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The proposed 2026 amendment to the Agreement reflects current regulatory requirements, administrative practices, and programmatic needs. It continues the Countywide approach among the Permittees (Orange County cities & County) to implement regional stormwater management strategies, and also provides added flexibility in designing and developing local watershed-specific strategies, programs, and projects. The amendment also formalizes the consultation process with the Orange County City Managers Association (OCCMA). The term of the Agreement is indefinite, unless amended or terminated in accordance with the terms in the Agreement.
Key provisions of the amended and restated Agreement include:
Continued designation of the County as the administrator of the regional Orange County Stormwater Program.
Clarification of responsibilities for each Permittee, including compliance reporting, monitoring, and implementation of Best Management Practices (BMPs). Engagement with the OCCMA for strategic input on compliance and funding. Updated collaborative review process for annual operating budgets, including new sub-budgets to be established with smaller groups of Permittees to support development of targeted water quality projects and programs. Continues the existing cost sharing formula between Permittees based on land area and population, with the Orange County Flood Control District contributing 10% and the County and Cities sharing the remaining 90% for the annual operating budget countywide. For new sub-budgets, the same approach will be used to share costs amongst those participating agencies.
The shared cost budget developed annually for this Agreement maintains the existing cost sharing formula based on land area and population for the unincorporated County and 34 Orange County cities. Historically, the City’s portion of the shared cost budget has been approximately 5.6%. Staff recommends the approval of this Agreement for continued compliance with federal and state regulations.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action. Approval of the Agreement allows the City to continue to comply with the Federal Clean Water Act and the related regulations promulgated by the State Water Quality Control Board.
FISCAL IMPACT
Funding is included in the approved FY 2025-26 budget and approval of this agreement does not result in an additional fiscal impact for the current fiscal year. The Fiscal Year 2026-27 funding for this Agreement is anticipated to be approximately $567,959.
Subsequent funding for future years will be included in the proposed budgets for City Council consideration.
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NPDES Permit Implementation Agreement
April 7, 2026
5 6
7 9
Fiscal
Year
Accounting Unit -
Account No.
(Project No.)
Fund
Description
Accounting Unit,
Account Description
Amount
2026-27 05717640-62300
Federal Clean
Water
Protection
Enterprise
Federal Clean Water
Protection Enterprise,
Contractual Services-
Professional
$567,959
TOTAL: $567,959
EXHIBIT(S)
1. Amended NPDES Stormwater Permit Implementation Agreement Submitted By: Rodolfo Rosas, P.E., Acting Executive Director – Public Works Agency Approved By: Alvaro Nuñez, City Manager
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1 AMENDED AND RESTATED NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM
STORMWATER PERMIT IMPLEMENTATION AGREEMENT
This AMENDED AND RESTATED NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM STORMWATER PERMIT IMPLEMENTATION AGREEMENT (“AGREEMENT”), for purposes of identification numbered [D02-048], and which may be alternatively referred to as the “OC Stormwater Program Implementation Agreement,” is entered into this ____ day of _________, 2026, by the County of Orange, (herein called the COUNTY), the Orange County Flood Control District (herein called DISTRICT) and the cities of Aliso Viejo, Anaheim, Brea, Buena Park, Costa Mesa, Cypress, Dana Point, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, Laguna Beach, Laguna Hills, Laguna Niguel, Laguna Woods, Lake Forest, La Habra, La Palma, Los Alamitos, Mission Viejo, Newport Beach, Orange, Placentia, Rancho Santa Margarita, San Clemente, San Juan Capistrano, Santa Ana, Seal Beach, Stanton, Tustin, Villa Park, Westminster, and Yorba Linda (herein called CITIES).
The COUNTY, DISTRICT, and CITIES may be referred to collectively as PERMITTEES or individually as PERMITTEE, COUNTY, DISTRICT, or CITY, respectively, in this AGREEMENT.
RECITALS
WHEREAS, the United States Congress in 1987, through the Water Quality Act, amended Section 402 of the Clean Water Act (33 U.S.C.A. 1342(p)) to require the United States Environmental Protection Agency (“EPA”) to promulgate regulations for permitting stormwater discharges; and
WHEREAS, EPA regulations require National Pollutant Discharge Elimination System (“NPDES”) permits for discharges from a municipal separate storm sewer system (“MS4”)(herein after called MS4 permits), and further require MS4 permits to include requirements to control pollutants from stormwater discharges; and WHEREAS, in 1927, the Orange County Flood Control Act created the DISTRICT
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2 to provide for the control of flood and stormwater and protect from damage from those flood or stormwater, the harbors, waterways, public highways, and property within the DISTRICT’s jurisdiction; and
WHEREAS, the powers granted to the DISTRICT include the authority to regulate discharges that threaten to impact its system and carry on technical and other investigations, examinations, or tests of all kinds, making measurements, collecting data, and making analyses, studies, and inspections pertaining to water supply, control of floods, use of water, water quality, nuisance, pollution, waste, and contamination of water, both within and without the DISTRICT; and
WHEREAS, the California State Water Resources Control Board (“SWRCB”), as designee of the EPA, has delegated authority to the California Regional Water Quality Control Boards-Santa Ana Region (“RWQCB-SAR”) and San Diego Region (“RWQCB-SDR”)(collectively, the RWQCBs) for administration of MS4 permits within the boundaries of their regions; and
WHEREAS, the COUNTY, DISTRICT, and CITIES are PERMITTEES under MS4 permits issued by the RWQCBs; and
WHEREAS, the RWQCBs have designated the COUNTY as the Principal PERMITTEE or Principal Watershed Co-permittee, as defined in the MS4 permits; and WHEREAS, the COUNTY, the DISTRICT and the CITIES previously entered into that certain agreement entitled National Pollutant Discharge Elimination System Stormwater Permit Implementation Agreement D90-094, on December 18, 1990, which was subsequently amended on October 26, 1993 by Amendment No. 1 and then on June 25, 2002 (the December 18, 1990 Agreement as Amended by Amendment No. 1 and the June 25, 2002 amendment will be referred to collectively hereinafter as the ORIGINAL AGREEMENT), to cooperatively develop, and did thereunder develop, an integrated stormwater runoff management program with the objective of fulfilling MS4 permit requirements and improving water quality in Orange County (program
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3 referred to herein as the “OC Stormwater Program”); and WHEREAS, Section X of the ORIGINAL AGREEMENT provides that the ORIGINAL AGREEMENT may be amended by consent of a majority of the PERMITTEES which represent a majority of the percentage contributions as described in Section IV of the ORIGINAL AGREEMENT; and
WHEREAS, continued cooperation between the CITIES, the COUNTY, and the DISTRICT to jointly implement the OC Stormwater Program to fulfill prior, new, and potential future MS4 permit requirements, to the extent feasible, is in the best interests of the CITIES, the COUNTY, and the DISTRICT; and WHEREAS, the PERMITTEES now desire to restate and amend the ORIGINAL AGREEMENT, as reflected and set forth in this AGREEMENT.
NOW, THEREFORE, the PERMITTEES do mutually agree as follows:
I. FILING STATUS
The COUNTY, the DISTRICT, and each CITY have filed applications for MS4 permits as PERMITTEES. The COUNTY, the DISTRICT and each CITY is a PERMITTEE under each MS4 permit to which they are subject.
II. INCORPORATION OF FEDERAL GUIDELINES
All applicable federal and state water quality regulations and guidelines under the Federal Clean Water Act, as presently written or as changed during the term of this AGREEMENT, are hereby incorporated by reference and made a part of this AGREEMENT and take precedence over any inconsistent terms of this AGREEMENT.
III. DELEGATION OF RESPONSIBILITIES
The responsibilities of each of the parties shall be as follows:
A. The COUNTY shall be the administrator of the OC Stormwater Program and, on a cost-shared basis, perform the following functions:
1. Annual operating budgets.
a. Prepare the annual operating budget (“annual operating budget”), which shall include a work plan and associated financial plan and
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4 budget. The annual operating budget is intended to provide for all programmatic functions and associated costs of the OC Stormwater Program, as outlined in this AGREEMENT and as generally described in Section V.A. Annual operating budgets and work plans may be based on RWQCB region (i.e., Santa Ana Region versus San Diego Region). The budget year shall coincide with the COUNTY's fiscal year, July 1 – June 30.
b. Consult with the Stormwater Program Representatives (as defined in Section III.C.8) when preparing annual operating budgets and major program elements therein.
c. A draft of the annual operating budget may be prepared for the PERMITTIES for review by February 15 each year. Annual operating budgets shall be submitted to the PERMITTEES for consideration and approval by May 15 of each year. Individual CITY approval shall be obtained from each CITY’s city manager or designee thereof by July 30 of each year. CITY manager designations for annual operating budget approval shall be provided in writing to the County and shall remain in effect until revoked in writing by the CITY’s city manager. An annual operating budget shall be deemed approved and adopted for the OC Stormwater Program by affirmative responses from PERMITTEES which represent a majority (50% or greater) of both the area and population percentage contribution as calculated in accordance with Section V.A (method for calculating approval percentage referred to as “Majority Approval”). The COUNTY and the DISTRICT shall represent one voting PERMITTEE with their percentage contribution equal to the total of the COUNTY and the DISTRICT as described in Section V.A. d. An approved and adopted annual operating budget shall not be
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5 exceeded without prior Majority Approval of the PERMITTEES.
2. Project or watershed-specific sub-budgets.
a. In coordination with the PERMITTEES, prepare project-specific and/or watershed-specific budgets and associated work plans (collectively, “sub-budget(s)”) for the design of water quality projects and/or responding to RWQCB enforcement orders and/or other orders (e.g., California Water Code 13267 or 13383 orders). b. Sub-budgets shall be prepared and proposed on an as-needed basis, at the discretion of the COUNTY, or as requested by interested PERMITTEES, subject to concurrence of the COUNTY.
c. Each PERMITTEE willing to participate in a sub-budget will confirm participation to the COUNTY in writing. A PERMITTEE who confirms participation in a sub-budget shall be referred to herein as “PARTICIPATING PERMITTEE(s).” Sub-budgets will be subject to unanimous approval by all PARTICIPATING PERMITTEES, except that where a Participating Permittee fails to vote to approve a proposed sub-budget, such failure shall be deemed a withdrawal from the sub-budget and the withdrawing PERMITTEE shall no longer be considered a PARTICIPATING PERMITTEE and shall have no obligation to pay for or participate in the sub-budget. d. Project elements that go beyond design (e.g., construction, operation, and maintenance) shall not be provided for in sub- budgets and, instead, are subject to separate agreement between the Participating Permittees.
3. Represent the OC Stormwater Program in reviews of documents, comments, and discussions with EPA, SWRCB, and RWQCBs and/or other resource agencies regarding MS4 permit requirements and related policies, programs, and regulations. The COUNTY shall timely notify the
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6 PERMITTEES of any decision reached during these discussions that, in the determination of the County, substantially impacts the OC Stormwater Program.
4. Implement approved annual operating budgets and sub-budgets.
5. Working in collaboration with PERMITTEES, prepare and submit regional compliance reports as the Principal PERMITTEE, as required under the MS4 permits, and/or as designated in the approved workplans.
6. Implement the regional monitoring and reporting program elements from approved workplans for the MS4 permits, including, but not limited to, tasks to monitor and measure the effectiveness of Best Management Practices (“BMPs”). This may include monitoring and modeling.
7. Obtain, as may be required by the annual operating budget and/or sub- budgets approved pursuant to this AGREEMENT, professional services, including, but not limited to, scientific, engineering, environmental, economic, and/or legal consultants to provide technical assistance for the work associated with the OC Stormwater Program. This work may include, but is not limited to, the preparation of technical or economic studies, legal analysis, watershed management plans, stormwater runoff management plans, water quality improvement plans, modeling, reasonable assurance demonstrations/reasonable assurance analyses, monitoring plans, technical reports, municipal staff training activities, and the design of structural and non-structural BMPs and strategies to prevent and/or reduce pollutants in stormwater runoff. Contracts for professional services to be funded under this AGREEMENT shall be made in conformance with the COUNTY’s procurement policies, and, to the extent there is no conflict, the following:
a. The COUNTY shall make efforts to stagger the date of issuance of new contracts for professional services, so that PERMITTEES may
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7 better absorb increases in consultant fee rates.
b. For contracts for professional services that would require approval by the Orange County Board of Supervisors (as determined within the sole discretion of the COUNTY), one Stormwater Program
Representative for every two designees of the COUNTY shall be allowed to participate in any panel formed for the purpose of evaluating responses to Requests for Proposals or similar competitive solicitations submitted by potential consultants. Where any contract subject to this provision is to be extended beyond the initial term, the COUNTY shall request feedback from the Stormwater Program Representatives, regarding the consultant’s performance, prior to executing the extension. This process shall in no way impinge upon or limit the COUNTY’s discretion to enter into, amend, extend, renew, or cancel any contract for professional services for the OC Stormwater Program.
c. The COUNTY shall notify the PERMITTEES of any changes in the COUNTY’s procurement policies that significantly affect the thresholds for competitive procurement, scoring, or selection processes for contract services.
8. Implement a facility inspection program, as required by the MS4 permits, for MS4 facilities within the unincorporated areas of the County, at no cost to the CITIES.
9. Implement a facility inspection program, as required by the MS4 permits, for MS4 facilities on County-owned property used for COUNTY governmental purposes (i.e., property used for governmental functions) and located within a CITY, at no cost to the CITIES. For purposes of this section, the regional facility known as Dana Point Harbor shall be considered a County- owned property used for governmental purposes.
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8 a. To avoid confusion in the implementation of each party’s facility inspection programs, the COUNTY shall provide a list of those facilities, buildings and properties that it owns and are located within other jurisdictions (i.e. non- unincorporated properties) that the COUNTY has decided to monitor and regulate pursuant to this Section III.A .9. The County further agrees to notify the affected PERMITTEE of changes to the status of a facility.
B. The DISTRICT shall, on a cost-shared basis, except as set forth in subparagraph 2 below:
1. Perform or cause to be performed the water quality and hydrographic monitoring for compliance with MS4 permits and/or in accordance with RWQCB-approved monitoring plans and/or in the approved workplans.
2. Implement a facility inspection program, as required by the MS4 permits, for MS4 facilities located on District-owned and controlled property that is used for governmental purposes, at no cost to the CITIES.
3. Undertake or cause to be undertaken all activities required of the CITIES in Section III.C and applicable to the District.
C. The CITIES, at no cost to the Counties and the District, shall:
1. Implement a facility inspection program for its MS4 facilities, as required by the MS4 permit(s) and within the jurisdictional boundaries of that CITY.
2. Submit to the COUNTY storm drain system maps and/or data describing the type and location of its MS4 facilities with periodic revisions that reflect any modifications made as a result of land
development/redevelopment. If possible, information shall be submitted as geographical information system (“GIS”) data.
3. Support the COUNTY in the preparation of watershed characterizations and catchment prioritization efforts, including, but not limited to, by:
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9 a. Identifying applicable zoning and land use designations. b. Identifying areas where sources of specific pollutants are known.
4. Upon COUNTY request, review, comment on, consider approval of, and, if approved, implement regional strategies to prevent and reduce pollutants in stormwater runoff.
5. Implement an illegal discharge detection and elimination program as required by the MS4 permit(s) to which the CITY is subject. Demonstrate adequate legal authority to control discharges to its MS4 facilities as may be required by the relevant MS4 permit(s) to which the CITY is subject.
6. Provide, as requested by the COUNTY, copies of the CITY’s jurisdictional reports, data, and any other information (in formats requested by the COUNTY, where such formats are reasonably available) to satisfy requirements in MS4 permits or other orders issued by a Regional Board or the State Board, to which the CITY is subject, provided the CITY has not otherwise challenged such order, and such challenge has not been resolved.
7. Participate in meetings convened by the COUNTY and respond to requests for information from the COUNTY, intended to obtain PERMITTEE input on matters related to this AGREEMENT and the implementation of the OC Stormwater Program.
8. Designate primary and secondary Stormwater Program Representative for matters related to this AGREEMENT and the implementation of the OC Stormwater Program. Designations shall be made by each CITY’s city manager, or designee, in writing to the COUNTY. Each designation shall remain in effect until revoked by the CITY’s city manager or designee.
Stormwater Program Representatives are intended to provide subject matter input and facilitate communication between the COUNTY and each CITY. For purposes of this AGREEMENT, a Stormwater Program
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10 Representative will not be deemed to have the authority to approve annual operating budgets on behalf of a CITY, as required in Section III.A.1, unless expressly stated in the written designation provided to the COUNTY.
D. In the unincorporated areas of the COUNTY, the COUNTY shall, at no cost to the CITIES or the DISTRICT, undertake or cause to be undertaken all activities required above of the CITIES in Section III.C that are not responsibilities of the DISTRICT as outlined in Section III.B.
IV. Orange County City Manager Association Engagement
A. In lieu of the activities of the Technical Advisory Committee under the ORIGINAL AGREEMENT, the COUNTY shall endeavor to create a working relationship with the Orange County City Manager Association (“OCCMA”) or a sub-group thereof, to address issues such as MS4 permit requirements, MS4 permit compliance methods, and funding needs and strategies to facilitate regional and/or watershed-based, multi-jurisdictional project efforts.
B. At its discretion, the COUNTY, in coordination with the PERMITTEES as set forth in this AGREEMENT, may implement recommendations (or parts thereof) that OCCMA may give on OC Stormwater Program matters, including, but not limited to, potential strategies for compliance with current and anticipated future MS4 permit requirements; funding strategies and options for MS4 permit compliance efforts; and OC Stormwater Program budgeting.
Recommendations that would result in unbudgeted costs shall be subject to Majority Approval of the PERMITTEES pursuant to III.A.1.d.
C. Under no circumstances shall this Section be interpreted as a replacement or substitute for any other responsibility of CITIES or the COUNTY under this Agreement. At the COUNTY’s discretion, the Director of OC Public Works may enter into a memorandum of understanding with OCCMA to facilitate
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11 procedures for OCCMA engagement under this Section. Under no circumstances shall this provision be interpreted to require any written agreement between the COUNTY and OCCMA.
V. PROGRAM COSTS
A. Annual Operating Costs.
Where not otherwise funded, the annual operating budget, including all costs of equipment, goods, COUNTY services (including, but not limited to, applicable COUNTY and COUNTY’S departmental overhead), and all professional services costs incurred by the COUNTY, and any cost of the MS4 permits, as determined by the COUNTY in its role as administrator of the OC Stormwater Program, shall be a shared cost and allocated among the COUNTY, DISTRICT, and CITIES, and paid for as follows:
Participants Percentage Contribution
DISTRICT 10
CITIES + COUNTY 90
The individual percentage contributions from each CITY and the COUNTY shall be functions of their respective dry land areas and population relative to those of the entire County of Orange. Each area shall be calculated as one-half of the sum of the area and population fractions, multiplied by 90%. National forests, state parks, airports, landfills, oceans, harbors, tidal bays, and active military installations shall be excluded from area calculations (Exhibit A-1). The contribution of the COUNTY shall be calculated from unincorporated areas and their respective populations. Should any external or alternative sources of funding become available, those funds may be directly applied to the appropriate budget(s) before the shared cost percentages are applied to the PERMITTTEES or credited to a subsequent budget.
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12 Share in percent for jurisdiction #1= {(X1/Xtot) + (Y1/Ytot)}/2 x (90)
X = area
Y = population
tot = total population or area
90 = total percentage excluding the DISTRICT’s contribution
The percentage share shall be calculated by the COUNTY from population and area data. The population data shall be the most recent annual population estimates produced by the California Department of Finance, and area is based on the most recent OC Public Works survey data available to the COUNTY. Percentage share calculations shall be updated by May of each budget year for the budget year following and shall be included in annual operating budget proposals. Annual operating budget proposals shall be prepared based on the following percentage share computation methods, as applicable, and subject to exclusions in Exhibit A-1:
1. Countywide costs will be calculated as described in the process and formula above and subject to Exhibit A-1 for the entire group of PERMITTEES.
2. Regional costs, specific to only one RWQCB permit (Santa Ana Region and San Diego Region), will be calculated based on the process and formula above for PERMITTEES within the respective permit geographic area. For PERMITTEES that have jurisdiction in both permit regions, the regional costs will be based on the land area and prorated population for that permit geographic area.
3. Sub-budgets shall be based on the PARTICIPATING PERMITTEES and their corresponding area and prorated population total within the geographic area subject to the specific sub-budget.
4. In the event of a regulatory directive issued to PERMITTEES requiring amendment of any approved budget, the COUNTY shall provide immediate
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13 notice to the included PERMITTEES and hold discussions with respect to responding to the directive and funding the immediate response. Such budget amendments shall be subject to the Majority Approval referenced in Section III.A.1.d.
5. If at any time during a budget year costs exceed the sum of the deposits for any approved budget, and prior Majority Approval for such exceedance has been obtained, the COUNTY shall submit invoices to the involved PERMITTEES to recover the deficit. The share for each PERMITTEE shall be prorated according to the formula that was initially used to apportion budget costs. Each CITY shall pay the invoice within 45 calendar days of the billing date.
6. If at any time costs exceed the sum of the deposits for any approved budget, the COUNTY may propose a budget increase and request payment by the PERMITTEES, and PERMITTEES shall pay such amount, provided the budget increase is approved in accordance with sections III.A.1.c-d or III.A.2.c of this Agreement, as may be applicable. Until such approval is obtained and sufficient deposits received, the COUNTY may, at its sole discretion, cease carrying out approved budget components so as to limit or not incur costs in excess of deposits. Nothing in this AGREEMENT shall be construed as requiring PERMITTEES to approve budget increases.
7. The COUNTY shall prepare a budget year-end accounting within 120 calendar days of the end of the budget year and present the same to the involved PERMITTEES for review. If the budget year-end accounting results in the sum of the deposits exceeding costs (net of interest earnings), the excess deposits shall carry forward to reduce the obligation of the PERMITTEES for the following budget year and prorated to the CITIES consistent with the cost-sharing population and area data
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14 calculation above.
8. The COUNTY shall invoice each CITY for its annual share of each approved budget by November 30 of each budget year. Each CITY shall pay their deposit(s) within 45 calendar days of the billing date or within 45 calendar days of November 30, whichever is later. Each CITY’S deposit(s) shall be based on their prorated share(s) of the approved budget(s), reduced for any carry forward amount identified in the prior budget year-end accounting.
9. The COUNTY shall hold each CITY’s annual share of each approved budget in interest-bearing accounts and credit interest earned on each CITY’s annual share against each CITY’s share of the approved budget costs.
The COUNTY shall maintain records regarding interest earned and credited on each CITY’s annual share and provide the same to the CITIES within 120 calendar days of the end of the budget year.
10. Upon termination of this AGREEMENT, a final accounting shall be performed by the COUNTY and presented to the PERMITTEES for review. If the sum of the deposits exceeds the costs, the COUNTY shall reimburse to each CITY its prorated share of the excess, within 120 calendar days of the final accounting.
VI. LIFE OF THE AGREEMENT
The term of this AGREEMENT shall be indefinite, unless amended or terminated in accordance with this AGREEMENT.
VII. ADDITIONAL PARTIES
Any CITY which becomes incorporated after the effective date of this AGREEMENT, or requests to become a party to this AGREEMENT after previously withdrawing pursuant to Section VIII, shall be eligible to become a party to this AGREEMENT, subject to Majority Approval. In approving adding additional cities to this AGREEMENT, the PERMITTEES may
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15 require such conditions of the added cities as they determine necessary or advantageous. The date of initiation, for determining costs for newly incorporated cities, shall be the date of incorporation. The costs for adding additional cities to this AGREEMENT and OC Stormwater Program including, but not limited to, permit and processing fees, as well as administrative costs incurred by the COUNTY and costs to reimburse the existing PERMITTEES for unreimbursed costs related to a previous withdrawal (if applicable), shall be calculated by the COUNTY, approved by Majority Approval of the PERMITTEES and, thereafter, invoiced by the COUNTY and paid by the added city(ies) within 45 calendar days of the billing date. Monies to be reimbursed to the existing PERMITTEES shall carry forward to reduce the billings for the following budget year.
VIII. WITHDRAWAL FROM THE AGREEMENT
A CITY may withdraw from this AGREEMENT by providing at least 60 calendar days written notice to the COUNTY. The COUNTY shall notify the PERMITTEES within 10 business days of receipt of any withdrawal notice. Neither the COUNTY nor any PERMITTEE shall be responsible for advising the withdrawing CITY of the legal, regulatory, or programmatic effects of withdrawing, nor have any continuing responsibility to the withdrawing CITY upon the effective date of the withdrawal. The withdrawing CITY shall be solely responsible for any costs the withdrawing CITY may incur related to its withdrawal, including, but not limited to, penalties assessed by RWQCBs, and or other resource agencies (e.g., EPA, CDFW, etc.) in connection with or related to its withdrawal. In addition, withdrawal shall constitute forfeiture of any deposits on hand from the withdrawing CITY, for the budget year in which the withdrawal is effective. If the effective date of a withdrawal is within 60 calendar days of the beginning of any budget year, the withdrawing CITY shall be responsible for paying its annual
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16 share for the upcoming budget year as if it were still a PERMITTEE participating in this AGREEMENT but shall be eligible to receive a credit for any prospective carry forward amount of such annual share as may be contemplated by this AGREEMENT. The cost allocations to the remaining PERMITTEES participating in this AGREEMENT shall be recalculated and collected and/or credited as necessary in the budget year following the effective date of the withdrawal.
IX. NON-COMPLIANCE WITH PERMIT OR ORDER REQUIREMENTS
Each PERMITTEE shall remain solely responsible for its own acts and omissions with respect to compliance with requirements of an MS4 permit or other order of the RWQCBs or SWRCB to which it may be subject, and nothing herein shall be deemed to waive, release, or transfer any such responsibility to any other PERMITTEE. Nothing in this AGREEMENT shall be construed as an assumption by any PERMITTEE of any liability or obligation of another PERMITTEE, whether past, present, or future.
X. LEGAL ACTION/ COSTS/ ATTORNEY FEES
In the event of legal action to enforce any provision of this AGREEMENT, each party shall bear its own attorneys’ fees and costs, and no party shall seek to recover the same from any other party through litigation or other legal proceedings.
XI. AMENDMENTS TO THE AGREEMENT
This AGREEMENT may be amended with Majority Approval. The COUNTY and the DISTRICT shall represent one voting PERMITTEE with their percentage contribution equal to the total of the COUNTY and the DISTRICT as described in Section V. No amendment to this AGREEMENT shall be effective unless it is in writing and signed by the duly authorized representatives of the COUNTY and the required Majority Approval of PERMITTEES.
XII. NOTICES
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17 All notices required under Section VIII shall be deemed duly given if delivered by hand (with written confirmation of receipt); via electronic mail (with confirmation of transmission); or three (3) days after deposit in the U.S. Mail, postage prepaid.
XIII. GOVERNING LAW
This AGREEMENT shall be governed and construed in accordance with laws of the State of California. If any provision or provisions of this AGREEMENT is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not any way be affected or impaired hereby.
XIV. CONSENT TO BREACH NOT WAIVER
No term or provision hereof shall be deemed waived and no breach excused, unless such waiver or consent shall be in writing and signed by the duly authorized representative of the PERMITTEE to have waived or consented.
Any consent by any PERMITTEE to, or waiver of, a breach by the other, whether express or implied, shall not constitute a consent to, waiver of, or excuse for any other different or subsequent breach.
XV. APPLICABILITY OF PRIOR AGREEMENTS
This AGREEMENT restates and amends the provisions in prior agreements and constitutes the entire AGREEMENT between the PERMITTEES with respect to the subject matter. All prior agreements, representations, statements, negotiations, and undertakings are superseded hereby.
XVI. EXECUTION OF THE AGREEMENT
This AGREEMENT may be executed in counterparts, and the signed counterparts shall constitute a single instrument. The parties agree that this AGREEMENT may be executed and delivered by electronic means, including via email or electronic signature platforms (e.g., DocuSign, Adobe Sign), and that such electronic signatures shall be deemed to have the same legal
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18 effect as original signatures. Each party agrees that electronically signed documents shall be valid, enforceable, and admissible in any legal proceeding to the same extent as a manually signed original.
XVII. NO WAIVER OF PRIVILEGE AND/OR WORK PRODUCTION PROTECTION
Notwithstanding anything in this Agreement to the contrary, nothing in this AGREEMENT shall require a party to release or provide information (including any reports, communications, data, etc.) that has been deemed by that party to be subject to the attorney-client privilege, attorney work product doctrine, or any other relevant privilege and protection, including, but not limited to, any reports or information generated by a party’s consultant that was prepared in consultation with, or at the direction of, such party’s attorney or counsel of record. Nothing in this AGREEMENT shall prohibit the parties hereto from entering into future agreements, including joint defense agreements, common interest agreements, or other similar agreements to share such privileged or protected information subject to the terms and conditions of such an agreement.
