Santa Cruz City Council
June 14, 2022

work provided in the list below include items with both direct and indirect relevance to the Department's budgets and financial planning.
• July 2021, the Commission received and accepted the FY 21 3rd Quarter Unaudited Financial Report and asked questions about its contents, discussed Water Rate Structures and provided feedback from Single-Family Residence Customer Panels on Rate Structure Approaches, and received a presentation on the status of federal and state initiatives related to rate assistance programs for low-income customers. • August 2021, received information on staff's recommendation to City Council to authorize the Graham Hill Water Treatment Plant Facility Improvements Project Progressive Design-Build Phase 1 Agreement with the AECOM/WM Lyles Joint Venture, and provided feedback to staff on the updated Long Range Financial Plan and Proposed FY 2023 - FY 2027 Water Rates schedule developed to reflect the Commission's input and took action to recommend a proposed water rate schedule for FY 2023 - FY 2027 to the Council for use in the Proposition 218 public notification and public hearing processes that are legally required prior to adoption and implementation of new rates.
• August 2021, updated the Commission on the including the working draft of the Long Range Financial Plan and October 2021, received presentation on the Urban Water Management Plan and Water Shortage Contingency Plan Review and commented on the draft 2020 Urban Water Management Plan, which includes the Water Shortage Contingency Plan, and recommend filing these plans with the California Department of Water Resources.
• November 2021, received information and a presentation on the progress of pipeline planning efforts and design progress report in advance of Commission receipt of the draft programatic environmental impact report.
• December 2021, accepted the FY 2021 4th Quarter and FY 2022 1st Quarter Unaudited Financial Reports.
• February 2022, received a presentation on the Department's accomplishments and progress of 2021 on capital investment projects and its 2022 planned projects. • March 2022, accepted the FY 2022 2nd Quarter Unaudited Financial Report.

In addition to the Water Commission's financially focused items highlighted above, the Commission continues to actively work with the Water Department on water supply reliability issues and will be heavily engaged in this year's Securing Our Water Future planning and community engagement work.

The Commission's active engagement and work with the Department over time has effectively prepared Water Commission members to understand the Water Department's current performance, and plans and strategies for the future. The Commission's recommendations to the Council on the Department's FY 2023 Operating Budget and FY 2023 to 2027 CIP reflect the Commission's ongoing engagement with staff to identify, understand and effectively address the water system's challenges.

27.62 Mayor Brunner, Vice Mayor Watkins and Councilmembers June 7, 2022

Included with this letter is a set of attachments that the Water Commission reviewed and discussed in detail at its annual budget and CIP review meetings this year:
• Water Attachment 1 is the FY 2023 Operating Budget;
• Water Attachment 2 is an example of Quarterly Financial Reports prepared for and distributed to the Water Commission;
• Water Attachment 3 is a CIP summary sheet for every project in the 2023 -2027 CIP; • Water Attachment 4 covers analytics and trends for the Water Department Budget over the last five years; and
• Water Attachment 5 is the Water Department's five-year Financial Pro Forma.

Given these materials as a backdrop, we would like to draw your attention to the following budget and CIP highlights:
• Revenues for FY 2023, including water rate revenues and other revenues, are projected to total $42,056,855.
• The proposed Operating Budget for FY 2023 is $39,303,063. The Operating Budget supports ongoing 24/7 /365 water utility operations and for personnel and services and supplies is 3.4% higher than the adopted FY 2022 Operating Budget. • Three new positions to the Water Department's personnel complement are planned for FY 2023, including a Management Analyst, Engineering Tech and Programmer Analyst (residing in the IT Department).
• The Department continues to invest in developing its own fimd to support leveling annual resources needed for heavy equipment replacement and is making some up-front investments to build the fund balance to help gain access to the long term benefits of this best practice approach to fleet management. Funds from this account (Fund 719) are proposed to be used to replace a Ford F-350 utility truck and a Ford Escape SUV for the Production staff These vehicles will be leased at an annual cost of $33,000. • The CIP budget for the five year period FY 2023-2027 is $295 million, with a focus of these resources on improving infrastructure resiliency and adaptability to climate change.

The proposed CIP budget for FY 2023 totals $35,499,221, with ongoing spending of $5 million for the Newell Creek Inlet/Outlet Replacement Project, $6 million for Newell Creek Pipeline and $8 million for the concrete tanks included as part of this total. The FY 2023 funding level will be supplemented by a significant, unspent amount carried over from FY 2022. Major progress is expected on several key CIP projects during FY 2023 including:
o The Newell Creek Dam Inlet/Outlet Replacement project -Construction on the Newell Creek Dam Inlet/Outlet Replacement project, a $69 million project awarded to Obayashi Corporation the spring of 2020, is well underway. The 1500 foot long tunnel and new intake structures in the reservoir are complete and work is beginning on the new intake pipeline connecting the new intake structures to the Newell Creek Pipeline, Completion is expected in early 2023. o GHWTP Concrete Tanks Replacement -Pacific Hydrotech Corporation from Perris, California was awarded a $28,352,350 contract for the replacement of three concrete tanks at the City's 62-year-old surface water treatment plant.

Construction of this project is well underway and be completed in September

27.63 Mayor Brunner, Vice Mayor Watkins and Councilmembers June 7, 2022

2024. An SRF loan in the amount of $45,900,000 has been obtained to cover the total cost of this project.
o Newell Creek Pipeline replacement (NCP) -NCP is a 9.5 mile pipeline that delivers water from Loch Lomond to the GHWTP. Due to increased frequency of breaks caused by age, corrosion and land movement, the NCP will be replaced in two phases. The first phase is to replace the segment from Felton to GHWTP, which is 4.4 miles. Construction is scheduled to commence in January 2023 and completion is expected May 2024. The forecasted cost for phase I is $33 million. o Water Supply Augmentation - Work on the Council-approved Water Supply Augmentation Strategy continues with significant progress made advancing plans for implementation of Aquifer Storage and Recovery (ASR) in the Mid County Groundwater Basin (MCGB), and exploring opportunities for the use of Recycled Water.

Pilot testing is one of the studies needed to demonstrate feasibility of ASR as a reliable source of supply and, while seemingly time-consuming, provides valuable insight into the operational and water quality parameters associated with this new water storage alternative. Also necessary is groundwater modeling, used to identify the number, size and location of ASR wells. After nearly 40 model scenarios, a project has been identified using the best available information to maximize the use of the MCGB for groundwater storage.

The Santa Cruz Water Rights project plays an important role in the advancement of ASR in the MCGB in that it is analyzing many of the ASR components at a project level so that following certification of this EIR active implementation of ASR in the MCGB can proceed.

With respect to Recycled Water, staff is developing several concepts that build on the Pure Water Soquel Project, and balance opportunities with other stakeholders such as large irrigation customers, and neighboring water agencies like Scotts Valley water District also interested in sustainable supply augmentation. o Meter Replacement -The Council authorized a full system meter replacement project in August of 2020, and the $11 million meter replacements commenced January 2022; completion is expected in early 2023. Jacobs Engineering is the project manager, procurement of meter box lids, meters and radios is continuing.

The meter installation contractor is Utility Partners of America (UP A), who agreed to hire local labor for the project. This project has been approved for a $1 million EPA grant.

27.64 Mayor Brunner, Vice Mayor Watkins and Councilmembers June 7, 2022

• CIP Funding -Given the scale of the Department's CIP, a major focus over the last several years has been on securing least cost financing for projects. The Department has had considerable success with these efforts, and low-interest long-term financing will benefit rate-payers both now and in the future. Some relevant details include:
o Projects with Drinking Water State Revolving Loan (DWSRF) funding: Both the Newell Creek Dam Inlet/Outlet Replacement project and the Graham Hill Water Treatment Plant (GHWTP) Concrete Tanks project are being funded through the DWSRF program, with loan rates of 1.4%. Loan repayment for these loans commences once construction has been completed for the projects in 2023 and 2024 respectively.
o Projects being developed to submit for DWSRF loan funding: The Graham Hill Water Treatment Plant Facilities Improvement Project (GHWTP FIP) is being developed in a manner that will allow it to be considered for funding with DWSRF funds. The DWSRF funding application process is a multistepped one, requiring reviews and approvals as project elements such as basis of design reports and environmental assessments are completed. o Projects being considered for inclusion in a July 2022 application submittal for a $164 million federal Water Infrastructure Finance and Innovation Act (WIFIA) loan: Along with the GHWTP FIP project, the Department is planning to include the Newell Creek Pipeline Replacement Project, ASR project and the University Tank #4 Replacement Project. o The Santa Cruz Mid-County Groundwater Agency (MCGA) received a $7.6 million check from the California Department of Water Resources for implementation work on the MCGA's groundwater sustainability plan. The Water Department's share of this grant is $1.7 million and will further the development of the ASR wells. The grant is provided to reimburse development expenses.
o Potential additional sources of funding for capital projects are being actively monitored and pursued. For example, the Hazard Mitigation Grant Program (HMGP) application pending before the program administrator (CalOES) which, if approved, would provide up to $63 million for the Newell Creek Pipeline Replacement project.
o A consequence of DWSRF and many other sources oflow-interest loans is that loan funds are disbursed on a reimbursable basis. This means that the Department has to have the cash to pay vendors and meet its other financial obligations and then file claims for reimbursement from approved loan funds after the costs are incurred. This approach introduces significant cash-flow challenges into the Department's operation. To address these challenges, the Department obtained a $SOM short-tenn line of credit that can be used as

27.65 Mayor Brunner, Vice Mayor Watkins and Councilmembers June 7, 2022

bridge funding over the coming several years while significant DWSRF projects are in construction.

As the Water Commission has worked with the Water Department on budget and financial planning over the last several years, the Commission has received regular updates on the Department's finances through the quarterly financial reports (Water Attachment 2) and annual comparative budget analytics (Water Attachment 4). Using these reports, the Commission has been actively tracking several key indicators of financial health, for example, how actual revenues generated by water sales compare with revenue projections for water sales included in the 2016 and 2021 Cost of Service and Water Rate Studies. Tracking this metric helps both staff and Commissioners keep focused on how accurate our system is for projecting revenues, which helps us identify and implement refinements to our projections in the event we are over or under forecasting. This and other analyses now in regular use by the Department's finance section and leadership team are helpful in ongoing financial planning and in the ongoing work to update the cost of service analysis and water rate structure and future water rates.

Another major goal of the Department's budget analytics work is to highlight trends and support greater understanding financial changes at both the organization and section level.

Commissioners are always impressed by the staffs knowledge and ability to concisely describe circumstances and conditions across the Department that influence actual spending from year to year and projected spending for the next fiscal year and beyond. Some key topics we inquired about during our review of the FY 2023 Budgets:
• Projected performance in meeting the Department's 1.5 debt service coverage ratio and 180 days' cash;
• Long-term projections of capital needs and financing strategies. • How the local economic recovery from the COVID pandemic, is expected to affect water use and water revenues; and
• How federal or state pandemic recovery initiatives and infrastructure funding legislation might provide opportunities for funding for some of the identified CIP projects, particularly those related to improved water system reliability, water infrastructure resiliency and climate adaptation.

With respect to financial forecasting and being able to put the proposed Budgets in an appropriate and understandable context, Water Commissioners would like to especially commend the City and the Department for the financial analysis and modeling tools that they have developed and applied at the Water Department. For the last five years, the Commission's budget review has focused heavily on not just the figures included in the Department's proposed Budgets, but on what they mean in terms of potential customer rate increases and achieving the financial metrics that the City Council set for the Department when it adopted the 2016 Long Range Financial Plan (LRFP) and the updated 2021 LRFP in September 2021. The key tool that the Commission uses in understanding how the Department's proposals fit into that plan is the Five-year Financial Pro Forma, a financial performance forecast that is generated by the Water Department's financial model (Water Attachment 5).

27.66 Mayor Brunner, Vice Mayor Watkins and Councilmembers June 7, 2022

The one-page Financial Pro Forrna provides a long-range view of operating and capital spending, performance related to key financial metrics such as debt service coverage, and illustrates how assumptions about capital spending, and operating costs including salary, benefits, and pension obligations, will affect revenue requirements over time. Department staff has been transparent in describing the key assumptions driving the financial model, and Water Commissioners have received detailed and thoughtful answers to questions about various aspects of the results presented in the Financial Pro Forrna. The Commission's key takeaway from these efforts is that the Department has a well-considered long-range financial plan and strategy - a plan which has continued to evolve and improve based on Department staff increasing their familiarity with this essential analytical and planning tool as well as the Department's ongoing experience with challenges such as the continuing dry conditions and opportunities such as those created by the City's participation in regional collaboration and local groundwater sustainability planning efforts.

In closing, at its June 6, 2022 meeting the Water Commission unanimously approved a motion in support of the City Council adopting the Water Department's proposed FY 2023 Operating and CIP budgets. Our careful review of these proposals shows that they have been developed using realistic assumptions that are well aligned with the financial policies and assumptions approved by the Council in its 2021 action approving the Department's LRFP.

We appreciate this opportunity to provide our recommendation to the Council and are available to answer any questions you may have.

Sincerely,
Sie �
Chair, Santa Cruz Water Commission
cc: Matt Huffaker, City Manager
Members of the Santa Cruz Water Commission
Rosemary Menard, Santa Cruz Water Director
Attachments:

Water Attachment 1: Water Department FY 2023 Proposed Operating Budget Water Attachment 2: Example of Quarterly Financial Reports prepared for and distributed to the Water Commission
Water Attachment 3: CIP Summary
Water Attachment 4: Water Department FY 2023 Budget Analytics Water Attachment 5: Water Department FY 2023 Five-year Financial Pro Forrna

27.67 1
Rosemary Balsley
From: Joanna Edmonds <[email protected]>
Sent: Friday, June 10, 2022 7:48 AM
To: City Council
Subject: CORE funding for Santa Cruz Toddler Care Center Begin forwarded message:

From: Joanna Edmonds <[email protected]>
Date: June 10, 2022 at 7:45:26 AM PDT
To: [email protected], [email protected], [email protected], [email protected], [email protected], [email protected], [email protected] Cc: [email protected], [email protected] Subject: CORE funding for Santa Cruz Toddler Care Center Dear Santa Cruz City Council,
The CORE funding process has threatened to cut 100% of Santa Cruz Toddler Care Center's (as well as other childcare centers) funding from the City and County. This loss means they would no longer be able to provide childcare on a sliding fee scale - an essential part of their mission for over 40 years. Affordable childcare plays a crucial role in supporting not only the well being of working families, but the economic stability of a community as well. Parents simply can’t work without childcare, and economies can’t function without working parents. The pandemic shone a light on the lack of support for childcare providers, and now is not the time to reduce or eliminate the tiny portion of government funding they receive.

We are parents of two young children and essential workers, a medical assistant and a City employee, who work hard to serve our community which we care deeply about. Without affordable childcare available we have had to reduce our working hours to care for our youngest child, who has been on the waiting lists for childcare centers since before their birth. We will finally both be able to work full time again for the first time since the beginning of the pandemic once our youngest child is old enough to attend the Santa Cruz Toddler Care Center, but it will not be possible if their funding is cut and they can no longer offer tuition on a sliding scale — meaning I cannot increase my hours working at the City. Full price tuition would cost us a third of our total monthly income if we are both working full time.

We reject the notion that only the very wealthy deserve access to quality childcare. Affordable childcare is key to helping hardworking Santa Cruz families stay in town and continue to contribute to our community as it becomes more and more expensive to live here. Please consider the impact your decisions have on local families who work hard day in and day out to keep Santa Cruz the amazing community it is, just like your own friends and family.

Thank you for reconsidering for the good of our community and local economy, Joanna and Kenyatte Edmonds

27.68 1
Rosemary Balsley
From: Julie Schaul <[email protected]>
Sent: Friday, June 10, 2022 12:39 PM
To: City Council
Cc: Tristia Bauman; Robert Norse; Patricia Colby; Graham Pruss; Wes White; Lili Graham; Alicia Kuhl; Keith McHenry; [email protected]; Brewster, Thomas; [email protected]; Janie Frank
Subject: Don't cut local childcare funding!!!
I was a licensed day care owner/operator/provider/employer in live oak in the mid to late eighties. Now my children and I have been counted for many years by one of the families (ASR applied survey research - point in time homeless count) who I did childcare for. I love 💕 the local family's I worked for, so no ill will towards them. However, Child care in Santa Cruz is basically volunteer work #LivableWage Do not cut funding to local childcare resources!!!
https://www.facebook.com/107933659445/posts/pfbid0S2oMf2UQde2dYErLPjqpZr3WjVNV3rTPpcE92Q6mh ukDzqPKABAnnyyHT6JkrhRfl/?sfnsn=mo

27.69 1
Rosemary Balsley
From: Ron Pomerantz <[email protected]>
Sent: Monday, June 13, 2022 1:52 PM
To: City Council
Cc: Justin Cummings; Sandy Brown; Sonja Brunner; Renee Golder; Martine Watkins; Shebreh Kalantari-Johnson; Donna Meyers
Subject: Re. 6-14-22 Agenda Item #27: Fiscal Year 2023 Proposed Budget Adoption (FN) Re. 6‐14‐22 Agenda Item #27: Fiscal Year 2023 Proposed Budget Adoption Good day Mayor and Councilmembers.

Budgets are always time consuming and tough choices must be made. Budgets are moral documents. The moral direction is spelled out by who and what is supported and who and what is not. Unfortunately Staff has given very little time for the public to study the proposed budget, let alone advocate for changes. Now is the time for the City to get our house in order and show millions in cost savings without harming vital services and programs that serve the marginalized and keep our City moving forward.

A recent Letter‐to‐the‐Editor in the Sentinel posed interesting information and questions. He said for fiscal year 2021 the Santa Cruz General Fund revenue was $108M having 883 employees with a population of 56,156. Watsonville had General Fund revenue or $46M having 388 employees with population of 51,366.

Both cities offer comparable general fund services. The new Santa Cruz City Manager Matt Huffaker was the previous Watsonville City Manager and is in an excellent position to explain why Santa Cruz City requires more than twice the revenue and employees of Watsonville with a similar population? A department by department comparison would also be very helpful.

A few immediate and obvious cost savings:
‐ Significantly reduce the overuse of consultants.
‐ Eliminate all Public Relations employees.
‐ Reduce the City Manager’s staff to pre‐COVID levels.
‐ Trim the salaries of upper management and administrators. ‐ Cut the Economic Development Department by 30‐40%.

If increased revenues are shown to be needed, once the City regains the public trust go to the voters for progressive taxes such as a real estate transfer tax and 3% increase in the Hotel tax (TOT).

Thank you for your time and attention.

Ron Pomerantz

27.70 1
Rosemary Balsley
From: Becky Steinbruner <[email protected]>
Sent: Monday, June 13, 2022 3:36 PM
To: City Council
Cc: Becky Steinbruner
Subject: City Water Pro Forma Budget Does Not Clearly Show Impending Annual Water Rate Increases
Dear Santa Cruz City Council,
I have reviewed Item 27 in your June 14, 2022 Agenda packet and am concerned that the information does not make it evident that water rates will increase a total of 53.5% over the next five years. The Five-Year Pro Forma Budget included on page 27.60 agenda materials (page 250 of packet) as "Water Attachment 5", shows water revenues nearly doubling by 2027 but does not explain how the fixed rate and volumetric revenues will be increased.
https://ecm.cityofsantacruz.com/OnBaseAgendaOnline/Documents/ViewDocument/City_Council_Regular_Me eting_1931_Agenda_Packet_6_14_2022_9_30_00_AM.pdf?meetingId=1931&documentType=AgendaPacket& itemId=0&publishId=0&isSection=false
Because I attend the City Water Commission meetings, I am aware of the significant rate increases that have been built into the Pro Forma Budget, but feel that your Council should publicly discuss this before accepting and approving the Water Commission's recommendations.

Here are the rate increases that I understand are scheduled to take effect upon your approval, but that I feel are not clearly identified in your June 14, 2022 agenda materials:
2022 6.9%
2023 16.4%
2024 16.4%
2025 6.9%
2026 6.9%
Please request that staff correct this oversight, conduct a public discussion and hearing, and also discuss what financial relief will be available for low and fixed-income households.

Thank you.

Sincerely,
Becky Steinbruner

27.71 Fiscal Year 2023
Budget Adoption
City of Santa Cruz
June 14, 2022
1 27.72
Agenda
• FY 2023 Proposed Budget
• Summary of Budget Solutions
• Challenges on the Horizon
2 27.73
FY 2023 Proposed Budget

27.74 FY 2023 Major Expenditures
• Significant increase in liability and property insurance costs • Investing $5M in Capital projects
• ERP system (accounting, human resources, payroll, purchasing) replacement set-aside
• Investing in organizational capacity to implement Council goals and strategies
• Negotiating 5 bargaining unit contracts and need to stay competitive 4 27.75
Major Investments:

Homelessness Response
• Responsive to employee and community feedback
• Proactive strategy
• Citywide integrated approach to solutions
• Building capacity
• Systemic solutions needed at the State and Federal level via lobbyists 5 27.76
FY 2023 General Fund Proposed Budget
Personnel
58%
Services,
Supplies, Other
25%
Capital Outlay
4%
Debt Service
2% Transfers Out
&Other Financing
Uses
11%
General Fund Expenditures
$127M
Taxes
71%
Licenses and
Permits
1%
Grants

0.3%
Charges for
Services
15%
Fines and
Forefeitures
1%
Rents & Misc Rev
5%
Transfers In
&Other Financing
Sources
7%
General Fund Revenues
$122M
+ $5.2M General Fund Balance

27.77 FY 2023 Citywide Operating Expenditures
General Fund
44%
Special Revenue
11%
Water
13%
Watewater
8%
Refuse
8%
Parking
2%
Storm Water

0.4% Other Funds
14%
General Fund
Special Revenue
Water
Watewater
Refuse
Parking
Storm Water
Other Funds
$290.6M

27.78 FY23 CIP by
Department
8 54%
2%
1%
3%

0.3%
10%
1%
29%
Public Works
Fire
Parks &
Recreation
Citywide
Information
Technology
Economic
Development
City Manager
Water
$123M

27.79 FY 2023 General Fund Priority 1 CIP Projects
Department Project Amount
FD Butler Building for Fire Station 3 26,500
FD Fire Station 2 Exercise & Storage Facility (rear expansion) 750,000 FD Generator for Fire Station #3 200,000
PW West Cliff Drive Stabilization 500,000
FD Fire Engine Ladder Pierce Tiller 100’ 1,500,000
FD Fire Station 3 Sewer Line with Clean Out 45,000
PR DeLaveaga Disc Golf Course “Pay to Play” Welcome Area and Course Safety Improvements
235,000
PW Public Facilities- Energy Savings and Maintenance 200,000 FD Fire Stations Paging System 150,000
PR Downtown Recovery- Phase I-IV Infrastructure and Site Beautification and Safety Improvements
470,000
PR Parks Operations Maintenance Yard- Building Safety Improvements 90,000 PR Driving Range Outdoor Safety Improvements 200,000
PR Driving Range Roof & Building Improvements 600,000
Total General Fund CIP Funding Priority 1 Projects 4,966,500

27.80 Unfunded Capital Investment Program
Department Unfunded CIP Estimates
Fire 20,201,500
Parks & Recreation 58,595,000
Public Works 255,860,000
Citywide 30,500,000
Total Unfunded CIP Estimates $365,156,500

27.81 General Fund Reserves (in Millions)
Fund FY 2020 FY 2021 FY 2022 Est* FY 2023 Est*
General Fund
(unrestricted)
-1.41 6.52 5.23 0
OPEB Reserve 3.50 3.76 4.38 4.51
Pension Reserve 7.56 8.60 9.48 9.77
Stabilization Reserve 6.17 6.23 6.42 6.61
Total GF Reserves 15.82 25.11 25.51 20.89
Reserve Goal ~17% of
Expenditures

17.3 16.60 19.20 22.0
*Includes American Rescue Plan funding
• Reserves are a sign of the City’s fiscal stability
• GFOA best practice is 2 months operating expenditures • In times of fiscal distress, provides the City time to make responsible decisions without making drastic budget reductions (about 60% of General Fund budget is staffing) • Reduces the City’s borrowing costs by decreasing interest rates

27.82 Summary of Budget Solutions

27.83 Budget Solutions
Target Reduction
$2,328,800
Proposed Solution
$2,454,770

27.84 General Fund Budget Solutions by Department
Department Amount
City Manager, City Clerk, City Council, City Attorney 173,451 Economic Development 65,000
Finance 72,500
Fire 682,313
Human Resources 51,800
Information Technology 180,000
Parks and Recreation 178,007
Planning and Community Development 311,358
Police 641,794
Public Works 98,547
Total General Fund Budget Solutions $2,454,770

27.85 American Rescue Plan Act Summary
15 End Furlough
3%
Homelessness
Response
33%
Revenue Loss
64%
$14.2M
• May, 2021: Coverage for Furloughs Ending
Early - $450,000
• December 2021: Safe sleeping, parking,
storage and infrastructure costs - $4,243,659
• May 2022: Two transportation vans and
additional program administration for
homelessness response - $486,000
• Over the last three years: Revenue loss
coverage - over $21M in revenue losses -
approximately $9M

27.86 What is Measure F?
• June 7 Ballot measure for the City of Santa
Cruz General Fund
• One-half of one percent sales tax, or 5 cents
on every $10
• Maintains essential services
• Would raise about $8 million annually

27.87 Budget Forecast With No Measure F
• $5M toward CIP projects
• $1.6M new positions
• $4M ongoing homelessness response programs
• $2M ERP in FY23-FY26
• $7M one-time homelessness CIP in FY23
• Modest growth in employee costs
• $2.3M in Liability Insurance in FY23, growing
through FY27
Revenue and offsets:
• $14M CA State funding in FY23
• $1.2M ongoing reductions FY23
• $1.2M in one-time reductions FY23
• $7.85M ARPA FY23

27.88 Budget Forecast With Measure F

27.89 Council Discussion Items
• Parks & Recreation Department - $178,007 Expenditure Reduction  $96,000 – Temporary Staff Budget – Services Remain Status Quo  $75,000 – Non-programmed Budget – Special Projects, Fleet, Printing, etc.
19 27.90
Council Discussion Items
• CORE
 Today - appropriate / adopt CORE FY 2023 Budget of $1,080,000  Now - transition options in process with County for non-selected, current FY 2022 recipients
 On June 28th - in concert with Board of Supervisors:
 Transition details for non-selected FY 2022 recipients  FY 2023 award recipients, along with appeal results
20 27.91
Challenges on the Horizon

27.92 Challenges on the Horizon: Pension Costs

27.93 Potential Pension Investment Return Scenario

27.94 Mitigating Pension Cost Volatility
• Adopted lower tier pension plans
• Higher employee retirement contribution
• Annual pre-payments of pension liabilities to lower interest payments • 2018 Pension trusts funded to generate returns to pay portions of future State payment increases
24 27.95
Overall Fiscal Strategies
• Continue Ad Hoc Revenue and Budget Committee to explore new revenue sources • Citywide fee study to address cost recovery
• Continue working with lobbyists to secure Federal and State funding • Develop long-term financial plan
 Evaluate investment strategies
 Evaluate pension cost financing
 Citywide capital asset inventory, evaluation, and financing  Long-term liability insurance management plan
25 27.96
Thank You

27.97 City Council

AGENDA REPORT
DATE: 06/03/2022
AGENDA OF: 06/14/2022
DEPARTMENT: Water
SUBJECT: Emergency Ordinance Amending Chapter 16.02 (Water Conservation) of the Santa Cruz Municipal Code (WT)
RECOMMENDATION: Motion to adopt an emergency ordinance prohibiting and regulating certain uses of water from the City water supply system not essential to the public health and safety and for water conservation purposes.

BACKGROUND: In response to the ongoing serious drought in California, the Governor issued an executive order in March calling for, among other actions, the State Water Resources Control Board (SWRCB) to adopt emergency regulations requiring urban water suppliers to implement actions from Stage 2 of their Water Shortage Contingency Plans (WSCP) as a means to reduce urban water use in the face of worsening drought conditions across the state. For Santa Cruz, such a requirement would involve water rationing for all customers and implementation of excessive use penalties, all of which is a really heavy lift given the state of Santa Cruz’s local supply situation and our customer’s ongoing highly efficient water use practices.

In mid-April SWRCB staff released a draft approach to emergency regulations that would not have provided any opportunities for systems using only local supplies and not experiencing local drought conditions to be excluded from a one-size-fits-all requirement for implementation of Stage 2 WSCP actions. After some initial discussion with stakeholders in late April, SWRCB staff released their original proposal for a 6 day public comment period on May 13th in advance of the May 24th SWRCB meeting where the Board was expected to take action.

Working with SWRCB staff, Senator Laird and his staff, and our City and Water Rights attorneys, Tony Condotti and Ryan Bezerra, respectively, Santa Cruz was able to develop language for an “alternate compliance strategy” for the State Board’s consideration at its May 24th meeting. With the strong support of Senator Laird and the tremendous advantage of Santa Cruz’s consistently strong performance on water use efficiency, the City was successful in having the State Board incorporate into the emergency regulations an alternate compliance strategy that does not require Santa Cruz to implement water rationing for our customers this year.

The alternate compliance strategy incorporated into the new emergency regulations (see attached) applies only to water utilities that meet the following (very narrowly crafted) criteria:

28.1 1. The supplier’s annual water supply and demand assessment submitted to the Department of Water Resources demonstrates an ability to maintain reliable supply until September 30, 2023.

2. The supplier does not rely on, for any part of its supply, the Colorado River, State Water Project, or Central Valley Project, and no more than ten (10) percent of its supply comes from critically over-drafted groundwater basins as designated by the Department of Water Resources.

3. The supplier's average number of gallons of water used per person per day by residential customers for the year 2020 is below 55 gallons, as reported to the Board in the Electronic Annual Report.

While Santa Cruz can definitely meet all three of these criteria, the State Board wanted to make sure that the critical nature of the State’s water situation was not “off the radar” even in communities such as Santa Cruz. The result is that emergency regulations do require Santa Cruz to implement some additional water conservation provisions including:

1. Initiating a public information and outreach campaign for water conservation and promptly and effectively reach the supplier’s customers, using efforts such as email, paper mail, bill inserts, customer app notifications, news articles, websites, community events, radio and television, billboards, and social media;

2. Implementing and enforcing a rule or ordinance limiting landscape irrigation with potable water to no more than two (2) days per week and prohibiting landscape irrigation with potable water between the hours of 10:00 a.m. and 6:00 p.m.;

3. Implementing and enforcing a rule or ordinance banning a range of wasteful water use practices; and

4. Prohibiting the use of potable water for the irrigation of non-functional turf at commercial, industrial, and institutional sites, where “non-functional turf” is defined as turf that is solely ornamental and not regularly used for human recreational purposes or for civic or community events. Non-functional turf does not include sports fields and turf that is regularly used for human recreational purposes or for civic or community events. The use of potable water for irrigation is not prohibited to the extent necessary to ensure the health of trees and other perennial non-turf plantings or to the extent necessary to address an immediate health and safety need.

DISCUSSION: In order to implement the State Board’s direction, the Water Department has prepared an emergency ordinance amending Section 16.02 of the Santa Cruz Municipal Code for Council consideration. This section, as currently written, includes a variety of prohibitions of wasteful water practices that have been part of Santa Cruz’s code for 20 years. The section also included some other potential restrictions that can be implemented by the Water Director upon notification of the Council and the community. Water Department staff is recommending adding the additional items from 2 through 4 in the list immediately above to a new “Additional Restrictions” section of Section 16.02. These changes will give the Department the authority it needs to implement and enforce the new state imposed requirements for this year and will provide flexibility to adapt to similar circumstances in the future.

In terms of enforcement, every effort will be made to communicate, educate, and advise customers of the need to comply with these regulations prior to taking enforcement actions.

Finally, in terms of communications, steps are already being taken to communicate new requirements to key customers, for example, the Boardwalk, and to coordinate with the City of Capitola on how the restrictions will affect their customers.

28.2 FISCAL IMPACT: The Department is requesting $75,376 in new appropriations from Water Operations Fund 711 to hire temporary staff to support implementation and enforcement of the required restrictions.

Prepared By:

Rosemary Menard
Water Director
Submitted By: Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. EMERGENCY ORDINANCE.DOCX

2. STATE BOARD EMERGENCY REGULATIONS 5-24-22.PDF

28.3 ORDINANCE N0. 2022-

AN EMERGENCY ORDINANCE OF THE CITY OF SANTA CRUZ AMENDING CHAPTER

16.02 “WATER CONSERVATION” OF TITLE 16 “WATER, SEWERS AND OTHER PUBLIC SERVICES” TO IMPLEMENT STATE WATER RESOURCES CONTROL BOARD

EMERGENCY REGULATION TO REDUCE WATER DEMAND AND IMPROVE WATER

CONSERVATIONS
WHEREAS, on April 21, May 10, July 8, and October 19, 2021, Governor Newsom issued proclamations that a state of emergency exists statewide due to severe drought conditions and directed state agencies to take immediate action to preserve critical water supplies and mitigate the effects of drought and ensure the protection of health, safety, and the environment; and WHEREAS, on March 28, 2022, Governor Newsom signed an Executive Order directing the State Water Resources Control Board (State Water Board or Board) to consider adopting emergency regulations to increase water conservation. The Executive Order included a request that the Board require urban water suppliers to implement Level 2 of their water shortage contingency plans, establish water shortage response actions for urban water suppliers that have not submitted water shortage contingency plans, taking into consideration model actions that the Department of Water Resources recommendations, and establish a ban on the irrigation of nonfunctional turf by entities in the commercial, industrial, and institutional sectors; and WHEREAS, Water Code section 1058.5 grants the State Water Board the authority to adopt emergency regulations in certain drought years in order to: “prevent the waste, unreasonable use, unreasonable method of use, or unreasonable method of diversion, of water, to promote water recycling or water conservation, to require curtailment of diversions when water is not available under the diverter’s priority of right, or in furtherance of any of the foregoing, to require reporting of diversion or use or the preparation of monitoring reports”; and WHEREAS, on May 13, 2022, the State Water Board issued public notice that would consider the adoption of the regulation at the Board’s regularly scheduled May 24, 2022 public meeting, in accordance with applicable State laws and regulations. The State Water Board also distributed for public review and comment a Finding of Emergency that complies with State laws and regulations; and
WHEREAS, on May 24, 2022, the State Water Board adopted Resolution No. 2022-0018, adopting California Code of Regulations, Title 23, Section 996, as appended to the resolution as an emergency regulation (the “Emergency Regulation”) that applies to urban water suppliers, as defined by Water Code section 10617; and
WHEREAS, the Emergency Regulation, at subdivision (c)(1), directs each urban water supplier that has submitted a water shortage contingency plan to the Department of Water Resources, at a minimum, to implement all demand reduction actions identified in the supplier’s water shortage contingency plan adopted under Water Code 10632 for a shortage level of ten (10) to twenty (20) percent (Level 2) by June 10, 2022; and

28.4 WHEREAS, subdivision (c)(3) of the Emergency Regulation nevertheless specifies that an urban water supplier may implement the actions identified in subdivision (d) in lieu of implementing the demand reduction actions identified in the supplier’s water shortage contingency plan adopted under Water Code section 10632 for a shortage level of ten (10) to twenty (20) percent (Level 2), provided the supplier meets all of the following:
(i) The supplier’s annual water supply and demand assessment submitted to the Department of Water Resources demonstrates an ability to maintain reliable supply until September 30, 2023.
(ii) The supplier does not rely on, for any part of its supply, the Colorado River, State Water Project, or Central Valley Project, and no more than ten (10) percent of its supply comes from critically overdrafted groundwater basins as designated by the Department of Water Resources.
(iii) The supplier's average number of gallons of water used per person per day by residential customers for the year 2020 is below 55 gallons, as reported to the Board in the Electronic Annual Report; and
WHEREAS, the City of Santa Cruz meets the criterial specified in subdivision (c)(3) for implementation of the demand management actions specified in subdivision (d) of the Emergency Regulation.

NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Santa Cruz as follows:

SECTION 1. The City Council of the City of Santa Cruz hereby finds that there is a current and immediate threat to the public health, safety and/or welfare and a need for immediate preservation of the public peace, health, or safety that warrants this urgency measure, which finding is based upon the facts stated in the recitals above, as well any oral and written testimony at the at the June 14, 2022 City Council meeting.

SECTION 2. This Ordinance and any regulations or actions that may be established and implemented thereunder are hereby declared by the City Council to be an emergency measure necessary for the immediate preservation of the public peace, health or safety. The facts constituting such urgency are all of those certain facts set forth and referenced in Section 1 of this Ordinance.

SECTION 3. Chapter 16.02 “Water Conservation” of Title 16 “Water, Sewers and other Public Services” is hereby renamed “Water Waste Prohibition and Other Water Use Regulations” and amended to read as follows:
“Chapter 16.02

WATER WASTE PROHIBITION AND OTHER WATER USE REGULATIONS Sections:

16.02.010 Purpose.

28.5 16.02.020 Application of regulations.

16.02.030 Definitions.

16.02.040 Regulations.

16.02.050 Remedies for Violations.

16.02.060 Citation Authority.

16.02.010 PURPOSE.

The purpose of this chapter is to ensure that the water supply of the city of Santa Cruz is put to maximum beneficial use and that waste or unreasonable use or unreasonable method of use of water be prevented and to support implementation of state required urban water use restrictions when local supply conditions do not support implementation of the Water Shortage Contingency Plan described in section 16.01.

16.02.020 APPLICATION OF REGULATIONS.

The provisions of this chapter shall apply to all persons using water, both in and outside the city and within city water service areas, and regardless of whether any person using water shall have a contract for water service with the city. Notwithstanding other code provisions inconsistent with this chapter, the provisions of this chapter shall supersede and prevail until termination of this chapter.

16.02.030 DEFINITIONS.

For the purpose of this chapter, the following words shall have the meanings set forth below:
(a) “Director” is the director of the water department of the city of Santa Cruz, or his or her designated representative.
(b) “Drip irrigation” shall mean low-flow point specific irrigation systems that apply water directly to plant root zones through emitters, low volume micro-spray devices that are components of a drip irrigation system, and soaker hoses. (c) “Non-functional turf” shall mean turf that is solely ornamental and not regularly used for human recreational purposes or for civic or community events. Non-functional turf does not include sports fields and turf that is regularly used for human recreational purposes or for civic or community events.
(d) “Person” shall mean any individual, firm, partnership, association, corporation, or political entity.
(e) “Water” shall mean any water obtained from the water department of the city of Santa Cruz.

28.6 16.02.040 REGULATIONS.
(a) Water Waste Prohibitions. It is unlawful for any person to use water for any of the following:

1. Fire Hydrants. Use of water from any fire hydrant unless specifically authorized by permit from the city, except by regularly constituted fire protection agencies for fire suppression purposes, or for other authorized uses, including distribution system flushing, fire flow testing, and filling of approved vehicles for sewer system flushing, storm drain maintenance, and street sweeping purposes.

2. Watering/Irrigation. The watering of grass, lawn, groundcover, shrubbery, open ground, crops and trees, including agricultural irrigation, in a manner or to an extent which allows excess water to run to waste.

3. Plumbing Leaks. The escape of water through leaks, breaks, or malfunction within the water user’s plumbing or distribution system for any period of time within which such break or leak should reasonably have been discovered and corrected. It shall be presumed that a period of twenty-four hours after the water user discovers such break, leak or malfunction, or receives notice from the city of such condition, whichever occurs first, is a reasonable time within which to correct such condition or to make arrangements for correction.

4. Washing of Exterior Surfaces. The washing of sidewalks, walkways, driveways, parking lots, patios, or other exterior surfaces unless the hose is equipped with an automatic shutoff nozzle.

5. Cleaning of Structures and Vehicles. The cleaning of building exteriors, mobile homes, cars, boats, and recreational vehicles unless the hose is equipped with an automatic shutoff nozzle.

6. Fountains. The operation of an ornamental fountain, unless such water is recycled in the fountain.

7. Cooling. The use of water in new ice-making machines and any other new mechanical equipment that utilizes a single pass cooling system to remove and discharge heat to the sanitary sewer. Water used for all cooling purposes shall be recycled.

8. Commercial Car Washes. The washing of vehicles at a commercial car wash unless the facility utilizes water recycling equipment, or operates on a timer for a limited time period and shuts off automatically at the expiration of the time period.

