Minutes — Santa Cruz City Council, March 26, 2024

City of Santa Cruz
809 Center Street
Santa Cruz, California 95060

MINUTES OF A CITY COUNCIL MEETING
March 26, 2024
12:00 PM
Mayor Keeley opened the City Council Closed Session at 12:02 p.m. in a public meeting via Zoom and in Council Chambers, for the purpose of announcing the agenda, and receiving public testimony.

Roll Call

Present: Councilmembers Newsome, Brown, Watkins, Kalantari-Johnson; Vice Mayor Golder; Mayor Keeley.

Absent: Councilmember Brunner.

Staff: City Manager M. Huffaker, Director of Economic Development and Housing B. Lipscomb, Finance Director E. Cabell, City Attorney T.

Condotti, Deputy City Clerk Administrator J. Wood, City Clerk Administrator B. Bush.

Statements of Disqualification – None.

Public Comment
Mayor Keeley opened the public comment period at 12:03 p.m. There were no speakers. Mayor Keeley closed the public comment period at 12:03 p.m., at which time the meeting was closed to the public and Council adjourned to the Courtyard Conference Room.

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Closed Session

1. Conference With Legal Counsel – Liability Claims (Government Code §54956.95) 1) Claimant: Liberty Mutual
2) Claimant: CSAA Insurance Exchange
Claims against the City of Santa Cruz
Council received a status report, took up under agenda item 13, and no reportable action was taken.

2. Real Property Negotiations (Government Code §54956.8) 1) Property: Approximately 8.15 acres located on Mount Hermon Road in Scotts Valley, CA
APNs: 022-721-07, 022-721-08, 022-721-09
Owner: City of Santa Cruz
City Negotiator: Bonnie Lipscomb
Negotiating Parties: City of Santa Cruz and City of Scotts Valley Under Negotiation: Price, terms of payment, or both
2) Property: 302 and 326 Front Street
APNs: 005-151-48 and 005-151-35
Owner: City of Santa Cruz
City Negotiator: Bonnie Lipscomb
Negotiating Parties: City of Santa Cruz and SCFS Venture LLC Under Negotiation: Price, terms of payment, or both
Council received a status report from the City Negotiator, took up item 2.2 under agenda items 25.1 and 25.2, and no reportable action was taken.

3. Conference with Legal Counsel – Existing Litigation (Government Code §54956.9(d)(1))
Alicia Lopez v. Mary McCoy, et al.
(Santa Cruz County Superior Court Case No. 18CV03301)
Council received a status report, and no reportable action was taken.

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Closed Session (continued)

4. Conference With Legal Counsel – Anticipated Litigation (Government Code §54956.9(d)(2))
Significant exposure to litigation (one potential case to be discussed) Council received a status report, and no reportable action was taken.

March 26, 2024 CITY COUNCIL MINUTES 6772
City of Santa Cruz
809 Center Street
Santa Cruz, California 95060

MINUTES OF A CITY COUNCIL MEETING
March 26, 2024
1:15 PM
Call to Order – Mayor Keeley called the meeting to order at 1:33 p.m. in Council Chambers.

Roll Call

Present: Councilmembers Newsome, Brown, Watkins, Kalantari-Johnson; Vice Mayor Golder; Mayor Keeley.

Absent: Councilmember Brunner.

Staff: City Manager M. Huffaker, City Attorney T. Condotti, Director of Parks and Recreation T. Elliot, Finance Director E. Cabell, Director of Economic Development and Housing B. Lipscomb, Director of Planning and Community Development L. Butler, Director of Information Technology K. Morgan, Director of Public Works N. Nguyen, Chief People Officer S. De Leon, Water Director H. Luckenbach (via Zoom), Deputy City Manager L. Murphy (via Zoom), Purchasing Manager E. Millwee, Recreation Superintendent T. Hedden-Jones, Senior Planner R. Bane, Deputy City Clerk Administrator J. Wood, City Clerk Administrator B.

Bush.

Oral Communications Announcement - The Mayor provided a brief announcement about Oral Communications.

Oral Communications
At 1:34 p.m. Mayor Keeley opened Oral Communications for members of the public who wished to speak regarding items not listed on the City Council agenda.