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19 IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT on the dates opposite their respective signatures:
ORANGE COUNTY FLOOD CONTROL DISTRICT
A body corporate and politic
By
Chairman of the Board of Supervisors
COUNTY OF ORANGE
A body corporate and politic
Date: By
Chairman of the Board of Supervisors
SIGNED AND CERTIFIED THAT A COPY OF THIS
AGREEMENT HAS BEEN DELIVERED TO THE
CHAIRMAN OF THE BOARD
Date: By
ROBIN STIELER
Clerk of the Board of Supervisors of
Orange County, California
APPROVED AS TO FORM COUNTY COUNSEL
ORANGE COUNTY, CALIFORNIA
By Julia Woo, Senior Deputy
Date:
///
///
///
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20 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF ALISO VIEJO
Date: ______
ATTEST:
City Clerk
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21 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF ANAHEIM
Date: ______
ATTEST:
City Clerk
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22 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF BREA
Date: _________________________
ATTEST:
City Clerk
City Council
18 –
25 4/7/2026
23 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF BUENA PARK
Date: ______
ATTEST:
City Clerk
City Council
18 –
26 4/7/2026
24 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF COSTA MESA
Date: _____
ATTEST:
City Clerk
City Council
18 –
27 4/7/2026
25 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF CYPRESS
Date: ______
ATTEST:
City Clerk
City Council
18 –
28 4/7/2026
26 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF DANA POINT
Date: ______
ATTEST:
City Clerk
City Council
18 –
29 4/7/2026
27 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF FOUNTAIN VALLEY
Date: ______
ATTEST:
City Clerk
City Council
18 –
30 4/7/2026
28 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF FULLERTON
Date: ______
ATTEST:
City Clerk
City Council
18 –
31 4/7/2026
29 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF GARDEN GROVE
Date: ______
ATTEST:
City Clerk
City Council
18 –
32 4/7/2026
30 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF HUNTINGTON BEACH
Date: ______
ATTEST:
City Clerk
City Council
18 –
33 4/7/2026
31 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF IRVINE
Date: ______
ATTEST:
City Clerk
City Council
18 –
34 4/7/2026
32 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF LA HABRA
Date: ______
ATTEST:
City Clerk
City Council
18 –
35 4/7/2026
33 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF LA PALMA
Date: ______
ATTEST:
City Clerk
City Council
18 –
36 4/7/2026
34 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF LAGUNA BEACH
Date: ______
ATTEST:
City Clerk
City Council
18 –
37 4/7/2026
35 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF LAGUNA HILLS
Date: ______
ATTEST:
City Clerk
City Council
18 –
38 4/7/2026
36 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF LAGUNA NIGUEL
Date: ______
ATTEST:
City Clerk
City Council
18 –
39 4/7/2026
37 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF LAGUNA WOODS
Date: ______
ATTEST:
City Clerk
City Council
18 –
40 4/7/2026
38 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF LAKE FOREST
Date: ______
ATTEST:
City Clerk
City Council
18 –
41 4/7/2026
39 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF LOS ALAMITOS
Date: ______
ATTEST:
City Clerk
City Council
18 –
42 4/7/2026
40 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF MISSION VIEJO
Date: ______
ATTEST:
City Clerk
City Council
18 –
43 4/7/2026
41 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF NEWPORT BEACH
Date: ______
ATTEST:
City Clerk
City Council
18 –
44 4/7/2026
42 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF ORANGE
Date: ______
ATTEST:
City Clerk
City Council
18 –
45 4/7/2026
43 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF PLACENTIA
Date: ______
ATTEST:
City Clerk
City Council
18 –
46 4/7/2026
44 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF RANCHO SANTA MARGARITA
Date: ______
ATTEST:
City Clerk
City Council
18 –
47 4/7/2026
45 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF SAN CLEMENTE
Date: _____
ATTEST:
City Clerk
City Council
18 –
48 4/7/2026
46 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF SAN JUAN CAPISTRANO
Date: _____
ATTEST:
City Clerk
City Council
18 –
49 4/7/2026
47 Date:
By:
ALVARO NUNEZ
City Manager
APPROVED AS TO FORM:
JENNIFER L. HALL KYLE NELLESEN
Assistant City Attorney
CITY OF SANTA ANA
ATTEST:
City Clerk
City Council
18 –
50 4/7/2026
48 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF SEAL BEACH
Date: ____
ATTEST:
City Clerk
City Council
18 –
51 4/7/2026
49 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF STANTON
Date: ______
ATTEST:
City Clerk
City Council
18 –
52 4/7/2026
50 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF TUSTIN
Date: ______
ATTEST:
City Clerk
City Council
18 –
53 4/7/2026
51 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF VILLA PARK
Date: ______
ATTEST:
City Clerk
City Council
18 –
54 4/7/2026
52 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF WESTMINSTER
Date: ______
ATTEST:
City Clerk
City Council
18 –
55 4/7/2026
53 By:
Mayor
APPROVED AS TO FORM:
City Attorney
CITY OF YORBA LINDA
Date: ______
ATTEST:
City Clerk
City Council
18 –
56 4/7/2026
54 EXHIBIT A - 1
DRY LAND AREA DEDUCTED FROM JURISDICTIONS
Landfills Jurisdiction
Olinda
County
Santiago County
Prima Deschecha County
Bee Canyon County
Coyote Canyon County
State Parks
Bolsa Chica State Beach* Huntington Beach
Chino Hills State Park County
Corona Del Mar State Beach Newport Beach
Crystal Cove State Park** County
Doheny State Beach Dana Point
Huntington State Beach Huntington Beach
San Clemente State Beach San Clemente
Airports
Fullerton Fullerton
John Wayne County
Military facilities
Joint Forces Training Base - Los Alamitos Los Alamitos
Former MCAS Tustin*** Tustin
Seal Beach Naval Weapons Station**** Seal Beach
National Forests
Cleveland National Forest County
*Includes Bolsa Chica Ecological Preserve
**Includes Laguna Laurel Ecological Preserve
***Active military areas
****Includes Seal Beach National Wildlife Refuge
City Council
18 –
57 4/7/2026
Public Works Agency
www.santa-ana.org/pw
Item # 19
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
April 7, 2026
TOPIC: Automated Metering Infrastructure Implementation Support Services
AGENDA TITLE
First Amendment to the Agreement with E Source Companies, LLC for Automated Metering Infrastructure Implementation Support Services (Project No. 16-6460) (Non- General Fund)
RECOMMENDED ACTION
Authorize the City Manager to execute a First Amendment to the agreement with E Source Companies, LLC to continue Automated Metering Infrastructure implementation support services, in an additional amount of $125,000, for a total revised agreement amount not to exceed $575,000 (Agreement No. A-2026-XXX).
GOVERNMENT CODE §84308 APPLIES: Yes
DISCUSSION
The Public Works Agency (PWA) operates and maintains the City’s water and sanitary sewer systems. The water system comprises approximately 480 miles of water main, 21 groundwater wells, seven pump stations, 10 reservoirs with a storage capacity of 49 million gallons, four pressure-regulating stations, and seven connection points to the Metropolitan Water District. The system has an average daily demand of 30 million gallons from its roughly 45,500 metered service connections.
In 2020, City Council approved the implementation and transition from manual meter readings to an Automated Metering Infrastructure (AMI) system utilizing smart water meters. The AMI system electronically transmits data to the Finance and Management Services Agency’s Municipal Utility Services (MUS) customer information and billing system, where water charges are generated. The introduction of the new smart meter technology required upgrades to existing MUS systems and significant efforts to implement and integrate those systems.
With progress on installing the new smart meters advancing on schedule, on August 20, 2024, the City Council approved an agreement with E Source Companies, LLC to
City Council
19 –
1 4/7/2026
Automated Metering Infrastructure Implementation Support Services April 7, 2026
5 6
8 0
provide implementation and operational support services as the City transitioned to AMI water meter data, for a total amount not to exceed $450,000. The support provided by E Source has been essential to systems integration, maintaining data quality, identifying system anomalies, and resolving issues across the AMI ecosystem. Their work has been instrumental in enabling the MUS support team to maintain the same level of customer service for Santa Ana residents and businesses while navigating the learning curve associated with the transition to AMI.
The agreement anticipated a full handoff of AMI system responsibilities to staff by the end of 2025. The majority of the budget was allocated for support from E Source leading up to the handoff milestone with tapering support services and training continuing through the end of 2027. During this period, City staff were also tasked with advancing other customer service and technology priority-initiatives such as the Accela Land Management, Business License software upgrades, and initiating a new Enterprise Resource Planning system. These additional ground-up technology projects required a significant investment of staff time and, as a result, diverted staff time from the AMI project, necessitating the extended use of E Source in the AMI operational support role beyond the originally anticipated timeframe.
The proposed $125,000 amendment reflects the cost of continued support such as system monitoring, data validation, billing read support, and City staff training through the remaining term of the agreement. This will allow for an adequate transition period for staff to assume full operational responsibilities of the AMI project by June 2027, and with minimal support services from E Source, as originally contracted, continuing through December 2027.
Staff recommends approval of the First Amendment to Agreement A-2024-133 (Exhibit 1) with E Source Companies, LLC in the amount of $125,000 for a total revised agreement amount of $575,000 (Exhibit 2). All the remaining terms of the agreement, effective through December 2027, will remain unchanged.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
Funds are available for expenditure in the Fiscal Year 2025-26. Any remaining balances not expended at the end of the fiscal year will be presented to City Council for approval of carryovers to FY 2026-27.
City Council
19 –
2 4/7/2026
Automated Metering Infrastructure Implementation Support Services April 7, 2026
5 6
8 0
Fiscal
Year
Accounting Unit
- Account No.
(Project No.)
Fund
Description
Accounting Unit,
Account Description
Amount
2025-26 06017645-62300
(16-6460) Water
Water
Admin/Engineering,
Contract Services -
Professional
$40,000
2026-27 06017645-62300
(16-6460) Water
Water
Admin/Engineering,
Contract Services -
Professional
$75,000
2027-28 06017645-62300
(16-6460) Water
Water
Admin/Engineering,
Contract Services -
Professional
$10,000
TOTAL $125,000
EXHIBIT(S)
1. Agreement A-2024-133
2. First Amendment to the Agreement E Source Companies, LLC Submitted By: Rodolfo Rosas, P.E., Acting Executive Director – Public Works Agency Approved By: Alvaro Nuñez, City Manager
City Council
19 –
3 4/7/2026
A-2024-133
INSURf\�CE ON FILE
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UN\T:������H¥��Pi5� 8DB2�B-26C9-4AA8-92E8-033D22A870E7
� 26101� OAT!:.: A
D. pwA L2-J . \ l\M) ( µi +. l.,oJ e.f>:iy.e,n J AGREEMENT WITH E SOURCE COMPANIES, LLC TO PROVIDE AMI
IMPLEMENTATION SUPPORT SERVICES FOR THE CITY OF SANTA ANA THIS AGREEMENT is made and entered into on this 20th day of August, 2024 by and between E Source Companies, LLC ("Consultant"), and the City of Santa Ana, a charter city and municipal corporaii.on organized and exist ing under the Constitution and laws of the State of California ("City").
RECITAL S
A. On June 25, 2024, the City issued Request for Proposals No. 24-085 ("RFP"), by which it sought a Consultant to provide Automated Metering Infrastrncture (AMI) Implementation Support Se!vices for the Public Works Agency Water Resources Division, including but not limited to project management, software integration, data management, and pe1formance analysis.
B. Consultant submitted a responsive proposal that was selected by the City. Consultant represents that it is able and willing to provide the services described in the scope of work that was included in the RFP.
c. In undertaking the performance of this Agreement, Consultant represents that it is lrnowledgeable in its field and that any services performed by Consultant under this Agreement will be perfonned in compliance with such standards as may reasonably be expected from a professional consulting ·firm in the field.
NOW THEREFORE, in consideration of the mutual and respective promises, and subject to the terms and conditions hereinafter set forth, the parties agree as follows:
1. SCOPE OF SERVICES
Consultant shall perform the services described in the scope of work that was included in the RFP, and as more specifically delineated in Consultant's proposal, which are collectively attached as Exhibit A- Scope of Work and incorporated herein by reference.
2. COMPENSATION
a. City neither warrants nor guarantees any minimum or maximum compensation to Consultant under this Agreement. Consultant shall be paid only for actual services performed under this Agreement at the rates and charges identified in Exhibit B - Compensation. The total amount to be expended during the term of this Agreement under the RFP shall not exceed Four Hundred Fifty Thousand Dollars and Zero Cents ($450,000), including any extension periods exercised under Section 3. b. Payment by City shall be made within forty-five (45) days following receipt of proper invoice evidencing work performed, subject to City accounting procedures. City and Consultant agree that all payments due and owing under this Agreement shall be made
City Council
19 –
4 4/7/2026
Docuslgn Envelope ID: 8DB22FEB-2609-4AA8-92E8-033D22A87Dg'7 through Automated Clearing House (ACH) trnnsfers. Consultant agrees to execute the City's standard ACH Vendor Payment Authorization and provide required documentation. Upon verification of the data provided, the City will be authorized to deposit payments directly into Consultant's account(s) with financial institutions.
Payment need not be made for work which fails to meet the standards of performance set forth in the Recitals which may reasonably be expected by City.
3. TERM
This Agreement shall commence on 2ot11 day of August, 2024 and terminate on December 31, 2027, with the option for the City to grant up to one 2-year extension (through December 31, 2029) exercisable by a writing by the City Manager and City Attorney, unless terminated earlier in accordance with Section 15, below.
4. INDEPENDENT CONTRACTOR
Consultallt shall, during the entire tel'tn of this Agreement, be construed to be all independent Consultant alld not all employee of the City. This Agreement is not intended nor shall it be construed to create an employer-employee relationship, a joint venture relationship, or to allow the City to exercise discretion or control over the professional manner in which Consultant performs the services which are the subject matter of this Agreement; however, the services to be provided by Co nsultant shall be provided in a manner consistent with all applicable stalldards and regulations governing suoh services. Consultant shall pay all salaries and wages, employer's social security taxes, unemployment insurance and similar taxes relating to employees and shall be responsible for all applicable withholding taxes.
5. OWNERSHIP OF MATERIALS
This Agreement creates a non-exclusive and perpetual license for City to copy, use, modify, reuse, or sublicense ally and all copyrights, designs, alld other intellectual property embodied in plans, specifications, studies, dmwings, estimates, and other documents or works of authorship fixed in allY tangible medium of expression, including but not limited to, physical drawings or data magnetically or otherwise recorded on computer diskettes, which are prepared or caused to be prepared by Consnltallt under this Agreement ("Documents & Data''). Consultant shall require all subcontractors to agree in writing that City is granted a non-exclusive and perpetual license for ally Documents & Data the subcontractor prepares under this Agreement.
Consultallt represents and warrants that Consultant has the legal right to license any and all Documents & Data. Consultant makes no such representation and warranty in regard to Docmnents & Data which were provided to Consultant by the City. City shall not be limited in ally way in its use of the Documents and Data at any time, provided that any such use not within the purposes intended by this Agreement shall be at City's sole risk.
6. INSURANCE
Prior to undertalcing peiformance of work under this Agreeme11t, Consultant shall maintain alld shall require allY subcontractors to obtain and maintain insurance as described Page2 of9
City Council
19 –
5 4/7/2026
Doouslgn Envelope ID: 8D822FEB-26C9-4AA8-92EB-033P22A87PE7 below for the entire Term oftlris Agreement against claims for injUiies to persons or damage to prope1ty which may arise from or in connection with services, products and materials supplied to the City. Total cost ofinsUiance shall be borne by Consultant.
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 !U1 "occurrence" basis, including products and completed operations, property damage, bodily injury and personal & advertising iajury with limits no less tb!Ul $1,000,000 per occmrence ruxl $2,000,000 in the aggregate.
Required policy limits can be met with primm:y and umbrella/excess insurance policies.
2. Automobile Liability: Insurance Services Office Form CA 00 01 covering Code I (any auto), with limits no less than $1,000,000 combined single limits. In the event Consultant does not maintain commercial automobile liability insUiance, City will accept evidence of personal automobile insUl'ance.
3. Workers' Compensatio11: insur!Ulce as required by the State of California, with statutory limits, and Employers' Liability insurance with a limit of no less than$1,000,000 per accident, policy or employee for bodily injury or disease.
Coverage is not required if Consultant has no employees and signs request to waive such insurance.
4. Professional Liability Insurance: wit11 limits no less than $1,000,000 per occurrence or claim, and $2,000,000 aggregate.
If Consultant maintains broader coverage and/or higher lilllits than the minim1un requirements for each line of coverage shown above, City requires and shall be entitled to the broader coverage and/or the higher limits maintained by Co11sultant. Any available inSUiance proceeds in excess of the specified minimum limits of insurance and coverage shall be made available to the City.
Other Insurance Provisions
The above requ ired insurance policies are to contain, or be endorsed to contain, tlie following provisions:
J. City, its City Council, officers, officials, employees, agents, and volunteers are to be covered as additional insureds under Consultant's CGL, Professional Liability, and Automobile Liability policies with respect to any liability arising out of work 01· operations performed by or on behalf of Consultant including materials, parts, equipment, and persoMel furnished in coll11ectio11 with such wm k or operations.
2. Consultant's Insurance company(ies) agrees to waive all rights of subrogation against the City, its City Council, its officers, officials, employees, agents, and volUPteers for losses paid under the terms of any policy which arise from work perfmmed by Page3 of9
City Council
19 –
6 4/7/2026
Docusliln Envelope ID: 8DB22FEB-26C9·4AA8·92E8-033D22AB7DE7 Consultant under this Agreement.
3. For any claims related to this contract, Consultant's insurance coverage shall be primary and any insurance maintained by City, its City Council, its officers, officials, employees, agents or volunteers shall not contribute with it.
4. A severability of interest provision must apply for all the additional insureds, enduring that Consultant's insurance shall apply separately to each insured against whom a claim is made or suit is brought, except with respect to the insurer's limits of liability.
5. hlSurance policies required herein shall provide that coverage shall not be canceled, suspended, voided, reduced in coverage or in limits, non-renewed by the carrier, or materially changed except after thitiy (30) days prior written notice has been given to the City. Ten (10) days prior written notice shall be provided to the City fot· policy cancellation or non-renewal due to non-payment of premium.
6. Certificate Holder on each Evidence of Insurance certificate shall be: City of Santa Ana, Attention: Public Works Agency, Executive Director, 20 Civic Center Plaza, M-21, Santa Ana, CA 92701. The name and location of project must be in dicated in the Description of Operations section of each certificate.
Self-Insured Retentions
Self-insured retentions must be declared to and approved by City. The City may require the Consult1111t to purchase coverage with a lower retention or 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 authorized to conduct business in the state of California with a current AM. Best rating of no less than A: VII, unlCBs otherwise acceptable to CnY.
Verification of Coverage
Consultant shall furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements before work begins. However, failure to obtain the required documents prior to the work begitJning shall not waive Consultant's obligation to provide them.
Special Risks or Circumstances
City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other circumstances.
7. INDEMNIFICATION
Consultant agrees to defend, and shall indemnify and hold harmless the City, its officers, agents, employees, contractors, special counsel, and representatives from liability: (1) for personal Page4 of9
City Council
19 –
7 4/7/2026
ooauslgn Envelope ID: 8DB22FEB-2609-4MB-92E8-033D22A87DE7 ittjmy, damages, just compensation, restitution, judicial or equitable relief arising out ofclaims for personal il\jury, including death, and claims for property damage, which may arise from the negligent operations of the Consultant, its subcontractors, agents, employees, or other persons acting on its behalf which relates to the services described in section I of this Agreement; and (2) from any claim that personal injury, damages, just compensation, restitution, judicial or equitable relief is due by reason of the terms of or effects arising from this Agreement. This indemnity and hold harmless agreement applies to all claims for damages, just compensation, restitution, judicial or equitable relief suffered, 01· alleged to have been suffered, by reason of the events referred to in this Section or by reason of the terms of, or effects, arising from this Agreement. The Consultant further agrees to indemnify, hold hannless, and pay all costs for the defense of the City, including fees and costs for special counsel to be selected by the City, regarding any action by a third party challenging the validity of this Agreement, or asserting that personal injury, damages, just compensation, restitution, judicial or equitable relief due to personal or property rights mises by reason of the terms of, or effects arising from this Agreement. City may make all reasonable decisions with respect to its repl'esentation in any legal proceeding. Notwithstanding the foregoing, to the extent Consultant's services are subject to Civil Code Section 2782.8, the above indemnity shall be limited, to the extent required by Civil Code Section 2782.8, to claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the Consultant,
8. INTELLECTUAL PROPERTY INDEMNIFICATION
Consultant shall defend and indemnify the City, its officers, agents, representatives, and employees against any and all liability, including costs, for infringement of ru1y United States' letters patent, trademark, or copyright infringement, including costs, contained in the work product or documents provided by Consultant to the City pursuant to this Agreement.
9. RECORDS
Consultant shall keep records ru1d invoices in connection with the work to be perfonned under this Agreement. Consultant shall maintain complete ru1d accurate records with respect to the costs incmred under this Agreement and any services, expenditures, and disbill'sements charged to the City for a minimmn period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of the City to exrunine, audit, and make transcripts or copies of such records and any other documents created pursuant to this Agreement during regular business hours. Consultant shall allow inspection of all work, data, documents, proceedings, and activities related to this Agreement for a period of th:t·ee (3) years from the date of final payment to Consitltant under this Agreement.
10. CONFIDENTIALITY
If Consultant receives from the City information which due to the nature of such information is reasonably m1derstood to be confidential and/or proprietary, Consultant agrees that it shall not use or disclose such information except in the performance of this Agreement, and further agrees to exercise the san1e degree of care it uses to protect its own information of like importance, but in no event less than reasonable care. "Confidential Information" shall include all
City Council
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Docusl� Envelope ID: 8DB22fEB-26C9-4AA8-92E8·033D22A87DE7 nonpublic information. Confidential information includes not only written inform ation, but also information transfe11·ed orally, visually, electronically, or by other means. Confidential information discl osed to either paiiy by any subsidiary and/or agent of the other paiiy is covered by this Agreement. The foregoing obligations of non-use and nondisclosure shall not apply to any information that (a) has been disclosed in publicly available sourceii; (b) is, through no fault of the Consultant disclosed in a publicly available source; (c) is in rightful posseiision of the Consultant without aJJ oblig ation of confidenti ality; ( d) is required to be disclosed by ope!'ation of law; or ( e) is independently developed by the Consulta11t without reference to information disclosed by the City.
11. CONFLICT OF INTEREST CLAUSE
Consultant covenants that it presently has no interests and shall not have intel'ei!ts, direct or indirect, which would conflict in any manner with performance of services specified under this Agreement.
12. NON-DISCRIMINATION
Co118ultant shall not discriminate because of race, color, creed, 1·e!igion, sex, marital status, sexual orientation, gender identity, gender expression, gender, medical conditions, genetic information, or military aJJd veteran status, age, national origin, anceiitry, or disability, as defined and prohibited by applicable law, in the recrui1ment, selection, teaching, training, utilization, promotion, termination or other employment related activities or any services provided under this Agreement. Consultant affirms that it is an equal opportunity employer aJJd shall comply with all applicable federal, state aJJd local laws and regulations.
13. EXCLUSIVITY AND AMENDMENT
This Agreement represents the complete and exclusive statement between the City and Consultant, and supersedeii a11y aJJd all other agreements, oral or written, between the parties. In the event of a conflict between the terms of this Agreement and any attachments hereto, the terms of this Agreement shall prevail. This Agreement may not be modified except by written instrument signed by the City aJJd by an authorized representative of Consultant. TI1e parties agree that any terms or conditions of any purchase order or other instmment that are inconsistent with, or in addition to, the terms and conditions hereof, shall not bind or obligate Consultmrt or the City. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, orally 01· otherwise, have been made by any party, or anyone acting on behalf of any party, which is not embodied herein.
14. ASSIGNMENT
Inasmuch as this Agreement is intended to secure the specialized services of Contractor, Consultant may not assign, transfer, delegate, or subcontract any interest herein without the p1ior written consent of the City aJJd aJJY such assignment, transfer, delegation or subcontract without the City's prior written consent shall be considered null aJJd void. Nothing in this Agreement shall be construed to limit the City's ability to have any of the services which are the subject to this Page6of9
City Council
19 –
9 4/7/2026
Docuslgn Envelope ID: 8DB22FEB"26C9-4AAB"92EB-033D22AB7DE7 Agreement perfonned by City personnel or by other Consultants retained by City.
15. TERMINATION
This Agreement inay be tenninated by the City upon thirty (30) days written notice of termination. In such event, Consultant shall be entitled to receive and the City shall pay Consultant compensation for all services perfo1med by Consultant prior to receipt of such notice of te1mination, subject to the following conditions:
a. As a condition of such payment, the Executive Director may require Consultant to deliver to the City all work product(s) completed as of such date, and in such case SU.ch work product shall be the property of the City unless prohibited by law, and Consultant consents to the City's use thereof for such purposes as the City deems appropriate.
b. Payment need not be made for work which fails to meet the standard of performance specified in tile Recitals of this Agreement.
16. WAIVER
No waiver of breach, failure of any condition, or any right or remedy contained in or granted by tile provisions of this Agreement shall be effective unless it is in writing and signed by the party waiving the breach, failure, right or remedy. No waiver of any breach, failure or right, or remedy shall be deemed a waiver of any other breach, failure, light or remedy, whether or not similar, nor shall any waiver constitute a continuing waiver unless the writing so specifies.
17. JURISDICTION· VENUE
This Agreement has been executed and delivered in the State of California and the validity, interpretation, performance, and enforcement of any of the clauses of this Agreement shall be determined aud governed by the laws of the State of California. Both parties further agree that O!'llllge County, California, shall be the venue for any action or proceeding that may be brought or arise out of, in connection with or by reason of this Agreement.
18. l'ROFESSIONAL LICF.NSES
Consultant shall, throughout the term of this Agreement, maintain all necessaty licenses, pennits, approvals, waivers, and exemptions necessary for the provision of the services hereunder and required by the laws and regulations of the United States, the State of California, the City of Santa Ana and all other governmental agencies, Consultant shall notify tile City immediately and in writing of its inability to obtain or maintafu such permits, licenses, approvals, waivers, and exemptions. Said inability shall be cause for termination oft11is Agreement.
19. NOTICE
Any notice, tender, demand, delivety, or other communication pursuant to this Agreement shall be in writing and shall be deemed to be properly given if delivered in person or mailed by
City Council
19 –
10 4/7/2026
Docuslgn Envelope JD: 8DB22FEB-26C9-4AA8"92E8-033D22AB7DE7 first class 01· certified mail, postage prepaid, or sent by fax 01· other telegraphic conunimication in the manner provided in this Section, to the following persons:
To City:
Clerk of the City Council
City of Santa Ana
20 Civic Center Plaza (M-30)
P.O. Box 1988
Santa Ana, CA 92702-1988
Fax:714-647-6956
With courtesy copies to:
Executive Director, Pu blic Works Agency
City of Santa Ana
20 Civic Center Plaza (M-21)
P. O.Boxl988
Santa Ana, California 92702
Fax:
To Consultant:
E Somce Companies, LLC
Attn: Dave Perotti
CEO
3020 Cal'bon Place, Suite 300
Boulder, CO 80301
A party may change its address by giving notice in writing to the oilier paiiy. Thereafter, any communication shall be addressed and transmitted to the new address. If sent by mail, communication shall be effective or deemed to have been given three (3) days after it has been deposited in the United States mail, duly registered or certified, with postage prepaid, and addressed as set forth above. If sent by fax, communication shall be effective or deemed to have been given twenty-four (24) homs after the time set fmth on the transmission report issued by the transmitting facsimile machine, addressed as set forth above. F'or pmposes of calculating these time fraines, weekends, federal, state, County or City holidays shall be excluded.
20. MISCELLANEOUS PROVISIONS
a. Each undersigned represents and wai1'ants that its signature herein below has the power, au1hority and right to bind 1heir respective parties to each of the terms of this Agreement, and shall indemnify City fully, including reasonable costs and attorney's fees, for any injuries or damages to City in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. c. All Exhibits referenced herein and attached hereto shall be incorporated as if fully
City Council
19 –
11 4/7/2026
Docusign Envelope ID: 80822FEB-26C9-4AA8-92E8-033D22AB7DE7 set forth in the body of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the date and year first above written.
ATTEST:
APPROVED AS TO FORM:
SONIA R. CARVALHO
City Attorney
�dui (!jJ IM.c,_ � -AJL. By . ...!..-���������
Andrea Garc ia-Miller
Assistant City Attorney
RECOMMENDED FOR APPROVAL:
Digitally signed by Nabil
Nab i I Saba �.�, 2024.08.05 12:41:47
·07"00'
Nabil Saba, PE
Executive Director
Public Works Agency
E Source Companies, LLC
Name: Dave Perotti
Title: CEO
City Council
19 –
12 4/7/2026
Docuslgn Envelope ID: BDl322FEl3-26C9-4AAB·92EB-033D22A87DE7
EXIDBITA
SCOPE OF SERVICES
City Council
19 –
13 4/7/2026
Docusign Envelope ID: 8DB22FEB-26C9-4AA8-92E8-033D22A87DE7
SCOPE OF WORK
INTRODUCTION AND BACKGROUND
The City of Santa Ana is located in the County of Orange in Southern California. The City encompasses 27.2 square miles and a population over 343,000 people. The City of Santa Ana Public Works Agency - Water Resources Division oversees and maintains the daily operations of the Water System and Sanitary Sewer System. The City of Santa Ana's water system has an average day demand of about 43 MG with approximately 45,500 metered service connections.