9. Construction. The use of potable water for dust control or soil compaction purposes in construction activities where there is a reasonably available source of reclaimed water appropriate for such use.

28.7 10. The indiscriminate running of water or washing with water not otherwise prohibited in this section, which is wasteful, and without reasonable purpose.

11. Use of potable water to irrigate turf, lawns, gardens, or ornamental landscaping between 10:00 a.m. and 6:00 p.m. unless by drip irrigation, or by hand watering with a quick acting positive shut off nozzle. (Exceptions may be made by the director for professional gardeners where there is no ability to not water between 10:00 a.m. and 6:00 p.m.).
(b) Imposition of State-Mandated Restrictions. From time to time the City may require additional water use restrictions in order to comply with state mandated restrictions on water use to address state-wide drought conditions when local supply conditions do not warrant implementation of the Water Shortage Contingency Plan. The water director shall provide notification to city council and the public before any such restrictions are put into effect. Such restrictions may include, but are not limited to:

1. Landscape Irrigation. To prevent unreasonable use of water and to promote water conservation, the number of days per week on which landscape irrigation is allowed may be limited and/or specific watering days may be assigned on which landscape irrigation is allowed.

2. Non-Functional Turf. To prevent the unreasonable use of water and to promote water conservation, the use of potable water for non-functional turf by commercial, industrial, or institutional users (as defined at 23 Cal. Code of Regulations section 996) may be restricted or prohibited. The use of water necessary to ensure the health of trees and other perennial non-turf landscaping is not prohibited.

3. A prohibition on serving drinking water to any customer, unless expressly requested, by a restaurant, hotel, cafe, cafeteria, or other public place where food is sold, served, or offered for sale.

4. The use of potable water for washing sidewalks, driveways, buildings, structures, patios, parking lots, or other hard surfaced areas, except in cases where health and safety are at risk.

5. The use of potable water for street cleaning or construction site preparation purposes, unless no other method can be used or as needed to protect the health and safety of the public.

6. The application of water to irrigate turf and ornamental landscapes during and within 48 hours after measurable rainfall of at least one fourth of one inch of rain.

In determining whether measurable rainfall of at least one fourth of one inch of rain occurred in a given area, enforcement may be based on records of the National Weather Service, the closest CIMIS station to the parcel, or any other reliable source of rainfall data available to the entity undertaking enforcement of this subdivision.

28.8 7. The use of potable water for irrigation of ornamental turf on public street medians.

16.02.050 REMEDIES FOR VIOLATIONS. Violations of this chapter shall be subject to any or all of the remedies set forth in this section. (a) Administrative Enforcement. Any person, firm, partnership, association, corporation, political entity or other water department customer violating any provision of this chapter may be subject to the administrative enforcement provisions, and assessed administrative penalties, in accordance with the administrative enforcement provisions of Section

16.01.110.
(b) Disconnection.

1. Any person in violation of the provisions of this chapter who fails to take corrective action within fifteen days of receiving written notification of the violation may be subject to disconnection of water service or installation of a water flow restrictor as deemed appropriate by the director or designee. Prior to disconnection or installation of water flow restrictor, reasonable notice and an opportunity to cure shall be given. Upon disconnection of water service a written notice shall be served upon the violator, or conspicuously posted at the entrance of the violator’s premises, and shall state the time, place and general description of the violation and the method by which reconnection can be accomplished.

2. Where water service is disconnected, as authorized above, it shall be immediately reconnected upon correction of the condition or activity and the payment of the reconnection charge in an amount specified by resolution of the city council. (c) Infraction Citation. In accordance with Title 23 Cal. Code of Regulations Sections 995(e) and 996 (d)(3), any person violating this chapter shall be deemed guilty of an infraction punishable by a fine of up to five hundred dollars ($ 500) for each day in which the violation occurs. . Any fine imposed pursuant to this subsection is in addition to, and does not supersede or limit, any other remedies, civil or criminal, including those provide for in Title 4 of the Santa Cruz Municipal Code. Each and every day a violation of this chapter exists constitutes a separate and distinct offense for which enforcement action may be taken.

16.02.060 CITATION AUTHORITY.

All peace officers and persons authorized by law to issue citations within the water service area shall, in conjunction with duties imposed by the law, diligently enforce the provisions of this chapter. Pursuant to the provisions of Section 836.5 of the State Penal Code, the following officers and employees of the city of Santa Cruz are hereby designated and authorized to issue citations for enforcement of this chapter:

Director of the water department

28.9 Deputy director/operations manager
Deputy director/Engineering manager
Water quality manager
Customer service manager
Meter shop supervisor
Water meter specialist
Utility supervisor;
Production superintendent;
Water distribution superintendent
Water distribution crew chief
Water conservation representative
Utility services field technician
Utility service representative;
Water department employees designated by the director.” SECTION 4. Severability
If any provision of this ordinance is found to be unconstitutional or otherwise invalid by any court of competent jurisdiction, that invalidity shall not affect the remaining provisions of this ordinance which can be implemented without the invalid provisions, and to this end, the provisions of this ordinance are declared to be severable. The City Council hereby declares that it would have adopted this ordinance and each provision thereof irrespective of whether any one or more provisions are found invalid, unconstitutional or otherwise unenforceable.

SECTION 5. California Environmental Quality Act (CEQA) Compliance.

This ordinance is not subject to the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and Section 15060(c)(3) (the activity is not a project as defined in Section 15378 of the CEQA Guidelines, because it has no potential for resulting in physical change to the environment, directly or indirectly.) SECTION 6. This Emergency Ordinance shall be adopted upon its first reading and become

28.10 effective immediately upon its adoption pursuant to Section 612 of the Charter of the City of Santa Cruz.

PASSED FOR ADOPTION as an emergency ordinance this 14th day of June, 2022, by the following vote:

AYES:

NOES:

ABSENT:

DISQUALIFIED:

APPROVED: ____________________________
Sonja Brunner, Mayor
ATTEST: __________________________________
Bonnie Bush, City Clerk Administrator
This is to certify that the above and
foregoing document is the original
of Ordinance No. 2022-XX and
that it has been published or posted
in accordance with the Charter of
the City of Santa Cruz.
________________________________
Bonnie Bush, City Clerk Administrator

28.11 STATE WATER RESOURCES CONTROL BOARD
RESOLUTION NO. 2022-0018

TO ADOPT AN EMERGENCY REGULATION

TO REDUCE WATER DEMAND AND IMPROVE WATER CONSERVATION
WHEREAS:

1. On April 21, May 10, July 8, and October 19, 2021, Governor Newsom issued proclamations that a state of emergency exists statewide due to severe drought conditions and directed state agencies to take immediate action to preserve critical water supplies and mitigate the effects of drought and ensure the protection of health, safety, and the environment.

2. These proclamations urge Californians to reduce their water use.

3. On March 28, 2022, Governor Newsom signed an Executive Order directing the State Water Resources Control Board (State Water Board or Board) to consider adopting emergency regulations to increase water conservation. The Executive Order includes a request that the Board require urban water suppliers to implement Level 2 of their water shortage contingency plans, establish water shortage response actions for urban water suppliers that have not submitted water shortage contingency plans, taking into consideration model actions that the Department of Water Resources, and establish a ban on the irrigation of nonfunctional turf by entities in the commercial, industrial, and institutional sectors.

4. Many Californians and urban water suppliers have taken bold steps over the years to reduce water use; nevertheless, the severity of the current drought requires additional conservation actions from urban water suppliers, residents, and the commercial, industrial, and institutional sectors.

5. Water conservation is the easiest, most efficient, and most cost-effective way to quickly reduce water demand and extend limited water supplies through this summer and into the next year, providing flexibility for all California communities.

Water saved is water available next year, giving water suppliers added flexibility to manage their systems effectively over time. The more water that is conserved now, the less likely it is that a community will experience dire shortages that may require water rationing or other emergency actions.

6. Most Californians use more water outdoors than indoors. In many areas, 50 percent or more of daily water use is for irrigation of lawns and outdoor landscaping irrigation. Outdoor water use is generally discretionary, and many irrigated landscapes would not suffer greatly from receiving a decreased amount of water.

28.12 2

7. The use of potable water to irrigate turf on commercial, industrial, or institutional properties that is not regularly used for human recreational purposes or for civic or community events can be reduced in commercial, industrial, and institutional areas to protect local water resources and enhance water resiliency.

8. Public information and awareness are critical to achieving conservation goals, and the Save Our Water campaign (SaveOurWater.com), run jointly by the Department of Water Resources (DWR) and the Association of California Water Agencies, is an excellent resource for conservation information and messaging that is integral to effective drought response.

9. SaveWater.CA.Gov is an online tool designed to help save water in communities.

This website lets anyone easily report water waste from their phone, tablet, or computer by simply selecting the type of water waste they see, typing in the address where the waste is occurring, and clicking send. These reports are filed directly with the State Water Board and relevant local water supplier.

10.Enforcement against water waste is a key tool in conservation programs. When conservation becomes a social norm in a community, the need for enforcement is reduced or eliminated.

11.On March 28, 2022, the Governor suspended the environmental review required by the California Environmental Quality Act to allow State Water Board-adopted drought conservation emergency regulations and other actions to take place quickly to respond to emergency conditions.

12.Water Code section 1058.5 grants the State Water Board the authority to adopt emergency regulations in certain drought years in order to: “prevent the waste, unreasonable use, unreasonable method of use, or unreasonable method of diversion, of water, to promote water recycling or water conservation, to require curtailment of diversions when water is not available under the diverter’s priority of right, or in furtherance of any of the foregoing, to require reporting of diversion or use or the preparation of monitoring reports.”

13.On May 13, 2022, the State Water Board issued public notice that it will consider the adoption of the regulation at the Board’s regularly scheduled May 24, 2022 public meeting, in accordance with applicable State laws and regulations. The State Water Board also distributed for public review and comment a Finding of Emergency that complies with State laws and regulations.

14.The emergency regulation exempts suppliers from enforcing connection moratoria, if their Level 2 demand management actions call for them, because new residential connections are critical to addressing the state’s housing supply shortage. However, the Board recognizes connections for other projects may not be appropriate given the shortage conditions and urges water suppliers to carefully evaluate new development projects for their water use impacts.

28.13 3

15.Disadvantaged communities may require assistance responding to Level 2 conservation requirements, including irrigation restrictions, temporary changes to rate structures, and prohibited water uses. State shortage contingency plans aimed at increasing water conservation, and state and local agencies should look for opportunities to provide assistance in promoting water conservation. This assistance should include but not be limited to translation of regulation text and dissemination of water conservation announcements into languages spoken by at least 10 percent of the people who reside in a water supplier’s service area, such as in newspaper advertisements, bill inserts, website homepage, social media, and notices in public libraries.

16.The Board directs staff to consider the following in pursuing any enforcement of section 996, subdivision (e): before imposing monetary penalties, staff shall provide one or more warnings; monetary penalties must be based on an ability to pay determination, consider allowing a payment plan of at least 12 months, and shall not result in a tax lien; and Board enforcement shall not result in shutoff.

17.The Board encourages entities other than Board staff that consider any enforcement of this regulation to apply these same factors identified in resolved paragraph 16. Nothing in the regulation or in the enforcement provisions of the regulation precludes a local agency from exercising its authority to adopt more stringent conservation measures. Moreover, the Water Code does not impose a mandatory penalty for violations of the regulation adopted by this resolution, and local agencies retain their enforcement discretion in enforcing the regulation, to the extent authorized, and may develop their own progressive enforcement practices to encourage conservation.

THEREFORE BE IT RESOLVED THAT:

1. The State Water Board adopts California Code of Regulations, title 23, section 996, as appended to this resolution as an emergency regulation that applies to urban water suppliers, as defined by Water Code section 10617.

2. State Water Board staff shall submit the regulation to the Office of Administrative Law (OAL) for final approval.

3. If, during the approval process, State Water Board staff, the State Water Board, or OAL determines that minor corrections to the language of the regulation or supporting documentation are needed for clarity or consistency, the State Water Board Executive Director or designee may make such changes.

28.14 4

4. This regulation shall remain in effect for one year after filing with the Secretary of State unless the State Water Board determines that it is no longer necessary due to changed conditions or unless the State Water Board renews the regulation due to continued drought conditions, as described in Water Code section 1058.5.

5. The State Water Board directs State Water Board staff to work with the Department of Water Resources and the Save Our Water campaign to disseminate information regarding the emergency regulation.

6. The State Water Board directs staff to, by January 1, 2023, survey urban water suppliers on their experience protecting trees and tree cover during drought, with attention to disadvantaged communities. The survey shall inquire about challenges encountered, strategies used, costs, and successes in protecting trees.

7. Nothing in the regulation or in the enforcement provisions of the regulation precludes a local agency from exercising its authority to adopt more stringent conservation measures. Local agencies are encouraged to develop their own progressive enforcement practices to promote conservation.

CERTIFICATION
The undersigned Clerk to the Board does hereby certify that the foregoing is a full, true, and correct copy of a resolution duly and regularly adopted at a meeting of the State Water Resources Control Board held on May 24, 2022.

AYE: Chair E. Joaquin Esquivel
Vice Chair Dorene D’Adamo
Board Member Sean Maguire
Board Member Laurel Firestone
NAY: None
ABSENT: Board Member Nichole Morgan
ABSTAIN: None
Jeanine Townsend
Clerk to the Board

28.15 5

ADOPTED EMERGENCY REGULATION TEXT
Version: May 24, 2022
Title 23. Waters
Division 3. State Water Resources Control Board and Regional Water Quality Control Boards
Chapter 3.5. Urban Water Use Efficiency and Conservation Article 2. Prevention of Drought Wasteful Water Uses
§ 996. Urban Drought Response Actions
(a) As used in this section:
(1) “Commercial, industrial and institutional” refers to commercial water users, industrial water users, and institutional water users as respectively defined in Water Code, section 10608.12, subdivisions (e), (i), and (j), and includes homeowners’ associations, common interest developments, community service organizations, and other similar entities but does not include the residences of these entities’ members or separate interests.
(2) “Common interest development” has the same meaning as in section 4100 of the Civil Code.
(3) “Community service organization or similar entity” has the same meaning as in section 4110 of the Civil Code.
(4) “Homeowners’ association” means an “association” as defined in section 4080 of the Civil Code.
(5) “Non-functional turf” means turf that is solely ornamental and not regularly used for human recreational purposes or for civic or community events. Nonfunctional turf does not include sports fields and turf that is regularly used for human recreational purposes or for civic or community events. (6) “Plant factor” has the same meaning as in section 491. (7) “Separate interest” has the same meaning as in section 4185 of the Civil Code.
(8) “Turf” has the same meaning as in section 491.
(9) “Urban water supplier” has the same meaning as Water Code section 10617. (10) “Water shortage contingency plan” means the plan required by Water Code section 10632.
(b) Each urban water supplier shall submit to the Department of Water Resources a preliminary annual water supply and demand assessment consistent with section

28.16 6
10632.1 of the Water Code no later than June 1, 2022, and submit a final annual water supply and demand assessment to the Department of Water Resources no later than the deadline set by section 10632.1 of the Water Code. (c) (1) Each urban water supplier that has submitted a water shortage contingency plan to the Department of Water Resources shall implement by June 10, 2022, at a minimum, all demand reduction actions identified in the supplier’s water shortage contingency plan adopted under Water Code 10632 for a shortage level of ten (10) to twenty (20) percent (Level 2).
(2) Notwithstanding subdivision (c)(1), urban water suppliers shall not be required to implement new residential connection moratoria pursuant to this section. (3) Notwithstanding subdivision (c)(1), an urban water supplier may implement the actions identified in subdivision (d) in lieu of implementing the demand reduction actions identified in the supplier’s water shortage contingency plan adopted under Water Code section 10632 for a shortage level of ten (10) to twenty (20) percent (Level 2), provided the supplier meets all of the following:
(i) The supplier’s annual water supply and demand assessment submitted to the Department of Water Resources demonstrates an ability to maintain reliable supply until September 30, 2023.
(ii) The supplier does not rely on, for any part of its supply, the Colorado River, State Water Project, or Central Valley Project, and no more than ten (10) percent of its supply comes from critically overdrafted groundwater basins as designated by the Department of Water Resources.
(iii) The supplier's average number of gallons of water used per person per day by residential customers for the year 2020 is below 55 gallons, as reported to the Board in the Electronic Annual Report.
(d) Each urban water supplier that has not submitted a water shortage contingency plan to the Department of Water Resources shall, by June 10, 2022, and continuing until the supplier has implemented all demand reduction actions identified in the supplier’s water shortage contingency plan adopted under Water Code 10632 for a shortage level of ten (10) to twenty (20) percent (Level 2), implement at a minimum the following actions:
(1) Initiate a public information and outreach campaign for water conservation and promptly and effectively reach the supplier’s customers, using efforts such as email, paper mail, bill inserts, customer app notifications, news articles, websites, community events, radio and television, billboards, and social media. (2) Implement and enforce a rule or ordinance limiting landscape irrigation with potable water to no more than two (2) days per week and prohibiting landscape irrigation with potable water between the hours of 10:00 a.m. and 6:00 p.m. (3) Implement and enforce a rule or ordinance banning, at a minimum, the water uses prohibited by section 995. Adoption of a rule or ordinance is not required if the supplier has authority to enforce, as infractions, the prohibitions in section 995 and takes enforcement against violations.

28.17 7
(e) (1) To prevent the unreasonable use of water and to promote water conservation, the use of potable water is prohibited for the irrigation of non-functional turf at commercial, industrial, and institutional sites.
(2) Notwithstanding subdivision (e)(1), the use of water is not prohibited by this section to the extent necessary to ensure the health of trees and other perennial non-turf plantings or to the extent necessary to address an immediate health and safety need.
(3) Notwithstanding subdivision (e)(1), an urban water supplier may approve a request for continued irrigation of non-functional turf where the user certifies that the turf is a low water use plant with a plant factor of 0.3 or less, and demonstrates the actual use is less than 40% of reference evapotranspiration. (f) The taking of any action prohibited in subdivision (e) is an infraction punishable by a fine of up to five hundred dollars ($500) for each day in which the violation occurs. The fine for the infraction is in addition to, and does not supersede or limit, any other remedies, civil or criminal.
(g) A decision or order issued under this section by the Board, or an officer or employee of the Board, is subject to reconsideration under article 2 (commencing with section 1122) of chapter 4 of part 1 of division 2 of the Water Code.

Authority: Section 1058.5, Water Code.

References: Article X, Section 2, California Constitution; Sections 4080, 4100, 4110, and 4185, Civil Code; Section 8627.7, Government Code; Sections 102, 104, 105, 275, 350, 377, 491, 1122, 10608.12, 10617, 10632, and 10632.1, Water Code; Light v. State Water Resources Control Board (2014) 226 Cal.App.4th 1463; Stanford Vina Ranch Irrigation Co. v. State of California (2020) 50 Cal.App.5th 976.

28.18 1
Rosemary Balsley
From: A Webb <[email protected]>
Sent: Saturday, June 11, 2022 4:17 PM
To: City Council; Sonja Brunner; Shebreh Kalantari-Johnson; Justin Cummings; Sandy Brown; Donna Meyers; Renee Golder; Martine Watkins
Subject: 6.14.22, Item #28, Water Conservation - Emergency Ordinance Dear Mayor and City Councilmembers,
Its great to read that rationing is unlikely this year. Hope that holds true.

It is very important in a communication campaign and as a matter of routine that the "end user" of water is included, not just limited to the customer (which seems to only mean the "account holder" in the City of Santa Cruz). I'm very glad to see this Ordinance stating it is also applicable to end-users, but the remainder is still a "customer" only focus.

Please consider enhancing this Ordinance and programs in the following 3 areas:

1. Communications:

The communications campaign sections are still directed only to "customers" and do not include any required communications directly to renters (end users) - who are a large part of the City, and about to be more so with all the high density building that is in the pipeline, etc.

It's always been a missing link - no requirements for landlords to provide information to tenants or renters, or directly from the City. Both of these approaches must be included. Perhaps the City can provide notices to be posted onsite in common areas and give landlords a handout to make copies of at regular intervals to give to all tenants: at move-in, and twice a year with current data directly from the City and/or landlord.

2. Retrofitting with HE fixtures/appliances:

There should be requirements that all multi-unit housing, office buildings, hotels/motels, vacation rental properties, retail business that have kitchen/bathrooms/laundry use onsite, be retrofitted with water efficient fixtures and appliances - NOW. With city, state (CA Climate Credits and this law), and PG&E rebate programs, costs are minimal to take this action for new water saving toilets/appliances, sink fixtures, landscape watering fixtures & water run off/storage (rainbarrels, grey water: https://elemental.green/complete-beginnerguide-to-greywater-systems/).

The City should look at a way to capture water when flushing out water main systems too. Its always hard to witness all that water just running down the storm drains on a maintenance routine. The City of San Jose uses a truck system that filters the water and puts it back into the main system - here's a short clip for inspiration:
https://youtu.be/k3KHPq6vmzk
I've been to offices and restaurants where there have been years old leaks, and old high volume toilets with signs to hold the handle down until fully drained. I was compelled once, during rationing, to turn off the cold water supply line under a bathroom sink that had not been repaired even after 2 months of a fast steady drip (it was my second visit to a restaurant). There doesn't seem to be consistent, and sometimes no response from the City when reporting leaks and waste. Revisiting compliance staffing and follow up timeliness for improvements would be good, and I see funding is being requested for that. Hopefully it includes properties with sub-meters.

3. Sub-metering:

28.19 2
There are no requirements for sub-meters for apartments and other types of tenant development - which naturally spurs awareness and conservation. This should be considered. Otherwise, the greatest burden of penalties or rationing is still on individual homeowners who have city accounts (aka: "customers"). Landlords pass on costs directly through rent increases in many cases, without any measures taken to conserve, so that direct communication link is important.

Thank you for giving these points serious consideration. Hoping to see them added.

Sincerely,
Anita Webb

28.20 1
Rosemary Balsley
From: Garrett <[email protected]>
Sent: Monday, June 13, 2022 11:27 AM
To: City Council
Subject: 6.14.22 Agenda Item #28 Water Emergency Ordinance

6.14.22 Agenda Item #28 Water Emergency Ordinance
Dear Council,
I am writing to thank everyone on the city staff for their hard and successful work advocating for the people of Santa Cruz in getting alternate compliance rules approved to avoid strict and unnecessary water rationing forced onto the city by the State.

Nobody wants fines or higher rates paying for less water while plenty floats in the reservoir.

Our garden plants thank you also.

Even the gophers thank you.

In reading other correspondence I note someone thinks mandatory retrofitting of household water systems is needed.

I don't need to remind you if some water fixture was legal when installed it's still legal now, otherwise that would be an ex-post-facto type (unconstitutional) law. It's also all about the water use, not private property fixtures which will eventually all get replaced anyway.

In reading other correspondence I note someone thinks landlords need to be required to pass along all changes to water conservation to renters who are actually the ones using water. Ah... no. If landlords are paying for water I suspect they might be doing that, but in any case, as they say, ignorance of the law is no excuse.

Garrett Philipp - Westside

28.21 1
City Implementation of State Required
Emergency Water Regulations for 2022
June 14, 2022

28.22 State Drought Conditions
• Third year of severe drought across California.
• Key state supply reservoirs below 50% capacity.
• Very dry winter and low snow-pack driving
increasingly urgent call to escalate water
conservation practices throughout the state.
• Governor’s March Executive Order directs State
Water Resources Control Board to consider statewide mandatory requirements.

28.23 Santa Cruz’s water supply
situation this year is not
typical of conditions
elsewhere in California
• The state has enacted
emergency water restrictions
for urban water suppliers
requiring implementing all the
Stage 2 actions of agency
Water Shortage Contingency
Plans.
• An alternate compliance
program for agencies similar
to Santa Cruz has been
provided.

28.24 Alternate Compliance
• The state recognized Santa Cruz’s unique situation
by providing an alternate compliance strategy for
utilities that
– Have two years of reliable supply;
– Use no water from Colorado River, State Water Project or Central Valley Water sources, or less than 10% from
critically over-drafted groundwater sources; and
– Have a residential water use that is lower than 55 gpcd.

28.25 28.26

28.27 Alternate actions Santa Cruz must implement:
• Requirements for conservation actions by Santa Cruz are intended to reinforce the ongoing need for water use efficiency throughout the state and include:
– A public information campaign emphasizing wise water use; – Enforcing water waste prohibitions, including irrigating landscaping between 10:00 a.m. and 6:00 p.m. and
restricting landscape irrigation to no more than 2 days per week; and
– Implementing the state-wide prohibition on irrigating “nonfunctional” turf for commercial, industrial, institutional customers and on non-functional turf areas in HOAs.

28.28 Emergency Ordinance Amending Chapter

16.02 of the Santa Cruz Municipal Code
• Provides explicit authority to implement restrictions when required by the state and when local supply conditions do not require implementation of the Water Shortage
Contingency Plan;
• Establishes updated authority for administrative
enforcement, remedies for violations, and appeals that is aligned with procedures in 2021 Water Shortage
Contingency Plan;
• Allows for immediate implementation of restrictions as required by the state.

28.29 City Council

AGENDA REPORT
DATE: June 2, 2022
AGENDA OF: June 14, 2022
DEPARTMENT: Planning and Community Development
SUBJECT: Approval of a Contract with Kimley-Horn and Associates for Consultant Services for the 6th Cycle Housing Element Update (PL)
RECOMMENDATION: Direct the City Manager to execute the contract, in a form approved by the City Attorney, with Kimley-Horn and Associates in the amount of $260,769 to procure consultant services to complete the 6th Cycle Housing Element Update.

BACKGROUND: The Housing Element of the City of Santa Cruz’ General Plan is required by State law to be updated on an eight year cycle to address how the City will meet its required Regional Housing Needs Allocation (RHNA). The RHNA is a specified number of housing units in four different affordability levels that is provided as a target for each jurisdiction across the State. Santa Cruz is currently in its fifth RHNA cycle and its sixth cycle will be from 2024 through 2031. State Housing Element law requires each Housing Element update to address a number of topics including a review of the jurisdiction’s housing characteristics, housing capacity, demographics, and policies to support housing growth within the jurisdiction. A primary requirement is that the Housing Element demonstrate to the State that the jurisdiction has sufficient, appropriately-zoned land to meet the RHNA for the next cycle in each income category.

Staff has begun the process of updating the Housing Element with the goal to have the City’s Housing Element certified by the State by December 2023. Since the last Housing Element update, the State has added a number of new Housing Element requirements. While the previous Housing Element was prepared by staff, the new requirements surpass staff’s capacity and necessitate the use of a professional consultant to prepare the document.

The City’s Planning staff has been working on multiple efforts to address local housing needs and take advantage of statewide funding opportunities. In May of 2020, the City Council directed staff to apply for a Local Early Action Planning (LEAP) State grant of $300,000, with the funds to be directed to consultants for help to complete the upcoming Sixth Cycle Housing Element Update and additional funds to be directed to the project to expand the boundaries of the Downtown Plan.

Staff received the full funding allocation of $300,000 in March 2021, and $150,000 of that grant funding is being put towards the 6th Cycle Housing Element Update project. Additional funding from the Planning Department’s budget will be utilized to make up the difference between the grant funding and the contract cost.

29.1.1 Consultant Procurement Process
The City released a Request for Proposals in April 2022 (see Request for Proposals attachment) and received two proposals from highly qualified firms by the May 4, 2022 deadline. After reviewing and scoring these proposals, staff selected a preferred consultant for these services. Staff recommends that the City Council direct the City Manager to execute the 6th Cycle Housing Element Update project contract with Kimley-Horn and Associates (KHA). The attached Consultant Contract document contains the full project scope, schedule, and fee proposed for this project.

DISCUSSION:

Proposal and Consultant Team
Staff finds that the project proposal by the recommended consultant, KHA, meets the needs of this project. KHA has relevant experience, a proven track record of successfully completing projects with the City, and an interest in supporting the City’s equity, public health, and sustainability goals as articulated through the City’s Health in All Policies commitment. In particular, KHA has worked on a variety of Housing Element updates, including many 6th Cycle updates throughout the State, and in doing so, has worked extensively with the State Department of Housing and Community Development (HCD), the agency that reviews and certifies Housing Elements within California. Given the new and extensive Housing Element requirements, this experience is of significant value. In addition, KHA is experienced with California Environmental Quality Act (CEQA) documentation, which is included in the contract.

KHA fulfills the criteria included in the Request for Proposals, listed below:
1) Experience leading a 6th Cycle Housing Element update. 2) Significant experience in community facilitation, land development, and city planning, especially regarding State housing laws, housing element review, and housing analysis such as housing needs, fair housing, housing constraints, and site inventories. 3) Significant experience in community engagement and in meeting with Planning Commissions and City Councils.
4) An organized and responsive team who listens to, partners with, and is passionate about collaboration with City staff, decision makers, and all sectors of the community. 5) A strategic project manager with substantial experience and success in housing element updates and community engagement.
6) Talented writers and illustrators who can prepare user-friendly administrative, draft, and final Housing Element Update deliverables.

Scope of Work
The consultant team has proposed a scope and schedule for the project that will allow the project to be completed and submitted for certification to HCD by December 2023. This timeline provides adequate time to perform all required tasks of the Housing Element Update including: community outreach and engagement; review of the existing Housing Element; housing needs analysis; housing constraints analysis; fair housing assessment; site inventory and analysis of resources; analysis and update of the Housing Element goals, policies, programs, and quantified objectives; City Council and Planning Commission Study Sessions; creating draft and final documents; and submittal of the final document for HCD review. The scope also includes the potential for identifying any needed General Plan amendments and/or rezoning to meet the City’s RHNA and

29.1.2 includes the appropriate environmental review of the Housing Element Update to meet CEQA requirements.

The scope of work provides for a Housing Element update process that complies with all State Housing Element laws including new Affirmatively Further Fair Housing (AFFH) requirements.

As part of the AFFH, the State requires that the Housing Element Update: “promote inclusive communities, further housing choice, and address racial and economic disparities through government programs, policies, and operations.” The scope of work addresses AFFH by stating:

Per AB 686, work with City staff to assess various actions to overcome patterns of segregation, address disparities in housing needs and access to opportunity, and foster inclusive communities. This will include an assessment of fair housing practices, examine the relationship of available sites to areas of high opportunity, and include actions to affirmatively advance fair housing.

Incorporate California Tax Credit Allocation Committee / HCD Opportunity Maps that illustrate areas that offer low-income children and adults the best chance at economic advancement, high educational attainment, and good physical and mental health. Consider and review the U.S. Department of Housing and Urban Development Affirmatively Furthering Fair Housing criteria, and utilize the data under the Fair Housing Assessment to assist in the update of the City’s Analysis of Impediments to Fair Housing Choice.

The AFFH portion of the Housing Element can be a tool to develop citywide policies and actions around affordable housing, fair housing, tenant protections, and displacement risks.

Outreach to historically underrepresented communities is also highlighted in the scope of work. In addition to three citywide community meetings, five focus group meetings will also be held seeking to hear from specific sectors of the community. All engagement materials will be translated into Spanish and all meetings will feature Spanish translation.

Next Steps
Once the contract has been signed, staff will have a kick-off meeting with KHA to trade knowledge, provide data, and further refine the schedule and community engagement plan. A City website will be set up that will keep the public informed of the progress on the project as well as providing information about the process and legal requirements.

Health in All Policies
KHA is committed to achieving the Health in All Policies (HiAP) goals of improving the wellbeing of all people by incorporating health, sustainability, and equity considerations into the goals and policies of the Housing Element. The Scope of Work includes addressing the AFFH requirements of 2018’s AB 686, including assessing actions to overcome patterns of segregation, address disparities in housing needs and access to opportunity, and foster inclusive communities.

KHA also proposes to incorporate California Tax Credit Allocation Committee/HCD Opportunity Maps that illustrate areas that offer low-income children and adults the best chance at economic advancement, high educational attainment, and good physical and mental health. KHA would also consider and review the U.S. Department of Housing and Urban Development Affirmatively Furthering Fair Housing criteria and utilize the data under the Fair Housing Assessment to assist in the update of the City’s Analysis of Impediments to Fair Housing Choice.

29.1.3 Health and sustainability will be important elements throughout the planning process, including an equitable engagement process. The Housing Element focuses on increasing housing opportunities at all affordability levels and in ways that provide access to opportunities for all.

Environmental Review
The appropriate level of California Environmental Quality Act (CEQA) documentation will be determined by further analysis and the outcomes of the Housing Element Update. However, it is anticipated that an addendum to the 2030 General Plan EIR is the most likely environmental document required. The contract includes an addendum and also includes an optional Supplemental EIR task if additional, targeted environmental review is needed.

FISCAL IMPACT: The City received a LEAP grant in the amount of $300,000, of which $150,000 will be used for the project. The Advance Planning Division intends to use budgeted Planning Services funds to cover the delta of $119,769. As Planning Services funds are meant to be used for consultant services and given the size and scope of the project, it is appropriate to use a portion of the funds to complete this required work.

Prepared By:

Katherine Donovan
Senior Planner
Matt VanHua
Principal Planner
Advance Planning
Submitted By:

Lee Butler
Director of Planning and
Community Development
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. Request for Proposals

2. Consultant Contract

29.1.4 City of Santa Cruz
Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 1

NOTICE INVITING PROPOSALS FOR
6 th Cycle Housing Element Update
Proposals Due: May 4, 2022, no later than 5:00 pm
Deliver proposals to:
[email protected]
Project Description:

The City of Santa Cruz (City) is seeking qualified professional consulting services to update the City’s adopted housing element in a manner consistent with current State law, ensuring certification of the final element by the State of California Department of Housing and Community Development (HCD) by December 15, 2023.

Proposals are solicited in accordance with the terms, conditions, and instructions as set forth in this Request for Proposals (RFP).

For More Information:

The Request for Proposals document, dated April 6, 2022, may be downloaded from the City’s website or obtained from the Planning and Community Development Department, 809 Center St, Rm 101 Santa Cruz, California, 95060.

For additional information or assistance, contact Katherine Donovan, Senior Planner, at 831-420-5134 or [email protected].

The City reserves the right to reject any or all proposals and waive any informality or minor defects in proposals received.

29.1.5 City of Santa Cruz
Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 2

1. GENERAL INFORMATION FOR CONSULTANTS

1.1 Summary Scope of Work
The Planning and Community Development Department of the City of Santa Cruz is soliciting proposals for the City of Santa Cruz 6th Cycle Housing Element 2023-2031. The City’s current Housing Element was previously certified by HCD and shall serve as a foundation for updating this Housing Element. The Consultant shall assist staff with the Housing Element Update, pursuant to and consistent with the State of California Government Code Sections 65580 through 65589.8, and shall accomplish the following tasks:

The Consultant (or firm) selected shall:
 Evaluate the City’s housing capacity based on prior studies  Review the effectiveness of the City’s housing programs, goals, and policies including the City’s HUD programs and inclusionary requirements
 Review the production of housing units at all income categories and identify any potential barriers to housing production
 Identify current housing characteristics
 Analyze special housing needs
 Consider new State Housing Laws and programs
 Ensure compliance with recently adopted legislation related to housing elements  Review General Plan and Zoning Code compliance to determine internal consistency and compliance with newly-adopted legislation and the City’s new Housing Element.

The Consultant shall assist staff with the Housing Element Update, pursuant to the State of California Government Code Sections 65580 through 65589.8, and shall accomplish the following tasks:
 Review previous housing element and do a consistency review of current General Plan 2030  Conduct community outreach including surveys, community meetings, and study sessions with the Planning Commission and City Council
 Provide Housing Element preparation including: needs analysis; Fair Housing Assessment; sites inventory and analysis of resources including but not limited to sites suitable for accommodating lower-income housing pursuant to 65583.2 and other relevant requirements; financial and programmatic resources; housing constraints; and housing goals, policies, and quantified objectives.  Development of General Plan amendments and a rezoning proposal  Prepare and finalize Housing Element including the Administrative Draft, Public Review Draft, HCD Public Review Draft, and Adopted Final Housing Element (including submittal to HCD)  Attend public hearings with Planning Commission and City Council  Prepare and submit applicable documents under the California Environmental Quality Act (CEQA) including public review, administrative draft, final drafts, and final documents (as needed) The City also expects all work conducted on this project to comply with the City’s Health in All Policies (HiAP) policy and implementation recommendations which are focused on addressing equity, public health, and sustainability. The City’s policy is summarized on the City’s website:
https://www.cityofsantacruz.com/government/city-departments/city-manager/health-in-all-policies.

The Consultant, while preparing the Fair Housing Assessment, shall also consider and review for the U.S.

Department of Housing and Urban Development Affirmatively Furthering Fair Housing criteria, and utilize the data under the Fair Housing Assessment to assist in the update of the City’s Analysis of Impediments to Fair Housing Choice.

29.1.6 City of Santa Cruz
Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 3

1.2 Background
The City of Santa Cruz (City) is a full-service charter city with a City Council/City Manager form of government and approximately 750 permanent full-time employees, over 40 half-time employees, and almost 350 temporary employees representing 12 departments. It is a municipal corporation, located in Santa Cruz County, California. The area of the City is just under 16 square miles with a population of approximately 65,000. The Citywide Operating Expenditures budget for Fiscal Year 2021-22 is approximately $221 million.

The City anticipates meeting its 5th Cycle RHNA by December 2023 but the 6th Cycle RHNA target is about four times greater: 747 units vs. 3736 units. Currently, the City has met all but the Very Low RHNA numbers for the 5th Cycle, with enough VLI units in the pipeline to more than meet the RHNA target and approximately double the 2023 total RHNA anticipated. A portion of the City is within the Coastal Zone.

1.3 Estimated Dollar Value
The City of Santa Cruz applied for and received a Local Early Action Planning (LEAP) Grant, part of which will be utilized for the Housing Element update. The City is estimating a budget of approximately $150,000 for the Housing Element Update project, including CEQA review. At this time, the City anticipates an Addendum to the existing General Plan EIR for the Housing Element will suffice; however, this could change depending on the outcome of analysis performed during the Housing Element process and the outcome of pending legislation that would exempt Housing Elements from CEQA. The City’s budget has been impacted by the COVID-19 pandemic and the City would ideally use some amount of this grant funding for staff time on this project as well.

1.4 Contact
If you have any questions concerning this solicitation, please contact Senior Planner Katherine Donovan at 831-420- 5134 or [email protected].

To learn solicitation results, call Katherine Donovan after the due date.

1.5 Proposal Deadline
Proposals are due no later than 5:00 pm, May 4, 2022. All proposals will be delivered to [email protected] on or before the due date. Late proposals may not be considered.

Consultants will deliver an electronic copy of the proposal on or before 5:00 pm on the due date by email or file transfer addressed to [email protected]. The City prefers electronic proposals. City staff will confirm receipt and ability to download the proposal within one hour of submittal during normal business hours between 9 am and 5:00 pm Monday-Friday and will notify consultants of any inability to download or access the submitted proposal. It is the responsibility of the consultant to ensure that electronic submittals have been received prior to the deadline.

In the event that an electronic proposal cannot be accessed by the City, the consultant will have an opportunity to submit a hard copy within one business day of the initial proposal deadline. Electronic proposals that cannot be accessed prior to 5 p.m. on Friday will need to be received in hardcopy no later than 5 p.m. the following Monday.

1.6 Proposal Evaluation and Award
The City will evaluate proposals and may select one or multiple Proposers to provide the requested services. The contract award will be made to the responsible Proposer(s) whose Proposal(s) is (are) determined to provide the overall best value to the City, considering the evaluation criteria, including price. The various qualitative and quantitative criteria that will be used by the evaluation committee to review and rate proposals includes, but is not limited to, the following:

1. When determining Responsiveness of the Consultant’s proposal, the City may consider any of the following, including but not limited to:

29.1.7 City of Santa Cruz
Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 4
a. Proposal received on time and completed per instructions b. Proposal contains required contents, forms, and signatures submitted in accordance with RFP instructions.

2. Proposal is compliant with specifications and industry standards,

3. Consultant is offering the lowest overall price for the best value based on the proposal evaluations as outlined in Section 3.5 of this RFP,

4. When determining Responsibility of the Consultant, the City may consider any of the following but not limited to:
a. Possession of industry standard licensing and/or certifications b. Financial capacity of the Consultant
c. Experience or past performance of the Consultant
d. Use of Subcontractors/Subconsultants
e. Past, Present and Pending Legal Actions
f. Exceptions with City’s Terms and Conditions.
g. Project delivery schedule.