Unidentified person spoke regarding a fruit cart vendor in their neighborhood.

Unidentified person spoke regarding the measures on the March 2024 ballot and the use of tax funds in general.

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Oral Communications (continued)
Bradley Snyder spoke regarding the acceptance rate at UCSC and the low rate of local students that are accepted.

At 1:42 p.m. Mayor Keeley closed Oral Communications.

Presentations

5. Mayoral Proclamation Declaring March 2024 as Procurement Month Councilmember Brown read from and presented a proclamation to Purchasing Manager E. Millwee and Buyer I L. Lane, declaring March 2024 as Procurement Month. Purchasing Manager E. Millwee spoke.

6. Mayoral Proclamation Declaring March 26, 2024, as Santa Cruz Antiques Faire Appreciation Day
Councilmember Newsome read from and presented a proclamation to Antiques Faire organizer Bonnie Belcher, declaring March 26, 2024, as Santa Cruz Antiques Fair Appreciation Day.

7. Clam Chowder Cook-off Update
Director of Parks and Recreation T. Elliot, Recreation Superintendent T.

Hedden-Jones, and Kris Reyes, Director of External Affairs at the Santa Cruz Beach Boardwalk, provided an update on the Clam Chowder Cook-off.

Presiding Officer's Announcements
Statements of Disqualification – None.

Additions and Deletions – None.

City Attorney Report on Closed Session – See pages 6770-6771 for the report.

Council Meeting Calendar

8. The City Council reviewed and did not revise the meeting calendar attached to the agenda.

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Consent Agenda
Councilmember Kalantari-Johnson made a comment on items 16 and 17.

Vice Mayor Golder made a comment on item 16.

Councilmember Watkins pulled item 15 for further discussion and made a comment on items 16 and 17.

Councilmember Brown pulled items 10 and 12 for further discussion.

Councilmember Newsome made a comment on items 16, 17, and 18.

Mayor Keeley opened the public comment period. The following people spoke:

Rachel Kippen spoke regarding item 17.

Sabrina Brennan spoke regarding item 17.

Mayor Keeley closed the public comment period.

MOTION: Councilmember Brown moved, seconded by Councilmember Watkins, to approve the remaining Consent Agenda.

ACTION: The motion carried with the following vote.

AYES: Councilmembers Newsome, Brown, Watkins, Kalantari-Johnson; Vice Mayor Golder; Mayor Keeley.

NOES: None.

ABSENT: Councilmember Brunner.

DISQUALIFIED: None.

Staff Assignments:

Publish a press release about how Santa Cruz is the second city to take action on supporting equal playing time, location, venue conditions, and prize compensation for sporting events, and hopefully inspire other jurisdictions to do the same.

9. Minutes of the March 12, 2024 City Council Meeting (CC) Motion carried to approve as submitted.

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Consent Agenda (continued)

10. Affordable Housing Sustainable Communities (AHSC), Infill Infrastructure Grant (IIG) and Set-Aside Administrative Approvals (EDH)
Director of Economic Development and Housing B. Lipscomb responded to Council questions.

Mayor Keeley opened the public comment period. The following people spoke.

John Hall
Alberto Lustre
Unidentified person
Mayor Keeley closed the public comment period.

MOTION: Councilmember Brown moved, seconded by Councilmember Watkins, to:
 Authorize the City Manager to execute project loan contracts, loan agreements and related loan and grant documents related to the City’s Federal Set-Aside for Pacific Station North and the Downtown Library Affordable Housing Project;
 Authorize the City Manager to execute program/project contracts, loan agreements and related loan documents with Affordable Housing Sustainable Communities (AHSC) and Infill Infrastructure Grants (IIG) and related documents for distributions of funds to the projects and programs;  Adopt Resolution No. NS-30,303 approving the FY 2024 AHSC, IIG and SetAside budget adjustment allocating AHSC, IIG and Set-Aside funds and appropriating the funds in the FY 2024 budget; and
 Direct staff to return to Council with a comprehensive update for the Downtown Library Affordable Housing Project, including the current budget, funding sources and expenditures for all components of the project, including incorporating cost escalation, and revised project timeline.

