22.131
BUDGET UPDATE-Phase 2 Progress/ Next Steps
DOWNTOWN LIBRARY &
AFFORDABLE HOUSING PROJECT
Phase 2: Interiors/TI’s: Library & Commercial
• Following Phase 1 Construction Documents &
Building Permit Review:
Complete Construction Documents Fall 2024
Final Construction Cost Estimate Fall 2024
Prepare RFP and Bid Documents
• Bring Update to City Council Fall 2024
• Anticipated Construction Start December 2025
• Total Projected Funding to Date $18.5M (approx.)
22.132
BUDGET UPDATE-Phase 2 Progress/ Next Steps
DOWNTOWN LIBRARY &
AFFORDABLE HOUSING PROJECT
Total Projected Funding:
• $5M -Measure S – remaining after phase 1
• $8-8.5M -Proceeds from Skypark Sale
• $2M -Requested FY24 Congressional Earmark
• $2M - Fundraising Campaign
• $1M -E.D.Trust Fund (Commercial)
• Applying for additional Grant Funding 2024-2025
Targeting funding applications that support:
Community Infrastructure
Libraries ( Library of Congress/ Federal)
Photovoltaic System (Solar Power)
Green Roof
Public Art
22.133
AGENDA
◼ Highlights of Recent Progress
◼ Design Progress & Building Permit
◼ Farmers' Market Update
◼ Budget Updates
◼ Project Schedule Update
◼ Next Steps
DOWNTOWN LIBRARY &
AFFORDABLE HOUSING PROJECT
22.134
PROJECT SCHEDULE UPDATE
DOWNTOWN LIBRARY &
AFFORDABLE HOUSING PROJECT
22.135
AGENDA
◼ Highlights of Recent Progress
◼ Design Progress & Building Permit
◼ Farmers' Market Update
◼ Budget Update
◼ Project Schedule Update
◼ Next Steps
DOWNTOWN LIBRARY &
AFFORDABLE HOUSING PROJECT
22.136
NEXT STEPS
Action Today:
• Adopt resolution ratifying the Amended and Restated Option Agreement • Amended and Restated Option Agreement includes 113 Lincoln Street (APN 005-141-11) • Ground Lease will be executed closer to Start of Construction • Requirement to be eligible for Various Funding Programs
DOWNTOWN LIBRARY &
AFFORDABLE HOUSING PROJECT
22.137
NEXT STEPS
RECOMMENDATION: Motion to adopt a resolution ratifying the Amended and Restated Option to Lease Agreement, authorizing the City Manager to enter into lease(s) once terms of the Option Agreement have been satisfied by the developer; and authorizing the Economic Development and Housing Director to execute any amendments or documents needed thereto of a non-substantive nature, in forms approved by the City Attorney, for real property located at 119 Lincoln Street (APN 005-141-21) and 113 Lincoln Street (APN 005-141-11) between the City of Santa Cruz and DTLMU Investors L.P. (a California Limited Partnership), and/or or its affiliate(s), for the previously approved Downtown Library Affordable Housing Project (DLAHP).
DOWNTOWN LIBRARY &
AFFORDABLE HOUSING PROJECT
22.138
NEXT STEPS
Building Permit Review Phase 1
Secure Final Funding Sources Phase 1
Relocation of Toadal Fitness & Farmers Market
Construction Phase 1 Start
Building Permit Review Phase 2
Secure Final Funding Sources Phase 2
Prepare Bids for Phase 2
Construction of Phase 2
For more information on the project:
www.cityofsantacruz.com/downtownlibraryaffordablehousing
DOWNTOWN LIBRARY &
AFFORDABLE HOUSING PROJECT
22.139
DOWNTOWN LIBRARY
& AFFORDABLE HOUSING PROJECT
Thank you !
22.140
City Council
AGENDA REPORT
DATE: 04/25/2024
AGENDA OF: 05/14/2024
DEPARTMENT: Water
SUBJECT: Resolution to Authorize the Agreement Between the City of Santa Cruz Water Department and Wells Fargo Bank for a $25 Million Line of Credit (WT)
RECOMMENDATION: Motion to:
1) Adopt a resolution authorizing the borrowing of an amount not to exceed $25,000,000 from Wells Fargo Municipal Capital Strategies, LLC under a Revolving Line of Credit agreement and approving related financing documents and official actions, and 2) Direct and authorize the City Manager to execute documents in forms approved by the City Attorney.
BACKGROUND: The City of Santa Cruz Water Department (SCWD or Department) is undertaking a major capital plan (an estimated cost of $310 million over a period of 5 years), during which an increased level of financial liquidity is needed. In Fiscal Year 2020-21, SCWD secured $149 million in reimbursable loans from the Drinking Water State Revolving Fund (SRF) at an interest rate of 1.4% to fund two projects in its capital plan, and $127.7 million in reimbursable loans from the United States Environmental Protection Agency’s Water Infrastructure Finance and Innovation Act (WIFIA) program at an interest rate of 3.77% to fund four projects in its capital plan.
The Department plans for the ability to meet future cash flow requirements; however, changes in project schedules or uncertainty regarding the timing of SRF and WIFIA loan disbursements can result in cash-flow shortfalls. For example, the total balance due from SRF is currently $7.2 million and reimbursements are averaging 120 days from the time requested until payment is received. The availability of a revolving line of credit (RLC) for use provides the flexibility needed to ensure timely payment to Department vendors at a reasonable cost.
In June of 2021, City Council authorized the Department to obtain an RLC in the amount of $50 million from Bank of America; there is currently an outstanding balance of $16 million. This RLC has a three-year term and will expire on June 14, 2024.
DISCUSSION: With the existing RLS expiring in June of 2024, known providers of RLCs were contacted in March; bids were obtained from Bank of America, J.P. Morgan Chase Bank, and Wells Fargo Bank. The most favorable bid was provided by Wells Fargo Bank.
23.1 It is recommended that the City Council authorize proceeding with an agreement with Wells Fargo Bank. The rate is based on the Secured Overnight Financing Rate (SOFR). The cost of the RLC is 80% of the current SOFR plus 55 basis points for drawn funds and 25 basis points for available, but undrawn funds. The interest cost for funds drawn would only accrue for any month the loan is utilized within any fiscal year. The new RLC will produce a lower borrowing cost than the existing RLC with Bank of America.
FISCAL IMPACT: Approval of the RLC only impacts the Water Operations Fund (Fund 711) and there is no impact to the City of Santa Cruz’s General Fund. Funding is available in Fund 711, Accounts 58140 (Loan Principal) and 58240 (Loan Interest). Costs of issuance of approximately $40,000 can be paid from RLC proceeds.
Prepared By:
David Baum
Water Chief Financial Officer
Submitted By:
Heidi Luckenbach
Water Director
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. RESOLUTION.DOCX
2. REVOLVING LINE OF CREDIT AGREEMENT.PDF
23.2 RESOLUTION NO. _______
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA
CRUZ AUTHORIZING THE BORROWING OF AN AMOUNT NOT TO
EXCEED $25,000,000 FROM WELLS FARGO MUNICIPAL CAPITAL
STRATEGIES, LLC UNDER A CREDIT AGREEMENT AND
APPROVING RELATED FINANCING DOCUMENTS AND OFFICIAL
ACTIONS
WHEREAS, the City of Santa Cruz (the “City”) owns and operates a public enterprise for the supply, treatment, and distribution of water within the service area of the City (the “Water System”); and
WHEREAS, the City has previously approved a capital improvement plan for the construction of improvements to the Water System, and in order to provide interim financing for such improvements the City has previously borrowed funds from Bank of America, N.A. under a revolving line of credit agreement (the “Bank of America Line of Credit”); and WHEREAS, the Bank of America Line of Credit becomes due and payable in full on June 14, 2024, and in order to provide funds to refinance its obligations thereunder and to pay the costs of the acquisition, construction, and installation of capital improvements to its Water System, the City proposes to enter into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Municipal Capital Strategies, LLC (“Wells Fargo”); the capitalized terms used herein and not otherwise defined herein shall have the meanings specified in the Credit Agreement; and WHEREAS, the City is authorized to enter into the Credit Agreement pursuant to its powers over municipal affairs as a charter city, including Chapter 16.26 of the Municipal Code of the City; and
WHEREAS, payment of amounts owed by the City under the Credit Agreement shall be secured by a pledge of and lien on the Net Revenues of the Water System, on a basis which is subordinate to the pledge and lien in favor of the Indenture and the Parity Obligation Documents securing the payment of the Bonds and the Parity Obligations; and WHEREAS, as required by Government Code Section 5852.1 enacted January 1, 2018, by Senate Bill 450, the City has publicly disclosed certain financial information relating to the Credit Agreement in connection with the adoption of this Resolution; and WHEREAS, the City Council has previously approved a debt policy which complies with Government Code Section 8855, and the execution, delivery, and issuance of the Credit Agreement will be in compliance with said policy; and
WHEREAS, the City Council of the City has duly considered such transactions and wishes at this time to approve said transactions in the public interests of the City; NOW, THEREFORE, the City Council of the City of Santa Cruz does hereby resolve, find, determine, and order as follows:
23.3 - 2 -
Section 1: Authorization to Borrow Funds; Approval of Credit Agreement. The City Council hereby authorizes the borrowing of funds by the City from Wells Fargo in an aggregate principal amount not to exceed $25,000,000 for the purpose of providing funds to refinance the City’s obligations under the Bank of America Line of Credit and to pay the costs of the acquisition, construction, and installation of capital improvements to its Water System. The City Council hereby authorizes the execution and delivery of the Credit Agreement, which is hereby approved in substantially the form on file with the City Clerk Administrator together with any changes therein or additions thereto deemed advisable by the City Manager, the Water Department Director or the Water Department Chief Finance Officer (each, an “Authorized Officer”), provided that the execution thereof by an Authorized Officer shall be conclusive evidence of the approval of any such changes or additions. An Authorized Officer is hereby authorized and directed to execute, and the City Clerk Administrator is hereby authorized and directed to attest to, the final form of the Credit Agreement in the name and on behalf of the City.
Section 2: Issuance of Promissory Note. The City Council hereby authorizes the issuance of a promissory note evidencing the obligations of the City under the Credit Agreement, in substantially the form attached to as Exhibit A to the Credit Agreement. An Authorized Officer is hereby authorized and directed to execute, and the City Clerk Administrator is hereby authorized and directed to attest to, the final form of the promissory note in the name and on behalf of the City.
The executed promissory note shall be delivered to Wells Fargo concurrently with the execution and delivery of the Credit Agreement.
Section 3: Extension of Term of Credit Agreement. Pursuant to Section 2.6 of the Credit Agreement, the City has the right to request an extension of the term of the Credit Agreement from Wells Fargo under certain circumstances and upon compliance with the requirements set forth in such Section 2.6. In the event an Authorized Officer determines that it is in the best interests of the City to request such an extension, the City Council hereby authorizes an Authorized Officer to execute all documents and take all actions as shall be required to request such an extension, without the need for further authorization from the City Council.
Section 4: Official Actions. The Mayor, the City Manager, the Finance Director, the Water Department Director, the Water Department Chief Financial Officer, the Deputy Director/Engineering Manager, the City Clerk Administrator and any and all other officers of the City are hereby authorized and directed, for and in the name and on behalf of the City, to do any and all things and take any and all actions, including execution and delivery of any and all assignments, certificates, requisitions, agreements, requests for loans, notices, consents, instruments of conveyance and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the transactions described herein and under the Credit Agreement. Any such actions previously taken by such officers are hereby ratified and confirmed.
Whenever in this Resolution any officer of the City is authorized to execute or countersign any document or take any action, such execution, countersigning, or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf if such officer is absent or unavailable.
Section 5: Effective Date. This Resolution shall take effect immediately upon its passage and adoption.
23.4 - 3 -
PASSED AND ADOPTED by the City Council of the City of Santa Cruz at a regular meeting held on May 14, 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
APPROVED:
Fred Keeley, Mayor
ATTEST:
Bonnie Bush, CMC
City Clerk Administrator
23.5 4859-0460-1269.6
CREDIT AGREEMENT
by and between
CITY OF SANTA CRUZ
and
WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC
Dated May 16, 2024
23.6 TABLE OF CONTENTS
PAGE
i
4859-0460-1269.6
ARTICLE I DEFINITIONS
Section 1.1. Definitions......................................................................................1 Section 1.2. Accounting Terms and Determinations........................................17 Section 1.3. Interpretation ................................................................................17 Section 1.4. Rates.............................................................................................17 ARTICLE II APPLICATION AND ISSUANCE OF THE LINE OF CREDIT;
PAYMENTS
Section 2.1. Application ...................................................................................18 Section 2.2. Making of Revolving Loans; Use of Proceeds.............................18 Section 2.3. Conditions Precedent....................................................................19 Section 2.4. Fees...............................................................................................23 Section 2.5. Reduction and Termination ..........................................................24 Section 2.6. Extension of Stated Commitment Expiration Date ......................24
ARTICLE III REVOLVING LOANS
Section 3.1. Revolving Loans Evidenced by Note ...........................................24 Section 3.2. Interest on Revolving Loans.........................................................25 Section 3.3. Repayment of Revolving Loans...................................................25 Section 3.4. Prepayment of Revolving Loans..................................................25 Section 3.5. Determination of Taxability .........................................................25 Section 3.6. Daily Simple SOFR Confirming Changes ...................................26 Section 3.7. Changed Circumstances ...............................................................26
ARTICLE IV SECURITY AND PLEDGE
Section 4.1. Security and Pledge ......................................................................28
ARTICLE V LIABILITY, INDEMNITY AND PAYMENT
Section 5.1. Liability of the Borrower..............................................................29 Section 5.2. Indemnification by the Borrower .................................................29 Section 5.3. Increased Costs.............................................................................30 Section 5.4. Calculation of Interest and Fees; Maximum Interest Rate; Default Rate..................................................................................31 Section 5.5. Form and Method of Payments; Late Payment; Net Payments.......................................................................................32 Section 5.6. Liability of the Bank.....................................................................33 Section 5.7. Obligations Unconditional............................................................34
ARTICLE VI REPRESENTATIONS AND WARRANTIES
Section 6.1. Representations and Warranties of the Borrower.........................34
23.7 ii
4859-0460-1269.6
ARTICLE VII AFFIRMATIVE COVENANTS OF THE BORROWER
Section 7.1. Maintenance of Existence.............................................................40 Section 7.2. Reports, Certificates and Other Information ................................40 Section 7.3. Maintenance of Books and Records.............................................41 Section 7.4. Access to Books and Records.......................................................41 Section 7.5. Compliance with Documents .......................................................41 Section 7.6. Environmental Compliance ..........................................................42 Section 7.7. Further Assurances.......................................................................42 Section 7.8. Application of Proceeds of Revolving Loans...............................42 Section 7.9. Payment of Obligations; Removal of Liens .................................43 Section 7.10. Compliance with Law; Employee Benefit Plan Compliance .......43 Section 7.11. Compliance with Obligations.......................................................43 Section 7.12. Insurance; Reconstruction of Water System; Application of Insurance Proceeds.......................................................................43 Section 7.13. Investment Policy .........................................................................44 Section 7.14. Amount of Rates and Charges......................................................44 Section 7.15. Collection of Rates and Charges ..................................................44 Section 7.16. Other Agreements.........................................................................45 Section 7.17. Preservation of Lien .....................................................................45 Section 7.18. Sovereign Immunity .....................................................................45 Section 7.19. Maintenance of Water System......................................................45 Section 7.20. Rating ...........................................................................................45 Section 7.21. Eminent Domain...........................................................................45
ARTICLE VIII NEGATIVE COVENANTS OF THE BORROWER
Section 8.1. Changes in Obligations.................................................................46 Section 8.2. Additional Debt ............................................................................46 Section 8.3. Swap Termination Payments........................................................47 Section 8.4. No Impairment..............................................................................48 Section 8.5. Only Authorized Uses of Revenues by the Borrower ..................48 Section 8.6. References to the Bank.................................................................48 Section 8.7. No Sale, Assignment, Transfer or Pledge ....................................48 Section 8.8. Consolidation or Merger...............................................................48 Section 8.9. Accounting Methods and Fiscal Year ..........................................48 Section 8.10. No Priority Claim .........................................................................48 Section 8.11. Competing Utility.........................................................................48 Section 8.12. Anti-Money Laundering Laws and Anti-Corruption Laws; Sanctions.......................................................................................49 Section 8.13. Source of Repayment and Collateral............................................49 Section 8.14. Exempt Status...............................................................................49
ARTICLE IX DEFAULTS AND REMEDIES
Section 9.1. Events of Default..........................................................................49 Section 9.2. Rights and Remedies Upon Default .............................................52 Section 9.3. No Waiver of Remedies ...............................................................53
23.8 iii
4859-0460-1269.6
Section 9.4. Remedies Not Exclusive...............................................................53
ARTICLE X MISCELLANEOUS
Section 10.1. Evidence of Debt ..........................................................................53 Section 10.2. Amendments, Etc .........................................................................53 Section 10.3. Addresses for Notices; Bank’s Office ..........................................53 Section 10.4. Survival of this Agreement...........................................................54 Section 10.5. Costs, Expenses and Taxes...........................................................54 Section 10.6. Right of Setoff; Other Collateral ..................................................55 Section 10.7. Severability...................................................................................55 Section 10.8. Governing Law; Waiver of Jury Trial; Jurisdiction and Venue............................................................................................56 Section 10.9. Successors and Assigns; Participations; Certain Pledges.............56 Section 10.10. Headings.......................................................................................58 Section 10.11. Counterparts .................................................................................58 Section 10.12. Patriot Act Notice .........................................................................58 Section 10.13. No Advisory or Fiduciary Responsibility.....................................58 Section 10.14. Integration.....................................................................................58 Section 10.15. EMMA Postings...........................................................................58 Section 10.16. Tax Identification Number ...........................................................59
EXHIBIT A - FORM OF NOTE
EXHIBIT B - FORM OF REQUEST FOR LOAN
EXHIBIT C - FORM OF REQUEST FOR EXTENSION
EXHIBIT D - FORM OF NOTICE OF EXTENSION
EXHIBIT E - FORM OF REQUEST FOR TERMINATION OR REDUCTION
EXHIBIT F - FORM OF NOTICE OF REDUCTION
EXHIBIT G - FORM OF NOTICE OF TERMINATION AT REQUEST OF THE BORROWER
EXHIBIT H - FORM OF NOTICE OF TERMINATION UPON EVENT OF DEFAULT
EXHIBIT I - FORM OF NOTICE OF PREPAYMENT
EXHIBIT J - FORM OF COMPLIANCE CERTIFICATE
EXHIBIT K - FORM OF INVESTOR LETTER
23.9 -1- 4859-0460-1269.6
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated [June __, 2024] (as amended, modified, supplemented or restated, this “Agreement”), is entered into by and between the CITY OF SANTA CRUZ, a charter city and municipal corporation duly organized and existing under and pursuant to the Constitution and laws of the State of California (the “Borrower” or the “City”) and WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC, a Delaware limited liability company (together with its successors and assigns, the “Bank”).
RECITALS
A. The Borrower wishes to obtain a revolving line of credit (the “Line of Credit”) from the Bank to refinance a line of credit previously entered into with Bank of America, N. A. to pay the costs of the acquisition, construction and installation of capital improvements to its Water System.
B. All obligations of the Borrower to repay Revolving Loans and to pay all other amounts payable to the Bank arising under or pursuant to this Agreement or the promissory note to be issued by the Borrower to the Bank hereunder (all such obligations are hereinafter collectively referred to as the “Payment Obligations”) are created under and will be evidenced by this Agreement and such promissory note and will be secured by a pledge of and lien on the Net Revenues (as defined herein) all in accordance with the terms and conditions hereof.
NOW, THEREFORE, in consideration of the foregoing Recitals and other consideration, the receipt and sufficiency of which is hereby acknowledged, and to induce the Bank to extend to the Borrower the Line of Credit, the Borrower and the Bank hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. The following terms shall have the following meanings as used herein:
“Additional Agreement” has the meaning set forth in Section 7.16 hereof. “Additional Rights” has the meaning set forth in Section 7.16 hereof. “Affiliate” means, with respect to any Person, any Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person. A Person shall be deemed to control another Person for the purposes of this definition if such first Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of the second Person, whether through the ownership of voting securities, common directors, trustees or officers, by contract or otherwise. “Anti-Corruption Laws” means: (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended; (b) the U.K. Bribery Act 2010, as amended; and (c) any other anti-bribery or anti23.10 -2- 4859-0460-1269.6
corruption laws, regulations or ordinances in any jurisdiction in which the Borrower is located or doing business.
“Anti-Money Laundering Laws” means applicable Laws or regulations in any jurisdiction in which the Borrower is located or doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto.
“Applicable Factor” means 80%.
“Applicable Spread” means a rate per annum of [0.55%]1; provided, however, that the per annum rate set forth above shall be (a) increased 0.15% per annum from and after the date of each Rating Downgrade and (b) decreased 0.15% per annum from and after the date of each Rating Upgrade, but only to the extent of any increase(s) in the rate resulting from a Rating Downgrade; provided, further that in no event shall the Applicable Spread at any time be less than 0.55% per annum. Any change in the Applicable Spread resulting from a Rating Downgrade or a Rating Upgrade shall be and become effective upon a change by the applicable Rating Agency and as of and on the date of the last announcement of such downgrade or upgrade. References to ratings in the definitions of Rating Downgrade and Rating Upgrade are to rating categories as presently determined by the Rating Agencies, and in the event of the adoption of any new or changed rating system or a “global” rating scale by any such Rating Agency, the rating categories shall be adjusted accordingly to a new rating which most closely approximates the requirements as set forth herein. “Authorized Denominations” means $250,000 and integral multiples of $1,000 in excess thereof.
“Authorized Representative” means the Borrower’s City Manager, Finance Director, Water Department Chief Financial Officer, Water Department Director or any other person designated by the Borrower as an Authorized Representative pursuant to a resolution of the governing board of the Borrower; provided, that a copy of such resolution shall have been provided to the Bank. “Available Commitment” means, on the Effective Date, an initial amount equal to the Commitment Amount, and thereafter as adjusted from time to time as follows: (a) downward in an amount equal to any Revolving Loan made hereunder; (b) upward in an amount equal to the principal amount of any Revolving Loan that is prepaid; (c) downward in an amount equal to any reduction of the Available Commitment effected pursuant to Section 2.5 or Section 9.2 hereof; and (d) downward to zero upon termination of the Commitment in accordance with the terms hereof. “Available Tenor” means, as of any date of determination and with respect to the thencurrent Benchmark, as applicable, (a) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (b) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark, in each 1 Such applicable spread to be locked on a mutually agreeable date
23.11 -3- 4859-0460-1269.6
case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 3.7(c)(iv). “Bank” means Wells Fargo Municipal Capital Strategies, LLC, a Delaware limited liability company, and its successors and assigns.
“Bank’s Office” means, the office or offices of the Bank described as such in Section 10.3, or such other office or offices as the Bank may from time to time notify the Borrower. “Benchmark” means, initially, Daily Simple SOFR; provided, that if a Benchmark Transition Event has occurred with respect to Daily Simple SOFR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 3.7(c)(i). “Benchmark Replacement” means, with respect to any Benchmark Transition Event, the sum of: (a) the alternate benchmark rate that has been selected by the Bank and the Borrower giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities and (b) the related Benchmark Replacement Adjustment; provided, that, if such Benchmark Replacement as so determined would be less than the Floor, such Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents. “Benchmark Replacement Adjustment” means, with respect to any replacement of the thencurrent Benchmark with an Unadjusted Benchmark Replacement for any applicable Available Tenor, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Bank giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities.
“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
(a) in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or (b) in the case of clause (c) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by the regulatory supervisor for the
23.12 -4- 4859-0460-1269.6
administrator of such Benchmark (or such component thereof) to be non-representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof). “Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
(a) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided, that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(b) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the FRB, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided, that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(c) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof). “Benchmark Transition Start Date” means, in the case of a Benchmark Transition Event, the earlier of (a) the applicable Benchmark Replacement Date and (b) if such Benchmark
23.13 -5- 4859-0460-1269.6
Transition Event is a public statement or publication of information of a prospective event, the 90th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 90 days after such statement or publication, the date of such statement or publication). “Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 3.7(c) and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 3.7(c).
“Bond Counsel” means Jones Hall, A Professional Law Corporation, as bond counsel to the City in connection with the transactions described herein. “Bonds” means all Bonds issued pursuant to and as defined in the Indentures. “Borrower” or “City” means the City of Santa Cruz, and its successors and assigns permitted hereunder.
“Business Day” means (a) a day which is not (i) a Saturday, Sunday or legal holiday on which banking institutions in New York, New York or the state where the principal corporate office of the Borrower is located are authorized by law to close, (ii) a day on which the New York Stock Exchange or the Federal Reserve Bank of New York is closed or (iii) a day on which the principal office of the Bank is closed and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, any Revolving Loans, any day that is a Business Day described in clause (a) and that is also a U.S. Government Securities Business Day. “Change in Law” means the occurrence, after the Effective Date, of any of the following:
(a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided, that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued (other than any rule thereunder that has been adopted and fully implemented prior to the Effective Date). “Code” means the Internal Revenue Code of 1986, as amended, and, where appropriate any statutory predecessor or any successor thereto.
“Commitment” means the obligation of the Bank to make future Revolving Loans of the unfunded portion of the Available Commitment hereunder subject to the terms and conditions of this Agreement.
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“Commitment Amount” means $25,000,000.
“Commitment Fee Rate” means a rate per annum of 0.25%; provided, however, that the per annum rate set forth above shall be (a) increased 0.05% per annum from and after the date of each Rating Downgrade and (b) decreased 0.05% per annum from and after the date of each Rating Upgrade, but only to the extent of any increase(s) in the rate resulting from a Rating Downgrade; provided, further that in no event shall the Commitment Fee Rate at any time be less than 0.25% per annum. Any change in the Commitment Fee Rate resulting from a Rating Downgrade or a Rating Upgrade shall be and become effective upon a change by the applicable Rating Agency and as of and on the date of the last announcement of such downgrade or upgrade. References to ratings in the definitions of Rating Downgrade and Rating Upgrade are to rating categories as presently determined by the Rating Agencies, and in the event of the adoption of any new or changed rating system or a “global” rating scale by any such Rating Agency, the rating categories shall be adjusted accordingly to a new rating which most closely approximates the requirements as set forth herein. Upon the occurrence and during the continuance of an Event of Default, the Commitment Fee Rate then in effect shall be increased by an additional 1.00% per annum from the Commitment Fee Rate otherwise in effect.
“Commitment Termination Date” means the earlier of (i) the Stated Commitment Expiration Date, (ii) the date Commitment terminates or (iii) the date the Available Commitment is reduced to zero in accordance with the terms hereof. “Compliance Certificate” means a certificate in the form attached to this Agreement as Exhibit J.
“Confidential Information” means any sensitive or confidential information regarding the Borrower, the Bank or any Affiliate of the Bank including, without limitation, address and account information, e-mail addresses, telephone numbers, facsimile numbers, names and signatures of officers, employees and signatories.
“Conforming Changes” means, with respect to either the use or administration of Daily Simple SOFR or the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of Section 3.7 and other technical, administrative or operational matters) that the Bank decides may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Bank in a manner substantially consistent with market practice (or, if the Bank decides that adoption of any portion of such market practice is not administratively feasible or if the Bank determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Bank decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents). “Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), a rate per annum equal to the greater of (a) SOFR for the day (such day, a “SOFR Determination Day”) that is five (5)
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U.S. Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website, and (b) the Floor. If by 5:00 p.m. on the second (2nd) U.S. Government Securities Business Day immediately following any SOFR Determination Day, SOFR in respect of such SOFR Determination Day has not been published on the SOFR Administrator’s Website and a Benchmark Replacement Date with respect to the Daily Simple SOFR has not occurred, then SOFR for such SOFR Determination Day will be SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on the SOFR Administrator’s Website; provided, that any SOFR determined pursuant to this sentence shall be utilized for purposes of calculation of Daily Simple SOFR for no more than three (3) consecutive SOFR Rate Days. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower.
“Debt” means all items that would be classified as a liability in accordance with GAAP, including, without limitation, (a) indebtedness or liability for borrowed money, or for the deferred purchase price of property or services (including trade obligations); (b) obligations as lessee under leases which should have been, or should be, recorded as capital leases in accordance with GAAP; (c) current liabilities in respect of unfunded benefits under employee benefit, retirement or pension plans; (d) obligations issued for the account of any other Person; (e) all obligations arising under acceptance facilities; (f) all guarantees, endorsements (other than for collection or deposit in the ordinary course of business) and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any other Person or otherwise to assure a creditor against loss; (g) obligations secured by any mortgage, lien, pledge, security interest or other charge or encumbrance on property, whether or not the obligations have been assumed; (h) all unfunded amounts under a loan agreement, letter of credit, or other credit facility for which the Borrower would be liable, if such amounts were advanced under the credit facility; and (i) obligations of the Borrower under any Swap Contract.
“Default” means any condition or event which, with the giving of notice or lapse of time or both would unless cured or waived become an Event of Default. “Default Rate” means, for any day, a fluctuating rate of interest per annum equal to the greatest of (i) the Prime Rate in effect at such time plus four percent (4.0%), (ii) the Fed Funds Rate in effect at such time plus five percent (5.0%), and (iii) ten percent (10.0%); provided, however, that in no event shall the Default Rate exceed the applicable Maximum Interest Rate then in effect.
“Determination of Taxability” means and shall be deemed to have occurred on the first to occur of the following:
(a) on the date when the Borrower files any statement, supplemental statement or other tax schedule, return or document which discloses that an Event of Taxability shall have in fact occurred;
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(b) on the date when the Noteholder or any former Noteholder notifies the Borrower that it has received a written opinion by a nationally recognized firm of attorneys of substantial expertise on the subject of tax exempt municipal finance to the effect that an Event of Taxability shall have occurred unless, within one hundred eighty (180) days after receipt by the Borrower of such notification from the Noteholder or any former Noteholder, the Borrower shall deliver to the Noteholder and any former Noteholder a ruling or determination letter issued to or on behalf of the Borrower by the Commissioner of the Internal Revenue Service or the Director of Tax Exempt Bonds of the Tax Exempt and Government Entities Division of the Internal Revenue Service (or any other government official exercising the same or a substantially similar function from time to time) to the effect that, after taking into consideration such facts as form the basis for the opinion that an Event of Taxability has occurred, an Event of Taxability shall not have occurred; (c) on the date when Borrower shall be advised in writing by the Commissioner of the Internal Revenue Service or the Director of Tax Exempt Bonds of the Tax Exempt and Government Entities Division of the Internal Revenue Service (or any other government official exercising the same or a substantially similar function from time to time, including an employee subordinate to one of these officers who has been authorized to provide such advice) that, based upon filings of the Borrower, or upon any review or audit of the Borrower or upon any other ground whatsoever, an Event of Taxability shall have occurred; or
(d) on the date when the Borrower shall receive notice from the Noteholder or any former Noteholder that the Internal Revenue Service (or any other government official or agency exercising the same or a substantially similar function from time to time) has assessed as includable in the gross income of such Noteholder or such former Noteholder the interest on the Note due to the occurrence of an Event of Taxability; provided, however, no Determination of Taxability shall occur under subparagraph (c) or (d) hereunder unless the Borrower has been afforded the opportunity, at its expense, to contest any such assessment, and, further, no Determination of Taxability shall occur until such contest, if made, has been finally determined; provided, further, however, that upon demand from the Noteholder or former Noteholder, the Borrower shall promptly reimburse, such Noteholder or former Noteholder for any payments, including any taxes, interest, penalties or other charges, such Noteholder or former Noteholder shall be obligated to make as a result of the Determination of Taxability.
“Dollar” and “$” mean lawful money of the United States. “Effective Date” means [June __, 2024].
“EMMA” means Electronic Municipal Market Access system as provided by the Municipal Securities Rulemaking Board.
“Environmental Laws” means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions,
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discharges or releases of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes into the environment, including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, petroleum or petroleum products, chemicals or industrial, toxic or hazardous substances or wastes or the clean up or other remediation thereof. “Event of Default” means any event or circumstance specified in Section 9.1 hereof. “Event of Insolvency” means, with respect to any Person, the occurrence of one or more of the following events:
(a) the issuance, under the laws of any state or under the laws of the United States of America, of an order of rehabilitation, liquidation or dissolution of such Person; (b) the commencement by or against such Person of a case or other proceeding seeking liquidation, reorganization or other relief with respect to such Person or its debts under any bankruptcy, insolvency or other similar state or federal law now or hereafter in effect, including, without limitation, the appointment of a trustee, receiver, liquidator, custodian or other similar official for such Person or any substantial part of its property or there shall be appointed or designated with respect to it, an entity such as an organization, board, commission, authority, agency or body to monitor, review, oversee, recommend or declare a financial emergency or similar state of financial distress with respect to it or there shall be declared or introduced or proposed for consideration by it or by any legislative or regulatory body with competent jurisdiction over it, the existence of a state of financial emergency or similar state of financial distress in respect of it; (c) the making of an assignment for the benefit of creditors by such Person; (d) the failure of such Person to generally pay its debts as they become due; (e) a debt moratorium, debt adjustment, debt restructuring or comparable restriction with respect to the payment of any indebtedness of such Person is declared or imposed by such Person or by any governmental authority having jurisdiction over such Person;
(f) such Person shall admit in writing its inability to pay its debts when due; or (g) the initiation of any actions to authorize any of the foregoing by or on behalf of such Person.
“Event of Taxability” means (i) a change in Law or fact or the interpretation thereof, or the occurrence or existence of any fact, event or circumstance (including, without limitation, the taking of any action by the Borrower, or the failure to take any action by the Borrower, or the making by the Borrower of any misrepresentation herein or in any certificate required to be given in connection with this Agreement) which has the effect of causing interest paid or payable on the Note to become includable, in whole or in part, in the gross income of a Noteholder for federal income tax purposes or (ii) the entry of any decree or judgment by a court of competent
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jurisdiction, or the taking of any official action by the Internal Revenue Service or the Department of the Treasury, which decree, judgment or action shall be final under applicable procedural law, in either case, which has the effect of causing interest paid or payable on the Note to become includable, in whole or in part, in the gross income of a Noteholder for federal income tax purposes.
An Event of Taxability does not include any event, condition or circumstance which results in interest on the Note being an item of tax preference subject to the federal alternative minimum tax, or any other tax consequences which depend upon a Noteholder’s particular tax status. “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided, that if such rate is not so published for any day which is a Business Day, the Federal Funds Rate for such day shall be the average of the quotation for such day on such transactions received by Wells Fargo Bank, National Association from three federal funds brokers of recognized standing selected by Wells Fargo Bank, National Association. Notwithstanding the foregoing, if the Federal Funds Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Fiscal Year” means the period commencing on July 1 of each year and terminating on the next succeeding June 30.
“Fitch” means Fitch Ratings, or its successors.
“Floating Rate” means a per annum rate of interest equal to the sum of (a) the product of (i) Daily Simple SOFR multiplied by (ii) the Applicable Factor plus (b) the Applicable Spread; provided, however, that immediately and upon the occurrence of an Event of Default (and without any notice given with respect thereto) and during the continuation of such Event of Default, “Floating Rate” shall mean the Default Rate.
“Floor” means a rate of interest equal to 0.00%.
“FRB” means the Board of Governors of the Federal Reserve System of the United States. “Generally Accepted Accounting Principles” or “GAAP” means generally accepted accounting principles in effect from time to time in the United States and applicable to entities such as the Borrower, including, without limitation, those principles set forth in the statements and pronouncement of the Government Accounting Standards Board. “Governmental Approval” means an authorization, consent, approval, license, or exemption of, registration or filing with, or report to any Governmental Authority. “Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
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“Gross Revenues” means all gross income and revenue received by the City from the ownership and operation of the Water System, including, without limiting the generality of the foregoing: (a) all amounts levied by the City as a fee for connecting to the Water System, as such fee is established from time to time under the applicable laws of the State of California; (b) all income, rents, rates, fees, capital improvement fees (including facilities capacity and pump zone fees), charges or other moneys derived from the services, facilities and commodities sold, furnished or supplied through the facilities of the Water System; (c) earnings on and income derived from the investment of such income, rents, rates, fees, charges or other moneys to the extent that the use of such earnings and income is limited by or under applicable law to the Water System; and (d) the proceeds derived by the City directly or indirectly from the sale, lease or other disposition of a part of the Water System as permitted hereunder. The term “Gross Revenues” does not include (i) customers’ deposits or any other deposits subject to refund until such deposits have become the property of the City, (ii) the proceeds of any ad valorem property taxes levied to pay general obligation bond indebtedness of the City with respect to the Water System, and (iii) special assessments or special taxes levied upon real property within any improvement district for the purpose of paying special assessment bonds or special tax obligations of the City relating to the Water System.
“IBank Agreement” means the Installment Sale Agreement, dated as of August 19, 2016 (Agreement No. ISRF 17-115), by and between the City and the California Infrastructure and Economic Development Bank (IBank) and any related instruments evidence the obligations of the City to IBank thereunder.
“Indemnified Party” has the meaning set forth in Section 5.2 hereof. “Indentures” means, collectively, (a) the Indenture of Trust dated as of July 1, 2014 between the Borrower and MUFG Union Bank, N.A., in its capacity as trustee (together with its successors thereto, the “Trustee”), and all supplements, amendments and modifications thereto, relating to the issuance of the City of Santa Cruz 2014 Water Revenue Refunding Bonds in the aggregate original principal amount of $11,260,000, and (b) the Indenture of Trust dated as of December 1, 2019 between the Borrower and the Trustee, and all supplements, amendments and modifications thereto, relating to the issuance of the City of Santa Cruz 2019 Water Revenue Bonds in the aggregate original principal amount of $20,925,000. “Interest Payment Date” means, as to any Revolving Loan, each Quarterly Payment Date, the Revolving Loan Maturity Date, any Prepayment Date and the Commitment Termination Date. “Investor Letter” has the meaning set forth in Section 10.9(b) hereof. “Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
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“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).
“Line of Credit” has the meaning provided in the Recitals hereto. “Loan Date” means the date on which the Bank honors a Request for Loan and makes the funds requested available to the Borrower.
“Loan Documents” means this Agreement, the Note, the Resolution, the Indentures and any documents related thereto.
“Material Adverse Effect” means an event or occurrence which adversely affects in a material manner (a) the assets, liabilities, condition (financial or otherwise), business or operations of the Water System (including the Net Revenues generated therefrom), (b) the ability of the Borrower to carry out its business as of the date of this Agreement or as proposed herein to be conducted or to meet or perform its obligations under this Agreement or any of the other Loan Documents on a timely basis, (c) the validity or enforceability of this Agreement or any other Loan Document or (d) the rights or remedies of the Bank under this Agreement, the Note or any other Loan Document.
“Maximum Annual Debt Service” means, as of the date of any calculation, the maximum sum obtained for the current or any future Fiscal Year so long as any of the Bonds remain Outstanding by totaling the following amounts for such Fiscal Year:
(a) the aggregate amount of principal of and interest on the Outstanding Bonds coming due and payable in such Fiscal Year; and
(b) the aggregate amount of principal of and interest on all outstanding Parity Obligations coming due and payable by their terms in such Fiscal Year. “Maximum Federal Corporate Tax Rate” means, on any given day, the maximum rate of income taxation imposed on corporations pursuant to Section 11(b) of the Internal Revenue Code, as in effect from time to time (or, if as a result of a change in the Internal Revenue Code, the rate of income taxation imposed on corporations generally shall not be applicable to the Bank, the maximum statutory rate of federal income taxation which could apply to the Bank). “Maximum Interest Rate” means the maximum rate of interest on the relevant obligation permitted by applicable law.
“Moody’s” means Moody’s Investors Service, Inc., or its successors. “Net Proceeds” means, when used with respect to any insurance or condemnation award, the proceeds from such insurance or condemnation award remaining after payment of all reasonable expenses (including attorneys’ fees) incurred in the collection of such proceeds.
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“Net Revenue Debt” means the Bonds and any other bonds, notes, leases, installment sale agreements or other obligations, Debt or indebtedness of the Borrower payable from and secured by a pledge of and lien upon any of the Net Revenues, including the Payment Obligations, and any Senior Debt and any Subordinate Debt entered into or issued or incurred under and in accordance with Section 8.2.
“Net Revenue Debt Issuing Documents” means, collectively, the Indentures or any indenture of trust, trust agreement, loan agreement, installment sale agreement, resolution or other document authorizing or evidencing the issuance or incurrence of any Net Revenue Debt. “Net Revenues” means, for any period, an amount equal to all of the Gross Revenues received during such period minus the amount required to pay all Operation and Maintenance Costs coming due and payable during such period.
“Non-Bank Transferee” has the meaning set forth in Section 10.9(b) hereof. “Note” means the Tax-Exempt Note in the amount of $25,000,000, substantially in the form attached hereto as Exhibit A.
“Noteholder” means the holder or owner of the Note.
“Online Portal” has the meaning set forth in Section 2.2(c) hereof. “Operation and Maintenance Costs” means the reasonable and necessary costs paid or incurred by the City for maintaining and operating the Water System, determined in accordance with generally accepted accounting principles, including but not limited to (a) all reasonable expenses of management and repair and other expenses necessary to maintain and preserve the Water System in good repair and working order, and (b) all administrative costs of the City that are charged directly or apportioned to the operation of the Water System, such as salaries and wages of employees, overhead, taxes (if any) and insurance. “Operation and Maintenance Costs” do not include (i) administrative costs of the Bonds which the City is required to pay under the Indentures, (ii) payments of debt service on bonds, notes or other obligations issued by the City with respect to the Water System, (iii) depreciation, replacement and obsolescence charges or reserves therefor, and (iv) amortization of intangibles or other bookkeeping entries of a similar nature.
“Parity Obligation Documents” has the meaning given to such term in the Indentures. The IBank Agreement and the SRF Loans are each a “Parity Obligation.” “Participant” means any entity to which the Bank has granted a participation in the obligations of the Bank hereunder and of the Borrower hereunder and under the Note. “Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Title III of Pub. L. 107 56 (signed into law October 26, 2001).
“Payment Obligations” has the meaning provided in the Recitals hereto.
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“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. “Prepayment Date” means any Business Day the Borrower prepays any Revolving Loan in whole or in part.
“Prime Rate” means, at any time, the rate of interest per annum publicly announced from time to time by Wells Fargo Bank, National Association as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in such prime rate occurs. The parties hereto acknowledge that the rate announced publicly by Wells Fargo Bank, National Association as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks. “Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, whether now owned or hereafter acquired. “Qualified Engineer” means a consulting engineer of recognized skill and experience in the field of engineering matters related to the construction and maintenance of systems similar to the Water System who is selected by the Borrower and approved by the Bank and who may be an employee of the Borrower.
“Quarterly Payment Date” means the first Business Day of each January, April, July and October, commencing on July 1, 2024.
“Rating Agency” means Fitch, Moody’s or S&P or any other nationally recognized rating agency with a Senior Debt Long-Term Credit Rating then in effect. “Rating Downgrade” means each rating category reduction of the Senior Debt Long-Term Credit Rating assigned by a Rating Agency. For example, a reduction by Fitch from “A-” to “BBB+” is one Rating Downgrade, and a reduction by Fitch from “A-” to “BBB” is two Rating Downgrades.