The City is currently in the process of implementing Automated Metering Infrastructure (AMI) for all of its metered water service connections. Communications equipment has been installed and the installation of meters is ongoing. However, the City of Santa Ana Public Works Agency desires to engage professional firms to provide additional support for the project in the areas of project management, systems integration and data analysis, and quality assurance field inspection services. The primary emphasis will be assisting City staff with testing data and system functionality to validate that the delivered systems can support the City's daily business and user requirements. Specifications for the project can be found in the agreement with the project's prime contractor here: https://publicdocs.santa ana.orq/Weblink/DocView.aspx?id= 125140&searchid=ac4e8f00-1 d6c-476a-ba09- cde533ca092c&d bid=1. Existing knowledge of the Sensus Regional Network Interface (RNI), enQuesta Customer Interface System (CIS), and SmartWorks Compass Meter Data Management (MOM) system is required.
CONTRACTOR RESPONSIBLITIES
The Consultant shall provide all labor, materials, services, and equipment necessary for the completion of the work entailed herein. All work shall be in accordance with applicable trade practices, workmanship, meet warranties and shall conform to all applicable laws, codes and regulations. Business hours are considered from 7:00 A.M. to 5:00 P.M. (Monday through Friday). Any time outside of business hours of operation may be considered after hours/weekends.
All work will be scheduled upon confirmation of scope and cost and completed within the time agreed upon for each specific item of work. The Consultant may not begin work before receiving a written Notice to Proceed by the City's Project Manager. All services, equipment and materials provided by the Consultant must be in accordance with all applicable Federal, State and local regulations, laws, and codes.
DESCRIPTION OF WORK
The consultant will be expected to develop a work plan in order to provide support in the following areas:
1. Project Management.
City of Santa Ana - RFP 24-085
AMI Implementation Support Services
City Council
19 –
14 4/7/2026
Oocusign Envelope ID: 8DB22FEB-26C9-4AA8-92E8-033022A87DE7 a. Support City staff in managing overall scope of work by prime contractor and subcontractors to ensure that all project tasks are executed, and provide advice and recommendat ions on how to address project-specific issues that may arise; b. Conduct weekly status meetings with City staff and contractors/vendors for overall project and/or systems integration performance and progress.
2. System Tes ting.
a. Coordinate with vendors to ensure configuration of systems are delivered and working to specifications;
3. Reporting.
a. Review daily reports to ensure communication systems are responsive; b. Investigate and/or recommend actions for City or contractor to take to make corrections.
4. Validation of Reads.
a. Review and analyze daily reporting data to ensure validity of reads received.
5. Quality Assurance and Field Inspection Services.
a. Perform in-field installation quality audits of meter installations, including checking for post-installation leaks;
b. Perform data quality audits using installation contractor's work order management software to verify meters are installed correctly.
CITY RESPONSIBILITIES
The City will provide access to the information in its possession and systems/software platforms relevant to the preparation of the required information in the RFP. Selected consultant is expected to perform a substantial review of the project's schedule and milestones to-date, and be familiar with all software platforms and data sources being utilized.
SUBCONTRACTORS
The use of Subcontractors is allowed, but will require approval by City prior to start of any assigned work. When a Subcontractor performs all or any part of the work, a markup shall be applied to the Subcontractor's actual cost of such work. The Contractor may add a markup of 1 O percent on the first $5,000 of the subcontracted portion of the extra work and a markup of 5 percent on work added in excess of $5,000 of the subcontracted portion of the work may be added by the Contractor.
---End of SCOPE OF WORK Section.---
City of Santa Ana - RFP 24-085
AMI Implementation Support Services
City Council
19 –
15 4/7/2026
Oocusign Envelope ID: 8DB22FEB-26C9-4AA8-92E8-033022A87DE7
E SOURCE PROPOSAL TO CITY OF SANT A ANA FOR AMI IMPLEMENTATION SUPPORT SERVICES Understanding of Scope of Services
E Source has had the pleasure of working with the team at Santa Ana on your AMI project. We have supported your team on the tasks that you have requested in your RFP and that are outlined below in our scope of work. We have established a positive and productive working relationship with your vendor partners, including AquaMetric, Xylem (Sensus), Harris SmartWorks, Systems & Software, and Concord Utility Services (Concord). We have extensive working knowledge of Santa Ana's entire AMI system, including RNI headend, Sensus Analytics, Compass MOMS, enQuesta CIS, and Peak Workflow Work Order Management system (WOMS).
Task 1: Project Management
One of the primary factors that distinguish successful AMI projects is the quality of the overall project management. In the E Source model, based on the Project Management lnstitute's (PMl's) PMBOK® and Agile methodologies, our Project Manager (PM) works very closely with Santa Ana's PM and the project team using proven process, methodologies, and templates to produce a robust, flexible implementation approach. We are very experienced in helping a combined vendor and utility team execute successfully to the project baseline.
Tara Turch, the E Source PM, will be responsible for supporting the activities listed in Table 1. Our PM will manage vendor performance, risk management, items of concern, and open action items. These items will be managed regularly and will be consistently tracked.
Scope
Management
Change
Management
Cost
Management
Quality
Management
Reporting
Management
Table 1. E Source Project Ma11ageme11t Activities
Ensure the project plans outline all of the work required to complete the project successfully and that the client and vendors avoid scope creep. Scope management consists of initiation, scope lanning, sco!Je definition, sco e verification, and scope change control.
Ensure a formal change control process is in place to control changes to the baseline project plan and SOW throughout the project lifecycle.
Ensure the project is completed within the approved budget. Cost management consists of resource planning, cost estimating, cost budgeting, and cost control.
Ensure the project will satisfy the needs for which it was undertaken. Quality management consists of quality planning, quality assurance, and quality control.
Ensure timely & appropriate generation, collection, distribution, and storage of project information.
Handle communications planning, performance reporting, and administrative closure.
Schedule Ensure timely project completion. Time management consists of activity definition, sequencing, and Management duration estimating, as well as schedule development and control.
Vendor Ensure vendors are completing their contractual scope of work on schedule and within budget.
Management Coordinate with technical resources as necessary to ensure verification of technical deliverables.
Resource Ensure qualified resources are available and properly prepared to perform each task. Identify Management project resourcing needs and coordinate with the appropriate organizations to meet them.
Ensure risk is identified, analyzed, and responded to appropriately based on probability and impact Risk& Issue in accordance with the risk management plan. Once a risk is realized, transition it to a Management pre-defined issue tracking and resolution process. -
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City Council
19 –
16 4/7/2026
Docusign Envelope ID: 8DB22FEB-26C9-4AA8-92E8-033D22A87DE7
E SOURCE PROPOSAL TO CITY OF SANTAANA FOR AMI IMPLEMENTATION SUPPORT SERVICES The E Source PM will host a kickoff meeting with E Source and Santa Ana staff following award of the contract to conduct introductions, discuss the scope of services and the implementation process. The E Source PM will assist the City in managing the overall scope of work by the prime vendor and subcontractors to ensure that all tasks are executed and provide advisory support and recommendations on how to address project specific issues that may arise. We will conduct weekly status meetings with City staff and vendor partners to monitor overall project and systems integration and testing performance and progress.
As part of our services, E Source will also closely monitor Santa Ana's readiness to take ownership of all tasks and activities to support the AMI system following system acceptance and stabilization. We will collaborate with the Santa Ana PM over the life of the project to assess and ensure that our level of support by task meets your needs. In the event that your needs change, we will work with you to adjust accordingly.
DELIVERABLES
- Weekly status meetings with City staff and contractors/vendors - Weekly integration and testing status reports
Maintain AMI implementation schedule
Task 2: System Testing Support
A graduated, thorough, and robust test program is needed for an AMI project, and E Source has implemented hundr eds of successful integrated technology testing programs for our clients. Our testing approach minimizes your risk by providing early validation of the technologies in steps, so that any problems are identified early and corrected. All discovered defects are formally logged, managed, and resolved as appropriate until acceptance is achieved. We produce test plans that exercise the functionality of systems that must interface to meet business, technical, functional, integration, performance, and any other specified requirements.
Should issues be identified during the testing process, we are ready and able to work with each vendor partner and development teams to resolve those issues. We follow a corrective action process that ensures the problem is documented, root-cause determined, corrective and preventive actions are taken, and retesting is performed to verify that the problem has been resolved.
Understanding where Santa Ana is at in the testing process based on our previous experience working with your team, we will focus on finalizing the following testing element:
-
E
• User Acceptance and Business Process Testing - This testing verifies that the correct information flows through for a particular business process, including both automated and manual business processes. It is the final gate and ensures that the syst�m functions and is aligned with requirements and processes that are used operationally. In this testing, a single trigger can initiate data transfers between multiple source and destination systems. It is the most comprehensive test of the complete set of business processes and maximizes to the extent possible the real-world use of Santa Ana's integrated systems. Test cases are executed by Santa Ana users of the systems on a day-by-day basis with direct support from E Source resources.
-
City Council
19 –
17 4/7/2026
Docusign Envelope ID: 8DB22FEB-26C9-4AA8-92E8-033D22A87DE7 E SOURCE PROPOSAL TO CITY OF SANTA ANA FOR AMI IMPLEl\IENT ATION SUPPORT SERVlCES E Source will coordinate the testing effort between the team at Santa Ana and the vendors. The end result is to ensure configuration of systems are delivered and working to Santa Ana's requirements and specifications.
DELIVERABLES
- Weekly remote testing and troubleshooting meetings
- On-demand troubleshooting support
- Weekly integration meetings with vendor partners
- Test plans and results documentation for all Santa Ana-owned tests Task 3: Reporting
The high volume of data produced by an AMI system can greatly enhance overall utility operations, but only if that data is properly monitored, managed, and utilized. The AMI system introduces a new variety of data sets such as consumption data, events, alerts, and various system exceptions. From previous work that E Source has performed for Santa Ana, a plan to manage and utilize the data from these new systems has been developed to ensure accuracy and completeness for billing and all other reporting functions. New or updated reports and notifications generated from this plan will inform Santa Ana of possible leaks, tampering, backflow, CIS-to-field mismatches, etc., but the data must be interpreted and acted upon appropriately to realize the maximum benefits.
E Source will review daily reports to ensure all communication systems are responsive and functioning within expected levels. Our team will investigate issues that arise, recommend actions to take, and work directly with City staff and/or vendor partner to address these issues through to resolution.
In addition, E Source will continue to guide Santa Ana through the implementation of the data management plan and provide on-the-job coaching. E Source will provide focused, hands-on support for staff responsible for data quality management and exception handling. With this hands-on approach, Santa Ana staff will more quickly grow familiar with their respective duties and how to troubleshoot and remediate exceptions. After this period, E Source will work with the Santa Ana team to refine and tailor the data management plan and assist in the development of written materials that will become organizational process assets for current and new staff to leverage.
DELIVERABLES
- Data management coaching materials (*.doc or *.xlsx)
- Updated Data Management Plan (*.xlsx)
Task 4: Validation of Reads
In conjunction with the activities detailed in Task 3: Reporting, E Source also will review and analyze daily reporting data to ensure the validity of meter reads received as system implementation continues. E Source will produce exception reports for investigation by Santa Ana and will assist Santa Ana and your vendor partners in troubleshooting and issue resolution. E Source will factor this activity into the updates to the data management plan, on-the-job coaching, and coaching materials detailed in Task 3.
-
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City Council
19 –
18 4/7/2026
Docusign Envelope ID: 8DB22FEB-26C9-4M8-92E8-033D22A87DE7
E SOURCE PROPOSAL TO CITY OF SANTAANA FOR AMI IMPLEMENTATION SUPPORT SERVICES Task 5: Quality Assurance and Field Inspection Services The AMI project involves the installation of thousands of properly configured meters and meter interface units (Ml Us) as well as the careful coordination of the materials, labor, and data. To accomplish this scope, E Source has expertise in deployment planning and oversight to ensure the AMI meters and communications equipment are installed correctly and efficiently with minimum disruption to existing Santa Ana systems and business processes.
E Source personnel have decades of experience working closely with AMI and Meter Installation Vendor (MIV) contractors and utility crews through interactive workshops to present and refine the business processes, construction, and labor standards necessary for effective meter and MIU installation. We also have specific experience with meter installation at Santa Ana and understand the specific needs within your community.
E Source presents industry best practices for the planning and installation of meters/Ml Us and have worked with Santa Ana's project team to tailor these processes to the specific requirements and standards of the City. Additionally, this implementation and planning effort includes identifying and documenting installation, construction, and customer contact standards. E Source has and will continue to provide advice and consulting to the City to leverage lessons learned on similar scale meter and endpoint deployment projects in North America.
E Source will:
• Perform in-field installation quality audits of meter installations performed by Concord, including checking for post-installation leaks and overall workmanship. • Track and report to the City and Concord any meter and/or MIU related exceptions encountered during installation quality audits.
• Perform data quality audits using Concord's Peak Workflow WOMS to verify meters and Ml Us are installed correctly.
• Review and advise the City on the progress of installations and volume of rework I Return to Utility (RTU).
• Address any potential disagreements that may arise between vendor partners and/or the City on responsibility for issues identified.
DELIVERABLES
- Inspection reports on verification of MIV work in the field -
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City Council
19 –
19 4/7/2026
Docualgn Envelope ID: BDB22FEB-26C9-4AA8-92E8"033D22AB7DE7
EXHIBITB
COMPENSATION
City Council
19 –
20 4/7/2026
Docusign Envelope ID: 8DB22FEB-26C9-4AA8-92E8-033022A87DE7 E SOURCE FEE PROPOSAL TO CITY OF SANT A ANA FOR AMI IMPLEMENTATIOM SuPPORT SERVICES Fee Schedule
E Source has developed the fee for services based on experience with several similar projects and understanding of the level of effort desired by Santa Ana. This fee includes all services and deliverables described herein. E Source will invoice Santa Ana monthly and will work with the Santa Ana project manager to establish an agreed upon payment schedule. Travel and incidentals will be billed monthly at actual cost.
Table 1. AMI Implementation Support Services Fee
AMI Implementation Support Services
Task ID Task Hours Fee Expenses Total
Task 1- Project Management 212 $ 59,760 $ 9,250 $ 69,010 Task 2 - Testing Support 80 $ 19,200 $ 3,700 $ 22,900
Task 3 - Reporting 432 $ 108,720 $ 3,700 $ 112,420
Task 4 - Validation of Reads 144 $ 36,240 $ -
$ 36,240
Task 5 - Quality Assurance and Field Inspection Services 384 $ 96,000 $22,200 $ 118,200 Total 1,252 $ 319,920 $38,850 $ 358,770
Table 2. Hourly Rates
Title Rate
Senior Vice President $300.00
Vice President $290.00
Program Manager $280.00
- - - -- -- --
Project Manager $270.00
Executive Consultant $280.00
,__ ---
Principal Consultant $270.00
Senior Consultant $260.00
Consultant $250.00
--
Associate Consultant $210.00
-- ---
� ------
E Source can adjust our proposed scope of work and our level of effort to provide more or less support to match the needs of Santa Ana. We will also collaborate with the Santa Ana PM over the life of the project to assess and ensure that our level of support by task meets the needs of Santa Ana. In the event that your needs change, we will work with you to adjust accordingly. -
E
City Council
19 –
21 4/7/2026
Docusign Envelope ID: 8DB22FEB-26C9-4AA8-92E8-033D22A87DE7 E SOURCE FEE PROPOSAL TO CITY OF SANTAANA FOR AMI llAPLEMENTATION SUPPORT SERVICES Reimbursable Expenses
Travel expenses will be submitted for reimbursement on an actual and reasonable basis. There is no markup on these direct costs, and E Source does not charge for time spent traveling. We will seek to minimize expenses using government contractor rates and teleconferences whenever possible.
Assumptions
The following assumptions apply to this proposal:
• E Source's fee to implement this Scope of Work is based on the timely start and timely completion of each proposed task as outlined in the project schedule provided. If the duration for any proposed task exceeds the duration outlined in the proposed schedule, E Source may need to develop a change order in accordance with the additional services required to complete the task(s).
• Deliverable documents will be in Microsoft Office, including MS-Word, PowerPoint, Excel, MS Project, Visio, or Adobe PDF.
• The Utility's management will coordinate and consolidate all Utility comments on draft document deliverables to provide a single redline for E Source to make updates to the final document deliverable s.
• The Utility will provide E Source with working space, network connections, infrastructure, administrative support, and other services and materials reasonably required to perform Project work while onsite at City offices, if requested.
• Utility personnel will support workshops and meetings as needed.
Taxes
These rates and estimates are exclusive of taxes. The taxes relating to applicable services are the sole responsibility of the City of Santa Ana.
Billing and Payment Terms
E Source will invoice the utility on a monthly basis for actual labor and expenses incurred on the required tasks. Payment terms are net thirty (30) days. Unless otherwise agreed to, E Source reserves the right to charge one and one-half (1.5%) percent per month, or the maximum rate permitted by law, whichever is greater, on any balance remaining unpaid after thirty (30) days.
Proposal Terms and Conditions
Terms of this proposal remain valid for 90 days from date of submittal. E Source reserves the right to negotiate any terms and conditions of the written agreement relating to this SOW. -
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City Council
19 –
22 4/7/2026
FIRST AMENDMENT TO AGREEMENT WITH E SOURCE COMPANIES. LLC TO PROVIDE
AMI IMPLEMENTATION SUPPORT SERVICES FOR THE CITY OF SANTA ANA
THIS FIRST AMENDMENT to the above -referenced agreement is entered into on April 7, 2026 by and between E Source Companies, LLC, a Delaware limited liability company (“Consultant”) and the City of Santa Ana, a charter city and municipal corporation organized and existing under the Constitution and laws of the State of California (“City”).
RECITALS
A. The parties entered into Agreement No. A-2024-133, dated August 20, 2024 (“Agreement”) by which Consultant agreed to provide Automated Metering Infrastructure (AMI) Implementation Support Services for the Public works Agency Water Resources Division, including but not limited to project management, software integration, data management, and performance analysis.
B. The term of the Agreement runs through December 31, 2027, and is current and in effect.
C. The parties now wish to amend the Agreement to increase the overall compensation to Consultant under the Agreement.
D. No other changes are contemplated by this Amendment.
The Parties therefore agree:
1. Section 2.a., COMPENSATION, is amended to increase the overall compensation by $125,000.
The total amount to be expended under the term of this Agreement, including any extensions exercised by the parties, shall not exceed $575,000.
2. Except as modified by this First Amendment, all terms and conditions of the Agreement shall remain in full force and effect.
[signature page to follow]
City Council
19 –
23 4/7/2026
S
IGNATURE PAGE: FIRST AMENDMENT TO AGREEMENT WITH E SOURCE
COMPANIES, LLC TO PROVIDE AMI IMPLEMENTATION SUPPORT SERVICES FOR THE
CITY OF SANTA ANA
A
TTEST
_________
______________________
JENNIFER L. HALL
City Clerk
AP
PROVED AS TO FORM
Sonia R. Carvalho
City Attorney
_________
__________________
KYLE NELLESEN
Assistant City Attorney
CITY OF SANTA ANA
______________________________
ALVARO NUÑEZ
City Manager
CONSULTANT
_______________________________
MATT JOY
CFO, BT&O
RE
COMMENDED FOR APPROVAL
_________
_____________________
RODOLFO ROSAS, P.E.
Acting Executive Director
Public Works Agency
Rodolfo Rosas
Digitally signed by Rodolfo Rosas
DN: cn=Rodolfo Rosas, [email protected],
c=US
Date: 2026.03.23 07:55:29 -07'00'
City Council
19 –
24 4/7/2026
City Manager’s Office
www.santa-ana.org/cm
Item # 20
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
April 7, 2026
TOPIC: Rename Cesar Chavez Campesino Park to Campesino Park, Remove the Name and Likeness of Cesar Chavez from All City-Owned Assets, and Negotiate Amendments to Labor Agreements to Modify the Cesar Chavez Day Holiday Designation
AGENDA TITLE
Rename Cesar Chavez Campesino Park to Campesino Park, Remove the Name and Likeness of Cesar Chavez from All City-Owned Assets, and Negotiate Amendments to Labor Agreements to Modify the Cesar Chavez Day Holiday Designation
RECOMMENDED ACTION
1. Direct the City Manager to initiate the renaming of Cesar Chavez Campesino Park back to its original name of Campesino Park.
2. Direct staff to remove the name and likeness of Cesar Chavez from all City- owned public assets, including, but not limited to, murals, signage, facilities, and commemorative displays.
3. Direct the City Manager to meet and confer with applicable bargaining units to amend labor agreements to rename the observance of Cesar Chavez Day with Farmworkers Day, or replace with a floating holiday for City employees, as appropriate.
GOVERNMENT CODE §84308 APPLIES: No
DISCUSSION
The City of Santa Ana currently recognizes Cesar Chavez through the naming of Cesar Chavez Campesino Park, as well as through various public artworks, signage, and the observance of Cesar Chavez Day as a paid holiday for City employees.
In light of recent allegations regarding aspects of Chavez’s leadership, personal conduct, and organizational practices, the Mayor consulted with the City Manager to evaluate the removal of existing recognitions of Cesar Chavez on City-owned assets to remain consistent with the City of Santa Ana’s current values and community standards.
This item is therefore presented for City Council consideration.
City Council
20 –
1 4/7/2026
Renaming of City-Owned Assets Bearing the Name of Cesar Chavez April 7, 2026
5 6
2 7
On March 26, 2026, California Governor Gavin Newsom signed legislation renaming the state holiday honoring Cesar Chavez to “Farmworkers Day,” effective immediately. The change reflects a broader effort to recognize the collective contributions of farmworkers rather than a single individual. The holiday will continue to be observed on March 31.
The Santa Ana Municipal Code (SAMC), Section 33-6, establishes a formal process for the renaming of public streets, buildings, and parks, which includes review by the Planning Commission.
Given the time-sensitive nature of this matter, staff recommends that the City Council dispense with the standard renaming procedures outlined in SAMC Section 33-6 for purposes of immediate name removal. Staff would not typically recommend deviation from established code requirements; however, staff finds that the current circumstances are extraordinary and warrant expedited action. The intent of this recommendation is to allow the City to respond promptly to evolving public sentiment and to align with actions being taken by other entities.
Staff does not anticipate significant risk in proceeding as recommended. To the contrary, staff finds that there may be greater potential harm in allowing the name to remain, even temporarily, given the current context and community concerns.
Additionally, while the Planning Commission serves an important advisory role in renaming matters, its recommendations are subject to final review and approval by the City Council. In this unique circumstance, staff recommends that the City Council exercise its authority to make a direct determination. Should the Planning Commission wish to provide further input, it may do so for subsequent City Council consideration.
Renaming of Cesar Chavez Campesino
Originally named Campesino Park, the park was renamed to “Cesar Chavez Campesino Park” in 2001 through approval by the Planning Commission and Santa Ana City Council.
The renaming of Cesar Chavez Campesino Park will require:
Removal and replacement of signage
Updates to City records, GIS systems, and public-facing materials Removal of Name and Image from Public Assets
City-owned murals, plaques, and commemorative displays that reference Cesar Chavez would require evaluation to determine scope and cost of removal or modification. This may involve:
Coordination with artists and stakeholders
Compliance with any applicable public art policies or agreements Assessment of potential legal or contractual considerations
City Council
20 –
2 4/7/2026
Renaming of City-Owned Assets Bearing the Name of Cesar Chavez April 7, 2026
5 6
2 7
Labor Agreement Amendments/Side Letter Agreements
Cesar Chavez Day is currently observed as a paid holiday in labor agreements with the City’s collective bargaining units. Transitioning to a floating holiday would require:
Meet-and-confer negotiations with all applicable bargaining units Amendments to Memoranda of Understanding (MOUs)
Consideration of impacts on employee compensation and scheduling
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
The estimated fiscal impact is up to $15,000 and will depend on the final scope of implementation. Costs may include removal and replacement of signage, modification or removal of public art, and administrative costs associated with labor negotiations.
Sufficient funding is available and budgeted in FY 2025–26 within the Non- Departmental Contract Services – Professional account (01105015-62300).
EXHIBIT(S)
N/A
Submitted by: Sylvia Vazquez, Deputy City Manager
Approved By: Alvaro Nuñez, City Manager
City Council
20 –
3 4/7/2026
Finance and Management Services
www.santa-ana.org/finance
Item # 21
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
April 7, 2026
TOPIC: Early Direction for the Fiscal Year 2026-27 Budget
AGENDA TITLE
Early Direction for the Fiscal Year 2026-27 Budget
RECOMMENDED ACTION
Provide direction to staff for the preparation of the proposed FY 2026–27 budget.
GOVERNMENT CODE §84308 APPLIES: No
EXECUTIVE SUMMARY
The City’s General Fund is estimated to face a structural deficit of approximately $19 million before adjustments in FY 2026-27, driven by rising personnel costs, pension obligations, contractual commitments, and continued expenditure growth outpacing trends in recurring revenue. While the City remains financially stable in the current fiscal year, corrective action will be necessary to maintain long-term fiscal sustainability.
As part of the FY 2026-27 budget development process, City Management is actively working with department directors to evaluate operations and identify opportunities to eliminate duplicative, outdated, or inefficient service delivery models. This review includes an assessment of discretionary programs, ongoing General Fund subsidies, internal service structures, and cost recovery practices to ensure that resources are aligned with core priorities.
Staff is presenting this Early Direction report to provide the City Council with an opportunity to review potential strategies, including expenditure reductions and revenue enhancements, prior to development of the Proposed Budget. The objective is to ensure recurring expenditures are supported by recurring revenues while maintaining essential services and protecting the City’s long-term financial position.
DISCUSSION
This Early Direction agenda item marks the start of the City Council’s deliberations for the upcoming FY 2026–27 budget. The report has two purposes: to provide information relevant to the FY 2026–27 budget and future fiscal years, and to request direction from
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the City Council. City Council is scheduled to review the proposed budget in May, followed by a public hearing in June.
Community Engagement
City staff presented the FY 2026–27 Budget Calendar and Community Engagement Plan to City Council on December 5, 2025. Community engagement activities began in January 2026. These initial efforts marked the start of a broader outreach process designed to provide residents with multiple opportunities to learn about the budget and share input on spending priorities.
Engagement activities will continue throughout early 2026 through Listening Tour visits in each City Council ward, where City staff will meet with residents to discuss the budget and hear their priorities for FY 2026–27. These visits will take place at neighborhood association meetings and community events across the City. Feedback gathered through these discussions, along with responses from the City’s year-round budget priorities survey available on the Budget Office website, will be summarized and shared with the City Council during scheduled budget workshops.
Budget Process
The City Manager’s Office and Finance and Management Services Agency have conducted internal budget meetings with departments to review budget requests and staff priorities. After reviewing these requests alongside City Council priorities identified during the Early Direction discussion and community input gathered through the budget outreach process, Finance will work with the City Manager’s Office to develop a proposed budget for City Council consideration in May.
General Fund
While the current FY 2025-26 General Fund budget is balanced, the City’s Ten-Year Outlook projected a potential deficit of approximately $8.5 million in FY 2026-27, indicating that expenditures were expected to outpace revenues in future years. During the City Council Goal Setting meeting on January 23, 2026, staff provided an updated early look at the FY 2026-27 budget reflecting new information and updated assumptions.
Since the prior outlook was presented, additional cost pressures have emerged, including higher labor costs, updated CalPERS actuarial information, and revised revenue estimates.
Based on updated information, the FY 2026-27 deficit could be as much as $19.0 million.
The budget is still under development and this estimate will likely change as revenue estimates and expenditure costs are finalized.
General Fund Ten-Year Outlook Assumptions
The General Fund Ten-Year Outlook has been updated to reflect the latest available information. The following assumptions were used:
Only recurring revenues and spending were included.
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Property Tax estimates from consultant for FY 2026-27 through FY 2030-31, 3.1% increase thereafter;
Sales Tax estimates from consultant for FY 2026–27 through FY 2027–28, with
3.1% growth thereafter; prior forecast of 2.9% revised to 1.9% for FY 2026-27 in the updated outlook based on recent taxable sales figures; Inflation factor for all other revenues: increase of the Consumer Price Index (CPI), as forecasted by the California Department of Finance, at 3.1% beginning in FY 2026-27 and thereafter;
Labor cost assumptions have been updated to reflect recently approved Memoranda of Understanding (MOUs). The prior outlook assumed increases of
2.5% for FY 2025-26 and 2.6% for FY 2026-27, which were based on projected CPI growth at the time. The approved MOUs provide for increases of 5% in FY 2025-26 and 4% in FY 2026-27;
Employees at the top of their salary range: negotiated increases per approved MOU; 3.1% CPI assumed in years beyond current agreements; Employees below the top of their salary range: Negotiated increases per approved MOU plus 5% merit-step increases; 3.1% CPI assumed in years beyond the current agreement;
Orange County Fire Authority contract increase of 3.0% in FY26-27 based on an early estimate from the Authority, and 4.5% annually thereafter; Contribution to OC Streetcar operations updated to as much as $2.0 million annually based on revised estimates from OCTA (prior outlook assumed $1.0 million);
Debt retirements (800Mhz, Appellate Court Garage, and Animal Shelter) totaling $1.4 million in FY26-27, and a total of $1.5 million thereafter; Employee pension unfunded liability contributions updated based on CalPERS actuarial information received in August 2025, resulting in an additional $2.2 million in required contributions in FY 2026-27 compared to the prior outlook; Contributions to, and uses of, the Pension Stabilization Account have been included to smooth the pension debt fluctuations in future years; and Inflation Factor for all other spending.
