that amount, $167,804 is one‐Ɵme and $317,253 represents an ongoing cost. In addiƟon, $1.1 million Budget Page 5

City Manager Message
of augmentaƟons are recommended in the Water Fund, $414,452 in the Sewer Fund, and $534,330 in the Parking Fund. The recommendaƟons are detailed in SecƟon 2 of this document and described throughout SecƟon 9 as part of the department updates.

Long Term Outlook and the Path Ahead
We are pleased to have finished FY 2023‐24 within budget and to deliver another balanced budget for FY 2024‐25. However, cauƟon is needed in the years ahead. As reported during the FY 2024‐25 Supplemental Budget preview on May 7, 2024, the General Fund forecast indicates that we will have a modest budget deficit in FY 2026‐27 that, if not addressed, is expected to grow to $8 million by FY 2028‐29. The forecasted deficit is largely driven by conƟnued increases to our required payments to CalPERs (something that all CalPERs agencies are facing), as well as the City’s obligaƟon to bring a fiŌh fire staƟon online by July 2026 in order to saƟsfy condiƟons of the Avila Ranch development agreement. Staff is currently working to idenƟfy opƟons to saƟsfy the requirements around a fiŌh fire staƟon, but the forecast includes an esƟmated annual operaƟng cost so that we can plan for this future expense.

The projected deficit is a shiŌ from prior budgets which have supported significant augmentaƟons to City services. AŌer years of rapid inflaƟon, other agencies conƟnue to increase compensaƟon and our cost to aƩract and retain a talented workforce will likely increase. Labor and materials costs have dramaƟcally increased the cost to deliver capital projects. The significant development currently underway will also increase the City’s capital operaƟng costs, as it is expected that our populaƟon will grow considerably by 2035. Given this, prudent financial decision making will be necessary to balance budgets and maintain service levels for our growing community. Staff will be working in the coming months to idenƟfy strategies to miƟgate the forecasted deficits in the outer years and will discussthese strategies with Council as a part of 2025‐27 Financial Plan development later this year.

Finally, on May 10, 2024, the Governor released the State’s May Budget Revision for FY 2024‐25, idenƟfying his administraƟon’s proposals to address a $27.6 budget shorƞall. The proposals have significant implicaƟons for health and human services funding provided to counƟes. The State budget proposals, as well as the passage of ProposiƟon 1 in March 2024, are expected to significantly impact the availability of funding for local jurisdicƟons to provide behavioral health and other supporƟve services to the most vulnerable in our community. Staff istracking State budget acƟons and will conƟnue to work with our County partners to understand how these changes could impact the City’s ability to address issues of homelessness moving forward.

Despite the choppy budget waters ahead, the good news is that the City has a strong foundaƟon of sound financial management and fiscal policies to guide us through the coming years. While we all need to mindful that expansion of programs or new programs will require tradeoffs, our community’s ongoing support and investmentsthrough the passage and management of Measure G‐20 funds and other revenue efforts will conƟnue to support the City’s ambiƟous projects and goals. By maintaining a long‐term perspecƟve and carefully considering the ongoing impacts of our decisions, I expect that we can collecƟvely work to reduce the forecasted budget gaps in the coming years.

I am grateful to the Council for the thoughƞul consideraƟon of staff’s recommendaƟons and to our staff for their adaptability over the last year.   San Luis Obispo is a special place and we are commiƩed to managing the budget to ensure the financial sustainability or our operaƟons to support our growing community.

Budget Page 6