ACTION: The motion carried with the following vote.

AYES: Councilmembers Newsome, Brown, Watkins, KalantariJohnson; Vice Mayor Golder; Mayor Keeley.

NOES: None.

ABSENT: Councilmember Brunner.

DISQUALIFIED: None.

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Consent Agenda (continued)

11. Three-Month Extension of Lease for Central Home Supply (EDH) Motion carried authorizing the City Manager to execute an amendment to the Lease Agreement with Santee Corporation dba Central Home Supply, providing a three-month extension of the lease term for the property located at 744 and 808 River Street, in a form approved by the City Attorney.

12. Griffin Structures: Owner’s Representative for the Downtown Library Affordable Housing Project – Change Order (EDH)
Council questions were responded to, and public comment was heard during item 10.

MOTION: Councilmember Brown moved, seconded by Councilmember Watkins, to approve a purchase order change order with Griffin Structures, Inc. (Santa Clara, CA) for serving as the Owner’s Representative on the Downtown Library Affordable Housing Project (DLAHP) and authorize the City Manager or his designee to execute a change order in the amount of $111,115 and any related documents, in a form approved by the City Attorney. The Economic Development and Housing Director is further authorized to execute future change orders within the approved budget.

ACTION: The motion carried with the following vote.

AYES: Councilmembers Newsome, Brown, Watkins, KalantariJohnson; Vice Mayor Golder; Mayor Keeley.

NOES: None.

ABSENT: Councilmember Brunner.

DISQUALIFIED: None.

13. Liability Claims Filed Against the City of Santa Cruz (FN) Motion carried to reject the liability claims of 1) Liberty Mutual Insurance Company, and 2) CSAA Insurance Exchange, based on staff recommendation.

14. Statement of Investment and Portfolio Policy (FN)
Motion carried to approve the Statement of Investment and Portfolio Policy.

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Consent Agenda (continued)

15. 2021 Compensation Study, Phase III Follow-up (FN/HR) Chief People Officer S. De Leon responded to Council questions.

Mayor Keeley opened the public comment period. The following people spoke.

Ken Bare
Emilio Galvan
Mayor Keeley closed the public comment period.

MOTION: Councilmember Watkins moved, seconded by Vice Mayor Golder, to:
 Approve Phase III Compensation Study (Study) implementation, which includes classification compensation increases as identified in the 2021 Study, as part of FY 2024, effective April 13, 2024;
 Adopt Resolution No. NS-30,304 amending the City’s Classification and Compensation Plan for multiple departments, as identified in Exhibit A; and  Adopt Resolution No. NS-30,305 amending the FY 2024 budget allocating funding for Phase III as detailed in the Budget Adjustment Attachment 1-3- month and Annual Costs for Phase III.

ACTION: The motion carried with the following vote.

AYES: Councilmembers Newsome, Brown, Watkins, KalantariJohnson; Vice Mayor Golder; Mayor Keeley.

NOES: None.

ABSENT: Councilmember Brunner.

DISQUALIFIED: None.

16. Annual Housing Element and General Plan Progress Reports (PL) Motion carried to accept the 2023 General Plan and Housing Element Annual Progress Reports, and direct staff to submit the reports to the Governor’s Office of Planning and Research and the California Department of Housing and Community Development.

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Consent Agenda (continued)

17. Pay and Play Equity in Sport Competition Permitting (PR) Motion carried to:
 Adopt Resolution No. NS-30,306 supporting equal playing time, location, venue conditions, and prize compensation for sporting events permitted by the City of Santa Cruz; and
 Direct staff to update the special event permit application language and event permit condition language for sports competition permits.