The Outlook does not include additional tax revenue from the Related Bristol development or the Village Santa Ana development. The following estimates were provided when the projects were approved.
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For the City to realize revenue from the Related Bristol development in 2036, construction would have had to begin in January 2026.
The Outlook’s graphical results show that expenditures continue to outpace revenues.
Beginning in FY 2026-27, this imbalance results in an estimated deficit and, absent structural adjustments, is expected to persist. When the Measure X rate decreases in 2029, the deficit is expected to widen further, increasing long-term fiscal pressure on the General Fund.
Recommendations from the Measure X Oversight Committee
Normally, this report would include budget recommendations from the Measure X Citizens Oversight Committee. Due to a lack of a quorum precipitated by three (3) vacant seats, the Committee’s December and March meetings were canceled, and the Committee has been unable to meet and develop recommendations.
Balancing Strategies
Staff intends to propose a balanced budget for City Council consideration. To facilitate discussion, staff has identified potential strategies, including expenditure adjustments and revenue enhancements, to ensure recurring expenditures align with recurring revenues.
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Expenditure Considerations
Exhibit 1 provides a department-by-department breakdown of activities and programs categorized by spending priority, as defined below:
Must-Have – Mandates required by law, Memoranda of Understanding (MOUs), bond covenants, public safety obligations, and land use regulations. Examples include records management, procurement compliance, and debt payments. Should-Have – Core services that protect City resources and minimize liability exposure. Examples include street and sidewalk maintenance and essential software services.
Nice-to-Have – Programs and services that are not legally required but enhance quality of life. Examples include newsletters, mentoring programs, recreation and library programming, and City events.
These spending categories are intended to support policy discussion by helping the City Council evaluate service levels and identify potential expenditure adjustments. If the City Council is interested in further evaluating any of the categories or specific programs, staff can conduct a more detailed review and provide an estimate of the fiscal impact of potential adjustments.
As requested by City Council on March 17, 2026, during the Polling Results agenda item, a presentation of the detailed Measure X spending plan is attached to this report (see Exhibit 3). Staff has separated out the items in the spending plan that cannot be modified to balance the budget (e.g. Orange County Fire Authority contract increases, structural budget deficit that existed prior to the passage of Measure X, etc.).
Credit Card Processing Fee
Before February 2012, the City charged a flat $3.54 credit card processing fee per transaction to offset merchant service costs. The fee was removed to simplify transactions and encourage the use of online payment services. Since then, merchant service fees for credit card transactions have been absorbed by the General Fund.
Over the past decade, credit card and online payments have increased significantly. As a result, merchant processing fees now constitute an ongoing operating expense for the City. Staff has evaluated reinstating a credit card processing fee as a cost-recovery measure. Based on current merchant costs, a 2.50% per-transaction fee is recommended. The proposed rate is designed to recover merchant processing costs associated with credit card transactions and would not exceed the City’s actual cost of service. This action is consistent with public entities outlined in Exhibit 2 and private sector businesses.
If implemented, establishing the new processing fee is estimated to reduce General Fund expenditures by approximately $320,000 annually, based on current transaction volumes.
The City currently maintains a $5,000 credit card transaction limit, established to manage processing costs while the General Fund absorbs merchant fees. If a processing fee is
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reinstated, staff would remove this administrative limit to provide greater flexibility for customers.
Several neighboring cities charge a credit card convenience fee to offset merchant processing costs. A comparison of selected jurisdictions and their fee structures is included as Exhibit 2.
Staff seeks City Council guidance on whether to add a 2.50% credit card processing fee to the Miscellaneous Fee Schedule. For reference, the estimated cost to a customer is typically $3.51 for typical transactions, although it varies with transaction value.
Technology Fee Evaluation
The City anticipates launching its new permitting and licensing system, Accela, in June 2026. This system is expected to enhance service delivery by improving processing times, increasing transparency, and providing a more user-friendly online experience for residents and businesses.
As the system becomes operational, staff will continue to assess the full scope of ongoing costs associated with maintaining and supporting the enhanced technology to customers.
These costs may include permitting and plan review software, online customer portals, electronic plan review platforms, GIS integration, hardware, cybersecurity measures, and system maintenance and support.
At a future date, once sufficient operational data is available, staff may return to Council to discuss potential cost recovery options, which could include a technology fee. Any such fee would be evaluated for compliance with applicable state law and would not exceed the reasonable cost of providing the associated services. This item is provided for informational purposes only, and no Council action is requested at this time.
One-Time General Fund Spending
As reported in the Mid-Year Update on March 3, 2026, the estimated spendable fund balance for one-time expenditures in the General Fund is $11,617,075. The following are potential options for utilizing this one-time funding and are presented for City Council discussion. Staff will return with formal recommendations for Council consideration in the Proposed Budget. The recommendations for the one-time resource is summarized in the following table.
Use Amount
Workers Compensation Fund Balance addition $2.5 million General Liability Fund Balance addition $1.7 million
Pension Stabilization Fund contribution $1.5 million
Street Sweeping Interim Subsidy $0.9 million
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High-Priority One-Time Projects $2.0 million
Remainder available for direction during May budget workshops $3.0 million Total One-Time Money Recommendations $11.6 million
To address unforeseen needs and emerging priorities of aging infrastructure, staff recommends setting aside $2.0 million for high-priority projects that may arise throughout the fiscal year. This may include critical repairs and improvements to City-owned facilities, such as the Bowers Museum, Eddie West Field Stadium, the Santa Ana Jail, community centers, and fire stations.
Of this amount, staff recommends allocating $1.0 million to the Public Works Agency to support facility-related needs and $1.0 million to the Non-Departmental budget to provide the City Council with flexibility to address time-sensitive priorities that may arise during the fiscal year.
Workers’ Compensation Fund
As previously reported in the August 5, 2025 staff report on the Citywide Insurance Program, actuarial valuations show that the Workers’ Compensation Fund reserves remain below the City’s target reserve level of 80% of actuarially determined liabilities. As of June 30, 2026, the actuarial present value of Workers’ Compensation liabilities is approximately $44.8 million. The City’s target reserve level is approximately $35.8 million, while the projected ending fund balance of $19.8 million reflects a reserve shortfall of approximately $16.0 million relative to the City’s policy target.
In addition, as discussed in the March 3, 2026, Mid-Year Budget Report, the Fund continues to face elevated claim-related costs, including wage continuation, medical treatment, and legal expenses. Estimated benefit payments for the current fiscal year total approximately $9.7 million, yet only $5.9 was originally budgeted.
To help replenish fund reserves and support long-term stability, staff recommends a one- time General Fund transfer of $2.5 million to the Workers’ Compensation Fund. This transfer would improve the Fund’s reserve position while Human Resources continues implementing operational improvements to manage claims activity and reduce future costs.
Human Resources, in coordination with the City’s third-party claims administrator AdminSure, City departments, and the City Attorney’s Office, continues to focus on claim- reduction strategies, training initiatives, and enhanced oversight of treatment and return- to-work practices. These efforts are expected to mitigate long-term cost escalation and improve the Workers’ Compensation Fund’s overall financial position.
General Liability Fund
As previously reported in the August 5, 2025, staff report regarding the Citywide Insurance Program, actuarial valuations indicate that General Liability Fund reserves
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remain below the City’s target reserve level of 80% of actuarially determined liabilities. As of June 30, 2026, the actuarial present value of General Liability claims is approximately $18.6 million. The City’s target reserve level is approximately $14.9 million. The estimated ending fund balance of $13.2 million reflects a reserve shortfall of approximately $1.7 million relative to the City’s policy target.
The General Liability Fund is used to pay claims and legal settlements arising from incidents involving the City. The City currently has various matters in different stages of review and litigation, including recent case developments that may not yet be fully reflected in prior actuarial projections. Maintaining adequate reserves supports the City’s ability to respond to potential claim activity and manage financial exposure.
To strengthen the Fund’s reserve position, meet the City’s target-goal, and provide additional capacity for potential claim obligations, staff recommends a one-time General Fund transfer of $1.7 million to the General Liability Fund.
Future Pension Costs Set-Aside – Section 115 Trust
Since 2021, the City Council has consistently set aside funds in the Section 115 Trust as part of its long-term pension cost management strategy. The Council has approved deposits during each annual budget cycle when financially feasible, including a $1 million allocation in the current fiscal year. As of December 2025, the Section 115 Trust has a balance of approximately $49.8 million.
The purpose of the Trust is to help mitigate future volatility in CalPERS-required contributions. CalPERS assumes an annual investment return of 6.8%. When investment performance falls below this assumption, the City’s unfunded liability increases, leading to higher required contributions in future years. Based on CalPERS’s latest projections, the City is expected to require approximately $189.2 million in contributions above the current budget level over the next 10 years.
Consistent with the City Council’s adopted “Unfunded Employee Pension Liability Cost Reduction Policy,” staff recommends an additional one-time $1.5 million allocation to the Section 115 Trust for FY 2026-27 and requests City Council concurrence. This proposed deposit would continue the City’s multi-year strategy of proactively setting aside funds to earn investment returns and help offset future pension cost increases.
Street Sweeping
The Sanitation Fund supports the City’s street-sweeping program, which is provided under contract by Athens Services and billed on a per-curbed-mile basis at a rate of $54.87 per mile (rising to $56.52 per mile on July 1 st). Based on current service levels, the City sweeps approximately 45,000 curb miles annually. Residential streets account for approximately 33,300 of those curb miles, representing the majority of total sweeping activity and cost. At current service levels, residential sweeping is estimated to cost approximately $1.8 million annually.
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Based on estimated revenues and contract costs, existing revenues are not sufficient to fully support current service levels on an ongoing basis. Staff is evaluating a range of options to address this gap, including potential adjustments to service frequency, operational efficiencies, and the feasibility of providing some services in-house. This includes exploring whether a portion of non-residential sweeping activities could be brought in-house, subject to operational feasibility, equipment needs, and staffing considerations. Staff is also reviewing whether eligible sweeping costs may, where allowable, be offset in part by restricted transportation-related funding sources, such as gas tax revenues.
To maintain current service levels in the near term while these options are further evaluated, staff proposes utilizing approximately $0.9 million in one-time funding to offset the projected shortfall for FY 2026-27. This approach provides additional time to develop and implement a long-term strategy without impacting current service or fee rates.
Recurring General Fund Spending
As reported in the Mid-Year Update on March 3, 2026, the net recurring amount available to the General Fund was $3,070. Based on updated information, the City now estimates a deficit for FY 2026-27. Staff seeks City Council direction on the following recurring items.
City Events
The City Events budget for FY 2025-26 includes a recurring allocation of $983,000. This amount excludes Public Safety support costs, which are currently absorbed within existing department operating budgets.
As part of the FY 2026-27 budget development process, staff proposes reducing the net General Fund cost of the City Events program. Staff is evaluating a combination of strategies to achieve this reduction, including securing increased sponsorship revenue, implementing or expanding participant and vendor fees where appropriate, and reviewing event scale and cost structures. The intent is to continue hosting key community events while increasing sponsorships and fees to reduce the amount of General Fund support required.
A summary of the current FY 2025-26 events and associated budget allocations is provided in the table below.
Event FY25-26 Budget
Fiestas Patrias $498,000
Chicano Heritage $127,000
Tet/Lunar Festival $80,000
July 4 Celebration $115,000
5K/10K Event $93,000
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Movies at the Park $30,000
Noche De Altares & Juneteenth $40,000
Total $983,000
Staff is seeking City Council direction and concurrence on this approach, including guidance on which events to prioritize or reconsider during the FY 2026-27 budget development process.
Boards, Commissions, and Committees
The City currently supports multiple Boards, Commissions, and Committees established through voter-approved measures, state law, and the Santa Ana Municipal Code (SAMC).
These bodies provide advisory input to the City Council on a range of policy, regulatory, and community matters.
Certain bodies are required by state law or voter-approved measures and cannot be eliminated without changes to those legal requirements. Others are established by ordinance in the SAMC and are discretionary in nature. Removal of a discretionary body would require City Council approval of an Ordinance amending the Municipal Code. The table below identifies each Board, Commission, and Committee, including whether it is legally required, the number of members, and meeting frequency. For this report, the estimated annual stipend cost for each body is also provided.
Staff requests City Council direction such as providing additional information for potential consolidation, reduction, or elimination of certain boards and commissions.
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Miscellaneous Fees
The City charges fees for services provided to individuals that do not benefit the public at large (e.g., building permits). Per state law, the City cannot charge more than the cost to provide these services. To keep pace with rising costs of doing business, including compensation and service-related expenses, staff recommends adjusting miscellaneous fees each year. Last year, the budget included a 4.76% increase, reflecting higher compensation for employees providing these services (including salary and benefits) and increased service-related costs.
The Consumer Price Index for Los Angeles-Long Beach-Anaheim increased by 3.59% for the year ending December 2025. However, personnel costs, which account for a significant share of the cost of providing fee-based services, continue to increase at a rate above the CPI. Most employee bargaining groups have negotiated wage increases of 5% for FY 2025-26 and 4% for FY 2026-27, with SEIU and SEIU PTNCS bargaining groups still in negotiations. Costs for workers' compensation and general liability have risen by 10% and 9%, respectively, and employee pension unfunded liability contributions will increase by 14% for FY 2026-27. Inflationary factors are also driving increases in other service-related costs, such as contract services and operational expenses. Based on this information, an increase of up to 4% is justified to ensure the City remains in compliance with state law.
Staff seeks City Council concurrence on a recommended 4% increase in miscellaneous fees for the FY 2026-27 budget.
Santa Ana Regional Transportation Center
The Santa Ana Regional Transportation Center (SARTC) serves as the City’s primary multimodal transit facility, providing regional rail and bus connections and serving as a gateway to Downtown and the Civic Center area. In addition to transit operations, the facility includes leasable commercial and office space.
Since FY 2021-22, the General Fund has provided an annual subsidy of approximately $1.1 million to support facility maintenance, security, utilities, and related operating costs.
In FY 2021-22, the City also provided $5.4 million in one-time funding for deferred maintenance improvements to address facility conditions, improve code compliance, and enhance the building’s overall marketability. These improvements were intended to better position the facility to attract tenants and increase long-term revenue potential.
Despite these investments, the facility still has significant vacant leasable space. Staff will continue to actively pursue leasing opportunities and explore strategies to increase occupancy, generating additional revenue and improving cost recovery. The anticipated 2026 start of OC Streetcar operations may further enhance regional connectivity and activity around the transportation center, thereby supporting future leasing efforts. The City cannot continue to sustain the full $1.1 million annual General Fund subsidy without raising revenue or reducing service levels in other areas. Accordingly, the Public Works
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Agency will be expected to increase lease revenue and improve cost recovery, thereby reducing reliance on General Fund support.
Animal Care Shelter
The City of Santa Ana contracts with OC Animal Care, a division of the County of Orange, for animal shelter and related services. The City’s Animal Control Officers, under the authority of the Police Department, respond to calls for service, conduct investigations, and enforce animal-related regulations within City limits. Animals collected by City staff and those brought in by residents are transported to the County-operated shelter.
The County’s cost allocation methodology is based on the level of animal shelter services provided to the City during the most recently completed fiscal year, including the number of animals received and the care provided. The total cost of services is reduced by fees collected at the shelter, such as animal licensing fees and owner-paid fees to reclaim their pets, resulting in the City’s annual net cost obligation. The County will use data from the most recent fiscal year to estimate the City’s projected cost for the upcoming year.
The City’s annual animal shelter cost consists of two components: (1) operating costs associated with providing shelter and veterinary services, and (2) the City’s allocated share of costs associated with the construction of the County’s new animal shelter facility.
A summary of these costs is provided in the table below.
Fiscal Year Shelter
Operating Costs
New Shelter (Debt
Service) Total Cost
FY 21-22 $1,963,357 $782,467 $2,745,824
FY 22-23 $2,816,711 $776,649 $3,593,360
FY 23-24 $3,221,078 $770,852 $3,991,930
FY 24-25 $3,577,734 $764,999 $4,342,733
FY 25-26 (Estimated) $4,226,507 $755,549 $4,982,056
Since FY 2021-22, shelter operating costs have risen 216% from $1.96 million to an estimated $4.23 million in FY 2025-26. In comparison, General Fund revenue has increased by 7.5% over the same four years. During this period, the City has also contributed its allocated share of the costs to construct the County’s new shelter facility, with FY 2025-26 marking the final year of those payments. Although these construction- related costs will end in FY 2026-27 and are already reflected in the Ten-Year Outlook, shelter operating costs have continued to increase significantly.
Given the continued growth in operating costs, staff believes it is appropriate to evaluate the long-term sustainability of the current cost structure. Cities across California are experiencing similar cost pressures related to animal shelter services and have implemented a variety of approaches to manage these expenses, including regional partnerships for shared shelter operations, contracting with nonprofit animal welfare
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organizations for certain services, adjusting cost-sharing methodologies to better reflect service demand, and enhancing licensing compliance to help offset shelter-related costs.
Staff will review these practices and assess whether adjustments to the City’s current service delivery or cost structure may improve long-term fiscal sustainability while maintaining appropriate service levels.
Internal Service Funds / Enterprise Funds
Building Maintenance Operations
The City currently accounts for Building Maintenance activities within an Internal Service Fund. Building Maintenance, a division of the Public Works Agency, provides routine maintenance, repairs, and facility support services to City facilities. Costs are allocated to user departments primarily based on square footage and specific service requests. While this structure allows costs to be charged directly to departments, it requires ongoing internal billings between funds, including the General Fund and enterprise funds.
To simplify the administrative process and improve internal efficiencies, staff proposes to transition Building Maintenance operations to the General Fund beginning in FY 2026-
27. It is common practice among cities to account for building maintenance within the General Fund, with costs attributable to enterprise and other non-General Fund operations recovered through an established cost allocation methodology. The City’s Indirect Cost Allocation Plan, already in place and applied Citywide, would continue to be used to recover costs from non-General Fund operations using established methodologies, including square footage where appropriate.
This change is administrative in nature and is not expected to result in an ongoing net fiscal impact on the General Fund, as costs will continue to be allocated to the appropriate funds. As part of this transition, the remaining spendable fund balance of the Building Maintenance Internal Service Fund, estimated at approximately $930,000, will be transferred to the General Fund. This transfer represents a one-time adjustment associated with the fund closure and is intended to support high-priority repairs to City- owned facilities.
Developer Impact Fee Study Update
The Public Works Agency is working with a consultant to prepare an updated Developer Impact Fee Study. The study will evaluate existing development impact fees and ensure they appropriately reflect the cost of infrastructure and facility improvements needed to support new development.
Developer impact fees are one-time charges on new development that help fund capital improvements required to accommodate growth. In Santa Ana, these fees support infrastructure such as transportation improvements, traffic signal upgrades, street and intersection capacity enhancements, storm drainage facilities, and other public infrastructure necessary to maintain service levels as development occurs.
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Public Works staff will return to the City Council with the study's results and any proposed updates to the fee schedule.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
There is no direct fiscal impact at this time. City Council is scheduled to review the proposed budget in May, followed by a public hearing in June.
EXHIBIT(S)
1. Programs by Department and Spending Priority
2. Credit Card Processing Fee Comparison
3. Detailed FY 2025-26 Measure X Spending Plan
Submitted By: Alexander Trinidad, Executive Director, Finance and Management Services Agency
Approved By: Alvaro Nuñez, City Manager
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PLANNING AND BUILDING
Must-Have Should-Have Nice-to-Have
• Budget, accounting, and asset management
• Records Management
• Building inspections
• Enforcement of building codes
• Fire safety regulations
• Permit services
• Commercial enforcement
• Residential and neighborhood enforcement, rental
enforcement
• A
gency and customer support services
• Cannabis regulatory program
• Historic preservation program
• Housing production analytics and reporting to the State • Compliance with the California Environmental Quality Act (CEQA)
• Ge
neral Plan compliance
• Land use permit compliance (e.g., issuance of development permits when required by State law)
• Policy, contracts, and grants oversight
• Quality of Life Team/Vacant property
enforcement
• GIS analytics and services
• Neighborhood support services (Com-link
support) and neighborhood initiatives
programs outside of environmental justice
efforts prescribed by the General Plan
• Major development project webpage content
posting and maintenance
• Multilingual and translation services
• Neighborhood reviews for historically sensitive
neighborhoods
• Human Resources-related services, such as
onboarding/offboarding, salary step memos,
recruitment tracking, payroll, leave of absence
tracking, etc.
• Information desk staffing that is solely funded
by the Planning and Building Agency
• Records specialist
• Providing paper copies of responses to public
records requests, e.g. provide online/digit
al
lin
ks only.
• Eliminate all paper records through
implantation of new land management system
• Over-the-counter plan checking services
EXHIBIT 1
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COMMUNITY DEVELOPMENT
Must-Have Should-Have Nice-to-Have
• Arts and Culture Commission to comply with SAMC and provide recommendations to City Council – SAMC Chapter 2, Article IV, Division 8, Section 2-550 to 2-553
Parking Meters, Parking Lots and Parking Structures to provide parking for older properties and their businesses that were not planned with sufficient parking – (SAMC: Chapter 36, Article VIII – Parking MetersArts and Culture Commission to comply with SAMC and provide recommendations to City Council - SAMC Chapter 2, Article IV, Division 8, Section 2-550 to 2-553 • Economic Development
• Homeless Outreach Services
• Art Funding - graffiti arts
program, artist grant program,
arts & culture programs, art walk,
mural restoration, and other arts
initiatives
• Youth employment program
• Downtown Santa Ana, Chamber
of Commerce, and other
community sponsorships
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LIBRARY
Must-Have Should-Have Nice-to-Have
• Student Success Cards – In California, local libraries and school districts are legally required to establish partnerships and create “Student Success Cards” ensuring every third-grader has access to a public library card by 2026 (SB 321, SB 1329).
• Facility operations – basic building maintenance (HVAC, plumbing, electrical), basic tree and landscape maintenance, basic janitorial services, utilities (power, water, internet)
• Safety & compliance – provide and maintain life safety systems (fire alarms, emergency lighting), ADA accessibility, basic safety policies and procedures
• Patron account software – Integrated Library System (ILS) and public catalog to maintain patron account confidentiality by law, internet access for staff, and core technology support (hardware, network) • Collections – basic physical collections (books and media) • Staffing – minimum professional and support staffing to deliver basic public and administrative services
• Governance – required to report to advisory/governing board or commission, per the State Education code
• Internet & technology compliance – Federal e-rate and CIPA compliance (internet filtering if public computers are provided) • Security – basic contracted security
services
• Collections & resources – regularly
updated collections reflecting
community needs, and digital
collections (eBooks, audiobooks,
databases)
• Technology & facilities – public
computers/printers/copiers,
equipment replacement cycle
(computers, printers), wi-Fi upgrades
and sufficient bandwidth
• Staffing & service quality – adequate
staffing levels to reduce service gaps,
ongoing staff training and
professional development
• Programs & core engagement – basic
youth and early literacy
programming, digital literacy, and
basic learning support. Basic
recreational style programming for
all ages.
• Outreach – basic outreach to schools
and community partners
• Enhanced staffing (additional staffing) –
expanded hours, outreach, and customer
service
• Enhanced collections – expanded multilingual
and culturally responsive collections, and
special collections
• Local history room – curated collections,
specialized programming, and a dedicated
public facing space
• Library of things – non-traditional lending
(technology kits, tools, games, park passes,
hot spots, and computers)
• Expanded programming – STEAM, maker,
arts, virtual programming, cultural
programming, live tutoring services, author
talks, book clubs, multilingual programming,
and special events
• Marketing & promotion – robust promotional
content (newsletters, videos, social media),
branded materials and storytelling about
library impact
• Community engagement – bookmobile, pop-
up services, and teen centers (El Salvador and
Garfield)
• Facility enhancements – improved
furnishings, study rooms, maker
spaces/media labs, library self-service kiosks,
and flexible community spaces
• Technology/Digital Services – RFID/self-
checkout technology, security gates, scanning
and mobile printing
• Security – integrated camera systems
City Council
21 –
17 4/7/2026
HUMAN RESOURCES
Must-Have Should-Have Nice-to-Have
• Personnel Records
• Workers Compensation and General Liability Programs and Insurance
• Employee Benefits
• Labor Relations
• Bargaining Group MOUs
• Equal Employment Opportunity Commission and Civil Rights Department Investigations
• Provide safety supplies/PPE
• Ergonomic testing
• Minimum HR staff levels
• Safety Training
• Training Tracking
• Personnel Board and Secretary
• Salary Schedules
• Job Descriptions
• Bi-lingual testing
• Leaves administration program
• Performance Evaluations
• Disaster Preparedness Training
• AED machines
• 3rd party consultant to provide
disability interactive process
professional services under the ADA
and Fair Employment and Housing Act
• Insurance Review Program
• Class and Comp Program
• Security badges
• Applicant tracking system
• Recruitment advertising
• Internal employees who are certified in
providing Ergonomic evaluations and
recommendations
• Certificate of insurance (Third party
vendors) – required verification of
insurance coverage
• Insurance broker that can provide short
term insurance certificates for vendors at a
reasonable price.
• Staff development and training
• Worker’s Comp Case accelerated process
• General Liability claim accelerated process
• Highly functioning HR Information System
• Learning Management System
• HR Monthly Newsletter
• Internship program
• Mentoring program
• Employee appreciation and recognition
City Council
21 –
18 4/7/2026
PUBLIC WORKS
Must-Have Should-Have Nice-to-Have
• Debt payments for purchase of streetlights
• Quality of Life Team (QOLT) Clean-Up Contract – contracted services to clean up homeless encampments
• Quality of Life Team (QOLT) Public Works Support – City Public Works staff supporting homeless encampment clean- up operations
• Streetlight pole Improvements – lighting installation in underlit areas
• Alley improvement program
• Sidewalk repair
• Traffic calming
• Pavement maintenance
• Pothole repair services
• Park maintenance enhancements
• Armed security for parks
• Park Facilities Personnel
• Street Tree Maintenance (Tree Trimming)
• Santa Ana Regional Transportation (SARTC) Center subsidy and maintenance
• Fleet operating supplies
• Median Landscaping
• Crossing Guard
• Engineering salaries for review of plan
checks and permits
• Protected bike lane sweeping program
• PWA Graffiti Abatement Service
Enhancement (Graffiti Removal)
• Bus shelter maintenance
City Council
21 –
19 4/7/2026
FINANCE
Must-Have Should-Have Nice-to-Have
• Treasury support for revenue receipts and banking
• Minimum level of revenue and tax collections
• Vendor invoice processing
• Payroll processing and reporting to comply with law and MOU’s • Purchasing requirements necessary to comply with restricted funding
• General ledger accounting and financial reporting required by law and restricted funding
• Budget preparation to comply with City Charter
• Debt management to comply with debt covenants
• Support Measure X Oversight Committee to comply with ballot measure
• Proactive revenue and tax collection support
to maximize receipts
• Auditing and account analysis
• Ability to invest idle funds in compliance
with state law
• Dedicated software systems to support
functionality
• Long-term financial planning
• Mail and copy room services
• Budget public communications
• Award-winning financial documents
City Council
21 –
20 4/7/2026
PARKS, RECREATION, AND COMMUNITY SERVICES
Must-Have Should-Have Nice-to-Have
• Charter-required recreation funding – Santa Ana Charter Section 607 requires the City to budget funding for public recreation programs equal to at least six cents per $100 of assessed property value based on the prior fiscal year
• Minimum facility operations and maintenance
• Senior Transportation, Cooling and Heating Centers, and Emergency Center Operations
• Permits and licenses - Required issuance of permits and enforcement of park use regulations
• Park utility costs
• Animal well-being program
• Animal food and medication
• Zoo veterinarian
• Pest control program
• Zoo facility maintenance
• Overnight security for the Zoo
• Visitor services and operations staff
• Staff uniforms for the Zoo (to meet MOU requirements) • Records Retention
• Congregate Meal Program for Seniors
• Health and Wellness Initiatives
• Zoo tree trimming
• Conservation program
• Public education staffing and programs
• Public volunteer programs
• Recreation program registration and facility reservation system
• Landscape maintenance
• Staff training program
• Community engagement
• Staff uniforms
• Enhanced Part-time staffing
• Cultura Magazine
• Santiago Creek ECO Center
• Butterfly Exhibit
• Complimentary Parking
• Resident Free-Days
• Community Special Events
• Senior Services Programming –
excursions and activities at the
Senior Center
• Summer Programming – day camps,
aquatics program, and other
summer activities
• After-school youth & teen
programs/services
• Contracted recreation classes (e.g.,
karate, art, dance
• Athletic facilities
City Council
21 –
21 4/7/2026
CITY MANAGER’S OFFICE
Must-Have Should-Have Nice-to-Have
• City Charter
• City municipal code
• Administrative leadership
• Budget oversight/preparation
• Implementation of council decisions
• Legal compliance
• Legislative affairs
• Policy research
• Communications team for transparency
• Citywide strategic planning
• Council aides
• Business expositions
• Sister City
• Public engagement events
• Leadership training
City Council
21 –
22 4/7/2026
CITY CLERK
Must-Have Should-Have Nice-to-Have
• Process Public Records Requests in compliance with the California Public Records Act (CPRA) (Government Code §§ 7920.000–7931.000)
• Conduct elections and related services as (CA Elections Code)
• Prepare and distribute Council Meeting Agendas and
Minutes (Government Code §§ 54950–54963)
• Claims Intake and Processing as required under the
Government Claims Act (Government Code §§ 810 -996.6.)