“Rating Upgrade” means each rating category increase of the Senior Debt Long-Term Credit Rating assigned by a Rating Agency. For example, an increase by Fitch from “A-” to “A” is one Rating Upgrade, and an increase by Fitch from “A-” to “A+” is two Rating Upgrades. “Relevant Governmental Body” means the FRB or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the FRB or the Federal Reserve Bank of New York, or any successor thereto.
“Request for Loan” means any request for a Revolving Loan made by the Borrower to the Bank, in the form of Exhibit B hereto, executed and delivered on behalf of the Borrower by an Authorized Representative of the Borrower.
“Resolution” means the resolution of the City adopted by the City Council of the City on May 14, 2024, together with any other resolutions or proceedings taken by the City in connection with the execution and delivery of this Agreement, the Note and the other Loan Documents.
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“Revolving Loan” means a revolving loan made from the Bank to the Borrower pursuant to Section 2.2(a) hereof.
“Revolving Loan Maturity Date” means, with respect to any Revolving Loan, the Commitment Termination Date or any earlier date on which all amounts due under the Loan Documents (including without limitation all Revolving Loans) are accelerated pursuant to Section 9.2 hereof.
“S&P” means S&P Global Ratings, and any successor rating agency. “Sanction” or “Sanctions” means any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and restrictions and anti-terrorism laws imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future statute or Executive Order, (b) the United Nations Security Council, (c) the European Union, (d) the United Kingdom, or (e) any other Governmental Authority with jurisdiction over the Borrower.
“Sanctioned Target” means any target of Sanctions, including: (a) Persons on any list of targets identified or designated pursuant to any Sanctions, (b) Persons, countries, or territories that are the target of any territorial or country-based Sanctions program, (c) Persons that are a target of Sanctions due to their ownership or control by any Sanctioned Target(s), or (d) otherwise a target of Sanctions, including vessels and aircraft, that are designated under any Sanctions program. “Senior Debt” means the Bonds, the Parity Obligations and any other bonds, notes, leases, installment sale agreements or other obligations, Debt or indebtedness of the Borrower payable from and secured by a pledge of and lien upon any of the Net Revenues on a basis which is senior to the lien on Net Revenues securing the Payment Obligations hereunder, entered into or issued or incurred under and in accordance with Section 8.2, and which constitutes Parity Obligations under the Net Revenue Debt Issuing Documents.
“Senior Debt Issuing Documents” means, collectively, the Indentures and any other indenture of trust, trust agreement, loan agreement, installment sale agreement, resolution or other document authorizing or evidencing the issuance or incurrence of any Senior Debt. “Senior Debt Long-Term Credit Rating” means unenhanced long-term credit ratings issued by one or more Rating Agencies for any Senior Debt. The Borrower acknowledges that as of the Effective Date the Senior Debt Long-Term Credit Ratings are “AA-” by S&P and “A-” by Fitch. “SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
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“SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time. “SOFR Determination Day” has the meaning specified in the definition of “Daily Simple SOFR”.
“SOFR Rate Day” has the meaning specified in the definition of “Daily Simple SOFR”. “SRF Loans” means the Construction Installment Sale Agreement No.
SWRCB0000000000D1902049 and SWRCB0000000000D2002022 between the City and the California State Water Resources Control Board.
“State” means the State of California.
“Stated Commitment Expiration Date” means [June___, 2027] unless extended as provided herein.
“Subordinate Debt” means any bonds, notes, leases, installment sale agreements or other obligations, Debt or indebtedness of the Borrower payable from and secured by a pledge of and lien upon any of the Net Revenues on a parity with the lien on Net Revenues securing the Payment Obligations, entered into or issued or incurred under and in accordance with Section 8.2, including without limitation, the Payment Obligations.
“Subordinate Debt Issuing Documents” means, collectively, this Agreement, the indenture of trust, trust agreement, loan agreement, installment sale agreement, resolution or other document authorizing or evidencing the issuance or incurrence of any Subordinate Debt. “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Taxable Date” means the date, if any, on which interest on the Note is first includable in gross income of any holder thereof (including the Bank) as a result of an Event of Taxability as such a date is established pursuant to a Determination of Taxability. “Taxable Period” has the meaning set forth in Section 3.5 hereof.
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“Taxable Rate” means, with respect to a Taxable Period, the product of (a) the interest rate on the applicable Revolving Loan (and the Note evidencing such Revolving Loan) during such period, and (b) the quotient of (i) one divided by (ii) one minus the Maximum Federal Corporate Tax Rate.
“Taxes” has the meaning provided in Section 5.5 hereof. “Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment. “United States” means the United States of America.
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities. “Vantage” has the meaning set forth in Section 2.2(c) hereof. “Water System” means entire system of the City for the supply, storage, treatment and distribution of water within the service area of the City, including but not limited to all facilities, properties, lands, rights, entitlements and other property useful in connection therewith, together with all extensions thereof and improvements thereto at any time acquired, constructed or installed by the City.
Section 1.2. Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made and all financial statements required to be delivered hereunder shall be prepared in accordance with Generally Accepted Accounting Principles as in effect from time to time, applied on a consistent basis.
Section 1.3. Interpretation. The following rules shall apply to the construction of this Agreement unless the context requires otherwise: (i) the singular includes the plural, and the plural the singular; (ii) words importing any gender include the other gender; (iii) references to statutes are to be construed as including all statutory provisions consolidating and amending, and all regulations promulgated pursuant to, such statutes; (iv) references to “writing” include printing, photocopy, typing, lithography and other means of reproducing words in a tangible visible font; (v) the words “including,” “includes” and “include” shall be deemed to be followed by the words “without limitation”; (vi) references to the introductory paragraph, recitals, articles, sections (or clauses or subdivisions of sections), exhibits, appendices, annexes or schedules are to those of this Agreement unless otherwise indicated; (vii) references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications to such instruments, but only to the extent that such amendments and other modifications are permitted or not prohibited by the terms of this Agreement; (viii) section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose; (ix) references to Persons include their respective permitted successors and assigns; and (x) in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to
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but excluding.” All references to “funds” herein shall include all accounts and subaccounts therein unless the context clearly requires otherwise.
Section 1.4. Rates. The Bank does not warrant or accept any responsibility for, and shall not have any liability with respect to, (a) the continuation of, administration of, submission of, calculation of or any other matter related to the Benchmark, any component definition thereof or rates referred to in the definition thereof, or with respect to any alternative, successor or replacement rate thereto (including any Benchmark Replacement), including whether the composition or characteristics of any such alternative, successor or replacement rate (including any Benchmark Replacement), as it may or may not be adjusted pursuant to Section 3.7(c), will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as, the Benchmark or any other Benchmark prior to its discontinuance or unavailability, or (b) the effect, implementation or composition of any Conforming Changes. The Bank and its Affiliates or other related entities may engage in transactions that affect the calculation of the Benchmark, any alternative, successor or replacement rate (including any Benchmark Replacement) or any relevant adjustments thereto and such transactions may be adverse to the Borrower. The Bank may select information sources or services in its reasonable discretion to ascertain the Benchmark, any component definition thereof or rates referred to in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.
ARTICLE II
APPLICATION AND ISSUANCE OF THE LINE OF CREDIT; PAYMENTS Section 2.1. Application. The Borrower hereby applies to the Bank for, and authorizes and instructs the Bank to issue for its account, the Commitment in the initial Available Commitment.
Section 2.2. Making of Revolving Loans; Use of Proceeds. (a) Subject to the terms and conditions of this Agreement and in reliance upon the representations, warranties and agreements set forth herein, including without limitation satisfaction of the conditions set forth in Section 2.3(b) hereof, the Bank hereby agrees to make Revolving Loans, as applicable, from time to time on any Business Day prior to the Commitment Termination Date, in amounts not to exceed at any time outstanding the then-outstanding Available Commitment, in accordance with the procedures set forth in Section 2.2(c) hereof. Each Revolving Loan requested shall be in an amount equal to or greater than $500,000 and integral multiples of $100,000 in excess thereof. Each Revolving Loan shall be made solely for the purpose of providing funds to pay or reimburse the Borrower for payment of the costs of the acquisition, construction and installation of capital improvements to the Water System and to repay Debt incurred to finance any of the foregoing. The aggregate amount of any Revolving Loan shall not exceed the applicable Available Commitment (calculated without giving effect to such
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Revolving Loan made on such date) at 8:00 a.m. (California time) on such date and at no point shall there ever be more than two (2) Revolving Loans outstanding at any one time. (b) Reborrowing. Within the limits of this Section 2.2, the Borrower may borrow, prepay pursuant to Section 3.4 hereof and reborrow under this Section 2.2. Upon any prepayment of a Revolving Loan, the Available Commitment shall be reinstated as set forth in the definition thereof.
(c) Method of Borrowing. Upon receipt of a Request for Loan by the Bank not later than 8:00 a.m. (California time) three (3) Business Days prior to the date of the requested Revolving Loan and otherwise in accordance with Exhibit B hereto, the Bank subject to the terms and conditions of this Agreement, including without limitation, satisfaction of the conditions precedent set forth in Section 2.3(b) hereof, shall be required to make a Revolving Loan by 11:30 a.m. (California time) on the day of the proposed Revolving Loan for the account of the Borrower in an amount equal to the amount of the requested Revolving Loan. With respect to any such Request for Loan received by the Bank after 8:00 a.m. (California time), the Borrower will be deemed to have submitted such Request for Loan not later than 8:00 a.m. (California time) on the following Business Day. The Bank shall not be required to advance more than one Revolving Loan per day.
Any Request for Loan shall be signed by an Authorized Representative. Each Revolving Loan shall be made by the Bank by wire transfer of immediately available funds to the Borrower in accordance with the instructions set forth in the Request for Loan. Each Revolving Loan shall be made from the Bank’s own funds. If, after examination, the Bank shall have determined that a Request for Loan does not conform to the terms and conditions hereof, then the Bank shall use its best efforts to give notice to the Borrower to the effect that negotiation was not in accordance with the terms and conditions hereof and stating the reasons therefor. The Borrower may attempt to correct any such nonconforming Request for Loan, if, and to the extent that, the Borrower is entitled (without regard to the provisions of this sentence) and able to do so. For the avoidance of doubt, the Borrower may submit its request for a Revolving Loan through the Bank’s Wells Fargo Vantage (“Vantage”) f/k/a Commercial Electronic Office (CEO) portal (Vantage, or any replacement or successor portal, the “Online Portal”).
Section 2.3. Conditions Precedent.
(a) Conditions Precedent to Effective Date. The obligations of the Bank to make the Commitment available hereunder shall be subject to the fulfillment of each of the following conditions precedent on or before the Effective Date in a manner satisfactory to the Bank in its sole discretion:
(i) The Bank shall have received a fully executed original of this Agreement and the original Note, duly issued by the Borrower, and confirmation that the Note is not (A) assigned a specific rating by any Rating Agency, (B) registered with The Depository Trust Company or any other securities depository, (C) issued pursuant to any type of official statement, private placement memorandum or other offering document or (D) placed or offered by a broker dealer in the capacity of an underwriter or a placement agent, and fully executed
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originals of the other Loan Documents or acknowledged copies of such other Loan Documents certified by an Authorized Representative as true, correct and complete copies thereof, and certifying that such documents were duly issued, adopted or executed and delivered, have not been modified, amended or rescinded and are in full force and effect on and as of the Effective Date.
(ii) The Bank shall have received a copy of the Resolution of the Borrower authorizing the execution and delivery of this Agreement, the Note and the other Loan Documents, certified as of the Effective Date by an Authorized Representative.
(iii) The Bank shall have received certified copies of all approvals, authorizations and consents of any trustee, or holder of any indebtedness or obligation of the Borrower or any governmental agency or public authority, necessary for the Borrower to enter into each of the Loan Documents and the transactions contemplated herein and therein.
(iv) The Bank shall have received an opinion addressed to the Bank and dated the Effective Date of counsel to the Borrower as to (a) the due authorization, execution and delivery, validity and enforceability with respect to the Borrower of this Agreement and the Note and the other Loan Documents, (b) the validity of the pledge of the Net Revenues to secure the Payment Obligations as described in Section 4.1 hereof, (c) the exclusion of interest on the Revolving Loans from gross income for federal income tax purposes and (d) such other matters as the Bank may reasonably request, in form and substance satisfactory to the Bank. (v) The following statements shall be true and correct on the Effective Date, and the Bank shall have received a certificate incorporating by reference the definitions of the capitalized terms defined in this Agreement, signed by an Authorized Representative, dated the Effective Date, certifying the name, incumbency and specimen signature of each individual authorized to sign this Agreement, the Note and the other Loan Documents and the other documents or certificates to be delivered by the Borrower pursuant hereto or thereto, on behalf of the Borrower, and of each individual authorized to act on behalf of the Borrower for purposes of this Agreement, on which the Bank may conclusively rely until a revised certificate is similarly delivered and as to the matters set forth in Sections 2.3(a)(x),(xi), (xii) and (xiii) hereof.
(vi) The Bank shall have received such authorization documents, certifications, incumbency certificates and opinions with respect to the other parties to the transactions as the Bank may reasonably request, in form and substance satisfactory to the Bank.
(vii) The Bank shall have received evidence satisfactory to the Bank that as of the Effective Date the only Net Revenue Debt are the Bonds, the IBank Agreement and the SRF Loans.
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(viii) The Bank shall have received certified copies of the proceedings of the Board of Directors of the Borrower approving all rate adjustments to become effective after the Effective Date.
(ix) The Bank shall have received evidence satisfactory to the Bank that the Borrower maintains with responsible insurers all such insurance on the Water System required by Section 7.12 hereof and evidence satisfactory to the Bank that the Bank will receive thirty (30) days’ prior written notice of any cancellation of any such insurance policy and evidence satisfactory to the Bank that all premiums necessary to be paid for the effectiveness of such insurance have been paid by or on behalf of the Borrower.
(x) The representations and warranties of the Borrower contained in each of the Loan Documents and each certificate, letter, other writing or instrument delivered by the Borrower to the Bank pursuant hereto or thereto are true and correct on and as of the Effective Date as though made on and as of such date. (xi) No Default or Event of Default has occurred and is continuing or would result from the execution and delivery of this Agreement or the making of the Commitment.
(xii) Since the most current date of the information, financial or otherwise, supplied by the Borrower to the Bank, there has been no change in the assets, liabilities, financial position or results of operations of the Borrower which might reasonably be anticipated to cause a Material Adverse Effect and the Borrower has not incurred any obligations or liabilities which might reasonably be anticipated to cause a Material Adverse Effect.
(xiii) All necessary action on the part of the Borrower shall have been taken as required for the valid pledge of and lien on the Net Revenues to secure the Payment Obligations as described in Section 4.1 hereof. (xiv) The Bank shall be reasonably satisfied that, in connection with the preparation, issuance, execution, delivery and filing of this Agreement, the Note and the other Loan Documents, payment will be made to the Bank promptly after demand therefor after the Effective Date of fees and disbursements of the Bank’s counsel (for disbursement by the Bank to its counsel).
(xv) All other legal matters pertaining to the execution and delivery of each of the Loan Documents and the adoption and implementation of the Resolution shall be reasonably satisfactory to the Bank and its counsel. (xvi) The Bank shall have received evidence that all required filings, if any, with the California Debt and Investment Advisory Commission have been or will be made and the fee of the California Debt and Investment Advisory Commission, if any, shall have been paid by the Borrower.
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(xvii) The Bank shall have received such other documents, certificates, opinions (including reliance letters), approvals (and if requested by the Bank, certified duplicates of executed copies of such approvals) and filings with respect to this Agreement, the Note and the other Loan Documents as the Bank may reasonably request, in form and substance satisfactory to the Bank. (xviii) The Bank shall have received a copy of the most recent unaudited financial statements for the Water System and the audited financial statements for the Water System for the Fiscal Years ending June 30, 2023, 2022 and 2021, a copy of the Borrower’s investment policy in effect as of the Effective Date and a copy of the most recent annual operating budget of the Water System. (xix) Evidence that a CUSIP number has been obtained and reserved from Standard & Poor’s CUSIP Service for the Note which shall be obtained and paid for by the Bank.
(b) Conditions Precedent to Each Revolving Loan. The obligation of the Bank to make a Revolving Loan on any date is subject to the following conditions precedent:
(i) The Borrower shall have delivered to Bank a Request for Loan signed by an Authorized Representative not later than 8:00 a.m. (California time) three (3) Business Days prior to the date of the requested Revolving Loan, or, if requested through the Online Portal, pursuant to the requirements of such Online Portal.
(ii) The representations and warranties of the Borrower contained in Article VI hereof, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of such Request for Loan, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this Section 2.3(b), the representations and warranties contained in Section 6.1(n) shall be deemed to refer to the most recent statements furnished pursuant to clause (a)(i) of Section 7.2.
(iii) No Default or Event of Default shall exist, or would result from such proposed Revolving Loan or from the application of the proceeds thereof. (iv) After giving effect to any Revolving Loan, the aggregate principal amount of all Revolving Loans outstanding hereunder shall not exceed the amount permitted under the Available Commitment.
(v) Such Revolving Loan shall not violate any order, judgment or decree of any court or authority of competent jurisdiction or any provision of law as then in effect.
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(vi) The Bank shall not have received notice (either verbal or written) from the Borrower, or Bond Counsel that any opinion delivered pursuant to Section 2.3(a) hereof may no longer be relied upon.
(vii) The Bank shall have received a resolution of the Borrower ratifying the execution and delivery of this Agreement and the Note, in form and substance satisfactory to the Bank.
(viii) The Bank shall have received, in form and substance satisfactory to it, such other assurances, certificates, documents or consents related to the foregoing as the Bank reasonably may require.
(ix) The Commitment and the obligation of the Bank to make Revolving Loans hereunder shall not have terminated pursuant to Section 9.2 hereof.
Unless the Borrower shall have otherwise previously advised the Bank in writing, delivery to the Bank of a Request for Loan shall be deemed to constitute a representation and warranty by the Borrower that on the Effective Date and on the date of such Request for Loan and on the date of the proposed Revolving Loan each such condition is satisfied.
Section 2.4. Fees.
(a) Commitment Fee. The Borrower agrees to pay to the Bank a nonrefundable annual fee (the “Commitment Fee”), payable quarterly in arrears on each Quarterly Payment Date and on the Commitment Termination Date, accruing at the Commitment Fee Rate on the Available Commitment in effect on each day during the preceding quarterly period. The Commitment Fee shall be calculated on the basis of a 360-day year and actual days elapsed.
(b) Amendment, Consent or Waiver Fee. Upon each amendment hereof, consent or waiver hereunder or under any Loan Document, the Borrower agrees to pay to the Bank an amendment fee of $2,500 and shall pay or cause to be paid attorneys’ fees and expenses, if any, incurred by the Bank in processing such amendment, consent or waiver. (c) Reduction or Termination Fee.
(i) The Borrower hereby agrees to pay to the Bank a reduction fee in connection with each and every permanent reduction of the Available Commitment prior to the first anniversary of the Effective Date in an amount equal to the product of (A) the Commitment Fee Rate in effect on the date of such reduction, (B) the difference between the Available Commitment (without regard to any temporary reductions of the Available Commitment) prior to such reduction and the Available Commitment (without regard to any temporary reductions of the Available Commitment) after such reduction, and (C) a fraction, the numerator of which is equal to the number of days from and including the date of such reduction to and including the first anniversary of the Effective Date and the denominator of which is 360, payable on the date the Available Commitment is reduced.
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(ii) The Borrower hereby agrees to pay to the Bank a termination fee in connection with the termination of the Commitment prior to the first anniversary of the Effective Date in an amount equal to the product of (A) the Commitment Fee Rate in effect on the date of termination, (B) the Available Commitment then in effect (without regard to any temporary reductions of the Available Commitment), and (C) a fraction, the numerator of which is equal to the number of days from and including the date of such termination to and including the first anniversary of the Effective Date and the denominator of which is 360 payable on the date the Commitment is terminated.
Section 2.5. Reduction and Termination.
(a) Subject to Section 2.4(c)(i), the Available Commitment shall be reduced from time to time as requested by the Borrower within five (5) days of the Borrower’s written notice to the Bank requesting such reduction in the form of Exhibit E hereto; provided, that (i) each such reduction amount shall be in an amount equal to $500,000 or an integral multiple of $100,000 in excess thereof, and (ii) any reduction in the Available Commitment shall not be effective until the Bank delivers to the Borrower a notice in the form attached hereto as Exhibit F reflecting such reduction. (b) Subject to Section 2.4(c)(ii), the Borrower may at any time and at its sole option terminate the Commitment and reduce the Available Commitment to zero upon five (5) days’ prior written notice to the Bank in the form of Exhibit E hereto; provided, that any termination of the Commitment and reduction of the Available Commitment to zero shall not be effective until the Bank delivers to the Borrower a notice in the form attached hereto as Exhibit G reflecting such termination. As a condition to any such termination, the Borrower shall pay or cause to be paid all Payment Obligations owed to the Bank.
Section 2.6. Extension of Stated Commitment Expiration Date. The Borrower may request an extension of the Stated Commitment Expiration Date in writing in the form of Exhibit C hereto not more than one hundred twenty (120) days prior to the then current Stated Commitment Expiration Date and not less than ninety (90) days prior to the then current Stated Commitment Expiration Date. The Bank will make reasonable efforts to respond to such request within sixty (60) days after receipt of such request, provided, that promptly upon request thereof by the Bank to the Borrower, the Bank receives all information necessary, in the Bank’s judgment, to permit the Bank to make an informed credit decision. If the Bank fails to definitively respond to such request within such sixty (60) day period, the Bank shall be deemed to have refused to grant the extension requested and the Borrower may submit additional requests for extension to the Bank and such additional requests shall not be governed by the time periods set forth above in this Section 2.6. The Bank may, in its sole and absolute discretion, decide to accept or reject any such request for extension and no extension shall become effective unless the Bank shall have consented thereto in writing in the form of Exhibit D hereto or otherwise. The Bank’s consent, if granted, shall be conditioned upon the preparation, execution and delivery of documentation in form and substance satisfactory to the Bank.
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ARTICLE III
REVOLVING LOANS
Section 3.1. Revolving Loans Evidenced by Note. The Revolving Loans will be evidenced by a single promissory note evidencing all Revolving Loans, in substantially the form set forth in Exhibit A hereto (as amended or supplemented from time to time, the “Note”) to be issued on the Effective Date, payable to the Bank in a principal amount of $25,000,000 (or, if less, the aggregate unpaid principal amount of all Revolving Loans made by the Bank from time to time hereunder) and otherwise duly completed. All Revolving Loans made by the Bank and all payments and prepayments made on account of principal thereof shall be recorded by the Bank as set forth in Section 10.1 hereof.
Section 3.2. Interest on Revolving Loans. Subject to Section 3.7 hereof, (a) each Revolving Loan shall bear interest on the outstanding principal amount thereof from the related Loan Date to the date such Revolving Loan is repaid to the Bank at a rate per annum equal to the Floating Rate, (b) upon a Determination of Taxability, each Revolving Loan shall bear interest on the outstanding principal amount thereof at a rate per annum equal to the Taxable Rate in accordance with the provisions of Section 3.5 hereof, and (c) upon the occurrence and during the continuance of an Event of Default, each Revolving Loan shall bear interest on the outstanding principal amount thereof at a rate per annum equal to the Default Rate. Interest on each Revolving Loan shall be paid to the Bank quarterly in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.
Section 3.3. Repayment of Revolving Loans. The principal of each Revolving Loan shall be repaid in full on the Revolving Loan Maturity Date.
Section 3.4. Prepayment of Revolving Loans. The Borrower may prepay any Revolving Loan, in whole or in part, on any Business Day, without cost, penalty or premium, provided written notice is provided by the Borrower to the Bank in the form of Exhibit I hereto not later than 8:00 a.m., California time, on the date which is at least ten (10) Business Days prior to the Prepayment Date. Each such notice of optional prepayment shall be irrevocable and shall bind the Borrower to make such prepayment in accordance with such notice. Accrued interest on all prepayments of principal to the Prepayment Date shall be payable on the Prepayment Date.
Section 3.5. Determination of Taxability.
(a) In the event a Taxable Date occurs, the Borrower hereby agrees to pay to the Bank or the Noteholder on demand therefor (i) an amount equal to the difference between (A) the amount of interest that would have been paid to the Bank or the Noteholder, as applicable, on any Revolving Loans during the period for which interest on such Revolving Loans, as applicable, is includable in the gross income of the Bank or the Noteholder, as applicable, if such Revolving Loans had borne interest at the Taxable Rate, beginning on the Taxable Date (the “Taxable Period”), and (B) the amount of interest actually paid to the Bank or the Noteholder, as applicable, during the Taxable Period, and (ii) an amount equal to any interest, penalties or charges owed by the Bank or a Noteholder,
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as applicable, as a result of interest on the Revolving Loans becoming includable in the gross income of the Bank or such Noteholder, as applicable, together with any and all reasonable attorneys’ fees, court costs, or other out of pocket costs incurred by the Bank or such Noteholder, as applicable, in connection therewith; (b) Subject to the provisions of clauses (c) and (d) below, the Bank shall afford the Borrower the opportunity, at the Borrower’s sole cost and expense, to contest (i) the validity of any amendment to the Code which causes the interest on any Revolving Loan to be includable in the gross income of the Bank or the Noteholder or (ii) any challenge to the validity of the tax exemption with respect to the interest on any Revolving Loan, including the right to direct the necessary litigation contesting such challenge (including administrative audit appeals);
(c) As a condition precedent to the exercise by the Borrower of its right to contest set forth in clause (b) above, the Borrower shall, on demand, immediately reimburse the Bank or the Noteholder, as applicable, for any and all expenses (including reasonable attorneys’ fees for services that may be required or desirable) that may be incurred by the Bank or the Noteholder, as applicable, in connection with any such contest, and shall, on demand, immediately reimburse the Bank or the Noteholder, as applicable, for any and all penalties or other charges payable by the Bank or the Noteholder, as applicable, for failure to include such interest in its gross income; and (d) The obligations of the Borrower under this Section 3.5 shall survive the termination of the Commitment and this Agreement.
Section 3.6. Daily Simple SOFR Confirming Changes. In connection with the use or administration of Daily Simple SOFR, the Bank will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document. The Bank will promptly notify the Borrower of the effectiveness of any Conforming Changes in connection with the use or administration of Daily Simple SOFR.
Section 3.7. Changed Circumstances.
(a) Circumstances Affecting Benchmark Availability. Subject to clause (c) below, in connection with any request for a Revolving Loan or otherwise, if for any reason (i) the Bank shall determine (which determination shall be conclusive and binding absent manifest error) that reasonable and adequate means do not exist for ascertaining Daily Simple SOFR pursuant to the definition thereof or (ii) the Bank shall determine (which determination shall be conclusive and binding absent manifest error) that Daily Simple SOFR does not adequately and fairly reflect the cost to the Bank of making or maintaining such Revolving Loans, then, in each case, the Bank shall promptly give notice thereof to the Borrower. Upon notice thereof by the Bank to the Borrower, any obligation of the Bank to make Revolving Loans shall be suspended (to the extent of the affected Revolving Loans) until the Bank revokes such notice. Upon receipt of such notice, (A) the Borrower may revoke any pending request for a borrowing of Revolving Loans (to the extent of the
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affected Revolving Loans) or, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of Revolving Loans bearing interest at the Prime Rate in the amount specified therein and (B) any outstanding affected Revolving Loans will be deemed to have been converted into Revolving Loans bearing interest at the Prime Rate immediately. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted. (b) Laws Affecting SOFR Availability. If, after the date hereof, the introduction of, or any change in, any applicable Law or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by the Bank (or its respective lending offices) with any request or directive (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, shall make it unlawful or impossible for the Bank (or its respective lending offices) to honor its obligations hereunder to make or maintain any Revolving Loan, or to determine or charge interest based upon SOFR or Daily Simple SOFR, the Bank shall promptly give notice thereof to the Borrower (an “Illegality Notice”). Thereafter, until the Bank notifies the Borrower that the circumstances giving rise to such determination no longer exist, any obligation of the Bank to make Revolving Loans shall be suspended. Upon receipt of an Illegality Notice, the Borrower shall, if necessary to avoid such illegality, upon demand from the Bank, prepay or, if applicable, convert all Revolving Loans to Revolving Loans bearing interest at the Prime Rate. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted. (c) Benchmark Replacement Setting.
(i) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, upon the occurrence of a Benchmark Transition Event, the Bank and the Borrower may amend this Agreement to replace the then-current Benchmark with a Benchmark Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. on the fifth (5th) Business Day after the Bank has posted such proposed amendment to the Borrower. No replacement of a Benchmark with a Benchmark Replacement pursuant to this Section 3.7(c)(i) will occur prior to the applicable Benchmark Transition Start Date.
(ii) Benchmark Replacement Conforming Changes. In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Bank will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.
(iii) Notices; Standards for Decisions and Determinations. The Bank will promptly notify the Borrower of (A) the implementation of any Benchmark Replacement and (B) the effectiveness of any Conforming Changes in connection
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with the use, administration, adoption or implementation of a Benchmark Replacement. The Bank will promptly notify the Borrower of the removal or reinstatement of any tenor of a Benchmark pursuant to Section 3.7(c)(iv). Any determination, decision or election that may be made by the Bank pursuant to this Section 3.7(c), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 3.7(c).
(iv) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (A) if the thencurrent Benchmark is a term rate and either (1) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Bank in its reasonable discretion or (2) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Bank may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (B) if a tenor that was removed pursuant to clause (A) above either (1) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (2) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Bank may modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(v) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, (A) the Borrower may revoke any pending request for a borrowing of Revolving Loans to be made during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of Revolving Loan bearing interest at the Prime Rate and (B) any outstanding affected Revolving Loans will be deemed to have been converted to Revolving Loans bearing interest at the Prime Rate immediately.
ARTICLE IV
SECURITY AND PLEDGE
Section 4.1. Security and Pledge. To secure the payment of all Payment Obligations, the Borrower hereby pledges, grants and assigns in favor of the Bank a lien upon the Net Revenues, which lien as it relates to Net Revenues is senior to all liens other than the lien of the Indenture
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and the Parity Obligation Documents securing the payment of the Bonds and the Parity Obligations. No filing, registering, recording or publication of this Agreement or any other Loan Document is required to establish the pledge hereunder or to perfect, protect or maintain the lien created hereby on the Net Revenues. The pledge and lien hereby granted shall remain effective for so long as any Payment Obligations remain unpaid. No obligations of the Borrower are entitled to the benefit of a prior lien and charge on any portion of the Net Revenues other than the payment of the Senior Debt.
ARTICLE V
LIABILITY, INDEMNITY AND PAYMENT
Section 5.1. Liability of the Borrower. The Borrower and the Bank agree that the obligation of the Borrower to pay the Payment Obligations is a contractual obligation of the Borrower payable solely from Net Revenues, shall not constitute a full faith and credit general obligation of the Borrower and shall not be affected by, and the Bank shall not be responsible for, among other things, (i) the validity, genuineness or enforceability of this Agreement, the Note or documents, notices or endorsements relating thereto (even if this Agreement or any documents, notices endorsements relating thereto should in fact prove to be in any and all respects invalid, fraudulent or forged), (ii) the use to which the amounts disbursed by the Bank may be put, or (iii) any other circumstances or happenings whatsoever, whether or not similar to any of the foregoing.
Section 5.2. Indemnification by the Borrower.
(a) (a) To the fullest extent permitted by law, the Borrower agrees to indemnify, defend and hold harmless the Bank, the Participants and their respective officers, directors, employees, representatives and agents (collectively, the “Indemnified Parties” and, individually, an “Indemnified Party”), from and against any and all claims, damages, penalties, actions, judgments, suits, disbursements, losses, liabilities, costs or expenses whatsoever (including reasonable attorneys’ fees) which any of them may incur (or which may be claimed against any of them by any Person) as a result of, or arising out of, or in any way related to, or by reason of or in connection with (i) the execution and delivery or transfer of, or payment or failure to pay under this Agreement or the Note, (ii) the application of the proceeds of Revolving Loans, (iii) any breach by the Borrower of any warranty, covenant, term or condition in, or the occurrence of any default under any of the Loan Documents, together with all reasonable expenses resulting from the compromise or defense of any claims or liabilities arising as a result of any such breach or default, (iv) any action or proceeding relating to a court order, injunction or other process or decree restraining or seeking to restrain the Bank from paying any amount under this Agreement (other than actions or proceedings instituted by or on behalf of the Bank), (v) any investigation, litigation or other proceeding (whether or not the Bank or any Participant is a party thereto) related to the entering into and/or each performance of any of the Loan Documents or the use of the proceeds of any Revolving Loan under this Agreement, or (vi)(A) any condition of the Water System, including without limitation, any environmental condition, (B) the construction, reconstruction, improvement, use, occupancy, conduct or management of or any work or anything whatsoever done or omitted to be done in or about
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the Water System or (C) any accident, injury or damage whatsoever to any person occurring in or about the Water System; provided, that the Borrower shall not be required to indemnify the Bank for any claims, damages, penalties, actions, judgments, suits, disbursements, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by (i) the willful misconduct or gross negligence of the Bank (as determined by a final order of a court of competent jurisdiction) in determining whether a Request for Loan presented hereunder complied with the terms hereof, or (ii) the Bank’s failure (as determined by a final order of a court of competent jurisdiction) to pay under any requested Revolving Loan after the presentation to it by the Borrower of a Request for Loan strictly complying with the terms and conditions hereof.
(b) The obligations of the Borrower hereunder shall include, but not be limited to (i) the burden and expense of defending all claims, suits and administrative proceedings (with counsel chosen by the Borrower and reasonably approved by the Indemnified Parties), even if such claims, suits or proceedings are groundless, false or fraudulent, (ii) conducting all negotiations of any description, and (iii) paying and discharging, when and as the same become due, any and all claims, damages, penalties, actions, judgments, suits, disbursements, losses, liabilities, costs or expenses due from or rendered against the Indemnified Parties.
(c) Nothing in this Section 5.2 is intended to limit the obligations of the Borrower contained in Section 5.7 hereof.
(d) The obligations of the Borrower under this Section 5.2 shall survive the termination of the Commitment and the payment in full of all Payment Obligations.
Section 5.3. Increased Costs.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, liquidity ratio, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, the Bank (except any reserve requirement contemplated by Section 5.3(d) below);
(ii) subject the Bank to any taxes on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on the Bank any other condition, cost or expense affecting this Agreement or any Revolving Loans made by the Bank; and the result of any of the foregoing shall be to increase the cost to the Bank of making, converting to, continuing or maintaining any Revolving Loan (or of maintaining its obligation to make any such Revolving Loan), or to reduce the amount of any sum received or receivable by the Bank hereunder (whether of principal, interest or any other amount) then, upon request of the Bank, the Borrower will pay to the Bank, such additional amount
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or amounts as will compensate the Bank, for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If the Bank determines that any Change in Law affecting the Bank or the Bank’s Office or the Bank’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on the Bank’s capital or on the capital of the Bank’s holding company, if any, as a consequence of this Agreement, the Commitment or the Revolving Loans made by the Bank, to a level below that which the Bank or the Bank’s holding company could have achieved but for such Change in Law (taking into consideration the Bank’s policies and the policies of the Bank’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to the Bank, as the case may be, such additional amount or amounts as will compensate Bank or the Bank’s holding company for any such reduction suffered.
(c) A certificate of the Bank setting forth the amount or amounts necessary to compensate the Bank or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay the Bank the amount shown as due on any such certificate within thirty (30) days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of the Bank to demand compensation pursuant to the foregoing provisions of this Section 5.3 shall not constitute a waiver of the Bank’s right to demand such compensation, provided, that the Borrower shall not be required to compensate the Bank pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that the Bank notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of the Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine (9) month period referred to above shall be extended to include the period of retroactive effect thereof).
Section 5.4. Calculation of Interest and Fees; Maximum Interest Rate; Default Rate. (a) Interest payable hereunder or under the Note or any other Loan Document shall be calculated on the basis of a year of three hundred sixty (360) days based on the actual number of days elapsed. The Commitment Fee payable hereunder shall be calculated on the basis of a year of three hundred sixty (360) days based on the actual number of days elapsed. Any change in the Floating Rate or the Default Rate resulting from a change in Daily Simple SOFR, the Federal Funds Rate or the Prime Rate shall become effective as of the opening of business on the day on which such change in Daily Simple SOFR, the Federal Funds Rate or the Prime Rate shall become effective. Each determination by the Bank of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error. All fees hereunder shall be fully earned on the date when due and, once paid, shall be non-refundable. If the Floating Rate becomes equal to the Default Rate pursuant to their definitions hereunder, the Borrower shall also pay all amounts due hereunder due to such change in the interest rate. The Bank shall
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promptly notify the Borrower of the Floating Rate promptly following each Loan Date; provided, however, that the failure by the Bank to provide notice of the Floating Rate shall not relieve the Borrower of its obligations arising under or related to this Agreement, the Note or the other Loan Documents.
(b) Any and all amounts remaining unpaid when due under this Agreement, the Note or any other Loan Document shall bear interest at the Default Rate until repaid and shall be payable upon demand. Any such amounts which constitute interest remaining unpaid when due shall be added to principal, and such interest shall, in turn, bear interest at the Default Rate until repaid and shall be payable upon demand. Any sum payable by the Borrower to the Bank hereunder or under the Note or any other Loan Document upon the occurrence or during the continuance of any Event of Default hereunder shall bear interest at the Default Rate.
(c) To the extent permitted by law, in the event that a rate of interest required to be paid by the Borrower under this Agreement, the Note or any other Loan Document shall exceed a maximum rate established by law or by the Resolution, any subsequent reduction in the rate of interest required to be paid by the Borrower hereunder or under the Note or any other Loan Document will not reduce the rate of interest below the maximum rate established by law until the total amount of interest accrued equals the amount of interest which would have accrued if the rate of interest required hereunder or under the Note or any other Loan Document (without giving effect to this paragraph) had at all times been in effect. Upon the date on which all amounts payable on Revolving Loans or other Payment Obligations are due and payable, and otherwise immediately on the Revolving Loan Maturity Date, in consideration for the limitation of the rate of interest otherwise payable under this Agreement, the Note or any other Loan Document, the Borrower shall pay to the Bank a fee equal to the amount of all such unpaid interest which would have accrued if the rate of interest required hereunder or under the Note or any other Loan Document (without giving effect to this paragraph) had at all times been in effect. (d) All amounts paid by the Borrower pursuant to this Agreement, the Note or any other Loan Document shall be non-refundable and shall be paid in lawful money of the United States of America in immediately available funds.
Section 5.5. Form and Method of Payments; Late Payment; Net Payments. (a) Form and Method of Payments. All payments made to the Bank under this Agreement, the Note or any other Loan Document shall be made not later than 4:00 p.m. (California time) without setoff, counterclaim or other defense by wire transfer in lawful currency of the United States and in immediately available funds to the Bank by the wire instructions set forth in Section 10.3 (or at such other bank, address or account as the Bank may designate in writing from time to time to the Borrower). Any payment received by the Bank later than 4:00 p.m. (California time) shall be deemed to be made on the next succeeding Business Day. If any payment required to be made by the Borrower hereunder or under the Note or any other Loan Document becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and interest thereon shall be payable at the applicable rate during such extension.
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(b) Late Payment. In addition to any other rights the Bank may have hereunder or under the Note or any other Loan Document, if any payment of principal or interest or portion thereof, under this Agreement, the Note or any other Loan Document is not paid within fifteen (15) days of when due, a late payment charge equal to five percent (5%) of such past due payment may be assessed and shall be immediately payable. (c) Net Payments. All such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein (but excluding any tax imposed on the overall net income of the Bank or a Participant pursuant to the laws of the jurisdiction (or any political subdivision or taxing authority thereof or therein) in which the principal office of the Bank or such Participant is located) and all interest, penalties or similar liabilities with respect thereto (collectively, “Taxes”); provided, however, that the Borrower shall have no liability with respect to any Taxes which are imposed on the Bank or any Participant that is a foreign banking institution pursuant to the laws of the jurisdiction (or any political subdivision or taxing authority thereof or therein) in which the principal office of the Bank or such Participant, as the case may be, is located, unless (i) the Bank or such Participant, as the case may be, is entitled to benefits of an income tax treaty with the United States that provides for an exemption from United States withholding tax on interest and other amounts payable to the Bank or such Participant, as the case may be, pursuant to the terms of this Agreement, the Note or any other Loan Document, or (ii) all interest and other amounts payable to the Bank or such Participant, as the case may be, pursuant to the terms of this Agreement, the Note or any other Loan Document will be effectively connected with the conduct by the Bank or such Participant, as the case may be, of a trade or business within the United States. If any Taxes are so levied or imposed, the Borrower agrees to pay the full amount of such Taxes and such additional amounts as may be necessary so that every payment of all amounts due hereunder or under the Note or the other Loan Documents, after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein or in the Note or the other Loan Documents. The Borrower will deliver to the Bank within fortyfive (45) days after the date the payment of any Taxes is due pursuant to applicable law certified copies of tax receipts evidencing such payment by the Borrower. To the extent permitted by law, the Borrower will indemnify and hold harmless the Bank and each Participant, and reimburse the Bank and each Participant upon written request, for the amount of any Taxes so levied or imposed and paid by the Bank or such Participant.
Section 5.6. Liability of the Bank. Neither the Bank nor any of its officers, directors, employees, representatives or agents shall be liable or responsible for (i) the use which may be made of any Revolving Loans or this Agreement or for any acts, omissions, errors, interruptions, delays in transmission, dispatch or delivery of any message or advice, however transmitted, of the Bank in connection with this Agreement or the Note, (ii) any action, inaction or omission which may be taken by the Bank in connection with this Agreement or the Note, (iii) the validity, sufficiency or genuineness of documents, or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged, (iv) payment by the Bank against presentation of documents which do not comply with the terms of this Agreement or a Request for Loan, including failure of any documents to bear any reference
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or adequate reference to this Agreement, or (v) any other circumstances whatsoever in making or failing to make payment under this Agreement or pursuant to a Request for Loan, except for acts or events described in the immediately preceding clauses (i) through (v), to the extent, but only to the extent, of any direct, as opposed to special, indirect, consequential or punitive, damages (the right to receive special, indirect, consequential or punitive damages being hereby waived) suffered by it which the Borrower proves were caused by (y) the Bank’s willful misconduct or gross negligence in determining whether documents presented under this Agreement comply with the terms of this Agreement or (z) the Bank’s failure to pay hereunder after the presentation to it of a Request for Loan strictly complying with the terms and conditions of this Agreement. The Borrower further agrees that any action taken or omitted by the Bank under or in connection with this Agreement or the related draft or documents, if done without gross negligence, shall be effective against the Borrower as to the rights, duties and obligations of the Bank and shall not place the Bank under any liability to the Borrower. In furtherance and not in limitation of the foregoing, the Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary.