A Consultant’s failure to promptly respond to City’s inquires for proposal clarification may result in determination of non-responsibility.

The contract will be awarded on an all or nothing basis and is tentatively scheduled to begin July 1, 2022.

Consultants have the right to take exception to the specifications or terms to this solicitation, however, such exceptions may deem the proposal submission non-responsive during evaluation. Any exceptions taken must be explained in the proposal. Any exceptions that contradict the City’s terms and conditions or contain provisions that are not in the best interest of the City will disqualify the Consultant. If exceptions are not explained, the Consultant will comply with the specifications as stated in this solicitation.

The City reserves the right to reject any or all proposals and waive any informality or minor defects in proposals received.

1.7 Organization of this RFP Document
The Request for Proposals (RFP) is organized in these sections:

Section 1- General Information to Consultants: Contains project summary, contact information, proposal due date, and general background information.

Section 2- Specifications: Provides details regarding the contract requirements.

Section 3- Process Instructions: Contains the tentative RFP schedule, explains how the proposals will be evaluated, and presents administrative information on the conduct of the RFP process.

Section 4- Terms and Conditions: Details the City’s contract terms and conditions.

Section 5- Proposal Cover Page: Provides basic Consultant contact information and an authorized signature accepting the City’s terms and conditions as stated in this solicitation.

Section 6- RFP Questionnaire: Presents questions for Consultant response.

Section 7- Fee Schedule: Provides format for submitting pricing. Fee Schedules will include all costs incidental to performing the 6
th Cycle Housing Element Update according to this solicitation.

Appendix A – Local Business Preference Certification
Appendix B – Draft Professional Services Agreement

29.1.8 City of Santa Cruz
Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 5
SECTION 2: SPECIFICATIONS

2.1 Project Overview
The City of Santa Cruz is looking for a consultant to assist with the preparation of the City’s 6th Cycle Housing Element Update. The City is a member of the Association of Monterey Bay Area Governments and, as such, the 6th Cycle for the City Planning Period runs from December 31, 2023 to December 31, 2032. While, in the past, the City has prepared its Housing Element Updates in-house, changes to Housing Element law have added requirements that shorten timelines for preparation and added public and HCD review timelines that make it difficult for the City’s limited staff to update the document. In addition, there are new requirements for additional General Plan Element review that are beyond staff capacity.

2.2 Responsibilities of Consultant
The successful firm will be responsible for providing the services outlined in the HCD Housing Element Completeness Checklist (https://www.hcd.ca.gov/community-development/housingelement/docs/housing%20element%20completeness%20checklist.pdf), including the following professional services:

1. Project Management and Coordination
This task covers communication and coordination between the consultant and city staff, including meetings, phone conferences, email exchanges, and other communications to ensure timely delivery and adoption of the City’s updated housing element. The Proposal should identify the number of meetings anticipated and expectations for jurisdictional staff. Strategies or practices to ensure clear and timely communication and effective project coordination should be described. Strategies for ensuring coordination with HCD over the course of the project should also be addressed, as needed, as well as dates for timely submittals to HCD with HCD review times included.

2. Review Existing Housing Element
Review the current Housing Element pursuant to Government Code Section 65588 and other applicable Government Code sections and identify the City’s success in accomplishing/implementing the identified goals, policies, and programs; and provide explanations and updates where goals, policies, or programs are in progress, have been abandoned, or have not proven effective. This should include effectiveness of programs to address special needs populations. It should be noted that the City was not required to rezone any properties due to a shortfall of adequate sites in the 5th cycle planning period. The City’s Annual Housing Element Progress Report contains information that can be utilized in this review.

3. Community Outreach and Engagement
Develop a program that effectively reaches, educates, and engages the community throughout the Housing Element update. This should include strategies to ensure broad inclusion, particularly of historically underrepresented populations, with special attention given to communicating information so it is accessible and easy to understand. Outreach is expected to begin early in the process and continue throughout for feedback on important topics such as draft ideas, site options, the draft Housing Element, and environmental reviews. Virtual and in-person meetings should be considered depending on changing safety considerations.

Consultant should lead the engagement and provide summaries of the meetings. At a minimum, outreach should consist of:
 Two community meetings
 One stakeholder focus group
 Online presence and virtual participation opportunities such as surveys  One Study Session each with Planning Commission and City Council

29.1.9 City of Santa Cruz
Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 6

4. Housing Needs Analysis
Consultant will update the needs analysis pursuant to Government Code Section 65583 with data from the HCD preapproved data packet, 2020 U.S. Census data, American Community Survey, and other relevant sources. Consultant will coordinate with staff to develop a current housing inventory and evaluate housing conditions using state-approved criteria. The updated needs analysis will include the following:
 Population and Demographics: Population trends and projections, race and ethnicity, and population age.
 Household Characteristics: Number, size, and type of existing households and characteristics of lower-income households (including extremely low).
 Employment and Income: Employment by industry, occupation of employed residents, and income trends.
 Housing Stock Characteristics: Housing types and conditions, overcrowded households, and vacancy rates.
 Housing Costs and Affordability: Home sale price trends, rental costs, affordability for households at all income levels including existing need for extremely low-income households, and overpayment.  Special Housing Needs: Special housing needs of persons with disabilities (including persons with developmental disabilities), seniors, large households, female-headed households, homeless, and students.
 Projected Housing Needs: RHNA by income group, including projected extremely low-income households.
 At-Risk Housing: Inventory and analysis of existing affordable units at risk of converting to market rate during the planning period and estimate of the number of units in need of replacement and rehabilitation.
 Opportunities for Energy Conservation: Pursuant to Senate Bill (SB) 375 and Assembly Bill (AB) 32, an inventory and analysis of opportunities to encourage the incorporation of energy-saving features, energy-saving materials, and energy-efficient systems and design for residential development. The City’s 2022 Climate Action Plan update will include some recommendations and the City is currently developing an Existing Building Electrification Roadmap as well.  Coastal Zone Requirements: Include a description of construction, demolition, and conversion of housing for lower- and moderate-income households within the Coastal Zone.  Infrastructure: Include a description of consistency with water and sewer priority requirements pursuant to SB 1087 (Gov. Code § 65589.7).

5. Analysis of Housing Constraints
Identify potential and actual governmental and nongovernmental constraints for the preservation, protection, or production of housing across income levels within the city.

6. Fair Housing Assessment
AB 686 requires each City or County to take actions to overcome patterns of segregation, address disparities in housing needs and access to opportunity, and foster inclusive communities. Jurisdictions will need to include an assessment of fair housing practices, examine the relationship of available sites to areas of high opportunity, and include actions to affirmatively advance fair housing. The California Tax Credit Allocation Committee / HCD Opportunity Maps should be included and are intended to display the areas, according to research, that offer low-income children and adults the best chance at economic advancement, high educational attainment, and good physical and mental health. While preparing the Fair Housing Assessment, the City would like the Consultant to also consider and review for the U.S. Department of Housing and Urban Development Affirmatively Furthering Fair Housing criteria, and to utilize the data under the Fair Housing Assessment to assist in the update of the City’s Analysis of Impediments to Fair Housing Choice.

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Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 7

7. Sites Inventory and Analysis of Resources
Prepare the sites inventory section of the Housing Element that meets Government Code section 65583 and section 65583.1. The sites inventory shall demonstrate how the City will satisfy its RHNA in each income category. This includes identifying and evaluating the number of units, location, and assumed affordability of identified sites throughout the community relative to all components of the assessment of fair housing and analyzing and concluding whether the identified sites improve or exacerbate conditions for each of the fair housing areas. The consultant shall also identify, evaluate, and prioritize factors that contribute to fair housing issues and identify goals and actions based on these factors. These analyses describe the methodology used to quantify the number of units that can be accommodated on each site, including minimum density and realistic capacity, accounting for land use controls, typical density trends for similar projects, and site improvement requirements. The analysis shall also include potential policy strategies to increase site capacity and demonstrate development viability (per State law). For non-vacant sites, demonstrate the potential and likelihood of additional development within the planning period based on the extent to which existing uses may constitute an impediment to additional residential development, current market demand for the existing use, any existing leases or other contracts, development trends and regulatory or other incentives or standards to encourage additional residential development on these sites.

The analyses should address whether sites are adequate to accommodate lower income needs based on identification in the 5th cycle for non-vacant sites or two or more for vacant sites. It should be noted that a number of non-vacant sites were developed or are pursuing development in the 5th cycle with high-density housing, many of which utilized the density bonus process. The review should also include a list of the number of pending, approved, or permitted units by income group based on actual or anticipated sales prices and rents since the beginning of the projection period. Any known environmental or other constraints, conditions, or circumstances, including mitigation measures, that impede development in the planning period should also be addressed. Finally, the analyses should address new requirements related to zoning for sites accommodating moderate and above moderate housing pursuant to AB 725.

The sites inventory information shall be input into HCD’s electronic form for submittal with the updated element. It is anticipated that this will be the most significant area of work for the update process and this task will need to start as early as possible to ensure adequate time for consideration of potential areas for general plan amendments, rezoning, or other changes to development policies or standards needed to achieve the RHNA. For more information, please review the following documents provided by HCD:
“Housing Element Sites Inventory Guidebook” and “Default Density Standard Option” at HCD’s technical assistance memos: (https://www.hcd.ca.gov/community-development/housing-element/housing-elementmemos.shtml) See Site Inventory Form Site Inventory Form Instructions:
https://www.hcd.ca.gov/community-development/housing
element/docs/Site_inventory_template09022020.xlsm
https://www.hcd.ca.gov/community-development/housing-element/housing-element-memos.shtml https://www.hcd.ca.gov/community-development/housing-element/docs/Site_inventory_instructions.pdf

8. Goals, Policies, Programs, and Quantified Objectives Consultant will work with City staff to update goals, policies, programs, and quantified objectives (pursuant to Government Code Sections 65583 et seq.) to address identified housing needs and constraints based on the effectiveness and continued appropriateness of existing programs, information received through public outreach, the analysis of constraints, and findings from the needs assessment. Programs will describe

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Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 8
specific steps for implementation and will identify a timeframe and responsible department. Programs will address:
 All current state requirements
 Consistency and compliance with the rest of the General Plan elements and community goals  Provision of adequate housing sites and infrastructure to meet the RHNA  Assistance in the development of affordable housing
 Promotion of the development of accessory dwelling units  Preservation and improvement of existing affordable housing  Possible mitigations of governmental constraints to providing and improving housing  Special housing needs of the elderly, persons with disabilities, extremely low-income residents, persons experiencing homelessness, and other special housing needs  Affirmatively furthering fair housing
 Consultant shall estimate the number of units likely to be constructed, rehabilitated, and conserved or preserved by income level, including extremely low-income, during the planning period.

9. General Plan Amendments and/or Rezoning (as needed)
Based on the sites analyses, work with City staff to identify potential areas for General Plan amendments and/or rezoning, if necessary. This must include consideration of the State requirement for maintaining an adequate housing sites inventory throughout the eight-year planning period.

Note to consultant: there is currently a project underway to expand the Downtown Plan boundary with the goal to add significant housing capacity to the City. This project is anticipated to be completed by the summer of 2023 so it will run concurrently with the Housing Element Update process. In conjunction with the Housing Accountability Act (HAA) and other legislation such as SB 9, the added housing capacity through the Downtown Plan expansion project may be enough to meet the City’s RHNA requirement and may negate the need for the Housing Element Update process to rezone sites for greater housing intensity elsewhere in the City. The City will coordinate closely with the consultant on this item because the added capacity has not yet been determined, as it will be chosen through a public process. The Council has adopted a three-year action plan that includes achievement of the City’s current low- and very-low-income RHNA targets and the achievement of the pro-rated share of low- and very-low-income RHNA targets for the first year of the next cycle. To facilitate achievement of those targets, the City could potentially choose to enact land use changes that provide a site inventory capacity that exceeds the minimum RHNA targets.

10. Agency Coordination, Draft Housing Element, and Public Hearings Coordination with HCD staff will be needed throughout the development of the document to ensure completeness. The consultant and City will coordinate with the California Coastal Commission (CCC) staff at times too. The consultant will prepare and submit an administrative draft Housing Element for City staff review. Staff will provide a comprehensive set of desired changes. Once edits are complete, the consultant will prepare a draft Housing Element that is made available to the public and presented to both the Planning Commission and City Council at public hearings. Based on Commission and Council input, prepare a HCD review draft and submit to HCD for the mandated review.  HCD coordination calls
 Up to two meetings with the CCC
 Administrative draft and draft housing element (Microsoft Word)  One study session each with Planning Commission and City Council

11. CEQA Documentation
Prepare all required documents for California Environmental Quality Act (CEQA) review and submittal, including an Initial Study, Negative Declaration, Mitigated Negative Declaration, Environmental Impact

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Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 9
Report, or reuse of prior environmental clearance and CEQA Determination. This should include public posting and noticing for comment. For budget purposes, consultant may list different prices depending on the level of analysis that may ultimately be needed. An early legal opinion indicated that it was likely that an Addendum to the City’s General Plan EIR may be sufficient but this would be dependent on the need and extent of potential rezoning and General Plan Map revisions.

Note to Consultant: AB 1486 was introduced during the 2021 California State Legislative session and made into a two-year bill with potential action on the bill coming in 2022. AB 1486 would potentially exempt a Housing Element Update from CEQA review.

12. Final Draft Hearings, Final Adoption, and Certification The consultant will work closely with HCD and City staff to respond to any comments and produce a final draft housing element for adoption. Present to the Planning Commission, City Council, and California Coastal Commission at public hearings. Prepare the final Housing Element, including any changes from the public hearings, and submit to HCD for final certification as well as the water/sewer district and the California Office of Planning and Research.
 Draft final and final housing element (Microsoft Word and PDF)  Three public hearings

2.3 Responsibilities of City
City staff will be responsible for the following:
1) Approving the final scope of work
2) Assisting Consultant in selecting an approach for community engagement and project schedule 3) Providing documents available to the City to assist Consultant in the existing conditions analysis 4) Working with Consultant to determine the most appropriate and effective community engagement tools for the project
5) Attending and assisting with facilitation of all community outreach meetings, events, or interviews 6) Acting as the primary point of contact for community and decision-maker questions and comments. 7) Updating the City’s website with information about the project 8) Reviewing and providing a comprehensive set of comments on all administrative, draft, and final deliverables.
9) Approving materials necessary to facilitate all community engagement activities. 10) Approving all deliverables.
11) Collaborating with Consultant to prepare agenda reports in advance of hearings and informational meetings with the Planning Commission and City Council.
12) Preparing for and presenting at hearings for the Planning Commission and City Council, supported by Consultant as needed.
13) Leading work to coordinate with the California Coastal Commission on review and approval of the Housing Element Update.

2.4 Basic Qualifications of Consultant
The selected Consultant will have relevant expertise, a proven track record of successfully completed projects, a passion for the development and urban design process, and an interest in supporting the City’s equity, public health, and sustainability goals as articulated through the Health in All Policies (HiAP) initiative. Experience with Affirmatively Furthering Fair Housing policy will be an important factor.

The ideal consulting firm would include the following disciplines and attributes:
1) Experience leading a 6th Cycle Housing Element update

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Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 10
2) Significant experience in community facilitation, land development, and city planning, especially regarding State housing laws, housing element review, and housing analysis such as housing needs, fair housing, housing constraints, and site inventories.
3) Significant experience in community engagement and in meeting with Planning Commissions and City Councils
4) An organized and responsive team who listens to, partners with, and is passionate about collaboration with City staff, decision makers, and all sectors of the community. 5) A strategic project manager with substantial experience and success in housing element updates and community engagement
6) Talented writers and illustrators who can prepare user-friendly administrative, draft, and final Housing Element Update deliverables

29.1.14 City of Santa Cruz
Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 11
SECTION 3: PROCESS INSTRUCTIONS

3.1 RFP Schedule
The City will make every effort to adhere to the following schedule:

Action DATE

1. Issue RFP 4/6/2022

2. Deadline for submitting additional questions 4/20/2022

3. City response to additional questions 4/27/2022

4. Proposal due date 5/4/2022

5. Oral presentations for finalists 5/11-5/17/2022

6. Proposal evaluation completed 5/20/2022

7. Notice of intent to award 5/23/2022

3.2 Proposal Format
The City will not be liable for any expenses incurred by Consultants responding to this solicitation.

Proposals should be organized as follows:

1. RFP Cover Page, Section 5: Provides basic Consultant contact information and an authorized signature accepting the City’s terms and conditions as stated in this solicitation.

2. Consultant Response to RFP Questionnaire, Section 6: Answers should be complete and in the order presented. Make your proposal as short as possible and do not include generic marketing materials.

3. Fee Schedule, Section 7: Provide complete pricing for all items listed. Include all possible costs.

Consultant will not be allowed to charge for costs not included in the proposal.

4. Optional Appendices or Exhibits: Consultants may include sample reports, peer review reports, letters of recommendation, or other exhibits that may assist the City in favorably evaluating the Consultant. Do not include generic marketing materials.

Consultants have the right to take exception to the specifications or terms to this solicitation. Any exceptions taken must be explained in the proposal. Any exceptions that contradict the City’s terms and conditions, or contain provisions that are not in the best interest of the City will disqualify the Consultant. If exceptions are not explained, the Consultant will comply with the specifications as stated in this solicitation.

3.3 Non-Response to RFP
In the event your business decides not to submit a proposal, it would be helpful if you responded to the contact person to indicate why your business did not wish to submit a proposal.

3.4 RFP Addenda
The City may determine it is necessary to revise any part of this solicitation. Revisions will be made by written addenda and it is the Consultant’s responsibility to comply with any addenda to this solicitation. Any addenda will be:
 Emailed to known interested Consultants, or
 Posted on the City’s website, www.cityofsantacruz.com, under Bidding Information, or  Consultants may contact Katherine Donovan at 831-420-5134 or [email protected]

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Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 12

3.5 Proposal Evaluation
RFP responses will be evaluated and ranked according to the criteria below by an evaluation committee composed of City staff. The evaluation committee will open and review the proposals in confidence. Proposals will be available to the public after contract award.

Does the proposal meet the minimum requirements to be responsive (supplied all documentation required): Pass/Fail
Does the proposal meet the minimum qualification requirements in Section 1.6 (4) to be responsible (the documentation provided shows that the offeror is capable of performing the work): Pass/Fail
If Passed both continue scoring based on the template below.

Criteria Weight

1. Consultant Team’s qualifications, experience, and references 30 Points

2. Consultant’s proposed work plan 25 Points

3. Fee schedule (pricing) 20 Points

4. Proposed Timeline 15 Points

5. Overall quality of proposal 10 Points
Total: 100 Points Possible

3.5.1 Proposal Evaluation Criteria Definitions
a. Consultant Team’s Qualifications (30 pts)
Proposals will be evaluated for the Consultant team’s qualifications, experience, and references. The criteria will also include an evaluation of the Consultant’s performance on products produced through similar contracts. The qualifications of the project manager are particularly important. b. Consultant’s Proposed Work Plan (25 pts), RFP Questionnaire, Section 7 Proposals will be evaluated for the Consultant’s ability to provide a community and analytical process that will result in the 6th Cycle Housing Element document. The work plan must also address potential need for a rezoning process and CEQA documentation.
c. Fee Schedule (20 pts)
The total cost of the contract will affect 20% of the overall evaluation. The lowest responsive offeror will be given the full points for this criterion and higher offers will be scored proportionally using the following formula:
((Lowest responsive offeror’s price, including discounts & preferences / this offeror’s price, including discounts & preferences) * 100 = Pre-weighted score) * 20% Proposed fees will be presented as not-to-exceed costs for the contract term and will include all professional fees and expenses.
d. Proposed Timeline (15 pts)
Project proposals should indicate timelines for development and completion of the Housing Element Update by December 15, 2023, including HCD review and approval. e. Overall Quality of Proposal (10 pts)
Proposals will be evaluated for its visual presentation and completeness of package. Consultants should provide all information in the order requested.

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3.6 Optional Evaluation of Semi-Finalists
After the initial proposal evaluation, the City may determine that additional information is needed to establish the final ranking of Consultants. The semi-finalists will be contacted and may be asked to:
 Make an oral presentation by responding to pre-established questions,  Provide additional information to assist City in determining the best value Consultant.

All semi-finalists will be given equal opportunity to provide the requested information to the City. Any oral presentations and/or demonstrations will be scheduled for a mutually agreed upon date, tentatively to be scheduled between May 11th through May 17th, and will be at no cost to the City.

The Evaluation Committee will use all information collected to rank the semi-finalists in order of their ability to best meet the requirements of the City. The City will begin negotiating a firm contract with the highest ranked Consultant. If no agreement can be reached, negotiations will begin with the next ranked Consultant.

3.7 Contract Implementation
The contract resulting from this solicitation is tentatively scheduled to begin July 1, 2022. Upon award notification and prior to final contract approval, the successful proposer will be required to submit:
a. Proof of insurance as specified in section 4.1 of this solicitation; b. A completed W9 form and, if applicable, non-resident withholding exemption form, if not already on file with the City; and
c. Proof of a current City of Santa Cruz business tax certificate if the Consultant is located in, or performs services within, the city limits for more than 6 days annually.

The finalized contract will include the RFP Section 2, the RFP Section 4, the Consultant’s response to Section 5 (RFP Cover Page), the Consultant’s response to Section 6 (RFP Questionnaire), the Fee Schedule as described in Section 7, the City’s standard terms as Exhibit A, and any negotiated modifications agreed to by the parties.

3.8 Public Record
Proposals received will become the property of the City. All proposals, evaluation documents, and any subsequent contracts will be subject to public disclosure per the California Public Records Act, California Government Code, sections 6250 – 6270. All documents related to this solicitation will become public records once discussions and negotiations with proposers have been fully completed and an award has been announced.

Appropriately identified trade secrets will be kept confidential to the extent permitted by law. Any proposal section alleged to contain proprietary information will be identified by the proposer in boldface text at the top and bottom as “PROPRIETARY.” Designating the entire proposal as proprietary is not acceptable and will not be honored.

Submission of a proposal will constitute an agreement to this provision for public records. Pricing information is not considered proprietary information.

3.9 Award Protests
The City desires to foster cooperative relationships with Consultants and to reach a fair agreement in a timely manner.

The City encourages Consultants to resolve issues regarding the solicitation requirements or the procurement process through written correspondence and discussions at least 5 business days prior to the proposal due date.

This will allow the City time to research the validity of the protest and either issue an addendum to the solicitation, cancel the solicitation, or determine the protest to be unfounded and proceed with the solicitation. In the event the protest of specifications is denied and the protester wishes to continue in the protest process, the protesting Consultant must still submit a proposal in accordance with the proposal submittal procedures provided in this solicitation. Questions or concerns prior to the intent to award notice will be directed to:

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Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 14
Katherine Donovan
Phone: 831-420-5134,
or email: [email protected]
Any Consultant who unsuccessfully bids on a city contract or any trade association representing workers who would have potentially been employed by such contract may formally protest a contract award. Protest letters regarding a formal contract award will be directed to:

City of Santa Cruz
City Clerk Administrator
809 Center Street, Room 9
Santa Cruz, California 95060
Protests will be filed with the City Clerk’s office no later than 5 business days after the written notice of intention to award has been distributed. Protest letters will include:
 The name, address, and telephone number of the protester;  The solicitation title and due date;
 Name of City employee and Department designated as the contact in the original solicitation;  A detailed statement of the legal and/or factual grounds for the protest; and  The form of relief requested.

The City Council will hear the protest prior to award of the contract. The protesting party may protest the City’s or successful Consultant’s failure to comply with the requirements of the Purchasing Ordinance or the solicitation documents. The protest must clearly set forth the basis for the protest; grounds not set forth in the written protest will not be considered by the City Council at the protest hearing. The City Council will sustain a protest if the protesting party demonstrates by clear and convincing evidence that, as specified above, the City would act improperly in awarding the contract. The decision of the City Council will be final.

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Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 15

4. TERMS AND CONDITIONS

4.1 City’s Standard Terms and Conditions
The City of Santa Cruz standard terms and conditions shall govern this contract. Review the terms and conditions here; all terms including but not limited to insurance apply to the contract resulting from this solicitation. A current copy of these terms will be included in the resulting contract as an Exhibit. A hard copy of the terms and conditions are available by contacting the Purchasing Division at 831-420-5080.

4.1.1 Insurance Requirements
Consultant will provide Certificate of Insurance(s) for Professional Liability, Auto Liability, and Workers’ Compensation as stated in the City’s standard terms and conditions.

4.2 Term of Contract
The term of the contract will commence upon final notification of award and continue through the completion of the project. Appendix C includes the Professional Services Agreement, which will apply to the project until the completion of the accepted final scope of work.

4.4 Consultant Travel Reimbursement Policy
When it is mutually agreed between the City and the Consultant, the Consultant’s employees will be reimbursed for travel expenses according to this policy. It is expected that all travel expenses incurred by Consultants while conducting activities on behalf of the City will be at reasonable rates and that Consultants will exercise prudence in incurring these expenses. Consultant must provide estimates of travel and meal costs desired, and those will be considered as part of the overall contract costs. The City’s reimbursement rates are shown below to assist Consultants in developing travel cost estimates.

Meals
Meals are reimbursed at the current GSA Meals & Incidental per diem rate by county (www.gsa.gov/travel). The City does not reimburse for actual costs for meals. Reimbursement is based solely on per diem rates. Do not submit meal receipts.
 Travel before 8:00a qualifies for breakfast reimbursement.  Travel between 8:00a – 1:30p qualifies for lunch reimbursement.  Travel between 1:30p – 7:00p (or later) qualifies for dinner reimbursement.  Days between hotel stays and days starting before 8a and ending after 7p, qualify for the full GSA Meals & Incidental per diem rate.

Ground Transportation
Ground transportation is reimbursable when it is for travel between the Consultant’s place of business, their employee’s home, an airport, or Santa Cruz hotel to their City work location.

1. Reasonable fees for taxis, shuttles, busses, trains, light rail, ride hailing services (Uber, Lyft), bike shares| (Jump), and similar modes of transportation will be reimbursed. Receipts are required for reimbursement.

2. Personal vehicles include vehicles owned by the Consultant or their employees.  Mileage will be reimbursed at the current IRS mileage rate.  Evidence of automobile liability insurance meeting the City’s requirements must be provided.  Maps showing starting point, City work location, and total miles are required for reimbursement.

3. Car rentals are reimbursable when
 Travel is necessary from an airport to the City work location.  The rental reservation is made as far in advance as is practical and the lowest possible price is obtained.  Insurance coverage is included in the rental agreement and the car is returned with a full tank of gas.  The smallest vehicle necessary is rented.

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Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 16
 Parking expenses are included in the GSA Meals & Incidental per diem rate. The City will not pay additionally for parking expenses.
 Receipts are required for reimbursement.

Airfare
Airfare is reimbursable when the Consultant’s place of business, or their employee’s home, is more than 250 miles away from Santa Cruz.
 Airfare must be lowest available coach class fare. Flights may be non-stop.  Airfare must be booked as far in advance as is practical.  Fees for one piece of checked luggage (and any equipment necessary for the work being done) will be reimbursed.
 Extra charges for seat assignments, refundable tickets, travel insurance/protection, and similar fees are not reimbursable.
 If the City cancels the need for travel and the ticket cannot be changed or refunded, the ticket cost will be reimbursable.
 Receipts are required for reimbursement.

Lodging
Lodging is reimbursable when the Consultant must work on site for two or more consecutive days and the Consultant’s place of business, or their employee’s home, is more than 60 miles away from Santa Cruz.  Lodging is reimbursed up to the current GSA rate by county (www.gsa.gov/travel).  Costs for hotel rooms above this rate are the responsibility of the traveler.  Receipts are required for reimbursement.

General
 Travel expenses not listed above will not be reimbursed.  Travel reimbursements are paid after the completion of travel. There are no travel advances.  Exceptions to any of the above requirements require advance written permission from the Department Head of the department contracting with the Consultant.

4.5 Equal Employment Opportunity/Non-Discrimination
City’s policies promote a working environment free from abusive conduct, discrimination, harassment, and retaliation; and require equal opportunity in employment for all regardless of race, religious creed (including religious dress and grooming practices), color, national origin (including language use restrictions), ancestry, religion, disability (mental and physical), medical condition, sex, gender (including gender identity and gender expression), physical characteristics, marital status, age, sexual orientation, genetic information (including family health history and genetic test results), organizational affiliation, and military or and veteran status, or any other consideration made unlawful by local, State, or Federal law. City requires Consultant to be in compliance with all applicable Federal and State and local equal employment opportunity acts, laws, and regulations and Consultant is responsible for ensuring that effective policies and procedures concerning the prevention of abusive conduct, discrimination, harassment, and retaliation exist in Consultant’s business organization. The City’s current Equal Employment Opportunity and Non-Discrimination policies to which this Section applies may be viewed at http://www.codepublishing.com/CA/SantaCruz/?SantaCruz09/SantaCruz0983.html and http://www.cityofsantacruz.com/home/showdocument?id=59192.

Copies are available upon request from the City’s Purchasing Division.

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Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 17

4.6 Indemnification
For General Services: To the fullest extent permitted by law, Consultant agrees to indemnify, defend, and hold harmless the City, its officials, officers, employees, and volunteers from and against any and all claims, demands, actions, liabilities, damages, judgments, or expenses (including attorneys’ fees and costs) arising from the acts or omissions of Consultant’s employees or agents in any way related to the obligations or in the performance of services under this Agreement, except for design professional services as defined in Civil Code § 2782.8, and except where caused by the sole or active negligence, or willful misconduct of City.

For Design Professional Services under Civil Code §2782.8: To the fullest extent permitted by law, Consultant agrees to indemnify, defend, and hold harmless City, its officials, officers, employees, and volunteers from and against any and all claims, demands, actions, liabilities, damages, or expenses (including attorneys’ fees and costs) arising from the negligence, recklessness, or willful misconduct of the Consultant, Consultant’s employees, or agents in any way related to the obligations or in the performance of design professional services under this Agreement as defined in Civil Code §2782.8, except where caused by the sole or active negligence, or willful misconduct of City. The costs to defend charged to the Consultant relating to design professional services shall not exceed the Consultant’s proportionate percentage of fault per Civil Code §2782.8.

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Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 18
SECTION 5: PROPOSAL COVER PAGE

1. Proposal Deadline
Proposals are due no later than 5:00 pm, May 4, 2022. All proposals will be delivered to [email protected] on or before the due date. Late proposals may not be considered.

Consultants will deliver an electronic copy of the proposal on or before 5:00 pm on the due date by email or file transfer addressed to [email protected]. The City prefers electronic proposals.

2. Proposal Response Sheet
The undersigned, upon acceptance, agrees to furnish the following in accordance with the specifications and terms and conditions per City of Santa Cruz “Request for Proposals for the 6th Cycle Housing Element Update” dated April 6, 2022, at the prices indicated herein.

The undersigned, under penalty of perjury, declares not to be a party with any other business to an agreement to bid a fixed or uniform price in connection with this proposal.

The undersigned declares under penalty of perjury that she/he is authorized to sign this document and bind the business or organization to the terms of this contract.

The undersigned recognizes the right of the City of Santa Cruz to reject any or all proposals received and to waive any informality or minor defects in proposals received.

Consultant Name:

Address:

Telephone Number:

Fax Number:

E-mail address:

Signature of Authorized Representative:

Printed Name of Authorized Representative:

3. Addenda
The City may determine it is necessary to revise any part of this solicitation. Revisions will be made by written addenda and it is the Consultant’s responsibility to comply with any addenda to this solicitation. Any addenda will be:
 Emailed to known interested Consultants, or
 Posted on the City’s website, www.cityofsantacruz.com, under Bidding Information, or  Consultants may contact Katherine Donovan, at 831-420-5134 or [email protected].

How many addenda were issued for this solicitation? ________

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SECTION 6: QUESTIONNAIRE
Answer all of the following questions. Any omission may be cause for rejection of proposal. Answers should be complete and in the order presented. A simple "yes" or "no" answer is not adequate.

Consultants have the right to take exception to the specifications or terms to this solicitation. Any exceptions taken must be explained in the proposal. Any exceptions that contradict the City’s terms and conditions, or contain provisions that are not in the best interest of the City will disqualify the Consultant. If exceptions are not explained, the Consultant will comply with the specifications as stated in this solicitation.

Consultant’s qualifications experience and references
1) Describe business background and qualifications, including year business was established. 2) Provide background of personnel who will be assigned to provide this service to the City. 3) Describe experience doing similar work for other public agencies, including excerpts from and/or links to similar plans prepared by the Consultant. Work on other 6th Cycle Housing Elements is of particular value and importance.
4) Provide the location of office which will be performing work for City of Santa Cruz. 5) Provide the names of three clients for whom your business currently provides the same or similar scope of services. Include the name of the business, the name of a contact person, and the phone number.

Consultant’s proposed work plan
6) Clearly define all work your business proposes to do for the City. Include a draft community outreach plan, a list of deliverables, and a work schedule.
7) If you will subcontract portions of the work, list all subcontractors to be used. Include business name, address and phone number.
8) The City of Santa Cruz recently adopted a Health in All Policies (HiAP) framework to ensure that City policy choices are made within a framework prioritizing equity, public health and sustainability.

Proposals should address how these priorities will be integrated into the planning process. More information is available in Chapter 6.02 of the Santa Cruz Municipal Code and at https://www.cityofsantacruz.com/government/city-departments/city-manager/health-in-all-policies.

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SECTION 7: FEE SCHEDULE
 Detail all costs incidental to the production of the 6th Cycle Housing Element Update. Include all costs in your proposal. Consultant will not be allowed to charge for costs not listed in the proposal.  Describe under what circumstances the City would be charged for additional work.

The following Early Pay Discount and Local Business and Locally Owned Business Preference will reduce the pricing evaluation criteria (as shown in RFP section 3.5.1) for bid evaluation purposes. The contract will be awarded for the full amount of the bid.

Early Pay Discount
The City will take any early pay discount offered as long as the discount period is fifteen days, or greater. This amount will be calculated at the percent offered and will be applied as a discount to the bid total.

A _____% discount is offered for payment within _____ days.

Local Business and Locally Owned Business Preference
Local Businesses and Locally Owned Businesses must submit Appendix A, Local Business Preference Certification with the proposal in order to receive the 2% preference for a local business and an additional 4% preference for a locally owned business. Any preference will be applied on the pricing criteria only.

29.1.24 City of Santa Cruz
Request for Proposals for 6th Cycle Housing Element Update February 2022 Page 21
Appendix A:

Local Business Preference Certification
Business Name: _____________________________________________ Local Businesses and Locally Owned Businesses must submit this certification with each bid or proposal in order to receive the 2% and additional 4% preference applied during the evaluation of any competitive process for goods, supplies, equipment, materials, services, or professional services.

Local Businesses
To qualify for the 2% local business preference, a business must meet the following criteria:
1) Does the business have an office with at least one employee located in the City of Santa Cruz? Yes No Business Address: _____________________________________________________ 2) Is the business current in the payment of all taxes, charges, assessments, or fees owed to the City of Santa Cruz?
Yes No
3) Does the business hold a valid City of Santa Cruz business license? Yes No DBA/license number: __________________________________________________ Locally Owned Businesses
To qualify for an additional 4% locally owned business preference, a business must meet the above requirements for a local business and at least 50% of the business’ owners must live in the County of Santa Cruz.

To qualify for the locally owned business preference, list all of the business’ owners and their county of residence (attach additional sheets if necessary).

Owner Name: ______________________________________ County: ________________________________ Owner Name: ______________________________________ County: ________________________________ Owner Name: ______________________________________ County: ________________________________ By submitting this form, I represent that I qualify as a (check all that apply):

Local Business
Locally Owned Business
I understand that by submitting false information or failing to disclose material information in order to qualify for the preference my business will be 1) required to pay the city any difference between the contract amount and what the city’s cost would have been if the contract had been properly awarded, and 2) prohibited from bidding on any city contract or receiving any city contract for a period of three years of the discovery of facts supporting the same.

Authorized Signature: ________________________________
Name & Title: ______________________________________
Date: _____________________________________________

29.1.25 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 1

PROFESSIONAL SERVICES AGREEMENT FOR
6TH CYCLE HOUSING ELEMENT UPDATE
THIS AGREEMENT for professional services is made by and between the City of Santa Cruz (“City”) and Kimley-Horn and Associates, Inc. (“Consultant”) (each is referred to individually as a “Party” and collectively, as the “Parties”) as of June 15, 2022 (the “Effective Date”).

NOW, THEREFORE, in consideration of each other’s mutual promises, the Parties hereto agree as follows:

SECTION 1: SCOPE OF WORK
Consultant will furnish services as defined and described in the Scope of Work, attached hereto as Exhibit A and incorporated herein.

SECTION 2: RESPONSIBILITIES OF CONSULTANT
All work performed by Consultant, or under Consultant’s direction, shall be rendered in accordance with the generally accepted practices, and to the standards of, Consultant's profession. Consultant represents and warrants that Consultant: (i) is fully experienced and properly qualified to perform the work and services provided for herein, (ii) has the financial capability required for the performance of the work and services, and (iii) is properly equipped and organized to perform the work and services in a competent, timely, and proper manner, in accordance with the requirements of this Agreement.

Consultant shall not undertake any work beyond the Scope of Work set forth in Exhibit A unless such additional work is approved in advance and in writing by City. The cost of such additional work shall be reimbursed to Consultant by City on the same basis as provided for in Section 4.

If, in performing the work, it is necessary to conduct field operations, security and safety of the job site will be the Consultant's responsibility excluding the security and safety of any facility of City within the job site which is not under the Consultant's control.

Consultant shall meet with Lee Butler, Director of the Planning and Community Development Department, hereinafter called "Director," or other designated and authorized City personnel, or third parties as necessary, on all matters connected with conducting Consultant’s services described in Exhibit A. Such meetings shall be held at the request of either Party. Review and City approval of completed work shall be obtained monthly, or at other intervals as may be mutually agreed upon during the course of this Agreement. Review, approval, or acceptance of Consultant’s work by City or others shall not relieve Consultant from responsibility for errors and omissions in Consultant’s work.

SECTION 3: RESPONSIBILITIES OF THE CITY
City shall make available to Consultant all necessary data and information in the City's possession and shall actively assist Consultant in obtaining such information from other agencies and individuals as needed. Consultant is entitled to reasonably rely upon the accuracy and completeness of such data and information, and Consultant shall provide City prompt written notice of any known defects in such data and information.

The Director may authorize a staff person to serve as his or her representative. The work in progress shall be reviewed at such intervals as may be mutually agreed upon between the Parties. The City will be the sole judge of acceptable work, provided that such approval will not be unreasonably withheld or delayed. If the work is not acceptable, City will inform Consultant of the changes or revisions necessary to secure approval.

29.1.26 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 2
SECTION 4: FEES AND PAYMENT
For services actually performed, the City will compensate Consultant at the rates set forth in the Fee Schedule detailed in Exhibit B and in accordance with the terms set forth therein. Payment for Consultant's services in conducting the entire the Scope of Work shall be made within the budget limit or limits shown in Exhibit B. Such payment shall be considered the full compensation for all personnel, materials, supplies, and equipment used by Consultant in the Scope of Work.

Consultant agrees that the payments to Consultant specified in this Section 4 will constitute full and complete compensation for all obligations assumed by Consultant under this Agreement. Where conflicts regarding compensation may occur, the provisions of this section apply.

Variations from the budget for each task which are justified by statements indicating personnel time expended and submittal of a revised budget are only allowed with prior City approval; however, in no event shall the total fee charged for the Scope of Work set forth in Exhibit A exceed the budget of $260,769 without advanced, written City authorization in the form of an amendment or change order.

Invoices shall detail the time worked by each class of employee on each task and the expenses incurred for which billing is made. Invoices shall indicate the percentage completion of each work task as identified in the Scope of Work in Exhibit A and the overall percentage of completion of the total required services. Unless otherwise specified in the fee schedule, payments shall be made monthly by the City within 30 days based on itemized invoices from the Consultant that list the actual costs and expenses.