• Publication and Noticing of Ordinances and Hearings
(Government Code § 36933)
• Support for City Boards and Commissions (Gov. Code
§§ 54950–54963)
• Records Management and Retention as required by
Gov. Code § 34090 (retention of city records), and
CPRA access requirements (Gov. Code §§ 7920.000 et
seq.)
• Voter Education and Engagement
• Lobbyist Registration Program as mandate by Political Reform Act’s intent (Gov. Code §§ 81000–81013)
• Contracts Management and Insurance Compliance:
Gov. Code § 23005 (general authority of local
agencies)
• Commissions
• Public searchable documents
database
• Streaming council meetings
• Automated PRA requests
• Electronic agenda management
system
City Council
21 –
23 4/7/2026
Police Department
Must-Have Should-Have Nice-to-Have
Office of the Chief of Police:
• Overall oversight of department operations
• Policy creation, revision & compliance
• Budget approval & strategic planning
Internal Affairs Unit
• Misconduct investigations
• Policy compliance
• SB 2 Reporting and Compliance
Crime Prevention
• Special events permitting
Public Relations
g
Field Operations/Patrol
• Citywide patrol and emergency response
• Preliminary investigations
Field Operations/ Operations Division:
Directed Patrol
N
QOLT
Nothing
SRO Program
• Leadership & organizational direction
• Early intervention
• Use of force tracking and review
• Police plan check
• Interdepartmental coordination
• Medi Media relations & crisis communications
• Community policing/engagement and problem solving
• Community policing/engagement and problem solving
• Interdepartmental coordination
• Public relations and engagement
• Patrol Vehicles
• Radios
• Computers
• Patrol support and emergency
response
• Community policing/engagement
and problem solving; app response
• Homeless-related cleanup
coordination
• Patrol support; homeless-related
issues
• Community policing/engagement
and problem solving
• On-campus emergency response
and crime prevention
City Council
21 –
24 4/7/2026
Must-Have Should-Have Nice-to-Have
PAAL
P.E.R.T
Community Engagement
Nothing
Probation Task Force/AB109
Homeland Security Grant/UASI
• UASI Grant Management
• Grant-funded assets and resources
Emergency Operations Center:
• Emergency/Disaster planning and response
• Major operations coordination and response
• Emergency services grant administration
Air Support Unit:
•
No
• Community policing/engagement and problem solving
• Mental health support
• Training & support
• City-wide camera management
• Event operations and support
• Citywide patrol and emergency response support
• Area searches/officer safety
• School support (school-funded,
contractually required)
• Community engagement/outreach
• Crime prevention
• Community policing /engagement /
outreach and problem solving
• Crime prevention
• Community policing/engagement
and problem solving
• Crime Prevention
• Interagency engagement &
cooperation
• Rehabilitation and reduction of
recidivism
• Interagency engagement and
cooperation
• Community engagement
• Community engagement and
outreach
City Council
21 –
25 4/7/2026
Must-Have Should-Have Nice-to-Have
K9 Unit:
o
SWAT (ancillary assignment):
Animal Control:
o
Downtown Business Directed Unit:
No
Field Operations/Traffic Division:
Motors
Collision Investigation Unit
• Major/Fatal traffic collision investigation
• Follow-up traffic-related criminal investigations (hit & run, etc.)
Collision PSO
Parking Control Unit
O
Investigations/CAP (Crimes Against Persons):
• Citywide patrol and alarm response
• Violent Criminal Apprehension
• Missing Persons Searches
• Citywide emergency response and support
• High-risk incidents and warrants
• Critical incident response and support
• Enforcement of animal-related laws and regulations
• Citywide vicious and injured animal response
• Patrol support and emergency response
• DUI checkpoints and enforcement
• Citywide emergency response and support
• Traffic collision investigation and support/ Traffic
enforcement/public safety
• Case preparation for prosecution
• Minor traffic collision investigations
• Traffic collision support
• Supplemental traffic control
• Parking enforcement
• Community Engagement
• Community Engagement and
Outreach
• Public education
• Community policing/engagement
and problem solving
• Special event support
• Community engagement and
education
• Special event support
• Community engagement and
education
• Special event support
• Community engagement and
education
• Special event support
• Community engagement and
education
City Council
21 –
26 4/7/2026
Must-Have Should-Have Nice-to-Have
Homicide Unit
• Follow-up hate crime investigations and DOJ reporting • Homicide investigations
• Follow-up felony assault investigations
• Follow-up kidnapping investigations
• Case preparation for prosecution
Cold Case Unit
• Follow-up homicide investigations (cold case)
• Case preparation for prosecution
Missing Persons & Aggravated Assaults
• Follow-up missing persons investigations
• Follow-up assault investigations
• Case preparation for prosecution
• DOJ Validations
Gang Suppression Unit
• Gang-related investigations
Court Liaison Unit
• Case review and submission
• Coordination of court appearances/Liaison w/DA’s Office and City Attorney’s Office
• Subpoena processing
Investigations/SID (Special Investigations Division)
Career Criminal Apprehension Unit and US Marshall’s Task Force
• Complex criminal investigations targeting career criminals & organized crime
• Evidence analysis and warrant service
• Support for homicide investigations
• Evidence analysis
• Support for assault investigations
• Evidence analysis
• Community engagement and problem-solving
• Gang activity suppression
• Case preparation for prosecution
• Expert court testimony
• Warrant preparation and service
• Surveillance and surveillance support
• Fugitive apprehension
• Evidence analysis and warrant service
• Expert court testimony
• Case preparation for prosecution
• Case follow-up for filing
• Interagency coordination
City Council
21 –
27 4/7/2026
Must-Have Should-Have Nice-to-Have
Vice Unit, OCRCFL, and OCHTTF
• Suppression and investigation of vice-related crimes
(prostitution, gambling, and narcotics)
Narcotics Unit & RNSP TF
• Suppression and investigation of major narcotics-related crimes
• Expert court testimony
Investigations/CID (Criminal Investigations Division)
Robbery and Assault Unit
• Robbery investigation
• Misdemeanor assault investigation
Special Crimes (Child Abuse, Sexual Assault, DV, and Sex Registrant Units
• Child and elder abuse investigations
• Sexual assault investigations
• Domestic violence investigations and victim support
• Sex registrant registration and compliance verification • Restraining order violations
• Internet crimes against children
Property Crimes (Auto Theft, Burglary, and Economic Crimes Units)
• Auto theft-related investigations Sexual assault
investigations
• Burglary and theft investigations
• Economic crimes investigations (ID theft, check fraud, credit card fraud/theft, embezzlement, financial elder
abuse, and counterfeiting)
• Vandalism, arson, animal abuse, and hate crime
investigations
• Surveillance and surveillance support
• Interagency coordination
• Expert court testimony
• Case preparation for prosecution
• Computer forensics
• Human trafficking investigations
• Surveillance and surveillance support
• Interagency coordination
• Patrol support and emergency response
• Warrant preparation and service
• Case Prep for Prosecution
• Warrant preparation and service
• Expert court testimony
• Case preparation for prosecution
• Warrant preparation and service
• Interagency coordination and support
• Case preparation for prosecution
• Warrant preparation and service
• ABC related investigations and
organized retail theft
• Interagency Cooperation
• Interagency Cooperation
• Interagency coordination and
surveillance support
• Community Engagement
• Interagency Cooperation
• Community outreach and
Engagement
City Council
21 –
28 4/7/2026
Must-Have Should-Have Nice-to-Have
Crime Analysis Unit
• Jeanne Clery stat submission
Forensic Services
• Critical incident analysis and review Crime scene
processing/evidence collection
Administration/Human Resources
Human Resources/Background Investigations/Recruitment
Section
• Hiring and recruitment
• Background investigations
• Personnel management (workers comp, transfers,
complaints, etc.)
• Promotional exam administration
Administration/Training
Training, Field Training Program, and Academy Support
• Administration and coordination of POST-mandated
training
• Provides stats for community requests, monthly
meetings
• Provide end-user assistance in acquiring and
implementing information system solutions and
software infrastructure.
• Assists Investigations Bureau with call detail record analysis, cellphone tower dumps, social media returns,
sexual assault case linking, etc.
• Suspect work-ups; social media leads
• Assists with public records requests
• Collect, clean and disseminate data
• Tracks ghost guns, NIBIN hits; enter cold cases into
FBI’s VICAP
• Collection and submission of DNA evidence
• Expert court testimony
• Lab processing of collected evidence - critical to
identifying suspects and prosecution efforts
• Fingerprint analysis
• Firearm analysis/Ballistics
• Case preparation for prosecution
• Technical skillset maintenance
• Critical incident analysis and review
• Assist in identifying and addressing
emerging crime patterns
• Interagency coordination and
support
City Council
21 –
29 4/7/2026
Must-Have Should-Have Nice-to-Have
• Administration and coordination of field training for new officers
Administration/Administrative Support Division
Fiscal Unit and CDC & Facilities Unit
• Budget administration
• Payroll
• Payments
• Procurement and distribution of required supplies and equipment
• Building and property maintenance
Administration/Communications
Dispatch and TRU
• 911 and non-emergency call taking
• Dispatching field units
• PRR; processing of call recordings
• Monitor NCIC Teletype/ CLETS entries
Administration/Records Division
Records Unit and Evidence Unit
• Report Storage and Management
• Evidence/stored property disposition
• NIBRS/UCR crime reporting compliance
• Secure storage of evidence
• Maintaining chain of custody
Administrative/Information Services Division
Information systems and Computer Services
• Tracking and analysis of uses of force, pursuits and
officer-related traffic collisions
• Monthly firearms qualifications (Range)
• Coordination of Academy-based training
• Coordination and administration of in-house training
courses
• Housekeeping and cleaning services
• Telephonic reports
• E-Reports (online reporting system)
• Tactical Dispatch Team (ancillary)
• Monitoring officer safety
• Records support for patrol and investigations
• Records support for PRA and 1421 material
• CAD/RMS administration
• Digital evidence management
• Software management
• Cybersecurity
• Computer and tech support
• Community Outreach and
Engagement
• Recruitment Events
City Council
21 –
30 4/7/2026
Must-Have Should-Have Nice-to-Have
Jail Administration
• Booking and intake operations including identification, medical screening, classification, and documentation-
• Transfers and transportation to county facilities, courts, and other jurisdictions
• Jail records management including warrants, court orders, custody documentation, and releases
• Facility operations including fire systems, emergency procedures, and security systems
• Jail Contracts-Medical, JMS, Food Services, various vendors. (Compliance with Title 15 regulations, PREA standards, ADA requirements, and mandated inspections)
• Ongoing correctional staff training and professional
development
• Enhanced inmate management system
• Preventative facility maintenance and operational
support services-infrastructure
• Adequate staffing levels to maintain safe supervision ratios and reduce operational risk
• Technology modernization and
automation tools improving
efficiency and reporting
• Educational partnerships related to
correctional services
• Facility improvements that enhance
workspace or operational efficiency
beyond minimum requirements
City Council
21 –
31 4/7/2026
Regional Comparison
Credit Card Processing Fees
Agency Percentage Flat Fee Minimum Notes:
Brea 6.00%
Fee Study, variable rate with max of $4.00 per transaction; does not appear to be in effect.
Costa Mesa 2.70%
Cypress Varies N/A Actual Cost
Fountain Valley 2.00%
Garden Grove 2.20% 2.00$
Huntington Beach 3.00%
La Palma Varies N/A Actual Cost
Lake Forest 3.00%
Los Alamitos 3.50%
Newport Beach 2.85%
Orange 3.12% Applied as a percentage of charged fee
Placentia 2.50%
Seal Beach 3.00%
Stanton 2.60%
Tustin Varies N/A Actual Cost
Westminster 3.00% Fee charged for amounts over $500
OC Treasurer 2.25% 1.50$
CDTFA 2.30%
*For entities assessing both a flat fee and a percentage-based fee, the percentage is calculated on the applicable user fee, and the flat fee is subsequently added to arrive at the total charge.
EXHIBIT 2
City Council
21 –
32 4/7/2026
FY2025-26 Measure X Spending Plan
Spending Plan
Type Category Description Department
Responsible One-Time Total plan
spending
Mandatory
Maintain Effective 9-1-1
Response Ambulance Service Contract increase to maintain service level FMSA 3,173,210 Mandatory Retaining Firefighters Orange County Fire contract increase to maintain service level FMSA 14,685,500 Mandatory
Unrestricted General Revenue
Purpose FY18-19 Budget Deficit - Planned Use of General Fund Reserve FMSA 10,200,000 Mandatory
Unrestricted General Revenue
Purpose FY18-19 Budget Deficit - Planned Staff Savings not implemented FMSA 1,500,000 Mandatory
Unrestricted General Revenue
Purpose New Debt Payments for Purchase of Streetlights PWA 800,000 Subtotal Mandatory Spending Items 30,358,710
Discretionary Addressing Homelessness Public Safety Response - Homelessness (Labor) PD 8,100,000 Discretionary Addressing Homelessness Public Safety Response - Homelessness (Contractual and Other) PD 1,200,000 Discretionary Addressing Homelessness QOLT Clean-Up Contract Homeless Services PWA 500,000 Discretionary Addressing Homelessness Homeless Outreach & Engagement CDA 574,880 Discretionary Addressing Homelessness Navigation Center Maintenance CDA 75,000 Discretionary Addressing Homelessness QOLT Clean-Up Staffing (2 Maint Workers II + Sanitation Inspect II) PWA 666,390 Discretionary Addressing Homelessness Code Enforcement Officers (2) PBA 323,109 Discretionary Fixing Streets Streetlight Pole work - Under lit Areas PWA 1,000,000 Discretionary Fixing Streets Alley improvement program PWA 1,500,000 Discretionary Fixing Streets Sidewalk and/or Street Repair PWA 1,000,000 Discretionary Fixing Streets Traffic Calming PWA 1,000,000 Discretionary Fixing Streets Pavement Maintenance PWA 2,000,000 Discretionary Fixing Streets Median Landscaping PWA 350,000 Discretionary Fixing Streets Maintain Asphalt Pothole Repair Services PWA 100,000 Discretionary Fixing Streets Business Area Road Improvements PWA X 1,500,000 Discretionary Fixing Streets Left Turn Signal at MacArthur & Flower PWA X 250,000 Discretionary
Maintain Effective 9-1-1
Response
Funding for additional police officers, traffic collision investigators; office assistants to relieve police officers stand-by pay, cash-outs and related benefits
PD
5,184,590
Discretionary
Maintain Effective 9-1-1
Response Police Department Overtime PD 2,870,170
Discretionary
Maintain Effective 9-1-1
Response
Public Safety Specialized Units: Criminal Investigations; Gang prevention and suppression; Communications; Enforcement; and Investigations and Support Service
PD
2,024,905
Discretionary
Maintain Effective 9-1-1
Response Human Resources Technician dedicated to Police Recruiting HR 103,000 Discretionary Maintaining Parks Park Maintenance and Repairs / Master Plan PRCSA/PWA 4,802,860
City Council
21 –
33 4/7/2026
FY2025-26 Measure X Spending Plan
Spending Plan
Type Category Description Department
Responsible One-Time Total plan
spending
Discretionary Maintaining Parks Armed Security for Parks PRCSA/PWA 1,667,000 Discretionary Maintaining Parks Park Facilities - Personnel PWA 1,999,540 Discretionary Maintaining Parks Park Ambassador PRCSA 20,075 Discretionary Youth Services Zoo and Recreation Personnel PRCSA 526,965 Discretionary Youth Services Zoo Contract & Supply Enhancements PRCSA 779,970 Discretionary Youth Services Crossing Guard PWA 220,000 Discretionary Youth Services Librarians and administrative Support (Personnel) Library X 559,610 Discretionary Youth Services Library Equipment & Expenses for Brach Reopening Library 235,320 Discretionary Youth Services Youth Employment Program CDA 100,000 Discretionary Youth Services Sports & Rec Equipment Lending + Additional Programming PRCSA 213,770 Discretionary Youth Services Centennial Park Lighting PRCSA X 1,330,000 Discretionary
Unrestricted General Revenue
Purpose Street Tree Maintenance (Tree-Trimming) PWA 678,330 Discretionary
Unrestricted General Revenue
Purpose Universal Legal Defense Fund for Dreamers & Parents CMO 300,000 Discretionary
Unrestricted General Revenue
Purpose Public Meeting Software & ADA Captioning City Clerk 90,000 Discretionary
Unrestricted General Revenue
Purpose Sales Tax Rebate - Volvo & Tac Energy CDA X 725,000 Discretionary
Unrestricted General Revenue
Purpose Santa Ana Regional Transportation Center Subsidy and Maintenance PWA 1,100,000 Discretionary
Unrestricted General Revenue
Purpose Support for Utility Billing, Business Retention and HR - Administrative FMSA 1,439,923 Discretionary
Unrestricted General Revenue
Purpose Principal HR Analyst HR 75,100
Discretionary
Unrestricted General Revenue
Purpose Permit Service Technician- PBA salaries PBA 125,624 Discretionary
Unrestricted General Revenue
Purpose Engineering Salaries for review of Plan Checks and Permits PWA 550,000 Discretionary
Unrestricted General Revenue
Purpose Vietnamese Community Liaison CMO 150,000
Discretionary
Unrestricted General Revenue
Purpose Part-Time staff salaries CMO 85,120
Discretionary
Unrestricted General Revenue
Purpose Executive Assistance CMO 136,400
Discretionary
Unrestricted General Revenue
Purpose (1) Full-time staff attorney position CAO 297,580
City Council
21 –
34 4/7/2026
FY2025-26 Measure X Spending Plan
Spending Plan
Type Category Description Department
Responsible One-Time Total plan
spending
Discretionary
Unrestricted General Revenue
Purpose Protected Bike Lane sweeping program (Equipment Operator) PWA 150,000 Discretionary
Unrestricted General Revenue
Purpose Support for City Clerk City Clerk 215,300
Discretionary
Unrestricted General Revenue
Purpose Increase the City Events budget PRCSA 331,160
Discretionary
Unrestricted General Revenue
Purpose Graffiti Arts Program CDA 100,000
Discretionary
Unrestricted General Revenue
Purpose Funding for Art Walk CDA 150,000
Discretionary
Unrestricted General Revenue
Purpose Arts & Culture Event Sponsorship Program / Arts Funding CDA 520,000 Discretionary
Unrestricted General Revenue
Purpose Economic Dev. Spec. I CDA 129,140
Discretionary
Unrestricted General Revenue
Purpose City Council, Contract Vendor Personnel Services CMO 420,000 Discretionary
Unrestricted General Revenue
Purpose PWA Graffiti Abatement Service Enhancement (Graffiti Removal) PWA 921,000 Discretionary
Unrestricted General Revenue
Purpose Zoning Code Updates PBA X 200,000
Discretionary
Unrestricted General Revenue
Purpose Fleet Operating Support - Operating supplies PWA 36,910 Discretionary
Unrestricted General Revenue
Purpose Bristol Parking Lot Improvements PWA X 250,000
Discretionary
Unrestricted General Revenue
Purpose Backflow Prevention Devices (Cross-Connection Control Program) PWA X 500,000 Discretionary
Unrestricted General Revenue
Purpose Fire Station Facilities Master Plan PWA X 250,000 Discretionary
Unrestricted General Revenue
Purpose Bus Shelter Replacement PWA X 250,000
Discretionary
Unrestricted General Revenue
Purpose Bus Shelter Maintenance PWA 250,000
Subtotal Discretionary Spending Items 53,203,740
FY2025-26 Measure X sPending Plan Total (All Items) 83,562,450
City Council
21 –
35 4/7/2026
Planning and Building Agency
www.santa-ana.org/pb
Item # 22
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
April 7, 2026
Topic: Amendment Application No. 2026-02 (Zone Change) for 2101 and 2109 East Santa Clara Avenue
AGENDA TITLE
Public Hearing - Amendment Application No. 2026-02 for the Santa Clara Avenue Zone Change (2101 and 2109 East Santa Clara Avenue)
Legal notice published in the OC Reporter on March 20, 2026 and notices mailed on the March 26, 2026.
RECOMMENDED ACTIONS
1. Adopt the environmental determination for Amendment Application (Zone Change) No. 2026-02, finding that the Project is within the scope of the 2022 Santa Ana General Plan Environmental Impact Report (EIR) (SCH No. 2020029087) and is exempt from further environmental review pursuant to CEQA Guidelines Sections 15162 and 15061(b)(3); and
2. Adopt an ordinance approving Amendment Application (Zone Change) No. 2026-
02. ORDINANCE NO. NS-XXXX entitled AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING AMENDMENT APPLICATION NO. 2026-02 AMENDING THE ZONING FOR THE PROPERTIES LOCATED AT 2101 AND 2109 EAST SANTA CLARA AVENUE (APNS: 396-261-26 AND 396-261-38) FROM GENERAL AGRICULTURAL (A1) TO ARTERIAL COMMERCIAL (C5); read by title only and waive further reading.
GOVERNMENT CODE §84308 APPLIES: Yes
EXECUTIVE SUMMARY
The City of Santa Ana is proposing to change the zoning district designation of two properties located at 2101 and 2109 East Santa Clara Avenue (“Site”) from General Agricultural (A1) to Arterial Commercial (C5) (“Project”). This zone change is to bring the zoning of the subject properties into consistency with the City’s General Plan, in
City Council
22 –
1 4/7/2026
AA No. 2026-02 for 2101 and 2109 East Santa Clara Avenue Zone Change April 7, 2026
5 6
2 0
accordance with Government Code Section 65860, which requires that zoning regulations be consistent with the adopted General Plan.
The proposed C5 zoning designation establishes consistency with the General Plan’s land use policies and objectives, supports commercial activation along Santa Clara Avenue, maintains consistency with the adjacent commercial center’s C5 zoning designation, and facilitates economic development, local-serving businesses, and employment opportunities while maintaining compatibility with surrounding uses. The requested action does not authorize any new development and is not tied to any development project application. CEQA review is satisfied by the 2022 General Plan EIR (SCH No. 2020029087) and the zone change is exempt from further environmental review under CEQA Guidelines Sections 15162 and 15061(b)(3).
Planning Commission Action
On February 23, 2026, the Planning Commission held a public hearing for the Project and voted 5:0:2 (Commissioners Oliva and Pham absent) to recommend that the City Council:
(1) adopt the environmental determination for Amendment Application (Zone Change) No. 2026-02, finding that the Project is within the scope of the 2022 Santa Ana General Plan Environmental Impact Report (EIR) (SCH No. 2020029087) and is exempt from further environmental review pursuant to CEQA Guidelines Sections 15162 and 15061(b)(3); and (2) approve Amendment Application (AA) No. 2026-02.
DISCUSSION
Project Description
The proposed Project consists of a City-initiated Amendment Application (AA) No. 2026- 02 to amend the City of Santa Ana Zoning Map by changing the zoning district designation of two properties located at 2101 and 2109 East Santa Clara Avenue from General Agricultural (A1) to Arterial Commercial (C5). The requested action does not authorize any development on the site, which would be subject to separate review by the City for any administrative or discretionary actions.
Table 1: Project and Location Information
Item Information
Project Address and Council Ward 2101 and 2109 East Santa Clara Avenue – Ward 3 Nearest Intersection Tustin Avenue and Santa Clara Avenue General Plan Designation General Commercial (GC) – No change Existing Zoning Designation General Agricultural (A1)
Proposed Zoning Designation Arterial Commercial (C5)
North Commercial center
East Drive-through restaurant Surrounding Land Uses
South Multi-family residential (Woodlyn North
Condominiums), preschool/kindergarten,
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Item Information
commercial center
West Parking and vehicular access for Horizon
Apartments multi-family residential community
Property Size 0.81-acres (35,400 square feet)
Existing Site Development
The subject sites contain two one-story, single-family
residences approximately 2,530 and 3,904 square feet
in size, with associated accessory structures.
Existing Site Uses Single-family residences (2)
Zoning Code Sections Affected SAMC Sections 41-665 and 41-667 Project Background
The project site encompasses approximately 0.81 acres (35,400 square feet) and is currently developed with two legal nonconforming single-family residences. The earliest aerial imagery from 1938 shows that the subject properties appeared to be first developed as an orchard. No buildings or structures were present on site at this time and most of the surrounding area was used for orchards, with some houses and agricultural buildings in the vicinity. The single-family residence addressed as 2101 East Santa Clara Avenue was constructed at an unknown date and moved to the site in 1967. The single-family residence addressed as 2109 East Santa Clara Avenue was constructed circa 1957 and included the main house and garage. The now-commercial shopping center to the north of the Project site remained undeveloped until 1972. Today, the two subject properties are legal non-conforming, as they do not meet most of the development standards for the underlying zone and were constructed prior to 1960.
Based on permit and title records, both 2101 and 2109 East Santa Clara Avenue were owned by the Newcomb family until they were sold to SRP Stater Bros, LLC in February 2021. In March 2023, the property owners submitted a voluntary lot merger application (No. 2023-02) to consolidate 2101 and 2109 East Santa Clara Avenue into a single legal lot. The lot merger application was executed and recorded in June 2023.
In April 2022, Development Project (DP) Review No. 2022-06 was submitted for a 3,975- square-foot McDonald’s with drive-through operations at 2101 and 2109 East Santa Clara Avenue. To facilitate the project, the applicant requested an amendment application (zone change) from General Agricultural (A1) to Arterial Commercial (C5) and a Conditional Use Permit (CUP) for the drive-through operations. On February 26, 2024, the Planning Commission held a public hearing and recommended City Council approval of the requested zone change and CUP. On April 2, 2024, the City Council held a public hearing for the requested entitlements. However, the applicant verbally withdrew their application prior to any action by the City Council. Therefore, no project was considered by the City Council and the Site retained its current zoning designation.
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Government Code Section 65860
Government Code Section 65860 was first enacted in the early 1970s as part of California’s Planning and Zoning Law to ensure that local zoning ordinances align with adopted General Plans. Under the original law, cities and counties were required to make their zoning consistent with their General Plan by January 1, 1974, and to amend inconsistent zoning within a reasonable time after a General Plan amendment. The statute established the General Plan as the foundational policy document for land use decisions and obligated local agencies to bring zoning into conformity with that plan.
In 2023, the Legislature passed Assembly Bill 821 (AB 821), which amended Section 65860 and became effective January 1, 2024. AB 821 strengthened and clarified the consistency requirement by setting firm timelines and procedures for addressing inconsistencies. For example, when a development application is consistent with the General Plan but inconsistent with zoning, a local agency must either amend the zoning ordinance within 180 days or process the application under applicable law and objective General Plan standards without relying on inconsistent zoning. The amendment also expands enforcement provisions, reaffirming that outdated zoning may not be used to delay or block development that is otherwise allowed under the General Plan.
The purpose of the proposed zone change is to bring the Site into consistency with the City’s General Plan, which was adopted in 2022, in compliance with Government Code Section 65860. Government Code Section 65860 requires that zoning regulations be consistent with the adopted General Plan, including its land use designations, goals, and policies. As a result of the 2022 General Plan Update, the subject properties were designated General Commercial (GC). However, the underlying zoning remained A1, creating an inconsistency between the General Plan and the Zoning Code.
Project Analysis
In accordance with Section 41-667 of the Santa Ana Municipal Code (SAMC) and Government Code Section 65860, staff recommends that the City Council adopt an ordinance approving AA No. 2026-02 to change the zoning designation of the subject properties from A1 to C5. The zone change is a corrective, policy-implementing action intended to resolve the existing inconsistency between land use policy and zoning regulations and does not authorize any specific development project. Moreover, no construction, demolition, or change in use is proposed as part of this action. Lastly, the proposed zone change implements the 2022 General Plan Land Use Element, supports orderly and planned development along a designated commercial corridor, and ensures ongoing compliance with State law governing General Plan and zoning consistency.
The C5 zoning designation reflects the established commercial character of the surrounding area, including the adjacent shopping center to the north and east and the broader commercial corridor along Tustin Avenue. The GC land use designation is
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intended to accommodate highly visible, arterial-oriented commercial uses that support employment opportunities and complementary services near established residential neighborhoods. Accordingly, the proposed C5 zoning designation is appropriate for the subject properties and fulfills the City’s obligation to maintain consistency between the Zoning Code and the General Plan. This proposed zoning amendment brings the properties into consistency with the GC land use designation adopted as part of the City’s 2022 General Plan Update and is compatible with the General Plan’s objectives, policies, and land use framework. Lastly, any future development or redevelopment of the site would be subject to separate discretionary review, environmental analysis, and permitting in accordance with applicable City regulations, including the SAMC, CEQA, and adopted design standards (if applicable).