Section 5.7. Obligations Unconditional. The Borrower’s obligation to pay the Payment Obligations and to perform and observe all of its other obligations under this Agreement, the Note or any other Loan Document shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower may have against the Bank, any Participant, or any other Person, including, without limitation, any defense based on the failure of any nonapplication or misapplication of the proceeds of Revolving Loans hereunder, and irrespective of the legality, validity, regularity or enforceability of this Agreement, the Note or any or all other Loan Documents, and notwithstanding any amendment or waiver of (other than an amendment or waiver signed by the Bank explicitly reciting the release or discharge of any such obligation), or any consent to, or departure from, this Agreement, the Note or any or all other Loan Documents or any exchange, release, or nonperfection of any collateral securing the obligations of the Borrower hereunder and any other circumstances or happening whatsoever, whether or not similar to any of the foregoing; provided, however, that nothing contained in this Section 5.7 shall abrogate or otherwise affect the rights of the Borrower pursuant to Section 5.2 hereof.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.1. Representations and Warranties of the Borrower. To induce the Bank to enter into this Agreement, the Borrower hereby represents and warrants to the Bank as of the Effective Date and as of the date of each Request for Loan and as of the date of each Revolving Loan, as follows:
(a) Organization Existence. The Borrower is a municipal corporation duly organized, validly existing and in good standing under and pursuant to the laws of the State. (b) Power and Authority. The Borrower has and had at the time of adoption, execution, delivery, issuance, sale or performance full power, right and authority to (i) execute, deliver and perform its obligations hereunder and under the Note and each of
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the other Loan Documents, and any and all instruments and documents required to be executed, adopted or delivered pursuant to or in connection herewith or therewith, (ii) pay the Payment Obligations at the times and in the manner set forth herein, (iii) own and operate the Water System, and (iv) perform each and all of the matters and things herein and therein provided for and the Borrower has complied with the laws of the State in, all matters relating to such execution, delivery and performance. (c) Due Authorization. This Agreement, the Note and each of the other Loan Documents have been duly authorized, executed, issued and delivered and constitute the legal, valid and binding obligations of the Borrower enforceable in accordance with their terms.
(d) Necessary Actions Taken. The Borrower has taken all actions necessary to be taken by it (i) for the adoption, execution, adoption and delivery by the Borrower of any and all such other instruments and the taking of all such other actions on the part of the Borrower as may be necessary or appropriate for the effectuation and consummation of the transactions on the part of the Borrower contemplated by the Loan Documents or in connection herewith or therewith and (ii) to authorize or approve, as appropriate, the execution or adoption, issuance and delivery of, and the performance of its obligations under and the transactions contemplated by, each of the Loan Documents and the payment of the Payment Obligations at the times and in the manner set forth herein. (e) Binding Effect. The Resolution has been duly adopted and is in full force and effect. This Agreement, the Note and each of the other Loan Documents has been duly authorized, executed and delivered by the Borrower and each constitutes a legal, valid and legally binding obligation of the Borrower, which obligation is enforceable in accordance with its terms, and the payment of the Payment Obligations is and shall continue to be a contractual obligation of the Borrower for which the Net Revenues are and shall continue to be pledged as provided in the Loan Documents, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, debt adjustment, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally or as to the availability of any particular remedy. No other Governmental Approval or other action by, and notice to or filing with, any Governmental Authority, and no election or referendum of or by any Person, organization or public body whatsoever required in connection with any of the foregoing actions or the performance by the Borrower of its obligations under the Loan Documents that has not been obtained. There are no provisions of State law which would allow, as of the date hereof or any date subsequent hereto, any public vote or referendum, the results of which could invalidate this Agreement, the Note or any other Loan Document or invalidate, limit or condition the obligation of the Borrower to pay the Payment Obligations to the Bank or any other obligation or pledge undertaken hereunder or in connection with the transactions contemplated by the Loan Documents.
(f) No Contravention. The adoption of the Resolution and the execution, delivery and performance of this Agreement, the Note and each of the other Loan Documents, and compliance with the provisions hereof and thereof, do not and will not (i) conflict with or result in a violation of any Laws, including any debt limitations or other
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restrictions or conditions on the debt-issuing power of the Borrower, (ii) contravene the Borrower’s authorizing legislation, (iii) require any consent or approval of any creditor of the Borrower, (iv) conflict with or result in a violation of, or breach of, or constitute a default under, any law, judgment, order, decree or administrative regulation or any of the terms, conditions or provisions of any ordinance, judgment, decree, contract, loan agreement, note, bond, resolution, indenture, mortgage, deed of trust or other agreement or instrument to which the Borrower is a party or by which it or any property of the Borrower is bound and (v) do not and will not result in the imposition or creation of any Lien upon or invalidate or adversely affect in any way the Net Revenues. The Borrower has not received any notice, not subsequently withdrawn, given in accordance with the remedy provisions of any bond resolution or ordinance, trust indenture, guarantee or agreement or state law pertaining to bonds or notes, of any default or event of default of the Borrower which has not been cured.
(g) Compliance with Law; Employee Benefit Plan Compliance. The Borrower is in compliance with all Laws (including, without limitation, Regulations T, U or X of the FRB, or any successor regulations), except for such noncompliance that singly or in the aggregate, has not caused or is not reasonably expected to cause a Material Adverse Effect.
The current collection of the Net Revenues and the management of the Water System and the accounting and recordkeeping therefor are in material compliance with all applicable state and federal laws and all applicable resolutions, ordinances and rules of the Borrower.
The Borrower is in material compliance with the terms of the employee benefit plans in which the Borrower or any of its employees participate. Neither the Borrower nor any employee benefit plan maintained by the Borrower, or to which the Borrower contributes (or has contributed or is required to contribute) is subject to the Employee Retirement Income Security Act of 1974, as amended.
(h) Compliance; No Breach. The Borrower is in compliance with the terms and conditions of each of the Loan Documents, and no breach of the terms hereof or thereof has occurred and is continuing, and no Default or Event of Default has occurred and is continuing.
(i) No Default. No default by the Borrower has occurred and is continuing in the payment of the principal of or premium, if any, or interest on any bond, note or other evidence of indebtedness issued by the Borrower with a lien on any portion of the Net Revenues. No bankruptcy, insolvency or other similar proceedings pertaining to the Borrower or any agency or instrumentality of the Borrower are pending or contemplated.
The Borrower is not in default under any other contract, loan agreement, note, bond, resolution, indenture, mortgage, deed of trust or other agreement or instrument to which the Borrower is a party or by which it or any property of the Borrower is bound, which default could have a Material Adverse Effect. The Borrower is in compliance with the terms and conditions of all Net Revenue Debt, and no breach of the terms hereof or thereof has occurred and is continuing, and no default or event of default under any Net Revenue Debt has occurred and is continuing.
(j) No Public Vote or Referendum; Pending Legislation and Decisions. To the best knowledge of the Borrower, there is no public vote or referendum pending, proposed
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or concluded, the results of which could in any way adversely affect the transactions contemplated by the Loan Documents, or the validity or enforceability of the Loan Documents. To the knowledge of the Borrower, there is no amendment, or proposed amendment to the Constitution or any law of the State or any administrative interpretation of the Constitution or any law of the State, or any legislation that has passed either house of the legislature of the State, or any judicial decision interpreting any of the foregoing, the effect of which could in any way adversely affect the transactions contemplated by the Loan Documents, or the validity or enforceability of the Loan Documents, or could otherwise reasonably be expected to result in a Material Adverse Effect. (k) No Immunity. The Borrower is not entitled to raise the defense of sovereign or governmental immunity in connection with any legal proceedings to enforce or collect upon this Agreement, the other Loan Documents or the transactions contemplated hereby or thereby, including the payment of the principal of and interest on the Revolving Loans or the payment of the other Payment Obligations.
(l) Litigation. There is no action, suit, inquiry, investigation or proceeding at law or in equity pending, or to the best knowledge of the Borrower, threatened, against or affecting the Borrower or the Water System before any court, governmental agency, authority, arbitrator or administrative or governmental body which (i) could result in any Material Adverse Effect, (ii) which in any manner draws into question the validity or enforceability of this Agreement, the Note or any other Loan Document, the pledge of the Net Revenues or the priority of any lien in favor of the Bank, (iii) which in any way affects the existence, organization or powers of the Borrower or any elected official thereof to execute and deliver any of this Agreement, the Note or the other Loan Documents or perform the obligations thereunder or contemplated thereby, (iv) affects the title of any official of the Borrower to such Person’s office, (v) seeks to restrain or enjoin the collection or the pledge of the Net Revenues to pay the Payment Obligations at the times and in the manner set forth in the Loan Documents, (vi) in any way contests or affects the validity or enforceability of any of this Agreement, the Note or the other Loan Documents, (vii) contests in any way the powers or authority of the Borrower with respect to any of this Agreement, the Note or the other Loan Documents, or (viii) which could materially adversely affect the ability of the Borrower to timely comply with its obligations under or in respect of any of this Agreement, the Note or the other Loan Documents or in connection with the transactions contemplated hereby or thereby.
(m) Disclosure. Neither the Loan Documents nor any other document, certificate or statements (including the unaudited financial statements, budgets, projections and cash flows) of the Borrower and the Water System furnished to the Bank by or on behalf of the Borrower in connection with the transactions contemplated hereby, or thereby contains any untrue statement of any material fact or omits to state any material fact necessary so as to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. (n) Financial Information. The Borrower has delivered to the Bank a copy of the audited financial statements for the Borrower and the Water System for the most recently completed Fiscal Year. These together with related notes, fairly present the
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condition (financial or otherwise), results of operations or projections of revenues of the Water System as of the date and for the periods therein set forth. All such financial statements have been prepared in accordance with Generally Accepted Accounting Principles for government entities consistently applied. There has been no change which would have a Material Adverse Effect since the last day of the Fiscal Year set forth in such financial statements. The Borrower has no material contingent liabilities or other material contracts or commitments which are not reflected in such financial statements or in the notes thereto. The annual operating budget of the Water System and any supplements thereto for the current Fiscal Year, a true and complete copy of which has been delivered to the Bank, fairly presents the anticipated income and expenses of the Water System and the Net Revenues for such Fiscal Year.
(o) Official Signatures. The Authorized Representative, on behalf of the Borrower, has full power and authority to execute, deliver and perform under each of the Loan Documents. Any agreement, certificate or request signed by or on behalf of any Authorized Representative and delivered to the Bank shall be deemed a representation and warranty by the Borrower to the Bank as to the truth, accuracy and completeness of the statements made by the Borrower therein.
(p) Incorporation of Representations and Warranties by Reference. The Borrower hereby makes to the Bank the same representations and warranties made by the Borrower in each Loan Document, which representations and warranties, as well as the related defined terms contained therein, are hereby incorporated by reference for the benefit of the Bank with the same effect as if each and every such representation and warranty and defined term were set forth herein in its entirety. No amendment to or waiver of such representations and warranties or defined terms made pursuant to any Loan Document shall be effective to amend such representations and warranties and defined terms as incorporated by reference herein without the prior written consent of the Bank. (q) Swap Contracts. The Borrower has not entered into any Swap Contract under which a termination payment would be required to be paid from any portion of the Net Revenues on basis senior to or on a parity with the lien on the Net Revenues securing the Payment Obligations.
(r) Insurance. The Borrower currently maintains insurance with respect to the Water System of such type and in such amounts or in excess of such amounts as are customarily carried by, and insures against such risks as are customarily insured against by, public agencies with similar public water systems. The Borrower maintains with responsible insurers all such insurance on the Water System required by Section 7.12 hereof.
(s) Usury. The terms of this Agreement, the Note and the other Loan Documents regarding the calculation and payment of interest and fees do not violate any applicable usury laws.
(t) Security. The Payment Obligations are payable from and secured by a Lien on the Net Revenues as set forth herein. No filing, registering, recording or publication of
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this Agreement is required to establish the pledge hereunder or to perfect, protect or maintain the Lien created hereby on the Net Revenues. No obligations of the Borrower are entitled to the benefit of a prior Lien on any portion of the Net Revenues other than the payment of the Senior Debt. No portion of the Net Revenues is subject to any Lien granted by or contractual obligation incurred by the Borrower other than the Lien of the Senior Debt Issuing Documents.
(u) Investment Policy. The Borrower has delivered to the Bank a true and complete copy of its investment policy. All investments of the Borrower have been and will be made substantially in accordance with such investment policy. Only the Borrower may amend, rescind or otherwise modify the Borrower’s investment policy. (v) Water System. The Borrower has maintained the Water System in good working order and repair, and there have been no changes to and no event has occurred which has had, or may result in, a Material Adverse Effect. (w) Environmental Matters. In the ordinary course of its business, the Borrower conducts an ongoing review of Environmental Laws on the business, operations and properties of the Borrower, in the course of which it identifies and evaluates associated liabilities and costs (including, without limitation, any capital or operating expenditures required for cleanup or closure of properties presently or previously owned or operated, any capital or operating expenditures required to achieve or maintain compliance with environmental protection standards imposed by law or as a condition of any license, permit or contract, any related constraints on operating activities, including any periodic or permanent shutdown of any facility or reduction in the level of or change in the nature of operations conducted thereat and any actual or potential liabilities to third parties, including employees, and any related costs and expenses). On the basis of such review the Borrower has reasonably concluded that Environmental Laws are unlikely to have a Material Adverse Effect.
(x) Anti-Money Laundering and Anti-Corruption Laws; Sanctions. (i) The Borrower has instituted, maintains and complies with policies, procedures and controls reasonably designed to assure compliance with AntiMoney Laundering Laws and Anti-Corruption Laws. To the best of the Borrower’s knowledge, after due care and inquiry, the Borrower is not under investigation for an alleged violation of Anti-Money Laundering Laws or Anti-Corruption Laws by a Governmental Authority that enforces such laws.
(ii) The Borrower is not a Sanctioned Target. The Borrower is not owned or controlled by, or is acting or purporting to act for or on behalf of, directly or indirectly, a Sanctioned Target. The Borrower has instituted, maintain and comply with policies, procedures and controls reasonably designed to assure compliance with Sanctions. To the best of the Borrower’s knowledge, after due care and inquiry, the Borrower is not under investigation for an alleged violation of Sanction(s) by a Governmental Authority that enforces Sanctions. The Borrower
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shall notify the Bank in writing not more than one Business Day after first becoming aware of any breach of this Section.
(y) Tax-Exempt Status. The Borrower has not taken any action or omitted to take any action, and knows of no action taken by any Governmental Authority, which action, if taken or omitted, would adversely affect the exclusion of interest on the Revolving Loans (and the Note) from gross income for purposes of federal income taxation.
ARTICLE VII
AFFIRMATIVE COVENANTS OF THE BORROWER
So long as the Commitment is outstanding and until all Payment Obligations shall have been paid in full, the Borrower hereby covenants and agrees that, unless the Bank shall otherwise consent in writing:
Section 7.1. Maintenance of Existence. The Borrower (a) shall maintain its existence as a municipal corporation duly organized and existing under and pursuant to the laws of the State and its rights, franchises and privileges material to the operation of the Water System and (b) shall not liquidate or dissolve, or sell or lease or otherwise transfer or dispose of all or any substantial part of its property, assets or business, or combine, merge or consolidate with or into any other entity or change the use of facilities or assets that generate Net Revenues.
Section 7.2. Reports, Certificates and Other Information. The Borrower shall furnish or cause to be furnished to the Bank copies of:
(a) (i) As soon as available, and in any event within two hundred seventy (270) days after the close of each Fiscal Year of the Borrower, the complete audited financial statements of the Borrower and the Water System including the balance sheet as of the end of such Fiscal Year and the related statements of revenues, expenses and cash flows and changes in fund balance for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the preceding Fiscal Year all in reasonable detail, certified and prepared by an independent certified public accountant (acceptable to the Bank) in accordance with GAAP, consistently applied, together (i) an opinion of an independent certified public accountant (acceptable to the Bank), which opinion shall not contain a “going concern” or other material qualification, to the effect that such financial statements fairly present the financial, changes in financial position and results of operations of the Borrower for such the last day of such Fiscal Year and for such Fiscal Year, and were prepared in accordance with generally accepted accounting principles, consistently applied, and (ii) a certificate of an Authorized Representative to the effect that no Default or Event of Default has occurred and is continuing, and certifying as to compliance with the covenants set forth in Sections 7.14 and 8.2 hereof and including a calculation showing the Borrower’s compliance with Section 7.14 hereof for such Fiscal Year;
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(ii) in connection with the financial statements required to be delivered by the Borrower pursuant to Section 7.2(a)(i) above, a Compliance Certificate signed by an Authorized Representative stating that no Event of Default or Default has occurred, or if such Event of Default or Default has occurred, specifying the nature of such Event of Default or Default, the period of its existence, the nature and status thereof and any remedial steps taken or proposed to correct such Event of Default or Default;
(b) As soon as available for each Fiscal Year, and in any event no later than ninety (90) days following the commencement of each Fiscal Year, a copy of a balanced annual operating budget for the Borrower and the Water System for such Fiscal Year and a certificate of an Authorized Representative to the effect that such annual operating budget includes all amounts reasonably anticipated to be necessary to make all payments in respect of the Payment Obligations due in such Fiscal Year;
(c) As soon as available, any disclosure documents distributed in connection with the original issuance or incurrence of any Net Revenue Debt; (d) Promptly upon obtaining knowledge of any Default or Event of Default, or notice thereof, and within five (5) days thereafter, a certificate signed by an Authorized Representative specifying in reasonable detail the nature and period of existence thereof and what action the Borrower has taken or proposes to take with respect thereto; (e) As soon as practicable, written notice to the Bank of all litigation served against the Borrower and all proceedings before any court or governmental authority which, in each case, directly or indirectly relates to the enforceability of this Agreement, the Note or any of the other Loan Documents or could have a Material Adverse Effect and promptly upon obtaining knowledge thereof, written notice to the Bank of the occurrence of any other event which could have a Material Adverse Effect; (f) Copies of any filings (including annual reports and notice of events described in the United States Securities and Exchange Commission Rule 15c2- 12(b)(5)(i)(C), if any) the Borrower files in the normal course of affairs with any nationally recognized municipal securities repository with respect to any Net Revenue Debt pursuant to any continuing disclosure agreement;
(g) Promptly after the adoption thereof and to the extent the Bank is not required to receive and make notice of the same, copies of any amendments to the Loan Documents or a waiver to any provisions of the same.
(h) Such other information regarding the affairs and condition of the Borrower or the Water System as the Bank may from time to time reasonably request.
Section 7.3. Maintenance of Books and Records. The Borrower shall keep proper books of record and account in which full, true and correct entries in accordance with the Borrower’s budget basis accounting principles and reporting practices shall be made of all dealings or transactions in relation to its activities.
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Section 7.4. Access to Books and Records. To the extent permitted by law, the Borrower shall permit any Person designated by the Bank to visit any of the offices of the Borrower to examine the books and financial records, including minutes of meetings of any relevant governmental committees or agencies, and make copies thereof or extracts therefrom, and to discuss the affairs, finances and accounts of the Borrower with its principal officials, all at such reasonable times and as often as the Bank may reasonably request.
Section 7.5. Compliance with Documents. The Borrower shall perform and comply with each and every covenant and agreement required to be performed or observed by it herein and in the Note and in each of the other Loan Documents, which provisions, as well as related defined terms contained therein, are hereby incorporated by reference herein with the same effect as if each and every such provision were set forth herein in its entirety all of which shall be deemed to be made for the benefit of the Bank and shall be enforceable against the Borrower. To the extent that any such incorporated provision permits the Borrower or any other party to waive compliance with such provision or requires that a document, opinion or other instrument or any event or condition be acceptable or satisfactory to the Borrower or any other party, for purposes of this Agreement, such provision shall be complied with only if it is specifically waived by the Bank in writing and such document, opinion or other instrument and such event or condition shall be acceptable or satisfactory only if it is acceptable or satisfactory to the Bank which shall only be evidenced by the Bank’s written approval of the same. No termination or amendment to such covenants and agreements or defined terms or release of the Borrower with respect thereto made pursuant to the Loan Documents shall be effective to terminate or amend such covenants and agreements and defined terms or release of the Borrower with respect thereto as incorporated by reference herein without the prior written consent of the Bank. Notwithstanding any termination or expiration of any such Loan Document, the Borrower shall continue to observe the covenants therein contained for the benefit of the Bank until the termination of this Agreement. All such incorporated covenants shall be in addition to the express covenants contained herein and shall not be limited by the express covenants contained herein nor shall such incorporated covenants be a limitation on the express covenants contained herein.
Section 7.6. Environmental Compliance. The Borrower shall comply with all Environmental Laws applicable to the construction, ownership or use of the Water System and shall cause, to the extent possible, its tenants and other Persons occupying or using its facilities to comply with such Environmental Laws, shall timely pay or cause to be paid all costs and expenses incurred in such compliance, and shall keep or cause to be kept all of its facilities free and clear of any liens imposed pursuant to such Environmental Laws, unless the same are being contested in good faith and by appropriate legal proceedings and such contest shall operate to stay the Material Adverse Effect of any such non-compliance.
Section 7.7. Further Assurances. From time to time hereafter, the Borrower shall execute and deliver such additional instruments, certificates or documents, and shall take all such actions as the Bank may reasonably request for the purposes of implementing or effectuating the provisions of the Loan Documents or for the purpose of more fully perfecting or renewing the Bank’s rights with respect to the rights, properties or assets subject to such documents (or with respect to any additions thereto or replacements or proceeds thereof or with respect to any other property or assets hereafter acquired by the Borrower which may be deemed to be a part thereof).
Upon the exercise by the Bank of any power, right, privilege or remedy pursuant to the Loan
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Documents which requires any consent, approval, registration, qualification or authorization of any governmental authority or instrumentality, the Borrower shall, to the extent permitted by law, execute and deliver all necessary applications, certifications, instruments and other documents and papers that the Bank may be required to obtain for such governmental consent, approval, registration, qualification or authorization.
Section 7.8. Application of Proceeds of Revolving Loans. The Borrower shall cause the proceeds from Revolving Loans made hereunder to be applied only to pay or reimburse the Borrower for payment of the costs of the acquisition, construction and installation of capital improvements to the Water System, including but not limited to the payment of obligations previously incurred by the Borrower to finance any of such costs.
Section 7.9. Payment of Obligations; Removal of Liens. The Borrower shall duly and punctually pay or cause to be paid the Payment Obligations and the other amounts due hereunder and under the Note and the other Loan Documents, on the dates, at the places and in the manner provided in or determined in accordance with this Agreement and the Note according to the true intent and meaning hereof. The Borrower will at all times faithfully perform and observe any and all covenants, undertakings and provisions contained in this Agreement or arising in connection with any obligation secured by Gross Revenues. The Borrower shall pay (a) all indebtedness and obligations of the Borrower in accordance with the terms thereof and (b) all assessments or other governmental charges as the same respectively become due, all taxes, assessments (general or special) and governmental charges of any kind whatsoever that may be at any time lawfully assessed or levied against or with respect to any portion of the Net Revenues or any interest thereon and promptly discharge or cause to be discharged all liens, encumbrances and charges on such property and assets. The Borrower shall include in each of the annual operating budgets for the Water System all amounts reasonably anticipated to be necessary to make payments due to the Bank hereunder or under the Note or the other Loan Documents.
Section 7.10. Compliance with Law; Employee Benefit Plan Compliance. The Borrower shall comply with and observe the obligations and requirements set forth in all Laws applicable to it and its Property, except where non-compliance could not reasonably be expected to result in a Material Adverse Effect, such compliance to include, without limitation, paying all taxes, assessments and governmental charges imposed upon it or its Property before the same become delinquent, unless and to the extent that the same are being contested in good faith and by appropriate proceedings and reserves are provided therefor that in the opinion of the Borrower are adequate. The Borrower shall in a timely fashion, comply, in all material respects with all requirements under any employee benefit plan in which the Borrower or any of its employees participate. Notwithstanding the foregoing, the Borrower shall comply with Sanctions, AntiMoney Laundering Laws and Anti-Corruption Laws.
Section 7.11. Compliance with Obligations. The Borrower shall comply with and observe the obligations and requirements arising in connection with any Net Revenue Debt.
Section 7.12. Insurance; Reconstruction of Water System; Application of Insurance Proceeds. The Borrower shall at all times maintain with responsible insurers all such insurance on those portions of the Water System as required by the Bank and as is customarily maintained with respect to works and properties of like character against accident to, loss of or damage to such
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works or properties. All policies of insurance required to be maintained hereunder shall provide that Bank shall be given thirty (30) days’ prior written notice of any intended cancellation thereof or reduction of coverage provided thereby. The Borrower shall provide to the Bank evidence that all such insurance with respect to the Water System is in effect promptly upon renewal thereof. If any useful part of the Water System is damaged or destroyed, such part will be restored for use or will be replaced. The money collected from insurance against accident to or destruction of the Water System will be used for repairing or rebuilding or replacing the damaged or destroyed Water System, unless the Borrower shall file with the Bank a written certificate of a Qualified Engineer to the effect that such reconstruction or replacement is not in the interests of the Borrower and the Bank. The proceeds of any insurance paid on account of such damage or destruction, other than business interruption loss insurance or public liability insurance, shall be deposited by the Borrower in a special account, held in trust by the Borrower, and made available for, and to the extent necessary applied to, the cost of such reconstruction or replacement, if any. Pending such application, such proceeds may be invested by the Borrower in accordance with its investment policy in effect from time to time in investments which mature not later than such times as shall be necessary to provide moneys when needed to pay such cost of reconstruction or replacement.
Any balance of such proceeds of insurance not required by the Borrower for the purposes aforesaid shall be deposited into a separate segregated fund for Operation and Maintenance Costs.
Section 7.13. Investment Policy. The Borrower shall comply with its investment policy in effect from time to time.
Section 7.14. Amount of Rates and Charges.
(a) The Borrower will fix, prescribe, revise and collect rates, fee and charges for the services and facilities furnished by the Water System during each Fiscal Year which are at least sufficient, after making allowances for contingencies and error in the estimates, to pay the following amounts in the following order: (i) all Operation and Maintenance Costs estimated by the Borrower to become due and payable in the Fiscal Year; (ii) the principal of and interest on the Senior Debt as they become due and payable during the Fiscal Year, without preference or priority; (iii) all payments coming due and payable during the Fiscal Year and required for compliance with the Senior Debt Issuing Documents; (iv) the Payment Obligations and the principal of and interest on the Subordinate Debt as they become due and payable during the Fiscal Year, without preference or priority; (v) all payments coming due and payable during the Fiscal Year and required for compliance with this Agreement and the other Subordinate Debt Issuing Documents; and (vi) all payments required to meet any other obligations of the Borrower which are charges, liens, encumbrances upon or payable from the Gross Revenues during the Fiscal Year.
(b) In addition, the Borrower will fix, prescribe, revise and collect rates, fees and charges for the services and facilities furnished by the Water System during each Fiscal Year which are sufficient to yield Net Revenues (including any amounts on deposit in any sinking fund for Bonds or Parity Obligations at the end of the current Fiscal Year) which are at least equal to 110% of the annual debt service on all Debt obligations of the Borrower secured by Net Revenues. For the purpose of calculating the debt service under this Agreement, the Commitment shall be considered fully drawn and paid over a 30-year
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period assuming level principal amortization and an interest rate equal to the Bond Buyer 20 bond index rating as in effect on the date debt service is calculated.
Section 7.15. Collection of Rates and Charges. The Borrower shall have in effect at all times rules and regulations requiring each consumer or customer located on any premises connected with the Water System to pay the rates, fees and charges applicable to the services and facilities furnished by the Water System to such premises and providing for the billing thereof and for a due date and a delinquency date for each bill. The Borrower shall not permit any part of the Water System or any facility thereof to be used or taken advantage of free of charge by any corporation, firm or person, or by any public agency (including the United States, the State and any city, county, district, political subdivision, public corporation or agency of any thereof); provided, that the Borrower may without charge use the Water System.
Section 7.16. Other Agreements. While this Agreement remains in effect, if the Borrower executes and delivers a final agreement evidencing a revolving credit agreement with a financial institution substantially similar to the financial arrangements provided for in this Agreement (“Additional Agreement”) relating to Debt of the Water System secured by Net Revenues on a parity basis with, or subordinate to, the Revolving Loans (i.e., on a basis subordinate to the Bonds and the Parity Obligations) and such Additional Agreement provides greater collateral than the collateral provided to the Bank in this Agreement, and/or events of default and/or remedies that are more favorable than are provided to the Bank in this Agreement (collectively, the “Additional Rights”), then the Borrower shall provide the Bank with a copy of such Additional Agreement and the Additional Rights shall be automatically deemed incorporated into this Agreement and the Bank shall have the benefit of the Additional Rights. The Borrower shall promptly cooperate with the Bank to enter into an amendment of this Agreement to include such Additional Rights.
Section 7.17. Preservation of Lien. The Borrower shall take all necessary action to maintain and preserve the lien on and security interest in the Net Revenues securing the Payment Obligations and the payment and performance of the Borrower’s obligations hereunder and under the Note and the other Loan Documents.
Section 7.18. Sovereign Immunity. The Borrower agrees not to assert any defense of sovereign immunity, if available, in any proceeding initiated by the Bank to enforce any of the obligations of the Borrower hereunder or under the Note or the other Loan Documents. To the extent that the Borrower has or hereafter may acquire under any applicable law any right to immunity from set off or legal proceedings, including but not limited to a writ of mandamus ordering a levy of taxes by the Borrower, on the grounds of sovereignty or otherwise, the Borrower, to the extent permitted by law, hereby irrevocably waives such rights to immunity for itself and agrees not to invoke any defense of immunity in respect of its obligations arising under or related to this Agreement, the Note or the other Loan Documents.
Section 7.19. Maintenance of Water System. The Borrower shall at all times operate or cause to be operated the Water System properly and in an efficient and economical manner, and shall maintain, preserve, reconstruct and keep the same or cause the same to be so maintained, preserved, reconstructed and kept, with the appurtenances and every part and parcel thereof, in good repair, working order and condition, and shall from time to time make, or cause to be made, all necessary and proper repairs, replacements and renewals so that at all times the operation of
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the Water System may be properly and advantageously conducted. The Borrower shall pay (a) all indebtedness and obligations of the Borrower in accordance with the terms thereof and (b) all assessments or other governmental charges as the same respectively become due, all taxes, assessments (general or special) and governmental charges of any kind whatsoever that may be at any time lawfully assessed or levied against or with respect to the Water System or Net Revenues or any interest thereon and promptly discharge or cause to be discharged all liens, encumbrances and charges on such property and assets.
Section 7.20. Rating. The Borrower shall maintain at all times Senior Debt Long-Term Credit Ratings from not less than two (2) Rating Agencies.
Section 7.21. Eminent Domain. If all or any part of the Water System shall be taken by eminent domain proceedings, the Net Proceeds thereof shall be applied as follows: (a) if (i) the Borrower certifies (x) the estimated loss of Net Revenues, if any suffered or to be suffered by the Borrower by reason of such eminent domain proceedings, (ii) a general description of the additions, betterments, extensions or improvements to the Water System proposed to be acquired by the Borrower from any Net Proceeds, and (iii) an estimate of the additional annual Net Revenues to be derived from such additions, betterments, extensions or improvements, and (ii) on the basis of such certificate, determines that the estimated additional annual Net Revenues will sufficiently offset the estimated loss of annual Net Revenues resulting from such eminent domain proceedings so that the ability of the Borrower to meet its obligations hereunder will not be substantially impaired (which determination shall be final and conclusive); then the Borrower shall promptly proceed with the acquisition of such additions, betterments, extensions or improvements substantially in accordance with such certification and such Net Proceeds shall be applied for the payment of the costs of such acquisition, and any balance of such Net Proceeds not required by the Borrower for such purpose shall be applied to pay the Senior Debt on a pro rata basis in the manner provided in the Senior Debt Issuing Documents and then to pay the Payment Obligations and the other Subordinate Debt on a pro rata basis in the manner provided herein and in the Subordinate Debt Issuing Documents. If the foregoing conditions are not met, then such Net Proceeds shall be applied to pay the Senior Debt on a pro rata basis in the manner provided in the Senior Debt Issuing Documents and then to pay the Payment Obligations and the other Subordinate Debt on a pro rata basis in the manner provided herein and in the Subordinate Debt Issuing Documents.
ARTICLE VIII
NEGATIVE COVENANTS OF THE BORROWER
While the Line of Credit is outstanding and until all of the Payment Obligations shall have been paid in full, the Borrower shall not do any of the following, without the prior written consent of the Bank:
Section 8.1. Changes in Obligations. The Borrower shall not repeal, modify, amend or supplement any provision of any Loan Document (including, without limitation, the Indentures), without the prior written consent of the Bank, that could reasonably be expected to result in a Material Adverse Effect unless expressly permitted by its terms.
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Section 8.2. Additional Debt.
(a) The Borrower shall not issue or incur any Parity Obligations after the Effective Date other than in compliance with the terms of Section 5.08 of each of the Indentures and the terms of any Parity Obligation Documents in effect immediately prior to the issuance of such Parity Obligations. In the event the Borrower issues or incurs Parity Obligations after the Effective Date, the Borrower shall deliver to the Bank of a copy of the certificate required to be delivered to the trustee pursuant to Section 5.08(e) of each of the Indentures, together with a copy of the calculations supporting the certifications of the Borrower contained in said certificate, which copy of the certificate shall be delivered to the Bank concurrent with its delivery to the trustee.
(b) The Borrower shall not issue or incur any Debt secured by Net Revenues after the Effective Date that is on parity with the Payment Obligations (“Additional Debt”) unless (i) Net Revenues as shown by the books of the Water System for the most recent Fiscal Year for which audited financial statements are available, or as shown by the books of the Water System for any more recent 12-month period, are at least equal to 115% of the sum of (A) Maximum Annual Debt Service in respect of all Bonds and Parity Obligations, (B) annual debt service on the Payment Obligations assuming the Commitment is fully drawn, that principal amortizes over a 30-year period assuming level principal amortization and an interest rate equal to the Bond Buyer 20 bond index rating as in effect on the date debt service is calculated, and (C) annual debt service on all Additional Debt (determined in accordance with its terms or, if any such Additional Debt comprises a revolving line of credit, determined assuming that the commitment under such line of credit is fully drawn, that principal amortizes over a 30-year period assuming level principal amortization and an interest rate equal to the Bond Buyer 20 bond index rating as in effect on the date debt service is calculated), (ii) no Default or Event of Default has occurred and is continuing or would result from such issuance or incurrence and (iii) the Bank shall have received a certificate of an Authorized Representative certifying that the conditions precedent to the issuance of such Additional Debt set forth in clause (i) and (ii) above have been satisfied and setting forth a calculation to such effect. (c) The Borrower shall not issue or incur any Debt secured by Net Revenues after the Effective Date that is subordinate to the Payment Obligations (“Subordinate Debt”) unless (i) Net Revenues as shown by the books of the Water System for the most recent Fiscal Year for which audited financial statements are available, or as shown by the books of the Water System for any more recent 12-month period, are at least equal to 100% of the sum of (A) Maximum Annual Debt Service in respect of all Bonds and Parity Obligations, (B) annual debt service on the Payment Obligations assuming the Commitment is fully drawn, that principal amortizes over a 30-year period assuming level principal amortization and an interest rate equal to the Bond Buyer 20 bond index rating as in effect on the date debt service is calculated, (C) annual debt service on all Additional Debt (determined in accordance with its terms or, if any such Additional Debt comprises a revolving line of credit, determined assuming that the commitment under such line of credit is fully drawn, that principal amortizes over a 30-year period assuming level principal amortization and an interest rate equal to the Bond Buyer 20 bond index rating as in effect on the date debt service is calculated) and (D) annual debt service on all Subordinate Debt
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(determined in accordance with its terms or, if any such Subordinate Debt comprises a revolving line of credit, determined assuming that the commitment under such line of credit is fully drawn, that principal amortizes over a 30-year period assuming level principal amortization and an interest rate equal to the Bond Buyer 20 bond index rating as in effect on the date debt service is calculated), (ii) no Default or Event of Default has occurred and is continuing or would result from such issuance or incurrence and (iii) the Bank shall have received a certificate of an Authorized Representative certifying that the conditions precedent to the issuance of such Subordinate Debt set forth in clause (i) and (ii) above have been satisfied and setting forth a calculation to such effect.
Section 8.3. Swap Termination Payments. The Borrower shall not enter into any Swap Contract (a) under which a termination payment would be required to be paid from any portion of the Net Revenues on a basis senior to or on a parity with the lien on the Net Revenues securing the Payment Obligations or (b) which requires the Borrower to post cash collateral to secure its obligations thereunder.
Section 8.4. No Impairment. The Borrower will neither take any action, nor cause or permit any other Person to take any action, under the Loan Documents inconsistent with the rights of the Bank under this Agreement including, without limitation, the Payment Obligations and pledge of the Net Revenues. The Borrower will neither agree to any amendment, modification or supplement to any Loan Document to which it is a party without the prior written consent of the Bank, nor shall the Borrower waive or consent to any waiver of any condition under any Loan Document.
Section 8.5. Only Authorized Uses of Revenues by the Borrower. The Borrower shall not transfer, or permit the transfer, of any Gross Revenues, for any purpose other than to pay Operation and Maintenance Costs, the payment of all Bonds, Parity Obligations, Payment Obligations, other Debt secured by Net Revenues and, thereafter, for any lawful purpose of the Water System.
Section 8.6. References to the Bank. The Borrower shall not refer to the Bank in any official statement, offering memorandum, or private placement memorandum (other than a factual description of this Agreement without a specific reference to the Bank) without the Bank’s prior written consent thereto.
Section 8.7. No Sale, Assignment, Transfer or Pledge. The Borrower shall not sell, mortgage or otherwise dispose of the Water System or any portion thereof essential to the proper operation of the Water System or to the maintenance of Gross Revenues. The Borrower shall not enter into any lease or agreement which materially impairs the operation of the Water System or any part thereof necessary to secure adequate Net Revenues for the payment of Payment Obligations or payment and performance of the Borrower’s obligations under this Agreement, the Note or the other Loan Documents.
Section 8.8. Consolidation or Merger. The Borrower shall not permit the Water System to consolidate with or merge into another Person or water system or permit one or more other Persons or water systems to consolidate with or merge into it or acquire all or substantially all of the property and assets of any other Person.
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Section 8.9. Accounting Methods and Fiscal Year. The Borrower shall not adopt, permit or consent to any change in accounting practices other than as required by GAAP and will not adopt, permit or consent to any change in its Fiscal Year.
Section 8.10. No Priority Claim. The Borrower shall not, directly or indirectly, incur, create, assume or permit any Lien on any portion of the Net Revenues with a claim to payment of equal to or of higher priority than the claim of the Payment Obligations or any of the Borrower’s obligations under this Agreement, the Note or the other Loan Documents other than the claim of the Indenture and the Parity Obligation Documents.
Section 8.11. Competing Utility. The Borrower shall not acquire, construct, operate or maintain, and shall not, within the scope of its lawful powers, permit any other private or public corporation, political subdivision, authority or agency, or any person whomsoever to acquire, construct, operate or maintain any competing system or utility in an area presently served by the Water System.
Section 8.12. Anti-Money Laundering Laws and Anti-Corruption Laws; Sanctions. (a) The Borrower shall not use any of the proceeds of the Revolving Loans to fund, finance or facilitate any activities, business or transactions that would be prohibited by Anti-Money Laundering Laws or Anti-Corruption Laws.
(b) The Borrower shall not use any of the proceeds of the Revolving Loans to fund, finance or facilitate any activities, business or transactions: (i) that are prohibited by Sanctions, (ii) that would be prohibited by U.S. Sanctions if conducted by a U.S. Person, or (iii) that would be prohibited by Sanctions if conducted by the Bank, or any other party to this Agreement. The Borrower shall notify the Bank in writing not more than one Business Day after first becoming aware of any breach of this Section.
Section 8.13. Source of Repayment and Collateral. The Borrower shall not fund any repayment of the Revolving Loans with proceeds, or provide as collateral any Property, that is directly or indirectly derived from any transaction or activity that is prohibited by Sanctions, AntiMoney Laundering Laws or Anti-Corruption Laws, or that could otherwise cause the Bank or any other party to this Agreement to be in violation of Sanctions, Anti-Money Laundering Laws or Anti-Corruption Laws.
Section 8.14. Exempt Status. The Borrower shall not take any action or omit to take any action that, if taken or omitted, would adversely affect the excludability of interest on the Revolving Loans (and the Note) from the gross income of the holders thereof for purposes of federal income taxation.
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.1. Events of Default. The occurrence of any of the following events (including the expiration of any specified time) shall constitute an “Event of Default,” unless waived by the Bank in writing:
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(a) The Borrower fails to pay, or cause to be paid, when due (i) any principal and interest due hereunder or under the Note, or (ii) any other amounts due hereunder or under the Note or any other amounts due to the Bank under any other Loan Document; or (b) (i) The Borrower fails to perform or observe any term, covenant or agreement contained in Section 7.1, 7.6, 7.8, 7.12, 7.13, 7.14, 7.15, 7.16, 7.18, 7.19, 7.20,
7.21 or Article VIII hereof or (ii) the Borrower fails to perform or observe any term, covenant or agreement contained in this Agreement (other than those referred to in Section 9.1(a) and (b)(i)) and any such failure is irremediable or, if remediable, remains unremedied for thirty (30) days after notice thereof to the Borrower or thirty (30) days after the Borrower obtains actual knowledge thereof, whichever comes first; (c) (i) A default occurs with respect to the payment of any Net Revenue Debt or any interest or premium thereon as and when the same shall become due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) (including any amount due in respect of any other obligation owed to the Bank as and when the same shall become due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise)); or (ii) a default occurs under any mortgage, agreement or other instrument relating to any Net Revenue Debt or other obligation owed to the Bank, and continuance of such default beyond the period of grace, if any, allowed with respect thereto, or the occurrence of any act or omission by the Borrower under any such mortgage, agreement or other instrument which results in such Net Revenue Debt or other obligation owed to the Bank becoming, or being capable of becoming, immediately due and payable or any such Net Revenue Debt or other obligation owed to the Bank is otherwise required to be prepaid (other than by a regularly scheduled required prepayment or an optional prepayment) prior to the stated maturity thereof; or
(d) The Borrower has taken or permitted to be taken any action which would materially adversely affect the enforceability of this Agreement, the Note, any other Loan Document or any other Net Revenue Debt Issuing Document against the Borrower or the legal ability of the Borrower to pay Payment Obligations or any Net Revenue Debt when due; or
(e) A court of competent jurisdiction shall enter a final, nonappealable order or judgment to the effect that any Net Revenue Debt is illegal or unenforceable; or (f) The issuance of any Net Revenue Debt shall result in a violation by the Borrower of any material law, rule or regulation, or any order of any court, governmental agency or regulatory body, or any indenture or loan or credit agreement (including this Agreement), or any other agreement or instrument, applicable to the Borrower or to such issuance; or
(g) Any representation or warranty on the part of the Borrower contained in any Loan Document or in any certificate, letter or other writing or instrument furnished or delivered by the Borrower to the Bank pursuant hereto or thereto or in connection herewith or therewith, shall at any time prove to have been incorrect in any material respect when
23.59 -51- 4859-0460-1269.6
made or deemed made or when effective or when reaffirmed, as the case may be, whether by misstatement or omission; or
(h) Any material provision of this Agreement, the Note or the other Loan Documents shall at any time for any reason cease to be valid and binding on the Borrower or shall be declared to be null and void by any court or governmental authority or agency having jurisdiction over the Borrower, or the validity or the enforceability of any material provision of this Agreement, the Note or the other Loan Documents shall at any time be contested by the Borrower in a judicial or administrative proceeding or the Borrower shall deny that it has any or further liability or obligation under any material provision of this Agreement, the Note or the other Loan Documents, or the validity or enforceability of any material provision of this Agreement, the Note or the other Loan Documents shall be contested by any governmental agency or authority having jurisdiction over the Borrower; or
(i) The Borrower fails to pay when due a final, nonappealable judgment or order for the payment of money in excess of $3,000,000 and for which insurance proceeds shall not be available shall be rendered against the Borrower or the Water System and such judgment or order shall continue unstayed, undischarged, unbonded or unsatisfied for a period of sixty (60) days; or
(j) An Event of Insolvency shall occur with respect to the Borrower; or (k) The Bank fails to have an enforceable lien on and security interest in the Net Revenues with the priority as contemplated by Section 4.1 hereof; or (l) Any funds or investments on deposit in, or otherwise to the credit of, any of the funds or accounts established hereunder or under any Loan Document (including, without limitation, the Indenture) or any other Net Revenue Debt Issuing Document shall become subject to any writ, judgment, warrant or attachment, execution or similar process; or
(m) The occurrence and continuation of an Event of Default or event of nonperformance under, or the occurrence of an event which results in or permits the early termination of, any of the Loan Documents after the expiration of any applicable grace period (other than as specified in another Event of Default under this Section 9.1); or (n) The Borrower’s accountant delivers a qualified opinion with respect to the Borrower’s or the Water System’s status as an on-going concern; or (o) Any Rating Agency shall downgrade the long-term, unenhanced rating assigned by it to any Debt secured by or payable from a lien on Net Revenues to a level below “Baa1” in the case of Moody’s, “BBB+” in the case of S&P and “BBB+” in the case of Fitch;
(p) The occurrence of any event (other than as specified in another Event of Default under this Section 9.1) which has had, or may result in, any Material Adverse Effect;
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(q) (i) The Borrower imposes a debt moratorium, debt restructuring, debt adjustment or comparable restriction on repayment when due and payable of the principal of or interest on any Debt secured by Net Revenues, or (ii) under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors, the Borrower seeks to have an order for relief entered with respect to the Water System or seeking to adjudicate the Borrower or the Water System insolvent or bankrupt or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to the Water System or the Debts of the Water System, or (iii) the Borrower seeks appointment of a receiver, trustee, custodian or other similar official for the Water System or for any substantial part of the property of the Water System, or the Borrower shall make a general assignment of the properties and assets of the Water System for the benefit of its creditors, or (iv) there shall be commenced against the Borrower or the Water System any case, proceeding or other action of a nature referred to in clause (ii) and the same shall remain undismissed, or (v) there shall be commenced against the Borrower or the Water System any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its property which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal, within sixty (60) days from the entry thereof, or (vi) the Borrower takes action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), (iii), (iv), (v) above, or (vii) the Borrower or the Water System shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its Debts secured by Net Revenues as they become due.