All invoices shall contain the following affidavit signed by Consultant (if individual) or by a principal of Consultant’s firm (if Consultant is an entity):
"I hereby certify [or as principal of Consultant] that the charge of (Insert invoice amount) as summarized above and shown in detail on the attachments is a fair and reasonable use of public funds, is in accordance with the terms of Agreement dated (Insert Agreement Date), and has not been previously paid."
SECTION 5: TRAVEL REIMBURSEMENT POLICY
The City shall not be responsible for any travel, meal, or lodging reimbursements to Consultant and/or Consultant’s employees unless otherwise specified in the Scope of Work. The total fees and costs of Consultant’s services shall not exceed the amount described in the Fee Schedule.

The City of Santa Cruz has the sole discretion to deny any Consultant-proposed reimbursable expense the City has determined to be excessive or an inappropriate use of public funds.

SECTION 6: CHANGES IN WORK
City may negotiate changes in the Scope of Work. No changes in the Scope of Work shall be made without the written approval of City and Consultant. Any change requiring compensation in excess of the sum specified in Exhibit B shall be approved in advance in writing by the City. Only City’s authorized representative(s) is authorized to approve changes to this Agreement on behalf of City.

SECTION 7: TIME OF BEGINNING AND SCHEDULE FOR COMPLETION The term of this Agreement shall be on the effective date of this Agreement and terminating on June 30, 2024.

Consultant shall begin work as specified in a written authorization (e.g. Notice to Proceed) to perform services. The

29.1.27 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 3
written authorization to perform work shall not be issued until after this Agreement has been approved and authorized by the City.

The Work Schedule for completion of the work shall be as shown upon Exhibit C. In the event that major changes are ordered, the schedule for completion as stated in Exhibit C may be adjusted by City so as to allow Consultant a reasonable period of time within which to complete any additional work that may be required as a result of the ordered changes.

Neither party will be held responsible for delay or default caused by declared emergencies, natural disasters, or any Force Majeure event which is beyond the party's reasonable control. Consultant will, however, make all reasonable efforts to remove or eliminate such a cause of delay or default and will, upon the cessation of the cause, diligently pursue performance of its obligations in this Agreement.

The City reserves the right to obtain the services covered by this Agreement from another source during any ongoing suspension of service due to the circumstances outlined above.

Consultant acknowledges that it is necessary for Consultant to complete its work on or before the completion date set forth in Exhibit C in order to allow the City to achieve its objectives for entering into this Agreement. The Parties therefore agree that time is of the essence in the performance of this Agreement.

SECTION 8: TERMINATION
The City may terminate the Agreement for convenience by providing written notice to Consultant not less than 10 calendar days prior to an effective termination date.

The City or Consultant may terminate the Agreement for cause by providing written notice to the other party not less than 30 calendar days prior to an effective termination date.

The City may, at its option, allow Consultant to cure its failure to perform within 15 business days (or longer period authorized in writing by the City) from the date of the City’s termination notice. The termination shall be become effective if Consultant has not cured within such time period to the City’s satisfaction.

Consultant may terminate this Agreement for cause if the City fails to cure a material default in performance within a period of 30 calendar days (or such longer period agreed to by the Consultant), from date of the Consultant’s written termination notice specifying the default in performance.

Upon notice of termination by either the City or Consultant, the Consultant will immediately act to not incur any additional obligations, costs or expenses, except as may be reasonably necessary to terminate its activities. The City’s only obligation to the Consultant will be just and equitable payment for services authorized by, and received to the satisfaction of, the City up to and including the effective date of termination less any amounts withheld. All finished or unfinished work or documents procured or produced under the Agreement will become property of the City upon the termination date. In the event of Consultant’s failure to perform pursuant to the Agreement, the City reserves the right to obtain services elsewhere and Consultant will be liable for the difference between the prices set forth in the terminated Agreement and the actual cost to the City for obtaining the services elsewhere. Termination of the Agreement pursuant to this paragraph shall not relieve the Consultant of any liability to City for additional costs, expenses, or damages sustained by City due to failure of the Consultant to perform pursuant to the Agreement. City may withhold any payments to Consultant for the purpose of set-off until such time as the exact amount of damages due City from Consultant is determined. After the effective date of termination, Consultant will have no further claims against the City under the Agreement. No other compensation will be payable for anticipated profit on unperformed services.

29.1.28 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 4
SECTION 9: INSURANCE
Prior to the beginning of and throughout the duration of the Agreement, Consultant will maintain and comply with the Insurance Requirements as set forth in Exhibit D. Consultant will insure the City against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder. The insurance coverages required shall not in any way limit the liability of the Consultant.

SECTION 10: INDEMNIFICATION
Consultant agrees, to the fullest extent permitted by law, to indemnify, defend, and hold harmless the City, its officials, officers, employees, agents, and volunteers (collectively, “Indemnitees”) from and against any and all liability, claim, action, loss, injury, damage, judgment, or expense, including attorneys’ fees and costs (“Losses”) caused by or resulting from the negligence, recklessness, or willful misconduct of Consultant, Consultant’s officers, employees, agents, or subcontractors in any way related to this Agreement. Consultant’s duty to indemnify and hold harmless Indemnitees shall not apply to the extent such Losses are caused by the sole or active negligence or willful misconduct of Indemnitees, as determined by an adjudicatory body or court of competent jurisdiction. The obligation to defend shall arise regardless of any claim or assertion that Indemnitees caused or contributed to the Losses.

In the event this Agreement involves the performance of design professional services by Consultant, Consultant’s officers, employees, agents, or subcontractors, Consultant’s costs to defend Indemnitees shall not exceed the Consultant’s proportionate percentage of fault per Civil Code §2782.8. This section shall survive the termination or expiration of this Agreement.

SECTION 11: EQUAL EMPLOYMENT OPPORTUNITY/NON-DISCRIMINATION POLICIES City’s policies promote a working environment free from abusive conduct, discrimination, harassment, and retaliation; and require equal opportunity in employment for all regardless of race, religious creed (including religious dress and grooming practices), color, national origin (including language use restrictions), ancestry, religion, disability (mental and physical), medical condition, sex, gender (including gender identity and gender expression), physical characteristics, marital status, age, sexual orientation, genetic information (including family health history and genetic test results), organizational affiliation, and military or veteran status, or any other consideration made unlawful by local, State or Federal law. City requires Consultant to comply with all applicable Federal and State and local equal employment opportunity laws and regulations, and Consultant is responsible for ensuring that effective policies and procedures concerning the prevention of abusive conduct, discrimination, harassment, and retaliation exist in Consultant’s business organization. The City’s current Equal Employment Opportunity and Non-Discrimination policies to which this Section applies may be viewed at http://www.codepublishing.com/CA/SantaCruz/?SantaCruz09/SantaCruz0983.html and http://www.cityofsantacruz.com/home/showdocument?id=59192.

SECTION 12: LEGAL ACTION/ATTORNEYS’ FEES
If any action at law or in equity is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees in addition to any other relief. The laws of the State of California, with jurisdiction in the Santa Cruz County Superior Court, shall govern all matters relating to the validity, interpretation, and effect of this Agreement and any authorized or alleged changes, the performance of any of its terms, as well as the rights and obligations of Consultant and the City.

SECTION 13: AMENDMENTS
This Agreement may not be amended in any respect except by way of a written instrument which expressly references and identifies this particular Agreement, which expressly states that its purpose is to amend this particular Agreement, and which is duly executed by the City and Consultant. Consultant acknowledges that no such amendment shall be

29.1.29 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 5
effective until approved and authorized by the City’s authorized representative. No representative of the City is authorized to obligate the City to pay the cost or value of services beyond the scope of services set forth in Exhibit A.

Such authority is retained solely by the City Manager, Director, or their designee. Unless expressly authorized by the City Manager or Director, Consultant’s compensation shall be limited to that set forth in Exhibit B, Fee Schedule.

SECTION 14: MISCELLANEOUS PROVISIONS

1. Project Manager. Director reserves the right to approve the project manager assigned by Consultant to said work.

No change in assignment may occur without prior written approval of the City.

2. Consultant Services Only. Consultant is employed to render professional services only and any payments made to Consultant are compensation solely for such professional services.

3. Independent Contractor. In the performance of this Agreement, it is expressly understood that Consultant, including each of Consultant’s employees, agents, subcontractors or others under Consultant’s supervision or control, is an independent contractor solely responsible for its own acts and omissions, and shall not be considered an employee of the City for any purpose. Consultant agrees to comply with AB5, codified at Labor Code section 2750.3, and shall indemnify, defend and hold harmless the City, its officials, officers, employees, and agents against any claim or liability, including attorneys’ fees and costs, arising in any manner related to this Agreement that an employee, agent or others under Consultant’s supervision or control was misclassified.

4. Consultant Not an Agent. Except as City may specify in writing, Consultant shall have no authority, express or implied, to act on behalf of City in any capacity whatsoever as an agent. Consultant shall have no authority, express or implied, pursuant to this Agreement to bind City to any obligation whatsoever.

5. Subcontractors. Consultant shall obtain prior approval of the City prior to subcontracting of any work pursuant to this Agreement. If at any time, the City determines any subcontractor is incompetent or unqualified, Consultant will be notified and will be expected to immediately cancel the subcontract. Consultant shall require and verify that all subcontractors maintain insurance meeting all of the requirements stated herein, including naming the City of Santa Cruz, its officers, officials, employees, agents, and volunteers as additional insureds. Any modification to the insurance requirements for subcontractors must be agreed to by the City in writing.

6. Assignment. This Agreement shall not be assigned without first obtaining the express written consent of the Director or after approval of the City Council. Neither party may assign this Agreement unless this Agreement is amended in accordance with its terms.

7. Conflicts of Interest. Consultant owes City a duty of undivided loyalty in performing the work and services under this Agreement. Consultant covenants (on behalf of Consultant and Consultant’s employees, agents, representatives, and subcontractors) that there is no direct or indirect interest, financial or otherwise, which would conflict in any manner or degree with the performance of services required under this Agreement. Consultant acknowledges and agrees to comply with applicable provisions of conflict of interest law and regulations, including the Political Reform Act, Section 1090 of the Government Code, and the City’s conflict of interest code. Consultant will immediately advise City if Consultant learns of a conflicting financial interest of Consultant during the term of this Agreement.

8. City Property. The work, or any portion, of Consultant in performing this Agreement shall become the property of City. The Consultant may be permitted to retain copies of such work for information and reference in connection only with the provision of services for the City. All materials and work product, whether finished or unfinished, shall be delivered to City upon completion of contract services or termination of this Agreement for any reason. Unless otherwise provided herein, Consultant agrees that all copyrights which arise from creation of

29.1.30 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 6
project-related documents and materials pursuant to this Agreement shall be vested in the City and Consultant waives and relinquishes all claims to copyright or other intellectual property rights in favor of City. Any work product related to this Agreement shall be confidential, not to be used by the Consultant on other projects or disclosed to any third party, except by agreement in writing by the City, or except as otherwise provided herein.

9. Intellectual Property and Indemnity. Consultant represents to City that, to the best of Consultant’s knowledge, any Intellectual Property (including but not limited to: patent, patent application, trade secret, copyright, and any applications or right to apply for registration, computer software programs or applications, tangible or intangible proprietary information, or any other intellectual property right) in connection with any services and/or products related to this Agreement does not violate or infringe upon any Intellectual Property rights of any other person or entity.

To the fullest extent permitted by law, Consultant agrees to indemnify, defend, and hold harmless City, its officials, officers, employees, and agents, from any and all claims, demands, actions, liabilities, damages, or expenses (including reasonable attorneys’ fees and costs) arising out of a claim of infringement, actual or alleged, direct or contributory, of any Intellectual Property rights in any way related to Consultant’s performance under this Agreement or to the City’s authorized intended or actual use of Consultant’s product or service under this Agreement. This provision shall survive termination or expiration of this Agreement.

If any product or service becomes, or in the Consultant’s opinion is likely to become, the subject of a claim of infringement, the Consultant shall, at its sole expense: (i) provide the City the right to continue using the product or service; or (ii) replace or modify the product or service so that it becomes non-infringing; or (iii) if none of the foregoing alternatives are possible even after Consultant’s commercially reasonable efforts, in addition to other available legal remedies, City will have the right to return the product or service and receive a full or partial refund of an amount equal to the value of the returned product or service, less the unpaid portion of the purchase price and any other amounts, which may be due to the Consultant. City shall have the right to retrieve its data and proprietary information at no charge prior to any return of the product or termination of service.

10. Confidentiality.
a. Consultant shall not acquire any ownership interest in data and information (“City Data”) received by Consultant from City, which shall remain the property of the City. Certain information may be considered confidential (“Confidential Information”). Confidential Information shall mean all non-public information or proprietary materials (in every form and media) disclosed or made available directly or indirectly through any means of communication, either verbally, electronically, or in writing, to Consultant in connection with this Agreement. Unless otherwise required by law, Consultant shall not, without City’s written permission, use or disclose City Data and/or Confidential Information other than in the performance of the obligations under this Agreement. As between Consultant and City, all City Confidential Information shall remain the property of the City. Consultant shall not acquire ownership interest in the City’s Confidential Information.
b. Consultant shall be responsible for ensuring and maintaining the security and confidentiality of City Data and Confidential Information, protect against any anticipated threats or hazards to the security or integrity of City Data and Confidential Information, protect against unauthorized access to or use of City Data and Confidential Information that could result in substantial harm or inconvenience to City or any end users; and ensure the proper return and/or disposal of City Data and Confidential Information upon termination of this Agreement with notice to the City.

29.1.31 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 7
c. Consultant shall take appropriate action to address any incident of unauthorized access to City Data and Confidential Information, including addressing and/or remedying the issue that resulted in such unauthorized access, notifying City as soon as possible of any incident of unauthorized access to City Data and Confidential Information, or any other breach in Consultant’s security that materially affects City or end users; and be responsible for ensuring compliance by its officers, employees, agents, and subcontractors with the confidentiality provisions hereof. Should confidential and/or legally protected City Data be divulged to unauthorized third parties, Consultant shall comply with all applicable federal and state laws and regulations, including but not limited to California Civil Code sections 1798.29 and 1798.82 at Consultant’s sole expense. Consultant shall not charge City for any expenses associated with Consultant’s compliance with these obligations.

d. Consultant shall defend, indemnify and hold harmless City, its officials, officers, employees and agents against any claim, liability, loss, injury, or damage (including attorneys’ fee and costs) arising out of, or in connection with, the unauthorized use, access, and/or disclosure of City Data and/or Confidential Information by Consultant and/or its agents, employees, or sub-contractors, excepting only loss, injury, or damage caused by the sole negligence or willful misconduct of the City. This provision shall survive the termination or expiration of this Agreement.

11. Consultant's Records. Consultant shall maintain accurate accounting records and other written documentation pertaining to the costs incurred relating to this Agreement for examination and audit by the City, State, or federal government, as applicable, during the period of this Agreement, and for a period of at least five years from the date of the final City payment for Consultant's services, unless otherwise stated herein. If Consultant engages a subcontractor to perform work related to this Agreement with a cost of $10,000 or more over a 12-month period, such subcontract shall contain these same requirements. This provision shall survive the termination of this Agreement.

12. California Public Records Act. City is a public agency subject to the disclosure requirements of the California Public Records Act (“CPRA”). If Consultant’s proprietary information is contained in documents or information submitted to City, and Consultant claims that such information falls within one or more CPRA exemptions, Consultant must clearly mark such information “Confidential and Proprietary,” and identify the specific lines containing the information. In the event of a request for such information, City will make best efforts to provide notice to Consultant prior to such disclosure. If Consultant contends that any documents are exempt from the CPRA and wishes to prevent disclosure, it is required to obtain a protective order, injunctive relief, or other appropriate remedy from a court of law in Santa Cruz County before the City is required to respond to the CPRA request. If Consultant fails to obtain such remedy within the time the City is required to respond to the CPRA request, City may disclose the requested information without any liability to Consultant.

Consultant further agrees that it shall defend, indemnify, and hold City harmless against any claim, action, or litigation (including but not limited to all judgments, costs, and attorney’s fees) that may result from denial by City of a CPRA request for information arising from any representation, or any action (or inaction), by the Consultant.

13. Compliance with Laws. All activities of Consultant, its employees, subcontractors, and/or agents will be carried out in compliance with all applicable federal, state, and local laws and regulations.

14. Licensure. Consultant warrants that Consultant, its subcontractors, and/or agents (if any) has/have complied with any and all federal, state, and local licensing requirements and agrees to provide proof of a current City of Santa Cruz Business Tax Certificate if:
• Consultant, its subcontractor(s) and agent(s), or its business is/are located in the City of Santa Cruz; • Will perform actual work in the City of Santa Cruz for 6 or more days annually; or • Will use company vehicles to deliver within the City of Santa Cruz for 6 or more days annually.

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For additional information and licensing requirements, view the City’s Business Licenses and Permits webpage or call the Revenue and Taxation division at 831/420-5070.

15. Living Wage. Every contract for services to the City for $10,000 or more is subject to City of Santa Cruz Living Wage Ordinance number 2000-25. If applicable, Consultant agrees to comply with the requirements of the Living Wage ordinance as provided in Santa Cruz Municipal Code Chapter 5.10.

16. Prevailing Wages for Public Work. To the extent that the work or services to be performed under this Agreement may be considered a “public work” (construction, alteration, demolition, or repair work) pursuant and subject to Labor Code section 1720 et seq., Consultant (and any subconsultant performing the work or services) shall conform to any and all prevailing wage requirements applicable to such work/and or services under this Agreement. Consultant (and any subconsultant) shall adhere to the prevailing wage determinations made by the Director of Industrial Relations (DIR) pursuant to California Labor Code Part 7, Chapter 1, Article 2, applicable to the work, if any. All workers employed in the execution of a public works contract (as such term is defined California Labor Code section 1720 et seq. and section 1782(d)(1)) must be paid not less than the specified prevailing wage rates for the type of work performed. (CA Labor Code sections 1720, 1774 and 1782.)
To the extent applicable to the scope of work and services under this Agreement, Consultant agrees to be bound by the state prevailing wage requirements, including, but not limited to, the following:
a. If a worker is paid less than the applicable prevailing wage rate owed for a calendar day (or any portion thereof), Consultant shall pay the worker the difference between the prevailing wage rate and the amount actually paid for each calendar day (or portion thereof) for which the worker(s) was paid less than the prevailing wage rate, as specified in Labor Code section 1775; b. Consultant shall maintain and make available payroll and worker records in accordance with Labor Code sections 1776 and 1812;
c. If Consultant employs (and/or is legally required to employ) apprentices in performing the work and/or services under this Agreement, Consultant shall ensure compliance with Labor Code section 1777.5; d. Consultant is aware of the limitations imposed on overtime work by Labor Code sections 1810 et seq. and shall be responsible for any penalties levied in accordance with Labor Code section 1813 for failing to pay required overtime wages;
e. Consultant shall post a copy of the applicable wage rates at each jobsite at a location readily available to its workers.
f. Any failure of Consultant and/or its subconsultant to comply with the above requirements relating to a public works project shall constitute a breach of this Agreement that excuses the City’s performance of this Agreement at the City’s sole and absolute option and shall be at the sole risk of Consultant.

Consultant on behalf of itself and any subconsultant, agree to indemnify, defend and hold harmless the City and its officials, officers, employees, and agents from and against any and all claims, liabilities, losses, costs, expenses, attorney’s fees, damages, expenses, fines, financial consequences, interest, and penalties of any kind or nature arising from or relating to any failure (or alleged failure) of the Consultant and any subconsultant to pay prevailing wages or to otherwise comply with the requirements of prevailing wage law relating to a public work.
g. Consultant acknowledges that it and/or any subconsultant may not engage in the performance of any contract for public work unless currently registered with the DIR and qualified to perform public work

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pursuant to Labor Code section 1725.5 [with limited exceptions from this requirement for bid purposes only under Labor Code section 1771.1(a)].

17. Storm Water Requirements. To the extent applicable to the Scope of Work under this Agreement, Consultant, Consultant’s employees, subcontractors, and agents are required to abide by the applicable City of Santa Cruz Storm Water Best Management Practices (BMPs) for the duration of the work. The City’s mandatory Storm Water BMPs, which are listed according to the type of work, operations, or business, are located on the City website at: https://www.cityofsantacruz.com/government/city-departments/public-works/stormwater/bestmanagement-practices

18. Dispute Resolution. The Parties agree to attempt in good faith to resolve through negotiation any dispute, claim, or controversy arising out of or relating to this Agreement. Either party may initiate negotiations by providing written notice in letter form to the other party, setting forth the subject of the dispute and the relief requested. Promptly upon such notification, the Parties shall meet at a mutually agreeable time and place in order to exchange relevant information and perspective, and to attempt to resolve the dispute. In the event that no resolution is achieved, and if, but only if, the parties mutually agree, then prior to pursuing formal legal action, the parties shall make a good faith effort to resolve the dispute by non-binding mediation or negotiations between representatives with decision-making power, who, to the extent possible, shall not have had substantive involvement in the matters of the dispute. To the extent that the dispute involves or relates to a public works project, the Parties agree to attempt to resolve the dispute by complying with the claims process as set forth in Public Contract Code sections 9204(e), 20104-20104.6, but without waiving the requirements of the California Tort Claims Act, Gov’t Code section 800 et seq. unless otherwise agreed to by the Parties.

19. Force Majeure. Neither party hereto shall be considered in default in the performance of its obligation hereunder to the extent that the performance of any such obligation is prevented or delayed by an act of God, natural disaster, pandemic, acts of terrorism, war, or other peril, which is beyond the reasonable control of the affected party and without the negligence of the respective Parties. Each party hereto shall give notice promptly to the other of the nature and extent of any Force Majeure claimed to delay, hinder, or prevent performance of the services under this Agreement. Each Party will, however, make all reasonable efforts to remove or eliminate such a cause of delay or default and will, upon the cessation of the cause, diligently pursue performance of its obligations in this Agreement. In the event either party is prevented or delayed in the performance of its respective obligation by reason of such Force Majeure, there may be an equitable adjustment of the schedule and Consultant compensation based on City’s sole discretion.

20. Complete Agreement. This Agreement, along with any attachments, is the full and complete integration of the Parties’ agreement with respect to the matters addressed herein, and this Agreement supersedes any previous written or oral agreements between the Parties with respect to the matters addressed herein. Unless otherwise stated, to the extent there is any conflict between this Agreement and any other agreement (written or oral), the terms of this Agreement shall control.

21. Severability. The unenforceability, invalidity, or illegality of any provision(s) of this Agreement shall not render the other provisions unenforceable, invalid, or illegal.

22. Waiver. Waiver by any party of any portion of this Agreement shall not constitute a waiver of the same or any other portion hereof.

23. Governing Law. This Agreement shall be governed by and interpreted in accordance with California law.

29.1.34 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 10

24. Contract Interpretation. Each party acknowledges that it has reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.

25. MacBride Principles/Peace Charter. City of Santa Cruz Resolution NS-19,378 (7/24/90) encourages all companies doing business in Northern Ireland to abide by the MacBride Principles and Peace Charter.

26. Notices. If either party shall desire or is required to give notice to the other, such notice shall be given in writing, via email, and concurrently delivered by overnight Federal Express [or priority U.S. Mail], addressed to recipient as follows:

To CITY:

City of Santa Cruz
Department of Planning and
Community Development
809 Center St, Room 107
Santa Cruz, CA 95060
[email protected]
831-420-5216
To CONSULTANT:

Kimley-Horn and Associates, Inc.

Bill Wiseman
824 Bay Ave, Ste 10
Capitola, CA 95010
[email protected]
831-316-1430
Changes to the above information shall be given to the other party in writing ten (10) business days before the change is effective.

27. Counterparts. The Parties may execute this Agreement in two or more counterparts, which shall, in the aggregate, be deemed an original but all of which, together, shall constitute one and the same instrument. A scanned, electronic, facsimile, or other copy of a party’s signature shall be accepted and valid as an original.

28. Warranty of Authority. The signatories to this Agreement warrant and represent that each is authorized to execute this Agreement and that their respective signatures serve to legally obligate their respective representatives, agents, successors, and assigns to comply with the provisions of this Agreement. [SIGNATURES ON FOLLOWING PAGE]

29.1.35 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 11
Approved As To Form:

By: _____________________________ Date: __________________ Office of the City Attorney

CITY OF SANTA CRUZ
By: _____________________________ Date: __________________ Lee Butler
Director of Planning and Community Development

CONSULTANT
By: _____________________________ Date: __________________ Printed: Bill Wiseman Title: Project Director
June 2, 2022

29.1.36 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 12

EXHIBIT A
Scope of Work
Kimley-Horn and Associates, Inc. (Kimley-Horn) has prepared this Scope of Work for the City of Santa Cruz (City) to prepare the City of Santa Cruz’s 6th Cycle 2024-2031 Housing Element Update (the project).  Task 1 – Project Initiation
 Kick-Off Meeting
Kimley‐Horn will participate in a kick‐off meeting with City staff to discuss the update process, answer questions, provide data, and exchange other important procedural aspects of the Housing Element Update. The meeting will address the following:

Review/Modify Scope of Work and Schedule
Define Outreach Methodologies
Data Sharing/Exchanging
Meetings and Community Engagement Plan
 Project Schedule
Kimley‐Horn will develop and maintain a project deliverables schedule outlining major milestones, meetings, work products, community outreach events, and public hearings. The project team will review HCD’s proposed timeline for the AMBAG region to ensure that the City of Santa Cruz is on schedule throughout the Housing Element Update process. The project deliverables schedule will include all tasks within the Scope of Work and accommodate anticipated City, public, and agency review times.  Community Engagement Plan
Kimley-Horn will prepare a Community Engagement Plan to describe the strategy for optimal engagement with the community, stakeholders, and decision makers during the Housing Element Update process. The Community Engagement Plan will identify the approach, purpose, and desired outcomes for each outreach event and the role of the Housing Element Team. Given the current COVID-19 restrictions on in-person meetings, City staff may wish to revise this plan as circumstances change.

Community Engagement process is envisioned to occur in two phases:

The first phase will commence with distribution of an informational fact sheet and conducting a virtual community workshop that will serve as an introduction to the Housing Element Update process and provide opportunity for initial community input. It will also include a series of meetings with stakeholder focus groups that will occur over five months, as well as an initial consultation with Coastal Commission staff. This first phase will initiate discussions about housing conditions and opportunities, as well as inform the community and stakeholder groups about how to stay involved throughout the project.

The second phase will further engage the community, stakeholder groups, and elected and appointed officials in conjunction with a review of the draft land use strategies and policies, and subsequently the release of the Draft Housing Element document. These outreach efforts will introduce the draft document to the public and follow a similar format to the first round of community outreach in gathering feedback.

29.1.37 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 13
Community outreach efforts will begin within two months following project initiation and continue through the adoption of the Housing Element update by the California Department of Housing and Community Development (“HCD”). The public and various stakeholders will have ample opportunities to obtain information and provide input in a variety of ways, including:

Project website (hosted by the City)
Informational fact sheet and event flyers
Community Housing Survey
Community workshops (3)
Coastal Commission Staff Initial Consultation
Monthly stakeholder meetings (5 month period)
Study sessions with Planning Commission and City Council Public hearings with Planning Commission and City Council The Community Engagement Plan will include efforts to engage with community members who do not traditionally participate in community outreach events and may be harder to reach. Creative methods to engage senior citizens, non-native English speakers, persons with limited access to technology, those living in disadvantaged areas, and other underrepresented groups will be identified.

Outreach materials will be provided in English and Spanish, with opportunities for Spanish-speaking engagement during each workshop, study session, and public hearing, with the possibility of specific Spanish language focus groups.

Kimley-Horn will conduct all outreach virtually. All project materials, recordings of public meetings, and summaries will be provided to the City for posting on the project website for community accessibility.  Informational Fact Sheet and Event Flyers
Kimley-Horn will prepare an informational fact sheet as a printable resource for posting on the City’s website. It will provide the public with background information on State requirements, the process for creating a compliant Housing Element, Santa Cruz-specific housing information, the organization of the Housing Element document, and the overall project timeline. This information is similar to what will be provided at the community workshops, but in a more accessible format.

Event flyers will also be prepared for the three community workshops.  Document Review
Kimley Horn will review City plans and policy initiatives that will help inform a future housing vision for the City of Santa Cruz. Plans and topics include but are not limited to the following:

Santa Cruz 5th Cycle Housing Element
Housing Blueprint Subcommittee Recommendations and Community Engagement Survey (2018) Santa Cruz Voices on Housing: Fall 2017 Community Engagement Report and City Council Study Sessions AMBAG Regional Housing Needs Assessment
City of Santa Cruz General Plan and EIR

29.1.38 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 14
Other existing studies, as identified by City staff
Kimley‐Horn will be responsible for identifying and resolving any information gaps using existing available data sources. Kimley‐Horn anticipates a “turnkey approach” for data collection to the greatest extent feasible and will only request information that is proprietary to the City to minimize the work effort by City staff.

Deliverables:

Kick‐Off Meeting Agenda
Kick‐Off Meeting Minutes
Project Schedule (updated as needed)
Community Engagement Plan
Informational Fact Sheet and Event Flyers
 Task 2 – Analyze Regional Housing Needs Assessment (RHNA) Community Housing Survey #1 – Values and Priorities
Kimley‐Horn will create a web‐based community survey using Microsoft Forms to identify and evaluate community values and priorities for potential housing, housing goals, policies, and programs.

The community housing survey will provide tangible data that can be incorporated into the Housing Element to better understand community and stakeholder interests, help determine land use alternatives, and document the City’s outreach efforts to HCD. Results of the survey will be incorporated into a draft and final baseline report. It will include charts and tables that quantify the survey results, a summary of key findings, and an appendix of all response comments.

Community Workshop #1 – Introduction and Policy Considerations Kimley‐Horn will facilitate the first community workshop to discuss the Housing Element update process.

Kimley‐Horn will prepare and deliver a PowerPoint presentation, informational handouts, visual aids, and other materials. Participants will be asked to identify challenges, issues, and opportunities for the Housing Element.

The meeting will introduce participants to the RHNA process, Housing Element requirements, legislative requirements and engage in the identification of policy considerations. A summary presentation of the results of the Community Housing Survey #1 – Values and Priorities will be provided highlighting survey findings and common themes, and refined in coordination with City staff.  Monthly Stakeholder Focus Group Meetings (5)
Kimley-Horn will meet monthly for five months with various stakeholder focus groups, as identified by City staff.

The objectives of these meetings will be to inform stakeholders about the project process and provide opportunities for on-going engagement, as well as to aid in soliciting participation from under-represented communities. Summary meeting minutes will be prepared for each meeting documenting key recommendations and action items. Stakeholder groups are envisioned to include the following:

Market and affordable housing developers
Nonprofits/NGOs and advocacy groups
Faith-based organizations/churches

29.1.39 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 15
Local organizations (senior centers, youth centers, homeless shelters, etc.) Higher education (e.g. UCSC) student housing advocates and Santa Cruz City Schools Coastal Commission Staff Consultation
In coordination with City staff, Kimley-Horn will meet with Coastal Commission staff to brief them on the project scope and schedule and get their initial feedback on the housing element update process.  Current Housing Element Assessment
As required by State law, Kimley‐Horn will review and evaluate the City of Santa Cruz’s current Housing Element and its programs. This task will include a review of the appropriateness of the housing goals, objectives, and policies in contributing to the attainment of the stated housing goals; the effectiveness of the Housing Element in attaining community housing goals and objectives; and the City’s progress in implementing the Housing Element. The assessment will include the following information:

Evaluate the status, effectiveness, and appropriateness of the current housing policy programs and identify any barriers to implementation
Compare identified goals from the adopted Housing Element to actual accomplishments during the plan period
Evaluate the existing Housing Element in relation to current State housing laws and identify any omissions or deficiencies
 Housing Needs, Constraints, and Resources Baseline Review  Housing Needs
Kimley‐Horn will assess housing needs, constraints, and resources. A population and housing profile will be conducted that analyzes population and household characteristics, special housing needs populations, and affordable units at risk of converting to market rate units as required by new state law.

Kimley-Horn will update the needs analysis pursuant to Government Code Section 65583 with data from the HCD preapproved data packet, 2020 U.S. Census data, American Community Survey, and other relevant sources.

Consultant will coordinate with staff to develop a current housing inventory and evaluate housing conditions using state-approved criteria. The updated needs analysis will include the following:

Population and Demographics: Population trends and projections, race and ethnicity, and population age.

Household Characteristics: Number, size, and type of existing households and characteristics of lowerincome households (including extremely low).

Employment and Income: Employment by industry, occupation of employed residents, and income trends.

Housing Stock Characteristics: Housing types and conditions, overcrowded households, and vacancy rates.

Housing Costs and Affordability: Home sale price trends, rental costs, affordability for households at all income levels including existing need for extremely low-income households, and overpayment.

Special Housing Needs: Special housing needs of persons with disabilities (including persons with developmental disabilities), seniors, large households, female-headed households, homeless, and students.

Projected Housing Needs: RHNA by income group, including projected extremely low-income households.

29.1.40 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 16
At-Risk Housing: Inventory and analysis of existing affordable units at risk of converting to market rate during the planning period and estimate of the number of units in need of replacement and rehabilitation.

Opportunities for Energy Conservation: Pursuant to Senate Bill (SB) 375 and Assembly Bill (AB) 32, an inventory and analysis of opportunities to encourage the incorporation of energy-saving features, energy-saving materials, and energy-efficient systems and design for residential development. The City’s 2022 Climate Action Plan update will include some recommendations and the City is currently developing an Existing Building Electrification Roadmap as well.

Coastal Zone Requirements: Include a description of construction, demolition, and conversion of housing for lower- and moderate-income households within the Coastal Zone.

Infrastructure: Include a description of consistency with water and sewer priority requirements pursuant to SB 1087 (Gov. Code § 65589.7).
 Housing Constraints
Housing constraints will identify non‐governmental, governmental, and environmental constraints that may have an effect on the future development of housing at all income levels. Housing resources such as availability of vacant land, zoning to accommodate RHNA growth needs, and capacities of available sites will be analyzed.

Funding and financing resources available to address housing needs will be identified. New requirements pursuant to Affirmatively Furthering Fair Housing will be included.

As required by new housing law, particularly AB 1397, and the City’s RHNA allocation, the adequate sites analysis will be much more in‐depth and detailed, particularly for site suitability for very‐low and low‐income RHNA categories.
 Fair Housing Assessment
Per AB 686, work with City staff to assess various actions to overcome patterns of segregation, address disparities in housing needs and access to opportunity, and foster inclusive communities. This will include an assessment of fair housing practices, examine the relationship of available sites to areas of high opportunity, and include actions to affirmatively advance fair housing.

Incorporate California Tax Credit Allocation Committee / HCD Opportunity Maps that illustrate areas that offer low-income children and adults the best chance at economic advancement, high educational attainment, and good physical and mental health. Consider and review the U.S. Department of Housing and Urban Development Affirmatively Furthering Fair Housing criteria, and utilize the data under the Fair Housing Assessment to assist in the update of the City’s Analysis of Impediments to Fair Housing Choice.

Deliverables:

Housing Element Data Resources Matrix
Current Housing Element Assessment
Draft and Final Housing Needs, Constraints, and Resources Baseline Review Adequate Sites Analysis Summary
GIS Based Inventory of Sites
Data Tables, Maps, and Relevant Text
Community Workshop #1 Presentation and Handouts

29.1.41 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 17
 Task 3 – Land Use Strategies – Prototype and Testing
This phase will utilize the analysis from the Baseline Review, the Community Housing Survey #1, and the Priority & Value Statement to develop up to three land use strategies that meet RHNA requirements. These land use strategies and polices will then be reviewed with the community and as part of a study session with the Planning Commission, and a second with the City Council.
 Sites Inventory and Analysis of Resources
Prepare the sites inventory section of the Housing Element that meets Government Code section 65583 and section 65583.1. The sites inventory shall demonstrate how the City will satisfy its RHNA in each income category. This includes identifying and evaluating the number of units, location, and assumed affordability of identified sites throughout the community relative to all components of the assessment of fair housing and analyzing and concluding whether the identified sites improve or exacerbate conditions for each of the fair housing areas.

Kimley-Horn will also identify, evaluate, and prioritize factors that contribute to fair housing issues and identify goals and actions based on these factors. These analyses describe the methodology used to quantify the number of units that can be accommodated on each site, including minimum density and realistic capacity, accounting for land use controls, typical density trends for similar projects, and site improvement requirements.

Potential policy strategies will be identified to increase site capacity and demonstrate development viability (per State law). For non-vacant sites, the analysis will demonstrate the potential and likelihood of additional development within the planning period based on the extent to which existing uses may constitute an impediment to additional residential development, current market demand for the existing use, any existing leases or other contracts, development trends and regulatory or other incentives or standards to encourage additional residential development on these sites.

This analyses will address whether sites are adequate to accommodate lower income needs based on identification in the 5th cycle for non-vacant sites or two or more for vacant sites, some of which utilized the density bonus process.

The review will also include a list of the number of pending, approved, or permitted units by income group based on actual or anticipated sales prices and rents since the beginning of the projection period. Any known environmental or other constraints, conditions, or circumstances, including mitigation measures, that impede development in the planning period will also be addressed. Finally, the analyses will address new requirements related to zoning for sites accommodating moderate and above moderate housing pursuant to AB 725.  Housing Policy Plan
As required by State law and taking into consideration the land use strategies described above, develop a Draft Housing Policy Plan that constitutes the policy component of the Housing Element. Existing relevant policies will be supplemented by new policies and programs that address new Housing Element Law. Strategies will clearly indicate their relationship with the community values, total number of units, and criteria.

The Housing Policy Plan will identify policies and programs to address State law requirements regarding: 1) Conservation and Improvement, 2) Availability and Production, 3) Affordability, Removal of Constraints, and 4) Equal Housing Opportunity. Policies and programs will be supplemented by Quantified Objectives by income category.

29.1.42 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 18
 Testing and Refinement
 Community Workshop #2 – Land Use Strategies and Housing Policies Results of the Sites Inventory and Analysis of Resources and initial draft housing policy plan will be compiled into a Land Use Strategies and Policy Report. A PowerPoint presentation summarizing this report will be presented at a second community workshop. Kimley-Horn will prepare a draft and final PowerPoint for review by City staff prior to the meeting.
 Planning Commission and City Council Study Sessions
Kimley-Horn will prepare for and help facilitate two study sessions with both the Planning Commission and City Council to review preliminary Land Use Strategies and Policy Report and associated comments received from the public. Kimley-Horn will prepare a draft and final PowerPoint for review by City staff prior to the meeting.  Draft Preferred Sites Accommodation Strategy
Based on feedback received from the community and the study sessions, Kimley-Horn will prepare a draft preferred sites accommodation strategy for review and comment by City staff. Once complete, this preferred strategy will constitute the project description for preparing the Housing Element and the environmental review.

The preferred strategy will include draft policies and programs. It is understood that due to the iterative nature of this process, additional revisions will likely occur in response to further community feedback, HCD comments, and environmental review.

Deliverables:

Preliminary Draft Land Use Strategies for review with City staff Preliminary Draft Housing Policy Plan and for review with City staff Draft and Final Land Use Strategies and Policy Report
Presentation for study session with the Planning Commission and City Council Draft Preferred Land Use Strategy
 Task 4 –General Plan Consistency Amendments
Based on the Sites Inventory and Analysis of Resources, work with City staff to identify potential areas for General Plan amendments and/or rezoning, if necessary, to ensure internal consistency of the General Plan and statutorily required implementation through code amendments. These may include revisions to the Land Use Element, Land Use Map Municipal Code amendments (rezones), and Safety Element as appropriate.

Because the level of effort required to make these General Plan amendments is currently unknown, a preliminary number of hours and budget estimate is shown on the attached budget. Based on the level of revisions required, this estimate may be subject to change pending project progression and discussions with City staff.

This scope of work assumes that revisions to the General Plan Circulation Element will not be required.  Land Use Element Revisions
Pursuant to various new statutes, including AB 1397, adequate sites requirements will require an in-depth analysis of adequate sites. If sites are not available to accommodate expected RHNA growth in the planning

29.1.43 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 19
period, the City must provide a rezoning program to address unaccommodated need. As zoning must be consistent with the General Plan, similar updates to the General Plan land use designations may be required.