Existing Zoning District Designation Proposed Zoning District Designation General Plan Consistency
The City of Santa Ana General Plan Update (GPU) was adopted in April 2022 following a seven-year public outreach and engagement process that included more than 60 community meetings and workshops, online surveys, direct mailers, study sessions, and individual meetings with the Planning Commission and City Council. This inclusive process informed the updated Land Use Element, which establishes the City’s long-term land use vision and development policies and reflects community goals related to growth, livability, and economic vitality (Goal LU-1; Policy LU-1.1).
Prior to adoption of the GPU, the subject properties were designated with a split land use of Institutional (INS) and GC. The GPU updated the designation to GC in its entirety, consistent with adjacent commercial center properties and the surrounding arterial corridor. However, the underlying zoning designation remained A1 and necessitates a zone change to resolve the inconsistency between the General Plan and the Zoning Code.
The proposed C5 zoning amendment is consistent with the GC land use designation and satisfies Government Code Section 65860, which requires zoning regulations to be compatible with General Plan objectives, policies, and land use designations. The GC Site Site
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designation is intended to accommodate highly visible, arterial-oriented commercial uses that support employment, local-serving retail, and complementary commercial activities near established residential neighborhoods (Goal LU-2; Policies LU-2.1 and LU-2.2). The proposed zone change resolves the zoning inconsistency with the 2022 GPU and supports reinvestment and business development consistent with the surrounding commercial corridor (Policies LU-2.6 and LU-2.7).
Existing General Plan Land Use Designation
By aligning zoning with adopted land use policy, the amendment promotes compatibility with adjacent development and preserves neighborhood integrity through the future application of City design and development standards (Goal LU-3; Policies LU-3.4 and LU-3.7). Any future development would be subject to applicable City review processes to ensure compatible scale, massing, and site design, contributing to a safe, attractive, and economically viable commercial environment.
The proposed zoning amendment is also consistent with the General Plan’s Economic Prosperity goals related to job creation and retention (Goal EP-1; Policy EP-1.2), economic diversification and support for high-growth and complementary businesses (Goal EP-2; Policies EP-2.1 and EP-2.3), and the promotion of a business-friendly environment that facilitates investment and balanced land use decisions (Goal EP-3; Policies EP-3.7 and EP-3.8). By resolving existing zoning inconsistencies and enabling commercial activation of underutilized land along an arterial corridor, the proposed zone change supports long-term economic vitality, employment opportunities, and fiscally productive land uses consistent with the adopted General Plan.
Public Notification and Community Outreach
Project notifications were posted, published, and mailed in accordance with City and State regulations. Copies of the public notice, including a 1,000-foot notification radius map, and the site posting are provided attached hereto as Exhibit 6. The project site is not located within the boundaries of a neighborhood association. However, prior to the Planning Commission public hearing, representatives of nearby neighborhood associations were contacted to identify any potential concerns related to the proposed request. No issues or concerns were identified during this outreach effort.
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In addition, no written or verbal public comments were received prior to or during the Planning Commission public hearing. As of the preparation of this report, no public concerns have been raised regarding the proposed zone change.
ENVIRONMENTAL IMPACT
In accordance with the California Environmental Quality Act (CEQA) and the CEQA Guidelines, the Project is not subject to additional environmental review pursuant to CEQA Guidelines Section 15162, as it is within the scope of the 2022 City of Santa Ana General Plan Environmental Impact Report (EIR) (SCH No. 2020029087), which was certified in conjunction with adoption of the General Plan Update. Section 15162 prohibits preparation of a subsequent or supplemental EIR unless substantial changes are proposed to the project, substantial changes occur in the circumstances under which the project is undertaken, or new information of substantial importance becomes available that was not known and could not have been known at the time the prior EIR was certified.
The proposed zone change is a City-initiated corrective action that aligns zoning with the GC land use designation adopted through the 2022 General Plan Update and does not authorize any new development, construction, or change in intensity beyond what was previously analyzed in the General Plan EIR. The land use designation and development assumptions associated with the proposed zoning were fully evaluated in the certified General Plan EIR. No substantial changes to the project, no changes in circumstances, and no new information requiring major revisions to the EIR have been identified.
Accordingly, no subsequent or supplemental EIR is required pursuant to CEQA Guidelines Section 15162.
In addition, the proposed zoning amendment is exempt from further environmental review under CEQA Guidelines Section 15061(b)(3) (the “Common Sense Exemption”), as it can be determined with certainty that the action will not result in a significant effect on the environment. The zone change is administrative and policy-implementing in nature, serves to maintain consistency between the Zoning Code and the General Plan pursuant to Government Code Section 65860, and does not, by itself, enable or approve physical development. Any future development would be subject to separate discretionary review and project-level CEQA analysis, as applicable. Therefore, the environmental effects of the proposed action have already been adequately analyzed in the 2022 General Plan EIR, and no further environmental review is required. A Notice of Determination and Notice of Exemption, Environmental Review No. 2026-05, will be filed for the project.
FISCAL IMPACT
There is no fiscal impact associated with this action.
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EXHIBITS
1. Ordinance Approving AA No. 2026-02
2. Vicinity Zoning and Aerial View
3. Site Photos
4. Certified General Plan Update Environmental Impact Report (hyperlink)
5. February 23, 2026 Planning Commission Staff Report and Exhibits (hyperlink)
6. Copy of Public Hearing Notice
Submitted By: Ali Pezeshkpour, AICP, Executive Director of Planning and Building Agency
Approved By: Alvaro Nuñez, City Manager
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Ordinance No. NS-XXXX
ORDINANCE NO. NS-XXXX
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA ANA APPROVING AMENDMENT APPLICATION
NO. 2026-02 AMENDING THE ZONING FOR THE
PROPERTIES LOCATED AT 2101 AND 2109 EAST SANTA
CLARA AVENUE (APNS: 396-261-26 AND 396 -261-38)
FROM GENERAL AGRICULTURAL (A1 ) TO ARTERIAL
COMMERCIAL (C5)
THE CITY COUNCIL OF THE CITY OF SANTA ANA HEREBY ORDAINS AS FOLLOWS:
Section 1. The City Council of the City of Santa Ana hereby finds, determines and declares as follows:
A. The Planning and Building Agency (“PBA”) is requesting approval of Amendment Application (AA) No. 2026 -02, to change the zoning district designation of two properties located at 2101 and 2109 East Santa Clara Avenue (APNs 396-261-26 and 396-261-38) from General Agricultural (A1) to Arterial Commercial (C5) (“Project”).
B. Chapter 41, Article I, Division 1, Section 41 -1 of the Santa Ana Municipal Code establishes that because of the necessity of segregating the location of residences, businesses, trades and industries; regulating the use of buildings, structures, and land; and regulating the location, height, bulk and size of buildings and structures, the size of yards and open spaces, the City is divided into land-use districts of such number, shape and area as may be considered best suited to carry out these regulations and provide for their enforcement. The regulations are considered necessary in order to:
encourage the most appropriate use of land, conserve and stabilize property value, provide adequate open spaces for light and air and to prevent and fight fires, prevent undue concentration of population, lessen congestion on streets and highways, and promote the health, safety and general welfare of the people, all as part of the general plan of the City. The City of Santa Ana has adopted a zoning map which has since been amended from time to time.
C. On April 19, 2022, the City adopted the General Plan Update , which went into effect on May 26, 2022. As a result of the 2022 General Plan Update, the subject properties were designated General Commercial (GC) under the General Plan . However, the underlying zoning remained A1, creating an inconsistency between the General Plan and the Zoning Code.
D. Government Code Section 65860, first enacted in the early 1970s as part of California’s Planning and Zoning Law, requires local zoning ordinances to align with adopted General Plans, establishing the General Plan as the foundational policy document for land use decisions. Cities must amend inconsistent zoning within a reasonable time after General Plan
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Ordinance No. NS-XXXX
amendments. In 2023, AB 821 strengthened these requirements effective January 1, 2024, by imposing firm timelines , such as 180 days to amend zoning for consistent development applications and clarifying that outdated zoning cannot block General Plan-compliant projects.
E. The Project is not tied to any development project application and is being initiated by the City to bring the zoning of the subject properties into consistency with the City ’s General Plan, in accordance with Government Code Section 65860, which requires that zoning regulations be consistent with the adopted General Plan. The zone change is a corrective, policy - implementing action intended to resolve the existing inconsistency between land use policy and zoning regulations and does not authorize any specific development project. No construction, demolition, or change in use is proposed as part of the Project.
F. Based on the entire record before the City Council and all written and oral evidence presented, the City Council finds that the Project aligns with the City’s General Plan long-term land use vision and development policies and reflects community goals related to growth, livability, and economic vi tality (Goal LU-1; Policy LU-1.1).
The proposed C5 zoning amendment is consistent with the GC land use designation and satisfies Government Code Section 65860, which requires zoning regulations to be compatible with General Plan objectives, policies, and land use designations. The GC designation is intended to accommodate highly visible, arterial -oriented commercial uses that support employment, local-serving retail, and complementary commercial activities near established residential neighborhoods (Goal L U-2; Policies LU-2.1 and LU-
2.2). The proposed zone change resolves the zoning inconsistency created by the 2022 GPU and supports reinvestment and business development consistent with the surrounding commercial corridor (Policies LU-2.6 and LU-
2.7).
By aligning zoning with adopted land use policy, the amendment promotes compatibility with adjacent development and preserves neighborhood integrity through the future application of City design and development standards (Goal LU-3; Policies LU-3.4 and LU-3.7). Any future development would be subject to applicable City review processes to ensure compatible scale, massing, and site design, contributing to a safe, attractive, and economically viable commercial environment.
The proposed zoning amendment is also consistent with the General Plan’s Economic Prosperity goals related to job creation and retention (Goal EP -1; Policy EP -1.2), economic diversification and support for high -growth and complementary businesses (Goal EP -2; Policies EP -2.1 and EP -2.3), and the promotion of a business -friendly environment that facilitates investment and balanced land use decisions (Goal EP -3; Policies EP-3.7 and EP-3.8).
By resolving existing zoning inconsistencies and enabling commercial
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Ordinance No. NS-XXXX
activation of underutilized land along an arterial corridor, the proposed zone change supports long-term economic vitality, employment opportunities, and fiscally productive land uses consistent with the adopted General Plan.
G. On February 23, 2026, the Planning Commission held a duly noticed public hearing and voted to recommend that the City Council adopt an ordinance approving Amendment Application No. 2026-02.
H. For the reasons contained herein, and each of them, Amendment Application No. 2026-02 is hereby found and determined to be consistent with the intent and purpose of Chapter 41 of the Santa Ana Municipal Code; thus, changing the zoning district is found to be consistent with the General Plan of the City of Santa Ana and is otherwise justified by the public necessity, convenience, and general welfare.
Section 2. The Amendment Application consists of amendments to the Zoning Map, as shown in Exhibit A, attached hereto and incorporated herein by reference.
Section 3. The City Council has reviewed a nd considered the information contained in the analysis performed pursuant to the California Environmental Quality Act (CEQA) and the CEQA Guidelines. In accordance with CEQA Section 15162, the Project is not subject to additional environmental review, as it is within the scope of the 2022 Santa Ana General Plan EIR (SCH No. 2020029087) , which was certified in conjunction with adoption of the General Plan Update . Section 15162 prohibits preparation of a subsequent or supplemental EIR unless substantial changes are proposed to the project, substantial changes occur in the circumstances under which the project is undertaken, or new information of substantial importance becomes available that w as not known and could not have been known at the time the prior EIR was certified.
The proposed zone change is a City-initiated corrective action that aligns zoning with the GC land use designation adopted through the 2022 General Plan Update and does no t authorize any new development, construction, or change in intensity beyond what was previously analyzed in the General Plan EIR. The land use designation and development assumptions associated with the proposed zoning were fully evaluated in the certifie d General Plan EIR. In the 2022 General Plan, the parcels were re -designated General Commercial (GC), which encompasses commercial zoning districts intended for highly visible and accessible shopping opportunities along arterial corridors, such as C -5, supporting a range of retail, service, recreational, cultural, business, and educational uses. No substantial changes to the project, no changes in circumstances, and no new information requiring major revisions to the EIR have been identified. Accordingly, no subsequent or supplemental EIR is required pursuant to CEQA Guidelines Section 15162.
In addition, the proposed zoning amendment is exempt from further environmental review under CEQA Guidelines Section 15061(b)(3) (the “Common Sense Exemption”), as it can be seen with certainty that the action will not result in a significant effect on the environment. The zone change is administrative and policy -implementing in nature, serves to maintain consistency between the Zoning Code and the General Plan pursuant
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Ordinance No. NS-XXXX
to Government Code Section 65860, and does not, by itself, enable or approve physical development. Any future development would be subject to separate discretionary review and project-level CEQA analysis, as applicable. Therefore, the environmental effects of the proposed action have already been adequately analyzed in the 2022 General Plan EIR, and no further environmental review is required. A Notice of Determination and Notice of Exemption, Environmental Review No. 2026-05, will be filed for the Project Section 4. The City Council of the City of Santa Ana, after conducting the public hearing, hereby approves Amendment Application No. 202 6-02 to change the zoning designation of the properties located at 2101 and 2109 East Santa Clara Avenue (APN: 396 -261-26 and 396-261-38) from A1 to C5 . This decision is based upon the evidence submitted at the above said hearing, which includes, but is not limited to: the Request for Planning Commission Action dated February 23, 2026 and exhibits attached hereto; and the public testimony, written and oral, all of which are incorporated herein by this reference.
Section 5. An amended Sectional District Map, showing the above described changes in use district designation, is hereby approved and attached hereto as Exhibit A, and incorporated by this reference as though fully set forth herein.
Section 6. If any section, subsection, sentence, clause, phrase or portion of this ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council of the City of Santa Ana hereby declares that it would have adopted this ordinance and each section, subsection, sentence, clause, phrase or portion thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional.
Section 7. This Ordinance shall become effective thirty (30) days after its adoption.
Section 8. The City Clerk shall certify the adoption of this ordinance and shall cause the same to be published as required by law.
ADOPTED this day of , 2026.
Valerie Amezcua
Mayor
APPROVED AS TO FORM:
Sonia R. Carvalho
City Attorney
By:
Melissa M. Crosthwaite
Senior Assistant City Attorney
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Ordinance No. NS-XXXX
AYES: Councilmembers
NOES: Councilmembers
ABSTAIN: Councilmembers
NOT PRESENT: Councilmembers
CERTIFICATE OF ATTESTATION AND ORIGINALITY
I, Jennifer L. Hall, City Clerk, do hereby attest to and certify the attached Ordinance No. NS- XXXX to be the original ordinance adopted by the City Council of the City of Santa Ana on , 2026 and that said ordinance was published in
accordance with the Charter of the City of Santa Ana.
Date:
City Clerk
City of Santa Ana
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Ordinance No. NS-XXXX
Exhibit A
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/13 /14 /14/15/16 /7 /1 /1 /17/15 /15/16 /12 /16/15/17 /14 /18 /17 /19 /16 /14 /20 /21 /17/22/12/23 /24/22/1/19 /17 /25 /26 /27 /18 /16 /18 /24 /25 /1/15/20 /24 /26 /28 /23 /14 /18 /24 /25 /1 /29 /28 /20 /20 /21 /25 /14 /30 /28 /18 /19 /26 /1 /31 /14/22/19/1/15/20 /18 /25 /14/15/20 /21 /27 /18 /21 /32 /12 /13 /14/22/19 /0 /1 /0 /60 /64 /65 /66 /67 /66 /56 /i255 /39 /i255 /40 /i255/68/66/48 /66 /44 /66 /56 /69 /i255 /43 /44 /45 /i255/46/55/58 /66 /43 /51 /i255/68/66/55 /70 /71/72/73 /72/74/75 /76/77 /76 /78 /79 /80/81/79/82/83/84 /85 /86 /87 /88 /78 /89 /90 /91 /80 /80 /84 /76 /77 /92 /78/89/84/93 /89 /93 /84 /94 /93 /86 /90 /95 /79 /96 /78 /79 /i255 /91 /96 /79 /i255 /98 /85/87 /96 /86 /79 /84 /99 /100 /85 /96 /76 /96 /77
/101 /73 /73 /i255 /102 /93 /93 /78
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AA No. 2026-02
Zone Change at 2101 and 2109 East Santa Clara Avenue
Exhibit 3 – Site Photo
Santa Clara Avenue, facing north
2101
3601
2109
3601
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CITY OF SANTA ANA
Planning and Building Agency
20 Civic Center Plaza ● P.O. Box 1988
Santa Ana, California 92702
www.santa-ana.org/pba
NOTICE OF PUBLIC HEARING
BEFORE THE CITY COUNCIL OF THE CITY OF SANTA ANA, CA
The City of Santa Ana encourages the public to participate in the decision-making process. This notice is being sent to those who live or own property within 1000 feet of the project site, within the city boundary , or who have expressed an interest in the proposed action. We encourage you to contact us prior to the Public Hearing if you have any questions.
NOTICE IS HEREBY GIVEN - The City Council of the City of Santa Ana will hold a public hearing to receive public testimony and will take action on the items described below.
Project Location: 2101 and 2109 East Santa Clara Avenue located within the General Agricultural (A1) zoning district.
Project Applicant: City of Santa Ana
Proposed Project:
The City of Santa Ana requests approval of Amendment Application (AA) No. 2026- 02 to change the zoning district designation of two properties located at 2101 and 2109 East Santa Clara Avenue from General Agricultural (A1) to Arterial Commercial (C5), ensuring consistency with the City’s General Plan, as required by California Government Code Section 65860.
Environmental Impact: Pursuant to the California Environmental Quality Act (CEQA) and the CEQA Guidelines, the project is exempt from further review under Section 15162, as it is within the scope of the certified 2022 City of Santa Ana General Plan Environmental Impact Report (EIR) (SCH No. 2020029087). The project is also exempt under Section 15061(b)(3), (the “Common Sense Exemption”), as it can be seen with certainty that the action will not result in a significant effect on the environment. A Notice of Exemption, Environmental Review No. 2026-05, will be filed for the proposed project.
Action Taken by the Planning Commission on February 23, 2026: Recommended that the City Council take the following actions: (1) A dopt the environmental determination for Amendment Application (Zone Change) No. 2026-02, finding that the Project is within the scope of the 2022 Santa Ana General Plan Environmental Impact Report (EIR) (SCH No. 2020029087) and is exempt from further environmental review pursuant to CEQA Guidelines Sections 15162 and 15061(b)(3) ; and (2) Adopt an ordinance approving Amendment Application ( Zone Change) No. 2026- 02. VOTE: 5:0:2 (Ayes: Commissioners Benninger, Escamilla, Leo, Ramos, and Woo; Absent: Commissioner s Oliva and Pham).
Meeting Details: This public hearing will be held on Tuesday, April 7, 2026, at 5:30 p.m., or as soon thereafter as the matter may be heard, in the City Council Chamber, 22 Civic Center Plaza, Santa Ana, CA 92701. Members of the public may attend this meeting in- person or join via Zoom. For the most up to date information on how to participate virtually in this meeting, please visit https://www.santa- ana.org/agendas-and-minutes/
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Written Comments: If you are unable to participate in the meeting, you may send written comments by e-mail to [email protected] (reference the Agenda Item # in the subject line) or mail to Jennifer L. Hall, City Clerk, City of Santa Ana, 20 Civic Center Plaza – M30, Santa Ana, CA 92701.
Deadline to submit written comments is 4:00 p.m. on the day of the meeting. Comments received after the deadline may not be distributed to the City Council but will be made part of the record.
Where To Get More Information: All staff reports regarding any item on this agenda are available for public inspection in the City Clerk’s Office during regular business hours and posted on the City’s website the Tuesday before a Council meeting at: https://www.santa-ana.org/agendas-and-minutes/
Who To Contact For Questions: Should you have any questions, please contact Nancy Tran with the Planning and Building Agency at [email protected] or (714) 667-2740.
Note: If you challenge the decision on the above matter in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City Council of the City of Santa Ana at, or prior to, the public hearing.
Si tiene preguntas en español, favor de llamar a Gema Zapien (714) 667-2732.
Nếu cần liên lạc bằng tiếng Việt, xin điện thoại cho Kristie Ha (714) 667-2206.
1000’ RADIUS NOTIFICATION MAP
2101 and 2019 East Santa Clara Avenue
1000’ Ft. Buffer Map
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CITY ATTORNEY
Sonia R. Carvalho
CITY MANAGER
Alvaro Nuñez
CITY CLERK
Jennifer L. Hall
20 CIVIC CENTER PLAZA - P.O. BOX 1988, M31 - SANTA ANA, CALIFORNIA 92702 TELEPHONE (714) 647-6900 - FAX (714) 647-6954 - www.santa-ana.org Councilmember-Requested Item Report
DATE
April 7, 2026
TOPIC
City Council Initiated Proposal Review in Accordance with the City of Santa Ana Affordable Housing Funds Policies and Procedures - Habitat for Humanity Affordable Homeownership Project
COUNCILMEMBER-REQUESTED ITEM TITLE
Discuss and Consider Providing Direction to the City Manager and Community Development Agency to Conduct a Review of a Proposed Habitat for Humanity Affordable Homeownership Project at 502 East Pine Street, Including Evaluation of Potential Affordable Housing Funding to Support the Project.
BACKGROUND
Habitat for Humanity of Orange County (“Habitat”) has requested that the City Council review its proposal and approve a sole-source award of funding allowable under the adopted Affordable Housing Funds Policies and Procedures utilizing the City Council Initiated Proposal Review process (See Exhibit 1 on page 10).
The proposal involves the acquisition and rehabilitation of an existing 18-unit condominium complex located at 502 East Pine Street, which currently operates as rental housing (See Exhibit 2). Habitat proposes to rehabilitate the property and convert the units into permanently affordable homeownership opportunities for low- income working families in Santa Ana. Planned improvements include interior rehabilitation of the units, upgrades to plumbing and electrical systems, and improvements to shared amenities such as the courtyard, laundry facilities, elevator, and parking structure.
The estimated total development cost is approximately $13.07 million, and Habitat has requested $6 million in City affordable housing funding to support acquisition and rehabilitation of the property.
Habitat anticipates completing acquisition, rehabilitation, and resale to qualified first- time homebuyers within approximately 24 months after funding approval.
DISCUSSION
Santa Ana continues to face one of the most competitive housing markets in California, where rising housing costs make homeownership increasingly out of reach for many working families. While the City has made progress in supporting affordable rental housing, opportunities for affordable homeownership remain limited.
This proposal represents an opportunity to:
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CITY ATTORNEY
Sonia R. Carvalho
CITY MANAGER
Alvaro Nuñez
CITY CLERK
Jennifer L. Hall
20 CIVIC CENTER PLAZA - P.O. BOX 1988, M31 - SANTA ANA, CALIFORNIA 92702 TELEPHONE (714) 647-6900 - FAX (714) 647-6954 - www.santa-ana.org Expand homeownership opportunities for Santa Ana residents Support working families building generational wealth Preserve and improve an existing housing asset within the community Stabilize neighborhoods and help prevent displacement Leverage a proven nonprofit housing model that combines public investment, volunteer labor, and homeowner partnership
Initiating a review of this project will allow staff to evaluate its feasibility and determine whether City participation could advance Santa Ana’s goals around housing stability, affordability, and long-term community investment.
Requested Scope of Report and Hearing
Direct the City Manager and Community Development Agency to:
1. Request a complete proposal from Habitat for Humanity.
2. Review and determine if complete proposal has met minimum threshold.
3. If minimum threshold is met, project to undergo an underwriting and subsidy layering review analysis by a real estate advisor selected by the City, to be paid for by Habitat for Humanity.
4. After the analysis has been completed, staff will present the real estate advisor’s analysis and the proposal to City Council for direction without any recommendation(s) from staff on funding or not funding the project.
SUBMITTED BY
Councilmember Benjamin Vazquez
EXHIBIT(S)
1. Affordable Housing Funds Policies and Procedures
2. Habitat for Humanity of Orange County request letter dated March 12, 2026 and attachment
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Affordable Housing Funds
Policies and Procedures
City of Santa Ana
Housing Division
and
Housing Authority of the
City of Santa Ana
Originally Adopted March 20, 2018
1st Amendment: August 18, 2020
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TABLE OF CONTENTS
I. INTRODUCTION 7
II. TYPES OF LOANS AND GRANTS 8
III. PROPOSAL SUBMITTAL AND REVIEW PROCEDURES 9
IV. PRE-LOAN COMMITMENT 19
V. LOAN TERMS AND CLOSING PROCEDURES 20
VI. PROJECT MONITORING AND REPORTING 22
VII. FUNDING SOURCES 23
Low and Moderate Income Housing Asset Fund 23
Inclusionary Housing Fund 26
HOME Investment Partnerships Program 28
Community Development Block Grant Program 32
Project-Based Voucher Program 34
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PURPOSE
On June 20, 2017, the City Council for the City of Santa Ana directed staff to develop a policy to allocate affordable housing development funds and criteria for selection of projects. These policies and procedures have been developed to guide how affordable housing funds and land assets available to the City of Santa Ana are allocated, committed, loaned and monitored for multi-family affordable housing development in the City.
INTENT
The intent of these policies and procedures is to provide a transparent, open and fair process for developers, businesses, non-profit organizations, individuals and other entities interested in the allocation of scarce affordable housing funds and land assets available to the City for affordable housing development.
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Definitions
Available Funds: The total amount of Inclusionary Housing Fund s, HOME Investment Partnerships Program, Community Development Block Grant Program , Project-Based Voucher Program, Low and Moderate Income Housing Asset Fund s (Housing Successor Agency Fund s) and/or any other funds received by the City of Santa Ana for housing purposes as published on a quarterly basis in the Housing Division Quarterly Report . Inclusionary Housing Fund In-Lieu Fee pending payments and any other funds that have not yet been received by the City shall not be considered Available Funds.
Affordability Restrictions: Covenants that shall run with the land and bind a property owner, its successors, its assignees and every successor in interest to a property that the property owner will make all subsidized rental units on the property available to extremely-low, very-low, low and/or moderate-income households at rents affordabl e to such households for at least fifty-five (55) years unless superseded by the regulations for an applicable program fund.
City: The City of Santa Ana when using the Inclusionary Housing Fund , HOME Investment Partnerships Program , and/or Community Development Block Grant Program funds; or the Housing Authority of the City o f Santa Ana when using the Project-Based Voucher Program and/or Low and Moderate Income Housing Asset Fund (Housing Successor Agency Fund).
Community Housing Development Organization (CHDO): A private nonprofit housing development corporation which meets a series of HUD qualifications prescribed in the HOME Program r egulations, including the requirement that it is duly organized to provide decent housing that is affordable to low - and moderate-income persons; maintains at least one -third of its governing board’s membership for residents of low -income neighborhoods, other low-income residents, or elected representatives of low -income neighborhood organizations; and, provides a formal process for low-income program beneficiaries to advise the organization in its decisions regarding the design, siting, development, and management of affordable housing.
Community Based Development Organization (CBDO) : A Housing Development Corporation which m eets the requirements of the CDBG Program regulations as defined in 24 CFR 570.204(a)(2)(c)(1), as amended from time to time.
Congregate Housing: A multi -family residential facility with shared kitchen facilities, deed - restricted or restricted by an agre ement approved by the City for occupancy by low or moderate income households, designed for occupancy for periods of six months or longer, providing services which may include meals, housekeeping and personal care assistance as well as common areas for residents of the facility.
Deed of Trust: Legal title in the property that is transferred to the City, which holds it as security for a loan provided by the City.
Development of Affordable Housing: The process of creating affordable housing through acquisition and/or rehabilitation of eligible properties for rental or transitional housing;
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acquisition and conversion of non-residential property to multifamily rental housing units; and/or new construction of housing units for rental housing.
Extremely Low-Income Household : Households with incomes that do not exceed 30% of the Orange County area median income, adjusted for household size, as published by the U.S.
Department of Housing and Urban Development (HUD) from time to time.
Fair Market Rents : Maximum rents as published by HUD for the Housing Choice Voucher Program for Orange County, adjusted for unit size.
Grant: Transfer of funds for purposes of financing the development of affordable housing, on the condition that grantee remains in full co mpliance with the Regulatory Agreement. Unlike a loan, the grant only becomes due and payable in the event that grantee is in default of the Regulatory Agreement.
Nonprofit Housing Development Corporation (HDC) : A private, nonprofit corporation with proven capacity to develop, own and operate housing, and which has a valid 501(c)(3) or (4) designation from the IRS.
Limited Equity Cooperative : A form of ownership whereby the residents form a cooperative corporation which owns and manages the property, and where the return on residents' original equity is limited to no more than 10%, as defined in the California Health and Safety Code Section 33007.5.
Loan Agreement: A loan of program funds for purposes of developing affordable housing with a Promissory Note secured by a Deed of Trust and Affordability Restrictions on the property.
Qualified Developer : A non -profit or for -profit affordable housing developer with proven capacity to develop, own and operate affordable housing.