Section 9.2. Rights and Remedies Upon Default.
(a) Automatic Termination. In the case of any Event of Default specified in Section 9.1(j) or 9.1(q) that has occurred, (i) the Commitment shall immediately terminate automatically and the Available Commitment shall be reduced to zero automatically and will no longer be reinstated and thereafter, the Bank will have no further obligation to make Revolving Loans hereunder and (ii) all amounts due hereunder and under the Note and the other Loan Documents (including without limitation all Revolving Loans, the Note and interest thereon) shall immediately become due and payable. Upon such termination, the Bank shall send a notice thereof in the form of Exhibit H hereto to the Borrower; provided, that failure to send or receive such notice shall not affect the termination of the Commitment as provided hereunder.
(b) All Events of Default. In the case of any Event of Default, including any Event of Default specified in Section 9.1(j) or 9.1(q), that has occurred and is continuing, the Bank may, in its sole discretion, but shall not be obligated to, exercise all, or any of, the following rights and remedies:
(i) By notice to the Borrower, declare all amounts due hereunder and under the Note and the other Loan Documents (including without limitation all Revolving Loans, the Note and interest thereon) immediately due and payable; and/or
23.61 -53- 4859-0460-1269.6
(ii) By notice to the Borrower in the form of Exhibit H hereto, reduce the Available Commitment to zero and thereafter the Bank will have no further obligation to make Revolving Loans hereunder and/or terminate the Commitment; and/or
(iii) Petition a court of competent jurisdiction to issue a mandamus order to the Borrower to compel specific performance of the covenants of the Borrower contained in any of the Loan Documents; and/or
(iv) Provide written notice of the occurrence of an Event of Default to the Borrower and exercise any rights and remedies available to the Bank at law, equity or hereunder or under any Loan Document.
Except as expressly provided in this Section 9.2, procurement, demand, protest and all other notices of every kind are hereby expressly waived.
Section 9.3. No Waiver of Remedies. No waiver of any breach of or default under any provision of this Agreement, the Note or any of the other Loan Documents shall constitute or be construed as a waiver by the Bank of any subsequent breach of or default under that or any other provision of any of the Loan Documents.
Section 9.4. Remedies Not Exclusive. No remedy herein conferred upon the Bank is intended to be exclusive of any other remedy herein or in any other agreement between the parties hereto or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity or by statute.
ARTICLE X
MISCELLANEOUS
Section 10.1. Evidence of Debt. The Bank shall maintain in accordance with its usual practices an account or accounts evidencing the indebtedness resulting from each Revolving Loan made from time to time hereunder and the amounts of principal and interest payable and paid from time to time hereunder. In any legal action or proceeding in respect of this Agreement, the entries made in such account or accounts shall be conclusive evidence (absent manifest error) of the existence and amounts of the obligations therein recorded.
Section 10.2. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the parties hereto shall in any event be effective unless the same shall be in writing and signed by such parties, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
Section 10.3. Addresses for Notices; Bank’s Office. Any notice required or permitted to be given under or in connection with this Agreement shall be in writing and shall be mailed by first-class mail, registered or certified, return receipt requested, or express mail, postage prepaid, or sent by email, telex, telegram, telecopy or other similar form of rapid transmission confirmed by mailing (by first-class mail, registered or certified, return receipt requested, or express mail, postage prepaid) written confirmation at substantially the same time as such rapid transmission, or
23.62 -54- 4859-0460-1269.6
personally delivered to an officer of the receiving party. All such communications shall be mailed, sent or delivered to the address or numbers set forth below, or as to each party at such other address or numbers as shall be designated by such party in a written notice to the other parties.
If to the Borrower: City of Santa Cruz
809 Center Street
Santa Cruz, California 95060
Attention: David Baum, Water Dept. CFO
Telephone: (831) 420-5030
Facsimile: (831) 420-5031
Email: [email protected]
If to the Bank: Payment Instructions:
Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
ABA #: [_________]
Attention: [_________]
Account #: [__________]
Bank to Bank Instructions: [__________]
FFC: [____________]
Notices:
Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
1655 Grant Street 3rd Floor
Concord, California 94520
Attention: Zina Monroe
Telephone: (925) 852-1061
Email: [email protected]
With a copy to: Wells Fargo Municipal Capital Strategies, LLC c/o Wells Fargo Bank, National Association
Attention: [________]
Telephone: [_________]
Email: [_________]
Section 10.4. Survival of this Agreement. All covenants, agreements, representations and warranties made in this Agreement shall survive the extension by the Bank of the Commitment and shall continue in full force and effect so long as the Commitment shall be unexpired or any sums drawn or due thereunder or any other obligations shall be outstanding and unpaid, regardless of any investigation made by any Person and so long as any amount payable hereunder remains unpaid. The agreement of the Borrower to indemnify the Bank under Section 5.2 hereof shall continue in full force and effect notwithstanding a termination of the Commitment or the payment in full of all Payment Obligations. The obligations of the Borrower under Sections 5.2, 5.3 and
23.63 -55- 4859-0460-1269.6
10.5 shall also continue in full force and effect notwithstanding a termination of the Commitment or the payment in full of all Payment Obligations.
Section 10.5. Costs, Expenses and Taxes. The Borrower agrees (i) to pay on demand all costs and expenses (including fees and disbursements of the Bank’s counsel) in connection with the preparation, issuance, execution, delivery, filing, enforcement and administration of any of the Loan Documents and any other instruments or agreements which may be delivered pursuant to or in connection therewith, or pursuant to or in connection with any waiver or amendment of, or the giving of any consent under, this Agreement or any of the Loan Documents and such other instruments or agreements and (ii) to pay on demand any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement or any of the Loan Documents and such other instruments and agrees to indemnify and hold the Bank harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes and fees. The obligations of the Borrower under this Section 10.5 shall survive the termination of the Commitment and the payment in full of all Payment Obligations.
Section 10.6. Right of Setoff; Other Collateral.
(a) Upon the occurrence and during the continuation of an Event of Default, the Bank is hereby authorized at any time and from time to time without notice to the Borrower (any such notice being expressly waived by the Borrower), and to the fullest extent permitted by law, to setoff, to exercise any banker’s lien or any right of attachment and to apply any and all balances, credits, deposits (general or special, time or demand, provisional or final), accounts or monies relating to the Water System at any time held and other indebtedness at any time owing by the Bank to or for the account of the Borrower relating to the Water System (irrespective of the currency in which such accounts, monies or indebtedness may be denominated and the Bank is authorized to convert such accounts, monies and indebtedness into dollars) against any and all of the obligations and liabilities of the Borrower arising under or connected with this Agreement, the Note and the other Loan Documents, whether or not the Bank shall have made any demand hereunder or thereunder.
(b) The rights of the Bank under this Section are in addition to, in augmentation of, and do not derogate from or impair, other rights and remedies (including, without limitation, other rights of set-off) which the Bank may have. The Bank agrees to promptly notify the Borrower after any such set-off and application referred to in subsection (a) above, provided, that failure to give such notice shall not affect the validity of such set-off and application.
(c) For such purpose, the Bank shall have, and the Borrower hereby grants to the Bank, a first lien on and security interest in such deposits, property, funds and accounts held or maintained by the Bank relating to the Water System and the proceeds thereof, other than funds (if any) which are subject to the lien in favor of the Senior Debt.
Section 10.7. Severability. Any provision of this Agreement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
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the extent of such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction.
Section 10.8. Governing Law; Waiver of Jury Trial; Jurisdiction and Venue. (a) This Agreement and the Note shall be deemed to be a contract under, and together with any disputes or controversies arising out of or relating to this Agreement and the Note shall be governed by, and construed and interpreted in accordance with the laws of the State and applicable federal law, without regard to choice of law rules. (b) Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any legal proceeding directly or indirectly arising out of or relating to this Agreement or the Note or the transactions contemplated hereby or thereby (whether based on contract, tort or any other theory). If and to the extent the foregoing waiver of the right to a jury trial is unenforceable for any reason, the parties hereto hereby consent to the adjudication of any and all claims pursuant to judicial reference as provided in California Code of Civil Procedure Section 638, and the judicial referee shall be empowered to determine any and all issues in such reference whether fact or law. Each party hereto acknowledges and represents that it and the other parties hereto have been induced to enter into this Agreement and the Note by, among other things, the mutual waivers and certifications in this Section, and that it has reviewed this waiver and consent, and knowingly and intentionally waives its jury trial rights and consents to judicial references following the opportunity to consult with legal counsel of its choice on such matters. In the event of litigation, a copy of this Agreement may be filed as a written consent to a trial by the court or to judicial reference under California Code of Civil Procedures Section 678 as provided herein.
(c) Each of the parties hereto hereby submits to the exclusive jurisdiction of any federal or state court of competent jurisdiction in the State for the purpose of any suit, action or other proceeding arising out of or relating to this Agreement and the Note and hereby waives any objection which it may have to the laying of venue of any such suit, action or proceeding in any of such courts and any claim that any such suit, action or proceeding has been brought in an inconvenient forum; service of process may be accomplished by registered mail, return receipt requested to each of the parties at the address listed for notice in Section 10.3 hereof.
Nothing in this Section shall affect the right of the Bank to serve legal process in any other manner permitted by law or affect the right of the Bank to bring any suit, action or proceeding against the Borrower or its property in the courts of any other jurisdiction.
Section 10.9. Successors and Assigns; Participations; Certain Pledges. (a) Successors and Assigns Generally. This Agreement is a continuing obligation and shall be binding upon the Borrower, its successors, transferees and assigns and shall inure to the benefit of the Noteholders and their respective permitted successors, transferees and assigns as set forth herein. The Borrower may not assign or otherwise
23.65 -57- 4859-0460-1269.6
transfer any of its rights or obligations hereunder without the prior written consent of the Bank. So long as no Event of Default shall have occurred and be continuing hereunder, the Bank may not assign its obligations to make Revolving Loans pursuant to the terms of this Agreement without the prior written consent of the Borrower. Each Noteholder may, in its sole discretion and in accordance with applicable Law, from time to time assign, sell or transfer in whole or in part, this Agreement, its interest in the Note and the other Loan Documents in accordance with the provisions of paragraph (b) of this Section. Each Noteholder may at any time and from time to time enter into participation agreements in accordance with the provisions of paragraph (c) of this Section. Each Noteholder may at any time pledge or assign a security interest subject to the restrictions of paragraph (d) of this Section.
(b) Sales and Transfers by Noteholder to a Non-Bank Transferee. Without limitation of the foregoing generality, a Noteholder may at any time sell or otherwise transfer all or any portion of the Note in Authorized Denominations to one or more transferees which are not Bank transferees but each of which constitutes (i) a “qualified institutional buyer” as defined in Rule 144A promulgated under the Securities Act of 1933, as amended, and (ii) a commercial bank organized under the laws of the United States, or any state thereof, or any other country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of any such country, and, in any such case, having a combined capital and surplus, determined as of the date of any transfer pursuant to this clause (b), of not less than $5,000,000,000 (each a “Non-Bank Transferee”) if (A) written notice of such sale or transfer, including that such sale or transfer is to a NonBank Transferee, together with addresses and related information with respect to the NonBank Transferee, shall have been given to the Borrower and the Bank, and (B) the NonBank Transferee shall have delivered to the Borrower and the Bank, an investor letter in substantially the form attached as Exhibit K to this Agreement (the “Investor Letter”).
From and after the date the Borrower and the selling Noteholder have received written notice and an executed Investor Letter (A) the Non-Bank Transferee thereunder shall be a party hereto and shall have the rights and obligations of a Noteholder hereunder and under the other Loan Documents, and this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to effect the addition of the Non-Bank Transferee, and any reference to the assigning Noteholder hereunder and under the other Loan Documents shall thereafter refer to such transferring Noteholder and to the Non-Bank Transferee to the extent of their respective interests; and (B) if the transferring Noteholder no longer owns the Note, then it shall relinquish its rights and be released from its obligations hereunder and under the Loan Documents.
(c) Participations. The Bank shall have the right to grant participations in all or a portion of the Bank’s interest in the Note, this Agreement and the other Loan Documents to one or more other Participants; provided, that (i) no such participation by any such Participant shall in any way affect the obligations of the Bank hereunder and (ii) the Borrower shall be required to deal only with the Bank, with respect to any matters under this Agreement, the Notes and the other Loan Documents and no such Participant shall be entitled to enforce any provisions hereunder against the Borrower.
23.66 -58- 4859-0460-1269.6
(d) Certain Pledges. In addition to the rights of the Bank set forth above, the Bank may at any time pledge or assign a security interest in all or any portion of its rights or interests under this Agreement (including under the Note, if any) to secure obligations of the Bank or an Affiliate of the Bank, including any pledge or assignment to secure obligations to a Federal Reserve Bank or to any state or local governmental entity or with respect to public deposits; provided, that no such pledge or assignment shall release the Bank from any of its obligations hereunder or substitute any such pledgee or assignee for the Bank as a party hereto.
Section 10.10. Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
Section 10.11. Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which counterparts, taken together; shall constitute but one and the same Agreement.
Section 10.12. Patriot Act Notice. The Bank hereby notifies the Borrower that pursuant to the requirements of the Patriot Act it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Bank to identify the Borrower in accordance with the Patriot Act. The Borrower hereby agrees that it shall promptly provide such information upon request by the Bank.
Section 10.13. No Advisory or Fiduciary Responsibility. In connection with all aspects of the transactions contemplated by this Agreement and the Loan Documents (including in connection with any amendment, waiver or other modification of this Agreement or of any Loan Document), the Borrower acknowledges and agrees that: (a)(i) any arranging, structuring and other services regarding this Agreement and the Loan Documents provided by the Bank or any Affiliate of the Bank are arm’s length commercial transactions between the Borrower on the one hand, and the Bank and any Affiliate of the Bank on the other hand, (ii) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated by this Agreement and the Loan Documents; (b)(i) the Bank and each Affiliate of the Bank is and has been acting solely as a principal and has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any other Person and (ii) neither the Bank nor any Affiliate of the Bank has any obligation to the Borrower with respect to the transactions contemplated by this Agreement and the Loan Documents, except those obligations expressly set forth herein; and (c) the Bank and each Affiliate of the Bank may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, and neither the Bank nor any Affiliate of the Bank has any obligation to disclose any of such interests to the Borrower.
Section 10.14. Integration. This Agreement constitutes the entire agreement between the Bank and the Borrower regarding the Line of Credit, and all prior oral or written communications between the Borrower and the Bank shall be of no further effect or evidentiary value.
23.67 -59- 4859-0460-1269.6
Section 10.15. EMMA Postings. In the event the Borrower files with EMMA this Agreement or any other Loan Document, or any description of the material terms thereof or notice of any agreement to covenants, events of default, remedies, priority rights or other similar terms, either voluntarily or as required pursuant to a continuing disclosure agreement or Rule 15c2-12 promulgated pursuant to the Securities and Exchange Act of 1934, as amended (the “Rule”) (each such posting, an “EMMA Posting”), the Borrower shall use its best efforts to notify the Bank prior to submitting or posting on EMMA any notice containing a copy of this Agreement or any other Loan Document to permit the Bank an opportunity to prepare and provide redacted copies of such documents redacting Confidential Information, if any, for use in connection with such posting.
The Borrower acknowledges and agrees that although the Bank may request review, edits or redactions of such materials prior to filing, the Bank is not responsible for the Borrower’s or any other entity’s (including, but not limited to, any broker-dealer’s) compliance or noncompliance (or any claims, losses or liabilities arising therefrom) with any continuing disclosure agreement or any applicable securities or other laws, including, but not limited to, those relating to the Rule.
Section 10.16. Tax Identification Number. The Borrower’s tax identification number is 946000427.
[Remainder of Page Intentionally Left Blank]
23.68 [Signature Page to Credit Agreement]
4859-0460-1269.6
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written.
CITY OF SANTA CRUZ
By:
Name:
Title:
ATTEST:
By:
Name:
Title:
WELLS FARGO MUNICIPAL CAPITAL
STRATEGIES, LLC
By:
Name: Brian Goins
Title: Vice President
23.69 -A-1- 4859-0460-1269.6
EXHIBIT A
[FORM OF NOTE]
NOTE
THIS NOTE IS SUBJECT TO CERTAIN TRANSFER RESTRICTIONS AS PROVIDED IN SECTION 10.9 OF THE HEREIN DEFINED AGREEMENT.
[CUSIP]
$25,000,000 Dated [June __, 2024]
Santa Cruz, California
For value received, the CITY OF SANTA CRUZ (the “Borrower”) promises to pay to the order of WELLS FARGO MUNICIPAL CAPITAL STRATEGIES, LLC, and its successors and assigns (the “Bank”), the amount of TWENTY-FIVE MILLION DOLLARS AND NO CENTS ($25,000,000) or, if less, the aggregate unpaid principal amount of all Revolving Loans made by the Bank from time to time pursuant to the Credit Agreement, dated [June __, 2024] (together with any amendments or supplements thereto, the “Agreement”), by and between the Borrower and the Bank, on the dates and in the amounts provided for in the Agreement.
The Borrower promises to pay interest on the unpaid principal amount of all Revolving Loans on the dates and at the rates provided for in the Agreement. All payments of principal and interest shall be made to the Bank in lawful money of the United States of America in immediately available funds. All capitalized terms used herein and not otherwise defined herein shall have the meanings specified in the Agreement.
This Note is the Note referred to in the Agreement and is entitled to the benefits thereof and of the Loan Documents referred to therein. As provided in the Agreement, this Note is subject to prepayment, in whole or in part. In case an Event of Default (as defined in the Agreement) shall occur and be continuing the principal of and accrued interest on this Note may be declared due and payable in the manner and with the effect provided in the Agreement.
This Note is payable solely from the Net Revenues in accordance with the Agreement, and this Note does not constitute a legal or equitable pledge, charge, lien or encumbrance upon any other property of the Borrower. The holder hereof shall not have the right to demand payment of this obligation from any sources or properties of the Borrower except the Net Revenues. [The remainder of this page intentionally left blank]
23.70 -A-2- 4859-0460-1269.6
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.
CITY OF SANTA CRUZ
By:
Name:
Title:
ATTEST:
By:
Name:
Title:
23.71 -B-1- 4859-0460-1269.6
EXHIBIT B
[FORM OF REQUEST FOR LOAN]
REQUEST FOR LOAN
Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
1655 Grant Street 3rd Floor
Concord, California 94520
Attention: Zina Monroe
Email: [email protected]
Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
[________]
[________]
Attention: [________]
Email: [_________]
Ladies and Gentlemen:
The undersigned, an Authorized Representative of the City of Santa Cruz (the “Borrower”), pursuant to Section 2.2 of the Credit Agreement, dated [June __, 2024] (together with any amendments or supplements thereto, the “Agreement”), by and between the Borrower and Wells Fargo Municipal Capital Strategies, LLC (the “Bank”) (the terms defined therein being used herein as therein defined), hereby requests that the Bank make a Revolving Loan under the Agreement in a principal amount not exceeding the then-outstanding Available Commitment, and in that connection sets forth below the following information relating to such Revolving Loan (the “Proposed Revolving Loan”):
1. The aggregate amount of the Proposed Revolving Loan is $__________;
2. The Proposed Revolving Loan is requested to be funded on ______, 202__, (the “Loan Date”), which date is a Business Day at least three (3) Business Days after the Bank’s receipt of this Request for Loan;
3. The aggregate amount of the Proposed Revolving Loan shall be used by the Borrower solely to pay the costs of the acquisition, construction and installation of capital improvements to its Water System reimbursable from the Net Revenues;
4. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Revolving Loan, at the time the Proposed Revolving Loan is to be made and as a result thereof, immediately thereafter:
(a) all representations and warranties of the Borrower contained in the Agreement are true and correct as though made on the date hereof and on the Loan Date; and (b) no Default or Event of Default shall have occurred and be continuing on the date hereof and on the Loan Date; and
5. The proposed Revolving Loan shall be made by the Bank by wire transfer of immediately available funds to the Borrower in accordance with the instructions set forth below:
Beneficiary Bank:
Bank Location:
23.72 -B-2- 4859-0460-1269.6
ACH/Wire Routing Number:
Beneficiary:
Beneficiary Account Number:
Type of Account:
Bank Representative Contact:
IN WITNESS WHEREOF, the Borrower has executed and delivered this Request for Loan this ____ day of __________, _____.
CITY OF SANTA CRUZ
By:
Name:
Title:
23.73 -C-1- 4859-0460-1269.6
EXHIBIT C
[FORM OF REQUEST FOR EXTENSION]
REQUEST FOR EXTENSION
Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
1655 Grant Street 3rd Floor
Concord, California 94520
Attention: Zina Monroe
Email: [email protected]
Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
[________]
[________]
Attention: [________]
Email: [_________]
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated [June __, 2024] (together with any amendments or supplements thereto, the “Agreement”) by and between the City of Santa Cruz (the “Borrower”) and Wells Fargo Municipal Capital Strategies, LLC (the “Bank”). All terms defined in the Agreement are used herein as defined therein.
The Borrower hereby requests, pursuant to Section 2.6 of the Agreement, that the Stated Commitment Expiration Date with respect to the Available Commitment as of the date hereof be extended to __________, ____. Pursuant to such Section 2.6, we have enclosed with this request the following information:
1. A reasonably detailed description of any and all Defaults that have occurred and are continuing;
2. Confirmation that all representations and warranties of the Borrower as set forth in Article VI of the Agreement are true and correct as though made on the date hereof and that no Default or Event of Default has occurred and is continuing on the date hereof; and
3. Any other pertinent information previously requested by the Bank.
The Bank is required to notify the Borrower of its decision with respect to this request within sixty (60) days of the date of receipt hereof. If the Bank fails to notify the Borrower of the Bank’s decision within such sixty (60) day period, the Bank shall be deemed to have rejected such request.
23.74 -C-2- 4859-0460-1269.6
IN WITNESS WHEREOF, the Borrower has executed and delivered this Request for Extension this ____ day of __________, _____.
CITY OF SANTA CRUZ
By:
Name:
Title:
23.75 -D-1- 4859-0460-1269.6
EXHIBIT D
[FORM OF NOTICE OF EXTENSION]
NOTICE OF EXTENSION
City of Santa Cruz
809 Center Street
Santa Cruz, California 95060
Attention: [________]
Email: [_________]
Ladies and Gentlemen:
We hereby notify you that pursuant to Section 2.6 of the Credit Agreement, dated [June __, 2024], by and between the City of Santa Cruz (the “Borrower”) and Wells Fargo Municipal Capital Strategies, LLC (the “Bank”), the Stated Commitment Expiration Date with respect to the Commitment as of the date hereof shall be extended to __________, ____. Your acknowledgment hereof shall be deemed to be your representation and warranty that all your representations and warranties contained in Article VI of the Agreement are true and correct and will be true and correct as of the date hereof and that no Default or Event of Default has occurred and is continuing.
IN WITNESS WHEREOF, we have executed and delivered this Notice of Extension as of the ____ day of __________, _____.
WELLS FARGO MUNICIPAL CAPITAL
STRATEGIES, LLC
By:
Name:
Title:
Acknowledged as of __________, ____ by
CITY OF SANTA CRUZ
By:
Name:
Title:
23.76 -E-1- 4859-0460-1269.6
EXHIBIT E
[FORM OF REQUEST FOR TERMINATION OR REDUCTION]
REQUEST FOR TERMINATION OR REDUCTION
Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
1655 Grant Street 3rd Floor
Concord, California 94520
Attention: Zina Monroe
Email: [email protected]
Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
[________]
[________]
Attention: [________]
Email: [_________]
Re: Credit Agreement dated [June __, 2024]
Ladies and Gentlemen:
The City of Santa Cruz (the “Borrower”), through its undersigned, an Authorized Representative, hereby certifies to Wells Fargo Municipal Capital Strategies, LLC (the “Bank”), with reference to the Credit Agreement dated [June __, 2024] (together with any amendments or supplements thereto, the “Agreement”) by and between the Borrower and the Bank (the terms defined therein and not otherwise defined herein being used herein as therein defined):
[(1) The Borrower hereby requests a reduction of the Commitment from [insert amount as of the date of Certificate] to [insert new amount], such reduction to be effective on __________, _____. Such reduction is in an amount equal to $500,000 or an integral multiple of $100,000 in excess thereof.] OR
[(1) The Borrower hereby requests the termination of the Commitment and the reduction of the Available Commitment to zero in accordance with the Agreement.]
IN WITNESS WHEREOF, the Borrower has executed and delivered this Request for Termination or Reduction this ____ day of __________, _____.
CITY OF SANTA CRUZ
By:
Name:
Title:
23.77 -F-1- 4859-0460-1269.6
EXHIBIT F
[FORM OF NOTICE OF REDUCTION]
NOTICE OF REDUCTION
City of Santa Cruz
809 Center Street
Santa Cruz, California 95060
Attention: [________]
Email: [_________]
Ladies and Gentlemen:
We hereby notify you that pursuant to Section 2.5(a) of the Credit Agreement, dated [June __, 2024], by and between the City of Santa Cruz (the “City”) and Wells Fargo Municipal Capital Strategies, LLC (the “Bank”), the Commitment is reduced from [insert amount as of the date of Certificate] to [insert new amount], such reduction to be effective on __________, _____.
IN WITNESS WHEREOF, we have executed and delivered this Notice of Reduction as of the ____ day of __________, _____.
WELLS FARGO MUNICIPAL CAPITAL
STRATEGIES, LLC
By:
Name:
Title:
23.78 -G-1- 4859-0460-1269.6
EXHIBIT G
[FORM OF NOTICE OF TERMINATION AT REQUEST OF THE BORROWER]
NOTICE OF TERMINATION AT REQUEST OF THE BORROWER
City of Santa Cruz
809 Center Street
Santa Cruz, California 95060
Attention: [________]
Email: [_________]
Ladies and Gentlemen:
We refer to the Credit Agreement dated [June __, 2024] (together with any amendments or supplements thereto, the “Agreement”) by and the City of Santa Cruz (the “Borrower”) and Wells Fargo Municipal Capital Strategies, LLC (the “Bank”). Any term below which is defined in the Agreement shall have the same meaning when used herein.
Pursuant to Section 2.5(b) of the Agreement, we hereby notify you that:
1. The Available Commitment is hereby reduced to zero and will no longer be reinstated; and
2. The Commitment is hereby terminated and the Bank has no further obligation to make Revolving Loans under the Agreement.
IN WITNESS WHEREOF, we have executed and delivered this Notice of Termination at the Request of the Borrower as of the ____ day of __________, _____.
WELLS FARGO MUNICIPAL CAPITAL
STRATEGIES, LLC
By:
Name:
Title:
23.79 -H-1- 4859-0460-1269.6
EXHIBIT H
[FORM OF NOTICE OF TERMINATION UPON EVENT OF DEFAULT]
NOTICE OF TERMINATION UPON EVENT OF DEFAULT
City of Santa Cruz
809 Center Street
Santa Cruz, California 95060
Attention: [________]
Email: [_________]
Ladies and Gentlemen:
We refer to the Credit Agreement dated [June __, 2024] (together with any amendments or supplements thereto, the “Agreement”) by and between the City of Santa Cruz (the “Borrower”) and Wells Fargo Municipal Capital Strategies, LLC (the “Bank”). Any term below which is defined in the Agreement shall have the same meaning when used herein.
We hereby notify you that an Event of Default has occurred under Section ____ of the Agreement. As a result, unless and until you have been advised otherwise by us:
1. The Available Commitment [has been automatically]/[is hereby] reduced to $0.00 and will no longer be reinstated; and
2. The Commitment [has been automatically]/[is hereby] terminated and the Bank has no further obligation to make Revolving Loans under the Agreement. [3. All amounts due under the Agreement and the Note are immediately due and payable.]
IN WITNESS WHEREOF, we have executed and delivered this Notice of Termination Upon Event of Default as of the ____ day of __________, _____.
WELLS FARGO MUNICIPAL CAPITAL
STRATEGIES, LLC
By:
Name:
Title:
23.80 -I-1- 4859-0460-1269.6
EXHIBIT I
[FORM OF NOTICE OF PREPAYMENT]
NOTICE OF PREPAYMENT
Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
1655 Grant Street 3rd Floor
Concord, California 94520
Attention: Zina Monroe
Email: [email protected]
Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
[________]
[________]
Attention: [________]
Email: [_________]
Re: Credit Agreement dated [June __, 2024]
Ladies and Gentlemen:
The City of Santa Cruz (the “Borrower”), through its undersigned, an Authorized Representative, hereby certifies to Wells Fargo Municipal Capital Strategies, LLC (the “Bank”), with reference to the Credit Agreement dated [June __, 2024] (together with any amendments or supplements thereto, the “Agreement”) by and between the Borrower and the Bank (the terms defined therein and not otherwise defined herein being used herein as therein defined):
The Borrower hereby informs you that the Borrower intends to prepay Revolving Loan(s) in an aggregate principal amount of $[insert prepayment amount] on __________, _____, which date is at least ten (10) Business Day following the date of this notice of Prepayment. Accrued interest on all prepayments of principal to the Prepayment Date shall be payable on the Prepayment Date.
IN WITNESS WHEREOF, the Borrower has executed and delivered this Notice of Prepayment this ____ day of __________, _____.
CITY OF SANTA CRUZ
By:
Name:
Title:
23.81 -J-1- 4859-0460-1269.6
EXHIBIT J
[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE
Financial Statement Date ____________, ____
To: Wells Fargo Municipal Capital Strategies, LLC
c/o Wells Fargo Bank, National Association
1655 Grant Street 3rd Floor
Concord, CA 94520
Attention: Zina Monroe
Email: [email protected]
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated [June __, 2024] (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), between the City of Santa Cruz (the “Borrower”), and Wells Fargo Municipal Capital Strategies, LLC, (the “Bank”).
The undersigned Authorized Representative hereby certifies as of the date hereof that he/she is the of the Borrower, and that, as such, he/she is authorized to execute and deliver this Certificate to the Bank on the behalf of the Borrower, and that:
1. Attached hereto as Schedule 1 are the year-end audited financial statements required by Section 7.2(a)(i) of the Agreement for the fiscal year of the Borrower ended as of the above date, together with the report and opinion of an independent certified public accountant required by such section.
2. The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of the Borrower during the accounting period covered by the attached financial statements.
3. A review of the activities of the Borrower during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period the Borrower performed and observed all its Payment Obligations under the Agreement and the Note, and
[select one:]
[to the best knowledge of the undersigned during such fiscal period, the Borrower performed and observed each covenant and condition of the Agreement, the Note and the Resolution applicable to it, and no Default has occurred and is continuing.] --or--
23.82 -J-2- 4859-0460-1269.6
[the following covenants or conditions have not been performed or observed and the following is a list of each such Default and its nature and status:]
4. The representations and warranties of the Borrower contained in Article VI of the Agreement, and/or any representations and warranties of the Borrower that are contained in any document furnished at any time under or in connection with the Agreement, the Note and the Resolution, are true and correct on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Compliance Certificate, the representations and warranties contained in Section 6.1(n) of the Agreement shall be deemed to refer to the most recent statements furnished pursuant to Section 7.2(a)(i) of the Agreement, including the statements in connection with which this Compliance Certificate is delivered.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of __________, _____.
CITY OF SANTA CRUZ
By:
Name:
Title:
23.83 -K-1- 4859-0460-1269.6
EXHIBIT K
[FORM OF INVESTOR LETTER]
INVESTOR LETTER
[DATE]
City of Santa Cruz
809 Center Street
Santa Cruz, California 95060
Re: $25,000,000 City of Santa Cruz Promissory Note
Ladies and Gentlemen:
This letter is to provide you with certain representations and agreements with respect to our purchase of [all] [a portion] of the above-referenced note (the “Note”), dated its date of issuance. The Note was issued under and secured in the manner set forth in that certain resolution adopted on May 16, 2024 (as amended, modified or restated from time to time, the “Resolution”) by the City Council of the City of Santa Cruz (the “City”). [Insert Name of Purchaser] (the “Purchaser,” the “undersigned,” “us” or “we,” as applicable) is purchasing [all] [a portion] of the Note pursuant to [Insert Name of Purchasing Agreement]. We hereby represent and warrant to you and agree with you as follows:
1. We understand that the Note has not been registered pursuant to the Securities Act of 1933, as amended (the “1933 Act”), the securities laws of any state nor has the Resolution been qualified pursuant to the Trust Indenture Act of 1939, as amended, in reliance upon certain exemptions set forth therein. We acknowledge that the Note (i) is not being registered or otherwise qualified for sale under the “blue sky” laws and regulations of any state and (ii) will not be listed on any securities exchange.
2. We have not offered, offered to sell, offered for sale or sold any of the Note by means of any form of general solicitation or general advertising, and we are not an underwriter of the Note within the meaning of Section 2(11) of the 1933 Act.
3. We have sufficient knowledge and experience in financial and business matters, including purchase and ownership of municipal and other taxable and tax-exempt obligations, to be able to evaluate the risks and merits of the investment represented by the purchase of the Note.
4. We have authority to purchase the Note and to execute this letter and any other instruments and documents required to be executed by the purchaser in connection with the purchase of the Note.
5. The undersigned is a duly appointed, qualified and acting representative of the Purchaser and is authorized to cause the Purchaser to make the certifications, representations and warranties contained herein by execution of this letter on behalf of the Purchaser.
23.84 -K-2- 4859-0460-1269.6
6. The Purchaser is either a “qualified institutional buyer” as defined in Rule 144A promulgated under the 1933 Act, or an “accredited investor” as defined in Rule 501 of Regulation D under the 1933 Act and is able to bear the economic risks of such investment.
7. The Purchaser understands that no official statement, prospectus, offering circular, or other comprehensive offering statement is being provided with respect to the Note. The Purchaser has made its own inquiry and analysis with respect to the City, the Note and the security therefor, and other material factors affecting the security for and payment of the Note.
8. The Purchaser acknowledges that it has either been supplied with or been given access to information, including financial statements and other financial information, regarding the City, to which a reasonable investor would attach significance in making investment decisions, and has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the City, the Note and the security therefor, so that as a reasonable investor, it has been able to make its decision to purchase the Note.
9. The Note is being acquired by the Purchaser for investment for its own account and not with a present view toward resale or distribution; provided, however, that the Purchaser reserves the right to sell, transfer or redistribute the Note, but agrees that any such sale, transfer or distribution by the Purchaser shall be to a Person that (i) is a secured party, custodian or other entity in connection with a pledge by the Purchaser to secure public deposits or other obligations of the Purchaser or one of its affiliates to state or local governmental entities; or (ii) the Purchaser reasonably believes to be a qualified institutional buyer or accredited investor and who executes an investor letter substantially in the form of this letter.
Very truly yours,
[Insert Name of Purchaser]
By:
Name:
Title:
23.85 City Council
AGENDA REPORT
DATE: 04/25/2024
AGENDA OF: 05/14/2024
DEPARTMENT: Parks and Recreation
SUBJECT: Santa Cruz Museum of Natural History Building Improvement Community Process (PR)
RECOMMENDATION: Motion to:
1) Consider and support the initiation of a public process led by the Parks and Recreation Department and Santa Cruz Museum of Natural History (Museum) related to facility improvements of the Museum, and
2) Authorize the City Manager to enter into an agreement, in a form approved by the City Attorney, with the Museum to define process roles and responsibilities for community outreach and design.
BACKGROUND: The City of Santa Cruz owns and leases the building located at 1305 E. Cliff Dr. to the Santa Cruz Museum of Natural History (Museum). The front portion of the building (e.g. closest to E. Cliff Dr.) is the historic Carnegie library portion of the facility. Two additions were added on the north side of the historic portion of the building in the 1960s to make up what is the current facility.
The Museum is an independent 501c3 non-profit organization with a mission oriented toward “Connecting people with nature and science to inspire stewardship of the natural world.” Historically, the museum was a City-run institution, and the first Museum in Santa Cruz, dating back to 1904 with the founding collection of Santa Cruz lighthouse keeper and naturalist, Laura Hecox. Today the Museum features educational, hands-on exhibits for children, families and adults who are curious about the world they live in and the natural history of one of the most scenic locations on the California coast. Many locals know the Museum by the life-size gray whale statue, created in 1982, that rests near its entrance, between Tyrrell Park and Seabright State Beach.
The Museum has resided in the building since 1954. When the Museum became an independently run non-profit in 2009, it leased the building from the City. The Museum is an outstanding partner of the City and an impactful and well-respected community organization serving Santa Cruz and beyond. The City owns and maintains Tyrell Park adjacent to and surrounding the Museum building.
24.1 The Museum’s 2021-2024 Strategic Plan includes a key goal to “Strengthen a dynamic and resilient organizational structure by investing in staff, employing strategic foresight, and practicing sound fiscal management.” Furthermore, “The Museum’s staff, infrastructure, and financial resilience will support its continued evolution as a modern cultural institution.” A key objective of the Museum under this broad goal is to “Initiate the facility Master Planning process to ensure the Museum space serves long-term strategic goals.” DISCUSSION: In early 2024, the Museum leadership approached the City to discuss its future and its needs related to the current facility. The current building is aging, needs improvements to address substandard storage and archives space, exhibits area, and office space, and lacks of dedicated education space. The Museum engaged the Parks and Recreation Department and proposed initiating a public process to engage neighbors and key stakeholders toward a goal of developing concepts for improvements to the existing building.
The long-term goal is to improve accessibility, protect the collections and archives, and invest in the historic Museum building. While the City owns the building and leases it to the Museum, the Museum proposed that it would take the leadership role to fundraise and financially support a process to engage the community and ultimately design and implement the building improvements. Parks and Recreation staff support this proposal to initiate a public process and the Parks and Recreation Commission voted unanimously to endorse the start of such a process to consider long-term facility improvements to the museum.
To accomplish this goal, Parks and Recreation is seeking support and direction from the City Council to endorse a public process that will include community outreach and will work toward initial design concepts for future building improvements and/or park design improvements.
Additionally, staff are seeking approval of a draft agreement between the City and Museum to define the roles and responsibilities of each party associated with the community outreach and design process.
Following the community outreach phase, Parks and Recreation Department staff and Museum representatives will return to the City Council and Parks and Recreation Commission to seek approval on a formal building project agreement. Such an agreement would memorialize specific roles and responsibilities associated with the subsequent building project pending approval of the design permit. City Council and the Parks and Recreation Commission will review the final project proposal. The project would be subject to review and all relevant permitting approvals.
With the appropriate public review, approvals, and permits, the Museum will fundraise to support the implementation of the approved building improvements. Parks and Recreation and the Museum may return to the City Council to update the existing lease as needed.
HEALTH IN ALL POLICIES: The Santa Cruz Museum of Natural History is an partner of the City of Santa Cruz and the Parks and Recreation Department, and is aligned with both the mission of Parks and Recreation and the City’s Health in All Policies with respect to health/wellness, sustainability, and equity. The Museum embodies these elements through its mission, programs, and strategic plans. The proposed improvements of the Museum’s building would allow for sustainability, accessibility, and the long-term viability of a key community partner housed in a City park.
FISCAL IMPACT: None for the initial outreach process.
24.2 Prepared and Submitted By:
Tony Elliot
Director of Parks and
Recreation
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. AGREEMENT.PDF
2. BUILDING CONDITION ASSESSMENT REPORT.PDF
3. SANTA CRUZ MUSEUM OF NATURAL HISTORY - A BRIEF HISTORY.PDF
24.3 1
SCMNH/City Planning and Coordination Agreement
PLANNING AND COORDINATION AGREEMENT
BY AND BETWEEN
THE CITY OF SANTA CRUZ
AND THE
SANTA CRUZ MUSEUM OF NATURAL HISTORY
This Planning and Coordination Agreement (“Agreement”) is entered into on __________ 2024, by and between the City of Santa Cruz, a municipal corporation (“City”), and the Santa Cruz Museum of Natural History, a California non-profit public benefit corporation (“Museum”). City and Museum may also be referred individually as a “Party” and collectively, as the “Parties”.
RECITALS
WHEREAS, the City of Santa Cruz owns the historic former Carnegie Library building (“Building”) and surrounding property, including Tyrrell Park, at 1305 East Cliff Drive; and WHEREAS, the Museum is a 501(c)(3) non-profit organization and leases the Building from the City for the purposes of operating a museum of natural history. Additionally, Museum maintains parts of the surrounding property under an Adopt-a-Park agreement; and WHEREAS, the Museum has operated at the Building since 1954. The Museum took over operations from the City in 2009 as an independent non-profit organization, and currently offers important resources to the City, its residents and its visitors, including providing educational curriculum; care and oversight of the Building; family-friendly programs and events; stewardship of important local natural history and scientific collections; and a destination for tourism; and
WHEREAS, the Building is in need of upgrades and improvements in order to support its continued utility, improve accessibility, protect the Museum’s priceless natural history collections, and support the Museum’s continued use as a public and educational institution; and WHEREAS, the Museum and the City intend to work collaboratively to develop a project description for a building improvement project (“the Project”) to support the use and health of the Building and potentially surrounding property, improve accessibility, protect and preserve the Museum’s collections, and improve the Building for continued use by the Museum.
NOW, THEREFORE, in consideration of the above recitals, the Parties hereto agree, as follows:
1. Purpose of this Agreement. The Parties enter into this Agreement to describe the Parties’ respective goals and responsibilities related to planning, coordination, and developing the scope of the Project.