18. Beach Street Restrooms (c301913) – 2nd Amendment to Agreement for Architectural and Engineering Services for Beach Street Public Restroom and Budget Adjustment (PR)
Motion carried to:
 Approve and authorize the City Manager to execute a second amendment for $15,000 to the Professional Services Agreement with Gelfand Partners Architects Inc. for architectural and engineering services to renovate the Beach Street Restroom at 120 Beach Street, in a form approved by the City Attorney, bringing the total amount to $112,900. The Director of Parks and Recreation is authorized to execute contract amendments within the approved project budget; and
 Adopt Resolution No. NS-30,307 amending the FY 2024 budget and appropriate $65,000 from the Parks Facilities Tax Fund account and amend the Parks and Recreation Capital Investment Program budget from $351,183 to $416,183 in c301913, Beach Street Restrooms.

19. West Cliff Drive Stabilization Project (c401501) – Contract Amendment (PW) Motion carried to approve and authorize the City Manager to execute a contract amendment with Pacific Crest Engineering (Watsonville, CA) for ongoing observation and testing services for the West Cliff Drive Stabilization Project (c401501), in a form approved by the City Attorney. The Public Works Director is authorized to execute contract amendments within the approved project budget.

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Consent Agenda (continued)

20. Emergency San Lorenzo River Levee Repair (e602401) – Authorization of Emergency Work (PW)
Motion carried to ratify emergency work through a purchase order with Granite Rock Co. (Watsonville, CA) for repair of the San Lorenzo River Levee in the amount of $227,705. The Public Works Director is authorized to execute change orders within the approved project budget.

21. Emergency Hagemann Aerial Sewer Repair (c401511) – Authorization of Emergency Work (PW)
Motion carried to ratify emergency work through a purchase order with Precision Grade, Inc. (Salinas, CA) for inspection and repair of the Hagemann Aerial Sewer Main in the amount of $300,000. The Public Works Director is authorized to execute change orders within the approved project budget.

22. Retaining Wall Reconstruction Project - 141 Archer Drive (g402402) - Authorization to Advertise for Bids and Award Contract (PW) Motion carried to approve the plans and specifications for the Retaining Wall Reconstruction Project – 141 Archer Drive (g402402), authorize staff to advertise for bids, and award the contract. The City Manager is hereby authorized and directed to execute the contract in a form approved by the City Attorney. The Director of Public Works is authorized to execute change orders within the approved project budget.

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Consent Agenda (continued)

23. Beltz 12 Phase II Ammonia Removal Improvements Project – Approval of Plans and Specifications and Authorization to Advertise for Bids and Award Contract – Budget Adjustment (WT)
Motion carried to:
 Approve the Plans and Specifications for the Beltz 12 Phase II Ammonia Removal Improvements Project (c702203) and authorize staff to advertise for bids and the Water Director to execute change orders within the approved project budget. The City Manager is hereby authorized and directed to execute the contract as authorized by Resolution No. NS-27,563; and
 Adopt Resolution No. NS-30,308 transferring $215,000 within Water’s Capital Investment Program, from project c701606 for the Newell Creek Dam Inlet/Outlet Replacement Project to project c702203 for the Beltz 12 Phase II Ammonia Removal Improvements Project.

End Consent Agenda
Public Hearings

24. 2nd Reading and Final Adoption of Ordinance No. 2024-07 Amending Santa Cruz Municipal Code Chapter 13.12 (CA/PR)
Mayor Keeley opened the public comment period. There were no speakers.

Mayor Keeley closed the public comment period.

MOTION: Councilmember Brown moved, seconded by Councilmember Kalantari-Johnson, to adopt Ordinance No. 2024-07 amending Chapter 13.12 of the Santa Cruz Municipal Code relating to City-owned parks and recreational facilities in response to amendments to Health and Safety Code section 115800.

ACTION: The motion carried with the following vote.

AYES: Councilmembers Newsome, Brown, Watkins, KalantariJohnson; Vice Mayor Golder; Mayor Keeley.

NOES: None.

ABSENT: Councilmember Brunner.

DISQUALIFIED: None.

March 26, 2024 CITY COUNCIL MINUTES 6781
Public Hearings (continued)

25. Cruz Hotel
Director of Planning and Community Development L. Butler introduced the item and responded to Council questions.

Senior Planner R. Bane gave a presentation.

Director of Economic Development and Housing B. Lipscomb gave a presentation and responded to Council questions.

Mayor Keeley opened the public comment period. The following people spoke.