Low-Income Household: Households with incomes that do not exceed 80% of Orange County area median income, adjusted for household size, as published by the U.S. Department of Housing and Urban Development (HUD) from time to time.
Maximum Affordable Rent: A rent which does not exceed thirty percent (30%) of the maximum income level of the income group being served (see "Low and Moderate Income Households"), adjusted for unit size and utility costs.
For Low and Moderate Income Housing Asset Fund: the Maximum Affordable Rent for households with incomes that do not exceed 120% of the area median income for Orange County shall be 30% of 110% of such median income.
Moderate-Income Household: Households with incomes that do not exceed 120% of the Orange County area median income, adjusted for household size, as published by the U.S. Department of Housing and Urban Development (HUD) from time to time.
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New Construction: The construction of new housing, including, but not limited to , assembly of factory-built modular housing, or conventional on-site construction.
Notice of Completion: Written notice issued by the owner of a project (or his or her agent) to notify concerned parties that all work on the project has been completed.
Operating Reserve Account : An account established for the purpose of funding a deficit in the project’s operation.
Permanent Loan: A l ong-term (maturity period of 55 years ) mortgage loan. Permanent loan financing is o btained after completion of construction, usually to repay the short -term (non - permanent) construction loan.
Promissory Note: A “promise to pay” and evidence of an obligation of a borrower to the City for repayment of a Permanent Loan.
Rehabilitation: Correction of local code violations and removal of health and safety hazards; upgrading of housing units to decent, safe and sanitary conditions to comply with the Housing Quality Standards promulgated by HUD and with local standards; repair or replacement of major building systems or components in danger of failure; and alterations, additions and improvements to expand the number of affordable units, or needed to improve the basic livability, energy efficiency, accessibility for the disabled, or security o f the property, and to reduce overcrowding.
Replacement Reserve Account: An account established for the purpose of funding major repairs or replacement of capital components of a building which reach the end of their economic life and require replacement.
Residual Receipts : The gross receipts from the property, less actual costs of operation, administration, maintenance, taxes, insurance, utilities, management, approved replacement and operating reserves, payments of principal and interest on loans sen ior to the City loan (s), and required debt service coverage. The amount of Residual Receipts shall be calculated based on the actual income and expenses set forth in the Annual Operating Budget required under the Regulatory Agreement or recorded Affordability Covenants, as approved by the City.
Transitional Housing: A type of supportive housing used to facilitate the movement of homeless individuals and families to permanent housing. Typically, transitional housing is housing in which homeless people live for up to 24 months and receive supportive services that enable them to live more independently. The supportive services may be provided by the organization managing the housing or coordinated by them and provided by other public or private social service agencies.
Very Low-Income Household: Households with incomes that do not exceed 50% of the Orange County area median income, adjusted for household size, as published by the U.S. Department of Housing and Urban Development (HUD) from time to time.
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I. INTRODUCTION
The City of Santa Ana provides financial assistance to support the acquisition, rehabilitation, and new construction of properties to preserve and increase affordable housing opportunities for lower income households through the following Programs:
Low and Moderate Income Housing Asset Fund ( Housing Successor Agency Fund ) including land assets owned by the Housing Successor Agency Inclusionary Housing Fund
HOME Investment Partnerships Program (HOME)
Community Development Block Grant Program (CDBG)
Project-Based Voucher Program (PBV)
Under these Funds and Programs (“Programs”), the City provides deferred payment loans and/or grants to bridge the financial gap between available resources, including the borrower's/grantee’s equity and private financing , and the costs of developing affordable multi -family housing. The Affordable Housing Funds Policies and Procedures (“Policies and Procedures ”) provide s an overview of the types and terms of loans which are available, proposal requirements, review procedures, selection criteria, loan commitment and closing procedures, and project monitoring and reporting requirements of these varied Programs within one comprehensive source of reference. [Throughout this document, loans and grants may be referred to collectively as “loans” except when the terms are unique to a loan or to a grant.]
These requirements are minimum requirements for participation in City Programs and are subject to approval by City Council . Meeting these re quirements does not guarantee participation in any Program. The City reserves the right to require additional qualifications for individual projects. The City reserves the right to reject any and all proposals.
At a minimum these Policies and Procedur es will be compared and reviewed to the City’s progress to achieve the goals in the Housing Element each year. If it is determined that the City is not making adequate progress to achieve the goals of the Housing Element, staff will review these Policies and Procedures to determine whether they should be amended to more effectively achieve the goals of the Housing Element.
These Programs are administered by the Housing Division of the City of Santa Ana (under the direct supervision of the Housi ng Division Manager, the direction of the Executive Director of Community Development, and the general supervision of the City Manager).
These Policies and Procedures should be interpreted in conjunction with Federal, State, and City statutes and regulati ons governing the use of these funds. I n the event of a conflict between these Policies and Procedures and such statutes and regulations, the requirements of those statutes and regulations shall prevail. All projects must comply with all applicable statut es and regulations, which may include federal requirements contained in 24 CFR 92, 570, 982, and 983, including, but not limited to, environmental review s, labor and wage requirements, debarred contractors, lead-based paint and equal opportunity. Leveraging of City dollars (to the extent possible) with outside funding sources will continue to be a priority to preserve and increase affordable housing opportunities for low income households.
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II. TYPES OF LOANS AND GRANTS
Program funds may be used for development loans for the following eligible purposes:
(1) The purchase of existing multi -family or other buildings for rent or sale to low- and very low-income households and for the development of congregate housing for rent to low- and very low-income persons with special needs (e.g. homeless individuals and families, elderly, persons with a disability) . Except for congregate housing , existing buildings shall consist of four or more units , unless the Housing Division Manager finds that a substantial public benefit will be provided by a project consisting of less than 4 units.
(2) The purchase or lease of land and buildings for new construction or rehabilitation of housing that may utilize available State and Federal hou sing assistance programs such as Low-Income Housing Tax Credits , the Section 202 Supportive Housing for the Elderly Program, tax -exempt bond financing, Section 811 Supportive Housing Program, and/or other available State and Federal programs. (3) The development of limited -equity housing cooperatives through either conversion or new construction.
(4) The provision of interim loan funds for any of the above purposes prior to the funding of a public or private loan. Eligible development costs for the ab ove uses include, but are not necessarily limited to:
a. site acquisition and preparation;
b. rehabilitation of dwelling units, common areas and related structures; c. new construction;
d. carrying charges and financing fees;
e. architectural, legal, and organizational fees;
f. temporary or permanent tenant relocation costs; and
g. developer fees consistent with the policies described in Section IV below.
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III. PROPOSAL SUBMITTAL AND REVIEW PROCEDURES
Proposal Submittal
All Proposals for Program funds shall be submitted to the Housing Division and shall be reviewed and recommended for approval to the Community Redevelopment and Housing Commission for its review and recommendation for City Council or Housing Authority approval through a transparent, open and competitive selection and review process as established in this section.
The competitive selection process will begin with a determination by Housing Division staff that the City has sufficient Available Funds to develop one or more affordable housing projects. If the City has sufficient Available Funds to develop one or more projects , the Housing Division , upon City Council approval, will issue a Request for Proposals (RFP), Request for Qualifications (RFQ) or Notice of Funding Availability (NOFA), collectively referred to as the “RFP Process” for a certain amount of Available Funds. The RFP Process will be open (“Open RFP Process”) and provide sufficient time for applicants to identify an eligible site and complete and submit a proposal in response to the RFP announcement . It will also align with annual funding cycles through the Low-Income Housing Tax Credit Program. The RFP Process will be open for at least one year with four (4) quarterly deadlines to submit a proposal scheduled throughout the year.
The RFP Process will be announced through notices to the following parties:
Interested Developers and Nonprofit Organizations on the Housing Division’s RFP Process Database
o Developers and Nonprofit Organizations interested in being added to the RFP Process Database can do so by contacting the City’s Housing Division Other affordable housing membership association resources (e.g. Southern California Association of Nonprofit Housing, Kennedy Commission, 2-1-1 OC) Public Notice in the local newspaper
Published on www.Planetbids.com
Proposals must meet the minimum requirements outlined in the RFP Process to ensure compliance with available funding sources’ regulations and requirements. Proposals will be received from qualified firms for projects consistent with the requirements of the Available Fund(s) issued through the RFP Process. Proposals shall not exceed the amount of the City’s total Available Funds as published on a quarterly basis in the Housing Division Quarterly Report.
A Qualified Developer (an “Applicant”) shall complete and submit to the Housing Division the Proposal for Program funds and prepare all required attachments and exhibits, including, but not limited to , the project proforma, budget, sources and uses, project management plan, tenant selection and marketing plan, relocation plan (if applicable), signed purchase agreement and escrow instructions, preliminary title report, and limited partnership documents (if applicable).
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Proposal Review
After each deadline for the Open RFP Process, the Housing Division staff shall review the Proposal to d etermine that the minimum Program and RFP Process requirements are met (minimum threshold review). Proposals that do not meet the minimum threshold review will be considered non-responsive. If the Proposal meets the minimum threshold review, the Housing Division will form a Review Panel. The Review Panel for the RFP Process will consist of at least one employee from the City’s Public Works Agency, Planning and Building Agency, and Community Development Agency and one outside agency or government-entity. If an employee is not available in one department, a second employee may be requested from one of the other two departments so long as there are at least two of the three City Agencies represented on the Review Panel.
Using the scoring and selection criteria provide d in the RFP Process and provided below , the Review Panel shall determine whether the proposal is recommended for a pre-loan commitment, with or without conditions. Including the scoring and selection criteria, the Review Panel shall review the design of the proposed project for appropriateness for the proposed target group, compatibility with surrounding uses, cost effectiveness of construction, and appropriateness of the design and construction for low maintenance and long term durability. Proposed proje cts must receive a minimum threshold score of 75 points to move forward with the proposal review process. If the Review Panel determines, in its discretion, that the Proposal may be recommended for approval, the Housing Division shall request an underwriting and subsidy layering review by a real estate advisor selected by the City . The real estate advisor shall confirm the underwriting for the Project, the financial g ap, and other programmatic requirements related to the funding sources. If the Review Panel determines that the Proposal will not be recommended for approval (i.e. the Proposal does not meet the minimum threshold score of 75 points), the Developer will be notified in writing of the decision and the result will be published in the Housing Division Quarterly Report.
City Council Initiated Proposal Review
A Developer may submit a request for a sole source award of funding directly to the City Council (the request cannot exceed the amount of the City’s total Available Funds as published on a quarterly basis in the Housing Division Quarterly Report ). A t least one Councilmember must then submit a written request to staff to review the Developer’s proposal . After a written request has been received, staff will request a complete proposal from the Developer . After the proposal has met a minimum threshold review by staff, the project will undergo an underwriting and subsidy layering review analysis by a real e state advisor selected by the City , to be paid for by the Developer. After the analysis has been completed, staff will present the real estate advisor’s analysis and the proposal to City Council for direction without any recommendation(s) from staff on funding or not funding the project . If City Council requests a second real estate analysis to be conducted, the City will pay for the second analysis, not the developer.
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By-Right Funding for Achieving City Goals and Objectives
If at any time a developer proposes a project that is located in a zoning district permitting development of residential uses “by -right” and such approvals do not require any discretionary actions by the City , the developer may submit an application for by -right funding of extremely low-income affordable housing units. Staff may then form a Review Panel to consider the developer’s application for by -right funding as quickly as possible using the scoring and selection criteria from the Open RFP Process. This policy will expedite con sideration of the developer’s application for by -right funding . Only units serving households at 30% Area Median Income and below may qualify for by-right funding under this application process. The maximum per unit subsidy shall not exceed the maximum l imits established by HUD for the HOME Program at the time of submission of the application for by -right funding by the developer. Applications for by-right funding may only request Inclusionary Housing Funds from the City under the above -described process and the requested amount shall not exceed the amount of the City’s total Available Funds as published quarterly in the Housing Division Quarterly Report. However, funding is subject to the availability of actual Inclusionary Housing Funds. Additionally, the City reserves the right to amend these policies at any time, which could affect the availability of such funding, or to deny funding for any project that the City determines in its sole discretion does not align with the City’s goals and objectives for this program.
Three-Year Goals for By-Right Funding Proposals:
The City of Santa Ana has established the following Goals for the next three years, to be evaluated on an annual basis, for proposals submitted under this section. The Goals are linked to the Regional Housing Needs Assessment (RHNA) per the City’s Housing Element and based upon what affordable housing development projects that the City has in the pipeline for development and estimates/goals for Year 3:
Year
# of Extremely Low-
Income Units at 30%
AMI
# of Very Low-Income
Units at 50% AMI
# of Low-Income Units
at 80% AMI
1 54 111 9
2 54 33 38
3 115 82 34
TOTAL 223 226 81
Competitive Selection Criteria
In selecting among competing project proposals, consideration shall be given to projects that meet the following General Principles:
Significantly increase affordable housing opportunities for large families (three- and four- bedroom units).
Benefit a high er percentage of units for extremely low-income households with deeper affordability.
Are cost effective with low operating costs (green building techniques). Increase affordable housing opportunities for special needs populations , including homeless individuals and families, persons with a disability, and seniors. Are located in areas currently underserved by affordable housing developments.
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The following constitute the City’s general selection criteria, and may be modified from time to time to address practical requirements arising from a particular solicitation at the City’s discretion:
COMPETITIVE SELECTION CRITERIA
1. LEVEL OF AFFORDABILITY AND TARGET POPULATION
(Max. 25 Points)
ELIGIBLE
POINTS
Project significantly increases affordable housing opportunities for large families (three- and four-bedroom units) 10
Project provides a higher percentage of units for extremely low-income households with deeper affordability 10
Project increases affordable housing opportunities for special needs populations including, but not limited to, homeless individuals and families, and persons with a disability
5 Sub-total 25
2. TIMELINESS TO BUILD NEW HOUSING (Max. 20 Points)
Project has demonstrated site control 7
Project is zoned appropriately 5
Project does not have any other site-related issues 5
Project aligns with the City’s Housing Element, Strategic Plan, and/or 5-Year Consolidated Plan 3
Sub-total 20
3. PROPERTY MANAGEMENT EXPERIENCE AND SKILLS
(Max. 15 Points)
Project is energy efficient and incorporates green-building techniques 6 Applicant's ability to manage affordable rental units to ensure ongoing compliance with affordability requirements and long term financial solvency 3 Applicant's past experience in property management 3
Applicant's capacity and ability to quickly lease completed units 3 Sub-total 15
4. DEVELOPER EXPERIENCE AND SKILLS (Max. 15 Points)
Applicant's capacity and ability to obtain additional funding 4 Applicant's capacity and ability to obtain entitlements 4 Applicant's overall past and projected effectiveness to provide affordable housing 4
Applicant's past and projected effectiveness to manage the construction process and stay on schedule 3
Sub-total 15
5. LEVERAGING OF CITY FUNDS
(Max. 5 Points)
Applicant's potential or capacity to obtain additional financing 5 Sub-total 5
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6. ANTICIPATED CASH FLOWS (Max. 15 Points)
Project's proposed development costs are reasonable and comparable 3 Project's proposed rents are realistic 3
Project's operating costs are realistic and reasonable 3 Project has sufficient operating and replacement reserves 3 Project is projecting a positive cash flow through affordability period 3 Sub-total 15
7. PROJECT LOCATION (Max. 5 Points)
Project is located in an area currently underserved by affordable housing 5 Sub-total 5
TOTAL ELIGIBLE POINTS 100
Developer Input on In-Lieu Fee Payments to the Inclusionary Housing Fund Under Section 41-1904(c)(3) of the Housing Opportunity Ordinance, a “Developer may provide input regarding what project the in lieu fees should be applied towards, but such input shall not be dispositive. The in-lieu fees collected by the City are City funds over which the City has complete and absolute discretion”. If a Developer chooses to provide input on the allocation of their in-lieu fees, input must be submitted in writing within no more than 90 calendar days from the date payment of the in-lieu fees are deposited with the City. The Developer’s request will be worth up to five (5) bonus points awarded to the applicant within the RFP Process through the Competitive Selection Criteria provided above. The bonus points do not guarantee that the project will be funded with the in-lieu fees paid by the Developer that provided the input.
Determination of Reasonable Costs and Financial Feasibility
A real estate advisor shall review the Applicant's estimates and projections of rents, expenses, reserves and development costs in accordance with industry-standard underwriting guidelines.
The Applicant shall provide a proforma and background documentation on all costs for t he analysis, as requested by the City. The City may recommend adjustments to cost and expense amounts as appropriate to conform to current market and industry standards. The total amount of the Program loan and all private loans shall not exceed the tota l development costs approved by the City.
The maximum allowable purchase price shall not exceed the appraised value as evidenced by an appraisal prepared by a California State Certified General Appraiser and approved by the Housing Division, which is da ted not more than six (6) months prior to the date of the proposal.
The appraisal may not determine property value based solely on sales of properties financed by public agencies.
The maximum affordable mortgage amount shall be calculated using the rent s chedule proposed by the Applicant as approved by the City, the proposed interest rate and terms of the primary loan(s), and reasonable operating allowances and reserves , including a reserve to amortize a mortgage, as needed.
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The requested City loan for a project shall not exceed the total amount of the gap between the maximum affordable mortgage amount available from non -City sources plus funds available from other sources of public subsidy, and the total development costs plus any on -going annuity necessary to maintain affordable rent levels as defined in the Proposal.
All assisted units must maintain rents that do not exceed the Maximum Affordable Rent, as defined in the Loan Documents, for the life of the loan in accordance with the terms of the loan or other recorded Covenants. Syndicated projects must be structured such that ownership can feasibly be acquired by the nonprofit General Partner at the end of the term of the limited partnership agreement, when appropriate. When determining the maximum City loan, the real estate advisor will review the rent schedule and annual cash flows to determine whether long - term affordability is maintained. In cases where a rent subsidy program is used and the mortgage is calculated on the basis of the subsidized rents, an "affordability reserve" may be required, where the amount of the reserve shall be sufficient to cover the difference between affordable rents and the subsidized rents.
Developer Fee
For new construction, acquisition and rehabilitation projects utilizing Low-Income Housing Tax Credits, the developer fee shall not exceed the maximum fee allowed by the California Tax Credit Allocation Committee. The Housing Division Manager may require the developer to defer a portion of their developer fee, based upon an analysis by the real estate advisor, to make the project feasible, reduce the amount of Program funds being requested for the project, or both.
Developer Capacity
Applicants must demonstrate the capacity to successfully develop the proposed project. The City shall evaluate capacity on the basis of the Applicant’s track record in developing and managing affordable housing, or inclusion of development team members with a successful record in developing such housing. In addition, Applicants must demonstrate the financial and legal capacity to undertake the proposed project.
Clear Title
The Applicant shall have the responsibility to obtain clear title to the property. As soon as feasible, the Applicant will submit a preliminary title report for City review and written approval.
Staff shall review the state of title, including the conditions, covenants, restrictions , and legal description of the property. In the case of title issue s, the Applicant shall correct the state of title and remove all exceptions to the title not consented to by the City before the City closes the loan.
Senior Financing
The Applicant shall secure other resources such as equity from syndication proceeds, t ax exempt financing, federal and state housing rental and development subsidies and available private financing to minimize the amount of the City loan. The Applicant will submit to the City the terms and conditions of all non -City financing as well as eq uity contributions for review. The
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Applicant must submit projected cash flows for the term of the loan, showing the ma ximum possible increases (i.e. worst case scenario) in debt service per year, the projected rent and expense increases, the means of maki ng up any deficits, and projected payments of Residual Receipts. The real estate advisor shall analyze the feasibility of the project to carry the loan (s), and if feasible will review the terms of the non-City financing.
The City may, at its sole discret ion, calculate the mortgage amount at the terms and rates of available financing programs other than that proposed by the Borrower, if alternative terms and rates are available that would reduce the amount of City subsidy required, and would otherwise conform to the City/Agency requirements.
Management and Affirmative Marketing Plan
The Applicant shall prepare a Project Management Plan for City review and approval. The Plan shall describe the Applicant's policies and procedures concerning:
(1) Affirmative marketing and tenant selection procedures , including proposal procedures, prioritization of Santa Ana residents and workers (see Local Preference section below) where possible; waiting lists, and lease agreements; and marketing efforts and tena nt selection procedures that will be used to attract eligible persons from all racial, ethnic and gender groups, as well as persons living with disabilities, in the housing marke t area to the available housing opportunities. The Plan should describe the pr otocols for keeping records of affirmative marketing activities and for keeping records of requests (from applicants and existing tenants) for all units assisted with affordable housing funds;
(2) Procedures for determining tenant eli gibility and certifying incomes. T he Plan should demonstrate sufficient outreach to disability -related service providers to ensure that accessible units are occupied to the extent possible by those households who need the accessibility features due to disability . The P lan should demonstrate that the Developer conducted sufficient outreach to persons that meet the qualifications identified in the Local Preference section below. An outreach plan and results from outreach efforts should be maintained by the developer and available to submit to the City upon request;
(3) Management/tenant relations and assistance to tenant organizations, including the training and use of tenants to perform maintenance and management functions as appropriate;
(4) Maintenance and repair services;
(5) On-site management facilities;
(6) Rent collection;
(7) Records and reporting requirements;
(8) Personnel and staffing;
(9) Compliance with all tenant protection laws, including Building and Health and Safety Codes;
(10) Fee schedule; and
(11) Any other relevant issues requested by the City to be addressed.
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No person shall on the grounds of race, marital status, sex, color, age, religion, national origin, ancestry, immigration status, physical disability, AIDS, sexual orientation, or any other protected class, be excluded from participating in, be denied the benefits of, or be subjected to discrimination under any program or activity funded in whole or in part with these funds.
Local Preference
Local preference for Santa Ana residents and workers in tenant selection shall be a requirement of the City’s Affordable Housing Funds and Programs. Local preference shall be a r equirement of the HOME, CDBG, and PBV Programs only if permitted by the federal government.
In evaluating a loan request, staff shall evaluate a loan applicant’s effectiveness in achieving the City’s local preference goals and give priority to those loan applicants who administer their wait lists using sorting protocols which result in outcomes where househol ds who live or work in Santa Ana are beneficiaries of City-funded affordable housing.
Subject to applicable tenant income limits and any preferences required by the laws of the United States or the State of California (including , but not limited to , laws and regulations governing nondiscrimination and preferences in housing occupancy), the Borrower shall give preference in leasing units in the following order of priority:
1. First priority shall be given to persons who have been permanently displaced or who face permanent displacement from housing in Santa Ana as a result of any of the following:
a. A redevelopment project undertaken pursuant to California’s Community Redevelopment Law (Health & Safety Code Sections 33000, et seq.) -- applicable only to projects funded by the Low-Moderate Income Housing Asset Fund. b. Ellis Act, owner-occupancy, or removal permit eviction; c. Earthquake, fire, flood, or other natural disaster;
d. Cancellation of a Housing Choice Voucher HAP Contract by property owner; or e. Governmental Action, such as Code Enforcement.
2. Second priority shall be given to persons who are either:
a. Residents of Santa Ana and/or
b. Working in Santa Ana at least 32 hours per week for at least the last 6 months. c. Persons who seek to reside in Santa Ana as an accommodation to a mental or physical disability.
Regarding any “accessible units” that are requir ed as part of a multifamily development, such accessible units should be first offered to existing occupants of the building (if applicable) who are not occupying an accessible unit and who have indicated a need for the features of an accessible unit. If n o existing occupants of the building have indicated the need for the features of an accessible unit, or if the building is being leased for the initial occupancy, then such accessible units should first be offered to applicants who have indicated the need for the features of an accessible unit, inclusive of the preferences above. The application of preferences may not conflict with Section 504 of the Rehabilitation Act of 1973, 24 C.F.R. §100.202, and any other preemptive laws that may be enacted regarding fair housing for persons living with disabilities.
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“Accessible units” refers to those units which were originally approved by the City specifically as accessible units and which provide specific features to address the needs of persons living with mobility impairments or persons living with sensory impairments.
Environmental Review
Project sites must be free from adverse environmental impacts or the proposed project must successfully mitigate these impacts. The City shall assess the environmental effects of each activity proposed to be carried out with City funding in accordance with the provisions of the National Environmental Policy Act of 1969 (NEPA) and the California Environmental Quality Act (CEQA), as applicable. For projects subject to NEPA review, no loan funds (except for activities normally exempted from the environmental clearance requirements in 24 CFR Part
58.34) shall be released until the e nvironmental review is completed , the notice of finding and environmental assessment results are published, and the 15-day public comment period expires.
Prevailing Wages
Any contract for construction (rehabilitation or new construction) of affordable housing with 12 or more units assisted with HOME Program funds, 8 or more units if the project is assisted with CDBG Program funds, or 9 or more units if the project is assisted with PBV Program funds, must contain a provision requiring that not less than the prevailing wages paid in the locality, as determined by the Secretary of Labor pursuant to t he Davis-Bacon Act, will be paid to all laborers and mechanics employed in the development of the project. Contractors and subcontractors must comply with regulations issued under this Act and pertaining to labor standards and HUD Handbook 1344.1.
Relocation
If necessary, the Applicant shall develop a plan for temporary relocation or permanent voluntary relocation, where necessary, for review by the City. The Relocation Plan shall be in accord with the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, and the implementing regulations at 24 CFR Part 42, and the California Relocation Assistance Act, where applicable. There shall be no permanent involuntary tenant displacement.
In cases where tenants will be voluntarily displaced, the Applicant must submit a copy of a letter to each tenant which details the tenant’s rights to relocation assistance . In the case of a tenant’s waiver of relocation payments, the Applicant must submit a letter signed by the tenant indicating the tenant’s knowing and voluntary waiver of any relocation assistance. In the absence of these items, the Applicant/“other displa cing entity,” as that term is defined under applicable state or federal law will be responsible for paying the tenant the appropriate level of relocation assistance.
Contracting Requirements
All Applicants will be required to submit an affirmative action/equal employment opportunity plan indicating the methods that they will use to encourage the participation of certified Minority
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Business Enterprise/Women Owned Business Enterprise (MBE/WBEs) in their development project. City staff will review the plan and competitive bid and selection process to ensure that required procedures have been followed. City staff will also monitor construction to ensure that MBE/WBEs are participating in the project as indicated in the construction contract.
All work shall be completed by State -licensed contractors which shall have Santa Ana business licenses. All contracts must comply with competitive bidding requirements. All efforts shall be made by the private owner or the Borrower to provide equal opportunity for employment without discrimination as to race, marital status, sex, color, age, religion, national origin, ancestry, physical disability, AIDS, sexual orientation, or any other protected class, in seeking contractors and subcontractors.
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IV. PRE-LOAN COMMITMENT
Pre-Loan Commitment
Following the RFP Process, Proposal Review, Determination of Reasonable Costs and Financial Feasibility, and conditional on meeting the other requirements and conditions outlined above, a pre-loan commitment letter may be drafted by the Housing Division, reviewed and approved by the Housing Division Manager , the City Attorney’s Office, and the Executive Director of Community Development , before being recommended for approval . The letter shall state the maximum amount of program funds reserved for the project and list all of the additional conditions, documents and steps that must be taken by the Borrower prior to loan closing.
After the pre-loan commitment letter has been drafted, staff will prepare a written staff report recommending a commitment of funds for a proposal and explaining the reasons for the commitment. The recommendation will be made first by the Housing Division to the Community Redevelopment and Housing Commission (CRHC) to issue the commitment of program funds to the project in the form of an award of program funds. If recommended by the CRHC to City Council, a recommendation will then be made by the Housing Division to the City Council and/or Housing Authority for final approval of the commitment of program funds by motion adopted by the affirmative votes of at least two-thirds (2/3) of the members.
If approved by City Council and/or the Housing Authority , a n otice of the issuance of the pre- loan commitment shall be posted publicly, and a copy of such notice shall be published in a newspaper of general circulation, no later than 21 days after the commitment is issued.
Upon issuance of a pre-loan commitment letter, the Housing Division shall work with the Developer to secure all of their remaining financing. If the conditions and projections for the project rent schedule or non -City loans changes or is modified after the pre-loan commitment letter is issued, a second underwriting and subsidy layering analysis will be conducted by a real estate advisor.
Conflict of Interest
No person who is an employee, agent, consultant, officer, or elected official or appointed official of the City w ho exercises or has exercised any function or responsibility regarding activities assisted with Program funds or who is in a position to participate in a decision making process or gain inside information concerning these activities, may obtain a financial interest or benefit from an activity, or have an interest in any contract, subcontract or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties, during their tenure or for one year thereafter.
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V. LOAN TERMS AND CLOSING PROCEDURES
Loan Terms
Permanent loans that are not grants shall be due and payable in no more than fifty-five (55) years subject to the terms of the applicable Loan Agreement and recorded Affordability Restrictions.
If a developer requests a shorter term loan, the City would be willing to negotiate. However, except for certain HOME funded projects, the Affordability Restrictions shall remain in effect for at least 55 years.