2. Term. This Agreement will commence upon execution by both Parties and will terminate upon completing and acceptance of the work related to this Project. This Agreement may also be terminated upon a 30-day written notice by either Party to the
24.4 2
SCMNH/City Planning and Coordination Agreement
other if adequate funding cannot be procured for the Project, or if either Party has made a determination that the Project is infeasible or undesirable. This Agreement may be extended or terminated by mutual written agreement of the Parties.
3. The Project.
a. The Parties desire to pursue the Project, intended to include upgrades and improvements to the former Carnegie Library building located at 1305 East Cliff Drive. These improvements may include, but are not limited to:
structural improvements to Building to address drainage and other structural concerns; addition(s) to Building’s footprint for a classroom and additional restroom(s); upgraded HVAC and environmental control systems; improvements to accessibility, such as Americans With Disabilities Act (ADA) entrance and elevator; and interior improvements to exhibit halls, office and collections spaces. In addition, the scope of the Project may include minor modifications to Tyrrell Park, including but not limited to improvements to pathways to support ADA access within the Park and the amphitheater, as well as safety, educational, and rehabilitative upgrades and improvements to the grey whale sculpture, the learning garden, and surrounding area. The Parties acknowledge that this anticipated scope is preliminary and is likely to change as a result of anticipated technical studies and information currently unknown to the Parties.
b. The Parties intend to have the final project scope memorialized in a later agreement related to the Project’s construction to be negotiated and approved by the Parties. The final Project scope, including the Project plans and specifications, must be approved by the City Council before the Museum proceeds with construction activities. The Parties further acknowledge that it is possible that the Project could be executed in phases and therefore may require more than one zoning permit and/or building permit. The Parties also acknowledge that this Agreement does not require or commit the Museum to commence or perform any improvements to the Building or Tyrrell Park, or to complete any specific improvements described in this Agreement.
4. Communication and Coordination. The Museum and the City will each designate a Representative, or primary “point of contact,” to be responsible for communications, coordination, oversight, and management of planning activities related to the Project, as set out below:
Museum Representative:
Felicia Van Stolk
Executive Director, Santa Cruz Museum of Natural History 831-420-6115, ext. 11; [email protected]
24.5 3
SCMNH/City Planning and Coordination Agreement
City Representative:
Tony Elliot
Director of Parks and Recreation
831-420-5270; [email protected]
The Representatives will meet and work together on a regular basis to further the goals of the Project. The Representatives will participate in meetings with design professionals, consultants, and contractors. City’s Representative shall have the option, but not the obligation, to participate in such meetings. The Representatives may appoint one or more designees to perform tasks related to the Project. In the event that either Party wishes to change the Representative designated in this Agreement, that Party will notify the other Party.
5. Museum’s Responsibilities.
a. Project Management. The Museum intends to hire one or more Project Managers to assist the Museum with planning, coordination, outreach, and management related to the planning of the Project. The Project Manager(s) will be contracted by the Museum and will take direction from Museum staff.
The Museum will notify the City if it hires or replaces a Project Manager. b. Donations and Funding. The Museum intends to fund the Project using donations and grants from private and public sources. The Museum certifies that it follows best accounting practices. This Agreement does not commit the City to using public funds for the Project, but does not preclude City from contributing funds or participating in grant funding.
c. Technical Studies. The Museum will be responsible for procuring or providing all technical studies and related documents that will be required for planning or permit approval purposes, including biological resources, cultural resources, historical resources, and traffic and transportation studies. d. Design. The Museum will be responsible for creating and funding the interior and exterior designs, architectural plans, and construction drawings for the Project, subject to City approval.
e. Landscaping. Museum will prepare a proposed landscape plan for Tyrrell Park that enhances accessibility, drainage, and current uses of the park, including educational, recreational, and passive community use. This does not preclude the City from contributing funds or participating in grant funding for preparation of the proposed landscape plan. The proposed landscape plan will include improvements to the pathways throughout the park, and may also include improvements and rehabilitation to the existing amphitheater and the grey whale sculpture. These improvements may be executed as part of the initial improvement project or through subsequent project phases. The Museum and the City may also elect to execute only a portion of, or none of, the improvements. The proposed landscape plan will be subject to City
24.6 4
SCMNH/City Planning and Coordination Agreement
approval. The City and the Museum intend to collaborate with each other to try to secure funding for any improvements to Tyrrell Park. f. Consultants and Contractors. Museum will select the
consultants/contractors for technical studies, architectural design, public outreach, engineering, and other related services for the Project. Museum will ensure that all contracts entered into by Museum in furtherance of the Project are consistent with the terms and conditions of this Agreement. Museum will provide copies of any contract related to the conceptual phase of project to the City for review and approval, upon the request of City. The Museum will provide any proposed contracts related to the preparation of construction drawings, landscape designs, engineering plans, structural engineering plans, and similar trades that go beyond the conceptual phase to the City for review and approval, without the City having to request copies of the contract. The City will not be a party to any contract with any selected contractor for the Project, unless necessary as the Landlord of the Premises Museum will oversee any selected consultant’s or contractor’s work on the Project, and will review and approve, in writing, all payment requests from the consultant(s)/contractor(s) on the Project. Museum is responsible for making all appropriate payments for any selected consultant’s or contractor’s work on the Project.
As further specified in this Agreement, before Museum hires the construction contractor(s), the Parties will enter into a construction contract, setting forth the Parties’ and the construction contractors’ construction-related responsibilities in greater detail.
g. Permits and Approvals. The Museum will be responsible at its sole cost and expense for obtaining all necessary permits and approvals related to the Project, including zoning entitlements, building permits and construction related approvals. This does not preclude the City from potentially providing waivers, if legally permissible, or support for grant applications for these expenses. The Museum will respond to any permitting authority’s permitting questions and requests for documents or information.
h. Outreach and Communication. The Museum and the City will meet with each other to develop a shared understanding for how the Parties will address inquiries and outreach related to the Project. The Museum will be the lead party in charge of outreach and communication regarding the Project, in close consultation and cooperation with the City. The Museum will have primary responsibility for holding public information meetings and responding to public inquiries regarding the Project. City is responsible for holding any permit-related public hearings, to the extent required by law.
24.7 5
SCMNH/City Planning and Coordination Agreement
i. Cooperation. The Museum will regularly communicate with the City on matters relating to the Project, including design, permitting, funding, grants, public communications, and outreach. The Museum will work to keep the City informed on Project progress and actual or anticipated complications.
6. City’s Responsibilities.
a. Lease. Assuming Museum has not breached or defaulted in its existing lease, and assuming the Parties can mutually agree to renewal terms, the City intends to renew the Museum’s existing lease for the Premises at a substantially similar rent base as that of the existing lease at or before the time the Parties enter into the separate construction contract. The City understands that the Museum requires a long-term lease in exchange for its investment in improving and preserving the Building and surrounding areas. The Parties will work to develop an updated lease outlining the City and Museum obligations for a 30-50 year period, which may take the form of a 30 year lease with an option to renew, subject to City approval.
b. Park. The City will collaborate with the Museum to plan for any upgrades, improvements, and/or changes to Tyrrell Park, including improvement or replacement of the grey whale sculpture, amphitheater, pathways, lighting, and landscaping.
c. Funding and Grants. The City has not committed any City funds to the Project; however, this Agreement does not preclude the City from exercising an option to commit its funds to the Project. The City will keep the Museum informed of potential grant opportunities that may support the Project, and will act as co-applicant on grants if appropriate and agreed to by both Parties. d. Permits and Approvals. The City will be responsible for conducting required public hearing processes to consider zoning entitlements, and issuing zoning and building permits for the Project, in accordance with local, state, and Federal laws and regulations. To the extent applicable, the City will be responsible for completing any CEQA review for the Project in accordance with its standard policies and procedures.
e. Cooperation. The City will communicate with the Museum on matters relating to the Project, including design, permitting, funding, grants, public communications, outreach, and construction. To the extent that it has information to share, the City will work to keep the Museum informed on project progress, public communications, and actual or anticipated complications. To the extent practicable or feasible, the City will coordinate with the Museum to identify possible locations, including City-owned and operated spaces, for storage of collections items as well as for temporary Museum operations during construction operations.
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7. Construction
a. After the Project description is finalized, the Parties intend to enter into a separate construction agreement, which will set forth the Parties’ agreement on matters such as the work schedule, construction contractor indemnity and insurance requirements, warranties, bonds/security, site access, change orders, and environmental covenants, among other construction-specific items. b. While the Parties intend to enter into a later detailed construction agreement, the Parties now agree that:
i. Museum will be responsible for funding and overseeing construction activities, including grading, paving, foundations, framing, and interior and exterior buildout for the primary building phase of the Project, with potential to oversee some park improvements, if identified in the landscape plan and agreed to by the Parties.
ii. The City will assist the Museum with locating and securing areas for construction staging, including possible staging areas within Tyrrell Park and on surrounding streets.
iii.Museum and any contractor performing Project-related work shall conform to the prevailing wage requirements and federal labor standard wage provisions applicable to Project-related work. Museum (and its contractors) shall adhere to the prevailing wage determinations made by the Director of Industrial Relations pursuant to California Labor Code Part 7, Chapter 1, Article 2, applicable to Project-related work. The Parties acknowledge that 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. Reference: California Labor Code Sections 1720, 1774 and 1782.
iv. Museum agrees to indemnify, defend and hold harmless City, officials, officers, directors, 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 Museum and its contractor(s) to pay prevailing wages or to otherwise comply with the requirements of prevailing wage law relating to a public work, to the extent those requirements apply to Project-related work.
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8. Indemnification Between Museum and City. The obligations under this Section of the Agreement shall survive expiration or termination of this Agreement to the fullest extent permitted by law.
a. To the fullest extent permitted by law, Museum agrees to indemnify, defend, and hold harmless City of Santa Cruz, its officials, officers, employees and volunteers (“Indemnitees”) from and against any and all claims, demands, actions, liabilities, damages, or expenses, (including attorneys’ fees and costs) (“Losses”) arising from the acts or omissions of Museum, Museum’s employees or agents in any way related to this Agreement, except where caused by the sole negligence, or willful misconduct of the City. The City does not, and shall not, waive any rights, against Museum or any of its contractors, which City may have pursuant to this Agreement, because of City’s acceptance of work related to the Project. The obligation to defend by Museum shall arise regardless of any claim or assertion that Indemnitees caused or contributed to the Losses
b. The City agrees to indemnify, defend, and hold harmless the Museum, its respective officials, officers, employees and agents from any and all claims, demands, actions, liabilities, damages, or expenses (including attorneys’ fees and costs), which Museum may sustain or incur or which may be imposed upon it, but only in proportion to and to the extent such Losses result from, arise out of, or in any manner are caused by the City’s negligent or intentional acts or omissions relating to this Agreement.
9. Consultant Insurance Requirements. Unless otherwise agreed to in writing by the Parties, Museum shall require that all consultant agreements related to the Project (including but not limited to agreements with architects, engineers, landscape architects, and design professionals) obligate Museum’s consultants performing work on this Project to maintain the type and amount of insurance coverage, as specified in Exhibit A to this Agreement. Any additional insurance or indemnity benefits that any consultant contract grants to the Museum will likewise be given to the City.
10. Consultant Indemnity Requirements. Unless otherwise agreed to in writing by the Parties, Museum shall require any consultant performing Project-related work to defend, indemnify, and hold harmless the City and its related parties. Unless otherwise agreed to in writing by the Parties, Museum’s contracts with consultants shall include the following indemnity provision:
“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’
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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. Consultant’s 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 § This indemnification clause shall survive termination of this Agreement.” a. Consultant Verification. Unless otherwise agreed to in writing by the Parties, Museum must require its Consultant to execute the Consultant Indemnification & Insurance Agreement, attached hereto as Exhibit B, to verify its Consultant’s compliance with these indemnification and insurance requirements.
11. Museum Insurance Requirements. To support its obligations under this Agreement, Museum shall maintain the type and amount of insurance coverage, as specified in Exhibit C to this Agreement.
12. Conflicts of Interest. No member, official, officer, employee, agent, representative, or consultant of the Parties will have any personal interest, direct or indirect, in this Agreement nor will any such member, official, officer, agent, representative, or employee participate in any decision relating to this Agreement which affects his or her personal interests or the interests of any corporation, partnership, or association in which he or she has a direct or indirect interest. Each Party warrants that it has not paid or given, and will not pay or give, any such member, official, officer, employee, agent, representative, or consultant of the other Party any money or other consideration for obtaining this Agreement.
13. Relationship of Parties. This Agreement does not create any joint venture, partnership, or agent relationship between any of the Parties.
14. Cooperation. The Parties acknowledge that this Agreement does not describe all of the actions, documents and approvals necessary for the Project; and each Party agrees to cooperate with the other Parties as may be necessary to achieve the purposes of this Agreement.
15. Contract Interpretation. Each party acknowledges that it has reviewed this Agreement. The Parties agree that the rule of construction that any ambiguities are to be resolved against the drafting party will not be employed in the interpretation of this Agreement.
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16. Museum’s Records. To the extent required by law, Museum will 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 Project completion.
17. Force Majeure. Neither Party will be considered in default in the performance of its obligations described in this Agreement 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, a strike, lockout or other labor difficulty, or other peril, which is beyond the reasonable control of the affected Party and without the negligence of the respective Parties. Each Party will 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.
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 will 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 Project involves or qualifies as a public works project, the Parties agree to comply with Public Contract Code sections 9204(e) and 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. Notices. If either Party desires or is required to give notice to the other, such notice shall be given in writing, via email, and concurrently delivered by: (a) personal delivery, in which case notice is effective upon delivery; or (b) overnight courier (i.e., Federal Express) with charges prepaid or charged to the sender’s account, in which case notice is effective when delivered; or (c) priority U.S. Mail, in which case notice shall be deemed delivered on the second business day after the deposit thereof with the U.S.
Postal Service. Notices should be addressed to recipient as follows:
If to City: City of Santa Cruz
Parks & Recreation Department
323 Church St.
Santa Cruz, CA 95060
Attn: Tony Elliot, Parks & Rec Director
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Email: [email protected]
If to Museum: Santa Cruz Museum of Natural History
1305 E Cliff Dr.
Santa Cruz, CA 95062
Attn: Felicia Van Stolk, Executive Director
Email: [email protected]
The Parties agree to provide notification of any changes to the above information in writing at least ten (10) business days before the change is effective.
20. Non-discrimination. Museum and its officers, agents, employees, contractors and subcontractors, if any, may not discriminate against any participant, employee or applicant for employment to be employed in the performance of this Agreement or the Project, with respect to hire, tenure, terms, conditions, or privileges of employment, or any matter directly or indirectly related to employment, because of race, sex, sexual orientation, gender identity, religion, color, national origin, ancestry, age, disability, or United States military service veteran status.
21. Successors and Assigns. Each Party binds itself and its partners, successors, executors, administrators and assigns to the other Party of this Agreement and to the partners, successors, executors, administrators and assigns of such other party, in respect to all covenants of this Agreement; except as otherwise provided herein, Museum may not assign, sublet or transfer its interest in this Agreement without the written consent of the City. Such consent will not be unreasonably withheld or delayed.
22. Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the Planning and Coordination of the Project and supersedes all prior agreements, written or verbal, between the City and Museum. No statements, promises or agreements whatsoever, in writing or verbal, in conflict with the terms of the Agreement have been made by the Parties which in any way modify, vary, alter, enlarge or invalidate any of the provisions and obligations herein stated. This Agreement may be amended and modified only in writing signed by both Parties.
23. Severability. The unenforceability, invalidity or illegality of any provision(s) of this Agreement will not render the other provisions unenforceable, invalid or illegal.
24. Governing Law. This Agreement is governed, construed, and enforced in accordance with the laws of the State of California.
25. Counterparts. The Parties may execute this Agreement in two or more counterparts, which will, in the aggregate, be deemed an original but all of which, together, will constitute one and the same instrument. A .pdf/electronic of a duly executed copy of this Agreement or of any document signed pursuant to this Agreement will be deemed for all purposes as receipt of an originally signed document, and any such copy bearing a .pdf/electronic signature will be binding upon, and enforceable against either Party.
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26. 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 corporate entity, representatives, agents, successors, and assigns to comply with the provisions of this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date written above.
CITY:
CITY OF SANTA CRUZ
By:______________________________
Name: Matt Huffaker
Its: City Manager
Approved as to form:
_______________________________
Office of the City Attorney
MUSEUM:
SANTA CRUZ MUSEUM OF NATURAL HISTORY
a California Non-Profit Public Benefit Corporation
By:____________________________________
Name:_________________________________
Title:____________________________________
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EXHIBIT A
CONSULTANT INSURANCE REQUIREMENTS
Consultant shall procure and maintain insurance against claims for injuries to persons or damages to property and otherwise which may arise from or in connection with the performance of the work under this Agreement and the results of that work by Consultant, its agents, representatives, employees, contractors, or subcontractors.
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, o The Certificate Holder will be City of Santa Cruz, Risk Management, 1200 Pacific Avenue, Suite 290, Santa Cruz, CA 95060,
o Certificate will be signed by an authorized representative, o An endorsement, if required below, will be provided to show the City, its officers, officials, employees, and volunteers as additional insureds, and o Coverages must be maintained during the term of the Agreement with the City, unless a longer duration is required as specified below.
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): $2,000,000 PER OCCURRENCE; $2,000,000
AGGREGATE
Proof of coverage for $2 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. ● 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 nonrenewed 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.
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● 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. (Not required if Consultant provides written verification it has no employees) - If Consultant has no employees, Consultant shall complete and sign a Workers’ Compensation Exemption Declaration and Release of Liability.
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, professional liability, and automobile insurance policies 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 self-insurance 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
Consultant may use excess liability/umbrella policies to meet the required liability limits on the condition that they provide all of the insurance coverages required herein,
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including, but not limited to, primary and non-contributory, additional insured, SelfInsured Retentions (SIRs), indemnity, and defense requirements. The excess liability/umbrella insurance policies shall be provided on a true “following form” or broader coverage basis, with coverage at least as broad as provided on the underlying CGL insurance. No insurance policies maintained by the additional insureds, whether primary or excess, and which also apply to a loss covered hereunder, shall be called upon to contribute to a loss until the Consultant’s primary and excess liability policies are exhausted.
● 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:
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, CPL, and automobile Policies 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. CONTRACTORS/SUBCONTRACTORS
Consultant shall require and verify that all contractors and subcontractors maintain insurance meeting all the requirements stated herein, and Consultant 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.
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EXHIBIT B
CONSULTANT INDEMNIFICATION & INSURANCE AGREEMENT
This Consultant Indemnification & Insurance Agreement (“Consultant Indemnification Agreement”) is entered into this day of , 20__, by ________________ (“Consultant”) and the City of Santa Cruz (the “City”). Each are individually referred to as a “Party” or collectively as the “Parties”.
RECITALS
WHEREAS, Santa Cruz Museum of Natural History (“Museum”) entered into the Planning and Coordination Agreement (“Agreement”) with the City related to an improvement project (“Project”) to improve the Santa Cruz Museum of Natural History for continued use by the Museum (“Project”) and for Museum to take steps to implement the Project (“Work”) in the attached Agreement, which is incorporated as Exhibit A hereto; WHEREAS, Consultant has entered into a separate agreement with Museum to perform the Work for the Project; and
WHEREAS, as required by the Agreement, Consultant is required to agree to indemnify, defend, and hold harmless the City in the same manner as Museum, and also provide insurance for claims arising from the Consultant’s work in performing any portion of the Project described in the Agreement;
NOW, THEREFORE, the Parties agree to incorporate the above Recitals and further agree as follows:
1. Indemnification. Consultant agrees to indemnify, defend, and hold harmless the City, its officials, officers, employees, and agents in the same manner as the Museum, as described in Section 10 of the Agreement as follows:
a. The City, its officials, officers, employees, and agents (collectively, “Indemnitees”) shall not be liable for any injury to persons or property arising out of, pertaining to or relating to the acts or omissions of the Museum or its agents, officers, employees, consultants, contractors and subcontractors, or others under Museum’s control or authority in the performance of the Work or Agreement, unless such damages are caused by the gross negligence or willful misconduct of Indemnitees. b. To the fullest extent permitted by law, Consultant hereby agrees to, and shall indemnify, defend, and hold harmless City, its officials, officers, employees, and agents (collectively, “Indemnitees”), from any liability or damage or claims for damage for personal injury, including death, as well as from claims for property damage or any other type of claims, liabilities, actions, losses, damages, fines, penalties, judgments, costs, and expenses, including attorneys’ fees and costs (“Losses”) which may arise directly or indirectly from the acts or omissions of
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Consultant or its subcontractors, agents, employees, or others acting under Consultant authority or control in connection with the Work under this Agreement. Consultant’s duty to indemnify, defend, and hold harmless the Indemnitees shall not apply to the extent such Losses are caused by the gross negligence or willful misconduct of the Indemnitees.
c. The obligation to defend by Consultant shall arise regardless of any claim or assertion that Indemnitees caused or contributed to the Losses.
d. 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.
e. The obligations under this section shall survive expiration or termination of this Contractor Indemnification Agreement to the fullest extent permitted by law.
2. Insurance. Consultant agrees to provide the insurance as required in Section 9 of the underlying Agreement.
3. Miscellaneous.
a. Each party acknowledges that it has reviewed this Consultant Indemnification 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 Contractor Indemnification Agreement. b. The unenforceability, invalidity or illegality of any provision(s) of this Consultant Indemnification Agreement shall not render the other provisions unenforceable, invalid or illegal.
c. The Parties may execute this Consultant Indemnification 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. d. The signatories to this Consultant Indemnification Agreement warrant and represent that each is authorized to execute this Consultant Indemnification 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.
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IN WITNESS WHEREOF, the Parties have executed this Consultant Indemnification Agreement the date and year first above written.
CITY OF SANTA CRUZ
By:___________________________
Name:_________________________
Its:____________________________
CONSULTANT
By:___________________________ By:______________________________ Name:_________________________ Name:___________________________ Its:____________________________ Its:______________________________
Signature Requirements for Business Entity:
a. Corporation – 2 officer signatures required (one from each group, unless person signing holds officer positions in both Group 1 and 2):
Group 1: Chief Executive Officer, Chairman of the Board, President, or Vice President Group 2: Secretary, Assistant Secretary, Chief Financial Officer, Treasurer, Assistant Treasurer b. Partnership - Signature of General Partner, or signature of partner who is authorized to execute documents per the Certificate of Partnership. If authorized partner is a corporation, follow Corporation signature requirement.
c. LLC- For a member-managed LLC, signature of any member. For a manager-managed LLC, signature of the manager. If the LLC has corporate officer designations, follow Corporation signature requirement.
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EXHIBIT C
MUSEUM INSURANCE REQUIREMENTS
Museum shall procure and maintain insurance against claims for injuries to persons or damages to property and otherwise which may arise from or in connection with the performance of the work under this Agreement and the results of that work by Museum, its agents, representatives, employees, contractors, or subcontractors.
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, o The Certificate Holder will be City of Santa Cruz, Risk Management, 1200 Pacific Avenue, Suite 290, Santa Cruz, CA 95060,
o Certificate will be signed by an authorized representative, o An endorsement, if required below, will be provided to show the City, its officers, officials, employees, and volunteers as additional insureds, and o Coverages must be maintained during the term of the Agreement with the City, unless a longer duration is required as specified below.
B. MINIMUM SCOPE AND LIMITS OF INSURANCE
Museum acknowledges that the insurance coverage and policy limits set forth in this section constitute the minimum amount of coverage required. If Museum 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 Museum. 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. ● 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 Museum and its employees. (Not required if Museum provides written verification it has no employees) - If Museum has no employees, Museum shall complete and sign a Workers’ Compensation Exemption Declaration and Release of Liability.
C. OTHER INSURANCE PROVISIONS
The insurance policies are to comply with the following provisions:
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● 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 Museum 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 Museum’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, Museum’s insurance coverage will be primary insurance as respects the City, its officers, officials, employees, agents, and volunteers.
Any insurance or self-insurance maintained by the City, its officers, officials, employees, agents, or volunteers will be excess of Museum’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
Museum hereby grants to the City a waiver of any right to subrogation, except as otherwise not applicable, which any insurer of said Museum may acquire against the City by virtue of the payment of any loss, including attorney’s fees under such insurance. Museum 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
Museum may use excess liability/umbrella policies to meet the required liability limits on the condition that they provide all of the insurance coverages required herein, including, but not limited to, primary and non-contributory, additional insured, Self-Insured Retentions (SIRs), indemnity, and defense requirements. The excess liability/umbrella insurance policies shall be provided on a true “following form” or broader coverage basis, with coverage at least as broad as provided on the underlying CGL insurance. No insurance policies maintained by the additional insureds, whether primary or excess, and which also apply to a loss covered hereunder, shall be called upon to contribute to a loss until the Museum’s primary and excess liability policies are exhausted. ● SELF-INSURED RETENTIONS
Self-insured retentions must be declared to and approved by the City. City may require Museum 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:
4. The Retroactive Date must be shown and must be before the date of the contract or the beginning of contract work.
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SCMNH/City Planning and Coordination Agreement
5. Insurance must be maintained, and evidence of insurance must be provided for at least five (5) years after completion of the contract of work.
6. 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 Museum must purchase “extended reporting” coverage for a minimum of five (5) years after completion of contract work.
● VERIFICATION OF COVERAGE
Museum 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, CPL, and automobile Policies 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 Museum’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. 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 Museum.
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Santa Cruz Museum of Natural History
Building Condition Assessment Report
Prepared by: Stephen Farneth FAIA
Final Report April 27, 2023
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Introduction
The Santa Cruz Museum of Natural History (also SCMNH and the Museum) is located in Tyrrell Park, just above the beach on the north side of Monterey Bay in Santa Cruz, California. The Museum was initially established in 1905 with the personal collections of Laura Hecox, a lighthouse keeper. In 1929, the collection of Humphrey Pilkington, a forester and agriculturalist was gifted to the city and joined the Hecox collection in 1932.
The present facility of the Santa Cruz Museum of Natural History was originally built in 1915 as a Carnegie Library to serve the surrounding Seabright neighborhood. The museum moved into the library building in 1954. The City of Santa Cruz operated the Museum until 2009 when the already existing, nonprofit, Santa Cruz Museum Association became the Santa Cruz Museum of Natural History and took over operations. The collections were transfered to the Museum in 2013, while the facility remains in a City lease. Today, the Museum anchors the surrounding Seabright neighborhood, and many visitors walk to the site from their homes or the beach.
Each year the Foundation for Advancement in Conservation, along with the Insitute of Museum and Library Services, offers competitive grants to small and mid-sized institutions with partial funding toward a general conservation assessment. The Collections Assessment for Preservation program certifies architectural assessors and collections assessors to work with museums through these grants. The successful institution selects two assessors, one from each list, who perform an intensive two-day site visit and produce a report that documents the institution’s efforts in collections preservation with a prioritized list of recommendations for improvement.
Stephen Farneth FAIA, is an architect whose practice for over 40 years has focused on historic buildings. He is the Founding Principal of Architectural Resources Group, an architecture, planning, and conservation firm with offices in San Francisco, Portland, and Los Angeles.
David Rasch is a conservator and collections preservation consultant in private practice from Santa Fe, New Mexico. His 1991 Master of Science in Conservation of Artistic and Historic Works is spotlighted in the Winterthur Museum Program / University of Delaware as their first conservator to specialize in natural science collections. David also holds two Museum Studies Certificates that supplement his 30 years of professional museum experience. This CAP project is David’s 40th since his CAP certification as a collections assessor in 1993.
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Executive Summary
The Santa Cruz Museum of Natural History is a gem in the Seabright neighborhood. Local residents really care about “their” museum which is affectionately called the “whale museum” for the life-sized California Gray Whale sculpture on the front lawn. Additionally, Tyrrell Park offers an intimate respite from the hustle and bustle of city life. The Museum offers diverse programs that are reminiscent of times past, using actual natural history specimens rather than props and digital gadgets.
This Collections Assessment for Preservation grant-funded project focused on the historic building and the permanent collections. In general, the two assessors were impressed with the level of preservation of the building and the collections and with the dedication of staff to their areas of expertise. Notable challenges include substantially undersized storage facilities and a lack of classroom or community event meeting space away from display galleries.
Collections Assessment Primary Recommendations:
The following are the Collection Assessor’s summarized recommendations provided in order of priority, short-term (up to 1 year), medium-term (2 to 5 years), and long-term (6 to 20 years) goals. More specific and additional information can be found in the detailed report of the Collections Assessor.
Short-Term Recommendations
● Consider hiring additional collection staff and/or establishing volunteers, interns, or contractors for
collections projects.
● Consider language to improve the mission statement or write vision statements that supports
collections preservation and local and regional significance. ● Consider establishing a unified catalog of all Museum resources with various levels of value and
preservation.
● Complete in-depth condition assessments for each type of collection item. ● Continue activities that will help to identify the source of insect pest problems, such as where food is
allowed, water sources, perimeter seals, materials brought in for events, and if the source is
inherent with the specimens themselves.
● Continue current practices in environmental monitoring and consider expanding the program with
additional tools, collections documentation activities, and digitization of paper archives.
Medium-Term Recommendations
● Continue rehousing projects for all collections to eliminate unstable materials and poor storage
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methods and stabilize storage room furniture to mitigate potential earthquake damage.
● Consider limiting the use of the storage room to only cataloged items, by relocating archives storage
and collections management supplies to other rooms in the Museum. ● Expand the food policy to include protocols for all activities, i.e., storage, preparation, consumption,
and disposal, and discuss strategies where these activities should and should not be allowed.
● Consider fabricating display mounts for ethnographic items and rotation schedules for especially lightsensitive materials.
● Discuss results of extended environmental monitoring and consider addressing concerns for possible
mitigation strategies.
Long-Term Recommendations
● Consider installing an appropriately high barrier on the open display diorama at the back wall of the
galleries to hinder handling.
● Consider relocating the intertidal pool to the SE gallery of the original building to increase light levels
for the living specimens and relocating the light-sensitive ethnographic displays with the wall
mural away from exterior windows to less light exposed galleries. ● Consider establishing an interior connection between the storage room in the basement and the
display galleries on the main floor to reduce risk of damage during exterior transportation of
collections.
● Consider expanding the collections storage room and/or installing a storage compacting system.
Building Assessment Recommendations:
The following are the Building Assessor’s primary recommendations in suggested priority order. a) Exterior Repair and Maintenance Recommendations:
Short Term:
• Spot repair of wood trim, areas of corrosion including railings, vents, flashings, nail heads, spot paint areas of repair.
• Remove selected bricks at the base of the entry columns, inspect and repair wood at base, (consider improved more water resistant base detail, possibly cutting the column at the bottom to create space for a
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restored column base), restore the wood of the upper columns, and repaint.
• Inspect upper level flat roof and skylight condition. • Repair existing leak at the furnace flue penetration at the upper roof. • Modify existing historic attic vents to be able to block wind blown rain. • Inspect and repair front door operator, and repair or replace weatherstripping.
• Excavate grade along the western retaining wall, inspect wall for source of leaking at joint between the buildings. Repair/improve the waterproofing on the wall. If missing, install a 4” drainage pipe along the wall at the base of the wall. Consider tying the downspout and west entry floor drain into this drain pipe.
Medium Term:
• Undertake comprehensive exterior painting and minor repair of walls, doors, windows, replacement of exterior vents.
• Consider adding wall insulation in the perimeter walls. This would need to be blown in insulation, and should be subject to further discussion regarding the feasibility and value of this effort.
b) Building System Upgrades
Short Term:
• Inspect wiring to verify safety of branch circuit wiring, and overloading of selected circuits
• Install small separate HVAC system to control the collections storage area.
• Inspect the sump pump for operation, verify its purpose. If new drainage is installed along the foundation wall, verify the need for the sump pump. • Review existing security system and concerns with security alarm company, make necessary improvements.
Medium Term:
• Install a new HVAC system for the building and related electrical system upgrades
• Install a building wide automatic fire sprinkler system • Consider adding photovoltaic system with panels at the upper flat roof.
Meet with electrical engineer to verify the capacity and value of such an installation.
c) Accessibility Improvements: Implement the specific recommendations of the ADA CASP inspector.
Short Term:
• Improve site paths of travel to both upper and lower levels to meet ADA requirements
• Improve/remodel upper and lower level entry and restrooms to meet ADA requirements
• Revise the reception desk to be ADA compliant.
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d) Interior Repair and Maintenance Recommendations:
Short Term:
• Consider reprogramming of selected exhibit areas to allow for the restoration of the southeast and southwest rooms.
• Replace the existing attic hatch with a folding ladder/hatch to allow more convenient access. Consult with a structural engineer to place limitations on storage capacity.
Medium Term:
• Improve the collection storage area shelving. Install a compact shelving system and improve overall configuration of shelving.
a) Planning and Design Studies:
Short Term: Develop the Master Plan for the Museum. The Master Plan will establish all of the long term goals and priorities for the building. As the Master Plan develops, continue to coordinate the recommendations listed above with the direction and timing of the Master Plan.
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Assessment Scope of Work:
The following Building Condition Assessment Report is a summary of findings and recommendation for the Santa Cruz Museum of Natural History, in Santa Cruz, California. It is based on a two day site visit, meetings and discussions with Museum staff and volunteers, and review of a limited collection of past reports, documents, and drawings. In conjunction with this report on the building fabric, a parallel assessment, focused on the care of the collections is being prepared by Conservator David Rasch, Santa Fe, New Mexico.
The assessors’ site visit was conducted on February 26-27, 2023. It began with an initial meeting with museum staff and volunteers to orient the assessors to the museum facilities, review its recent history, outline goals, and objectives that the museum staff have for the institution, and identify specific issues that the assessors should look at during the site visit.
Tasks identified for particular focus for this building assessment included:
• Assess the condition of the overall building envelope, including review and assessment of recent leaks along the west foundation wall.
• Review the condition and current capacity of the building’s HVAC systems, with respect to climate conditions for the collection.
• Evaluate current exhibit areas with respect to sun control, lighting and circulation. • Evaluate condition of existing collection storage areas within the building. • Outline any current egress or code issues, including disabled access compliance. • Comment on current space limitations, especially with regard to collections storage and staff work areas, and the need for additional program space. Discuss the needs for additional space, and planning proposals currently being considered.
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1. Historical Background:
The Santa Cruz Museum of Natural History dates its origins to 1904 when Laura Hecox donated her collection of natural history to the City of Santa Cruz for the establishment of its first public museum. Originally the collection was housed with the city’s Central Library.
It relocated several times, before being located in 1954 in the Seabright Branch Library building. The Library building itself was constructed in 1915, as part of the Carnegie Library program. Since moving into the library building, the Museum has remodeled and developed the structure through several remodeling campaigns to arrive at the current building form. The building is a locally listed historic structure.
The following is a partial chronology of the development of the building as it exists today:
• 1915: (no drawings available) The original Carnegie Library was constructed. • 1962: (Drawings available) A 35’x20’ two story structure was added to the north side of the original library, extending the roof form of the original building. The new addition created additional exhibit area on the main level and excavated grade to create a lower level serving administrative and back of house functions. • 1968: (No drawings available) A second rectilinear addition 30’ x 40’ was developed to the north. The addition further increased exhibit areas on the main level and extended the lower level to create additional administration and collection storage areas.
• 1981: (limited drawings available). Remodel of the interior, and reportedly updating of selected exhibits. The work included the creation of a central reception area, restrooms, and gift shop. The large central skylight was also installed at this time. Landscape work was also executed during this time including, development of the amphitheater, reworking of the entrance patio and site walkways, and construction of the whale sculpture.
2. Building Description:
Original Building:
Sited on a knoll overlooking the Pacific Ocean, the 1915 Carnegie Library building is a one story, wood framed structure over a crawl space. In plan it consists of a rectilinear central element, facing south, with two wings extending at 45 degree angles to the southeast and southwest, framing the south-facing entrance portico. The roof of the building and wings is a steeply pitched gabled roof, which terminates on the two angled wings with simplified Mission Revival parapet walls. A hidden, flat roof exists at the level of the gable ridge, over the center portion of the building. A simple columned portico defines the main entrance on the south façade, opening onto a small entrance patio. The original exterior features of the building, including roofs, cornices, stucco walls and trim, windows and door openings are all in their original form, and mostly original materials. The building has a high level of its original historic integrity.
1962 Addition:
The 1962 addition extended the original building’s form to the north by 20 feet, also extending the existing sloped and flat central roof and exterior wall finishes. The addition
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excavated the existing grade to the north of the original building to create a lower level at slightly below the sloped grade. The structure consists of a slab on grade lower level floor, with partial height perimeter retaining walls, above which the walls are framed in wood studs. Main floor and roof structure are all wood framed. A full attic exists above the ceiling of the upper level exhibit area, accessed by a ceiling hatch. The attic is connected with the attic above the original structure and is unused. 1968 Addition:
The 1968 addition further extended the building to the north by an additional 30 feet. The width of the new addition was 40 feet, extending the building to the east by approximately 5 feet. The 1968 addition took the same approach as the 1962 addition, extending the sloped and central flat roof of the original building, the sloped perimeter roof is hipped at the north east and north west corners, creating a matching sloped roof along the north façade. The wall finish is stucco, matching that of the 1962 addition. The attic is currently used for miscellaneous storage, although access from a ceiling hatch is limited. 1981 Remodeling:
The original building’s interior was altered in 1981 to create the two bathrooms currently existing and to open up the center of the original building to provide more open access to the exhibit spaces to the north. As part of this work, a new skylight centered in the flat roofed center of the original roof was installed, adding daylight to the center of the building where the reception area was developed.
3. Structural Conditions:
As described above, the building is a two-story wood framed structure, constructed in at least four major building campaigns. Despite this history of alterations, the building appears to be in very good structural condition. No significant cracking or distress was observed anywhere in the building. The 1915 structure, although there are no drawings available, appears to be very well built for its time. The subsequent additions from the 1960’s were actually more lightly built, but seem to have held up reasonably well. One item noted from the 1962 drawings, the walls of the addition appear to have been built with diagonal let in braces and gypsum wall sheathing rather than plywood or structural wall sheathing. The buildings’ construction as a light wood frame wood structure is not a significant risk from earthquake failure, and no obvious repairs from the 1989 Loma Prieta earthquake were observed or mentioned. Despite this observation, it might be prudent to have a structural engineer evaluate the building from a seismic perspective, looking primarily at how the three building additions have been tied together, and whether any additional connections are recommended. This would be especially important if future additions to the building are contemplated.
4. Building Exterior Envelope:
a) Overall Condition: The building is located in an extremely exposed and corrosive environment. Despite this, and despite the age of the building, it has been very well maintained and is in generally good condition. The exterior of the building will be
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ready soon for a new coat of paint with associated preparation and façade repairs to deteriorated wood trim and corroded metal elements.
b) Roofs/Flashing/Gutters and Downspouts: Due to stormy conditions during the site visit, we were unable to access and inspect the upper flat roof and skylight. This should be inspected by city staff once the storms abate. One leak was noted during the attic inspection; the furnace flue penetration at the upper flat roof leaks into the attic during heavy rains. The flue roof jack should be inspected and sealed appropriately. The composition shingle roofs on the steep sloped roofs of the building are in very good condition. The gutters and downspout systems are all in good condition and appear to be working adequately. The downspouts are mostly connected into a storm drainage system. Sheet metal flashings particularly at the wall parapets show signs of some rusting; they should be prepped and painted with rust preventive primer during the painting of the overall building. (or before that if the painting of the building is several years away).
c) Insulation: The attic of the 1915 structure and the open attic areas of the later additions have been insulated with 8” of loose cellulose insulation. The drawings for the 1962 addition do not indicate any insulation in the wall cavities of the upper or lower level walls. It is assumed that the 1915 structure 1968 additions also have no wall insulation. Consideration should be given to adding insulation to the walls. This can be done without removing the finishes, using blown in insulation, but additional review of this recommendation is necessary to assure that there are no ongoing moisture problems in the walls.
d) Porches and Stairs: The concrete stairs to the basement on the west façade are in fair condition. The handrails associated with this set of stairs are rusting, and need to be prepped and painted.
The wood egress stair on the east side of the 1968 addition appears to be a replacement stair installed fairly recently. It is constructed of pressure treated wood, with galvanized steel handrails, and is currently in fair condition. At this time it is functioning adequately, but it is not of the same construction quality or style as the main building, and will deteriorate over time. Ultimately it should be replaced with a higher quality more weather-resistant stair.
The front porch and entry area were remodeled as part of the 1981 remodeling. At that time the patio was raised up to the floor level of the first floor to provide accessibility to the front door. The concrete and brick-edged benches and paving are in fair condition. The metal pipe handrails at the stair are in need of prep and painting. One concern with the paving at the portico is that the raised level of the bricks have obscured or caused to be removed, what were almost certainly cement bases for the wood columns of the portico. Currently the wood columns simply land on the bricks with a sealant joint, which has failed. There is almost certainly considerable moisture damage to the bases of the columns. This area will need careful exposure, repair, and probably a revised base detail when the building exterior is repaired and painted. If that project is more than a few years in the future, the column bases should be repaired and restored as a separate project.
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e) Walls and Trim: The stucco wall surfaces of the building are generally in good condition. Vertical cracks in the stucco exist at the location of the joints between the building additions. While these cracks do not seem to be allowing water intrusion into the building, they should be monitored and repaired when the building exterior is repaired and painted.
Wood trim throughout the exterior is somewhat deteriorated and showing signs of need for repair in addition to painting. This is particularly noticeable at the wood columns of the front portico, and the wood belt course trim which circles the building at the first floor level. Attic vents located at the upper wall/roof joint around the 1962 and 1968 additions as well as other metal vents in the walls are in many locations showing corrosion and damage. They should be replaced with corrosion resistant vents when the building is painted.
The arched attic wall vents located in the upper areas of the historic wings are important design features of the original building. The vent in the southeast wing was noted during recent storms to be allowing windblown rain to enter the attic.
The southwest vent has been closed off from the inside. When the building exterior is painted, (or before), these wooden vents should be restored, screened from the inside, and the wood slats should be extended on the interior by adding a piece of sheet metal to the top of each vent slat, to further restrict wind-blown rain, while still preserving the historic vent material.
f) Windows/Doors: The historic windows of the 1915 portion of the building have been modified to create more exhibit and display wall space, and also to reduce the amount of sunlight which pours into these spaces. The modifications have been accomplished without destroying the underlying historic window materials.
However, since these spaces are the most character-defining spaces of the original building, in planning for the long term uses of the spaces of the building, consideration should be given to locating less light-sensitive exhibit materials into these spaces (such as the tide pool exhibit), which might allow for the restoration of the windows. The wood windows themselves appear to be in fair condition. UV reducing film has been added to the window glass in 2020. Other windows in the 1962 and 1968 addition are metal-clad windows, some recently replaced, and are in good condition.
The front door of the building in the south façade, was originally a pair of glazed wood doors with divided light transom above. The doors have been replaced with a single, disabled accessible glass door with glazed sidelight, and an automatic operator. At the time of inspection the automatic operator was not working and the door was propped in an open position. This was adjusted by a city maintenance worker during the inspection, but the door and operator should be further inspected and repaired to operate as originally designed. At the same time the existing door weatherstripping should be replaced.
Metal doors in the east and west facades of the additions are in fair condition.
The threshold of the west-facing door at the lower level shows signs of leaking and water intrusion into the building. It was reported that this drain was connected to the sump pump and in a large storm it was not able to keep up with the flow over
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water, allowing the water to back up over the threshold and into the building. The floor drain in the area outside the door should be inspected and cleaned out. At the same time, verify if it is connected to the sump pump. When the waterproofing and drain improvements are installed along the west wall, this floor drain could be connected into the site drainage pipe, to provide a reliable path for the water to exit by gravity.