The Land Use Element Update will primarily rely on the necessary updates to the Housing Element to accommodate RHNA growth needs. Updates may include changes to the Land Use Element including new land use designations, revised descriptions of the purpose and intent of existing land use designations, and additional land use considerations.

This element will describe the City’s planning boundaries, including any revisions to the General Plan Land Use Element and associated Land Use Map, and establish a strategy for growth that reflects the community’s vision and supports the Housing Element. Revisions to land use policy and land use designations will be based on these considerations.
 Safety Element Revisions
Pursuant to newly adopted statutes, the General Plan Safety Element may be required to be updated to address climate change and the risk of fire. The review shall also address fire hazards, generally, to describe goals, policies, and objectives.

Deliverables:

General Plan Consistency Memo that identifies sections of the City’s current General Plan requiring update including revised/added text, tables, maps, and figures  Task 5 – CEQA Compliance
Kimley-Horn will prepare an Addendum or Supplemental EIR to the City’s 2030 General Plan EIR per CEQA Guidelines Section 15163 and 15154. Our approach assumes that no substantial land use changes will be proposed and that the sites inventory will identify capacity consistent with the General Plan land use policies and build-out projections, which will include additional housing associated with the Downtown Plan Expansion project in the area south of Laurel Street.

This scope of work assumes that no technical studies will be required and that the Addendum will rely on policy language to demonstrate less than significant impacts. The Addendum will include a table that identifies the changes in goals or policies between the existing 5th Cycle and the proposed 6th Cycle Housing Elements Kimley-Horn anticipates one review cycle of the Administrative Draft EIR Addendum, with an approximate two weeks for staff review. Once City staff has reviewed and commented on the Administrative Draft, Kimley-Horn will prepare the Public Review Draft EIR Addendum, as directed.

This scope of work assumes that the City will prepare the Notice of Determination (NOD) following the adoption of the Housing Element by the City Council. This includes preparing the necessary mailings, and circulation of environmental documentation and payment of all required fees.

Deliverables:

Administrative Draft EIR Addendum
Public Review Draft EIR Addendum (electronic suitable for City website posting)

29.1.44 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 20
 Task 6 – Draft Housing Element
Kimley‐Horn will prepare an internal Administrative Draft, Public Review Draft, and Draft Final Housing Element.

Administrative Draft Housing Element
Kimley‐Horn will prepare and submit an Administrative Draft Housing Element to the City for review. The Administrative Draft will be a complete draft and include all required components of a Housing Element, as described in prior tasks, and will include all tables, maps, and graphics. It is assumed the City will provide one set of consolidated comments on this Administrative Draft.

Public Review Draft
Kimley‐Horn will prepare a Public Review Draft Housing Element based on consolidated City comments on the Administrative Draft. Kimley‐Horn will address any identified issues and make necessary revisions prior to formal submittal to HCD.

Community Workshop #3 - Public Review Draft Housing Element Working with City staff, Kimley-Horn will facilitate a community meeting to inform the public about the Public Review Draft Housing Element and opportunities for comment and feedback. Prior to the meeting, Kimley-Horn will prepare a draft and final PowerPoint for staff review.

First HCD Submittal Draft
Once the Public Review Draft Housing Element is complete, it will be submitted to HCD for an initial 90‐day review. Kimley‐Horn will prepare a transmittal letter and Completeness Review Checklist detailing how the Public Review Draft Housing Element meets state law requirements. It is assumed the City will sign the transmittal letter and transmit to HCD for review.

Response to Comments
Kimley‐Horn will prepare appropriate responses to applicable public and agency comments (including HCD) on the Public Review Draft Housing Element. Based on new requirements, third party interest, and the general nature of the topic, the City should be prepared to receive considerably more comments from the public and other stakeholders during the sixth cycle.

Second HCD Submittal Draft
Kimley-Horn will prepare a second HCD submittal draft of the Housing Element incorporating their comments on the first Draft and City staff comments, as directed. The second HCD submittal draft will be posted for public review and interested parties notified at least seven days prior to submittal to HCD.

Final Housing Element
Following review by HCD, Kimley‐Horn will revise the HCD submitted Public Review Draft Housing Element. This Final Draft Housing Element will be presented at public hearings before the Planning Commission and City Council.

Deliverables:

Administrative Draft Housing Element
Public Review Draft Housing Element

29.1.45 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 21
HCD Streamline Review Checklist
Final Review Draft Housing Element
 Task 7 – Plan Adoption
Public Hearings
Kimley‐Horn assumes participation at one public hearing before the Planning Commission and one public hearing before the City Council. Kimley‐Horn will prepare and present a PowerPoint presentation, assist in drafting staff report language, and respond to questions at each of the public hearings.

Deliverables:

Electronic copies (in PDF and PowerPoint format) of draft presentations for Public Hearings Final Housing Element/HCD Certification
Based on the City Council direction, Kimley‐Horn will make final revisions and prepare a Final Housing Element for transmittal to HCD for final certification. Kimley‐Horn will maintain ongoing communication with the State until the Final Housing Element is officially deemed certified.  Task 8 – Meetings and Project Management
This task assumes attendance by Kimley-Horn staff at the following virtual and in-person (hybrid) meetings:

Project Kick-off Meeting (1)
Project Team Coordination Meetings (4)
Project Team Conference Calls (12)
Community Workshops (3)
Stakeholder Focus Group Meetings (5)
Coastal Commission Staff Initial Consultation
Planning Commission and City Council Study Sessions (2, one each) Adoption Public Hearings (2)
This scope of work assumes that Kimley-Horn’s role at the public meetings will be to provide support to the City in answering questions and providing general guidance and recommendations, and providing draft and final presentation materials. Virtual attendance at public meetings/hearings assumes preparation of one draft and final PowerPoint presentation for each applicable meeting.  Project Management
In addition to the research, analysis, communications, and report writing tasks described above, Kimley-Horn will perform project management duties to ensure that the Housing Element update and EIR Addendum or other CEQA documentation meets the Client’s standards of quality, and that it is delivered on time and within budget. These duties will include team supervision and coordination, oral and written communications with City staff, project accounting, and quality assurance review by Kimley-Horn and the technical editor for all deliverable products. Kimley-Horn will ensure that the Housing Element Update meets the requirements of State law as interpreted by HCD to the best of their ability.

29.1.46 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 22
 Budget and Schedule
A draft budget is attached separately. All work will be performed on a not-to-exceed price and is valid for a period of 90 days from the date of this proposal.

Kimley-Horn is committed to working with City staff to tailor the project to best suit your needs and objectives.

We anticipate that this scope of work, budget, and schedule will be refined based on further discussions.

A project schedule is shown below illustrating Final House Element adoption by Santa Cruz City Council and HCD Certification by the required December 2023 deadline.
 Project Budget
An initial project budget is shown on below. Should we be selected, we will work with you to customize this scope of work and budget to best fit your needs and expectations. Kimley-Horn does not offer an early pay discount.

29.1.47 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 23
EXHIBIT B: FEE SCHEDULE
See following page

29.1.48 City of Santa Cruz Housing Element Update - 6th Cycle Project Budget Bill/Dave Molly Erik /
Sophie Ace Noemi / Jessie Erik M.

Principal /
Project
Manager
Associate
Planner
Assistant
Planner /
Graphics
Senior
Env.

Analyst
Env.

Analyst GIS
Admin /
Graphic
Support
Labor $325 $175 $140 $200 $165 $160 $130
Project Kick-off Meeting (prep.) 2 2 4 $1,000
Project Schedule 2 2 $350
Community Engagement Plan 4 4 $700
Information Fact Sheet and Event Flyers 8 2 10 $1,660
Document Review 4 4 $700
$4,410
Community Housing Survey #1 - Values and Priorities 4 8 24 36 $6,060 Community Workshop #1 - Introduction and Policy Considerations (prep.) 2 4 8 2 16 $2,730 Monthly Stakeholder Focus Group Meeting Minutes 2 10 12 $2,400 Current Housing Element Assessment 4 8 24 16 52 $8,620
Housing Needs, Constraints, and Resources Baseline Review 24 60 80 8 172 $30,780 $50,590
Sites Inventory and Analysis of Resources 16 48 40 40 144 $25,600 Housing Policy Plan 8 40 60 108 $18,000
Community Workshop #2 – Land Use Strategies and Housing Policies (prep.) 2 4 4 10 $1,910 PC/CC Study Sessions (prep) 2 4 2 8 $1,670
Draft Preferred Sites Accommodation Strategy 4 8 8 4 24 $4,460 $51,640
Land Use Element Revisions 2 8 4 14 $2,610
Safety Element Revisions 2 8 4 14 $2,610
$5,220
EIR Addendum
Administrative Draft 8 8 40 56 $10,800
Public Review Draft 4 8 16 28 $5,540
Figures/Graphics/QA-QC 8 8 8 24 $5,040
$21,380
Administrative Draft Housing Element 8 24 40 4 6 82 $13,820 Community Workshop #3 - Public Review Draft Housing Element (prep.) 4 8 12 $2,700 Public Review Draft 4 16 8 4 3 35 $6,250
1st HCD Submittal Draft 2 8 4 3 17 $3,000
Response to Comments 2 8 2 3 15 $2,760
2nd HCD Submittal Draft 4 24 4 32 $6,020
Final Draft Housing Element 2 8 4 2 16 $2,950
$37,500
Public Hearings (2) (prep.) 2 4 6 $1,350
Final Housing Element / HCD Certification 2 8 6 16 $2,830 $4,180
Project Kick-off Meeting (1) 4 2 6 $1,650
Project Team Coordination Meetings (4) 8 8 16 $4,000
Project Team Conference Calls (10) 20 20 6 46 $10,960
Community Workshops (3) 24 24 8 56 $13,040
Stakeholder Focus Group Meetings (5) 15 15 30 $7,500
Coastal Commission Consultation 4 4 8 $2,000
PC/CC Study Sessions (2) 16 16 32 $8,000
Adoption Public Hearings (2) 12 16 28 $6,700
Ongoing Project Management 40 24 64 $17,200
$71,050
Labor Total $245,970
$12,299
$2,500
$260,769
Total
Hours
Total
Cost
Task 1. Project Initiation
Task 2. Analyze Regional Housing Needs Assessment
Task 3. LU Strategies - Prototype and Testing
Task 4. General Plan Consistency Amendments
Task 5. CEQA Compliance
Expenses
Direct Expenses Allocation (5% of labor)
Indirect Expenses (e.g. travel and accommodation)
Total Budget
Task 6. Draft Housing Element
Task 7. Plan Adoption
Task 8. Meetings and Project Management
6/2/2022

29.1.49 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022 Page 24
EXHIBIT C: WORK SCHEDULE
See following page

29.1.50 City of Santa Cruz Housing Element Update - 6th Cycle Project Schedule
TASK June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

1. Project Initiation
Kick-off Meeting
Project Schedule
Community Engagement Plan
Informational Fact Sheet and Event Flyers
Document Review

2. Analyze Regional Housing Needs Assessment
Community Housing Survey #1 - Values and Priorities
Community Workshop #1 - Introduction and Policy Considerations Stakeholder Focus Group Meetings (Monthly - 5)
Current Housing Element Assessment
Housing Needs, Constraints, and Resources Baseline Review

3. LU Strategies - Prototype and Testing
Sites Inventory and Analysis of Resources
Housing Policy Plan
Testing and Refinement
Community Workshop #2 - Land Use Strategies and Housing Policies PC / CC Study Sessions
Draft Preferred Site Accommodation Strategy

4. General Plan Amendments
Code Amendments - Rezones
Land Use and Safety Element Revisions

5. CEQA Compliance
Administrative Draft Initial Study
Public Review Draft Initial Study

6.Draft Housing Element
Administrative Draft Housing Element
Public Review Draft
Community Workshop #3 - Public Review Draft Housing Element HCD Submittal Draft
Initial 90-Day HCD Review of Draft
Response to Comments
Second HCD Review/ Final Draft Housing Element
General Plan Consistency Amendments

7. Plan Adoption
Adoption Public Hearings (2)
Final Housing Element / HCD Certification
Project Team Coordination Meetings (4)
Project Team Conference Calls (10)
2023
6/2/2022

29.1.51 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022
EXHIBIT D: INSURANCE REQUIREMENTS
A. CERTIFICATE REQUIREMENTS
The City will be issued a Certificate of Insurance (a Memorandum of Understanding will not be accepted) with the following minimum requirements:
• Certificate(s) will show current policy number(s) and effective dates, • Coverage and policy limits will meet, or exceed, requirements below, • The Certificate Holder will be City of Santa Cruz, Risk Management, 333 Front Street., Suite 200, Santa Cruz, CA 95060,
• Certificate will be signed by an authorized representative, • An endorsement, if required below, will be provided to show the City, its officers, officials, employees, and volunteers as additional insureds, and
• Coverages must be maintained during the term of the Agreement with the City, unless a longer duration is required.

B. MINIMUM SCOPE AND LIMITS OF INSURANCE
Consultant acknowledges that the insurance coverage and policy limits set forth in this section constitute the minimum amount of coverage required. If Consultant maintains broader insurance coverage and/or higher limits than the minimums shown below, the City of Santa Cruz requires and shall be entitled to the broader insurance coverage and/or higher limits maintained by Consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City of Santa Cruz.

Coverage will be at least as broad as:
• COMMERCIAL GENERAL LIABILITY (CGL): $1,000,000 PER OCCURRENCE; $2,000,000 AGGREGATE Proof of coverage for $1 Million per occurrence including products and completed operations, property damage, bodily injury, personal and advertising injury will be provided on Insurance Services Office (ISO) Form CG 00 01 covering CGL. If a general aggregate limit applies, either the general aggregate limit will apply separately to this project/location (ISO CG 25 03 or 25 04) or the general aggregate limit will be at least twice the required occurrence limit. • PROFESSIONAL LIABILITY (ERRORS AND OMISSIONS): $2,000,000 PER OCCURRENCE OR CLAIM, $2,000,000 AGGREGATE.

Consultant will maintain insurance appropriate to Consultant’s profession; with limit no less than $2,000,000 per occurrence or claim, $2,000,000 aggregate. Insurance must be maintained, and evidence of insurance must be provided for at least five (5) years after date of completion of the services under this Agreement. If coverage is canceled or non-renewed and not replaced with another claims-made policy form with a Retroactive Date prior to the contract effective date or start of work date, Consultant must purchase “extended reporting” coverage for a minimum of five (5) years after completion of contract work.
• AUTOMOBILE LIABILITY:

Proof of coverage for $1,000,000 provided on ISO Form Number CA 00 01 covering any auto (Code 1), or if Consultant has no owned autos, hired, (Code 8) and non-owned autos (Code 9), per accident for bodily injury and property damage.
• WORKERS’ COMPENSATION AS REQUIRED BY THE STATE OF CALIFORNIA, WITH STATUTORY LIMITS, AND EMPLOYER’S LIABILITY INSURANCE: $1,000,000 per accident for bodily injury or disease.

The Worker’s Compensation policy must be endorsed with a waiver of subrogation in favor of the City for all work performed by the Consultant and its employees.

29.1.52 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022
C. OTHER INSURANCE PROVISIONS
The insurance policies are to comply with the following provisions:
• ADDITIONAL INSURED STATUS
The City, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of Consultant including materials, parts, or equipment furnished in connection with such work or operations.

General liability coverage will be provided in the form of an endorsement to Consultant’s insurance at least as broad as ISO Form CG 20 10 11 85, or if not available, through the addition of both CG 20 10 CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 (if a later edition is used). • PRIMARY COVERAGE
For any claims related to this Agreement, Consultant’s insurance coverage will be primary insurance as respects the City, its officers, officials, employees, agents, and volunteers. Any insurance or selfinsurance maintained by the City, its officers, officials, employees, agents, or volunteers will be excess of Consultant’s insurance and will not contribute with it. • NOTICE OF CANCELLATION
Each insurance policy required above shall state that the coverage shall not be canceled, except with notice to the City.
• WAIVER OF SUBROGATION
Consultant hereby grants to the City a waiver of any right to subrogation, except as otherwise not applicable, which any insurer of said Consultant may acquire against the City by virtue of the payment of any loss, including attorney’s fees under such insurance. Consultant agrees to obtain any endorsement that may be necessary to effectuate this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer. • EXCESS LIABILITY/UMBRELLA INSURANCE POLICIES
The excess/liability policies will provide similar coverage as the primary CGL policy with no new exclusions - Excess liability insurance must follow form the terms, conditions, definitions, and exclusions of the underlying CGL insurance. The excess/umbrella policy must also be written on a primary and noncontributory basis for an additional insured, and that it will apply before any other insurance that is available to such additional insured which covers that person or organization as a named insured, and we will not share with that other insurance.

The policy regarding Limits of Insurance regarding Aggregates must provide that the aggregate limits if applicable shall apply in the same manner as the aggregate limits shown in the Schedule of the Underlying Insurance.
• SELF-INSURED RETENTIONS
Self-insured retentions must be declared to and approved by the City. City may require Consultant to purchase coverage with a lower retention or provide proof of ability to pay losses and related expenses.

The policy language shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the named insured or City.
• ACCEPTABILITY OF INSURERS
Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A: VII, unless otherwise acceptable to the City.
• CLAIMS MADE POLICIES
If any of the required policies provide coverage on a claims-made basis:

29.1.53 City of Santa Cruz Professional Services Agreement for 6th Cycle Housing Element Update June 2022

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

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

3. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a Retroactive Date prior to the contract effective date, the Consultant must purchase “extended reporting” coverage for a minimum of five (5) years after completion of contract work. • VERIFICATION OF COVERAGE
Consultant will 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 to be approved by the City before work commences. However, failure to obtain the required documents prior to the work beginning will not waive the Consultant’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time.

D. SUBCONTRACTORS
Consultant shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein, and Contractor shall ensure that City is an additional insured on insurance required from subcontractors.

E. SPECIAL RISKS/CIRCUMSTANCES
City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances and provide notice to Consultant.

29.1.54 City Council
City of Santa Cruz
June 14, 2022
6th Cycle Housing
Element Update
Consultant Contract

29.1.55 2
• Housing Element is part of General Plan
• Updated every 8 years
• Process for updating Housing Element subject of State law • Must address RHNA (3,736 units, up from 747)
• New requirements since last update
• Due to HCD December 2023
Housing Element Update

29.1.56 3
• New outreach requirements
• Must meet all legal requirements, including AFFH
• Must be certified by HCD
• Likely to need several rounds of HCD review
• New consequences for failure to receive certification (grant funding, rezoning timeline)
• Opportunity for City to consider new housing policies and action items
Housing Element Update

29.1.57 4
• Request for Proposals released April 6, 2022
• Kimley-Horn response scored highest:
• Extensive 6th Cycle Housing Element experience
• Considerable CEQA experience
• Lowest price
• Meets scheduling requirements
• Responsive to City’s concerns
Housing Element RFP Process

29.1.58 5
• Project scope includes significant public outreach
• Scope includes community meetings and focus groups
• Focus on outreach to under-represented communities
• Online outreach including surveys and informational items • Outreach strategy will be flexible to meet changing
pandemic conditions
Community Outreach

29.1.59 6
AFFH requires that the Housing Element:
• Facilitate deliberate action to address, combat, and relieve disparities resulting from past patterns of segregation to foster more inclusive communities.
• Assess fair housing practices.
• Analyze available sites and high and low resource areas. • Project scope includes addressing these requirements.

Affirmatively Furthering Fair Housing

29.1.60 7
Funding:
• Local Early Action Planning Grant (LEAP) - $150,000
• Additional funding through Department’s Consultant
Services budget
Housing Element Update Funding

29.1.61 8
Direct the City Manager to execute the
contract with Kimley-Horn and Associates
in the amount of $260,769 to procure
consultant services to complete the 6th
Cycle Housing Element Update.

Staff Recommendation

29.1.62 City Council

AGENDA REPORT
DATE: 06/03/2022
AGENDA OF: 06/14/2022
DEPARTMENT: City Council
SUBJECT: Resolution Providing Guidance to the City’s 6th Cycle Housing Element (CN)
RECOMMENDATION: Resolution providing guidance to the City 6th Cycle Housing Element Update process.

BACKGROUND: The associated agenda item related to the consultant contract for preparation of the City’s 6th Cycle Housing Element Update contains additional background information on the forthcoming planning process.

DISCUSSION: In response to this, the attached resolution makes recommendations for policies and actions that should be analyzed and considered as part of the Housing Element Update process. It is recommended that the Council adopt this resolution to provide additional guidance for the Housing Element Update effort.

FISCAL IMPACT: See associated report on this same Council agenda for the consultant contract for the 6th Cycle Housing Element Update process.

Submitted By:

Sonja Brunner
Mayor
Submitted By:

Shebreh Kalantari-Johnson
Councilmember
Submitted By:

Donna Meyers
Councilmember
ATTACHMENTS:

1. RESOLUTION.DOCX

29.2.1 RESOLUTION NO. NSRESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ DIRECTING

STAFF TO ANALYZE AND CONSIDER POLICIES OR ACTIONS FOR INCLUSION IN THE CITY’S 6TH CYCLE HOUSING ELEMENT
WHEREAS the City of Santa Cruz, the Monterey Bay region, and the State of California, are in a housing crisis, and policies that support the production of more housing at all levels of affordability are needed to create a more sustainable City that offers more opportunities for more people; and
WHEREAS, the City’s 6th Cycle Housing Element will begin in 2024; WHEREAS, the draft Regional Housing Needs Allocation (RHNA) assigned by the Association of Monterey Bay Area Governments identifies the need for Santa Cruz to plan for 3,736 units between 2024 through 2031, which includes 857 Very Low Income, 562 Low Income, and 709 Moderate Income units; and
WHEREAS, on June 14, 2022, the City Council is considering a consultant scope of work regarding the production of the City’s 6th Cycle Housing Element; and WHEREAS, citywide housing policies and action items developed through the 6th Cycle Housing Element effect everyone living, working, and visiting the City, and the voices of historically underrepresented populations should be emphasized in the development of the Housing Element; and
WHEREAS, climate change, wildfires, and the moral imperative to provide opportunities for socioeconomic mobility create an urgent need to plan for the rapid expansion of multifamily housing capacity in locations with high housing prices; good access to transit, jobs and schools; and separation from the wildland-urban interface;
WHEREAS, a certified Housing Element that meets housing targets and other related housing production objectives is either a prerequisite for or makes the City more competitive for various State funding opportunities, such as Infill Infrastructure Grants, some Community Development Block Grant funding, Affordable Housing and Sustainable Communities Grants, Transformative Climate Communities Grants, and the Transit and Intercity Rail Capital Program; WHEREAS, a Housing Element that advances the goals of the state law governing housing elements will strengthen local control by solving a statewide problem through regional cooperation; and
WHEREAS, direction to analyze policies and actions and consider them for inclusion in the Housing Element will provide information that will inform future decisions on the Housing Element and is therefore exempt from the provisions of the California Environmental Quality Act (CEQA) under CEQA Guidelines section 15306.

29.2.2 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa Cruz that the City Council hereby directs staff to analyze and consider the following policies or actions for inclusion in the 6th Cycle Housing Element developed by City staff and the project consultant:
1) Develop policies and action items that support Affirmatively Furthering Fair Housing by seeking to combat housing discrimination, undo historic patterns of segregation, and lift barriers that restrict access in order to foster a more inclusive community and help achieve racial equity and fair housing choice. Policy directions can include: prioritizing rezoning in higher resource, historically exclusionary neighborhoods; housing replacement programs/tenant protections for redevelopment of rental housing projects; homeownership opportunities for historically excluded groups. Consider citywide tools and outreach strategies, including engagement of underserved communities, to help address disproportionate housing needs as well as direct and indirect displacement risks. 2) Explore creative approaches to incentivizing higher density residential development and/or smaller units, within the same or slightly larger building volume, such as expanding locations that allow Flexible Density Units or creating a citywide average unitsize density ordinance like that of the City of Santa Barbara. 3) Evaluate possible locations where additional residential capacity, development height, and/or density maximums could potentially be increased, including but not limited to exploring the use of SB 10 legislation that allows the City to change the General Plan and Zoning of properties to accommodate up to 10 units, regardless of property size, and without triggering California Environmental Quality Act (CEQA) review, so long as the property is located in a transit-rich area or is an urban infill site as defined by the State of California (Government Code: 65913.5). Include Affirmatively Furthering Fair Housing objectives in the event that residential capacity increases are being evaluated. 4) Consider evaluation of site inventory capacities that exceed the RHNA amount. A small excess capacity could serve as a buffer that allows the Housing Element to still be certified, even if HCD does not approve of certain site capacities identified in the update.

Such additional capacity could also give the City a greater chance of meeting its RHNA targets during the Housing Element Cycle.
5) Consider allowing 100% affordable residential development to be considered a “byright” use that only requires ministerial Planning approval and Building Permits to be constructed.
6) Evaluate whether alternative inclusionary approaches may produce more affordable housing or deeper levels of affordability. Options to consider could include alternative inclusionary percentages based on differing levels of affordability or incentivizing land dedication versus provision of units on-site. Following this evaluation, consider whether changes to the inclusionary regulations should be proposed. 7) Consider policy changes, such as updates to square footage or development standards, which can incentivize and promote Accessory Dwelling Unit (ADU) production,

29.2.3 including creative approaches that go beyond minimum state requirements, and evaluate implications of whether the maximum allowable square footage for an ADU could be allocated to multiple ADUs rather than one single ADU. Consider mid-cycle adjustment if ADU permitting activity is lower than estimated in the housing element. 8) Consider reducing other barriers to development such as: reduction of parking minimums; reduction of impact fees; delaying the collection of impact fees until the issuance of the certificate of occupancy to reduce financial impacts on new housing and make the units cheaper by not asking the developer to carry impact fee charges or debt throughout the construction phase.
9) In the event that rezoning for additional housing capacity is required as part of the Housing Element process, only consider residential use in industrial land if it is ancillary to industrial land’s full employment capacity being achieved in an economically viable manner.
10) Expeditiously perform any necessary rezoning after Housing Element certification.

PASSED AND ADOPTED this 14th day of June, 2022, by the following vote:

AYES:

NOES:

ABSENT:

DISQUALIFIED:

APPROVED: __________________________
Sonja Brunner, Mayor
ATTEST: __________________________
Bonnie Bush, City Clerk Administrator

29.2.4 1
Rosemary Balsley
From: Santa Cruz YIMBY <[email protected]>
Sent: Sunday, June 12, 2022 9:21 AM
To: City Council
Subject: Agenda Item #29.2 on 6/14/22
Attachments: June 14 Agenda #29.2 - Housing Element Resolution.pdf Mayor, Vice Mayor and Councilmembers,
Please find attached our letter regarding the Housing Element Resolution, Item #29.2 on your 6/14/22 agenda.

Santa Cruz YIMBY
We envision a community where our neighbors of all ages, cultures, abilities, and incomes, can make Santa Cruz County their home.

29.2.5 June 10, 2022
To: Santa Cruz City Council
From: Santa Cruz YIMBY
Re: Support for Housing Element Resolution, Item #29.2 on June 14, 2002 Agenda We are writing in support of the Housing Element Resolution, Item #29.2 on your June 14, 2022 agenda. The City of Santa Cruz must allow more housing in every neighborhood, especially historically affluent and exclusionary neighborhoods, and remove barriers to both subsidized affordable and market rate housing. We believe the resolution captures many requirements that will yield a plan for fair, abundant, and affordable housing in our communities:
● A focus on Affirmatively Furthering Fair Housing. With the long history of racist and segregationist housing policy in California, it’s critical that the City of Santa Cruz’s Housing Element works to undo historic and ongoing inequities, integrate communities, and provide opportunities for social mobility. Santa Cruz YIMBY emphasizes the consideration of policy directions such as rezoning in higher resource and historically exclusionary neighborhoods, the adoption of tenant protection and other policies to reduce displacement.
● Use of thoughtful and meaningful tools for the City Santa Cruz to incentivize higher density residential development. We support more flexible zoning and development standards to maximize homes within building volumes or on parcels. Let’s legalize more housing in every neighborhood, especially the historically affluent and exclusionary neighborhoods. We know that duplexes, townhomes, cottage courts, and other “missing middle” housing can fit into our neighborhoods and provide more affordable and sustainable housing options.
● Quickening the production of housing through permit streamlining and removal of other barriers to development. We approve the “by-right” approach to 100% affordable residential development. We are strong advocates for parking reform, both reduction or removal of parking minimums near transit, and also allowing for unbundled parking.

We also want to emphasize the importance of public engagement in the Housing Element process. Since the Housing Element spans several years of future housing policy, it’s important that City of Santa Cruz’s public outreach program surveys an expansive and inclusive group of stakeholders. This includes stakeholders within each of the income brackets identified in the Housing Element, as well as people who commute into the City of Santa Cruz for work, since many of those workers

29.2.6 would likely relocate in order to reduce the amount of time they sit in their cars each day. It includes the many organizations that are involved in the effort to build abundant and affordable housing and advocacy groups such as Santa Cruz YIMBY that are working on a local and state level towards a vision of communities where neighbors of all ages, cultures, and incomes can make their home.

Sincerely,
Henry Hooker
Rafa Sonnenfeld
Janine Roeth
Ryan Meckel
Leads, on behalf of Santa Cruz YIMBY
Santa Cruz YIMBY Mission: We envision a community where our neighbors of all ages, cultures, abilities, and incomes, can make Santa Cruz County their home. In response to the ever-increasing cost of living, we advocate for more affordable housing to meet the needs of our growing population.

Santa Cruz YIMBY is a chapter of YIMBY Action, a 501(c)(4) nonprofit organization.

29.2.7 City Council August 14, 2022
Resolution Guiding
the Housing Element
Update Process

29.2.8 2
• City’s 6th Cycle Housing Element begins 2024
• New state laws around equity and outreach
• Draft Regional Housing Needs Allocation (RHNA) five times greater than 5th Cycle Housing Element
Housing Element Overview
Income Level: Number of
VLI Units
Number of LI
Units
Number of
Moderate
Units
Number of
Above
Moderate
Units
Total Units
Draft 6th
RHNA Cycle:
857 562 709 1,606 3,736
Current 5th
RHNA Cycle:
180 118 136 313 747

29.2.9 3
• Develop policies and action items that support Affirmatively Furthering Fair Housing (AFFH)
• Consider citywide tools and outreach strategies, including engagement of underserved communities, to help address
disproportionate housing needs as well as direct and indirect displacement risks.

Resolution Policy #1

29.2.10 4
• Explore creative approaches to incentivizing higher density residential development and/or smaller units within the same or slightly larger building volume.

Resolution Policy #2

29.2.11 5
• Evaluate possible locations where additional residential capacity, development height, and/or density maximums
could potentially be increased, including but not limited to exploring use of SB 10 legislation.
• Include AFFH objectives in the event that residential capacity increases are being evaluated.

Resolution Policy #3

29.2.12 6
• Consider evaluation of site inventory capacities that exceed the RHNA target by a small amount.
• A small excess capacity could serve as a buffer that allows the Housing Element to still be certified, even if HCD does not approve of certain site capacities identified in the update.

Resolution Policy #4

29.2.13 7
• Consider allowing 100% affordable residential development to be considered a “by-right” use that only requires ministerial Planning approval and Building Permits to be constructed.

Resolution Policy #5

29.2.14 8
• Evaluate whether alternative inclusionary approaches may produce more affordable housing or deeper levels of
affordability.
• Could include alternative inclusionary percentages based on differing levels of affordability or incentivizing land dedication versus provision of units on-site.

Resolution Policy #6

29.2.15 9
• Incentivize and promote Accessory Dwelling Unit (ADU) production.
• Consider mid-cycle adjustment if ADU permitting activity is lower than estimated in the housing element.

Resolution Policy #7

29.2.16 10
• Consider reducing other barriers to development
• Options: reduction of parking minimums; reduction of
impact fees; delaying the collection of impact fees until the issuance of the certificate of occupancy.

Resolution Policy #8

29.2.17 11
• In the event that rezoning for additional housing capacity is required as part of the Housing Element process, only consider residential use in industrial land if it is ancillary to industrial land’s full employment capacity being achieved in an
economically viable manner.

Resolution Policy #9

29.2.18 12
• Expeditiously perform any necessary rezoning after Housing Element certification.

Resolution Policy #10

29.2.19 City Council August 14, 2022
Resolution Guiding
the Housing Element
Update Process

29.2.20 City Council

AGENDA REPORT
DATE: 6/8/2022
AGENDA OF: 6/14/2022
DEPARTMENT: Planning and Community Development
SUBJECT: Downtown Plan Expansion, Preferred Development Scenario for Study under CEQA (PL)
RECOMMENDATION: Motion to direct staff to initiate work on an Environmental Impact Report (EIR) relating to the area identified for expansion of the boundary of the Downtown Plan, and provide that the preferred development scenario include the following: a minimum of 1,800 housing units; maximum heights of 225 feet for one taller building element, 185 feet for three taller elements, and 145 feet of one taller element, with each height being inclusive of anticipated height increases associated with a 50% density bonus and with the taller building elements comprising only a portion of shorter podium building forms; an option for auto circulation including the permanent closure of Spruce Street east of Pacific Avenue; the creation of new civic space in the closed Spruce Street right of way; enhanced pedestrian connections between the Downtown and the beach; and options for the location of a permanent arena facility for the Santa Cruz Warriors, with a preferred location being on the south side of Spruce Street between Pacific Avenue and Front Street.

BACKGROUND: The Downtown Plan was first adopted as the Downtown Recovery Plan in 1991 in aftermath of the 1989 Loma Prieta Earthquake. The plan has been amended since, including in 2017, when it was renamed to the Downtown Plan. The 2017 amendments included measures that encourage new development along Front Street and Pacific Avenue between Soquel Avenue and Laurel Street, including increased height limits in some areas of the Downtown. Following these amendments, there was an increase in the number of housing applications in the downtown, including new deed-restricted affordable housing and supportive housing units.

Staff has continued to address local housing needs and take advantage of statewide funding opportunities to further this success. In October of 2020, the City Council directed staff to apply for a Regional Early Action Planning (REAP) grant to expand the current boundaries of the Downtown Plan as a means to accommodate additional residential and commercial development capacity. The project proposal met the main goal of the REAP grant funding source to accelerate housing production and received the full funding allocation of $300,000 in January of 2021. An additional $150,000 in project funding was also approved through the Local Early Action Planning grant (LEAP).

30.1 Prior to beginning the consultant procurement process for the current project, staff sought direction from the City Council in March 2021 on a draft expansion boundary. The selected project boundary extends the Downtown Plan south from Laurel Street to the intersection of Pacific Avenue and Center Street, down both sides of Pacific Avenue, and east to the San Lorenzo River levee. The project boundary and was selected based on the goals for the project together with the existing zoning, General Plan, and physical conditions in the area. Below are the current goals for the expansion of the Downtown Plan, which continue to be refined during the process:

1. Add capacity for multi-family housing.

2. Create opportunities for public amenities and infrastructure including parks, the Santa Cruz Riverwalk trail, or other spaces for community use.

3. Better connect downtown with the river and beach areas.

4. Create new economic opportunities for local businesses and workers.

5. Generate new tax revenue to support City services.

6. Improve the pedestrian & bicycle experience.

7. Incorporate a permanent, financially-viable Warrior’s arena into the plan.

Following a standard purchasing process, Kimley-Horn Associates (KHA) was selected as the prime consultant to lead this project at the Council meeting on June 22, 2021. The Councilapproved Scope of Services and Schedule are included in the attachments. The first phase of the project involved the consultant team conducting an existing conditions analysis to understand the relevant physical, financial, and legal characteristics of the project area. Coordination with key stakeholders such as the Warriors began during this phase and an initial community outreach meeting was then held on November 13, 2021 to hear from the community and establish a vision for the neighborhood as redevelopment takes place. The work from this phase is summarized in the attached Real Estate Market Overview Report and Community Outreach Report.

DISCUSSION:

Development Scenarios
The second phase of the project built on the initial community feedback and stakeholder input as well as the established project goals. Three preliminary development scenarios were created to show three different levels of new housing capacity that could be incorporated into the expanded downtown area. The current housing capacity in the project area is around 930 housing units, of which fewer than 200 currently exist. The three development scenarios considered meeting a modest to significant amount of the City’s projected housing needs by increasing that number to just over 1,300, 1,500, or 1,700 new units, respectively. In addition to housing capacity, the preliminary scenarios also include ideas for many other project features such as improved streetscape and circulation, beach connectivity, civic spaces, resiliency, and considerations for a new Santa Cruz Warriors arena. These draft project ideas and development scenarios were presented to the public in an open house format on April 20, 2022. They were then presented to the Planning Commission on May 5, 2022 and to the Downtown Commission on May 12, 2022.

Additional details and illustrative materials can be found in the attached Planning Commission Staff Report.

30.2 Circulation and Beach Connectivity
The project team showed a proposal for altering the existing roadways to realign the connection from Front Street to Laurel Street Extension to move the one-way roadway to the base of the cliff, allowing the closure of portions of Spruce Street and a portion of the existing Laurel Street Extension to provide additional space for civic amenities and housing. Removing a road that currently exists between the expansion area and the San Lorenzo River could open up possibilities for new public space to better engage with the river.

For beach connectivity, the team has considered all three ways that connect the project area to the beach area. Two of these ways are around the hill as is most often used currently. The third was is over the hill and the team has put more thought into the pedestrian experience between the project development, the Cliff Street stairs, and the Boardwalk. A new connection incorporating artistic lighting and appropriate street trees between an overlook at the top of the Beach Hill stairs and the Boardwalk would help beach visitors make the short walk up Beach Hill to take in a view of the San Lorenzo River or the ocean. From there, lighting and wayfinding signage can help them find places to eat and other activities to explore in the downtown, without needing to drive between the beach and downtown.

Resiliency
Planning for a significant amount of new housing also means the City is considering the effects of new demand on the planned water supply. The City’s Water Department has planned for growth and continues to look for ways to improve the City’s water storage despite climate change threats to supply. Additional storage capacity identified in existing aquifers, together with potential new supply sources such as Pure Water Soquel, provide sufficient water to meet the planned and projected population growth over the next 20 years, particularly given the significant water efficiency of new multi-family development.

Arena and Civic Space
One of the primary goals of this planning process is to incorporate a land use plan that accommodates a possible location for a new, permanent, arena for the Santa Cruz Warriors GLeague basketball team. A permanent arena facility would likely be somewhat larger than the existing temporary facility in order to incorporate permanent office space for operations staff, league-standard locker rooms, and modern practice facilities, all of which are not present or below standard in the current facility. A somewhat higher seating capacity and an eye for designing the arena with multi-purpose use in mind (i.e., better acoustics) could create an events venue that is not currently available in the Monterey Bay Area, drawing all kinds of new activity to Santa Cruz. In terms of whether such a facility can be built as a privately funded endeavor, the plan for the project area includes significant development intensity in order to off-set arena construction costs by providing return on investment into substantial residential development.

A new, permanent arena also creates a significant opportunity to create a safe, accessible, and engaging social gathering space for the community. The three development scenarios show options for two different locations for a new Warriors arena: the current location south of Spruce Street between Front Street and the river levee or on the adjacent block on the south side of Spruce Street between Pacific Avenue and Front Street. The different locations provide different opportunities for new civic spaces, a difference in heights adjacent to the San Lorenzo River, and practical considerations for the Warriors during the construction period.

30.3 The Spruce Street right of way contains significant underground utility infrastructure for the City’s flood control and wastewater systems, and therefore complete abandonment of this roadway is not feasible or advised. However, vehicular access could be limited to utility services and the area converted to a pedestrian plaza. By closing parts of Spruce Street to traffic, two of the development scenarios show a possible civic plaza space in its place between Pacific Avenue and Front Street. While conceptual at this point, this plaza could potentially provide space for thousands of community members and visitors to gather for a variety of events. With a successful arena project, a plaza like this could be activated by adjacent commercial uses wrapping portions of the arena exterior or on adjacent properties. A public, urban plaza of this scale could provide a powerful connection to the San Lorenzo River levee area as well. The project area is a bridge between the Downtown, the river, and the beach and it provides an opportunity to create a vibrant neighborhood inspired through art, entertainment, technology, and illumination.