Purchase Option
At the end of the permanent loan term, the City may have the option to take title to the property in accordance with the terms of an option agreement if the owner of the property decides to sell
Interest Rates for Loans
The interest rate shall be set at either:
(1) The rate established by the Federal Home Loan Mortgage Corporation for the average conventional commitment of a fixed rate, thirty -year (30) mortgage, and shall be compounded annually; or
(2) When necessary to secure investor equity, interest rates of affordable housing projects that include tax credits or conventional lenders, at 3% simple interest; or (3) When the City loan is in a subordinate position to a first trust deed capital advance/loan made under th e U.S. Department of Housing and Urban Development (HUD) Section 202 or Section 811 Programs, the interest rate shall not exceed the highest permissible rate on the applicable HUD Section 202 or Section 811 Program mortgages, under authority of Chapter 24 of the Code of Federal Regulations (CFR), Subpart 885.410(g); or
(4) When required to meet federal subsidy layering guidelines, at the Applicable Federal Rate (that rate established by the Internal Revenue Service pursuant to Section 1274(d)(1) of the Internal Revenue Code).
Loan Payments
Payments on permanent loans shall be made as follows:
(1) Payments of principal and interest shall be made annually to the City in an amount equal to 50% of project Residual Receipts, if any. Payments shall be applied first to accrued interest, and then to principal.
(2) The Borrower may elect to prepay the loan prior to the end of the term. However, the Regulatory Agreement or recorded Affordability Covenants shall remain in full force and effect for its term regardless of any prepayment.
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(3) If the Borrower violates the terms of the Regulatory Agreement or recorded Affordability Covenants such that the City declares the loan in default, the entire amount of unpaid principal plus accrued interest at the rate e stablished at the time of closing shall be due based on the terms of the agreement.
(4) Unless paid in full earlier, the remaining principal balance of the loan and accrued interest shall be due and payable at the end of the term of the Promissory Note. W here necessary to meet requirements of third party investors and with approval of the Housing Division Manager, the City may allow the remaining principal and accrued but unpaid interest to be payable only to the extent that the fair market value of the Pr oject exceeds the principal balance of the existing indebtedness secured by the property.
Security
The loan shall be secured as follows:
(1) The loan shall be secured by a Deed of Trust and Promissory Note which may be subordinated to Deeds of Trust secur ing other Federal, State, City loans, or loans from conventional financing institutions used in conjunction with the loan on the same property. The City must approve all requests for subordination. (2) The loan shall be further secured by a Regulatory Agr eement or recorded Affordability Covenants to assure that Program funds are used to provide long -term affordable rental housing opportunities for low -, very low -, and extremely low -income households , as applicable. The Borrower and the City shall execute the Regulatory Agreement or recorded Affordability Covenants regulating project rents, tenant selection procedures, use of project income, management and maintenance, transfer of property, and permitted forms of ownership and use. The Regulatory Agreement or recorded Affordability Covenants shall be recorded with the Deed of Trust.
Loan Closing Procedures
After the developer has secured all of their remaining non -City financing (e.g. Low -Income Housing Tax Credits), the Housing Division will prepare draft loan documents following the Loan Terms above, including a draft Loan Agreement, Promissory Note, Deed of Trust (or other appropriate security as determined by the Housing Division Manager), and Regulatory Agreement or recorded Covenants, and submit them to the City Attorney’s Office for review and approval as to form. Requirements for a Regulatory Agreement or recorded Covenants may be waived in the case of a project which is funded under the HUD Section 202 or Section 811 Program.
After the loan documents have been finalized, a recommendation will be made by the Housing Division to the CRHC to approve the loan documents. If recommended by the CRHC to City Council, a recommendation will then be made by the Housing Division to the City Council and/or Housing Authority for final approval of the loan documents by motion adopted by the affirmative votes of at least two -thirds (2/3) of the members . Funds may be disbursed following execution and recording of the Loan Documents by the Borrower and the City Manager, and compliance with all commitment conditions. Staff shall submit a request for release of funds required for loan closing to the Executive Director of Finance . The Executive Director of Finance may then authorize release of loan funds into an escrow account established for the loan closing with instructions for disbursement.
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VI. PROJECT MONITORING AND REPORTING
The Housing Division shall monitor the project during rehabil itation or construction as needed for compliance with any loan documents and applicable City, State and/or Federal regulations.
The Housing Division shall request notification of the final inspection and final construction release from the primary lender, and shall review management practices and reporting procedures with the borrower and project management agent at that time for full compliance with Program requirements. A copy of the Notice of Completion for the project shall be submitted to the Housing Division at the time the Notice is recorded.
Borrowers shall be required to certify annually that they have complied with affirmative marketing and tenant selection procedures, and shall submit an annual report to the Housing Division in the form speci fied by the Division. The Housing Division shall monitor compliance with any Regulatory Agreement or recorded Affordability Covenants, the loan documents, and applicable City, State and/or Federal regulations on an annual basis. Additional details regarding the monitoring process will be included as part of the final Loan Documents.
Fair Housing and Equal Opportunity
Borrower shall post notices stating that a housing project is subject to Fair Housing and Equal Employment Opportunity requirements of 24 CFR 92.350 and 351 at each project site.
Establishment and Use of Reserve Funds
Upon completion of project constru ction, the borrower will be required to capitalize a reserve fund in an amount determined by the City and make annual contributions to the fund. The reserve fund can be used for expenditures related to necessary structural and equipment replacements and i mprovements of a capital nature, and is not intended to be used for ordinary maintenance items.
Annual Reporting by the Housing Division
On a quarterly basis, the Housing Division shall prepare a report to the CRHC for its review and recommendation for City Council approval. The quarterly report shall include details on at least the following items:
(1) Loan Activity;
(2) Loan Portfolio Management and Monitoring;
(3) Proposals that were submitted during the previous quarter under the RFP Process but were not recommended for approval by a Review Panel;
(4) Affordable Housing Projects under Development; and
(5) Available Funds for Affordable Housing Development Projects.
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VII. FUNDING SOURCES
Low and Moderate Income Housing Asset Fund
(Housing Successor Agency Fund)
Source of Funds
Funding sources for this program are generated from proceeds from the sale of former Redevelopment Agency housing assets, residual receipts from former Re development Agency assets (i.e. loans), as well as a portion of the loan repayments from the former Redevelopment Agency to the City. Sources are set aside for the purpose of increasing, improving and preserving the community’s supply of low and moderate income housing as stipulated by California Health and Safety Code Section 34176. (Further information on grant terms provided in Section III).
This fund includes land assets owned by the Housing Authority acting as the Housing Successor Agency that must be develope d for affordable ho using or sold at or above fair market value to increase the Low and Moderate Income Housing Asset Fund.
Eligible Borrowers/Grantees
Eligible borrowers are nonprofit Housing Development Corporations (HDC ’s) duly organized to promote and undertake communi ty development activities on a not -for-profit basis, or for -profit housing developers or development corporations, with proven capacities to develop, own, and operate affordable housing. Limited partnerships whose general partners are otherwise eligible under the above are also eligible to borrow Program funds.
Eligible Projects
All new construction projects shall be affordable to households whose income, as adjusted for household size, does not exceed 80% of area median income.
Eligible acquisition and/or rehabilitation projects will:
(1) have four or more apartment s or be congregate housing or mobile home units, except where the Housing Division Manager finds that the project will provide a substantial public benefit;
(2) be in need of rehabilitation as defined herein;
(3) be located in the City of Santa Ana;
(4) be free from significant adverse environmental conditions , except those that can be mitigated at a reasonable cost through rehabilitation; and, (5) minimize tenant displacement.
Eligible Uses and Activities
Program funds can be used to make loans or grants to eligible borrowers who will provide affordable housing, principally for low - and moderate -income households. Eligible uses of deferred payment loan funds or grants include, but are not limited to, the following:
(1) acquisition and/or rehabilitation of eligible properties for rental or transitional housing;
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(2) acquisition and conversion of non -residential property to multifamily rental housing units; and
(3) new construction of housing units for rental or transitional housing.
Affordability Requirements
As required by State law, all projects shall be targeted to households earning 80% or less of the area median income , based on the State of Califo rnia Housing and Community Development income and rent limits. State law also requires that at least thirty percent (30%) shall be expended for rental housing affordable to and occupied by “low -income” households does not exceed thirty percent (30%) of the area median income and no more than twenty percent (20%) affordable to and occupied by households between 60% of the area median income and 80% of the area median income.
Units are considered affordable when the rent, less a deduction for a utility allo wance, for a “very low-income” household does not exceed thirty percent (30%) of 50% of the area median income; for a “low-income” household does not exceed thirty percent (30%) of 6 0% of the area median income.
Very low-income households are households whose incomes do not exceed 50% of the area median income. Low-income households are households whose income does not exceed 80% of the area median income. The area median income as referenced above is the Orange County area median income figure, adjusted for household size, as published by the California Department of Housing and Community Development (HCD) from time to time.
Security
The loan or grant shall be secured by a Deed of Trust and Promissory Note which may be subordinated to deeds of trust sec uring other Federal, State, or City loans, or loans from conventional financing institutions used in conjunction with the Low and Moderate Income Housing Asset Fund loan on the same property. The City must obtain written commitments to protect the City’s investment in the event of a default. The City must approve all requests for subordination.
The loan or grant shall be further secured by recorded Affordability Covenants and Restrictions, running with the land, to assure that Program funds are used to p rovide long -term affordable rental housing opportunities for low - and moderate-income households. The Borrower and the City shall execute and record Affordability Covenants and Restrictions regulating project rents, tenant selection procedures, use of project income, management and maintenance, transfer of property, and permitted forms of ownership and use, including a prohibition on conversion of the project to con dominium or stock cooperative ownership for the term of the recorded Affordability Covenants and Restrictions. The recorded Affordability Covenants and Restrictions shall provide for the longest feasible time. Notwithstanding the above, the Affordability Covenants and Restrictions would in no event, be shorter than any other term of a Regulatory Agreement or Covenant recorded concurrently with the City’s Covenants and Restrictions. The Affordability Covenants and Restrictions shall be recorded with the De ed of Trust.
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In some circumstances, these Affordability Covenants and Restrictions may be subordinated by the City, pursuant to Section 33334. 14 of California Health and Safety Code, to liens, encumbrances, or regulatory agreements of other federal or sta te agencies or lenders providing financing for the project, subject to assurances by senior lenders that the City’s lien rights will be protected.
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Inclusionary Housing Fund
Source of Funds
Funding for this program is provided using revenues generated through in-lieu fees from the City of Santa Ana Housing Opportunity Ordinance (revised and adopted by City Council in October 2015).
Eligible Borrowers/Grantees
Eligible borrowers are nonprofit Housing Development Corporations (HDC’s) duly organized to promote and undertake community development activities on a not -for-profit basis, and which have a valid 501(c)(3) or (4) designation from the IRS, or for -profit housing developers or development corporations, with proven capacities to develop, own, and operate affordable housing. Limited partnerships whose general partners are otherwise eligible under the above are also eligible to borrow Program funds.
Eligible Projects
Funds can be used to increase and improve the supply of housing af fordable to moderate (120% AMI), low (80% AMI) , very -low (50% AMI) and extremely -low income (30% AMI) households in the City.
Eligible rehabilitation projects will:
(1) be in need of rehabilitation as defined herein;
(2) be located in the City of Santa Ana;
(3) be free from significant adverse environmental impacts , except those that can be mitigated through rehabilitation; and
(4) avoid permanent involuntary tenant displacement to the greatest degr ee feasible in order to carry out the program.
Eligible projects which involve new construction or conversion of an existing non-residential use will conform to items (2), (3), and (4) above.
Eligible Uses and Activities
Funds can be used to make loans to eligible borrowers to provide affordable housing, for moderate (120% AMI), low (80% AMI), very -low (50% AMI) and extremely -low income (30% AMI) households, including, but not limited to, the following:
1. Acquisition and rehabilitation of eligible rental properties. Existing rental units may be acquired, substantially rehabilitated and then income and affordability covenants can be recorded on the units for rental or ownership.
a. Defined as rehabilitation of a dwelling unit that has substantial building and other code violations such that the unit is returned to the City’s housing supply as decent, safe and sanitary affordable housing. The housing must comply with all local building and zoning codes and standards, including energy efficiency and water conservation standards, and meet housing quality standards in Section 882 of Title 24.
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2. Purchase and rehabilitation of homes with code-related issues for sale to low- and moderate-income buyers;
3. New construction of rental housing units;
4. To pay for one-time programs and activities for code enforcement, quality of life and general health and safety issues that directly relate, enhance, and promote affordable housing projects and activities.
5. Acquisition and conversion of non-residential (e.g. commercial) property to multifamily rental housing units;
6. Homeless services programs;
7. Security deposit assistance programs;
8. Immigrant-focused housing programs, services and activities for non-U.S. citizens;
9. Foreclosure and eviction prevention programs, services and activities.
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HOME Investment Partnerships Program
Source of Funds
Funding for this Program is provided through the U.S. Department of Housing and Urban Development (HUD) HOME Program (including program income and residual receipts) , and therefore is subject to the federal rules and regulations found in 24 CFR Part 92, as amended from time to time.
Eligible Borrowers/Grantees
Eligible borrowers are nonprofit Housing Development Corporations (HDC’s) duly organized to promote and undertake community development activities on a not -for-profit basis, and which have a valid 501(c)(3) or (4) designation from the IRS, or for-profit housing developers or development corporations, with proven capacities to develop, own, and operate affordable housing. Limited partnerships whose general partners are otherwise eligible under the above are also eligible to borrow Program funds.
Eligible Projects
Projects eligible for HOME funding shall:
(1) be rental projects located in the City of Santa Ana; (2) contribute to the achievement of the City's Strategic Plan and fair housing goals; (3) involve 4 or more apartments which will be rented to eligible lower income households at rents that do not exceed rents as defined by 24 CFR 92.252, as amended from time to time. Projects serving persons with special needs, or where the City Manager finds that the project will provide a substantial public benefit, may have fewer than four units. Transitional or permanent supportive housing may be provided (but not temporary shelters).
(4) have at least 20% of the HOM E-assisted units rented to very low -income families (50% of median income) under t he terms and conditions set forth in 24 CFR 92.252 (2)(b);
(5) demonstrate financial feasibility -- including the ability to maintain rents for the subsidized units at affordable levels for the periods specified in 24 CFR 92.252; (6) be free of significant adverse environmental impacts, except those that can be mitigated through the project itself;
(7) minimize tenant displacement;
(8) comply with all local building and zoning codes and standards, including energy efficiency and water conservat ion standards, and meet housing quality standards in Section 882.109 of Title 24. Newly constructed housing must meet the current edition Model Energy Code of the Council of American Building Officials; (9) make efficient use of public funds and avoid " layering" of subsidies beyond those necessary to achieve a financially feasible project; and, (10) have at least 51% of the project space be residential, if in a mixed use project.
Eligible Uses and Activities
HOME funds may only be used to finance new co nstruction or acquisition and/or rehabilitation of rental housing which is affordable to very low and low -income households as defined by 24
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CFR 92.2. Fifteen percent (15%) of the annual HOME fund allocation shall be set aside for certified Community Housing Development Organizations (CHDO’s).
New construction costs eligible for HOME funding shall be as specified in 24 CFR Part 92, including:
1. site acquisition;
2. site preparation costs (grading, filling, etc.);
3. financing costs as described in 24 CFR 92.206;
4. architectural, engineering, and other related soft costs;
5. the cost of extending or upgrading utilities to the site to support the proposed project;
6. construction costs;
7. relocation costs; and,
8. affirmative marketing and audit costs related to HOME program requirements.
Rehabilitation costs eligible for HOME funding include:
9. project acquisition with or without rehabilitation;
10. financing costs, as described in 24 CFR 92.206;
11. architectural, engineering, or other design costs;
12. utility upgrade or extension costs;
13. costs associated with demolition (where necessary) only if rehabilitation is commenced within 12 months of demolition;
14. construction costs;
15. project audit costs; and,
16. affirmative marketing costs.
Ineligible Uses and Activities
The following costs are not eligible for HOME funding:
1. project reserve accounts for replacement or operating reserves, and operating subsidies;
2. payment of impact fees;
3. land banking;
4. emergency repair or weatherization programs;
5. commercial properties;
6. temporary shelters; or
7. project-based rental assistance.
Affordability Requirements
HUD provides the following maximum HOME rent limits. The maximum HOME rents are the lesser of:
1. The fair market rent for existing housing for comparable units in the area as established by HUD; or
2. A rent that does not exceed 30 percent of the adjusted income of a family whose annual income equals 65 percent of the median income for the area, as determined by HUD, with adjustments for number of bedrooms in the unit. The HOME rent limits provided by HUD will include average occupancy per unit and adjusted income assumptions.
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In rental projects with five or more HOME-assisted rental units, twenty (20) percent of the HOME-assisted units must be occupied by very low-income families and meet one of following rent requirements:
1. The rent does not exceed 30 percent of the annual income of a family whose income equals 50 percent of the median income for the area, as determined by HUD, with adjustments for smaller and larger families. HUD provides the HOME rent limits which include average occupancy per unit and adjusted income assumptions. However, if the rent determined under this paragraph is higher than the applicable rent under 24 CFR
92.252(a), then the maximum rent for units under this paragraph is that calculated under 24 CFR 92.252(a).
2. The rent does not exceed 30 percent of the family's adjusted income. If the unit receives Federal or State project-based rental subsidy and the very low-income family pays as a contribution toward rent not more than 30 percent of the family's adjusted income, then the maximum rent (i.e., tenant contribution plus project-based rental subsidy) is the rent allowable under the Federal or State project-based rental subsidy program.
To ensure that HOME investments yield affordable housing over the long term, HOME imposes rent and occupancy requirements over the length of an affordability period. For homebuyer and rental projects, the length of the affordability period depends on the amount of HOME assistance to the project or buyer, and the nature of the activity funded.
Table 1-1: Determining the HOME Period of Affordability:
HOME Assistance per Unit or Buyer Length of the Affordability Period Less than $15,000 5 years
$15,000 - $40,000 10 years
More than $40,000 15 years
New construction of rental housing 20 years
Refinancing of rental housing 15 years
Throughout the affordability period, income -eligible households must occupy the HOME - assisted housing. When units become vacant during the affordability period, subsequent tenants must be income eligible and must be charged the applicable HOME rent.
Other Requirements
Minimum Loan: All HOME investments must total not less than $1,000 m ultiplied by the number of HOME-assisted units in the project.
Maximum Loan : The maximum amount of subsidy per unit shall not exceed the maximum allowed by HUD under the HOME program (24 CFR 92.250), or that provided for under Section IV, Loan Terms, of these Policies and Procedures , whichever is less. The City will avoid unnecessary layering of subsidies from different federal, state and local programs and seek to maximize the benefit to target households from the investment of HOME funds in a project. The Housing Division will use HUD’s Cost Allocation Tool to identify the ma ximum subsidy per unit for each project.
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Property Standards: Housing that is assisted with HOME funds must meet, at a minimum, the City’s Property Standards , including all applicable local, State and Federal codes and regulations. Newly constructed housing must also meet the current edition of the Model Energy Code published by the Council of American Building Officials. Substantially rehabilitated housing must meet the cost-effective energy conservation and effectiveness standa rds in 24 CFR
39. Labor Standards/Construction Contracts: Any contract for construction (whether it is for rehabilitation or for new construction) of affordable housing with 12 or more units assisted with HOME funds must contain a provision requiring tha t not less than the prevailing wages paid in the locality, as determined by the Secretary of Labor pursuant to the Davis -Bacon Act, will be paid to all laborers and mechanics employed in the development of the project. Contractors and subcontractors must comply with regulations issued under this Act and pertaining to labor standards and HUD Handbook 1344.1. These provisions apply whether HOME funds are used for construction or non-construction costs.
Lead-based Paint: Housing assisted with HOME funds constitutes HUD -associated housing for the purpose of the Lead -Based Paint Poisoning Prevention Act and the Lead Safe Housing Rule, and is therefore subject to 24 CFR Part 35. Unless otherwise provided, borrowers are responsible for testing and abatement.
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Community Development Block Grant Program
Source of Funds
Funding for this program is provided through the U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) program (including program income and residual receipts) , and therefore is subject to the federal rules and regulations found in 24 CFR Part 570, as amended from time to time.
Eligible Borrowers/Grantees
Eligible borrowers are community-based nonprofit housing development corporations (CBDO’s) duly organized or with capacity to promote and undertake community development activities on a not -for-profit basis, with proven capacity to develop, own and operate affordable housing, within a neighborhood identified in the Comm unity Development plan (Annual Action Plan) .
Such organizations are defined in CDBG regulations (24 CFR 570.204(a)(2)(c)(1)). Nonprofit Housing Development Corporations (HDC’s) and social service agencies with proven capacity to develop, own, and operate affordable housing, and limited partnerships whose general partner(s) is otherwise eligible under the above provisions , are also eligible to borrow Program funds if the nonprofit partner is the managing general partner throughout the term of the loan and w ill receive at least 51% of the developer fee. Nonprofit corporations must have a valid 501(c)(3) or (4) designation from the Internal Revenue Service.
Eligible Projects
Eligible projects will: (1) have four or more apartment units or fewer than four u nits in the case of congregate housing, mobile home units or where the Housing Division Manager finds that the project will provide a substantial public benefit; ( 2) if new construction, have 51% of the units occupied by low income tenants; ( 3) be free fr om significant adverse environmental impacts , except those that can be mitigated; and, ( 4) avoid permanent involuntary tenant displacement to the greatest degree feasible in order to carry out the program. Transitional or permanent supportive housing may be provided. Rents of assisted units shall be affordable to households whose incomes do not exceed 80% of the area median income.
Eligible Uses and Activities
Funds can be used to make loans to eligible borrowers to provide affordable housing, principally for low and moderate income households, including, but not limited to:
(1) acquisition and/or rehabilitation of eligible rental properties; (2) new construction of rental or limited equity cooperative housing by a CBDO is eligible, provided the construction activity is carried out as part of a neighborhood revitalization, community economic development or energy conservation project .
New housing construction carried out by an eligible CBDO must be part of a larger effort to revitalize the nei ghborhood (i.e., a plan for the community’s revitalization efforts based on a comprehensive plan, not just for the sake of the CDBG project);
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Affordable Housing Funds Policies and Procedures Page 33
Ineligible Uses and Activities
Funds may not be used for the following activities:
1. the construction of new rental housing or for any program to subsidize or assist such housing, except when carried out by a CBDO, provided the construction activity is carried out as part of a neighborhood revitalization, community economic development or energy conservation project;
2. to provide income payments for rent or utilities, except in emergency situations for a period not longer than three months; or,
3. to assist rental housing properties if less than 51% of the units will be occupied by low and moderate income households.
Compliance with Federal and Local Regulations
All projects must comply with all applicable federal requirements contained in 24 CFR Part 570 Subpart K, including , but not limited to , standards of financial management, environmental review, labor and wage r equirements, debarred contractors, lead -based paint and equal opportunity. Borrowers should note:
Contract Requirements: All work shall be completed by licensed contractors. All contracts must comply with competitive bidding requirements.
Labor Standards: A project with eight or more residential units must comply with the Federal Labor Standards, including the Davis -Bacon Act requirements, as promulgated by HUD, and set forth in 24 CFR Part 570, Subpart K in the performance of the rehabilitation or const ruction work financed by the loan. Contracts over $10,000 must comply with Equal Opportunity Affirmative Action requirements of Section 3 of the Housing Urban Development Act of 1968.
All efforts shall be made to provide equal opportunity for employment without discrimination as to race, marital status, sex, color, age, religion, national origin or ancestry, and to seek out qualified local tradespeople for contracting and subcontracting bids.
Lead-based Paint: Housing assisted with CDBG funds constitutes HUD-associated housing for the purpose of the Lead -Based Paint Poisoning Prevention Act and the Lead Safe Housing Rule, and is therefore subject to 24 CFR Part 35. Unless otherwise provided, borrowers are responsible for testing and abatement.
Accessibility: All projects must comply with the federal Section 504 Disabled Accessibility regulations contained in Sections 8.22 and 8.23 of Subpart C, 24 CFR Part 8.
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Project-Based Voucher Program
Source of Funds
Project-based vouchers are a component of a public housing authority’s (PHA) Housing Choice Voucher Program. Funding for project -based vouchers comes from funds already obligated by the U.S. Department of Housing and Urban Development to a PHA under its Annual Contributions Contract. A PHA can attach up to 20 percent of its Annual Contributions Contract to specific housing units if the owner agrees to either rehabilitate or construct the units, or the owner agrees to set-aside a portion of the units in an existing development. The PHA can use up to 20 percent of its housing choice vouchers for project-based vouchers.
Eligible Borrowers
Eligible borrowers are nonprofit Housing Development Corporations (HDC’s) duly organized to promote and undertake commun ity development activities on a not -for-profit basis, or for -profit housing developers or development corporations, with proven capacities to develop, own, and operate affordable housing. Limited partnerships whose general partners are otherwise eligible under the above are also eligible to borrow Program funds.
Eligible Projects
Eligible projects include acquisition, rehabilitation, or new construction of rental housing projects which:
1. The PHA may attach PBV assistance for units in existing housing or for newly constructed or rehabilitated housing developed under and in accordance with an Agreement.
a. Existing housing—A housing unit is considered an existing unit for purposes of the PBV program, if at the time of notice of PHA selection the units substantially comply with HQS.
i. Units for which rehabilitation or new construction began after owner's proposal submission but prior to execution of the Agreement to Enter into a Housing Assistance Payments Contract do not subsequently qualify as existing housing.
ii. Units that were newly constructed or rehabilitated in violation of program requirements also do not qualify as existing housing.
Eligible Uses and Activities
Program funds can be used to enter into an Agreement with eligible borrowers who will provide affordable housing, principally for low and moderate income households. Eligible uses of Project-Based Voucher funds include, but are not limited to, the following:
(1) acquisition and/or rehabilitation of eligible rental properties; (2) acquisition and conversion of nonresidential property to multifamily rental housing units; and
(3) new construction of rental housing units.
Affordability Requirements
All units assisted under this program shall be affordable to households with incomes that do not exceed 30% of median income.
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Compliance with Federal and Local Regulations
All projects must comply with all applicable federal requirements contained in 24 CFR 982, including, but not limited to , environmental review, labor and wage requirements, debarred contractors, lead-based paint and equal opportunity. Borrowers should note:
Contract Requirements: All work shall be completed by licensed contractors. All contracts must comply with competitive bidding requirements.
Labor Standards: A project with nine or more residential units must comply with the Federal Labor Standards, including the Davis-Bacon Act requirements, as promulgated by HUD, and set forth in 24 CFR Part 570, Subpart K in the performance of the rehabilitation or construction work financed by the loan. Contracts over $10,000 must comply with Equal Opportunity Affirmative Action requirements of Section 3 of the Housing Urban Development Act of 1968.
All efforts shall be made to provide equal opportunity for employment without discrimination as to race, marital status, sex, color, age, religion, national origin or ancestry, and to seek out qualified local tradespeople for contracting and subcontracting bids.
Lead-based Paint: Housing assisted with PBV funds constitutes HUD -associated housing for the purpose of the Lead -Based Paint Poisoning Prevention Act and the Lead Safe Housing Rule, and is therefore subject to 24 CFR Part 35. Unless otherwise provided, borrowers are responsible for testing and abatement.
Accessibility: All projects must comply with the federal Section 504 Disabled Accessibility regulations contained in Sections 8.22 and 8.23 of Subpart C, 24 CFR Part 8.
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Habitat for Humanity of Orange County
2200 Ritchey Street
Santa Ana, CA 92705
March 12, 2026
Honorable Mayor and Members of the City Council
Amezcua, Valerie [email protected]
Phan, Thai Viet [email protected]
Bacerra, Phil [email protected]
Hernandez, Johnathan [email protected]
Lopez, Jessie [email protected]
Penaloza, David [email protected]
Vazquez, Benjamin [email protected]
22 Civic Center Plaza
Santa Ana, CA 92701
RE: City Council Initiated Proposal Review
502 East Pine Street, Santa Ana, CA 92701
Dear Honorable Mayor and Members of the City Council,
On behalf of Habitat for Humanity of Orange County, I respectfully request that the City Council initiate the City Council Initiated Proposal Review process for the project located at 520 East Pine Street in Santa Ana and consider an award of $6,000,000 in affordable housing funding to support the development of this important homeownership opportunity.
Habitat for Humanity of Orange County is currently evaluating the acquisition and rehabilitation of an existing multifamily condominium complex located at 520 East Pine Street. The project would convert the property into 18 affordable homeownership opportunities for low-income working families in the City of Santa Ana.
Originally developed as a condominium complex, the property consists of a mix of two - and three - bedroom units with amenities that include controlled access, private patios or balconies, elevator service, a laundry room, and a gated subterranean parking garage. The complex is currently operating as a rental property with no individual condominium owners.
Habitat OC proposes to undertake a comprehensive rehabilitation of the property, including interior upgrades such as new flooring, interior paint, kitchen and bathroom improvements, and evaluation of plumbing and electrical systems to ensure long -term durability and safety. The rehabilitation will also include improvements to common areas such as the courtyard, laundry facilities, and elevator system.
The estimated total development cost for the project is approximately $13.07 million.
The requested City investment of $6 million would provide critical gap financing needed to acquire and rehabilitate the property and ensure that the homes remain affordable to working families who otherwise would not have access to homeownership in Santa Ana’s competitive housing market.
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March 12, 2026