A leak was reported at the exterior door threshold to the lower level restroom.
However at the time of the inspection, a period of heavy rain, it appeared to be functioning adequately.
g) Foundations/Drainage: The foundations of the 1915, 1962, and 1968 structures are all constructed of reinforced concrete, although the extent of reinforcing probably varies by age. The 1962 drawings call for #5 bar reinforcing at 18” on center, horizontal and vertical, in the retaining walls. This is a reasonable level of reinforcing for that era. The foundations throughout appear to be sound, no signs of settlement or cracking were noted.
A significant leak has occurred in the past in the southwest corner of the collections storage area, adjacent to the Director’s Office, flooding the floor in those areas. This leak occurs approximately at the joint between the 1962 and 1968 additions. It is probably related to an opening of the joint between the buildings, tearing the waterproofing at that location, or simply improper overlap between the waterproofing of the retaining wall at this connection. The proper diagnosis of the problem should include excavation of the grade at this location, exposing the retaining wall all the way down to the footing, inspection of the waterproofing, and then repair and recoating of the waterproofing system along the wall. If there is no drain along the base of the wall, a new 4” perforated drain pipe should be installed along the base of the wall all the way to and around the northern corner of the 1968 addition, extending along the northern wall to drain to daylight. In addition, a roof downspout discharges in the area adjacent to the leak. It could be reconfigured to drain into the new drainage pipe and get additional storm water away from this area.
5. Building Systems: While the Mechanical, Electrical, and Plumbing systems of the building are all in working order, all of the systems are in need of a partial or complete upgrade to current standards.
a) HVAC Systems: The existing climate control system for the building consists of a gas fired furnace, located in the crawl space of the 1915 building. Supply air ducts from the furnace distribute warm air to the floor registers in the floor of the main level above, and through ceiling mounted ducts to the lower level administrative and collection storage areas. There is no return air ducting system. Outside air is heated by the furnace then supplied to the various spaces and is then vented out to the exterior through open damper vents located in the north wall. There is only one control zone for the entire building, controlled by a thermostat in the reception area of the exhibit level. The collection storage area has a separate dehumidifier to temper the air in that space. Air circulation in that space is augmented by portable
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fans. However, it is safe to say that the existing HVAC system is highly energy inefficient, and is not an appropriate climate control system for a museum use.
The building needs a new HVAC system. While this will require further study, a variable refrigerant volume (VRV) system will probably be the most appropriate system for a building of this type. This system will require an outdoor condensing unit which will supply refrigerant to a series of air handling units inside the building serving the various spaces. This type of system will provide heating and cooling and will allow the exhibit, collection storage and administrative areas to all be separately zoned and controlled. The system will be electrical and will require an upgrade to the electrical service.
b) Electrical Systems: The building is served by a 250 amp single phase service. The main panel is located at the lower level west entrance. The panel itself appears to be of fairly recent vintage. However, it is unclear how the wiring distribution system has developed over time. There may be earlier eras of branch wiring still in operation. Staff noted that some circuits tripped regularly, probably due to portable electric heaters used in the office areas, but possibly due to other unknown causes.
A comprehensive review of the wiring and circuiting by an electrical engineer is recommended.
The upper flat roof provides a fairly large area (approximately 800sf) which is not visible from the ground where a photovoltaic system could be installed. This might be of interest in the future if the building undergoes a renovation. c) Sump Pump: A sump pump exists in the crawl space. It appears to be installed to pump out ground water from behind the retaining walls and underslab areas, and seems to be in working order. The staff reports that in times of heavy rain it has not been able to pump out water adequately. It was not possible to evaluate this further during the site visit. Further evaluation of the condition and operational capacity of the sump pump is needed.
d) Fire Suppression System: The building does not have a fire suppression system.
While not required by code to be installed retroactively, an automatic fire sprinkler system is a very important element in building preservation, as fire is the biggest hazard facing historic buildings. It is recommended that an automatic fire sprinkler system be installed throughout the building.
e) Fire Alarm/Smoke Detection System: The building has a fire alarm/smoke detection system which appears to be functioning adequately.
f) Security System: The building’s security system consists of a mix of door sensors, motion detectors, and 4 cameras monitored via mobile app by executive staff. Two recent burglaries have occurred. While the motion detectors went off and notified the alarm company, the response was not fast enough to prevent the burglary.
Further discussion with the alarm service company is recommended to improve the system, more effectively discourage break ins, and improve the response time. This should lead to a more specific set of security system recommendations.
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6. Building Code Considerations:
a) Egress and Fire/Life Safety: The building has adequate egress paths on both levels.
No significant fire/life safety hazards were observed
b) Disabled Accessibility: An evaluation of ADA compliance has recently been prepared by a certified CASp inspector, William M Holl AIA. A detailed listing of deficiencies can be found in that report. In general, there are numerous accessibility issues throughout the building and site. All of these deficiencies can be resolved once the proposed master plan for the museum is implemented. However, since that work may be far in the future, the general accessible path to and through the building, as well as the noted deficiencies in the restrooms at the upper and lower levels, should be resolved and made to be compliant in the nearer-term future. The following is a general summary listing of the primary deficiencies. Refer to the CASp report for a more detailed listing of deficiencies and recommendations. • Site path of travel: There needs to be a dedicated disabled parking space located on the side street, with appropriate signage, and curb cuts to the sidewalk and connection to the site path. The walkway up to the main entry path appears to exceed 5% slope. It needs to be either regraded to 5%, or handrails need to be installed on each side. The walkway down to the lower level entrance also appears to have areas of slope which exceed 5%. Verify the existing slopes and install appropriate handrails if necessary.
• Path of travel at the upper level: Entry door (when operating properly) provides access. The path of travel throughout the exhibit areas appears to comply with access requirements. The entry desk does not comply with current access requirements.
• Path of travel between levels: The two occupied levels of the building are not connected other than by outside walkways. This issue affects both disabled and able bodied users. In that sense it is not an immediate accessibility concern, but as the museum develops, a long term goal should be to develop a more convenient connection between the levels, elevator and stairway. • Path of travel at the lower level: The entry hallway and entry door to the lower level do not appear to provide adequate clearances for wheelchair access. • Accessible restrooms: Restrooms at the upper level appear to be generally compliant. However, there are numerous dimensional deficiencies that must be addressed.
• The all gender restroom and entry area at the lower level have numerous access dimensional deficiencies. While these issues will eventually be resolved when the master plan for the building is implemented, further discussion with the CASp inspector may be necessary to determine an appropriate recommendation for the short term.
7. Building Interior: The interior spaces of the building are generally both well-maintained and well utilized. There are no significant interior finish or repair needs that must be addressed.
However, the interior spaces overall suffer from the requirement to serve a large program
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with many user needs inserted into a building that is too small to properly support it. A number of additional functional needs were discussed, including the need for a classroom or meeting room which can support the education programs, while preserving all of the existing exhibit areas.
a) Public Areas:
Original Building Areas: The entry hall and the south-facing wings of the building were the most outward-looking spaces of the original structure. Each of the wings had windows on three sides providing openness and views of the Pacific. In order to create more exhibit wall area, and to better control the amount of direct sunlight in these spaces two of the three windows in each space have been enclosed from the inside, (while generally preserving the exterior appearance). While it is understandable how these decisions were made over time, it might be desirable to bring back some of the original character of these spaces. This would involve rethinking the uses and exhibit strategy for these rooms to make them more amenable to light and view. For example, as discussed on site, the southeast wing currently exhibits Native American artifacts, and a descriptive wall mural, all sensitive to sunlight, while the hands on tide pool exhibit, which actually needs daylight, exists in a dark area of the 1962 wing. If these exhibit locations could be reversed, the southeast wing could have its spatial and view character restored, while connecting the tidepool exhibit with the view of the ocean. A similar idea could be considered for the southwest wing, although it would require finding an appropriate location for the Gift Shop, (it was originally located across from the reception alcove, a much smaller space). If another location could be found for the Gift Shop, the southwest wing could function very well as a children’s discovery area, utilizing the less valuable pieces of the collection while restoring the outward looking character of the room.
1962/1968 Exhibit Areas: Both the 1962 and 1968 additions are open rooms without windows or columns. They provide very effective, flexible space for museum exhibits. The museum staff utilizes this flexibility by frequently relocating cases and exhibits within the spaces. The 1968 wing also is utilized for small meetings and presentations, which require relocating of cases, installing projection screen and seating for each event. The museum needs a classroom or meeting space dedicated to these purposes independent of the exhibit areas.
The exhibit spaces suffer from a lack of storage space. A storage closet has been added to the eastern wall of the 1968 wing, while additional back of house equipment is hidden behind exhibits. Ideally additional storage areas would be provided without imposing on the exhibit areas. An access panel in the ceiling of the 1968 addition provides access to the full attic above both spaces. This space is currently used for storage, although access is very limited. A pull-down type access ladder/hatch would make access to the attic safer and more convenient. However, it would also make the storage area more utilized and might lead to overloading the existing ceiling structure. If this idea were considered, a structural engineer should
24.39 16
be engaged to evaluate the ceiling capacity and place very clear limits on what can be stored in the attic.
b) Service Areas: At the upper level, the reception desk is ideally located to provide view and supervision over almost all areas of the public space. The reception area seems to function adequately, and the skylight and columned aedicule provide a welcoming bright center between the historic building and the 1962/1968 exhibit areas. Restrooms in this area also seem to function adequately. c) Collection Storage: Storage of the museum’s collection is provided primarily in a space on the lower level, approximately 800 square feet, with additional storage space provided in an off-site storage room. The detailed issues of collection management and storage are provided in the parallel Conservator’s report.
However, architecturally, the storage area would benefit from the installation of a rolling compact storage system. This would not only add capacity to the space but would give a sense of order to the location and arrangement of shelving. The size and configuration of the system would be developed in concert with a detailed inventory of the sizes and types of objects needing storage. In the process of rethinking the shelving configuration of this space, the HVAC system should be upgraded to provide a more stable environment for the storage space. A complete new HVAC system is recommended for the building. However, if this is not possible in the near future, a small mini-split system should be installed to service only the collections storage. This will involve an outdoor condenser and an indoor cassette or air handler unit in the storage room. Electrical requirements for this system would need to be coordinated with the existing electrical panel capacity. However, it would replace the need for a separate dehumidifier.
Additional functional elements of the collection management program include areas for cleaning and conservation of artifacts, tool and equipment storage, and a quarantine area for arriving or damaged artifacts. All of these overlapping functions are currently accommodated in the very small work area adjacent to the kitchen/staff meeting area. This area is obviously too small and in conflict functionally with the staff area. Ideally it would be relocated in another area of the lower level. Unfortunately there is no space available, without giving up staff work areas.
d) Administrative Areas: The limited office areas of the lower level support the needs of 19 employees. This overall need is accommodated through desk sharing.
However even with the remote and hybrid work conditions imposed by the pandemic, the office areas are tight and overcrowded.
8. Space Utilization and Programmatic Needs
As described above, the museum currently has serious space limitations for its existing public programs and staff. In addition, lack of a separate classroom or meeting room greatly impedes its ability to house student groups, provide public gatherings and generally serve its community mission. A master planning program is underway to begin
24.40 17
to explore how the museum might grow to service all of the needs, while still preserving its historic structure and location within Tyrrell Park. Many of the issues and needs outlined in this report should be integrated into the planning process, including:
• Provision for a new multipurpose space for classes, lectures and small community events.
• Better connection with the exterior from the museum including the outdoor amphitheater
• Universally accessible paths of travel for all users, from the public way to and throughout the building, including provision for an elevator. • Improvements to the back of house functions of the museum, including exhibit related storage, collections management areas in addition to collections storage, increased staff work and support areas.
• Upgrading of the building’s mechanical, electrical, and plumbing systems including provision for a fire suppression system.
9. Recommendations:
Below is a summary of the recommendations described in the report text above, organized into the different categories of work and listed in order of priority. a) Exterior Repair and Maintenance Recommendations:
Short Term:
• Spot repair of wood trim, areas of corrosion including railings, vents, flashings, nail heads, spot paint areas of repair.
• Remove selected bricks at the base of the entry columns, inspect and repair wood at base, (consider improved more water resistant base detail, possibly cutting the column at the bottom to create space for a restored column base), restore the wood of the upper columns, and repaint.
• Inspect upper level flat roof and skylight condition. • Repair existing leak at the furnace flue penetration at the upper roof. • Modify existing historic attic vents to be able to block wind blown rain. • Inspect and repair front door operator, and repair or replace weatherstripping.
• Excavate grade along the western retaining wall, inspect wall for source of leaking at joint between the buildings. Repair/improve the waterproofing on the wall. If missing, install a 4” drainage pipe along the wall at the base of the wall. Consider tying the downspout and west entry floor drain into this drain pipe.
Medium Term:
• Undertake comprehensive exterior painting and minor repair of walls, doors, windows, replacement of exterior vents.
• Consider adding wall insulation in the perimeter walls. This would need to be blown in insulation, and should be subject to further discussion regarding the feasibility and value of this effort.
24.41 18
b) Building System Upgrades
Short Term:
• Inspect wiring to verify safety of branch circuit wiring, and overloading of selected circuits
• Install small separate HVAC system to control the collections storage area.
• Inspect the sump pump for operation, verify its purpose. If new drainage is installed along the foundation wall, verify the need for the sump pump. • Review existing security system and concerns with security alarm company, make necessary improvements.
Medium Term:
• Install a new HVAC system for the building and related electrical system upgrades
• Install a building wide automatic fire sprinkler system • Consider adding photovoltaic system with panels at the upper flat roof.
Meet with electrical engineer to verify the capacity and value of such an installation.
c) Accessibility Improvements: Implement the specific recommendations of the ADA CASP inspector.
Short Term:
• Improve site paths of travel to both upper and lower levels to meet ADA requirements
• Improve/remodel upper and lower level entry and restrooms to meet ADA requirements
• Revise the reception desk to be ADA compliant.
d) Interior Repair and Maintenance Recommendations:
Short Term:
• Consider reprogramming of selected exhibit areas to allow for the restoration of the southeast and southwest rooms.
• Replace the existing attic hatch with a folding ladder/hatch to allow more convenient access. Consult with a structural engineer to place limitations on storage capacity.
Medium Term:
• Improve the collection storage area shelving. Install a compact shelving system and improve overall configuration of shelving.
g) Planning and Design Studies:
Short Term: Develop the Master Plan for the Museum. The Master Plan will establish all of the long term goals and priorities for the building. As the Master Plan develops, continue to coordinate the recommendations listed above with the direction and timing of the Master Plan.
24.42 19
10. Existing Conditions Photographs:
S
Figure 1: South Elevation
Figure 2: East Elevation
24.43 20
Figure 3: North Elevation
Figure 4: West Elevation
24.44 21
Figure 5: Roof Detail
Figure 6: Vent Corrosion Figure 7: Railing Corrosion
24.45 22
Figure 8: West Porch Figure 9: East Porch
Figure 10: Column Detail Figure 11: Column Base Detail
24.46 23
Figure 12: Wall Trim Detail Figure 13: Attic Vent
Figure 14: Entry Door Figure 15: Historic Window Detail
24.47 24
Figure 16: Collections Storage, Wall Leak Location
Figure 17: Exterior Area, Wall Leak Location
24.48 25
Figure 18: Crawl Space: Furnace Detail
Figure 19: Air Diffuser, Collections Storage Room
24.49 26
Figure 20: Interior: Entry/Reception Area
Figure 21: Interior: Southeast Wing
24.50 27
Figure 22: Southwest Wing, Gift Shop
Figure 23: Interior, North Exhibit Area
24.51 28
Figure 24: Interior, Lower Level Meeting area/Kitchen/Library
Figure 25: Lower Level, Director's Office Figure 26: Lower Level, Work Area
24.52 29
Figure 27: Lower Level, Collections Storage Figure 28: Collections Storage
Figure 29: Lower Level Admin Work Area
24.53 est. 1905, nonprofit-run c. 2009
A Brief History
Santa Cruz’s First Public Museum
In 1904, local lighthouse keeper and naturalist Laura Hecox deeded her collection of shells, fossils and other items to the City of Santa Cruz for its first public museum. The City Museum opened to the public on August 21, 1905, in the basement of the downtown Carnegie library, to the delight of the local community. The City Museum’s collections continued to grow, and was housed in several locations before moving in 1930 to the Crafts House, a three-story building on the site of present-day Tyrrell Park.
A Seabright Institution
In 1954, the Crafts House was condemned and the City Museum moved into the nearby Seabright Branch Library, another Carnegie building that had opened in 1915. The historic structure was deemed too small for the combined library and Museum, and by 1964 the library was moved. City funds were made available to expand the building in 1962 and 1968, bringing the Museum to its present size of 5000 square feet. By the 1970s, the City Museum was focusing its exhibits primarily on regional natural history and indigenous culture. It had become a valued and integral part of City life and the Seabright neighborhood.
Non-Profit Support
The Santa Cruz Museum Association was formed in 1977 to help support the City Museum’s membership and educational programs. Association staff and volunteers worked alongside City employees for several decades. When the recession hit in 2009, the Museum was cut from the City’s budget. To avert closure, the Association took over operations for the entire Museum. In 2012, the nonprofit legally changed its name to the Santa Cruz Museum of Natural History and the City officially transferred ownership of the collections. While the Museum now operates as an independent nonprofit organization, the City remains a vital partner as owner of both the building and the surrounding park.
24.54 est. 1905, nonprofit-run c. 2009
Ongoing Partnership
As a tenant, the Museum takes excellent care of the building’s interior. Museum staff recently upgraded offices, installed new carpets and fixtures, and repainted walls, as well as performing standard maintenance. The Museum has cared for the landscaping surrounding the building since it was a City-run institution. In 2020, it entered into an “Adopt-a-Park” agreement with the City to do so on a continuing basis. Additionally, Museum staff provide general surveillance of the building and surrounding areas, and coordinate with the City to ensure timely maintenance.
The Museum and City also work closely to coordinate the care and maintenance of the iconic grey whale sculpture in the park, with the Museum providing essential research into materials, processes, and vendors.
Need for Space
The original 1904 Hecox collection has been built upon over the decades, with the full collection currently at more than 17,000 objects. As early as 1983, staff identified a need for increased space for the Museum’s exhibitions, collections, programs, and personnel. Subsequent planning processes and studies also identified a clear and persistent need for purpose-built space to meet the specific needs of collections stewardship and museum operations. When the Museum was still City-run, plans to improve the Seabright site, or move the Museum location entirely, did not advance due to lack of funding and other reasons. City councils and the Museum Board have confirmed since then that the existing building urgently needs upgrades and modifications to maintain the building and safely accommodate the Museum and its visitors.
Looking to the Future
Since taking over operations in 2009, the Museum has rebuilt itself as an independently-operating nonprofit. It has strategically expanded its staff and budget through community support. The Museum has also made a commitment to increasing inclusion and accessibility in all its work. Today, the Museum offers more educational programs and special exhibits than ever before, and welcomes an increasing number of visitors and members through its doors. The Museum is striving to achieve the highest standard for collections stewardship, and to be an accessible, welcoming, safe, and healthy place to visit and work. Improvements to the building infrastructure can greatly help to achieve these goals and enable the Museum to remain in the iconic Seabright neighborhood.
24.55 Building
Improvement Project
Connecting people with nature and science
to inspire stewardship of the natural world.
24.56 BACKGROUND
● Museum partnership and collaboration
● Facility needs and outreach to City
● Support from Parks and Rec Commission
● Seeking support to initiate a public process
24.57 Background
● The City Museum -
established in 1905,
nonprofit-run since 2009.
● Shared stewardship of the
Carnegie Library since 1954.
● Caring for Tyrrell Park.
○ Garden Learning Center
○ Adopt a Park
Se n tin e l, 1954
Key statistics
● 35,000 visitors, students, volunteers,
participants annually.
● 120+ class visits onsite annually at no cost to
schools, serving every elementary school in
the Santa Cruz City School District.
● 17,000 items in the collections, only 4% of
which is on exhibit.
● 53% of visitors are from Santa Cruz County.
24.58 Issues
● Historic building in need of care.
● Invaluable collections threatened.
● Environmental and accessibility
improvements needed.
● Crowded space for students and
visitors.
● Limited exhibition space.
How we’ve assessed these issues:
● Staff and board assessment
● Former planning processes
● Community input
● Professional assessments
24.59 Our Problem-Solving Approach
We will address these issues and enhance our ability to do what we do best!
24.60 Our proposed solutions
● Preserve the historic building
● Protect the collections
● Create classroom space
● Create adequate, healthy and
effective space for employees,
volunteers, and visitors
● Improve ADA accessibility
● Enhance sustainability
● Improve connections between
park and Museum spaces
● Improve visitor experience
24.61 Process Roadmap
Conceptual Plan
The Museum and City
assess needs and
opportunities for building
improvements, and
develops concept to
present for community
feedback.
Community
Engagement
The Museum and City
seek community input to
refine concept through
multiple outreach events.
The Museum
concurrently prepares
permit applications,
which is filed by the City
as the building’s owner.
Public Hearings
Approvals and permits:
● Parks and Rec
Commission
● Historic Commission
● Planning Commission
● City Council
Museum initiates a
capital campaign.
Building Agreement
The City and Museum
develop agreements for the
building phase of the
project, including:
● Lease approval
● Authorizing grants
applications
● Authorize funding if any
We are here
24.62 Thank you.
24.63 City Council
AGENDA REPORT
DATE: 5/10/2024
AGENDA OF: 5/14/2024
DEPARTMENT: Planning and Community Development
SUBJECT: 1129 Mission Street: CP23-0106 (APN 006-493-27) Appeal of the Planning Commission Approval of an Administrative Use Permit to Establish a Cannabis Retail Facility on a Parcel in the MU-M (Mixed-Use Medium Density) Zone District and within the Mission Street Urban Design Plan. Environmental Determination: Categorical Exemption 15301, Existing Facilities. Applicant: Bryce Berryessa. (PL)
RECOMMENDATION: Motion for the City Council to consider the information provided and make a determination to:
1) Adopt a resolution denying the appeal, recognizing the environmental determination, and upholding the Planning Commission’s decision to approve the Administrative Use Permit to establish a cannabis retail facility at 1129 Mission Street; OR
2) Adopt a resolution upholding the appeal and denying the Administrative Use Permit to establish a cannabis retail facility at 1129 Mission Street.
BACKGROUND: This is a proposal to establish a cannabis retail outlet within an existing commercial building located on the northeast corner of Mission Street and Laurel Street in the MU-M zone district. The building was occupied by Emily’s Bakery for many years, and the 2,878 square foot building is being proposed to be split into two commercial spaces, including 1,000 square feet for Emily’s kitchen and café and 1,878 square feet for a new cannabis retail store (The Hook Santa Cruz). Section 24.10.802(1)(c) of the Zoning Ordinance allows cannabis retail sales in the MU-M zone district with approval of an Administrative Use Permit (AUP) and subject to Part 14 (Commercial Medical and Adult Use Cannabis Regulations) of Section 24.12 of the Santa Cruz Municipal Code.
Zoning Code Section 24.12.1320(5) allows cannabis retail sales with approval of an AUP, a city cannabis retailer license, and acquiring a state cannabis retailer or nonprofit license. It should be noted that while this Zoning Code Section 24.12.1320(5) references the CC (Community Commercial) zone district, this property was recently rezoned to MU-M, which also permits cannabis retail sales with the approval of an AUP pursuant to the aforementioned Section
24.10.802(1)(c). Cannabis retail sales are not permitted to be located within six hundred feet, as
25.1 measured from the property lines, from any school, day care center, youth center, or any other cannabis retail site. The proposed cannabis retail site meets all of the above-mentioned setbacks.
The portion of the building to be used by Emily’s kitchen and café is not a part of this proposal.
The adult use of recreational marijuana was approved by the citizens of California in 2016 through the passage of the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA) and was updated in 2017 by Senate Bill 94 and Assembly Bill 133. The result is a State-wide comprehensive set of regulations for the use of both medical and recreational cannabis.
The Santa Cruz City Council unanimously approved Resolution No. NS-29,333 on November 14, 2017, incorporating Chapter 6.90 (Cannabis Retailer licenses), as well as amendments to Section
24.10 of the Zoning Ordinance to regulate the commercial, medical, and adult use of cannabis. The ordinance amendments became effective on December 28, 2017. The approved regulations incorporate all of the State legislation and were intended to provide a path to allow the legal retail sales of commercial cannabis while protecting the community from negative impacts of such sales.
The establishment of regulations allowing use of both medical and recreational cannabis were found consistent with the will of the majority of citizens in Santa Cruz, based on voting records for AUMA, with 70-percent of the nearly 128,000 votes tallied countywide supporting marijuana legalization.
The applicant recently applied to transfer of one of the five Cannabis Retail Licenses available within the City. That license transfer has been approved by the City, with final administrative steps being completed to transfer the license from WAMM (Wo/Men’s Alliance for Medical Marijuana) Phytotherapies (https://wammphytotherapies.org/about) to the current applicant (The Hook Santa Cruz, https://www.hookoutlet.com/). WAMM Phytotherapies is committed to compassionate care and community support. The organization is dedicated to offering therapeutic-quality, regeneratively-grown cannabis products that are both accessible and affordable, reflecting a deeprooted commitment to health, wellness, and holistic care for individuals with serious illnesses. The Hook will have a partnership with WAMM to ensure that affordable cannabis reaches community members in dire need. The collaboration with WAMM will ensure that a segment of the sales goes towards providing free or reduced cost cannabis to low-income patients suffering from severe medical conditions like cancer, AIDS, MS, and epilepsy. WAMM has been providing this service to those in need for decades. The license is not restricted to any specific location, thus the request for the subject AUP approval at this location.
At the March 7, 2024 Planning Commission hearing, thirty-six members of the public spoke, both in support and in opposition to the project. Speakers opposing the project expressed concerns including but not limited to:
The cannabis dispensary would be too close to the high school and middle school; Cannabis would be easily accessible to students with medical cannabis cards or fake identifications and would be distributed at schools;
Many students walk by this location each day and the presence of a dispensary would normalize cannabis use; and
Negative impacts of marijuana use (THC) on youth and families, including addiction, cognition and academic performance.
Speakers in support of the project expressed the following:
25.2 Valerie Corral and WAMM have been a great organization that has transformed lives and supported the community over the years;
Retail dispensaries have strict rules and guidelines that would not permit students to enter the dispensary;
Kids are not getting cannabis from retail dispensaries, rules are strict and dispensaries are too expensive;
Due to the buffer zones established in the Zoning Ordinance, there are limited locations for this use, and this site meets those requirements; and
The applicant owns other dispensaries in the County and has run those business responsibly with no violations.
The Planning Commission listened to the public testimony and discussed some of the issues raised by the speakers. The Commissioners each commented on the project, expressing the following:
There are limited locations available for this use and the proposed site is consistent with the Zoning Code by meeting the buffer requirements and performance standards; Conditions of approval address any concerns;
Moving the goal posts on this applicant would be bad government; The findings for denial in the resolution are weak;
Not a referendum on cannabis which is overly regulated, but no way to reconcile how close this location is to the high school and the negative impact on students; The proliferation and potency of today’s cannabis is a concern; The 600-foot buffer was fully vetted when the ordinance was adopted and the site and use meet the Zoning Code requirements, and the city should not be changing the rules on applicants;
Students are very mobile (especially with e-bikes) and have access to dispensaries throughout the city, so increasing the buffer would not help this situation; The Santa Cruz Police Department has reviewed the application and found no complaints or service calls for cannabis sales to minors at any of the existing city retail dispensaries over the last four years, and strict state rules call for multiple verifications to gain access to a dispensary; and
Agree that there are problems with kids and cannabis use, but the community has had a long history of legal cannabis use and the rules have been established, it would be unfair to change the rules and not allow the use at this location.
The Planning Commission voted 5-2 (Dann, Gordon, Kennedy, Thompson and Conway in support; McKelvey and Polhamus opposed) to approve the Administrative Use Permit. No revisions were made to the conditions of approval.
On March 14, 2024, an appeal of the Planning Commission decision was received from a group of concerned parents. The appeal letter is attached to this report and discussed below.
DISCUSSION: The Planning Commission staff report provides an in-depth analysis of the proposed project and is attached to this report. The attachments to the Planning Commission staff report, some of which are referenced in this report, along with the public correspondence received in advance of the Planning Commission hearing, are available with the March 7, 2024 Planning Commission agenda materials on the “Agenda & Reports” link at https://www.cityofsantacruz.com/pc. The appeal letter discusses the reasons for the grounds of
25.3 the appeal. This section summarizes the issues raised in the appeal, followed by responses from staff for each item.
1. Commercial Cannabis (24.12.1250) Use Findings. The appellants assert that the proposed use is not in conformance with Zoning Code Sections 24.12.1350(2) and 24.12.1350(4) which are findings required to approve an Administrative Use Permit (AUP) for a cannabis related use. The two referenced findings read as follows:
(2) The proposed use will not adversely affect the health, safety or welfare of area residents or businesses, or uses, or will not result in an undue concentration in any one neighborhood or district and will not be located within proximity of an incompatible use, such as a children's school, day care facility or children’s play area. (4) The proposed use is compatible with the sizes and types of other neighboring uses in the surrounding area, particularly those used primarily by persons under the age of eighteen;
The appeal letter states that the project site is located approximately 850 from Santa Cruz High School at one of the two main signalized Mission St./Highway 1 crossings students use on their way to school and that the retail dispensary use would adversely affect the health, safety, and welfare of students in the area. It is also states that Finding 4 specifically requires decision-makers to consider persons under the age of 18 when reviewing a cannabis application.
Staff Response: Staff presented draft findings to the Planning Commission in two separate resolutions – one for approval and one for denials – that would have allowed the Commission to either support the application by making these findings or to deny the application by not making the findings. Upon review of the draft findings, staff report, and public testimony, the Planning Commission found that they can be made based on the information provided by the applicant and the proposed retail use conforming to the required Zoning Code criteria. Similar approval and denial resolutions, along with associated findings supporting either position, are included as attachments to this report for the Council’s consideration.
While the use meets the objective standard of a minimum 600-foot buffer from said schools, daycare facilities, youth centers and other cannabis retail outlets, the findings are more subjective, allowing the City additional discretion to consider whether the use is “within proximity of an incompatible use” and whether it will “adversely affect the health, safety, or welfare” of proximate uses, namely students at the high school or middle school. Similar discretion is afforded to the City under finding four, which speaks to the use being compatible with "other neighboring uses in the surrounding area, particularly those used primarily by persons under the age of eighteen.” As demonstrated on the 600-foot buffer map below, the number of locations available for cannabis retail uses is limited:
25.4 The 600-buffer zone was thoroughly discussed as part of the cannabis ordinance adoption process, with input from the Santa Cruz Police Department (SCPD), public, and City Council. SCPD reviewed both the cannabis retail license transfer, as well as the subject AUP application. With the project outside of the buffer zone and the stringent ID requirements for adults 21 years old and older, SCPD did not express any concerns with the proposed location or retailer. Additionally, as part of the review of this application SCPD researched their records for the other cannabis retail outlets in the city and found no complaints or service calls for cannabis sales to minors. Based on these facts, it could be argued that the proposed retail use does not qualify as “within proximity” of a school and that it would not “adversely affect the health, safety, or welfare” of students. It could also be viewed as unfair to the applicant for the city to “move the goal posts,” so to speak, by finding that the established 600-foot buffer is insufficient.
Many concerns about the proposed use at this location have been expressed by the Santa Cruz City School District and parents of Santa Cruz High and Mission Hill Middle School students, and those concerns are understandable. A number of students from both schools walk and bike by this location each day, with the signalized intersection of Laurel and Mission Streets serving as one of the two primary locations where students cross Mission Street (the other being three blocks away at Walnut Avenue), and the presence of a dispensary could be conveyed as normalizing cannabis use. Additionally, it is not uncommon for underage individuals to obtain false identification or medical cannabis cards, raising concerns about the potential for younger students to gain access to cannabis through false identification (ID) or for students to acquire these cards and distribute cannabis to younger peers. In addition to providing a letter of opposition (see Planning Commission staff report attachments) to the proposed application, the Superintendent of Santa Cruz City Schools also included a number of articles ( see Planning Commission staff report attachments) on the impact of THC (a psychoactive ingredient in some cannabis products) on
25.5 youth, the impact of dispensaries to schools, the acquiring of false IDs, and relevant school data on marijuana use within the school district. Some of the key findings from those articles include:
Marijuana use has been associated with several adverse mental health outcomes, including increased incidence of addiction and comorbid substance use, suicidality, and new-onset psychosis;
Negative impacts on cognition and academic performance; Nine percent of youth in grades 9 to 12 use marijuana daily or nearly every day, an increase of 80% since 2008;
Vaping marijuana by teens doubled between 2013 and 2020; Young adults who live in neighborhoods with a higher number of medical marijuana dispensaries use pot more frequently than their peers, with storefront signage being extremely influential;
A Santa Cruz High School focus group notified the Superintendent that acquiring fake IDs is incredibly easy for students and that they are available to students from people in the community and easily accessible online; and
Santa Cruz City School High School District reported 91 incidents that resulted in students being suspended for possession or use of a controlled substance during the school day during the 2022-2023 school year. 95% or more of these were for vaping marijuana.
To add to the discussion, the applicant has also provided data regarding the effects of marijuana on young people (psychosis, neurocognitive functioning) (see Planning Commission staff report attachments) and the effectiveness of identification policies at cannabis outlets, assessing the ease of access to marijuana by underage patrons (see Planning Commission staff report attachments).
Some key findings from information provided by the applicant include:
Contrary to concerns that cannabis could cause mental illness, regular marijuana use over two years did not trigger early onset of symptoms in teens and young adults at risk of developing psychotic disorders;
Modest improvements in cognitive functioning and a decrease in the use of other medications was found among marijuana users (tracking 210 patients, aged 12-25, from an Early Detection and Intervention for the Prevention of Psychosis Program over two years); Continuous cannabis use was not associated with an increased rate of transitioning to psychosis, nor did it worsen clinical symptoms, functioning levels, or overall neurocognition;
Licensed recreational marijuana outlets in California are effective in preventing underage customers from accessing marijuana. This may be due to strong incentives for outlet owners and managers to comply with the law to avoid legal consequences; and Underage youth are not obtaining marijuana from licensed recreational outlets.
Other considerations that have arisen during the review of this application follow:
While the general population must be 21 years old or older to purchase recreational cannabis, adults 18 years old and older who have a doctor’s prescription for medical cannabis use can also legally purchase cannabis at retail stores. Anecdotes have pointed to ease of obtaining a medical cannabis card, which have raised concerns about 18-year-old high school students having legal access to cannabis products, which they could then distribute to others. To combat this concern, the applicant has voluntarily agreed to not
25.6 sell cannabis to anyone under the age of 19 years, even if they have a valid medical cannabis prescription.
The applicant has claimed that students’ cannabis access is not from legal sources, noting that legal products can be traced. While it may be true that students are accessing cannabis through illegal sales or unpermitted distribution, it is also likely true that students would not necessarily maintain the original packaging of products purchased legally. Thus, it would not be easy to determine whether products possessed by students were initially acquired through legal retailers or not.
In the public interest, should the application be approved, the applicant would be required to meet all Performance Standards listed in Section 24.12.1340 of the Municipal Code and included in the Conditions of Approval. The conditions regard security, lighting, hours of operation, loitering, litter removal, and signage. The use will not result in an undue concentration of cannabis retail establishments, as the nearest cannabis retail stores are located approximately 0.85 miles (Fair Ave.), 1 mile (Ocean St.), and 1.2 miles (Limekiln St.) away, respectively. The use will not be located within the proximity of an incompatible use, as defined by the specified buffers in the Zoning Ordinance, as the site meets the requirements of Section 24.12.1320(5) of the Zoning Ordinance, which requires that cannabis retail sales facilities maintain a 600-foot buffer from schools, parks, day care centers, youth centers, and other cannabis retail sales facilities. The location provides a distance of approximately 850 feet from Santa Cruz High School and approximately 1,360 feet from Mission Hill Middle School. As located and conditioned, it can be found that the proposed use will not adversely affect the health, safety, or welfare of area resident or businesses, or uses, which was, in part, the basis for the Planning Commission’s approval. On the other hand, the Council could rely on the more subjective findings, as detailed above and as presented in the draft denial resolution, and find that, although the numeric separation standards are met, the findings cannot be made due to the location of the business along students’ travel route to/from the high school and middle school, coupled with the potential negative implications of such exposure, as noted in some of the materials provided and attached to the Planning Commission report.
2. Administrative Use Permit (24.08.50) Findings. The appellants assert that the proposed use is not in conformance with Zoning Code Section 24.08.50(1) and 24.08.50(3) which are findings required to approve an Administrative Use Permit (AUP) or Special Use Permit (SUP). The two referenced findings read as follows:
(1) The proposed structure and use conforms to the requirements and the intent of this title, and of the General Plan, relevant area plans, and the Coastal Land Use Plan, where appropriate.
(3) The use and structure will not constitute a nuisance or be detrimental to the public welfare of the community.
The appeal letter goes on to argue that the use does not conform with certain General Plan policies as well as the intent of the Zoning Ordinance as is called for in Finding 1 above. Additionally, the appellants state that Finding 3 cannot be made as research has demonstrated that proximity to cannabis outlets increases cannabis usage among young adults and therefore the use would be detrimental to the public welfare.
25.7 Staff Response: The subject parcel has a Mixed-Use Medium Density (MXMD) General Plan designation. This designation applies to sites along the Mission Street corridor between Swift and Laurel Streets. The General Plan states that in MXMD designations, “the typical commercial uses are similar to those in the Community Commercial (CM) designation, and pedestrian-oriented commercial uses are encouraged on the ground floor.” For reference, the CM designation calls for “businesses that serve the general needs of the community, including retail, service, and office establishments. Typical uses in these areas include restaurants, grocery stores, furniture stores, general merchandise, medical and legal offices, and auto parts stores, as well as mixed-use projects that include these commercial uses on the ground floor.” The proposed use is consistent with the policies of the General Plan, including the following:
LU3.2.1 – Pursue the expansion of employment-intensive uses that have long-term economic viability.
ED1.1.1 – Encourage the development of diverse, innovative, and sustainable business enterprises that reinforce Santa Cruz’s position as a regional employment, cultural, visitor, and shopping center.
ED1.1.2 – Support the development and expansion of businesses that make a balanced contribution to the cultural, environmental, and economic health of the city. ED1.1.3 – Encourage the development of year-round businesses and visitor activities, resources, and destinations that can also attract and engage local residents. ED1.1.5 – Encourage additional commercial businesses that support and enhance creative industries and lifestyles, such as marine, retail, visitor, and recreational activities and services.
ED1.9.1 – Promote and develop clean, visually inviting, and safe shopping environments. ED2.1 – Foster a robust and diversified economic and municipal tax revenue base. ED2.1.1 – Recruit new and support existing businesses that generate substantial municipal revenue.
ED2.1.2 – Maintain and expand retail sales tax opportunities within the city. ED2.2.3 – Support local and environmentally sound vendors. ED2.2.4 – Encourage businesses to provide for easy consumer identification of locally produced and environmentally sound goods.
ED4.3.3 – Encourage the expansion and attraction of commercial businesses and industries that create stable, year-round, livable wage jobs with maximum health benefits. ED5.2.1 – Encourage neighborhood shopping in nodes of commercial development that serve residential areas and have adequate transit, pedestrian, and bicycle access. ED6.1.1 – Support the establishment of industries and “lifestyle businesses” that draw on Santa Cruz’s natural assets and environment.
ED6.2.1 – Support commercial projects that demonstrate a public benefit. ED6.3 – Foster and retain locally owned businesses and start-ups. ED6.3.1 – Assist small businesses and small-scale, low-impact, start-up uses in navigating the City’s permit process, and expedite project review.
The project site is located within the Mission Street Urban Design Plan (MSUDP) which encourages retail uses such as this. The community’s vision is to re-establish Mission Street as a vibrant commercial corridor that recognizes and carefully balances its functions as both a State Highway and local-serving commercial street. As noted in the MSUDP, the corridor should maintain a predominantly commercial mixed-use character. The intent is to create a corridor that is safe, attractive, economically and socially vibrant, which in turn will improve the quality of life
25.8 for Westside residents. While the MSUDP plan mostly addresses design concepts along the corridor, the project meets the following MSUDP areawide land use and redevelopment strategy plan objectives and policies:
Objective 4: To enhance economic and social vitality of the Mission Street corridor by creating a more stable and sustainable mix of uses that serve both community and visitor needs.
Policy 4c – Encourage “mixed-use” development and “local-serving” commercial uses as a means of reducing automobile use within the planning area. Development of complementary uses (retail and office, retail and housing, office and housing) in proximity to each other allows residents, employees, and visitors to walk and/or bicycle when undertaking many of the typical daily trips, whether it is going to lunch, running errands, or going out for the evening.
Objective 5: Promote the revitalization and redevelopment of existing outdated, underutilized, or marginal uses or businesses in order to enhance the economic potential of the area as a whole.
Policy 5c – Encourage redevelopment and infill development along Mission Street that will improve the corridor’s economic vitality, enhance the definition and character of the corridor, and create better pedestrian scale and orientation.
With the MSUDP adopted in 2002, the plan does not speak to cannabis retail uses. But Mission Street is a commercial corridor providing commercial services to local residents as well as tourists.
The site is adjacent to offices, restaurants and other commercial services. The central location of this site will provide convenient access to purchase legal cannabis to West Side residents of Santa Cruz. Santa Cruz is a destination for tourism, and a cannabis retailer in this visible location would attract more consumers travelling on Highway 1 to the adult-use market. The project site is positioned to take advantage of the existing heavy tourist traffic on Mission Street. For these reasons, the project can be found consistent with the MSUDP.
The cannabis industry in Santa Cruz as a whole (manufacturing, distribution, labs, retail) benefits the general public by providing additional high-quality jobs within the City, including scientists and other technical positions. All cannabis retailers are required to pay a living wave and shall not discourage employees from joining or forming a union, pursuant to Chapter 6.91.090 of the Santa Cruz Municipal Code. The Hook would be one of two cannabis retail stores that serve the westside neighborhoods, as well as visitors to the City. As noted above, the Land Use Element and the Economic Development Element of the City of Santa Cruz 2030 General Plan list goals and policies that support the proposed use at this location.
That said, the General Plan’s Guiding Principles express the City’s “commitment to education through our schools, educational systems and programs.” The appellants have expressed concerns about the proposed business due to its proximity to and students’ respective routes to and from Santa Cruz High School and Mission Hill Middle School. Opponents to the proposed use indicate that the normalization of cannabis use due to repeated exposure to business patrons and signage or the easy access to the dispensary (for example, for those with false identification) could result in increased use of cannabis among students, and such use would have implications on children’s health and development due to the detrimental effects of THC on adolescents’ brains, including heightened risks of anxiety, depression, and psychosis.
25.9 While the proposed use is consistent with a number of General Plan policies as stated above, project opponents would suggest General Plan inconsistencies with policies such as:
CC7.4 - Enhance programs designed to reinforce positive juvenile behavior and prevent delinquency.
CC7.4.3 - Work with Santa Cruz City Schools and private schools to provide drug prevention.
CC8.4.1 - Implement the Safe Routes to School program where funded. CC8.3.4 – Work with appropriate agencies to develop aggressive prevention and early intervention efforts toward reduction educational failure and other problems for children and youth.