Housing and RHNA
The primary goal for this project is housing production and adding housing capacity that will benefit the City not just in the near term, but also for many generations to come. The City’s draft Regional Housing Need Allocation (RHNA) was released following the start of this project and was taken into consideration in the preliminary development scenarios. The RHNA is the first step in the Housing Element cycle and is intended to ensure that housing is planned for where it is most needed. Factors used by the Association of Monterey Bay Area Governments (AMBAG) in considering the distribution of housing requirements across the region included: the regional growth forecast, a jurisdiction’s share of jobs in the region, the jobs/housing ratio, existing transit routes, wildfire and sea level rise risk, race and affluence concentration, and State of California opportunity mapping. The final draft RHNA would require the City to plan for 3,736 housing units. By comparison, the current cycle of the RHNA required the City to accommodate 747 new housing units between 2015 and 2023.

While more detailed analysis will take place in the beginning phases of the Housing Element Update (slated to start by the summer of this year), staff recognizes that the existing planned housing capacity of the adopted 2030 General Plan will not be sufficient to meet this new requirement. The City needs to identify additional locations and properties to accommodate the City’s housing obligation. By taking advantage of this project area to add more housing in an 180 118 136 313
747 859
562 709
1,606
3,736
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1500
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Total RHNA
RHNA 2015-2023
Housing Built 2015-2021
Draft RHNA 2024-2032
RHNA Comparison

30.4 ideal downtown location, the City will be in a better position during this upcoming Housing Element Update process if sites for further housing capacity need to be identified.

The expansion area represents a rare opportunity to plan for a significant amount of new housing in a location that is among the most sustainable sites in the region to grow based on its proximity to jobs, amenities, recreation, and transportation options. New multi-family buildings will have an expected life span of well over 60 years, which means this added capacity can help meet the housing needs of future generations of Santa Cruzans. With that in mind, while it is important to add capacity in the near term to help the City meet its upcoming 2023-2031 RHNA requirement, it is just as important to consider the medium and long term benefits of adding housing and that this housing can lay the groundwork for meeting future RHNA requirements as well.

Development Scenarios: Height
The building heights shown in the preliminary development scenarios show the addition of taller components as buildings start to exceed six or seven stories, with maximum heights between 120 and 200 feet. The proposed building form would dictate that these taller elements are limited to a certain percentage of the total building footprint and are not considered for the entirety of any of the parcels. These scenarios are an increase to the allowed maximum heights in the City and present the opportunity to create a new downtown skyline that helps define the city’s core as a distinct place with a strong urban identity. The taller buildings can also serve as a beacon for visitors to the City, drawing them to downtown where they can support local businesses. The taller building elements are proposed to be located in five distinct areas across four sites, all located away from the historic residential district to the west that is outside of the expansion area.

Open House and Commission Meetings
These development scenarios and topic areas were presented to the community at the second community open house held on April 20, 2022. Following this large community open house, the materials were presented to the Planning Commission on May 5, 2022, and to the Downtown Commission on May 12, 2022. The attached Planning Commission Staff Report of May 5, 2022 includes all the referenced materials. The purpose of the materials presented was to generate feedback and collect ideas for the project going forward and to define the preferred scenario that will become the project description for the purposes of environmental review under the California Environmental Quality Act (CEQA). The comments received at the April 20, 2022 open house event are shown in the Open House Comments attachment and are organized by topic area. The draft minutes from the Planning Commission and Downtown Commission are also attached.

Following this feedback, staff developed recommendation for the preferred development scenario detailed in the following sections. The presentation to the Council at the June 14, 2022 meeting will also provide further detail and enhanced context.

Based on feedback provided at the April 20 open house and online comments received as of this writing, community members are very supportive of the proposed concepts for changes to the roadway circulation, improved connectivity with the beach area, new civic spaces, and increased housing intensity in the project area. Participants contributed local insights and existing concerns regarding beach-bound traffic congestion and shared ideas about future programming and activation for the new civic spaces and the new arena, such as considering the acoustics of the space so it could serve the needs of the Santa Cruz Symphony. Some expressed concerns about

30.5 any new development, but most showed support and enthusiasm for a significant change in the project area. Many comments also advocated for increased street closures and further limiting through traffic on Pacific Avenue, Laurel Street Extension, and Cliff Street.

Community comments advocated for green roofs and community garden space, for making roof decks publicly accessible, and for pursuing alternative transportation options like trolleys, shuttles, and pedicabs for better mobility between the beach and downtown. Existing tenants like the Hub for Sustainable Living and existing residential tenants raised questions and concerns about how they can fit into a redeveloped neighborhood and what their options are for relocation.

Another common theme was the need for more housing options for moderate- and lower-income households and support for creating a neighborhood with housing options for all income levels.

The community reacted favorably to proposing taller buildings in order to add more housing capacity and create a new, vibrant node in Santa Cruz. Many participants in the public open house expressed a motivation to increase housing options and to make efficient use of urban land while creating the space for significant public improvements and amenities associated with new development like multi-family housing and the arena. Some community members were initially surprised by the proposed building heights and had questions about how height could be effectively regulated and why taller elements were proposed. As the project team was able to show the increase in the number of housing units, explain the reasons for pursuing taller elements situated over shorter podium building forms, and show the three-dimensional renderings of the massing for different options, many became supportive and even excited about the opportunity created by a new urban neighborhood with thousands of new residents. Some others remained skeptical about the degree of change proposed and expressed a preference for one of the more moderate development scenarios. The attachment showing the Open House Comments captures the written comments made by community members during this event.

Planning Commission
The Planning Commission discussed the various components of the development scenario during a regularly-scheduled meeting on May 5, 2022. The Commissioners reacted positively to the ideas for the civic spaces and enhanced connections to the river and beach area. The concept for the realignment of the roadway connections raised concerns among some Commissioners regarding the existing residential care facility at 126 Front Street, and Commissioners requested that the language in the Downtown Plan be clear that the roadway realignment could not take place until an alternative location for the facility could be identified. The Commissioners spent time discussing the advantages of different height limits and building forms, the right number of housing units to recommend for this neighborhood, and the best location for a potential permanent arena site. The motion that passed was passed on a 4-3 vote after some debate. The attachment showing the Planning Commission Minutes of May 5, 2022 includes the full text of the successful motion, and a separate attachment provides additional staff responses (beyond those below) to the motion.

One of the primary points of disagreement among commissioners was the appropriate height and building form of new buildings in the project area. The motion that passed recommended lower heights than even Scenario 1. However, one of the Commissioners who voted for the motion offered a friendly amendment to the motion to remove this restrictive height cap, but the friendly amendment was not accepted by the maker of the motion, and the Commissioner voted in favor of the prior motion that included the height limitations. The language regarding height in the Planning Commission recommendation was for the maximum height in the expansion area to be

30.6 no taller than the Palomar building (90 feet), inclusive of the use of density bonus, so long as a maximum of 1,600 units can be achieved. Staff is opposed to part of the motion.

The Planning Commission’s maximum height proposal, by itself, is actually more restrictive than even the current Downtown Plan, where its maximum heights are not inclusive of the density bonus. As discussed in greater detail in the height regulation section on page 10, the City would have to set base building heights in the plan even lower to account for the use density bonus.

Because the City can only use base height in the Housing Element unit count, this could require even more units to accounted for elsewhere in the City and increase the possibility of rezoning needed outside of the Downtown.

This recommendation removed all taller height elements in favor of using solid block buildings all at the same height to achieve a maximum of 1,600 units. In order to achieve this unit maximum, the building heights throughout the project area would have to all be seven stories with six floors of residential over one floor of commercial. Given current building typologies and construction cost economies of scale, it is not as likely that some buildings will even achieve that height, particularly on the smaller parcels along Pacific Avenue, reducing the realistic potential of housing development and the likelihood of full build-out of the public and private improvements desired for this area. Based on this lack of feasibility on some sites, Planning Commission’s recommendation is more likely to produce a maximum of 1,458 units. In order to achieve the full 1,600 units, additional height would be needed. An increase of one story to achieve 1,600 units (creating a neighborhood of eight-story buildings) is not likely to be economically feasible either due to the fire code constraints that appear after 75’ of floor height.

These structural requirements add significant costs to projects and would need to be off-set by a commensurate shift in returns in the form of many additional stories containing additional units.

Should it even be feasible for all buildings throughout the expansion area to achieve the maximum 90’ height that allows for seven or eight stories, there is a strong aesthetic and urban design argument in favor of taller building elements. Large blocks of buildings all at the same 90-foot height would look and feel monotonous and oppressive. Taller building elements, which will create a distinctive skyline, would actually feel lighter and allow the base portions of all buildings in the project area to be in scale with their environment, including a lower height along the west side of Pacific Avenue transitioning toward the Neighborhood Conservation zone.

Narrower but taller elements also shorten the amount of time that shade is cast on adjacent properties versus longer and wider buildings. Importantly, taller building elements would also function as a beacon and provide a strong way-finding element in the City skyline, which supports downtown businesses, improves the economic development potential of the downtown, and helps create an anchor and magnet for activity in the new civic spaces.

The Warriors and their development partners currently have some control over blocks A, B, C, and D in the expansion area that are shown in the attached development scenarios. The Planning Commission’s recommendation specifically removes the taller building elements on all of these four blocks and, therefore, removes housing development capacity that could help privately fund the arena and other public amenities. Specifically, the Planning Commission’s recommendation would accommodate approximately 894 units in total across the four blocks, while staff’s recommended Scenario 3.1 would accommodate approximately 1,239 units in total across those same blocks

30.7 The Planning Commission also raised questions about potential displacement of current City residents – both directly within the project site as redevelopment occurs and indirectly as new investment raises property values in adjacent neighborhoods. Direct displacement will be addressed under existing State law and City ordinances requiring tenant relocation assistance, replacement housing for any units occupied by lower-income qualifying households, and the first right of return for those displaced tenants as new affordable housing units are created. Indirect displacement is a broad and complicated issue and one for the City to consider comprehensively as housing costs continue to rise throughout the region. As an important citywide issue, it requires a comprehensive response, not one limited to the geographic area contained within the Downtown Plan Expansion area, which is what would occur if the issue were addressed through policies only applicable in the Plan area. Staff recommends that the City consider this issue on a citywide scale as part of the upcoming Housing Element update, where comprehensive analysis of both direct and indirect displacement is required by California law as part of the City’s duty to affirmatively further fair housing under AB 686 of 2018.

Similarly to Planning Commission’s concerns around displacement, the motion also included direction to pursue significantly higher inclusionary housing requirements. Increasing inclusionary housing requirements requires detailed studies and market analyses to ensure a rate that can maximize affordable housing production while also making housing development financially feasible and likely to occur. These studies can take significant time and resources.

The State of California deems inclusionary requirements a potential impediment to the development of housing and requires evidence that an inclusionary rate is not such an impediment as part of a Housing Element Update. In other words, the state seeks to ensure that inclusionary requirements are not abused to prevent or limit housing production. Given that the City is undertaking the Housing Element this summer, increasing the inclusionary rate as part of this project could complicate the Housing Element process and certification. If Council chooses to consider a higher inclusionary rate staff recommends that a separate consultant be brought on board to evaluate the implications of such a change, along with any implications an alternative rate could have on the viability of the privately-funded amenities and the overall viability of development. Staff would also recommend a presentation to Council regarding implications of such work on the Advance Planning Division’s and Economic Development & Housing Department’s respective work plans.

The Planning Commission motion also included a number of other recommendations, and responses to each of those recommendations is contained in an attachment to this report.

Downtown Commission
The Downtown Commission (DTC) discussed the preliminary development scenarios during a regularly-scheduled meeting on May 12, 2022. The DTC received the same materials presented to the Planning Commission. The discussion addressed questions relating to parking in and around the project area, programming elements relating to the proposed new commercial space in the project area, plans for affordable housing, state housing element law, and opportunities for the new civic space. The DTC was enthusiastically supportive of the concepts for the civic spaces and increasing activity and engagement in this area of downtown. Commissioners also identified the possibilities for existing local businesses as newly-built commercial space comes on to the market, noting that new development in this area could support existing businesses that are currently considering costly updates to older commercial buildings.

30.8 The DTC favored the most intense development scenario and was excited about creating a downtown expansion area with a distinct identity and skyline. The DTC noted the opportunity this project offered and expressed interest in even more intensity in this area in order to make efficient use of the land and the strengths of this area. The Commission encouraged the project team to capitalize on the economic opportunities facilitated by a modern sports arena and events venue and pursue more intensity in the project area.

Coastal Commission
Local staff of the California Coastal Commission (CCC) reviewed the scenarios and submitted written comments to staff which can be read in the Coastal Commission Comments from June 8, 2022 attachment. CCC recognizes the importance of this project for the City and is supportive of increased densities in the proposed project areas so long as other amenities proposed in the plan are included. CCC staff desire that attention is paid to both the river side of the project area (i.e., improved connectivity in terms of public recreational access but also aesthetic and ecological connectivity) and to siting/design measures that can reduce perceived scale (e.g., upper stories setback from lower stories, no cantilevers, and the use of cutouts, articulation, etc.). City staff agree on the importance of the river in terms of access and design. These latter, more specific design details will be developed in the next phase of the project as objective standards are created.

CCC did not provide specific direction on maximum building heights in the expansion area but did state that it will be important for the EIR and related materials to thoroughly evaluate such height and massing increases. CCC also stated that the EIR should include alternative height scenarios to ensure that any proposed massing makes sense from a coastal resource standpoint, and they also sought clarity on how the density bonus would apply in the area and within the context of the Local Coastal Program. CCC reiterated the value of visual simulations of scenario alternatives in order to understand potential coastal resource impacts whether they are visual or access-related. These comments will be reflected in the EIR scope of work. CCC stated that the EIR should also provide detailed information on the proposed treatments of the public rights of way throughout the project area to help understand how they might relate to the intensification and densification proposed. Given the programmatic level of the EIR, detailed public right of way design will not be included in the EIR itself but will be in the final plan. Staff agrees with CCC that providing such information will help ensure that public right of way improvements function seamlessly with proposed building development while enhancing multi-modal transportation (bicycle/pedestrian/transit) and vehicular access.

Recommended Development Scenario
Based on the input from all of the above sources, the project team is recommending that the City Council provide direction to study a slightly modified development scenario called Scenario 3.1.

Given the great desire for increased housing, the general interest in taller buildings, the visual draw that taller buildings can have to downtown, and the aspiration to take advantage of the rare opportunity the area presents, Scenario 3.1 was created to be like Scenario 3 in every way but with slightly higher maximum heights on the taller building elements. In Scenario 3.1, the five taller elements in Scenario 3 would be allowed an additional 25 feet in height to provide more housing capacity and allow for greater flexibility with Density Bonus calculations. Scenario 3.1 has the following features:
1) A total housing unit count of no less than 1,800 dwelling units. 2) Maximum building heights of no more than 145 feet on one taller building element, 185 on three taller building elements, and 225 feet on one taller building element. The taller

30.9 building elements will be controlled to be only a small portion of a site that rises above the associated and respective podium building. This promotes a lighter and more varied feel from the ground and when viewing the skyline.
3) A preferred circulation option that relocates the existing connection from Front Street to Laurel Street Extension to the bottom of Beach Hill, so long as that the residential care facility at 126 Front Street and any existing residents are relocated to an appropriate replacement facility elsewhere in the project area or within the County. Alternatives shall be considered should the facility and its residents not relocate. 4) Consideration for two options for the location of a permanent Warriors Arena:
a. The preferred location on the adjacent block, on the south side of Spruce Street between Pacific Avenue and Front Street; and
b. The current site of the temporary arena.
5) Permanent closure of Spruce Street to automobile traffic east of Pacific Avenue. 6) Creation of new civic spaces within the closed Spruce Street right of way and connecting to the San Lorenzo River levee.
7) Enhancement of streetscape in all areas within the project area as well as both sides of Cliff Street connecting to Beach Street.

This recommendation reflects the project team’s understanding of the community interest in focusing housing intensity into the City’s downtown and stepping down height towards the neighborhood conservation district to the west. Scenario 3.1 takes greater advantage of the opportunity for redevelopment in this area. Pursuing a building form where a taller building is situated over a smaller portion of a shorter podium building is the most feasible way to achieve housing development in the desired amount. Helping promote the likelihood of development in the expansion area also helps to privately fund the many great public benefits and public realm enhancements envisioned with this project area, including but not limited to the Warriors arena that would allow them to stay in Santa Cruz. As noted above, in expansion blocks A through D, where the Warriors development team has some partnerships, our recommended Scenario 3.1 anticipates approximately 1,239 housing units while the Planning Commission Scenario would achieve only approximately 894 units, a difference of 345 units that could help fund various public and private amenities. In addition to project feasibility, taller building forms create distinct urban design and wayfinding opportunities that would not be created by shorter, blockier buildings. By adding more height in limited locations, the City can help to create hundreds more housing units for a variety of household sizes and affordability levels, while also increasing the economic and social vitality of Santa Cruz.

Height Regulation
Like Scenario 3, Scenario 3.1 reflects what staff anticipates as the allowed heights of buildings, inclusive of the current maximum 50% Density Bonus for market rate development. There are a few options for achieving these thresholds. First, a property owner could enter into a Development Agreement (DA) with the City to cap heights at the respective 145-foot, 185-foot, or 225-foot levels (corresponding to the height limits anticipated in for different buildings in Scenario 3.1), in exchange for build out of some of the public benefits planned for the area. This option requires the City and each affected property owner where taller buildings are anticipated to agree on the terms of a contract that will apply to these sites, and once such an agreement is in place, would allow the City to count the number of housing units established in the DA toward efforts to meet the RHNA requirements. Alternatively, the City could think of these heights as

30.10 the heights that would be allowed after the application for a State Density Bonus, setting the regulations in the Downtown Plan and Zoning code at a lower level of development intensity on the assumption that many of the developers will pursue bonuses. This alternative has a draw back in that the City cannot be sure how many developers will pursue a State Density Bonus and to what level, and, therefore, the only units that can be counted toward meeting the RHNA requirement are the units in the base plan and zoning with the lower height limits. This option would likely leave the community looking for more sites to identify for increased residential capacity as part of the Housing Element process in order to demonstrate full compliance with the state laws requiring planning for adequate housing.

The full details for Scenario 3.1 are included in the attachments, along with a three-dimensional rendering showing the overall building massing that are recommended. The project team has also modeled the Planning Commission recommendation, and these materials can also be found in an attachment to this report. Planning staff is recommending Scenario 3.1 as the superior option, because it would result in approximately 350 more units of housing compared to the development expected with the Planning Commission recommendation, it is economically more feasible, and it reshapes the Santa Cruz skyline, identifying the entire downtown as a vibrant urban center serving as an attractor and wayfinding tool for both locals and visitors alike.

Next Steps. Following direction by the City Council, staff and consultants will finalize the project description for the EIR and begin work on the required analyses. The EIR process will take approximately ten months. More specific details and policies of the plan, such as objective design standards, will be drafted during this time and will include further input from the community. Following completion of the required studies, staff will bring the proposed amendments to the Downtown Plan, General Plan, Beach/South of Laurel Plan, Local Coastal Program, Municipal Code and Zoning Maps, together with the Draft EIR, back to the Planning Commission, Downtown Commission, and City Council for recommendation and adoption in the spring and summer of 2023.

HEALTH IN ALL POLICIES. The components of the current proposal are consistent with the Health in All Policies pillars of equity, public health, and sustainabilty in that they would encourage creation of both needed housing and economic opportunities and foster greater accessibility between the Downtown, San Lorenzo River, and beach areas. Development in the Downtown area is in close proximity to transit, jobs, amenities, and a wide range of entertainment and recreational activities, making it one of the most sustainable places to grow in the region. From an equity perspective, the project area will include space for new inclusionary low-income housing, including replacement housing for any existing low- and very-low income residents. This project encourages active transportation modes that support both personal health and environmetnal sustainability.

CEQA: The Downtown Plan Expansion will require environmental review prior to Council’s final consideration. It has been determined that an EIR will be prepared for the project. As the California Coastal Commission recommended, the EIR will include analysis of height and massing alternatives as well as visual simulations of these alternatives. The final proposed amendments to the Downtown Plan, General Plan, Local Coastal Program, Beach/South of Laurel Plan, and Municipal Code, together with the Draft EIR, are anticipated to be considered by the Planning Commission for a recommendation to the City Council by the summer of 2023.

30.11 FISCAL IMPACT: This report is part of the grant-funded project to expand the Downtown Plan boundary. The total project cost is currently scoped to be $555,000. Planning was awarded two grants for this project, totaling $450,000, and general fund sources will be used to cover the full cost of the project beyond the grant amount. The City is considering creative solutions to allow the beneficiaries of the plan to reimburse City general fund costs towards the funding of the plan, including staffing costs associated with the development of the plan, and policies will be considered for incorporation into the final plan to address these reimbursements. Further grant funding may also be pursued, should opportunities arise.

As the project area is built out, staff anticipates that the additional property, admissions, and sales taxes, together with any special assessments elected for the project area, will have positive impacts on the City’s long-term fiscal conditions. Provision of services to the area will result in additional costs to the City, but given the location and efficiency of land uses under consideration, revenues should be expected to exceed expenses. Creating a new urban destination with distinct urban character and a major events venue of regional importance could make this project the center of a highly successful economic development endeavor, bringing residents and visitors from throughout the region into the downtown and helping them navigate between key points of interest at the beach, river levee, and Downtown. Detailed and precise information on the longer-term fiscal implications will not be fully known until new uses and buildings are constructed and operating.

Prepared by:

Sarah Neuse
Senior Planner
Matt VanHua
Principal Planner
Submitted by:

Lee Butler
Director of Planning and
Community Development
Approved by:

Matt Huffaker
City Manager
ATTACHMENTS:

1. Planning Commission Staff Report of May 5, 2022 and attachments

2. Recommended Preferred Development Scenario Materials

3. Planning Commission Preferred Development Scenario Materials

4. Minutes of the Planning Commission from May 5, 2022

5. Staff Responses to Planning Commission’s May 5, 2022 Motion

6. Action Agenda of the Downtown Commission from May 12, 2022

7. Coastal Commission Comments from June 8, 2022

8. Public Correspondence - Downtown Expansion Plan

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PLANNING COMMISSION

AGENDA REPORT
DATE: April 27, 2022
AGENDA OF:

DEPARTMENT:

May 5, 2022
Planning and Community Development Department
SUBJECT: Downtown Plan Expansion Project – Review of Development Scenarios (PL)
RECOMMENDATION: Review included materials relating to project area development scenarios, receive presentation from project team, discuss, and provide input on a preferred development scenario for study under the California Environmental Quality Act (CEQA).

BACKGROUND: Staff have been working on multiple efforts to address local housing needs and take advantage of statewide funding opportunities. In October of 2020, the City Council directed staff to apply for a Regional Early Action Planning (REAP) grant to expand the current boundaries of the Downtown Plan as a means to accommodate additional development capacities, both residential and commercial, in areas near the existing Downtown. The project proposal met the main goal of the REAP grant funding source to accelerate housing production and received the full funding allocation of $300,000 in January of 2021. An additional $150,000 in project funding was also approved through the Local Early Action Planning grant (LEAP).

The Downtown Plan was first adopted as the Downtown Recovery Plan in 1991 in aftermath of the 1989 Loma Prieta Earthquake. The plan has been amended since, most recently in 2017, when it was renamed to the Downtown Plan. The 2017 amendments included measures that encourage new development along Front Street and Pacific Avenue between Water Street and Laurel Street, including increased height limits in some areas of the Downtown. These amendments successfully resulted in increasing the number of housing applications in the City’s core and allowed for greater opportunities for creating new deed-restricted affordable housing units and supportive housing.

The preliminary boundary for the project area was discussed with the City Council and Planning Commission prior to issuance of the request for proposals. The study area was selected based on the established goals for the project, together with the existing zoning, General Plan, and physical conditions in the area. Below are the established the goals for the expansion of the Downtown Plan:

1. Increase the total number of housing units that can be built in the City by adding capacity for multi-family housing. (Per grant requirements, the project must expand housing capacity and encourage housing production.)

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2. Better connect Downtown with the river and beach areas, in order to:
a. Give the community better access to the river and beach. b. Help visitors see more of Santa Cruz, including its local businesses.

3. Work with the Santa Cruz Warriors to establish design standards and use allowances that accommodate potential development of a permanent arena.

4. Generate new tax revenue for City.

5. Create new economic opportunities for local businesses and workers.

6. Create opportunities for public amenities and infrastructure including parks, the levee trail, or other spaces for community use.

Based on the Regional Housing Needs Allocation (RHNA) process, which has advanced since the project goals were first drafted and feedback received through the community, Planning Commission, and Council, these goals will be refined and updated as the project progresses and in advance of the environmental review process in drafting the environmental impact report (EIR).

Process and Timeline
Following a standard purchasing process, Kimley-Horn Associates (KHA) was selected as the prime consultant to lead this project in June 2021. The official project kick off took place in August of 2021 with a first meeting bringing together the consultant team led by Bill Wiseman of KHA and multiple City departments. The project team conducted background research necessary to evaluate the potential for redevelopment in the project area focusing on residential, arena, and commercial or office uses. The approved Scope of Services and Schedule are included in the attachments.

The first phase involved gathering existing conditions and relevant background data on the physical, financial, and legal characteristics of the project area. This work is summarized in the Real Estate Market Overview Report included as an attachment. In November 2021, the project team held the first community workshop via Zoom to introduce the project area and goals and then to hear from the community about their priorities for the area and their questions about the process and existing conditions. Around 25 members of the community attended the event live, and approximately 90 visited the online platform to respond to the survey or leave comments on the idea wall or interactive map. These comments are summarized in the attached Community Outreach Report.

The project team considered the initial community and stakeholder input as well as the established project goals and the City’s draft Regional Housing Need Allocation (RHNA) to develop ideas for the project area relating to streetscape and circulation, beach connectivity, civic spaces and the arena, housing, city infrastructure, and resiliency. Together, these topic areas form the basis of the three development scenarios that were presented to the community at the second community workshop held on April 20, 2022. The purpose of all the ideas and materials presented at the workshop was to generate and collect ideas for the project going forward and to receive feedback to help define the preferred scenario that will become the project description for the purposes of environmental review under the California Environmental Quality Act (CEQA).

The City Council will review the preferred scenario prior to initiation of the CEQA process. The comments received at the April 20, 2022 open house event are shown in the Open House Comments attachment, and are organized by topic area. A summary of the comments is also incorporated under each topic in the Discussion section below.

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This report reviews the details of the development scenarios at a high level and includes detailed information as attachments. The presentation to the Commission at the May 5, 2022 meeting will provide further detail and enhanced context.

DISCUSSION:

This project was initiated to expand the Downtown Plan and pursue grant funding from the REAP funding source specifically to increase the planned housing capacity within the City.

Housing supply is at the core of this planning effort to think long-term in choosing the best locations for new buildings to house Santa Cruz residents for generations. Large multi-family or commercial buildings typically have functional life spans of at least 60 years, if not longer, so considering a multi-decade time frame with this planning process is necessary. A Project Orientation and set of Base Maps is included as an attachment. The following sections will discuss the various aspects of the development scenarios for the project area by topic to provide an overview of the components that are under consideration at this stage of the planning process.

The following sections will discuss various plan concepts being considered, as well as three distinct scenarios for development of the project area. The first three topics discussed, while still flexible and open to change, do not vary with the different development scenarios presented. The final two topics addressing the Arena and Housing include different alternatives for the purpose of generating discussion and considering the pros and cons of the options.

Key Decision Points:

The full scope of amendments to the Downtown Plan will address most aspects of development and build out of the plan – everything from the big picture (heights of buildings, density of residential uses, square footage of commercial development) to the smaller details (design of street furniture and lighting, street tree species, paving treatments, etc.). At this point in the process, the project team needs feedback on the bigger-picture items in order to initiate the environmental review process. To that end, while additional information on other topics is provided, Planning Commission comments on the following issues would be most helpful at this time:

1. Number of housing units

2. Building heights and locations

3. Arena location

4. Proposed concept for street connectivity
Streetscape and Circulation. The existing Downtown area, specifically along Pacific Avenue, has a strong sense of place and an appealing pedestrian environment communicated through the streetscape elements like lighting, street trees, and pedestrian amenities like seating and outdoor dining areas. The concept for the project area involves extending these successful elements and then building on them to enhance new uses that could come into the area. The streetscape envisions maintaining a heavy focus on the pedestrian experience, incorporating appropriatelyscaled lighting, consistent street tree planting, and generous sidewalk widths. One idea under consideration is the use of “flex zones” along Pacific Avenue that can be available for on-street perpendicular or angled parking at certain times and for outdoor dining or community events at other times, creating more opportunities for community space and flexible use throughout the week, month, and year.

One aspect of the circulation in this area includes traffic flow utilizing the Laurel Street Extension to connect from Downtown or the west side over to the base of Beach Hill and the

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Beach Flats neighborhood. The concept for the roadways at this point includes realignment of this connection to move the one-way roadway to the base of the cliff, allowing the closure of portions of Spruce Street and the existing Laurel Street Extension to provide additional space for public plazas, civic amenities, and housing. This allows the project to better engage with the river and creates more space for public plazas and an enhanced overlook at the river adjacent to the project area (see further discussion below under Civic Spaces). Bicycle traffic in both directions along Front Street, lower Pacific Avenue, and the realigned roadway will allow cyclists to connect between the existing levee trail and the planned rail trail to the west of the Zone. The connection to the levee from Pacific Avenue along Spruce Street provides sufficient distance to create a relatively level transition to the top of the Levee, making access to the San Lorenzo River accessible to more residents and visitors, regardless of mobility constraints.

The parking needs for the neighborhood will be determined based on the land uses identified for the preferred development scenario, and the details of the Downtown Parking District boundary, the policies relating to event and daily parking requirements, and any required parking standard for new development will be evaluated as part of the process of drafting the amendments to the Downtown Plan over the next 12 months. Further study relating to existing parking patterns, considerations for roadway closures, and elements of seasonal and event-day parking needs will be part of the analysis that will guide policy recommendations included with the final recommended language in the Downtown Plan.

Community Comments: Reactions to the conceptual streetscape and circulation diagrams were predominantly positive, with many points made regarding the existing challenges with summer beach traffic and full parking lots at the Boardwalk generating traffic flow issues as far north as Laurel Street. Many comments also advocated for increased street closures and further limiting through traffic on Pacific Avenue.

In reviewing the attached Circulation and Street Scape materials, the Planning Commission should consider the realignment and configuration of roadways and provide comments on the proposed street closures, realignment, and associated cross sections.

Beach Connectivity. Located between Downtown and the base of Beach Hill, the project area presents an opportunity to improve the connection between Downtown and the beaches, a vision that has been articulated in many planning efforts in the past. The beaches and Santa Cruz Beach Boardwalk are major regional tourist attractions, and making sure these visitors are able to visit the Downtown and experience more of the City is a primary goal of this project. Significant private investment in the project area would make improvements to the existing public infrastructure possible, including potential enhancements to the levee trail, a more engaging and accessible pedestrian experience, and the opportunity for additional civic spaces like a lookout area at the top of the Beach Hill stairs.

The initial concept for these connections focuses on the pedestrian experience between the stairs and the Boardwalk. A new connection incorporating artistic lighting and appropriate street trees between an overlook at the top of the Beach Hill stairs and the Boardwalk would help beach visitors make the short walk up Beach Hill to take in a view of Downtown and the San Lorenzo River. From there, lighting and wayfinding signage can help them find places to eat and other activities to explore in the Downtown, without needing to drive between the beach and Downtown. The attachment shows how lighting could be incorporated along the river levee,

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Cliff Street, into the Zone, and at other key points of interest Downtown, drawing visitors to move through the City and engage with attractions of downtown Santa Cruz.

Community Comments: While the community was interested in the potential for enhancing connectivity via the Cliff Street Stairs and an enhanced sidewalk down Cliff Street, many comments focused on improving bicycle circulation and including alternative transportation modes like trolleys or transit. There were several comments about limiting car access along Laurel Street Extension and Cliff Street.

In reviewing the attached Beach Connectivity materials, the Planning Commission should consider the routes over and around Beach Hill and provide comments on the proposed enhancements to Cliff Street or alternative routes.

Infrastructure and Resiliency. The San Lorenzo River Levee protects most of Downtown from flooding, and the mechanical components of the pump system are located adjacent to the levee just south of Laurel Street (next to the Laurel Street Bridge). The pipes that carry water out of Downtown and over to Neary Lagoon run under Spruce Street – both stormwater and wastewater. This infrastructure is critically important, and access to these pipes must be maintained. This is the reason that all the development scenarios maintain the right of way of Spruce Street for public use – even though portions are shown as closed to automobile traffic in each scenario.

The project area is shown as susceptible to climate change impacts over the next 100 years, so the CEQA review will consider the most appropriate and effective mitigation measures that should be incorporated with any new development and for the area as a whole. New investment and redevelopment in the area provides the opportunity to incorporate these mitigation and resiliency protocols.

Planning for a significant amount of new housing also means the City is considering the effects of new demand on the planned water supply. New development is very water efficient. The City’s Water Department has planned for growth and continues to look for ways to improve the City’s water storage despite climate change threats to supply. Additional storage capacity identified in existing aquifers, together with potential new supply sources such as Pure Water Soquel, provide sufficient water to meet the planned and projected population growth over the next 20 years. The attached information on water shows how increasing efficiency of new buildings and landscaping, combined with changing habits around water use, has kept water demand from increasing drastically despite steady population growth going back to the 1950s.

And comparatively, the per unit water use in higher density buildings like those contemplated in the plan area is less than in other, less dense development types.

Community Comments: The comments from the community on this topic touched on a wide range of issues from advocating for green roofs and community garden space for new residents to questions about flood and sea level rise resilience for new construction. This topic also generated further comments about alternative transportation options, including trolleys and bike cabs, and questions about utilizing water supply management technology, including purple pipe use and rainwater catchment.

The project team will be analyzing needs for infrastructure and resiliency as part of the CEQA review process in order to ensure that any existing or potential hazards are mitigated to the extent

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necessary. Maintaining the existing function of the stormwater and levee infrastructure is incorporated into all potential development scenarios.

Civic Spaces and Arena. One of the primary goals of this planning process is to incorporate a land use plan that accommodates at least one possible location for a new, permanent, arena for the Santa Cruz Warriors, the local G-League basketball team. The current facility where the team plays was built in 2012-13 and was intended to last for five to ten years. A permanent arena facility would likely be somewhat larger than the existing facility, to incorporate permanent office space for operations staff, league-standard locker rooms, and practice facilities, all of which are currently not present or below standard in the current facility. A somewhat higher seating capacity and an eye for designing the arena with multi-purpose use in mind (i.e. better acoustics) could create a venue that is not currently available in the Monterey Bay Area, drawing new kinds of activity and events to Santa Cruz. The concepts for public spaces envision a highly successful development of the project area. The feasibility of any of these options will be influenced by the cost, feasibility, and intensity of development planned for this area. With a Developer’s Agreement, the City will have more leverage to require full build out of the spaces envisioned in this section to ensure that the community receives substantial benefits in exchange for the increased development capacity planned for the private property in the project area.

A new, permanent arena also creates a significant opportunity to create a safe, accessible, and engaging social gathering space for the community, arena events, and visitors of all ages at a scale that is not often available. The concept for this area will be refined over the next 12 months, and the initial vision includes several key components. By closing parts of Spruce Street to traffic, two of the development scenarios show a possible civic plaza space that occupies the entire bock of Spruce Street between Pacific Avenue and Front Street. While conceptual at this point, a plaza occupying this entire block, for the full width of the existing right of way, could potentially provide space for thousands of community members and visitors to gather. A public, urban plaza of this scale with a connection to the arena will allow for different kinds of public and community events. Some arenas incorporate liquid crystal display (LCD) or projection screens on the building exterior to allow events to be viewed from the adjacent plaza or even to host outdoor events for the community. Initial estimates are that a few thousand people could gather in the civic space captured along Spruce Street and up to an expanded public area at the river levee. With a successful arena project, a plaza like this could be activated by adjacent commercial uses including dining and drinking establishments that could wrap portions of the arena exterior or be located on adjacent property. The Zone, the project area, is a bridge between the Downtown, the river, and the beach, and it provides an opportunity to create a vibrant Downtown neighborhood inspired through art, entertainment, technology, and illumination.

Examples of existing arena spaces, as well as concepts for lighting and other plaza features, are shown in the attachment on Civic Spaces and the Arena.

Community Comments: Most reactions to the concepts for the new civic spaces and the activation features were positive. We heard several comments about incorporating other uses into the arena space – making acoustics work for the Santa Cruz Symphony or other concerts.

Questions about incorporating the existing Hub for Sustainable Living and space for community youth, along with differing opinions about the best location for the arena facility, were also raised.

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In reviewing the attached Civic Spaces and Arena materials, the Planning Commission should provide feedback on the location of the arena within the project area and on the plazas, activation features, and lighting concepts in public spaces.

Housing. As stated above, one of the primary goals of the project to expand the Downtown Plan boundary is to increase the increase the number of new homes that can be built in the City above what is currently planned for in the adopted 2030 General Plan, Beach / South of Laurel Plan, and zoning ordinance. The dual housing crises of supply and affordability have been driving housing policy in the state, Monterey Bay region, and within the City in recent years, and additional options continue to be necessary. Some of the factors considered in selecting the area South of Laurel as the target of this project were the presence of relatively large parcels, which are typically more likely to be redeveloped over time, as well as the absence of historic districts, single-family homes, and existing protective zoning, all of which would make the development of new housing less likely. As currently proposed, the 12-acre project area includes at least nine acres that have strong redevelopment potential, should the existing property owners choose to exercise it. Staff has identified a project area that is actually likely to generate some level of new housing units in the near to mid-term (five to ten years) and substantially contribute to the number of residents living Downtown close to jobs, leisure activities, household needs, and transportation choices, particularly as the project area fully redevelops on a decades-long time scale.

The area south of Laurel Street represents a unique opportunity to plan for a significant amount of new housing in a location that is the most sustainable site in the region: placing new housing near existing jobs and services means residents can make fewer automobile trips; adding housing in an area with a relatively more secure water supply than other parts of the greater region and in a manner that is the most water-, land-, and resource-efficient form of development promotes conservation; and facilitating new development that can plan for and accommodate mitigations necessary to ensure resilience to climate change and sea level rise will help protect both the new and the existing residents and businesses in the area south of Laurel Street. The redevelopment that will take place in this neighborhood over the next few decades can contribute significant positive effects to the rest of Downtown, the City of Santa Cruz, and to the Monterey Bay Area as a region, in that providing significant new housing options in the Downtown focuses growth into discrete areas where infrastructure for parking, utilities, public space, and household services like grocery stores, medical offices, and government services can also be planned and concentrated.

The planning for the project area assumes that the current protections for residential tenants under both state law and local ordinance will remain in place throughout the duration of any redevelopment period. These protections include requirements for relocation assistance, first right of return, and replacement of every housing unit that is removed from the market. For existing deed restricted units or units occupied by income qualifying households (households that meet the state definition of Low- or Very Low-Income based on the area median income level), replacement units will be required to meet those income thresholds and equivalent sizes in order to allow existing tenants to return to housing of equivalent size and cost. Questions have been raised about the existing County mental health housing located south of the existing arena on Front Street. Should that facility be removed to facilitate realignment of the roadway, the City would work with the County and any developer proposing such action to minimize impacts to current residents and maximize the long-term availability of such critical services. The project

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team is also working under the assumption that the existing 20% inclusionary requirement will apply to all new housing proposed in the project area.

Regional Housing Needs Allocation
The City must also now consider the response that will be required to meet the state mandates around planning for additional housing. The Housing Element process begins each eight-year cycle by identifying a minimum number of additional housing units for each jurisdiction (city/town or unincorporated county) in the state. This number is the Regional Housing Need Allocation (RHNA) and is intended to ensure that housing is planned for where it is most needed. Factors used by the Association of Monterey Bay Area Governments in considering the RHNA distribution across the region for the upcoming 2023 to 2031 cycle included: the regional growth forecast, a jurisdiction’s share of jobs in the region, the jobs/housing ratio, existing transit routes, wildfire and sea level rise risk, race and affluence concentration, and State of California opportunity mapping. These factors determined the housing need for which the local jurisdictions need to plan. This process has not yet been completed for the Association of Monterey Bay Area Governments (AMBAG) of which Santa Cruz is a member, and the initial drafts, consistent with other jurisdictions around the state, show that the local housing plans will be required to show an increase of over 3,700 planned housing units. By comparison, the current cycle of the RHNA required the City to accommodate fewer than 750 new housing units starting in 2015. This capacity was contained in the adopted 2030 General Plan, and then further housing capacity was added in 2017-18 with additional height allowances in the core of the Downtown.