Joaquin Benitez
Hector Azpilcueta
Unidentified person
Celica Valdez
Unidentified person
Nicholas Whitehead
Unidentified person
Josephine Garcia
Jordan Sisson
[Unintelligible name]
Nora Hochman
Alberto Lustre
Grant Wilson
Joy Schendledecker
Owen Lawlor
Mayor Keeley closed the public comment period.

Owen Lawlor, Co-GP Managing Member of SCFS Ventures, LLC, and Frank Petrilli, Partner with Coblentz Patch Duffy & Bass LLP, responded to Council questions.

March 26, 2024 CITY COUNCIL MINUTES 6782
Public Hearings (continued)

25. Cruz Hotel (continued)

25.1 302, 310, 314, 322, 324, 326, 328 Front Street: CP21-0051 (APN 005-151-29, - 34, -35, -43, -48, -51) Coastal Permit, Non-Residential Demolition Authorization Permit, Design Permit, Boundary (Lot) Line Adjustments, Special Use Permit, Administrative Use Permit, Additional Height Request, Revocable License for Outdoor Extension Area, and a Heritage Tree Removal Permit, to Demolish a Commercial Building, Combine Five Parcels, and Construct a SixStory, 232-Room Hotel with Ground Floor Retail, Banquet and Conference Space, Restaurant, and Bar on Property Located within the CBD (Central Business District)/CZ-O (Coastal Zone Overlay)/ SP-O (Shoreline Protection Overlay)/ F-P (Floodplain)/FP-O (Floodplain Overlay) Zone District and within the Front Street/Riverfront Subarea of the Downtown Plan. The Project Requires Approval of a Section 408 Permit from the US Army Corps of Engineers to Allow for the Placement of Fill Between the Levee and the Proposed Building and to Allow for the Development of an Outdoor Extension Area Adjacent to the Riverway Path. The Project Also Includes a Finding that the Sale of the Exempt Surplus Properties is Consistent with the General Plan in Accordance with the Surplus Lands Act. (Environmental Determination: Categorical Exemption, Section 15332). Applicant: SCFS Venture LLC (PL)

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Public Hearings (continued)

25. Cruz Hotel (continued)

25.1 302, 310, 314, 322, 324, 326, 328 Front Street (PL) (continued)

25.2 Consideration of an Option and Purchase Sale Agreement Between the City of Santa Cruz and SCFS Venture LLC for the City-owned Property, Located at 302 and 326 Front Street, North of the Intersection with Laurel Street, APNs 005- 151-48 and 005-151-35 (EDH) (continued)
MOTION (continued):
2) Adopt Resolution No. NS-30,310 authorizing and directing the City Manager to execute an Option Purchase and Sale Agreement between the City of Santa Cruz and SCFS Venture LLC, a Delaware limited liability company, for the purchase of City-owned property located at 302 and 326 Front Street, in a form approved by the City Attorney subject to any nonsubstantive changes, with the following amendments, and to take any further actions and authorize the City Manager to execute any other related documents necessary to conclude the sale:
 Amend Section 6(g) Conditions to Seller’s Obligations The Project shall have received "Final Entitlement Approval," which for purposes of this Agreement means the later of the following: (i) the date which is ninety (90) days after receipt of the Project Entitlements, as defined in the Recitals, (ii) if any appeal from the Project Entitlements is filed with the California Coastal Commission, the date which is ninety (90) days following the date on which the appeal is resolved in a manner acceptable to Buyer as determined by Buyer in Buyer’s sole discretion, or (iii) if litigation against the Project Entitlements is commenced within ninety (90) days following approval of the Project Entitlements or resolution of any appeal taken to the California Coastal Commission, the date on which the litigation is resolved in a manner reasonably acceptable to Seller as determined by Seller in Seller’s reasonable discretion. intentionally blank.

March 26, 2024 CITY COUNCIL MINUTES 6784
Public Hearings (continued)

25. Cruz Hotel (continued)

25.1 302, 310, 314, 322, 324, 326, 328 Front Street (PL) (continued)

Buyer acknowledges the protections in California Civil Code Section 1542 regarding the waiver and release provided herein, which states:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE

CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO

EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE

AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY

AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”
By initialing below, Buyer knowingly and voluntarily waives the provisions of Section 1542 in connection the waiver and release of this Section 9(g)(ii). However, the foregoing provisions of this Section 9(g)(ii) shall not serve to release Seller from any claim for fraud against Seller.