It could be argued that establishment of a cannabis dispensary in the general vicinity of schools is inconsistent with these policies, tempting juveniles into bad behavior (i.e., acquiring false identification (IDs)) and normalizing the use of cannabis through exposure to the facility along the route to school.
3. Questionable Compliance with Municipal Code 24.12.1320(5). The appellants assert that the MU-M (Mixed-Use Medium Density) zone district in which the subject parcel is located is not listed as an allowed use within the zone district pursuant to the Zoning Code.
Staff Response: Pursuant to 24.10.802(c), “Cannabis retail, subject to the commercial cannabis regulations, Part 14 of Chapter 24.12” is permitted in the MU-M zone district with the approval of an Administrative Use Permit (AUP).
ENVIRONMENTAL REVIEW: The project is categorically exempt from environmental review under Class 1 of the CEQA Guidelines, Section 15301, which allows for minor alterations to existing facilities that result in negligible or no expansion of the existing use. The proposed project meets this exemption since it is proposing a specialty retail store within an existing commercial building previously used as a retail store, with no proposed expansion to the building.
None of the exceptions to the exemptions under Section 15300.2 apply to the project in that the project is not part of a larger project that could result in a cumulative impact, there are no unusual circumstances associated with the project or subject parcel, the project will not result in damage to resources associated with an officially designated scenic highway, the project site is not included on any lists compiled pursuant to Section 65962.5 of the Government Code related to Hazardous Waste Sites, and the project will not result in substantial adverse changes in the significance of a historical resource site.
HEALTH IN ALL POLICIES (HiAP): HiAP is a collaborative approach to improving the health of all people by incorporating health considerations into decision-making across sectors and policy areas. HiAP is based on 3 pillars: equity, public health, and sustainability. The goal of HiAP is to ensure that all decision-makers are informed about the health, equity, and sustainability impacts of various policy options during the policy development process. The project supports the pillar of equity by providing a range of jobs that cater to diverse backgrounds and by providing both medicinal and recreational cannabis to locals and visitors of all income levels. The proposed use is on a site that is improved with sidewalks and street trees and that is close to public transportation, commercial goods and services, and residential areas. A business in this central location encourages a sustainable and
25.10 healthy lifestyle by promoting alternative forms of transportation, such as walking or biking for retail shopping needs. Additionally, the business will employ sustainable practices, including enrolling in the PG&E Solar Choice program, retrofitting all existing faucets in the building to enhance water conservation, and minimizing waste by separating all refuse into trash, recycling, and compost. The business will generate consistent Cannabis Business Tax which can be used to further HiAP objectives, including a portion of which that is dedicated to funding services and programs for those 25 years old and younger. Therefore, the project can be considered consistent with the three pillars of the HiAP.
In letters of opposition to the project, commenters suggested the use is inconsistent with HiAP policies. One could argue inconsistency with the HiAP health pillar based on the potential for the location to normalize cannabis use, that such normalization could increase youth use, and on evidence presented that cannabis use negatively impacts developing brains of youth.
SUMMARY AND RECOMMENDATION: The proposed cannabis retail use meets all of the objective standards laid out in the City Zoning Code. That being said, subjective findings allow the City Council additional discretion to consider potential impacts the use could have on high school and middle school students given proximity to the high school and the site’s location at a key Mission Street pedestrian crossing for the middle school and high school. There are certainly merits to both arguments, and both sides present valid points. Hence, staff recommends that the City Council consider the Planning Commission’s approval and the information provided and make a determination to approve or deny the application based on one of the resolutions provided.
The attached approval resolution includes findings supporting the approval, coupled with conditions of approval. The attached denial resolution includes findings supporting a denial.
FISCAL IMPACT: The applicant and appellants have paid fees to compensate for costs associated with staff time processing this application and subsequent appeals. The cannabis retail use will contribute to the general fund through sales tax and cannabis business tax (currently 7% of gross receipts) revenue to the City. The additional revenue generated by the project will help offset the costs of providing municipal services demanded by the project.
Prepared By:
Ryan Bane
Senior Planner
Submitted By:
Lee Butler
Director of Planning and
Community Development
Approved By:
Matt Huffaker
City Manager
ATTACHMENTS:
1. Resolution with findings and conditions of approval
2. Resolution with findings for denial
3. Project Plans
4. Operations Narrative and Security Plan
5. Appeal letter dated March 14, 2024
6. March 7, 2024 Planning Commission Staff Report. Attachments and public correspondence can be found here https://www.cityofsantacruz.com/pc
7. March 7, 2024 Planning Commission Minutes
8. Correspondence received after March 7, 2024
25.11 RESOLUTION NO. NS-30,XXX
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ DENYING AN
APPEAL, ACKNOWLEDGING THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION AND APPROVING AN ADMINISTRATIVE USE PERMIT TO ESTABLISH A CANNABIS RETAIL FACILITY ON A PARCEL IN THE MU-M (MIXEDUSE MEDIUM DENSITY) ZONE DISTRICT AND WITHIN THE MISSION STREET URBAN DESIGN PLAN. (APPLICATION NO. CP23-0106)
WHEREAS, on September 14, 2023, Bryce Berryessa (“applicant”), for a property located at 1129 Mission Street also known as Assessor’s Parcel Numbers 006-493-27, applicant applied for the above-described permits; and
WHEREAS, the project site and its development is governed by the standards and guidelines contained in California State Law, the City of Santa Cruz General Plan 2030, the Mission Street Urban Design Plan, and Santa Cruz Municipal Code; and WHERAS, the project qualifies for a Categorical Exemption for Existing Facilities pursuant to CEQA Guidelines Section 15301, as described fully in the staff report; and WHEREAS, the Planning Commission conducted a duly noticed public hearing on March 7, 2024 to consider the Administrative Use Permit for a cannabis retail facility use and the full public record and approved the application on a 5-2 vote; and WHEREAS, an appeal of the Planning Commission decision was received on March 14, 2024 from concerned parents; and
WHEREAS, the City Council conducted a duly noticed public hearing on May 14, 2024 and considered all oral and written testimony; and
WHEREAS, the City Council now denies the appeal and makes the following findings:
Administrative Use Permit Findings, Section 24.08.050
1. The proposed structure and use conforms to the requirements and the intent of this title, and of the General Plan, relevant area plans, and the Coastal Land Use Plan, where appropriate.
The subject parcel has a Mixed-Use Medium Density (MXMD) General Plan designation.
This designation applies to sites along the Mission Street corridor between Swift and Laurel Street. The General Plan states that in MXMD designations, “the typical commercial uses are similar to those in the Community Commercial (CM) designation, and pedestrianoriented commercial uses are encouraged on the ground floor.” For reference, the CM designation calls for “businesses that serve the general needs of the community, including
25.12 retail, service, and office establishments. Typical uses in these areas include restaurants, grocery stores, furniture stores, general merchandise, medical and legal offices, and auto parts stores, as well as mixed-use projects that include these commercial uses on the ground floor.” The proposed use is consistent with the policies of the General Plan, including the following:
LU3.2.1 – Pursue the expansion of employment-intensive uses that have long-term economic viability.
ED1.1.1 – Encourage the development of diverse, innovative, and sustainable business enterprises that reinforce Santa Cruz’s position as a regional employment, cultural, visitor, and shopping center.
ED1.1.2 – Support the development and expansion of businesses that make a balanced contribution to the cultural, environmental, and economic health of the city. ED1.1.3 – Encourage the development of year-round businesses and visitor activities, resources, and destinations that can also attract and engage local residents. ED1.1.5 – Encourage additional commercial businesses that support and enhance creative industries and lifestyles, such as marine, retail, visitor, and recreational activities and services.
ED1.9.1 – Promote and develop clean, visually inviting, and safe shopping environments. ED2.1 – Foster a robust and diversified economic and municipal tax revenue base. ED2.1.1 – Recruit new and support existing businesses that generate substantial municipal revenue.
ED2.1.2 – Maintain and expand retail sales tax opportunities within the city. ED2.2.3 – Support local and environmentally sound vendors. ED2.2.4 – Encourage businesses to provide for easy consumer identification of locally produced and environmentally sound goods.
ED4.3.3 – Encourage the expansion and attraction of commercial businesses and industries that create stable, year-round, livable wage jobs with maximum health benefits. ED5.2.1 – Encourage neighborhood shopping in nodes of commercial development that serve residential areas and have adequate transit, pedestrian, and bicycle access. ED6.1.1 – Support the establishment of industries and “lifestyle businesses” that draw on Santa Cruz’s natural assets and environment.
ED6.2.1 – Support commercial projects that demonstrate a public benefit. ED6.3 – Foster and retain locally owned businesses and start-ups. ED6.3.1 – Assist small businesses and small-scale, low-impact, start-up uses in navigating the City’s permit process, and expedite project review.
The cannabis industry in Santa Cruz as a whole (manufacturing, distribution, labs, retail) benefits the general public by providing additional high-quality jobs within the City, including scientists and other technical positions. The Hook will be one of two cannabis retail stores that will serve the westside neighborhoods as well as visitors to the City. The Land Use Element and the Economic Development Element of the City of Santa Cruz 2030 General Plan list goals and policies that support the proposed use at this location.
25.13 The project site is located within the Mission Street Urban Design Plan (MSUDP) which encourages retail uses such as this. The community’s vision is to re-establish Mission Street as a vibrant commercial corridor that recognizes and carefully balances its functions as both a State Highway and local-serving commercial street. As noted in the MSUDP, the corridor should maintain a predominantly commercial mixed-use character. The uses that are considered most appropriate for the Mission Street district will:
Provide goods and services that cater to the daily needs of the local community; Provide visitor-serving services that are dependent on highway visibility/frontage; Are compatible with the creation of an attractive, pedestrian-friendly commercial district; Are not primarily auto-oriented; and
Are not industrial or manufacturing in nature
The intent is to create a corridor that is safe, attractive, economically and socially vibrant, which in turn will improve the quality of life for Westside residents.
The project site is within the “Westside Zone” area of the Mission Street Urban Design Plan. The Westside Zone, which extends from (both sides of) Laurel Street to Swift Street, includes predominantly retail and service type uses with scattered residential, office and institutional uses. The project meets the objectives of the Westside Zone by way of establishment of a retail use for both residents and visitors. The project also meets the following areawide land use and redevelopment strategy plan objectives and policies:
Objective 4: To enhance economic and social vitality of the Mission Street corridor by creating a more stable and sustainable mi of uses that serve both community and visitor needs.
Policy 4c – Encourage “mixed-use” development and “local-serving” commercial uses as a means of reducing automobile use within the planning area. Development of complementary uses (retail and office, retail and housing, office and housing) in proximity to each other allows residents, employees, and visitors to walk and/or bicycle when undertaking many of the typical daily trips, whether it is going to lunch, running errands, or going out for the evening.
Objective 5: Promote the revitalization and redevelopment of existing outdated, underutilized, or marginal uses or businesses in order to enhance the economic potential of the area as a whole.
Policy 5c – Encourage redevelopment and infill development along Mission Street that will improve the corridor’s economic vitality, enhance the definition and character of the corridor, and create better pedestrian scale and orientation.
Mission Street is a commercial corridor providing commercial services to local residents as well as tourists. The site is adjacent to offices, restaurants and other commercial services.
The central location of this site will provide convenient access to purchase legal cannabis to west side residents of Santa Cruz. Santa Cruz is a destination for tourism, and a cannabis retailer in this visible location would attract more consumers travelling on Highway 1 to the adult-use market. The project site is positioned to take advantage of the existing heavy tourist traffic on Mission Street.
25.14 The site is not located in the Coastal Zone.
2. Any additional conditions stipulated as necessary in the public interest have been imposed.
Additional conditions have been imposed on the project to ensure that the sale of cannabis products operates in a safe manner and will prevent the use from becoming a nuisance. The Police Department has reviewed this application and recommended additional conditions of approval to minimize impacts to neighboring uses, ensure on-site security, and encourage responsible service. Conditions have been included to install surveillance cameras, and to limit the retail store hours to the hours of 7AM to 10PM, which is consistent with the cannabis performance standards other retail uses in the area. In the public interest, the applicant will be required to meet all Performance Standards listed in Section 24.12.1340 of the Municipal Code and included in the Conditions of Approval.
The conditions regard security, lighting, hours of operation, parking, loitering, litter removal and signage. Furthermore, the site is not located within six hundred feet of a school, park, day care center, youth center, or to another cannabis retail sales facility, so the proposed use can be supported in this location. The applicant has voluntarily agreed to condition the use to not sell cannabis products to anyone under 19 years of age, even if that individual has a medical cannabis prescription.
3. The use and structure will not constitute a nuisance or be detrimental to the public welfare of the community.
The proposed cannabis retail use will not constitute a nuisance or be detrimental to the public welfare of the community in that the use is a low intensity type of use, with a select clientele and limited hours of operation (7AM to 10PM). The use will be required to meet all Performance Standards listed in Section 24.12.1340 of the Municipal Code and included in the Conditions of Approval, limiting or eliminating any nuisance issues that could be detrimental to the public welfare of the community. The Police Department has reviewed this application and recommended additional conditions of approval to minimize impacts to neighboring uses, ensure on-site security, and encourage responsible service. Conditions of approval included are to install surveillance cameras; to limit the retail store hours to 7AM to 10PM, which is consistent with other retail uses; to maintain free of litter the area adjacent to the premises over which the applicant has control; to monitor the area in an effort to prevent loitering of persons on any property adjacent to the premises; to provide exterior lighting on the premises; etc. The application does not include any live entertainment.
Furthermore, the site is not located within six hundred feet, as measured from the property lines, from any school, day care center, youth center, or to another cannabis retail sales facility. The use is consistent with the zone district with approval of an Administrative Use Permit, adequate parking is provided on site, operational Conditions of Approval will be enforced, and the police will have an opportunity to review and modify the security plan.
25.15 Findings for Commercial Cannabis Uses, Section 24.12.1350
4. The proposed use complies with all of the mandatory requirements of this section and other applicable sections of this code and applicable policies of the General Plan and local coastal plan if located in the Coastal Zone.
As discussed in detail in the staff report, the proposed use complies with all of the mandatory requirements listed in Part 14 of Zoning Code Chapter 24.12 Community Design, including but not limited to location, hours of operation, air infiltration systems, security, and general operations.
The subject parcel has a Mixed-Use Medium Density (MXMD) General Plan designation.
This designation applies to sites along the Mission Street corridor between Swift and Laurel Streets. The General Plan states that in MXMD designations, “the typical commercial uses are similar to those in the Community Commercial (CM) designation, and pedestrianoriented commercial uses are encouraged on the ground floor.” For reference, the CM designation calls for “businesses that serve the general needs of the community, including retail, service, and office establishments. Typical uses in these areas include restaurants, grocery stores, furniture stores, general merchandise, medical and legal offices, and auto parts stores, as well as mixed-use projects that include these commercial uses on the ground floor.” The proposed use is consistent with the policies of the General Plan, including the following:
LU3.2.1 – Pursue the expansion of employment-intensive uses that have long-term economic viability.
ED1.1.1 – Encourage the development of diverse, innovative, and sustainable business enterprises that reinforce Santa Cruz’s position as a regional employment, cultural, visitor, and shopping center.
ED1.1.2 – Support the development and expansion of businesses that make a balanced contribution to the cultural, environmental, and economic health of the city. ED1.1.3 – Encourage the development of year-round businesses and visitor activities, resources, and destinations that can also attract and engage local residents. ED1.1.5 – Encourage additional commercial businesses that support and enhance creative industries and lifestyles, such as marine, retail, visitor, and recreational activities and services.
ED1.9.1 – Promote and develop clean, visually inviting, and safe shopping environments. ED2.1 – Foster a robust and diversified economic and municipal tax revenue base. ED2.1.1 – Recruit new and support existing businesses that generate substantial municipal revenue.
ED2.1.2 – Maintain and expand retail sales tax opportunities within the city. ED2.2.3 – Support local and environmentally sound vendors. ED2.2.4 – Encourage businesses to provide for easy consumer identification of locally produced and environmentally sound goods.
ED4.3.3 – Encourage the expansion and attraction of commercial businesses and industries that create stable, year-round, livable wage jobs with maximum health benefits.
25.16 ED5.2.1 – Encourage neighborhood shopping in nodes of commercial development that serve residential areas and have adequate transit, pedestrian, and bicycle access. ED6.1.1 – Support the establishment of industries and “lifestyle businesses” that draw on Santa Cruz’s natural assets and environment.
ED6.2.1 – Support commercial projects that demonstrate a public benefit. ED6.3 – Foster and retain locally owned businesses and start-ups. ED6.3.1 – Assist small businesses and small-scale, low-impact, start-up uses in navigating the City’s permit process, and expedite project review.
The cannabis industry in Santa Cruz as a whole (manufacturing, distribution, labs, retail) benefits the general public by providing additional high-quality jobs within the City, including scientists and other technical positions. The Hook will be one of two cannabis retail stores that will serve the westside neighborhoods as well as visitors to the City. The Land Use Element and the Economic Development Element of the City of Santa Cruz 2030 General Plan list goals and policies that support the proposed use at this location.
The site is not located in the Coastal Zone.
5. The proposed use will not adversely affect the health, safety or welfare of area residents or businesses, or uses, or will not result in an undue concentration in any one neighborhood or district and will not be located within proximity of an incompatible use, such as a children's school, day care facility or children’s play area.
In the public interest, the applicant will be required to meet all Performance Standards listed in Section 24.12.1340 of the Municipal Code and included in the Conditions of Approval. The conditions regard security, lighting, hours of operation, loitering, litter removal and signage.
The use will not result in an undue concentration of cannabis retail establishments as the nearest cannabis retail stores are located approximately 0.85 miles (Swift St.), 1 mile (Ocean St.), and 1.2-miles away respectively. The use will not be located within the proximity of an incompatible use, as the site meets the requirements of Section
24.12.1320(5) of the Zoning Ordinance, which requires that cannabis retail sales facilities maintain a 600-foot buffer from schools, parks, day care centers, youth centers, and other cannabis retail sales facilities. The location provides a distance of approximately 850 feet from Santa Cruz High School and approximately 1,360 feet from Mission Hill Middle School. As located and conditioned, the proposed use will not adversely affect the health, safety, or welfare of area resident or businesses, or uses.
6. The operational characteristics of the proposed use, such as hours of operation, noise, odor, amount and location of parking, signage, loitering and litter, will not have a negative impact upon the surrounding area.
The proposed cannabis retail use will not have a negative impact upon the surrounding area in that the use is a low intensity type of use, with a select clientele and limited hours of operation (7AM to 10PM). The use will be required to meet all Performance Standards
25.17 listed in Section 24.12.1340 of the Municipal Code and included in the Conditions of Approval, limiting or eliminating any nuisance issues that could be detrimental to the public welfare of the community. The Police Department has reviewed this application and recommended additional conditions of approval to minimize impacts to neighboring uses, ensure on-site security, and encourage responsible service. Conditions of approval included are to install surveillance cameras; to limit the retail store hours to the hours of 7AM to 10PM, which is consistent with other retail uses; to maintain free of litter the area adjacent to the premises over which the applicant has control; to monitor the area in an effort to prevent loitering of persons on any property adjacent to the premises; to provide exterior lighting on the premises; etc.
7. The proposed use is compatible with the sizes and types of other neighboring uses in the surrounding area, particularly those used primarily by persons under the age of
18. The proposed use will be compatible with the sizes and types of other neighboring uses in the surrounding area which consists of other similar retail type uses as well as restaurants and office uses along Mission Street. Security systems and operational performance standards will ensure the use is compatible with the size and type of neighboring uses.
There are no neighboring uses in the area that are used primarily by persons under the age of 18. Santa Cruz High School is approximately 850-feet away, and Mission Hill Junior High is approximately 1,360 feet from the proposed cannabis retail use, and the location meets the required 600-foot buffer from schools, parks, day care centers, youth centers as required by Section 24.12.1320(5) of the Zoning Ordinance.
8. The proposed use is not located in what has been determined by the Santa Cruz police department to be a high-crime area, where a disproportionate number of police service calls occur, or where there is currently parking congestion.
The Police Department has stated the proposed use is not located in a high-crime area or where there is currently parking congestion.
9. The proposed use shall meet all the building, electrical, and fire code requirements for such occupancy.
The applicant will be required to obtain a building permit for the tenant improvements.
With Respect to the California Environmental Quality Act The project is categorically exempt from environmental review under Class 1 of the CEQA Guidelines, Section 15301, which allows for minor alterations to existing facilities that result in negligible or no expansion of the existing use. The proposed project meets this exemption since it is proposing a specialty retail store within an existing commercial building previously used as a retail store, with no proposed expansion to the building.
25.18 None of the exceptions to the exemptions under Section 15300.2 apply to the project in that the project is not part of a larger project that could result in a cumulative impact, there are no unusual circumstances associated with the project or subject parcel, the project will not result in damage to resources associated with an officially designated scenic highway, the project site is not included on any lists compiled pursuant to Section 65962.5 of the Government Code related to Hazardous Waste Sites, and the project will not result in substantial adverse changes in the significance of a historical resource site.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa Cruz that it hereby denies the appeal and acknowledges the CEQA determination and approves the Administrative Use Permit to establish a cannabis retail facility on a parcel in the MU-M (MixedUse Medium Density) zone district and within the Mission Street Urban Design Plan, subject to the Findings listed above and the Conditions of Approval listed in Exhibit “A,” attached hereto and made a part hereof.
PASSED AND ADOPTED this _____day of ________ 2024, by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
APPROVED: ______________________
Fred Keeley, Mayor
ATTEST: _________________________
Bonnie Bush, City Clerk Administrator
25.19 EXHIBIT "A"
CONDITIONS OF APPROVAL FOR THE PROJECT ON PROPERTY AT
1129 Mission Street – CP23-0106
Administrative Use Permit to establish a cannabis retail facility on a parcel in the MU-M (Mixed-Use Medium Density) zone district and within the Mission Street Urban Design Plan.
1. If one or more of the following conditions is not met with respect to all its terms, then this approval may be revoked.
2. All plans for future construction which are not covered by this review shall be submitted to the City Planning and Community Development Department for review and approval.
3. Expiration of the permit shall be consistent with Section 24.12.1380 of the Zoning Code, as amended. Should this expiration condition conflict with Section 24.12.1380, as amended, the Zoning Code section shall take precedent. This permit shall be exercised within one (1) year of the date of final approval or it shall become null and void. When a building permit is required, a zoning permit shall be considered exercised following the issuance of a valid building permit.
When no building permit is required, a zoning permit shall be considered exercised when the occupancy occurs. Once a permit has been exercised, it remains effective unless terminated (including through expiration as discussed in the Zoning Code) or modified, but shall expire and become void where the use has ceased for a period of six consecutive months, whether or not it is the intent of the business and/or property owner to abandon the use.
4. If, upon exercise of this permit, this use is at any time determined by the Zoning Administrator to be incompatible with the surrounding neighborhood, in violation of a condition of approval, or constituting a public nuisance, revocation of, or amendment to, this permit by the Zoning Administrator could occur.
5. The use shall meet the standards and shall be developed within limits established by Chapter
24.14 of the Santa Cruz Municipal Code as to the emission of noise, odor, smoke, dust, vibration, wastes, fumes or any public nuisance arising or occurring incidental to its establishment or operation.
6. The applicant shall be responsible for the completeness and accuracy of all forms and supporting material submitted in connection with any application. Any errors or discrepancies found therein may result in the revocation of any approval or permits issued in connection therewith.
25.20 7. All final working drawings shall be submitted to the Zoning Administrator for review and approval in conjunction with building permit application.
8. Subsequent to occupancy of the premises, all landscaping shall be permanently maintained.
9. The following operating conditions are to ensure that commercial cannabis is compatible with the surrounding neighborhood:
A. The business shall meet all the operating criteria, including security procedures, for the cultivation, distribution and warehousing, manufacturing, testing, and retail sales of cannabis and cannabis products as may be required by the state of California, the Santa Cruz city council and police department, and/or the county health department or their designee.
B. No product shall be smoked, ingested, or otherwise consumed on the premises.
C. The hours of operation shall be limited to no more than 7:00 a.m. to 10:00 p.m. dependent upon the specific site characteristics and conditions of approval of the administrative use permit issued for the site. In general, no cannabis retail business shall open earlier or close later than the other businesses in the vicinity.
D. The business shall prevent loitering by persons outside the establishment, either on the premises or within fifty feet of the premises.
E. A cannabis retail business shall provide litter removal services each day of operation on and in front of the premises and, if necessary, on public sidewalks within fifty feet of the premises.
F. Cannabis businesses shall contain an air filtration system to regulate odor.
G. All exhaust fans directing air outside shall be secured to prevent forced entry to the facility.
H. The business shall provide adequate security on the premises to ensure the safety of persons and to protect the premises from theft. All security shall, at a minimum, meet the requirements of state law for cannabis businesses as well as any additional requirements included as conditions of approval for the site use permit. Minimum city security requirements include:
Security alarms for the building that include motion activation and manual activation capabilities;
25.21 Exterior security lights that provide 360-degree coverage around the perimeter of all buildings while meeting the performance standards in the Zoning Ordinance;
Exterior security cameras (minimum 1280X720 pixels) that provide 360- degree coverage around the perimeter of all egress and ingress into the building.
The security camera system shall have the capability to provide the recordings to police within 24 hours;
Interior cameras (minimum 1280X720 pixels) within the business itself that cover the doors, windows, and the sales counter area of the business; All camera recording systems shall have the ability to retain the video for 90 days.
Doors leading into the vestibules and all rooms used for growing and processing (drying) cannabis must be steel and have a bolt lock or key pad lock; All rooms used for growing and processing shall be fire-rated, solid-core doors and shall remain locked;
All doors and windows shall be fortified and levered windows replaced with solid windows that have a security coating to prevent illegal entry; and Cannabis retail businesses that are open to the public shall provide an onsite security guard during business hours and adequate security on the premises, including lighting and alarms, to insure the safety of persons and to protect the premises from theft.
All security procedures and systems shall be reviewed and approved by the Police Department, and security plans approved by the Police Department shall be adhered to by the applicant unless changes are authorized in writing by the Police Department.
I. Exterior lighting of the parking area shall be kept at a sufficient intensity so as to provide adequate lighting for patrons and employees, while not disturbing surrounding residential or commercial areas.
J. Signage for the establishment shall be consistent with Section 24.12.300 of the Zoning Ordinance. All signage and advertising shall comply with Sections 26150 through 26155 of the state of California Business and Professions Code.
K. The business shall provide the zoning administrator, the chief of police, and all neighbors located within fifty feet of the establishment with the name, phone number, and email address of an on-site community relations staff person to whom notice can be provided if there are operating problems associated with the establishment. The business shall make every good faith effort to encourage neighbors to call this person to try to
25.22 solve operating problems, if any, before any calls or complaints are made to the police department or the zoning administrator.
L. The business shall post a copy of the conditions of approval for the administrative use permit on the premises in a place where it may be readily viewed by any member of the general public. A copy of the city cannabis retailer license (for retail businesses) and the state cannabis license (for all cannabis businesses) shall also be posted in a prominent position on the premises.
M. The business shall meet any specific additional operating procedures and measures as may be imposed as conditions of approval by the planning commission at the time of issuance of the administrative use permit in order to ensure that the business will be a good neighbor.
N. In addition to the required application materials, the business shall submit an operations manual to describe the operation of the facility in conformance with these performance standards and the requirements of state law. The operations manual shall be consistent with the operations plan submitted to the state in the business’ state license application.
O. To offset power consumption, the business shall install solar panels to provide as much power as possible for the indoor cultivation and manufacturing of cannabis and cannabis products. Businesses that can demonstrate low power usage may be excused from this requirement. Commercial cannabis businesses shall meet the city’s green building requirements.
P. Trash containing cannabis and cannabis products or byproducts shall be disposed of securely. The business owner shall work with the Police Department and the city’s waste/recycling program to create a process for safe and secure disposal of waste materials.
Q. A cannabis business is not allowed as an accessory use to any other principal, special, or conditional use. All cannabis businesses are subject to the applicable administrative use permit and cannabis retailer license requirements.
R. Prior to occupancy of the tenant space the applicant shall obtain a Zoning Clearance from the Planning Department and a Business License from the Finance Department.
S. The applicant shall pay fees for Police Department inspections for the first year of operation. Should the Police Department require additional inspections, the applicant shall be responsible for paying all fees related to such inspections. Additional
25.23 inspections will be required in future years, and the applicant shall be responsible for paying all fees related to such future inspections. The number and type of inspections shall be at the sole discretion of the Police Chief. Failure to pay the applicable fees for requisite inspections may result in revocation of this Administrative Use Permit.
T. The applicant shall pay fees for Fire Department inspections for the first year of operation. Should the Fire Department require additional inspections, the applicant shall be responsible for paying all fees related to such inspections. Additional inspections will be required in future years, and the applicant shall be responsible for paying all fees related to such future inspections. The number and type of inspections shall be at the sole discretion of the Fire Chief. Failure to pay the applicable fees for requisite inspections may result in revocation of this Administrative Use Permit.
U. This use permit shall run with the land and shall be transferrable to a subsequent property owner or tenant upon confirmation that the subsequent use is in substantial compliance with the original use as verified through issuance of a Zoning Clearance.
V. This use permit shall expire and become void if the use has ceased for a period of six consecutive months, whether or not it is the intent to abandon said use.
10. The establishment shall not admit anyone or transact medical cannabis to anyone under the age of 19. Unless subsequently modified by the state, the minimum age for recreational cannabis transactions is 21 years.
25.24 RESOLUTION NO. NS-30,XXX
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ
UPHOLDING AN APPEAL AND DENYING AN ADMINISTRATIVE USE PERMIT TO ESTABLISH A CANNABIS RETAIL FACILITY ON A PARCEL IN THE MU-M (MIXEDUSE MEDIUM DENSITY) ZONE DISTRICT AND WITHIN THE MISSION STREET URBAN DESIGN PLAN. (APPLICATION NO. CP23-0106)
WHEREAS, on September 14, 2023, Bryce Berryessa (“applicant”), submitted an application for an administrative use permit for a property located at 1129 Mission Street also known as Assessor’s Parcel Numbers 006-493-27; and
WHEREAS, the project site and its development is governed by the standards and guidelines contained in California State Law, the City of Santa Cruz General Plan 2030, the Mission Street Urban Design Plan, and Santa Cruz Municipal Code; and WHEREAS, the Planning Commission conducted a duly noticed public hearing on March 7, 2024 to consider the Administrative Use Permit for a cannabis retail facility use and the full public record and approved the application on a 5-2 vote; and WHEREAS, an appeal of the Planning Commission decision was received on March 14, 2024 from concerned parents; and
WHEREAS, the City Council conducted a duly noticed public hearing on May 14, 2024 and considered all oral and written testimony; and
WHEREAS, the City Council, after hearing testimony, agrees with many of the points raised in both the appeal letter and expressed in the public testimony in opposition to the project; and
WHEREAS, the City Council now makes the following findings to approve the appeal and deny the application:
Administrative Use Permit Findings, Section 24.08.050
1. The proposed structure and use conforms to the requirements and the intent of this title, and of the General Plan, relevant area plans, and the Coastal Land Use Plan, where appropriate.
The General Plan’s Guiding Principles express the city’s “commitment to education through our schools, educational systems and programs.” As established by numerous oral and written comments in the record, as well as those presented to the City Council on appeal; due to its proximity to students’ respective routes to and from Santa Cruz High School and Mission Hill Middle School, the normalization of cannabis use due to repeated
25.25 exposure to business patrons and signage or the easy access to the dispensary (for example, for those with fake identification) could result in increased use of cannabis among students, and such use would have implications on children’s health and development due to the detrimental effects of THC on adolescent’s brains, including heightened risks of anxiety, depression, and psychosis.
While the proposed use is consistent with a number of General Plan policies, the use is not consistent with the following General Plan policies:
CC7.4 - Enhance programs designed to reinforce positive juvenile behavior and prevent delinquency.
CC7.4.3 - Work with Santa Cruz City Schools and private schools to provide drug prevention.
CC8.4.1 - Implement the Safe Routes to School program where funded.
Establishment of a cannabis dispensary in the general vicinity of schools is inconsistent with these policies, tempting juveniles into bad behavior (i.e. acquiring fake IDs) and normalizing the use of cannabis.
2. Any additional conditions stipulated as necessary in the public interest have been imposed.
Finding is not applicable with recommendation for denial.
3. The use and structure will not constitute a nuisance or be detrimental to the public welfare of the community.
Based on evidence contained in the record before the Planning Commission, as well as the written and oral communications by members of the public to the Council on appeal, a number of students from both Santa Cruz High School and Mission Hill Middle School walk and bike by this location each day, with the signalized intersection of Laurel and Mission Streets serving as one of the two primary locations where students cross Mission Street (the other being three blocks away at Walnut Avenue), and the presence of a dispensary conveys a normalization of cannabis use for youth who regularly pass by the site and is therefore detrimental to the public welfare of the community. It is not uncommon for underage individuals to obtain fake identification or medical cannabis cards, raising concerns about the potential for younger students to gain access to cannabis through fake identification or for students to acquire these cards and distribute cannabis to younger peers. The impact of THC (a psychoactive ingredient in some cannabis products) on youth, the impact of dispensaries to schools, and the acquiring of fake identification are all detrimental to the community based on the following study findings:
Marijuana use has been associated with several adverse mental health outcomes, including increased incidence of addiction and comorbid substance use, suicidality, and new-onset psychosis;
25.26 Negative impacts on cognition and academic performance; Nine percent of youth in grades 9 to 12 use marijuana daily or nearly every day, an increase of 80% since 2008;
Vaping marijuana by teens doubled between 2013 and 2020; Young adults who live in neighborhoods with a higher number of medical marijuana dispensaries use pot more frequently than their peers, with storefront signage being extremely influential;
A Santa Cruz High School focus group notified the Superintendent that acquiring fake IDs is incredibly easy for students and that they are available to students from people in the community and easily accessible online; and
Santa Cruz City School High School District reported 91 incidents that resulted in students being suspended for possession or use of a controlled substance during the school day during the 2022-2023 school year. 95% or more of these were for vaping marijuana.
Findings for Commercial Cannabis Uses, Section 24.12.1350
4. The proposed use complies with all of the mandatory requirements of this section and other applicable sections of this code and applicable policies of the General Plan and local coastal plan if located in the Coastal Zone.
The General Plan’s Guiding Principles express the city’s “commitment to education through our schools, educational systems and programs.” Due to its proximity to students’ respective routes to and from Santa Cruz High School and Mission Hill Middle School, normalization of cannabis use and easy access to the dispensary, as further discussed elsewhere in these findings and in the associated staff report, could increase youth cannabis use which will have implications on children’s health and development due to the detrimental effects of THC on adolescent’s brains, including heightened risks of anxiety, depression, and psychosis.
While the proposed use is consistent with a number of General Plan policies, the use is not consistent with the following General Plan policies:
CC7.4 - Enhance programs designed to reinforce positive juvenile behavior and prevent delinquency.
CC7.4.3 - Work with Santa Cruz City Schools and private schools to provide drug prevention.
CC8.4.1 - Implement the Safe Routes to School program where funded.
Establishment of a cannabis dispensary in the general vicinity of schools is inconsistent with these policies, tempting juveniles into bad behavior (i.e. acquiring fake IDs) and normalizing the use of cannabis.
5. The proposed use will not adversely affect the health, safety or welfare of area residents or businesses, or uses, or will not result in an undue concentration in any
25.27 one neighborhood or district and will not be located within proximity of an incompatible use, such as a children's school, day care facility or children’s play area.
The proposed use is located within proximity of both Santa Cruz High School and Mission Hill Middle School and will therefore adversely affect the health, safety and welfare of those students due to the potential for normalization, access, and increased use, as discussed elsewhere in these findings and in the associated staff report. A number of students from both Santa Cruz High School and Mission Hill Middle School walk and bike by this location each day, with the signalized intersection of Laurel and Mission Streets serving as one of the two primary locations where students cross Mission Street (the other being three blocks away at Walnut Avenue), and the presence of a dispensary conveys a normalization of cannabis use, the potential for increased ease of access, and the potential for increased youth cannabis use and is therefore detrimental to the public welfare of the community.
6. The operational characteristics of the proposed use, such as hours of operation, noise, odor, amount and location of parking, signage, loitering and litter, will not have a negative impact upon the surrounding area.
The proposed use will have a negative impact upon the surrounding area as it is located in close proximity to Santa Cruz High School and Mission Hill Middle School, on a route that is frequently used by students travelling to/from school, potentially resulting in normalization of cannabis use, easier access to cannabis for students, and increased youth use of cannabis. Cannabis usage will have implications on children’s health and development due to the detrimental effects of THC on adolescent’s brains, including heightened risks of anxiety, depression, and psychosis.
7. The proposed use is compatible with the sizes and types of other neighboring uses in the surrounding area, particularly those used primarily by persons under the age of
18. Santa Cruz High School and Mission Hill Middle School are in close proximity to the proposed use and is therefore not compatible with neighboring uses, specifically the school which are attended primarily by persons under the age of 18. The use is located close proximity to Santa Cruz High School and Mission Hill Middle School, on a route that is frequently used by those students travelling to/from school, potentially resulting in normalization of cannabis use, easier access to cannabis for students, and increased youth use of cannabis. Cannabis usage will have implications on children’s health and development due to the detrimental effects of THC on adolescent’s brains, including heightened risks of anxiety, depression, and psychosis.
8. The proposed use is not located in what has been determined by the Santa Cruz police department to be a high-crime area, where a disproportionate number of police service calls occur, or where there is currently parking congestion.
25.28 The Police Department has stated the proposed use is not located in a high-crime area or where there is currently parking congestion.
9. The proposed use shall meet all the building, electrical, and fire code requirements for such occupancy.
The applicant would be required to obtain a building permit for the tenant improvements.
However, this finding is inapplicable in the case of a denial, where the use is not allowed.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa Cruz, based on the evidence presented in advance of and at the public hearing for the project, that it hereby upholds the appeal and denies the Administrative Use Permit to establish a cannabis retail facility on a parcel in the MU-M (Mixed-Use Medium Density) zone district and within the Mission Street Urban Design Plan, based on the Findings listed above.
PASSED AND ADOPTED this _____day of ________ 2024, by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
APPROVED: ______________________
Fred Keeley, Mayor
ATTEST: _________________________
Bonnie Bush, City Clerk Administrator
25.29 SITE
SITE
1129BUILDING STREET ADDRESS NUMERALS IN CONTRASTING COLORS, MIN 6" HIGH 1 KNOX BOX
1 1129
William Fisher Architecture, Inc.
303 Potrero Street, Building 42, Suite 102
Santa Cruz, California 95060
(831) 246-0117 [email protected]
modern-architecture.com
COPYRIGHT 2023, WILLIAM FISHER ARCHITECTURE, INC.
AI N
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10/31/25
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Licensed
Architect
William Fisher
C−11008
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Mailing Address:
P.O. Box 8
Santa Cruz, CA 95063
11/6/2023 1:41:36PM
THE HOOK - SANTA CRUZ
A0
THE HOOK - SANTA CRUZ
BRYCE BERRYESSA
1129 MISSION STREET
SANTA CRUZ, CA 95060
APN: 006-493-27
TITLE SHEET
SHEET LIST
A0 TITLE SHEET
A100 SITE, ROOF AND EXTERIOR LIGHTING PLANA101 EXISTING & DEMO FLOOR PLANA102 PROPOSED FLOOR PLANA103 SECURITY PLAN PARCEL
12,981 SF/ 0.2980 ACRES
ZONING MU-M AREA
EXISTING: 2,878 SF
KITCHEN 2,878 SF
PROPOSED: 2,878 SF
KITCHEN: 1,000 SFDISPENSARY: 1,878 SF
REMODELED: 42 SF
STORIES: 1 (NO CHANGES) LOT COVERAGE (NO CHANGES) FAR (NO CHANGES)HEIGHT (NO CHANGES)PARKING PER SCMC 24.12.290.4.A, NO PARKING INCREASES OR CHANGES WILL BE REQUIRED
VEHICLE
14 SPACES
13 STANDARD, 1 ADA
BICYCLE
2 CLASS 1 SPACES 1 CLASS 2 SPACE
SPRINKLERED NO
VICINITY MAP (NOT TO SCALE)PROJECT LOCATION
DO NOT SCALE THE DRAWINGS.STUDY THE CONTRACT DOCUMENTS AND THE FIELD CONDITIONS BEFORE BIDDING OR DOING WORK ON THIS PROJECT. IMMEDIATELY REPORT TO THE ARCHITECT ANY ERRORS, OMISSIONS, OR UNCLEAR DIRECTIONS. THE ARCHITECT WILL EVALUATE THE PROBLEM AND MAKE A WRITTEN INTERPRETATION.
NOTIFY THE ARCHITECT IMMEDIATELY OF ANY DEVIATIONS OR VARIATIONS FROM THE DRAWINGS OR SPECIFICATIONS SHOWN HEREIN.DIMENSIONS MARKED "CLEAR" SHALL BE MAINTAINED AND SHALL ALLOW FOR THICKNESS OF FINISH MATERIALS.DIMENSIONS ARE TAKEN FROM FACE OF FRAMING, OR FROM CENTER LINES AS INDICATED, U.N.O."ALIGN" MEANS TO LOCATE FINISHED FACES IN SAME PLANE."APPROVED" MEANS, UNLESS INDICATED OTHERWISE BY THE ARCHITECT, APPROVED IN WRITING BY THE ARCHITECT."AS DIRECTED" OR "AS INDICATED" MEANS AS DESCRIBED EITHER VERBALLY OR IN WRITING BY THE ARCHITECT. "AS INDICATED" NORMALLY REFERS TO AN ITEM EXPLAINED IN THE CONTRACT."THE CONTRACTOR" REFERS TO THE GENERAL CONTRACTOR, NOT HIS SUBCONTRACTORS."PROVIDE" MEANS THAT THE CONTRACTOR SHALL FURNISH AND INSTALL."UNLESS NOTED OTHERWISE", "UNO", OR "UNLESS INDICATED OTHERWISE" MEANS THAT THE ITEM DESCRIBED IS TYPICAL AS SHOWN EXCEPT AS WHERE SPECIFICALLY CALLED OUT AS DIFFERENT."VERIFY" MEANS, UNLESS INDICATED OTHERWISE BY THE ARCHITECT, TO OBTAIN WRITTEN VERIFICATION OF THE ITEM OR METHOD INDICATED FROM THE ARCHITECT. THIS VERIFICATION MIGHT INCLUDE ELABORATION OR EXPLANATION BY THE ARCHITECT REQUIRING A MORE COMPLEX CONSTRUCTION SOLUTION THAN MIGHT BE
ASSUMED BY READING THE DRAWING WITHOUT THE VERIFICATION, THEREFORE PLEASE MAKE VERIFICATIONS AS EARLY AS POSSIBLE BEFORE BIDDING THE WORK. APPROVED SHOP DRAWINGS DO NOT CONSTITUTE VERIFICATION.