While further, more detailed analysis will take place in the beginning phases of the Housing Element Update (slated to start by the summer of this year), staff recognizes that the existing planned housing capacity in the 2030 General Plan and zoning code will not be sufficient to meet this new requirement, and it is likely that the City will need to identify additional locations and properties to accommodate the City’s housing obligation. By taking advantage of the opportunity presented in the project area to add more housing Downtown, the City will be in a better position during the Housing Element Update process when sites for additional housing capacity need to be identified, in that the housing capacity added Downtown will not need to be planned for elsewhere in other neighborhoods. Finally, staff recognizes that the number of units called for by the RHNA represents an administrative and legal threshold as a minimum amount of planned housing that is required and that the actual need for new housing at various affordability levels exceeds the legally-required number. The RNHA is also used as the threshold that is evaluated to determine the applicability of the project streamlining available under SB 35, and the City could find itself in a position of falling from the current tier requiring that SB 35 applications include no less than 50% of the proposed housing units as affordable to low-income households, down to the tier where SB 35 streamlining applies when no more than 10% of the proposed housing units are restricted to low-income affordability if we fail to demonstrate adequate progress toward meeting our housing obligation. The Housing Materials attachment shows the RHNA numbers for the current and the upcoming cycles relative to the residential construction that has taken place in the City during the current Housing Element cycle. Given the scale of the RHNA housing obligation for the City, staff intends to refine the project goals to more specifically reference the need for this project to accommodate a significant portion of the 6th Cycle RHNA requirement. The housing planned for this area will likely be built out over many years, meaning that the housing in this neighborhood could also help the City demonstrate compliance with multiple RHNA cycles over the next few decades.

Community Comments: Comments on housing focused heavily on creating more housing affordable to moderate- and lower-income households and also conveyed excitement to create a

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significant amount of new housing for all income levels in the project area. Comments regarding potential building heights came both in favor and against the taller heights being contemplated in this area, as well as with differing opinions on preferable unit sizes.

In reviewing the Housing materials attached, the Planning Commission should consider the draft RHNA goal and the degree to which that goal may be partially met in the project area. These considerations should also inform comments on the Development Scenarios discussed in the following section.

Development Scenarios. The attached materials provide details on the locations, number of housing units, square feet of other potential uses, and heights of three different scenarios for redevelopment of the project area. The parking spaces shown on the attached materials are preliminary calculations and will require further study and analysis. The parking rate shown is not inherent in the scenarios and more work is being done on that topic to ensure that the right balance of parking and car-free areas are included in the project area. These scenarios are intended to provide the basis for discussion of development options, and that discussion will lead to the creation of a final preferred development scenario (for the purposes of study under CEQA) that will likely include features of a few of these preliminary scenarios. In their discussion, the Planning Commission should address all aspects of the scenarios including the location of a new arena facility, the total amount of planned housing, overall heights, potential configurations of new residential buildings (proposed tower over podium, considerations for skyline controls and tapering, etc.), roadway configurations and improvements, multi-modal connections, new civic amenities and gathering spaces, exterior treatment of a new arena facility, climate resiliency considerations, paths of travel through this neighborhood, and connecting the area to the existing Downtown, the river levee, and the beaches. For the purposes of CEQA review, as well as initial analysis for updating the Local Coastal Program, the project team will need to establish a relatively precise number of housing units, a square footage threshold for an arena, potential total square footage of new commercial uses, anticipated heights, and the locations of potential new structures. Details relating to specific design elements, paving, furniture and lighting for civic plazas, programming and processes for existing residential and commercial tenants, and the precise details for street cross sections will be given further attention as the project progresses and will be the subject of additional community process.

Arena Location
The three development scenarios show options for two different locations for a new Warriors arena: the current location south of Spruce Street between Front Street and the river levee, or on the adjacent block below Spruce Street between Pacific Avenue and Front Street. The different locations provide different opportunities for new civic spaces, as well as a difference in heights adjacent to the San Lorenzo River and practical considerations for the Warriors during the construction period. The current location adjacent to the river would create a lower height profile of the skyline in that location. The closure of Spruce Street would extend only from Front Street to the levee, supported by the realignment of the Laurel Street Extension to the base of Beach Hill, south of the arena. The civic space created in this block could connect directly to an enhanced walkway and overlook at the river levee, and this location also takes advantage of a clear connection to the Beach Hill stairs and any new overlook that is established at the top of that pathway. In this location, the Warriors would not have an opportunity to remain in the existing facility during the construction period and would likely need to find alternative event locations for the duration of at least one, if not two or three, training and competition seasons.

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Also, placing the arena next to the river means that the residential component of the plan would be located on the more interior blocks between Front Street and Pacific Avenue. The residential components, in all scenarios, are taller buildings than the projected arena, so the location of the arena dictates a transition in height, to some degree, either away from the river or away from the neighborhood west of Pacific Avenue. Taller building elements being located towards the east side of the project area, along the river, could form a better transition to the historic neighborhood just to the west, outside of the plan area. The location of the arena could also have some effect on the way the acoustics of the civic plaza affect options for programming when there are no building walls between an arena event and the river. In other words, buildings block or reduce sound transmission, so the placement of the arena, the plaza, and other buildings will affect how sound travels to nearby residential uses, which could affect the way that the programming of the space reaches residential neighbors. The project team will also want to consider how lights and noise could create impacts to river habitats.

Additionally, planning the arena on the interior block would allow for the Warriors to remain in their current facility during the construction period; will create more distance between the arena, with its associated light and noise, and the San Lorenzo River; and would allow for a two-block pedestrian plaza connecting from Pacific Avenue to the river levee, creating a civic space of substantial size. The preferred location for taller buildings, and the benefits of transitioning heights either toward the river or toward the existing neighborhood are a point of discussion with the community, and staff is interested in hearing the Planning Commission’s thoughts and preferences. Staff will be refining the project goal relating to the arena and will incorporate further detail on the arena as the project progresses, such as Land Uses
A successful and vibrant Downtown Santa Cruz requires a range of complementary land uses in order to maintain variety and appeal throughout market cycles and over time. Residential uses provide night time and weekend activity, office and employment uses provide daytime weekday activity, and visitor-serving uses draw tourist dollars to support local businesses. A full range of residential and commercial uses, such as those already allowed in other Downtown neighborhoods, is expected to be allowed in the project area as well as the additional allowance for an arena – which would add both local and regional visitors to the area. As an arts, entertainment, and sporting district, the Zone could serve as a draw for neighbors and visitors to support local businesses and restaurants. The anticipated mix of commercial, office, residential, and arena land uses would be complementary to the existing Downtown area. The attached Development Scenario materials include an estimate of the amount of square footage that could be built as residential and commercial/non-residential space.

Housing Capacity
The three scenarios present three different levels of new housing that could be incorporated into the expanded Downtown area. The analysis of the existing General Plan shows that the current capacity in this area is around 930 housing units, of which fewer than 200 currently exist. The development scenarios consider meeting a modest to significant amount of the City’s projected housing needs by increasing that number to just over 1,300, 1,500, or 1,700 new units, respectively.

The maps included in the attachment on Development Scenarios show how these units could be allocated among the blocks and parcels that are considered to have strong potential for redevelopment within the next 20-30 years based on the existing level of development and age of

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the structures. Scenario 1 shows the Warriors arena remaining in its current location, and Scenarios 2 and 3 show the arena moving to the adjacent block, away from the river. Scenarios 2 and 3 incorporate elements of tower-over-podium building types, and the locations of those towers is a topic of discussion. This type of construction requires minimum spacing between towers and, for efficiency purposes, maximum dimensions and floor plates of tower elements must also be considered. The specific locations are purely representational at this point, intended to indicate that the increased height would apply only to a limited percentage of the block. This would allow for less bulky taller buildings and an airier skyline. The potential building envelopes described by the maps are also shown as three dimensional renderings in the attachment materials. The three dimensional drawings are blocky because they are meant to conceptually show the building envelope, not an actual building. These building envelopes are based on the height and location standards in each of the scenarios, so one can get a rough idea of how the potential new development in the project area might feel relative to the rest of Downtown if fully built out.

The residential intensities shown for the project area represent a desire to think about the future and take full advantage of planning for housing in a neighborhood that can become a thriving destination for the next century and more. Planning for less housing, or smaller buildings, could miss this opportunity for redevelopment and put the City in a position of being unable to meet the City’s housing needs in the next 15 to 20 years. An opportunity like this one is rare. Taking full advantage of it would involve planning for higher intensity uses than have occurred previously in Santa Cruz, so those allowances would need to be coupled with development standards that address that increased scale, such as limiting tower footprints, incorporating tower separations, and tapering of tower elements. Staff recommends choosing a scenario that is on the higher end of development intensities because it is the best way to establish the most sustainable land use pattern for the long-term future of Santa Cruz, and it helps meet the upcoming and future RHNA targets without as many impacts to other parts of the City. The vision of expansive civic space, streetscape and connectivity improvements, and changes to circulation will be funded by private development, and the larger the scale of the development, the more capable the developers will be of fully executing the ultimate vision for those improvements and amenities.

Heights
The Development Scenarios show three different options for building heights that correlate with the three different numbers of dwelling units contemplated with each scenario. The building heights shown in Scenarios 2 and 3 represent a concept of including elements of towers over podiums, so the maximum heights of 160 feet and 200 feet, respectively, are not considered for the entirety of any of the buildings. These heights represent an increase to the existing maximum heights in the City, and staff is interested in considering the best level of building intensity for this area. Reactions from the community showed that many meeting attendees were enthusiastically in favor of including taller buildings in order to add more housing and create a new, dense, and vibrant node in Santa Cruz. Others were more cautious regarding the height but were interested in pursuing a significant amount of housing and accepted that height increases would be necessary to achieve that goal. A minority were focused on limiting height to its current state or even lower, despite the limitations such choices would place on housing. The discussion of building heights by the Planning Commission can consider the appropriate location and size of tower elements, the total number of tower elements, the heights of podiums, and the location of taller buildings within the project area. Height can be discussed as a companion issue to the total number of housing units, as there is a connection between the two topics. The feedback for staff on height does not need to strictly reflect those currently shown in the

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development scenarios, as a preferred approach could be some combination of elements shown in the scenarios or even a variation from that shown. For the reasons expressed in preceding sections, in particular the analysis in the Housing Capacity section immediately above and the analysis regarding the long-term, multi-cycle planning to meet RHNAs, staff recommends building heights on the higher end of the scenarios.

Height Regulation
These scenarios are currently thought of as representing the final allowed heights of buildings.

There are a few options for achieving these thresholds: first, a property owner could enter into a Developer’s Agreement (DA) with the City to cap heights at the respective 120-foot, 160-foot, or 200-foot levels (corresponding to certain height limits in Scenarios 1, 2, and 3, respectively), in exchange for build out of some of the public benefits planned for the area. This option requires the City and each property owner to agree on the terms of a contract that will apply to these sites, and once such an agreement is in place, would allow the City to count the number of housing units established in the DA toward efforts to meet the RHNA requirements. Alternatively, the City could think of these heights as the heights that would be allowed after the application for a State Density Bonus, and set the regulations in the Downtown Plan and Zoning code at a lower level of development intensity on the assumption that many of the developers will pursue bonuses. This alternative has a draw back in that the City cannot be sure how many developers will pursue a State Density Bonus and to what level, and, therefore, the only units that can be counted toward meeting the RHNA requirement are the units in the base plan and zoning. This option would likely leave the community looking for more sites to identify for increased residential capacity as part of the Housing Element process in order to demonstrate full compliance with the state laws requiring planning for adequate housing.

Community Comments: The Development Scenarios provoked a range of reactions from the public. Many comments favored significant increases of development intensity, such as the options shown in Scenarios 2 and 3, while several also expressed concern about heights over 60 feet. In general, community members preferred scenarios where the height transitioned toward the neighborhood to the west and kept the major height components close to the river levee.

Comments also included prioritizing income-qualified affordable housing in the area and supporting existing commercial tenants to find space in a re-developed neighborhood.

Community members also mentioned building housing for a range of household sizes as a goal for this plan.

In reviewing the attached Development Scenario materials, the Planning Commission should consider the location of the arena (either in the existing location or on the block south of Spruce Street between Front Street and Pacific Avenue) and the degree to which additional housing capacity should be added to this area. The intensity, location, and configuration of the new housing is one of the key components of the preferred development scenario to be studied under CEQA, so the Planning Commission should provide comments on a preferred location for a new arena, the degree to which current and future housing needs should be met in this area, and the manner in which heights of new buildings should be managed and regulated.

Staff recommends pursuing a development scenario that includes a minimum of 1,600 housing units, and preferably more, in order to fully utilize the opportunity to densify the City’s Downtown for future generations of Santa Cruz residents, create a vibrant space for people to visit in Santa Cruz, and limit the amount of rezoning that will be necessary in the upcoming and future Housing Element cycles.

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Next Steps. The Planning Commission discussion will be followed by a similar discussion with the Downtown Commission on May 12. The feedback received will be integrated with the community feedback provided during the Open House event on April 20 and any online commentary submitted by the end of May to lead into a preferred development scenario that addresses the project goals to the greatest degree possible. The City Council will consider the preferred scenario before it is used for the EIR project description, and the environmental review process will begin in the summer of 2022. Staff work on developing the amendments to the Downtown Plan and further community input on the details of the plan will take place concurrently with the EIR work over the next year.

Health in All Policies. The components of the current proposal are consistent with the Health in All Policies pillars of equity, public health, and sustainabilty in that they would encourage creation of both needed housing and economic opportunities for local residents and foster greater accessibility between the Downtown, river and beach areas. Development in the Downtown area is in close proximity to jobs and a wide range of entertainment and recreational amenities. From an equity perspective, the project area will include space for new inclusionary low-income housing, including replacement housing for any existing low- and very-low income residents. This encourages active transportation modes that support both personal health and environmetnal sustainability.

Environmental Review. The Downtown Plan Expansion will require environmental review prior to Council’s final consideration. The content raised in this report will form the basis of the project evaluated under the required environmental review process. The scope of the project dictates that an Environmental Impact Report (EIR) will be required. The final proposed amendments to the Downtown Plan, General Plan, Local Coastal Program, Beach/South of Laurel Plan, and Municipal Code, together with the Draft EIR is anticipated to be considered by the Planning Commission for a recommendation to the City Council by the summer of 2023.

Fiscal Impact: This report is part of the grant-funded project to expand the Downtown. The total grant amount of $450,000 will be required to complete the planning process, and general fund sources will be used to cover the full cost of the project beyond the $450,000 that is necessary to complete the EIR and associated studies. The City is considering creative solutions to allow the beneficiaries of the plan to reimburse City general fund costs towards the funding of the plan, including staffing costs associated with the development of the plan, and policies will be considered for incorporation into the final plan to address these reimbursements. Further grant funding may also be pursued, should opportunities arise.

As the project area is built out, staff anticipates that the additional property, admissions, and sales taxes, together with any special assessments elected for the project area, will have positive impacts on the City’s long-term fiscal conditions. Provision of services to the area will result in additional costs to the City, but given the location and efficiency of land uses under consideration, revenues should be expected to exceed expenses. Detailed and precise information will not be fully known until new uses and buildings are constructed and operating.

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Prepared by:

Sarah Neuse
Senior Planner
Submitted by:

Matt VanHua
Principal Planner
Approved by:

Lee Butler
Director of Planning and
Community Development
ATTACHMENTS:

1. Approved Scope and Schedule

2. Real Estate Market Overview Report

3. Community Outreach Report

4. Project Orientation and Base Maps

5. Circulation and Streetscape Materials

6. Beach Connectivity Materials

7. Infrastructure and Resiliency Materials

8. Civic Spaces and Arena Materials

9. Housing Materials

10. Development Scenario Materials

11. Open House Comments

30.26 City of Santa Cruz Downtown Plan Expansion
Scope of work | Page 1
7/7/2021
City of Santa Cruz
Downtown Plan Expansion
Scope of Work
Kimley-Horn and Associates, Inc. (Kimley-Horn), in coordination with our subconsultants (collectively the Consultant Team) has prepared this Scope of Work for the City of Santa Cruz (the City) to prepare the Downtown Expansion Plan (the project).

Kimley-Horn will be the prime consultant and will be responsible for all project deliverables, project management, and serve as the primary point of contact.

For the purposes of this scope, key stakeholders is assumed to include the Santa Cruz Warriors, land owners, California Coastal Commission, Downtown Association of Santa Cruz, community interest groups, and others as identified by the City.

The project scope includes two overarching phases, one for the creation of the plan itself and one for the development of the necessary environmental documents. Kimley-Horn has been informed by City staff that this is the best approach for budgeting given there are two grant funding sources with one grant funding each phase.

PHASE 1
Project Initiation
City Staff Kick-off Meeting
Prepare for and participate in an initial kick-off meeting with City staff. This task will include the following:
 Obtain relevant maps, documents, GIS/CADD data, and related information.  Review project objectives, scope of work, project schedule, project contacts, etc.  Clear articulation and assignment of roles, responsibilities and communication protocol.  Discussion of key issues, challenges and opportunities to be addressed on during the project.  Discussion of a community engagement strategy including outreach.  Discuss product deliverables including format, organization, and graphic presentation.

Community Engagement Strategy
Following the project team kick-off meeting, prepare a draft and final Community Engagement Strategy memo that identifies target audiences, web-based engagement platform, specific tasks, roles and responsibilities (including the identification of digital meeting facilitators [Consultants and City staff]), schedule, and anticipated outcomes.

30.27 City of Santa Cruz Downtown Plan Expansion
Scope of work | Page 2
7/7/2021
The Community Engagement Strategy will be a living document and roadmap that will guide the team as activities are implemented and monitored for success, and may be adjusted to ensure we are reaching all target audiences in an effective and meaningful way. The Community Engagement Strategy will be prepared through the lens of the City’s Health in All Policies(HiAP), with strategies aligned to the HiAP framework and relevant pillars. Where feasible, engagement tactics will be metrics-driven, to support HiAP evaluation: monitoring, tracking, and reporting.

Design and Build Project Digital Engagement Platform
This scope of work assumes that community engagement will need to be conducted “virtually” for all or part of the project due to COVID restrictions. Outreach throughout the project is envisioned to include social media, email notifications, press releases, city manager messaging, and focused stakeholder and community organizations outreach, as defined in the Community Engagement Strategy.

Should COVID restrictions be lifted regarding in-person meetings, Kimley-Horn will work with staff to adjust this scope of work accordingly. Acknowledging the potential equity issues arising from an initially virtual approach, opportunities for stakeholders with limited or no data access will provided. This could include working with community organizations or promoting access through the Downtown Branch library and other City-owned resources.

Project Website
Prepare a customized project website integrated with the Social Pinpoint digital engagement platform that will be used the primary digital “portal” for community engagement.  Prepare an initial graphic design theme which will be the basis for the design of the website.  Prepare a logo to communicate the project’s identity.  Review preliminary web site design with Client and revise accordingly. This scope assumes one round of revisions. Content is envisioned to include project background materials, links to reference documents, project schedule and meeting dates, email sign-up, and integration with the digital engagement platform (described below).
 Provide on-going content management service as requested. Task includes addition of new information and project deliverables as the project evolves.

Community Interests Contact List
Working with City staff, develop and maintain a contact list of interested parties (digital contact list).

This list will include email addresses and social media contact groups (e.g. Instagram, Facebook, Nextdoor, Twitter, etc.). The Consultant Team will work with City staff to develop this initial distribution list and then maintain and expand this list over the duration of the project as additional contacts are identified. Creating and building out a robust and comprehensive contact list will ensure the Plan is inclusive of community needs and expectations. As part of this effort and where known, preferred engagement channels will be listed against contacts.

Digital Engagement “Platform”
Using Social Pinpoint (unless preferred otherwise by the City), prepare a web-based digital engagement platform that will enable the City and Consultant Team to gather community feedback using a variety of tool and capabilities including:

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 Community forums
 Interactive mapping
 Comment board (“digital idea wall”)
 Topic landing pages and forums
 Project schedule and events calendar
 Background reports, work products, and presentations
 Community interest sign-up and event registration, if necessary  Administration (City and Consultant)
o Stakeholder engagement dashboard
o Security
o Content management
o Reporting
 Other as identified in coordination with City staff
Social Media
To reach a broader audience in their preferred medium, a social media campaign will be implemented to promote the project and community engagement opportunities. Platforms may include Nextdoor, Facebook, Twitter, and Instagram. The social media campaign may include geo-coded ads and post boosts to drive views, and will include use of existing City social outlets (e.g. [email protected]).

Data Collection
Collect relevant land use and planning data as provided by the City and other existing digital resource, as relevant. This will include GIS data, General Plan, development code, other City policy and planning documents, and other information as provided by City staff.

Base Mapping
Prepare base maps of existing conditions, including but not limited to:
 Initial project boundary
 Boundaries of other plans and jurisdictions (e.g. Beach/South of Laurel Plan, Coastal Zone, San Lorenzo Urban River Plan, existing Downtown Plan, etc.)  Existing General Plan and Zoning designations
 Parcel size
 Property ownership
 Public streets and rights-of-way
 Building footprints
 Building heights
 Pedestrian circulation (sidewalks, pathways, accessways)  Bicycle circulation
 Existing infrastructure

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 Parking (surface and structures)
 Transit routes, stations, and stops
Peer Community Parking Research and Parking Survey
Many communities have wrestled with the issue of right-sizing parking and have implemented various strategies including revised parking ratios. Up to five cities with similar characteristics to Santa Cruz will be researched and surveyed to assess the local practices and successes related to parking including:
 Parking ratios (including mixed-use and affordable housing)  Shared parking
 Event demand management
 Pricing
 In-lieu fees
 Enterprise districts
 Time-restrictions
 Enforcement
Findings from this research will be used to inform an approach to parking that is rooted in best practices and tailored to the unique conditions in Santa Cruz.

To make data-driven decisions about parking, current parking patterns will be observed for the study area. The following data will be collected and field-verified to inform the project:
 Inventory of parking supply for all facilities in the study area (ownership, number of spaces, restrictions, price)
 Observational occupancies of representative conditions for one weekday and one weekend for a 10-hour period to capture midday and evening peak demand periods All data collected will be stored in a GIS format to easy use, transfer, and visual representation.

Project Discovery
This phase of the project involves information gathering and analysis to determine predominant themes and preferences as they relate to future development of the downtown expansion area.

Existing Conditions Assessment
Prepare an Existing Conditions Assessment, in memo format, including but not limited to:
 Existing development conditions (by land use for residential [DUs] and commercial [square footage], using City data and/or County Assessor’s records).  Existing development capacity allowed under the current General Plan land use designations and Zoning Ordinance, with consideration given to SB 330 requirements.  Analyze appropriate level of future housing and commercial intensity, based in part on existing plans and polices.
 Summarize key findings from the Market Analysis (described below).

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 Analyze potential for affordable housing and replacement housing requirements and potential displacement impacts.
 Analyze potential future parking needs and strategies to accommodate parking including an assessment of current and potential future parking requirements.  Analyze potential mobility and circulation options including bike, pedestrian and transit connections both within and around the project area, including connections to the Main Beach.

Review draft Existing Conditions Assessment with City staff and key stakeholders and, through one round of review, prepare a Final Existing Conditions Assessment.

Market Assessment
EPS will establish and document real estate market potential and development factors relevant to the downtown expansion area. As part of the market assessment, EPS will consider broad market trends as well as detailed information concerning new, high-performing local and regional comparable projects, including their market positioning, architectural format, key amenity offerings, and market value. The outputs from this market research will serve as critical inputs to the subsequent pro forma financial feasibility analysis.

Socioeconomic and Market Trends
EPS will document trends in population, employment, lease rates, vacancy rates, new product deliveries, and other relevant market data for each land use category, locally and regionally. These data will offer a critical market-focused geographic and historical context for preparation of Precise Plan alternatives. In addition, EPS will consider real estate product trends that are relevant to planning for the downtown.

Market Valuations
EPS will study real estate market product values in the local and regional market, including sale values and lease rates for product types that may be most appropriate for development downtown. This focus on product valuation will identify specific building sale and lease transactions. EPS will consider a range of potentially comparable projects, developing case studies as appropriate, to establish market data for subsequent financial pro forma feasibility analysis.

The data and findings generated by the market assessment will provide the basis for EPS evaluation of prototype project feasibility, described below.

Community Workshop #1
Review agenda with City staff. Advertise the Community Form according to Community Engagement Strategy.

Using the project digital platform and video conferencing application (e.g. Zoom), host an online community workshop to present findings from the Existing Conditions Assessment and receive comments from participants. Based on further refinement with City staff, the meeting format is envisioned to include:
 Introductions / Mayor Opening Remarks
 Overview of Project Objectives, Format and Schedule
 Summary of Findings from the Existing Conditions Assessment

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 Breakout Group Discussion – Visioning and Guiding Principles  Facilitator (Consultants and City staff) Report Back
 Next Steps
 Closing
Note: If COVID restrictions to public gathering is lifted, this workshop could occur in person (e.g. in the Santa Cruz Warrior’s existing arena).

Community Workshop #1 Findings Memorandum
Results from the Community Workshop #1 will be presented in a draft and final memorandum. It will describe the predominant themes/findings including text, charts, graphics, and illustrations relevant to feedback from the Community Workshop #1. Individual written and oral comments will be included in the appendix.

Review the Draft Community Outreach Findings Report with City staff and key stakeholders and, through one round of review, prepare the Final Community Workshop #1 Findings Memorandum.

Future Development Scenario Investigation
This phase includes preparation and testing of the up to three development scenarios for the downtown expansion area, and presenting them in a second community workshop.

Financial Analysis
A pro forma financial feasibility model and analysis of prototypical projects will offer critical input to preparation of the development scenarios. EPS will develop a pro forma financial analysis to inform the financial viability of potential projects for the Downtown. Based on prototype projects identified by the consultant team, EPS will test for financial viability. These test cases will specify project parameters, including site size, project density, use mix, parking requirements, and other factors. The test cases will be designed to evaluate development projects under various policy scenarios (e.g., affordable housing requirements) and/or alternative development schemes.

To test the financial feasibility of development, EPS will develop a stabilized-year ("static") pro forma financial model and prepare an analysis of up to six unique prototype projects. The financial analysis will assess market value, development cost (including required investment returns), and land value. The analytical model will rely on market assumptions drawn from market study efforts.

EPS will determine achievable rents and/or for-sale values for each of the uses. To determine costs, EPS will draw from available construction cost estimating sources (e.g., RS Means, Saylor) and input from the consultant team, rely on typical soft cost burdens, and consult with the City to identify typical permit and fee levels.

The financial analysis will quantify in monetary terms the development potential for each of the test cases. Specifically, the analysis will seek to identify the level of development intensity necessary to support real estate development activity in the downtown expansion area.

Future Development Scenario Framework
Working with City staff, prepare initial development scenarios, including but not limited to:

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 Land use diagrams
 Land use buildout summaries in table format (residential units, commercial square footage)  Preliminary development standards including densities, height, massing, setbacks, parking, private open space, etc.
 Conceptual mobility and circulation diagrams (pedestrian, bicycle, transit), including linkages to San Lorenzo River and Main Beach
 Parking strategies, including arena event parking (surface and structure) Joint Planning Commission / Downtown Study Session
Prepare a draft and final PowerPoint presentation for review by City staff. Meet with City staff to discuss meeting agenda, roles, objectives and preferred outcomes.

In coordination with City staff, facilitate a joint study session with the Planning Commission and Downtown Commission to review work products prepared to date, summarize community and stakeholder feedback, and seek input on the development scenario options in particular.

Review and Refine Development Scenarios Framework
Prepare a Draft Development Scenarios Framework document consisting of text, site plans, illustrations, and imagery to communicate key planning and urban design principles, development standards, and financial (pro formas) for each development scenario. Work with City staff and key stakeholders to refine the Draft Development Scenarios Framework and through two rounds of review, prepare a Final Development Scenarios Framework.
3-D Massing Model of Development Scenarios (Optional Task) As an optional task, prepare 3-D massing models of the development scenarios. There are two options:
1) Photo Simulations, or 2) Full Volumetric 3-D Model. A description and examples of each are shown in the Appendix of this proposal.

Community Workshop #2
Prepare a PowerPoint presentation that summarizes the Final Development Scenarios Framework.

Review presentation and agenda with City staff and advertise Community Workshop #2 according to the Community Engagement Strategy.

Using the project digital platform and video conferencing application (e.g. Zoom), host a second online community forum to present the Final Development Scenarios Framework and receive community comments and feedback.

Based on further refinement with City staff, the meeting format is envisioned to include:
 Introductions/City staff Opening Remarks
 Summary of Community Workshop #1 (comments and suggestions)  Summary presentation of the Final Development Scenarios Framework  Group Discussion and Feedback
 Next Steps

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 Closing
Note: If COVID restrictions to public gathering is lifted, this workshop could occur in person (e.g. in the Santa Cruz Warrior’s existing arena).

Community Workshop #2 Findings Memorandum
Results from the Community Workshop # 2 will be presented in a draft and final memorandum. It will describe the predominant themes/findings including text, charts, graphics, and illustrations relevant to feedback from the Community Workshop # 2. Individual written and oral comments will be included in the appendix.

Review the Draft Community Outreach Findings Report with City staff and key stakeholders and, through one round of review, prepare the Final Community Workshop # 2 Findings Memorandum.

City Council Study Session
Prepare a draft and final PowerPoint presentation for review by City staff. Meet with City staff to discuss meeting agenda, roles, objectives and preferred outcomes.

In coordination with City staff, facilitate a study session with theCity Council to review work products prepared to date, summarize community and stakeholder feedback, and seek input on the project as a whole, and the development scenario options in particular.

This scope of work assumes that based on the outcome of this study session, a preferred development scenario will be identified for further refinement and development as part of the preparation of the Administrative Draft Downtown Plan for the downtown expansion area.

Amendments to the Downtown Plan
1 st Administrative Draft Downtown Plan
Based on findings from the above tasks, prepare amendments to the Administrative Draft Downtown Plan that incorporates the new Downtown expansion area. The work product will include all text, tables, graphics, and maps. It will be highly graphical and easy to read. It will establish the zoning and associated development standards and design guidelines for the downtown expansion area of the amended Downtown Plan.

Simple and clear graphic prescriptions for street standards, building height, how buildings are placed on site, and building elements (e.g. massing, materials, architectural features) will be incorporated to control the form of development, with less emphasis on the ultimate land use to encourage future redevelopment in an organized manner that furthers the City’s vision and goals as described in the Downtown Plan.

Consistent with the City’s Health in All Policy (HiAP), the amended Downtown Plan will incorporate policies and plan elements that promote equity, public health, and sustainability.

Natural Resources: The Plan will address measures to protect the San Lorenzo River and use of the public pathways and amenities that surround it. (Sustainability | Public Health)

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Neighborhood Integrity and Housing: The Plan will address measures to maintain the identity and vitality of the Plan area, actively pursuing affordable housing for a diversity of households and promoting compatible livability and high quality design in new buildings, major additions, and redevelopment. (Equity | Sustainability)
Mobility: Plan will address measures to provide an accessible, comprehensive, and effective transportation system that integrates automobile use with sustainable and innovative transportation options—including enhanced public transit, bicycle, and pedestrian networks both within the Plan area and to/from the surrounding community. (Sustainability) Specific task that will be prepared for incorporation in to the amended Downtown Plan include the following:

Introduction
 Incorporate minor updates to Community’s Vision, The First Principals, and The Basis for Change, as appropriate.

Executive Summary
 Incorporate minor updates to Planning Principles and Strategies, as appropriate.

Land Use Plan
 Prepare a narrative character description for the downtown expansion area.  Update the Land Use Concept figure to incorporate the downtown expansion area.

Development Standards and Design Guidelines
A. All Central Business Districts Land Uses
 Update Table 4-1: Central Business Districts Use Allowances — Ground Floor (Street Level) and Table 4-2: Central Business Districts Use Allowances — Upper Floors (Includes Riverwalk Level) to incorporate the downtown expansion area.
 Update Figure A-1: Downtown Plan Height to incorporate the downtown expansion area.  Incorporate miscellaneous text edits in context to the downtown expansion area.  Prepare a new section regarding development standards for the downtown expansion area.

Downtown Expansion Area Development Standards and Design Guidelines Create a new section to address development standards and design guidelines for the downtown expansion area. Topics to be addressed include, but are not limited to:
 Building height (including floors, floor-to-floor height, base height and floors, mechanical penthouses, sloping roofs, visual impact study)
 Building setbacks (including from the San Lorenzo River)  Building facades, materials, colors, windows, balconies, rooflines, etc.

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 Entrances
 Property line and street walls, retaining walls, fencing, etc. (if applicable)  Build-to lines and setbacks (including active outdoor uses, sidewalks, recessed storefronts)  Landscaping
 Gateway intersections and treatments
 Riverwalk access, public passageways, and rear service alleys  Exterior lighting
 Public and private parking facilities (including below grade parking and access driveways, visual screening, district-specific special considerations)
 Parking structures (site design, facades, vehicular and pedestrian access)  Driveways and curb cuts
 Encroachments (if applicable)
 Bird-safe design criteria, particularly along the San Lorenzo River  Other development standards and design guidelines as identified during the planning process Arena Development Standards and Design Guidelines
Given the unique nature of constructing a permanent arena in the downtown expansion area, prepare a set of additional development standards and design guidelines that apply to the arena. This will be developed in close coordination with the City staff and the Santa Cruz Warriors and their project team.

This approach will help streamline the subsequent review process and help minimize potential visual impacts and the associated CEQA analysis.

Additional Height Zones
 Create a new Additional Height Zone and incorporate figures and graphics, including massing diagrams (if applicable)
All Central Business Districts Storefront Standards and Guidelines  Incorporate minor text revisions (if applicable)
All Central Business Districts Other Development Standards and Design Guidelines  Incorporate minor text revisions (if applicable)
Circulation and Parking Plan
This section will be revised to incorporate new text and figures that address circulation and parking as they apply to the downtown expansion area. Topics to be addressed include, but are not limited to:
 Special streetscape treatments (e.g. Pacific Avenue, Front Street)  Vehicular, pedestrian, and bike circulation
 Riverfront and beach linkages

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 Transit
 Beach access
 Service access
 Parking management strategies (on- and off-street)
 Appropriate parking ratios for anticipated uses including mixed-use and affordable housing  Event parking and circulation for the permanent arena Streetscape and Open Space Plan
This section will be revised to incorporate new text and figures that address streetscape and open space as they apply to the downtown expansion area. Topics to be addressed include, but are not limited to:
 Streetscape cross-sections
 Sidewalks and pathways
 Landscaping, including tree species, spacing and height and ground-level planting  Lighting
 Activity nodes and key intersections
 Public seating, gathering spaces
 Street-specific recommendations (i.e. Pacific Avenue, Front Street, Spruce Street, Laurel Street Extension, as applicable)
 Park and plazas (if applicable)
Implementation and Management Strategy
This section will be revised to incorporate new text that addresses specific implementation policies, strategies, management, and financing as they apply to the downtown expansion area. This section will be developed in close coordination with city departments (e.g. police and fire) and key stakeholders, as identified by City staff.

Appendix 2: The Downtown – Beach Link
This section will be revised to incorporate new text, figures and graphics that addresses policies and strategies to improve circulation and transit linkages between the downtown and the beach. 2 nd Administrative Draft Amendments to the Downtown Plan Following review by City staff (and key stakeholders as applicable), prepare a 2nd Administrative Draft Amendments to the Downtown Plan. This scope assumes that the City will be responsible for providing one consolidated set of review comments.

Other Amendments
Following receipt of City comments on the 1st Administrative Draft Amendments to the Downtown Plan, prepare administrative draft amendments, including text and figures, other City planning and regulatory documents. The focus of these amendments are briefly described below.

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2030 General Plan
The Central Business District (CBD) zone is the primary zone district that implements the broader Regional Visitor Commercial (RVC) General Plan land use designation. Prepare revisions associated with the new development standards, including Floor Area Ratio permitted under the General Plan (3.75 FAR for many of the parcels).

Beach and South of Laurel Plan
The downtown expansion area will take a portion of properties out of the Beach and South of Laurel Area Plan, requiring an amendment the Beach and South of Laurel Area Plan, including removing portions of the plan and updating its maps.

Municipal Code
Development standards identified in the amended Downtown Plan will require an update to corresponding regulatory elements of the Municipal Code including building heights, parking, allowed uses, etc.

San Lorenzo Urban River Plan
Because the amended Downtown Plan will address strategies and guidelines to better engage the San Lorenzo River and river levee areas to foster grater connections, amendments to the San Lorenzo Urban River Plan (SLURP) may be required, although the plan does not include policies, only recommendations.

Local Coastal Program
The project area is located within the coastal zone, and the City has a certified LCP that consists of a Land Use Plan, implementing ordinances and maps. The Land Use Plan (LUP) consists of policies, programs and maps; Area Plan coastal policies and maps; and a Coastal Access Plan. The Implementation Plan (IP) consists of ordinance and regulations used to implement the Land Use Plan, including sections in the Municipal Code. These plans will need to be amended to be consistent with the amended Downtown Plan.

This scope assumes a collaborative approach working in coordination with City staff to prepare these amendments.

Draft Amendments to the Downtown Plan
Following review by City staff (and key stakeholders as applicable), prepare a Draft Amendments to the Downtown Plan. This scope assumes that the City will be responsible for providing one consolidated set of review comments.

Community Meeting #3
Following a community outreach effort to publicize the availability of the Draft Amendments to the Downtown Plan, conduct a third community workshop to receive public comments. Given the range of topic areas, it is envisioned that the format for this workshop will be a series of topic stations that highlight how the plan addresses issues associated with urban design and development standards, housing, streetscape, urban design, connection to the beach, etc. The stations will be staffed by consultants and City staff and comments will be recorded.

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Community Workshop #3 Findings Memorandum
Results from the Community Workshop # 3 will be presented in a draft and final memorandum. It will describe the predominant themes/findings including text, charts, graphics, and illustrations relevant to feedback from the Community Workshop # 3. Individual written and oral comments will be included in the appendix.

Review the Draft Community Outreach Findings Report with City staff and key stakeholders and, through one round of review, prepare the Final Community Workshop # 3 Findings Memorandum.

PHASE 2
CEQA Analysis
Kimley-Horn, working on close coordination Dudek and City staff, will prepare the CEQA document. This scope of work assumes the preparation of a Subsequent Environmental Impact Report (SEIR) to the previously prepared Downtown Plan Amendments Final EIR, although other potential CEQA options or strategies will be reviewed with the City.

This scope of work assumes a program-level analysis for the remainder of the downtown expansion area and a project-level analysis for the proposed Santa Cruz Warriors arena. Should there arise a timing issue or otherwise (i.e. contractual constraint), an optional task is included below to prepare a separate project-level EIR for the permanent Santa Cruz Warriors arena.

The SEIR will address amendments to the Downtown Plan incorporating the downtown expansion area and applicable development standards, and associated supporting amendments to the 2030 General Plan including: the City’s LCP, the Beach and South of Laurel Plan, the Municipal Code, and potentially the SLURP. Our CEQA team will work closely with the City to estimate potential new development that could be accommodated by the Downtown Plan amendments in order to provide a basis for the CEQA analysis.

CEQA Kick-Off Meeting
Meet with City staff to discuss the environmental review process for the project and develop a strategy for environmental compliance that meets the requirements of CEQA. This meeting will focus on a discussion of the technical studies that have been or are anticipated to be prepared for the project (in support of the project application for the arena) and elements of previous environmental documents that will be utilized in preparation of CEQA documentation for the project.

Research and Investigation
Work with City staff and the Santa Cruz Warriors (project applicant) to collect and review all relevant project plans and reports. Review and confirm that the project information collected is suitable for use in developing the project description, as well as applicable impact assessments for the environmental document.

Project Description and Notice of Preparation
Draft Project Description
Prepare a draft of the project description including all referenced figures, as required per Section 15124 of CEQA. The draft project description will be submitted to the City and the project applicant to ensure its accuracy.

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Notice of Preparation
Prepare the Notice of Preparation (NOP) that summarizes the project and what environmental issues will be addressed fully in the SEIR and those that will be determined to be insignificant, as described below.