March 26, 2024 CITY COUNCIL MINUTES 6785
Public Hearings (continued)

25. Cruz Hotel (continued)

25.1 302, 310, 314, 322, 324, 326, 328 Front Street (PL) (continued)

25.2 Consideration of an Option and Purchase Sale Agreement Between the City of Santa Cruz and SCFS Venture LLC for the City-owned Property, Located at 302 and 326 Front Street, North of the Intersection with Laurel Street, APNs 005- 151-48 and 005-151-35 (EDH) (continued)
MOTION (continued):
 Amend Section 13 Covenants of Seller and Buyer:
(b) Covenants of Buyer:
(iii) Prior to Closing, Buyer shall execute an enforceable commitment, secured by a performance bond or other security instrument approved by Seller in its reasonable discretion, to pay all applicable impact fees and other fees due and pull a building permit for construction of the Project within forty-five (45) days after Closing.
 Direct staff to deposit the sale proceeds and additional consideration into the Affordable Housing Trust Fund;
 Direct staff to explore options for designating a portion of the sale proceeds, additional consideration, and future Transient Occupancy Tax (TOT) revenue from the hotel for the following three affordable housing programs funded by the City and administered by City partners: the Security Deposit Program, the Emergency Rental Assistance Program, and the Landlord incentive Program/Owner Assurance Program, with the goal of broadening the reach of the programs and the level of assistance received by recipients and to make such program changes, as necessary, in order to achieve these goals. Such changes may include, but not be limited to, the following:
 Conversion of program funding from loans to grants (Security Deposit Program);
 Increase term of assistance (Security Deposit Program);  Increased funding when needed to provide assistance for additional recipients (all programs); and
 Lowering the threshold to qualify for assistance (all programs).

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Public Hearings (continued)

25. Cruz Hotel (continued)

25.1 302, 310, 314, 322, 324, 326, 328 Front Street (PL) (continued)

The applicant shall develop an employee parking plan in consultation with City staff that shall be finalized prior to issuance of the certificate of occupancy. The plan shall permit the use of onsite parking spaces for hotel employees as capacity allows, and shall provide for low- or no-cost parking options for employees when onsite parking is not available; and  Amend Condition 77(c):

From:

Prior to final occupancy the applicant shall provide the City of Santa Cruz with a one-time contribution in the amount of $50,000 to the City’s “Santa Cruzer” downtown and beach shuttle program.

To:

The applicant shall provide an annual payment of $10,000 for a period of ten years to the City of Santa Cruz to fund the City’s “Santa Cruzer” downtown and beach shuttle program.

Councilmember Newsome accepted.

FRIENDLY AMENDMENT: Councilmember Brown requested to increase the affordable housing in-lieu fee from $5 per square-foot to $10 per square-foot to get one unit of affordable housing.

Councilmembers Newsome and Kalantari-Johnson did not accept.

March 26, 2024 CITY COUNCIL MINUTES 6787
Public Hearings (continued)

25. Cruz Hotel (continued)

25.1 302, 310, 314, 322, 324, 326, 328 Front Street (PL) (continued)

AYES: Councilmembers Newsome, Watkins, Kalantari-Johnson; Vice Mayor Golder; Mayor Keeley.

NOES: Councilmember Brown.

ABSENT: Councilmember Brunner.

DISQUALIFIED: None.

Adjournment – Vice Mayor Golder moved, seconded by Councilmember Watkins, to adjourn. By consensus City Council adjourned at 4:47 p.m.

RESPECTFULLY SUBMITTED: ss/Julia Wood, Deputy City Clerk Administrator, ATTEST: ss/Bonnie Bush, City Clerk Administrator, APPROVED: ss/Fred Keeley, Mayor.

Santa Cruz City CouncilMarch 26, 2024

Santa Cruz City Council
March 26, 2024