Note that this approach takes a conservative approach by including potentially significant and legally challengeable environmental resource topics. This list may be amended based on discussions with City staff, as appropriate.

Included for Detailed SEIR Analysis (Potentially
Significant)
Excluded from Detailed SEIR Analysis
(Insignificant)
J Aesthetics
J Air Quality and Greenhouse Gas
Emissions
J Biological Resources
J Cultural Resources
J Hydrology & Water Quality
J Land Use & Planning
J Noise
J Population & Housing
J Public Services, Utilities & Energy
J Transportation
J Agricultural Resources
J Geology & Soils
J Hazards & Hazardous Materials
J Mineral Resources
The NOP will adhere to the content requirements set forth in the CEQA Guidelines, including information describing the project, its location, and probable environmental effects. This work plan assumes the City will be responsible for distribution of the NOP, including submittal of the Office of Planning and Research, and applicable public noticing.

Comments received during the 30-day public review period for the NOP will be used to finalize the scope of the SEIR. Review comments with City staff to determine whether any issues require a modification to this scope of work.

Public Scoping Meeting
Attend and facilitate a public scoping meeting for the proposed project. This meeting may occur as part of a Planning Commission meeting, or be conducted separately as a either a “virtual” meeting (due to COVID restrictions), or in person at a location near the project site. The public scoping meeting will serve to obtain information and input from responsible agencies and the public, as well as to inform the public about the CEQA review and SEIR process.

Prepare a draft and final presentation (in PowerPoint) and handout materials including copies of the NOP and comment forms. These materials will be reviewed with the Client prior to finalizing.

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Review NOP and Refine Project Scope
Based on comments received by the public from the NOP and the public scoping meeting, clarify/refine the scope of work for the SEIR, and identify any additional analytical tasks not included in this scope of work.

Administrative Draft SEIR
Introduction and Purpose
The Introduction section will cite the provisions of CEQA and the City of Santa Cruz CEQA implementation procedures for which the proposed project is subject to. This section will identify the purpose of the study and statutory authority as well document scoping procedures, summary of the SEIR format, listing of responsible and trustee agencies, and documentation incorporated by reference.

Executive Summary
Prepare an Executive Summary including a Project Summary, an overview of project impacts, mitigation and levels of significance after mitigation, summary of project alternatives, and areas of controversy and issues to be resolved.

Project Description
Update/finalize the project description based on NOP comments and any minor refinements as provided by the City and/or the project applicant.

The Project Description will detail the project location, background and history of the project, discretionary actions, characteristics, goals and objectives, phasing, agreements, and permits and approvals which are required for the project based on available information.

Environmental Analysis
Aesthetics
Identify the visual characteristics of the project site and surrounding area. Describe the existing aesthetic environment and visual resources, including a discussion of views within the project site and views from surrounding areas, particularly from the adjacent uses, utilizing pictures and information from a site reconnaissance of the project site and surrounding area.

For the proposed arena, architectural renderings and elevations, as well as visual simulations from selected viewpoints as determined by the City and as provided by the project applicant, will be included as exhibits.

The impact analysis will focus on scenic and public viewpoints (i.e. public roadways and the San Lorenzo levy trail) and changes to the visual character of the project in context to surrounding land uses.

The aesthetics analysis will evaluate the following:

J Description of existing views to and from the project site will be provided with an emphasis on views from public roadways.

J Evaluation of the alteration of scenic views or scenic resources of the project site to and from these public viewing areas.

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J Evaluation of the proposed project for the potential to introduce substantial new night-time lighting or create new sources of glare that could affect surrounding land uses.

J Evaluation of applicable General Plan policies and regulations and identification of any potential conflicts related to scenic quality.
 Identification of mitigation measures, if needed and determined to be appropriate and those determined to be feasible for implementation.

Air Quality and Greenhouse Gas Emissions
Dudek will prepare the assessment of the air quality impacts will utilizing the significance thresholds in CEQA Guidelines Appendix G and the Monterey Bay Air Resources District (MBARD) emissions-based thresholds. The California Emissions Estimator Model (CalEEMod) land use and air quality model will be used to estimate operational criteria air pollutant emissions generated by mobile sources for existing conditions and with the proposed changes in land use intensity to identify net increase in air pollutants, GHG emissions, and operational energy consumption. Construction emissions will be discussed qualitatively. Consistency with the MBARD’s Air Quality Management Plan will be reviewed in accordance with the District’s methodology of reviewing housing unit development within the City.

Biological Resources
The downtown expansion area is located within a developed area of the City, and no biological impacts would occur. However, the eastern portion of the expansion area is adjacent to the San Lorenzo River, and potential indirect impacts due to development height will be addressed. Riparian setbacks and other recommendations for the area, as set for in the City-wide Creeks and Wetlands Management Plan and San Lorenzo Urban Rive Plan, will be discussed. Dudek will review the proposed downtown expansion area amendments with regard to development standards along the San Lorenzo River and potential impacts to birds, taking into account the City’s bird-safe building standards. Analyses included in the Downtown Plan Amendments EIR will be reviewed and updated, but no focused bird surveys are include as part of the scope.

Cultural Resources
An updated archaeological records search will be provided and known historical buildings as listed in state, national or local registries will be identified. This section will be based on existing studies and does not include review of other potential historical buildings. No project-level or parcel-specific historical or archaeological reviews are included in this scope This scope of work assumes that consultation with Native American tribes, as may be required by SB18, will be completed by the City.

Hydrology & Water Quality
Analyze the proposed project related to hydrology and water quality based on a review of existing City plans and other exiting data including the City of Santa Cruz General Plan 2030 EIR and the Downton Plan Amendments EIR regarding background information on regulatory setting and surface and groundwater hydrology. Both EIRs will be incorporated by reference in accordance with section 15150 of the State CEQA Guidelines.

Similar to conclusions identified in the Downtown Plan Amendments Final EIR, this scope of work assumes that the following hydrology and water quality CEQA criteria will be identified as Effects Not Found to be Significant:
 Violation of Water Quality Standards

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 Groundwater
 Drainage and Water Quality
The project area is located in an area identified as being subject to flood hazards along the San Lorenzo River. The propose amendments are likely to allow for increased height in specific locations and under specified conditions, but would not change the area in which development and/or redevelopment is currently permitted. However, a review of hazards due to potential San Lorenzo River flooding, tsunami inundation and sea level rise in the project area will be analyzed in the SEIR based on existing City studies. Should a potentially significant impacts(s) be identified, recommend mitigation measures to reduce these impacts to the extent feasible.

Land Use & Planning
Review of potential project conflicts with plans, policies or regulations adopted for the purpose of avoiding or mitigating an environmental effect will be analyzed in the SEIR. This will include the 2030 General Plan, the Local Coastal Plan, the Downtown Plan, the Beach and South of Laurel Plan, the San Lorenzo River Urban River Plan, and the Zoning Code. A consistency analysis, in table format, will be prepared identifying potential conflicts with the 2030 General Plan policies.

The project site is not subject to any Habitat Conservation or Natural Community Conservation Plans and therefore will be identified as Effects Not Found to be Significant.

Population and Housing
Population growth that may result from development of new housing units in DRP amendment area will be addressed. The review will consider estimated city-wide buildout estimated in the General Plan 2030 EIR and AMBAG population growth forecasts.

Noise
Dudek will provide a technical noise study to estimate operational noise emission from a set of anticipated events hosted at the proposed arena. The scope includes review of all existing studies and information, including former arena studies prepared by Smith, Fause, & McDonald (SFMI). A brief field survey during daytime hours will be conducted to measure existing outdoor ambient sound pressure level (SPL) measurements at up to a total of seven (7) on-site and nearby off-site measurement locations, thus collecting data to quantify and help characterize baseline acoustical conditions for the project vicinity. (These are likely to be comparable to measurement locations reported in the aforementioned SFMI study.) These investigator-attended short-term (ST) measurements will typically be no more than 15 minutes in duration each and performed with a portable ANSI Type 1 or 2 sound level meter (SLM). During the site survey, the investigator shall document observations with respect to field conditions and witnessed or perceived acoustical contributors to the measured SPL.

Using available project information, predictive sound propagation analyses will be performed using techniques and computer-aided tools. Tabulated results will be provided for up to ten (10) specific receptor positions, and color-coded SPL contours or bands across a horizontal plane five feet above grade that extends up to approximately 600 feet from the Project boundary, for up to five (5) operation scenarios as follows:
 (a) Sporting event with full attendance, including public address (PA) system or related speech/music reinforcement;

30.43 City of Santa Cruz Downtown Plan Expansion
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 (b) Hosted concert event with full attendance, including additional stage speakers and/or usage of “house” PA system;
 As “a” above, but with an alternative building envelope structure, layout or design that may change expected aggregate sound emission to the neighboring community;  As “b” above, but with an alternative building envelope structure, layout or design that may change expected aggregate sound emission to the neighboring community; and,  An additional scenario as determined or requested by the City.

Modeled sound sources are expected to include the following: crowd noise (based on referenced speech levels or previous studies), operating mechanical systems, event sounds (e.g., reinforced rock band music). Predicted noise levels due to these modeled project operation scenarios will be compared to relevant standards and policies. If these predicted noise levels exceed such sound level standards, we will recommend conceptual and practical options for noise-reducing project design features (PDF).

Results and findings will be summarized in a technical noise study with one round of City comments and edits.

The project site is not located near an airport or private airstrip, and therefore will be identified as Effects Not Found to be Significant.

Public Services, Utilities & Energy Conservation
Potential impacts related to public service /utility demand resulting from growth and development accommodated by the amendments will be assessed. Updated information regarding water supply planning will be provided to reflect any changes in water demands and water supplies as identified in recent City plans, including an updated Urban Water Management Plan that is expected to be released in 2021. The section will also provide operational energy calculations, utilizing the CalEEMod results to address energy use.

Transportation
VMT Analysis
The City of Santa Cruz adopted a VMT transportation threshold on June 9, 2020 in accordance with CEQA and state requirements. The threshold establishes a no net increase in VMT for retail and other non-residential uses for land use projects and provides a process for transportation projects.

The City has developed guidelines to determine whether a land use project is within the VMT threshold.

The process includes a screening process in which situations are identified under which projects are determined not have a significant impact and further analysis is not required. City VMT screening maps indicate that the downtown is located in an area with VMT lower than the County average, and therefore future residential and commercial land use project in the downtown would be screened out from further review and would not conflict with the City’s established VMT threshold. Furthermore, the downtown expansion area is located within a transit-priority area across the street from the Santa Cruz Metro bus station. The State Guidelines also indicate that a project that falls below an efficiency-based threshold that is aligned with long-term environmental goals and relevant plans would have no cumulative impact distinct from the project impact (California Office of Planning and Research, December 2018).

30.44 City of Santa Cruz Downtown Plan Expansion
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Regarding the proposed arena, it is a replacement of an existing facility and neither the City nor the California Office of Planning and Research have VMT guidelines for such uses. Given the arena’s location downtown and close proximity to transit, bicycle and pedestrian facilities, and it is essentially a replacement in-kind of an existing facility, this this task will analyze the project in context to CEQA Guidelines section 15064.3 and make a determination regarding potential conflicts or inconsistencies.

Note that Kimley-Horn developed the current version of the SCC Travel Demand Model, wrote the City of Santa Cruz’s VMT policy, and developed the VMT Calculator being used by the City.

Given this context, specific tasks will include:
 Kimley-Horn will evaluate the VMT for each known land use updates individually per the City’s guidelines, specifically including residential, retail, and a sports arena.  Residential uses will be screened or be evaluated based on the SCC VMT Tool to make a significance determination. It is assumed that the total residential trip generation will not exceed the 2,500 trips per day limitation of these approaches.  Retail uses are assumed to be local-serving and less than 50,000 square foot on a store basis.

Based on this assumptions a qualitive assessment will be completed.  It is assumed that the sports arena will have either an increase in number seats and/or frequency of events (including non-sports events) resulting in the need to evaluate VMT.

Accordingly a net-change metric will be applied. It is assumed that we will be able to utilize a simple routing and logistics method using the existing TransCAD model and/or data provided by the City. The analysis will focus on the delta and consider the location of employees and patrons. This does not include a detailed analysis of the location of other competing facilities.  Kimley-Horn will prepare a technical memorandum detailing the findings of the analysis and respond to one-set of non-conflicting comments.
 If any of the above assumptions are not correct, this may result in a change to scope/fee for this task.

Alternatives
Pursuant to CEQA Guidelines Section 15126.6, provide an analysis of up to three (3) alternatives, including an analysis of the “No Project” Alternative. The analysis will include a sufficient level of detail to allow decision makers to gain a greater understanding of all alternatives should a determination be rendered to support an alternative development scenario. This alternatives section will culminate with the selection of the environmentally superior alternative in accordance with CEQA requirements.

Additional Sections
Prepare additional sections in the EIR to meet the CEQA Guidelines including the following: Significant Irreversible Environmental Changes, Effects Found Not to be Significant, Inventory of Mitigation Measures, Inventory of Unavoidable Adverse Impacts, and Organizations and Persons Consulted / Bibliography.

Administrative Draft EIR Compilation
Assemble all completed sections into a single consolidated Administrative Draft SEIR submittal (ADSEIR) with appendices. The ADSEIR will include figures to enhance the written text and clarify the project’s

30.45 City of Santa Cruz Downtown Plan Expansion
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environmental impacts. The entire document will be reviewed to ensure consistent references to terms, methodology of analysis, correct use of grammar, etc.

The ADSEIR will be sent to the City for review by City staff.

Public Review Draft EIR
Screencheck and Public Review Draft SEIR
Respond to the City review of the ADSEIR and will prepare the Public Review Draft SEIR. This subtask includes preparation of an electronic Screencheck SEIR prior to publication of the Public Review Draft SEIR.

In addition, Kimley-Horn will prepare the Notice of Completion (NOC) and Notice of Availability (NOA) for delivery to the State Clearinghouse. It is assumed that the City will be responsible for public posting of the NOA (e.g. newspaper).

Certification of the Environmental Impact Report
Administrative Final SEIR
Kimley-Horn will meet and/or coordinate with City staff to review written comments on the Public Review Draft SEIR; comments from public meetings/hearings (if applicable); and develop a strategy and framework for responding to comments. Given the fact that Kimley-Horn does not know how many comment letters and public hearing comments will be received, we have included an initial estimate of time in the project budget. Once all comments are received, Kimley-Horn will review and discuss any modifications to the budget estimate with City staff.

Upon review of the comment letters and discussions with City staff, Kimley-Horn will prepare an Administrative Final SEIR with written responses to comments received on the Public Review Draft SEIR.

The Administrative Final SEIR will consist of comment letters, responses to comments, and Public Review Draft EIR errata pages indicating text changes in underlined text for additions and strikeout text for deletions, with notations for the relevant response to comment. The Administrative Final SEIR will be sent to the City for review and comment.

Final SEIR
Kimley-Horn will respond to City comments on the Administrative Final EIR, complete necessary revisions, and prepare the Final SEIR.

Project-Level Santa Cruz Warriors Arena EIR (Optional Task) As an optional task, prepare a stand-alone separate project-level EIR for the permanent Santa Cruz Warriors arena. This task will include preparation of a draft and final EIR and associated documents as required by CEQA. A detailed separate scope of work and budget will be prepared at such time this EIR is considered necessary.

30.46 City of Santa Cruz Downtown Plan Expansion
Scope of work | Page 21
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PHASE 1 (cont.)
Downtown Plan Amendments and SEIR Public Hearings & Adoption Assist staff in preparing presentations for public hearings before the Planning Commission and City Council. This scope of work assumes that the Consultant Team will provide support to City staff but will not be responsible for the preparation of staff reports, ordinances, or other supporting materials necessary for plan adoption and SEIR certification.

Project Deliverables
 Community Engagement Strategy Memo
 All materials and presentations necessary to conduct planned community engagement activities or meetings.
 Summaries of feedback from community workshops (3) and other activities  Existing Conditions Assessment
 Draft and Final Market Assessment
 Draft and Final Development Scenario Investigation
 Vision and Guiding principles for the expanded downtown area  Administrative Drafts of the Downtown Plan for review by City staff  Public Draft Downtown Plan incorporating feedback and edits from City staff.  Final Downtown Plan incorporating feedback from staff, public, and elected/appointed officials.  Administrative Drafts SEIR
 Administrative Drafts of the Final SEIR
 Final Downtown Plan and Final SEIR for City Council approval  Graphic Illustrations of design standards for inclusion in the Downtown Plan All products will be provided in Microsoft Word, Excel, PowerPoint and/or PDF files with high-resolution graphics as jpegs, as necessary.

Meetings, Coordination, and Project Management
Meetings and Project Management
This task assumes attendance by the Kimley-Horn team at the following meetings:
 Project Kick-off Meeting
 Project Team Meetings (5)
 Project Team Conference Calls (10)
 Community Workshops (3)
 Stakeholder Meetings (3)
 Coastal Commission Meetings (2)
 Joint Planning Commission/Downtown Commission Study Session  City Council Study Session (1)

30.47 City of Santa Cruz Downtown Plan Expansion
Scope of work | Page 22
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 Public Hearings (4)
Ongoing Project Management
Kimley-Horn will provide on-going project management including coordination with project team and subconsultants, and coordination of meetings, conference calls, and administrative tasks. Kimley-Horn will also maintain a master schedule identifying the proposed duration of each major task performed the work described herein, as well as estimates for the work of other consultants. The schedule will be maintained on a regular basis and a copy of the updated schedule shall be provided to the Client for discussion.

Project Assumptions
In addition to any assumptions noted above, the scope and associated costs are based on the following assumptions:

General

1. The cost estimate includes meetings described in this scope of work. Additional meetings will be billed on a time and materials basis.

2. The Client will provide Kimley-Horn with all technical materials, maps, project plans, GIS data, etc. as they become available. This scope of work assumes that all project plans and supporting technical studies to be prepared outside of this scope of work will be provided prior to preparation of any project deliverables and that no further modification to the data will be required.

3. No new technical analysis or preparation of technical reports will be required, other than those identified in this scope of work.

4. All technical studies provided to Kimley-Horn are assumed to be technically accurate and not require a peer review. Unless specifically stated otherwise, Kimley-Horn’s review of these technical studies will be limited to an assessment of their completeness necessary to prepare the work products identified in this scope of work.

5. Deliverables will be submitted to the Client in electronic (PDF) format and source files, except for printed copies as identified in this scope of work.

6. Client will act as a clearinghouse for comments on all administrative draft documents and will provide Kimley-Horn with a single, internally reconciled set of comments for each submitted draft document.

7. There will be a single round of review and revision to all draft document deliverables. If Client feels that additional reviews are necessary, a contract amendment for additional work may be necessary, depending on the nature and circumstances associated with the additional changes (e.g. changes to the project description, additional technical analysis required, etc.). These changes can be characterized as being outside of the control or knowledge of Kimley-Horn and would not be considered reasonable from the standpoint of professional standards of service and appropriate due diligence.

8. Revisions to screencheck documents will focus on typographical errors, formatting issues, and other minor edits. Such revisions will not include substantive content changes from the Client and the project applicant. Edits other than typographical and formatting may require discussion and substantiation from the project applicant.

30.48 City of Santa Cruz Downtown Plan Expansion
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9. The Client will be responsible for the preparation and distribution of all public notices and publications (e.g. newspaper) unless otherwise noted in this scope of work.

10. The project budget is based on completion of work within an agreed upon schedule. If substantial delay occurs, an amendment of the budget may be warranted to accommodate additional project management time and other costs. Substantial delay is normally defined as 90 calendar days or more.

11. This project includes an allowance for printing as shown in the attached budget. This is an allowance only, based on the numbers of products and copies shown in this scope of work. If this allowance is exceeded, additional printing costs will be billed at Kimley-Horn’s direct cost.

12. The Client will be responsible for meeting logistics, including schedule coordination, public outreach, document production, printing notices, mailing costs, room reservations, room set-up and take-down, and refreshments.

13. The Client will be responsible for identifying and communicating with all stakeholders including on-going scheduling and coordination and distribution of all materials.

14. The Client will coordinate/schedule all internal staff meetings.

15. Project schedule assumes timely review by the Client (no more than 15 working days) for all product deliverables. Outside review by the applicant or their representative(s) or Client designee; including legal review separate from Client staff, shall result in a modification to the project schedule.

16. Kimley-Horn retains the right to transfer budget allocations between tasks to support completion of the work products, as needed, as long as the total budget is not exceeded. Shifts in task budget allocation will be at the discretion of Kimley-Horn’s Project Manager.

17. Kimley-Horn retains the right to make modifications to this scope of work based on changes to the project, change in regulatory requirements, or other factors outside of Kimley-Horn’s control, and reasonably deemed acceptable by the Client.

CEQA Documents

18. Because the extent of public and agency comments received on CEQA documents (e.g. Draft EIR) is unknown, the proposed budget includes a preliminary budget estimate of time to respond to comments. Kimley-Horn will consult with the Client after the evaluation of the comments to determine if the preliminarily budget estimate is sufficient.

19. Once the proposed project description, baseline and alternatives are approved by the Client for analysis in the CEQA document, it is assumed that they will not change significantly thereafter. If changes requiring revisions to the CEQA document occur, an amendment of the budget may be warranted.

20. The project applicant will provide various technical reports (as noted) that will be used as supporting background information. This scope of work assumes that these reports will be sufficient in their accuracy and comprehensive in their level of detail sufficient for preparing the CEQA analysis. Kimley-Horn, and its sub-consultants (where applicable), will review the first draft of these documents. Should it be found that the information presented is not adequate (at the discretion of Kimley-Horn and the Client), and that additional substantive revisions are required, Kimley-Horn reserves the right to request additional compensation on a time and materials basis, per prior approval by the Client.

21. The CEQA statutes or guidelines may change during the course of this project, or legal decisions can alter the extent of the analysis needed. If amendments or decisions redoing work already performed or substantially increasing effort, a contract amendment may be warranted.

30.49 City of Santa Cruz Downtown Plan Expansion
Schedule | Page 1
7/7/2021
Project Schedule
Task End Date
2021
Project Initiation August
Project Discovery
Existing Conditions Assessment September
Market Assessment September
Community Workshop #1 October
Future Development Scenario Investigation
Financial Analysis November
Draft Scenario Framework November
Community Workshop #2 December
Refine Scenario Framework December
2022
Joint or Separate Planning Commission / Downtown Commission Study Session(s) February Amendments to the Downtown Plan
1 st Administrative Draft Downtown Plan March
City Review May
2 nd Administrative Draft Downtown Plan June
Other Amendments June
City Review June
Draft Downtown Plan July
Community Workshop #3 August
Joint or Separate Planning Commission / Downtown Commission Study Session(s) September CEQA Analysis
Project Description and NOP July
Public Scoping Meeting July
Admin. Draft SEIR September
City Review October
Screencheck Draft EIR November
City Review November
Public Review Draft EIR December
2023
End of Public Comment Period February
Admin. Draft Final SEIR March
City Review April
Final EIR April
Public Hearings & Adoption
Planning Commission Meetings May
City Council Meetings June

30.50 Economic & Planning Systems, Inc.

The Economics of Land Use
1330 Broadway, Suite 450  Oakland, CA 94612
510.841.9190  www.epsys.com

SANTA CRUZ

DOWNTOWN PLAN

EXPANSION

PROJECT
Real Estate Market Overview
December 2021

30.51 Economic & Planning Systems EPS PPT Presentation | 1

DOWNTOWN PLAN EXPANSION PROJECT
 Real Estate Market (Ongoing)
– Population and housing
– Employment and industry trends
– Real estate development trends
– Real estate market performance

ECONOMICS SCOPE OF WORK
 Financial Feasibility (Next Steps)
– Project prototypes
– Development cost factors
– Real estate value potential
– Required returns
Photo credit: CoStar Group

30.52 Economic & Planning Systems EPS PPT Presentation | 2

SANTA CRUZ SOCIOECONOMIC TRENDS
POPULATION TREND – CITY OF SANTA CRUZ
0 10,000
20,000
30,000
40,000
50,000
60,000
70,000
City of Santa Cruz Population
Household Group Quarters  Citywide population
increase of 4,600 (7.7%)
from 2010 to 2020
 About 40% of population
growth (~1,800) occurred
in households (vs. dorms)
 The pandemic led to a
significant reduction in the
local student population
 Household population
increased between 2020
and 2021 (January data)
Source: California Dept. of Finance 30.53
Economic & Planning Systems EPS PPT Presentation | 3

SANTA CRUZ SOCIOECONOMIC TRENDS
HOUSING TREND – ALL HOUSING UNITS – CITY OF SANTA CRUZ
 Housing (including rental and
for sale) increased by about
850 units (3.7%) between 2010
and 2021
 Almost 50% of new units are in
larger multifamily projects (5+
units)
 Housing vacancy decreased
from over 7% to less than 6%*
 Household size remained
stable at about 3.4 persons per
unit
* DOF-reported vacancy presented here
includes second homes
0 5,000
10,000
15,000
20,000
25,000
City of Santa Cruz Housing Units
Other Multifamily (5+ Units)
Source: California Dept. of Finance 30.54
Economic & Planning Systems EPS PPT Presentation | 4

SANTA CRUZ SOCIOECONOMIC TRENDS
EMPLOYMENT TREND – CITY OF SANTA CRUZ
0 5,000
10,000
15,000
20,000
25,000
30,000
35,000
City of Santa Cruz Employment
 Employment has recovered from
the 2008 recession, with job
counts eclipsing the 2008 peak in
2018
 Since 2008, notable job gains in:
– Accommodation & Food Services
(1,500 jobs)
– Manufacturing (650 jobs)
– Arts, entertainment & recreation
(500 jobs)
– Professional, scientific & technical
services (350 jobs)
– Retail (250 jobs)
 Job losses observed in public
administration, information
(publishing, software), wholesale
trade, education, and construction
Source: US Census Bureau (On the Map) 30.55
Economic & Planning Systems EPS PPT Presentation | 5

SANTA CRUZ SOCIOECONOMIC TRENDS
UNEMPLOYMENT TREND – CITY AND COUNTY LABOR FORCE
Source: California Employment Development Dept.
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Unemployment Rate
County of Santa Cruz
City of Santa Cruz
 The Covid-19 Pandemic
had a dramatic impact on
unemployment in Santa
Cruz, but the effect has
subsided in recent months
 Unemployment in the City
spiked to 14% in April
2020, slightly below the
18% rate countywide
 City employment recovered
rapidly, and unemployment
has hovered around 4% -6%
since November 2020

30.56 Economic & Planning Systems EPS PPT Presentation | 6

SANTA CRUZ SOCIOECONOMIC TRENDS
EMPLOYMENT CENTERS – CITY OF SANTA CRUZ
 Santa Cruz employment
concentrations:
– UC Campus
– Downtown
– Westside
– Soquel / Water Street
corridors
 Top industries by
employment:
– Education
– Accommodation & food
service
– Retail
– Health care
Source: US Census Bureau (On the Map) 30.57
Economic & Planning Systems EPS PPT Presentation | 7

REAL ESTATE MARKET CONDITIONS
FOR-SALE RESIDENTIAL MEDIAN SALE PRICE – CITY OF SANTA CRUZ $0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
City of Santa Cruz Home Sale Prices
All Housing
Types
Condominiums
& Cooperatives
 Steady increase in
home prices since
2014
 Home prices are up
nearly 85% since 2014
 Notable 30% jump in
home prices 2020 to
2021
 Condominium prices
increased less, about
65% from 2014 to
2021
Source: Redfin Data Center 30.58
Economic & Planning Systems EPS PPT Presentation | 8

REAL ESTATE MARKET CONDITIONS
MULTIFAMILY RENTAL APARTMENT ASKING RENTS – CITY OF SANTA CRUZ  Increasing apartment
rents since 2000, with
minor dips during
recessionary periods
(2002-3, 2009 and 2020)
 Notable 20% jump in
asking rents from 2020 to
2021
 Even with new deliveries,
multifamily rental vacancy
remains very low at about
3%*
*Vacancy reported by CoStar Group includes
multifamily rentals only
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
Asking Rent Per Square Foot per Month
Source: CoStar Group 30.59
Economic & Planning Systems EPS PPT Presentation | 9

REAL ESTATE MARKET CONDITIONS
MULTIFAMILY RENTAL UNITS - DEVELOPMENT TREND  Roughly 1,000 new multifamily rental units
citywide since 2000
 Rental projects include:
– Chestnut Street Apts*
(96 units; 2002)
– Pacific Shores*
(206 units; 2003)
– The Breakers
(73 units; 2005)
– The Tannery*
(100 units; 2009)
– FIVE55
(94 units; 2018)
– Water Street Apartments*
(41 units; 2019)
– Nanda on Pacific
(79 units; 2020)
* Fully or partially affordable. Public
funding provided by City/RDA.

Source: CoStar Group and EPS
0 50
100
150
200
250
300
New Multifamily Housing Units

30.60 Economic & Planning Systems EPS PPT Presentation | 10

REAL ESTATE MARKET CONDITIONS
FIVE55 (555 Pacific) 2018
 94 Units & 5,000 square feet (SF) of retail
 97,200 SF on 0.8 Acres (118 DU/AC & FAR=2.8)
 100 parking spaces (1.06 parking stalls / unit)
 36 Studios (440 SF) and 58 1-bed (630 SF)
 Rents from about $2,300 to $3,100 ($4.95 PSF)
 Currently no residential vacancy
 Residents generally are young professionals and
students

NEW MID-RISE MULTIFAMILY RESIDENTIAL EXAMPLES
Nanda on Pacific (1547 Pacific) 2020
 79 Units & 4,500 square feet (SF) of retail
 78,000 SF on 0.6 Acres (135 DU/AC & FAR=3.1)
 16 Studios (421 SF), 43 1-bed (673 SF) & 20 2-
bed (1,045 SF)
 Rents from about $2,500 to $4,300 ($4.85 PSF)
 Current residential vacancy of about 3%
 Residents generally are young professionals and
students
Source: CoStar Group and EPS research 30.61
Economic & Planning Systems EPS PPT Presentation | 11

REAL ESTATE MARKET CONDITIONS
Anton Pacific (Pacific & Laurel) – Under Construction
 205 Units & 11,000 square feet of retail
 205,000 SF in 7 stories
 48 Studios (500 SF), 98 1-bed (750 SF) & 59 2-
bed (950 SF)

MULTIFAMILY RESIDENTIAL DEVELOPMENT PIPELINE
Additional Pipeline (Planned Future Development)
 530 Front Street – 170 units
 Metro Pacific Station
– North ~94 units (affordable)
– South ~85 units (affordable)
 Library Mixed Use Project – 100+ units
 Center Street/Calvary Church - 65 units
 350 Ocean Street – 63 units (affordable)
 908 Ocean - 398 units (small ownership units)
 130 Center - 233 units (single room occupancy)
 2120 Delaware - 248 units
 190 West Cliff - 89 units (condominiums).
 1800 Soquel – 32 units
Source: CoStar Group, EPS, City of Santa Cruz 30.62
Economic & Planning Systems EPS PPT Presentation | 12

REAL ESTATE MARKET CONDITIONS

RECENT MULTIFAMILY RENTAL DEVELOPMENT (COMPLETED AND UNDER CONSTRUCTION) Source: CoStar Group, EPS, City of Santa Cruz
 Notable clustering
of new
multifamily
residential rental
projects around
the Santa Cruz
downtown area

30.63 Economic & Planning Systems EPS PPT Presentation | 13

REAL ESTATE MARKET CONDITIONS

OFFICE MARKET
 Office rents have climbed
12% over their previous
peak in 2012
 Only about 22,000 square
feet of new office has
been delivered since 2012
 Office vacancy has fallen
from over 10% in 2010 to
under 6% in 2021
 Pandemic-related
work-from-home
conditions create
ongoing uncertainty in the
office market
$15.00
$17.00
$19.00
$21.00
$23.00
$25.00
$27.00
Asking rent per square foot per year
Source: CoStar Group 30.64
Economic & Planning Systems EPS PPT Presentation | 14

REAL ESTATE MARKET CONDITIONS

OFFICE DEVELOPMENT EXAMPLES
Rittenhouse Building
 64,000 SF built in 2008
 4 stories including ground-level retail
 Vacant for ~6 years until it was leased to tech
tenant Looker Data Sciences
 Looker (acquired by Google in 2019) now
occupies the entire building
Office at 100 Panetta
 15,200 SF built in 2014
 3 stories with onsite parking
 On the market asking $5.5M ($360/SF)
Source: CoStar Group 30.65
Economic & Planning Systems EPS PPT Presentation | 15

REAL ESTATE MARKET CONDITIONS
RETAIL MARKET  Retail rents have generally
trended upward since the
2008 recession, peaking
in 2017 before falling to
about $25
 Less than 40,000 SF of
retail has been delivered
citywide since 2012
 Vacancy dipped below 2%
from 2016 to 2018 and
now is reported at about
3% (actual likely higher)
 Pandemic conditions pose
ongoing challenges for
retail and restaurant
businesses
$15.00
$17.00
$19.00
$21.00
$23.00
$25.00
$27.00
$29.00
Asking rent per square foot per year
Source: CoStar Group 30.66
Economic & Planning Systems EPS PPT Presentation | 16

REAL ESTATE MARKET CONDITIONS

RETAIL DEVELOPMENT EXAMPLES
Ground floor retail at FIVE55
 5,000 square feet in 4 distinct retail spaces
 Retail spaces from 750 to 1,450 SF
 Tenanting includes a Big Basin Vineyards
Tasting Room, Café Iveta, and Current eBikes
Ground Floor at Nanda on Pacific
 4,357 SF – Divisible challenging to do so
 Vacant since building delivery/available
 Currently courting brewpub/taproom tenants
 Lack of outdoor seating cited as an issue for
most interested users
Source: CoStar Group 30.67
Economic & Planning Systems EPS PPT Presentation | 17

THE EXPANSION AREA
 “South of Laurel” area of downtown is
situated between the downtown core and
beach boardwalk areas
 Existing uses include a mix of residential and
commercial development, some of which
dates to the early to mid 20th century
 Notable recent development projects include:
– Renovation of The Mill (2008)
– Pacific Blue Inn (2009)
– Warriors temporary arena (2012)
– FIVE55 multifamily residential (2018)

OVERVIEW

30.68 Economic & Planning Systems EPS PPT Presentation | 18

THE EXPANSION AREA
 The Warriors along with development
partners wish to establish a permanent home
for the team
 Private sector master planning underway for
redevelopment of the temporary arena and
adjacent areas to create a sports/
entertainment mixed-used use district
 Anchor use is a new arena with seating for
3,200 to 3,800 and programming for 200
days per year
 Preliminary development concept for 1,000
housing units, up to 250,000 SF office and
ground level retail, restaurant and
entertainment on about 7 acres

OPPORTUNITIES

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ENTERTAINMENT-ANCHORED DISTRICTS
Sports Facility Anchor – Minor League Ballpark
 City-owed stadium; home of Oakland A’s High-A Affiliate  Location: Downtown Lansing, Michigan
 Stadium Capacity: 11,000 seats; includes 18 suites
 Stadium Year Built: 1996; renovated in 2015
 Stadium Cost: $16M ($13.5M renovation)
Surrounding Neighborhood - “Stadium District”
 Multifamily Development – Two mixed-use multifamily projects (a 50-unit project built in 2007 and an 84-unit project) built in 2016. Both projects received public financing through
redevelopment and the State’s economic development arm. One of the projects overlooks the outfield of the stadium and includes an event venue.
 Commercial Development - The popularity of the Lugnuts and increase in downtown residents contributed to new commercial uses proximate to the ballpark, including a distillery, brewpub, and smaller scale restaurants and bars.

CASE STUDY: LANSING LUGNUTS STADIUM

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ENTERTAINMENT-ANCHORED DISTRICTS
Sports Facility Anchor – Minor League Ballpark
 Home of the Reno Aces (Arizona Diamondbacks AAA
Affiliate) and home field for 1868 (MLS club) for three seasons (until the club disbanded in 2021)
 Location: Reno, Nevada
 Stadium Capacity: 9,100 capacity (6,500 fixed seats)
 Stadium Year Built: 2009 (renovated in 2021)
 Stadium Cost: $50M ($600,000 renovation)
Surrounding Neighborhood - “Freight House District”
 Adjacent Commercial Development – The Freight House District, attached to the Reno Aces Stadium, features a sports bar overlooking the field, a restaurant/music venue, beer garden, and a Mexican restaurant. The project has been successful (on and outside of game days), owing to its proximity to downtown, nearby hotels, and the Truckee river.

CASE STUDY: GREATER NEVADA FIELD

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ENTERTAINMENT-ANCHORED DISTRICTS
Sports Facility Anchor – G-League Basketball Arena
 Home of the Wisconsin Herd (G-League Affiliate for the Milwaukee Bucks)
 Location: Oshkosh, Wisconsin
 Stadium Capacity: 3,500 seats
 Stadium Year Built: 2017
 Stadium Cost: $15M
Surrounding Neighborhood - “Sawdust District”
 Adjacent Commercial Development – Arena project includes restaurant and team store in the facility. Limited investment in adjacent properties has occurred so far, though large-scale redevelopment projects along Lake Winnebago may catalyze future development.
 Master planned development overseen by City’s Redevelopment Authority. Largely privately funded arena is part of larger plan for new housing and commercial development. The arena has faced financial challenges and received additional tax incentives from City.

CASE STUDY: OSHKOSH ARENA

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THE EXPANSION AREA  Residential – The Santa Cruz housing market has evolved over the past 5 to 10 years, with new
multifamily housing projects downtown exhibiting
healthy rents and strong leasing activity. New housing is the primary market-based development opportunity in
the expansion area.
 Office– With minimal office development in recent
decades and local employment at a 20-year high, build-
to-suit office development may allow successful growing local companies, particularly high-value tech employers, to stay in Santa Cruz. New office should be encouraged
but may or may not be developed in the near term.
 Retail– Small-format retail and new restaurant space in mixed-use buildings could be difficult to fill, but a new arena with sufficient around-the-calendar programming
could drive demand for a modest-sized entertainment
district nearby. New ground level retail should be
encouraged, but planning should allow for flexible
tenanting of ground floor space.

OPPORTUNITIES

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THE EXPANSION AREA
 Infrastructure – Redevelopment of existing uses will require infrastructure upgrades and accommodation of existing public facilities. For example, the pump station located near the arena likely needs to be incorporated into arena project design. Public funding/financing for infrastructure may be required to encourage redevelopment.
 Community Benefits – New development is required to contribute to public improvements and to meet policy requirements for community advancement. Development impact fees include a childcare fee and public safety fee. The City also recently has increased the inclusionary affordable housing requirement on market rate housing development.  Existing Land Uses – A major arena project will require redevelopment of existing uses, and cooperation among property owners including public and private entities. Existing uses include parking lots, commercial space, and residential real estate. Redevelopment of occupied existing uses can be costly, because site acquisition costs reflect usable space and because of tenant/resident lease buyouts and/or relocation requirements.  Opportunity Zone – The entire Downtown Extension Study Area is within a federally designated “Opportunity Zone.” OZs seek to spur economic development by providing tax incentives. The OZ status of the Plan Area marginally increases investment potential in the near term.

ADDITIONAL CONSIDERATIONS
Opportunity Zone
Source: HUD
City of Santa Cruz Pump Facility on the
San Lorenzo River

30.74 REAL ESTATE ECONOMICS

PUBLIC FINANCE

LAND USE & TRANSPORTATION

ECONOMIC DEVELOPMENT & REVITALIZATION

FISCAL & ECONOMIC IMPACT ANALYSIS

HOUSING POLICY
PUBLIC PRIVATE PARTNERSHIPS (P3)

PARKS & OPEN SPACE ECONOMICS
EPS

30.75 Santa Cruz Downtown
Plan Expansion Project
Community Outreach Report
February 2022

30.76 Santa Cruz Downtown Plan Expansion Project
Community Outreach Report
Page i
2/15/2022
Table of Contents
Executive Summary......................................................................................................................... 1 Community Survey Results............................................................................................................. 3 Social Pinpoint Comments Map.................................................................................................... 40 Social Pinpoint Ideas Wall............................................................................................................. 48 Appendix A : Community Workshop Flyer and Q&A Report

30.77 Santa Cruz Downtown Plan Expansion Project
Community Outreach Report