ANY ERROR, OMISSION, OR OTHER CONFLICT BETWEEN THESE DOCUMENTS MUST BE BROUGHT TO THE ATTENTION OF THE ARCHITECT FOR HIS RESOLUTION AS SOON AS IT IS DISCOVERED.INFORM THE ARCHITECT IMMEDIATELY IF THE DRAWINGS, SPECIFICATIONS, OR OTHER CONSTRUCTION DOCUMENTS DON'T SEEM TO COMPLY WITH CURRENT APPLICABLE LAWS, CODES, OR REGULATIONS.THE GENERAL CONTRACTOR SHALL VERIFY AND BE RESPONSIBLE FOR ALL DIMENSIONS AND CONDITIONS ON THE PROJECT. THE ARCHITECT MUST BE NOTIFIED IMMEDIATELY OF ANY DEVIATIONS OR VARIATIONS FROM THE DRAWINGS OR SPECIFICATIONS.OBTAIN ALL PERMITS AND INSPECTIONS AND COMPLY WITH ALL CODES, LAWS, RULES, ORDINANCES, AND REGULATIONS OF ALL PUBLIC AUTHORITIES (FEDERAL, STATE, AND LOCAL) GOVERNING THE WORK. THE MOST STRINGENT SHALL APPLY.U.N.O., APPLY, INSTALL, CONNECT, ERECT, CLEAN, AND CONDITION PRODUCTS PER THEIR MANUFACTURER'S CURRENT WRITTEN INSTRUCTIONS.VERIFY WITH MANUFACTURERS THEIR EQUIPMENT REQUIREMENTS (FOR INSTANCE, STRUCTURAL BLOCKING OR SUPPORT, ELECTRICAL OR MECHANICAL REQUIREMENTS, ETC.). OBTAIN EQUIPMENT SPECIFICATIONS FROM MANUFACTURER(S) TO HELP ENSURE PROPER FIT AND OPERATION.SURVEY FIELD CONDITIONS AND VERIFY FEASIBILITY OF INDICATED WORK, FOR INSTANCE LOCATIONS OF OUTLETS IN RELATION TO STRUCTURAL ELEMENTS. DISCONNECT, CUT BACK TO THEIR SOURCE, AND CAP UTILITIES TO BE REMOVED. SEAL PENETRATIONS AND OTHER DAMAGE CREATED BY UTILITY REMOVAL TO MATCH ADJACENT CONSTRUCTION AND FINISHES. NOTIFY ARCHITECT IMMEDIATELY OF UTILITIES DETERMINED DURING CONSTRUCTION AS NECESSARY TO BE REMOVED WHICH HAVE NOT BEEN SO DESIGNATED IN THE CONTRACT DOCUMENTS. REMOVE SUCH UTILITIES ONLY AFTER CONSULTATION WITH THE ARCHITECT. INSTALL HORIZONTAL FRAMING CROWN UP TYPICALLY. PROVIDE S4S DOUGLAS FIR FRAMING LUMBER TYPICALLY: #1 OR BETTER GRADE FOR HORIZONTAL MEMBERS OR RAFTERS, #2 OR BETTER GRADE FOR VERTICAL MEMBERS. BLOCKING AND OTHER INCIDENTAL NON-STRUCTURAL ITEMS MAY BE STUD GRADE OR BETTER. USE LOW/NO VOC PAINT. EXCEED MANDATORY REQUIREMENTS PER CBC TABLES 4.504DUCTS TO BE COVERED DURING CONSTRUCTIONHERS TESTING REQUIRED, SEE ENERGY DOCUMENTSBUILDING NUMBERS SHALL BE PROVIDED. NUMBERS SHALL BE A MINIMUM OF FOUR (4) INCHES IN HEIGHT ON A CONTRASTING BACKGROUND AND VISIBLE FROM THE STREET. WHERE NUMBERS ARE NOT VISIBLE FROM THE STREET, ADDITIONAL NUMBERS SHALL BE INSTALLED ON A DIRECTIONAL SIGN AT THE PROPERTY DRIVEWAY AND THE STREET.THE JOB COPIES OF THE BUILDING PLANS AND PERMITS MUST BE ON-SITE DURING INSPECTIONS.RECYCLE MINIMUM 80% JOB SITE CONSTRUCTION & DEMOLITION WASTEREQUIRED COMPLIANCE WITH THE FOLLOWING: 2022 CALIFORNIA BUILDING CODE2022 CALIFORNIA RESIDENTIAL CODE2022 CALIFORNIA ELECTRICAL CODE2022 CALIFORNIA MECHANICAL CODE2022 CALIFORNIA PLUMBING CODE2022 CALIFORNIA ENERGY CODE2022 CALIFORNIA FIRE CODE2022 CALIFORNIA GREEN BUILDING STANDARDS CODECITY OF SANTA CRUZ GREEN BUILDING PROGRAM CITY OF SANTA CRUZ LANDSCAPE WATER CONSERVATION STANDARDS CIVIL CODE §1101.1 - §1101.8 PROJECT NOTES PROJECT DESCRIPTION: EXISTING 2,880 SF. COMMERCIAL KITCHEN AND CAFE. 1,000 SF OF KITCHEN TO REMAIN AND REMAINING 1,880 SF TO BECOME CANNABIS DISPENSARY. PROJECT INFORMATION DIRECTIONS: TAKE HIGHWAY 1 NORTHBOUND - ARRIVE AT 1129 MISSION STREET TAKE HIGHWAY 1 SOUTHBOUND - ARRIVE AT 1129 MISSION STREET
PARCEL MAP (NOT TO SCALE)
BAY STREET
HIGHWAY 1
/ MISSION
STREET
WEST
CLIFF
DRIVECOWELL BEACH
SAN
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CLIENTBRYCE BERRYESSA 4170 GROSS RD. STE 5CAPITOLA, CA 95010(831) [email protected] FISHER ARCHITECTURE, INC. COURTNEY HUGHES303 POTRERO ST., BLDG. 42, SUITE 102 SANTA CRUZ, CA 95060(831) [email protected] DIRECTORY
EXISTING BUILDING SIGNAGEEXISTING SITE SIGNAGE
PROPOSED SITE SIGNAGE
PROPOSED BUILDING SIGNAGE
PROJECT SIGNAGESIGNAGE NOTESSITE / MONUMENT SIGN
EXISTING: "EMILY'S" SQUARE 7’-1” X 6'-0"PROPOSED: "THE HOOK" CIRCLE, 6’-0" DIAMETER MOUNTED @ +24”HAND-PAINTED ALUMINUM, SIGN BOARD
BULIDING SIGNS
EXISTING: ‘EMILYS” 9’10’’ LINEAR FEET PROPOSED: ‘’THE HOOK’’ 9’ LINEAR FEET DIE CUT ALUMINUM, SIGN BOARD EXISTING: “BAKERY” 10’ LINEAR FEET PROPOSED: “OUTLET” 8.5’ LINEAR FEET DIE CUT ALUMINUM, SIGN BOARD EXISTING: ZEBRA SQUARE, APPROX 3.5’ X 3.5’PROPOSED: “THE HOOK” CIRCLE, 3.5’ DIAMETER HAND-PAINTED ALUMINUM SIGN BOARDPROPOSED: 2 GREEN CROSSES 3’ X 3’ ON CENTERPLEXIGLASS WITH PAINTED BLACK WOOD FRAME
SITE / MONUMENT SIGN
THE HOOK - SANTA CRUZ
BRYCE BERRYESSA
1129 MISSION STREET
SANTA CRUZ, CA 95060
APN: 006-493-27
1 1
1 1
Revision Schedule
Rev. No. Date
1 2023-10-19
25.30 M
I
S
S
I
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S
T
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L A U R E L S T R E E T
1 7/8
"
/
1 '-0
"
1 7/8
"
/
1 '-0
"
1 23
4 5
6 7
8 9
10 11
12 13
14 ADA
PROPERTY LINE
(51.
73')
(4')
(15.48')
(
1 4
.
34 '
)
(21
.15')
(97.14')
(102.5')
(107.
8')
ENTRANCE
EXIT
(21.
84')
(44.5')
TRUE PROJECT
(64.9')
(184.9')
(64.46')
1119 MISSION STREET
1144 LAUREL STREET
(N) BIKE PARKING2 CLASS 2 SPACES
(E) BIKE PARKING
4 SPACES
(E) LIGHT POLE
(E) LIGHT POLE
(E) TRAFFIC SIGNAL
W/ OVERHEAD LIGHT
(E) TRAFFIC SIGNAL
(E) FLOOD LIGHT
EXTERIOR WALL, TYP.
EAVE, TYP.
(2.5')
(10.
2') APN: 006-493-28
APN: 006-493-24
BETWEEN EXT. WALLS
APPROX. 11'-12'
BETWEEN
EXT.
WALLS
APPROX.
45 '
(E) EXTERIOR LIGHT, TYP
1 LIGHTING NOTES1. EXTERIOR LIGHTING OF THE PARKING AREA SHALL BE KEPT AT A SUFFICIENT INTENSITY SO AS TO PROVIDE
ADEQUATE LIGHTING FOR PATRONS AND EMPLOYEES,
WHILE NOT DISTURBING SURROUNDING RESIDENTIAL OR COMMERCIAL AREAS. 1 1
1 1
1 (108.
08 ')
2' - 0" MIN
6' - 0" MIN
BIKE
16' - 0" MIN
7' - 6" MIN
COMPACT
19' - 0" MIN
8' - 6" MIN
STANDARD
COPYRIGHT 2023, WILLIAM FISHER ARCHITECTURE, INC.
AI N
OFI A L
R
10/31/25
RENEWS ON
C
Licensed
Architect
William Fisher
C−11008
F
ET
A
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William Fisher Architecture, Inc.
303 POTRERO ST., BLDG 42, SUITE 102
SANTA CRUZ, CALIFORNIA 95060
(831) 246-0117
[email protected]
MODERN-ARCHITECTURE.COM
MAILING ADDRESS:
P.O. BOX 8
SANTA CRUZ, CA 95063
THE HOOK - SANTA CRUZ
A100
Issue Date
SITE, ROOF AND EXTERIOR
LIGHTING PLAN
THE HOOK - SANTA CRUZ
BRYCE BERRYESSA
1129 MISSION STREET
SANTA CRUZ, CA 95060
APN: 006-493-27
1" = 10'-0" 1 SITE 1/4" = 1'-0" 2 PARKING SPACES
REVISION SCHEDULE
REV. NO. DATE
1 2023-10-19
25.31 TRUE PROJECT
109
106
1 2 3 4 5 6
12 11 10
101
8 7
102
15 107
16 55' - 8 3/4"
50' - 4 1/8"
5' - 2 3/4" 5' - 10" 9' - 5 5/8" 5' - 1 1/2" 16' - 11 3/4" 4' - 0 1/2" 8' - 6 3/4" 9' - 1 1/2" 7' - 3 3/8" 3' - 4 1/2"
8' - 2 1/2"
5' - 0 5/8"
38' - 0 3/8"
10' - 6 7/8"
8' - 9"
2' - 9 1/4"
103
108
105
104
RETAIL / KITCHEN 1
1749 SF
BATH 1
50 SF STORAGE 1 354 SF
STORAGE 2
48 SF
WALK-IN REFRIGERATOR
1749 SF
RETAIL / KITCHEN 2
126 SF
STORAGE 3
25 SF
STORAGE 4
74 SF
BATH 2
41 SF
100
1 EXISTINGDEMOLISHNEW
WALL LEGEND
COPYRIGHT 2023, WILLIAM FISHER ARCHITECTURE, INC.
AI N
OFI A L
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10/31/25
RENEWS ON
C
Licensed
Architect
William Fisher
C−11008
F
ET
A
T
O
S
William Fisher Architecture, Inc.
303 POTRERO ST., BLDG 42, SUITE 102
SANTA CRUZ, CALIFORNIA 95060
(831) 246-0117
[email protected]
MODERN-ARCHITECTURE.COM
MAILING ADDRESS:
P.O. BOX 8
SANTA CRUZ, CA 95063
THE HOOK - SANTA CRUZ
A101
Issue Date
EXISTING & DEMO FLOOR PLAN
THE HOOK - SANTA CRUZ
BRYCE BERRYESSA
1129 MISSION STREET
SANTA CRUZ, CA 95060
APN: 006-493-27
1/4" = 1'-0" 1 LEVEL 1 - EXISTING & DEMO
REVISION SCHEDULE
REV. NO. DATE
1 2023-10-19
25.32 55' - 8 3/4"
(E) COMMERCIAL KITCHEN TO REMAIN
(N) CANNABIS RETAIL /
DISPENSARY
KITCHEN ENTRANCE / EXIT
DISPENSARY ENTRANCE
DISPENSARY EXIT
TRUE PROJECT
3' - 8" MIN 3' - 8" MIN
RETAIL SALES AREA
RETAIL DISPLAY AREA
3' - 0" 6' - 0"
ADA COUNTER REGISTERS 1 - 4
(RESTRICTED ACCESS AREA)
CUSTOMER SALES
(LIMITED ACCESS AREA)
STORAGESTORAGE
106
1 2 3 4 5 6
12 11 10
101
8 7
102
15 107
16 112
113
103
105
50' - 4 1/8"
27' - 3 5/8" 16' - 11 3/4" 4' - 0 1/2"
26' - 1"
35' - 7" 11' - 4 1/4" 2' - 0 5/8"
18' - 3 1/4" 8' - 2 1/2" 33' - 1 5/8"
6' - 0" 3' - 0"
235 SF
INVENTORY &
CANNABIS
WASTE STORAGE
50 SF
BATH 1
65 SF
RECORD
STORAGE &
VIDEO
SURVEILLANCE
590 SF
KITCHEN
41 SF
BATH 2
86 SF
ADMINISTRATION
OFFICE
48 SF
STORAGE 2
64 SF
BREAK ROOM
1010 SF
RETAIL 1
25 SF
STORAGE 3
74 SF
STORAGE 4
179 SF
WALK-IN
REFRIGERATOR
110
(LIMITED ACCESS AREA)
111
114
4' - 11 1/4"
10' - 0"
115
10' - 2 3/8"
VENDOR
ENTRANCE
112 SF
LOADING &
UNLOADING
47 SF
HALL
917 SF
DECK
(NOT IN SCOPE)
100
11 18"
60" 48" 109
1 DERO ULTRA SPACE SAVER SINGLE BIKE RACK(N) CLASS 1 BIKE PARKING SPACE 1 VACANT, NO CURRENT TENANT. ANY CHANGE IN
OCCUPANCY WILL RESULT IN A SEPARATE
FUTURE ADMINISTRATIVE USE PERMIT
APPLICATION.
1 EXISTINGDEMOLISHNEW
WALL LEGEND
TYPE ASWING DOORINTERIOR OR EXTERIOR SOLID COREPAINTED WOODFLAT SLAB
DOOR LEGEND
TYPE BSWING DOOREXTERIORFIRE RATED
ANTI THEFT
TYPE CSLIDING FREEZER DOORINTERIOR SOLID COREPAINTED WOODFLAT SLAB COPYRIGHT 2023, WILLIAM FISHER ARCHITECTURE, INC.
AI N
OFI A L
R
10/31/25
RENEWS ON
C
Licensed
Architect
William Fisher
C−11008
F
ET
A
T
O
S
William Fisher Architecture, Inc.
303 POTRERO ST., BLDG 42, SUITE 102
SANTA CRUZ, CALIFORNIA 95060
(831) 246-0117
[email protected]
MODERN-ARCHITECTURE.COM
MAILING ADDRESS:
P.O. BOX 8
SANTA CRUZ, CA 95063
THE HOOK - SANTA CRUZ
A102
Issue Date
PROPOSED FLOOR PLAN
THE HOOK - SANTA CRUZ
BRYCE BERRYESSA
1129 MISSION STREET
SANTA CRUZ, CA 95060
APN: 006-493-27
1/4" = 1'-0" 1 LEVEL 1 - PROPOSED
NEW DOOR SCHEDULE
MARK TYPE WIDTH HEIGHT COMMENTS
109 A 3' - 0" 6' - 8" CHANGE DOOR SWING
110 B 3' - 0" 6' - 8"111 A 3' - 0" 7' - 0" STEEL DOOR W/ BOLT OR KEYPAD LOCK112 A 3' - 0" 7' - 0"113 A 3' - 0" 7' - 0" STEEL DOOR W/ BOLT OR KEYPAD LOCK114 A 3' - 0" 7' - 0" STEEL DOOR W/ BOLT OR KEYPAD LOCK115 C 4' - 0" 7' - 0"
WINDOW & DOOR NOTES
ALL DOORS AND WINDOWS SHALL BE FORTIFIED AND LEVERED
WINDOWS SHALL BE REPLACED WITH SOLID WINDOWS THAT HAVE A SECURITY COATING TO PREVENT ILLEGAL ENTRY. 1 1
REVISION SCHEDULE
REV. NO. DATE
1 2023-10-19
25.33 KITCHEN ENTRANCE / EXIT
DISPENSARY ENTRANCEDISPENSARY EXIT
3' - 8"
RETAIL SALES AREA
RETAIL DISPLAY AREA
ADA COUNTER REGISTERS 1
-4
(RESTRICTED ACCESS AREA
CUSTOMER SALES
(LIMITED ACCESS AREA)
STORAGESTORAGE
(LIMITED ACCESS AREA)
VENDOR ENTRANCE
TRUE PROJECT
12 3
4 5
6 7 8
9 11 10
12 13
1415 16
17 18
19 20
21 235 SF
INVENTORY &
CANNABIS
WASTE STORAGE
50 SF
BATH 1
65 SF
RECORD
STORAGE &
VIDEO
SURVEILLANCE
179 SF
WALK-IN
REFRIGERATOR
590 SF
KITCHEN
41 SF
BATH 2
86 SF
ADMINISTRATION
OFFICE
48 SF
STORAGE 2 64 SF
BREAK ROOM
1010 SF
RETAIL 1
25 SF
STORAGE 3
74 SF
STORAGE 4
P
M
P
M
P
M
FE
FE
FE
112 SF
LOADING &
UNLOADING
47 SF
HALL
106
101
102
107
112
113
103
105
110
111
114
115
100
109
##
SECURITY CAMERA & ALARM360 DEGREE SECURITY CAMERA
SECURITY KEY
MPFE
MOTION SENSORPANIC BUTTON FIRE EXTINGUISHER
1. SECURITY ALARMS FOR THE BUILDING SHALL INCLUDE MOTION ACTIVATION AND MANUAL ACTIVATION CAPABILITIES.
2. EXTERIOR SECURITY LIGHTS SHALL PROVIDE 360-DEGREE COVERAGE AROUND THE PERIMETER OF BUILDING.
3. EXTERIOR SECURITY CAMERAS SHALL HAVE A MINIMUM RESOLUTION OF 1280 X 720 PIXELS PROVIDE 360-DEGREE COVERAGE AROUND THE PERIMETER OF ALL EGRESS AND INGRESS INTO THE BUILDING. 4. THE SECURITY CAMERA SYSTEM SHALL HAVE THE CAPABILITY TO PROVIDE THE RECORDINGS TO POLICE WITHIN 24 HOURS AND RETAIN VIDEO FOR A MINIMUM OF 90 DAYS. 5. INTERIOR CAMERAS SHALL COVER THE DOORS, WINDOWS, AND THE SALES COUNTER AREA OF THE BUSINESS (IF THERE ARE ANY SALES ON SITE).6. DOORS LEADING INTO THE STORAGE ROOMS MUST BE STEEL AND HAVE ABOLT LOCK OR KEYPAD LOCK. SEE DOOR SCHEDULE/A102. 7. ALL DOORS AND WINDOWS SHALL BE FORTIFIED AND LEVERED WINDOWS REPLACED WITH SOLID WINDOWS THAT HAVE A SECURITY COATING TO PREVENT ILLEGAL ENTRY; AND ALL SECURITY PROCEDURES AND SYSTEMS SHALL BE REVIEWED AND APPROVED BY THE POLICE DEPARTMENT.
SECURITY NOTES
1 COPYRIGHT 2023, WILLIAM FISHER ARCHITECTURE, INC.
AI N
OFI A L
R
10/31/25
RENEWS ON
C
Licensed
Architect
William Fisher
C−11008
F
ET
A
T
O
S
William Fisher Architecture, Inc.
303 POTRERO ST., BLDG 42, SUITE 102
SANTA CRUZ, CALIFORNIA 95060
(831) 246-0117
[email protected]
MODERN-ARCHITECTURE.COM
MAILING ADDRESS:
P.O. BOX 8
SANTA CRUZ, CA 95063
THE HOOK - SANTA CRUZ
A103
Issue Date
SECURITY PLAN
THE HOOK - SANTA CRUZ
BRYCE BERRYESSA
1129 MISSION STREET
SANTA CRUZ, CA 95060
APN: 006-493-27
1/4" = 1'-0" 1 LEVEL 1 - SECURITY
REVISION SCHEDULE
REV. NO. DATE
25.34 #6 Operations Narrative
The Hook Santa Cruz
The Hook Santa Cruz (THSC) will operate Monday through Sunday from 9am to 9pm. THSC will employ up to 10 individuals total on-site. THSC anticipates up to 3 commercial vehicles entering and exiting the site per day. Deliveries will only occur 8:30 AM to 3 PM Monday through Friday.
THSC anticipates the type of commercial vehicles to be delivery vans not to exceed 20 feet in length.
The Hook Santa Cruz does not anticipate any potential nuisance features such as nature and extent of noise, smoke, dust, fumes, and other such features generated by the use and types of controls proposed.
THSC uses standard non-toxic cleaning chemicals to ensure guest and employee health and safety it’s other two locations are Monterey County-certified green businesses. This location will apply for and obtain green business certification as well.
THSC does not use any corrosives, gases or chemical agents which will be used at the site.
THSC does not anticipate having regular live entertainment, if permitted by the city and or zoning and THSC would like to have an event with live music, THSC will contact the city for permission/permits and guidelines.
THSC will not have Alcohol served, sold or consumed on the premises.
Items #7- #8
The Hook Santa Cruz
7. The Hook Santa Cruz is not a Food Service Facility, the Wastewater Discharge Questionnaire is not applicable to this operation.
8. The Hook Santa Cruz is not a Community and Day Care Facilities, submit the number and ages of children or adults to be served. Not applicable to this operation.
25.35 13. Cannabis Retail Sales. Cannabis retail sales, including both medical (medicinal) and adult use (recreational) cannabis, for-profit or nonprofit, are allowed in Community Commercial (CC), Thoroughfare Commercial (C-T), General Industrial (I-G), and General Industrial Performance (IG/PER-2) Districts with approval of an administrative use permit and city cannabis retailer license per Chapter 6.91, and the obtaining of a state cannabis retailer or nonprofit license. Cultivation, manufacturing, and distribution functions of cannabis businesses holding state microbusiness licenses are allowed in General Industrial (I-G) and General Industrial Performance (IG/PER-2) Districts only with an administrative use permit. Retail sales for cannabis businesses holding state microbusiness licenses shall follow all zoning district use and locational criteria and shall obtain both an administrative use permit and a city cannabis retailer license.
The Hook Santa Cruz has begun the process of obtaining a state retailer license and upon issuance of the required city permits and licenses and the issuance of the required CEQA/Staff Resolution and any other required local authorization The Hook Santa Cruz will complete the application for a state retailer license.
14. Cannabis retail sales facilities, including nonprofit and microbusiness, shall not be located within six hundred feet, as measured from the property lines, from any school providing instruction in kindergarten or any grades one through twelve, day care center, or youth center (as defined in the state of California Health and Safety Code Section 11353.1) that is in existence at the time the state license for the facility is issued. In addition, no new retail sales facility, including a business holding a nonprofit or state microbusiness license, shall be located within six hundred feet from an existing cannabis retail sales facility.
The proposed facility is not located within six hundred feet, as measured from the property lines, from any school providing instruction in kindergarten or any grades one through twelve, day care center, or youth center.
The proposed facility is not located within six hundred feet from an existing cannabis retail sales Facility.
15. Cannabis Retail Sales. Cannabis retail sales, including both medical (medicinal) and adult use (recreational) cannabis, for-profit or nonprofit, are allowed in Community Commercial (CC), Thoroughfare Commercial (C-T), General Industrial (I-G), and General Industrial Performance (IG/PER-2) Districts with approval of an administrative use permit and city cannabis retailer license per Chapter 6.91, and the obtaining of a state cannabis retailer or nonprofit license. Cultivation, manufacturing, and distribution functions of cannabis businesses holding state microbusiness licenses are allowed in General Industrial (I-G) and General Industrial Performance (IG/PER-2) Districts only with an administrative use permit. Retail sales for cannabis businesses holding state microbusiness licenses shall follow all zoning district use and locational criteria and shall obtain both an administrative use permit and a city cannabis retailer license.
The Hook Santa Cruz proposed location meets the zoning criteria listed in the ordinance. The
25.36 Hook Santa Cruz will apply for any and all use or administrative permits, licenses required at the city and state level. The Hook Santa Cruz will not begin retail sales until all applicable permits, licenses have been issued.
16. PERFORMANCE STANDARDS
Commercial cannabis businesses, once permitted, shall meet the following operating procedures and performance standards for the duration of the use:
1. The business shall meet all the operating criteria, including security procedures, for the cultivation, distribution and warehousing, manufacturing, testing, and retail sales of cannabis and cannabis products as may be required by the state of California, the Santa Cruz city council and police department, and/or the county health department or their Designee.
The Hook Santa Cruz will meet all operating criteria for retail sales of cannabis and cannabis products as may be required by the state of California, the Santa Cruz city council and police department, and/or the county health department or their designee.
2. No product shall be smoked, ingested, or otherwise consumed on the premises.
The Hook Santa Cruz prohibits and will enforce our company policy that no products will be smoked, ingested, or otherwise consumed on the premises.
3. The hours of operation shall be limited to no more than 7:00 a.m. to 10:00 p.m., dependent upon the specific site characteristics and conditions of approval of the administrative use permit issued for the site. All cannabis retailer businesses holding an administrative use permit prior to October 13, 2020, are allowed to operate and be open to the public until 10:00 p.m. despite the operating hours stated in their original administrative use permit conditions of approval that limit the business to an earlier closure. In general, no cannabis retail business shall open earlier or close later than the other businesses in the vicinity.
The Hook Santa Cruz anticipates hours of operation to be 9am to 9pm Monday through Friday.
At no time will The Hook Santa Cruz operate outside the 7:00 a.m. to 10:00 p.m.
4. The business shall prevent loitering by persons outside the establishment, either on the premises or within fifty feet of the premises.
The Hook Santa Cruz will prevent loitering by persons outside the establishment, either on the premises or within fifty feet of the premises. The Hook Santa Cruz security team, management and employees are trained to spot, report and resolve and nuisances including loitering.
5. A cannabis retail business shall provide litter removal services each day of operation on and in front of the premises and, if necessary, on public sidewalks within fifty feet of the premises.
25.37 The Hook Santa Cruz will provide litter removal services each day of operation on and in front of the premises and, if necessary, on public sidewalks within fifty feet of the premises. The Hook Santa Cruz security team, management and employees are trained to spot, report and resolve any litter or debris issues daily.
6. Cannabis businesses shall contain an air filtration system to regulate odor.
The Hook Santa Cruz utilizes an air filtration system and employs an odor management plan.
The Hook Santa Cruz security team, management and employees are trained to spot, report and resolve any odor management issues, including regular maintenance of filtration systems. a. Odor Control
The business has a full and robust odor control policy. As of 2018, no cannabis products come into the facility that is not already packaged in state-approved opaque child-resistant packaging. This change in regulations has virtually eliminated all issues of cannabis odors at dispensary facilities, as no cannabis is opened, packaged, consumed, or otherwise available not in pre-packaged form onsite.
The business will install and maintain, and use REME hydro ionization systems to eliminate odors occurring in and leaving the Property. Such systems shall be independently tested, and the business shall take all necessary steps to prevent odors from leaving the property.
If an odor issue is discovered or reported all other areas that are exposed to product odor or where there is a potential for product exposure shall meet the following:
· Air intake/supply intake air shall have proper filtration. This shall eliminate odors and/or contaminants from escaping outside.
· All air exhaust shall go through a listed specifically impregnated carbon filter for odor removal.
· Corridors and hallways or any room considered non-odorous may not be used as part of odorous room ventilation design unless AHJ determines that air may not migrate or diffuse from an odorous area to a non-odorous area.
· If rooftop units provide both air conditioning and outside air, the discharge side of the RTU shall be equipped with the listed carbon filter impregnated specifically for odor removal.
REME®
(Reflective-Electromagnetic-Energy) is an advanced Indoor Air Quality (IAQ) technology developed by RGF Environmental Group to minimize and neutralize indoor air pollutants such as bacteria, viruses, mold, gases (VOCs) particulate, allergens and odors. The REMEHALO® utilizes a patented Photohydroionization® (PHI-CELL®) along with an automatic, self-cleaning ion generator designed to reduce airborne particulate by coagulating ultrafine airborne particles making them easier for filters to remove. The PHI-CELL® utilizes a broad-spectrum, high intensity UV light targeted on a hydrated quad-metallic catalyst. The UV light in conjunction with the catalyst promotes the conversion of naturally occurring water vapor into airborne molecules of hydrogen peroxide (H2O2). These airborne H2O2 molecules revert to oxygen and hydrogen once they have come in contact with a pollutant.
25.38 The combination of the Photohydroionization® and ionization in the REME-HALO® provides the most advanced means for inactivating all types of air and surface microbial hazards and reducing airborne particulates, including allergens and Volatile Organic Compounds (VOC’s).
Safety
It is a normal reaction to question the long-term safety of any product that is effective and uses new or ‘breakthrough’ technology. This type of question has become common with the growing demand for safe, effective, and reliable indoor air quality devices. Hydrogen peroxide naturally occurs in the air and was originally discovered in the early 1800s during experiments to “decompose” air. Additionally, it has been shown to be produced naturally via photochemical, chemical, and biological processes(1). Over the past 20 plus years, RGF has more than four million advanced IAQ products successfully used worldwide without a safety problem. The breakthrough in RGF’s PHI-CELL® advanced IAQ technology is the controlled creation of hydrogen peroxide. Hydrogen peroxide is created in our atmosphere whenever three components are present: Oxygen molecules, water vapor, and energy (sunlight photochemical). Low level, airborne hydrogen peroxide is highly effective at destroying harmful microbials in the air and on surfaces. The PHI-CELL® advanced IAQ technology found in RGF’s Guardian Air, REME-HALO® and HALO-LED™ product families has brought natures antimicrobials found in the outside air back into the conditioned space of your home or business. 1. European Union, Risk Assessment Report, CAS No: 7722-84-1
25.39 25.40
7. All exhaust fans directing air outside shall be secured to prevent forced entry to the Facility.
The Hook Santa Cruz will ensure all exhaust fans (if any) directing air outside will be secured to prevent forced entry to the facility.
25.41 17. SECURITY. The business shall provide adequate security on the premises to ensure the safety of persons and to protect the premises from theft. All security shall, at a minimum, meet the requirements of state law for cannabis businesses as well as any additional requirements included as conditions of approval for the site use permit. Minimum city security requirements include:
The Hook Santa Cruz will provide adequate security on the premises to ensure the safety of persons and to protect the premises from theft. The Hook Santa Cruz security will meet the requirements of state law for cannabis businesses as well as any additional requirements included as conditions of approval for the site use permit.
25.42 CONFIDENTIAL DOCUMENT
Updated 08//26/2023
The Hook Santa Cruz City
CANNABIS DISPENSARY
SECURITY PLAN V2
25.43 CONFIDENTIAL DOCUMENT
I. INTRODUCTION..………………………………………...……………………………………….…....... 3 II. PHYSICAL BUILDING……………………………………………….…………………….……….......... 4 1. Location & Building Specifications……………………………………………………......................... 4 2. Gates, Fencing, & Odor Control…………………………………………………….………….............. 5 3. Camera & Alarm Systems……………………………………………………………………………….. 6 4. Lighting & Posted Notices….……………………………………............................................................. 6 5. Doors, Walls, Windows, & Roof Tops……………..………………………………................................ 7 6. Security Guards………………..………………………….…………………………………….….......... 8 7. Limited Cash Operations & Business Hours………………………………………………………………. 9 8. Staff & Non-Staff Access Control……………………………………………………………………..….. 9 9. Non Patient & Patient Access…………………………..………………………….……………………… 10 III. ELECTRONIC SECURITY SYSTEM.................................................................................................... 11 1. Panic Buttons, Card Reader, ID Badges…………………………………………………….…………. 11 2. Video Surveillance, Alarm Testing, Biometric Systems…………………………………………......... 12 3. Guard Tour & Third Party Monitoring……………………………………………….……………….… 13 4. Burglar Alarm Systems, Equipment Maintenance & Testing………………………………….............. 14 5. Hazardous Materials & Fire Safety……………………………………………………………………… 15 IV.
POLICES AND PROCEDURES FOR FACILITY……………................................................................ 16 25.44
1. Personal & Training
Records………………………………….…………………….........…………...16-18
2. Incident Management & Emergency Response……………….…………………….........…………...... 19 2. Outside Partnerships….…..………………………………………………………………………........... 19 3. Closing Procedures………….……………………………………………………………………........... 19 4. Preventing Theft & Non-Diversion…….………………………………………………………….......... 20 5. Preventing On-Site Consumption…………………………………………………………………......... 20 6. Incident Log………………………………………………………………………………………........... 20 7. Ingress / Egress / Access..….……………………………………………………………………............ 21 8. Suspicious Activity, Visitors, & Loitering………………………………………………………........... 22 9. Weapons & Development Agreement………………….……………………………………………….. 22 V.
OPERATIONS SECURITY..................................................................................................................... 22 1. Staffing………………………........…………………………………………………………………....... 22 2. Background Checks……………………………………………………………………………………… 23 3. Packaging Security………………………………………………………………………………………. 23 4. Training Drills…………….…………………………………………………………………….............. 23 5. Sales, Tracking, Storage, Visibility……………………………………………………………………... 24 6. Disposal of Unused or Surplus Cannabis……………………………………………….......... 24
7. Record Keeping…………………………………………………………………………………………..
24 8. Vehicle – Employee – Public Safety.……………………………………………………………….… 25-27
9. Information System Security………………………………….……………………………….............. 27 25.45
SECURITY PLAN
This is the written Security Plan for The Hook Santa Cruz City. This plan addresses and meets the requirements of the State of California & Santa Cruz City Program Rules & Regulations.
INTRODUCTION
The Hook understands all private business sectors are now faced with the challenges of protecting their employees from harm and their assets from vandalism, theft, and external threats never before addressed. Multilevel applications of Management, Supervision, Training and the latest technological innovations of the electronic industry have changed Physical Security. This includes personnel, documents, keys, computer discs, lighting, fencing, protective barriers, structures, safety, closed-circuit television (CCTV) monitoring, electronic eavesdropping, entry systems, and numerous others.
Protection and Prevention programs designed to address these challenges have three (3) basic components:
physical security, prevention, and detection. A successful Protection & Prevention program integrates each of these components and coordinates them across organizational lines within the company. Since security faces threats from external and internal sources, a business must coordinate its security efforts with service providers and purveyors who have expertise in these fields. We have taken extensive measures to have professionally vetted policies, procedures, and systems in place to provide comprehensive protection, for our employees, patients and the public at large, not only for our physical plant and inventory, but also for our employees, vendors, and customers. Our security policies and practices will meet and/or exceed Santa Cruz City requirements and the state of California set forth.
We have retained Uretsky Security PPO #16659 as the licensed security company in charge of security consulting. Uretsky Security has been providing fully licensed, trained, and professional security throughout Monterey County for 17 years. Uretsky Security was founded by Bill Uretsky, who retired as a Lieutenant from the Carmel Police Department after more than 26 years in law enforcement.
As the “Security Liaison”, Bill Uretsky will have oversight responsibility and serve as a liaison with the executive staff, board, and law enforcement. In addition, Bill Uretsky will have oversight responsibility to review and update the plan on a regular basis (at intervals not to exceed one year) to ensure our continued compliance with all applicable Cannabis laws and ordinances as they apply to the State of California and Santa Cruz City. With the leadership of our Security Agent, we have developed a state-of-the-art plan that takes advantage of the security industry’s best practices and most up-to-date technology, ensuring that our facility operates at the highest level of security preparedness.
In addition to contracting with Uretsky Security, we will also have at all times one or more designated Managers as a “Security Liaison” to work with Uretsky Security and Santa Cruz City. Currently, the Security Liaison will be our COO David Volkland until a suitable manager will take over the position.
If, and As Necessary, The Hook and Bill Uretsky will reach out and work with Santa Cruz City and all other appropriate law enforcement and city officials to enlist their input and cooperation in the development of our security procedures. The goal is for our plan to meet or exceed current standards for securing these types of facilities.
Our Security Plan is divided into three components: Facility Security, Policies & Procedures, and Operations Security. The preventive measures adopted in these components will minimize our security exposure, protecting
25.46 the public, our patients, and our staff. We are confident that should there be any breach of security, our comprehensive response capabilities will ensure the incident is quickly detected, contained, and resolved at the appropriate response level.
FACILITY SECURITY
The security at the facility is designed to reduce the likelihood of security breaches and to trigger an immediate response in the event of a breach. In addition, it is designed to control access to the facility, limiting it to authorized and properly identified personnel.
25.47 The perimeter of the Facility will be secured to prevent unauthorized intrusion using the following critical elements: security guards and electronic surveillance (round-the-clock camera surveillance and electronic intrusion detection as well as a manned security guard(s) during all operating hours).
Upon receiving a permit from Santa Cruz City the following security measures have been implemented, and any additional security requirements not listed below can be added as additional security measures as seen fit by Santa Cruz City City Police Department or the Santa Cruz Sheriff’s Department and the Bureau of Cannabis Control. The internal plan of the facility has the following configurations:
1. Location and Building Specifications
1129 Mission St. Santa Cruz CA 95060
The property is located at 1129 Mission St, Santa Cruz, CA, which is located in a predominately Commercial / mixed use area. The building on the property will be split into two designated commercial spaces. One space is a 910 square-foot commercial kitchen, the second space will be converted to a cannabis retail dispensary. The two suites have separate entrances and exits, and no commonly shared areas. There is only one entrance and exit into the parking lot, which contains 14 parking spaces located on one side and to the front of the property. There are two types of fencing currently surrounding the property. The property is not near any schools, or places of worship. There is only one entrance/exit into the property, which is located off of Mission and Laurel Streets.
1129 Mission St, formerly Emily’s Bakery which is 2634 square feet of which 1724 square feet will be converted into a secured cannabis retail dispensary. The back entrance is the staff/vendor entrance, loading and unloading, and inventory storage. The primary entrance and exit will be for public use. The entrance will be monitored by security staff and the general public will be allowed into the retail sales area only after verifying a government-issued ID. The general public will enter the sales display area, where all displayed merchandise will be secured behind glass displays. The general public will leave the retail display area and proceed to the sales counter where they will be helped by staff who will transact the sale and provide purchased products to customers. No products are available for the general public to handle. 1129 Mission St. contains 3 front entrance points: 1: A standard entryway that opens into the retail display floor. 2: A standard exit that enters the front parking lot once customers have transacted a sale. 3: The primary entrance for the commercial kitchen and other suites on site. Laurel St side has a solid steel door for vendor and staff entrance. There are skylights and exterior windows that would allow for unauthorized entry. Highsecurity steel locking gates and/or security film and bars are installed on the facility's interior over all glass windows and points of entry into the building.
Areas where cannabis will be stored have no windows, secondary locked containment, secured access, and 24/7 video surveillance and can be accessed only from within the facility.
The internal plan of the facility has the following configurations:
● Areas, where cannabis will be stored shall not be visible from the exterior, any windows or glass will have internal security bars, and exterior access points will be secured internally with high-security internal locking gates, as well as commercial locks and antitheft rails to prevent unauthorized entry. All access points will have breach, fire, and motion alarm monitoring through Verkada Command. All points
25.48 of the facility shall have secured access and 24/7 video surveillance as well as live remote monitoring during closed hours.
● The inventory Room is in the inner permitter of a limited access area of the rear of the building. Access to the inventory area will have commercial grade steel doors with high-security locks that shall remain locked during all non-operational hours. Additional internal gates will also be installed and locked to prevent unauthorized entry during non-open hours. The inventory area is not accessible to general public.
The inventory storage area will be kept itemized, and organized, and have a reinforced storage and secondary containment system as per local regulations installed. ● Exterior Entry into the facility has reinforced doors with security plates and security locks. All exterior entrance points are reinforced internally with high-security internal locking gates by Labyrinth Security Corp. Gates are to be locked with commercial grade locks during all off-hours and prevent unauthorized access or the ability for cars to drive through main entrances into the office and facility. ● All main access point door hinges will be equipped with commercial-grade high-security locks (Schlage) to increase security. This configuration yields optimal conditions for surveillance. These design elements make unauthorized access extremely unlikely; they will also discourage any theft attempts. ● Security Doors: safe room, vendor intake, breakroom, and office entrances have been equipped with an interior coded lock prior to entry into the main facility. ● Security Cameras: Verkada cameras are installed on the exterior of all buildings, entrances, and in every room where cannabis is located as well as in all offices and conference rooms. The cameras are compliant with current CA state regulations and Santa Cruz City requirements and utilize a hybrid solid-state drive and cloud recording capabilities to guarantee uninterrupted recording. Santa Cruz City Police Department will have remote viewing capabilities of the camera system available at all times through the Verkada Command platform. This platform will allow management and city officials the ability to monitor, review, and obtain actionable insights in real-time. External cameras will include a license plate reader that monitors all traffic into the parking lot and a dome zoom cameras that can be controlled remotely. ● Alarm System: All Verkada cameras are equipped with motion sensors that activate upon arming the alarm system. Additional Motion sensors will be placed within key areas of the interior and are linked to a cell back up in the event, the Internet goes down, or the camera system is disrupted this acts as a redundant system in times of emergency or outages. Upon detection of motion or vibration, an alert will be sent to the alarm company, as well as owners and executives of The Hook, and immediately to Santa Cruz City Police Department. Any motion detection will trigger processes for management to view the video for the area of motion to be shown via remote viewing on cell phones or tablets. If attempted intrusion or intrusion is detected, law enforcement will be notified immediately. The alarm company will also contact owners in event of an alarm breach and local law enforcement will be notified and immediately called to respond. The cameras, utilize artificial intelligence, and any visible threat detected immediately, is pushed to a live monitoring agent who has access to the cameras, and can assess and determine any threat levels and notify management or law-enforcement in real time immediately as issues are occurring.
● Windows: The facility has ground-level windows on all sides of the building. Ground-level windows will be covered with high-security gates equipped with commercial-grade high-security anti-intrusion, film, or bars where necessary. As per local regulations, the security systems will allow all points of ingress and egress to be able to be opened in case of emergency or fire during operational hours. There are skylights that would grant access to the premise from the rooftops these do not open, however, will be covered with an internal steel bar system to prevent unauthorized entry.
25.49 ● There are two double glass entry door and one exit door on the front north side of the building. Groundlevel access points will be covered with high-security gates equipped with commercial-grade highsecurity locks during off-hours. As per local regulations, the security systems will be able to be opened in case of emergency or fire during operational hours.
● The Hook Staff and security personnel will ensure that Santa Cruz City Cannabis Ordinances are followed, including enforcement on the following:
1. The sale, dispensing, or consumption of alcoholic beverages on or about the facility or in the parking lot area for the facility is prohibited.
2. Cannabis may not be inhaled, smoked, eaten, ingested, vaped, or otherwise used or consumed on the premises or in the parking areas of the premise.
3. Loitering by persons on the premise or within 100 feet of the premise is prohibited.
4. Properly removing and storing all trash, litter, rubbish, and debris on the premises at the
5. end of each business day;
6. Properly disposing of all trash, litter, rubbish, and debris from the premises;
7. Removing graffiti placed upon the premises within forty-eight (48) hours of its
8. occurrence;
9. Keeping driveways, sidewalks, park strips, and fire access roads on or adjacent to the premises clear and clean;
10. Providing lighting on the exterior premises to ensure the safety of the public and the employees of the cannabis business; and
11. Otherwise operating in a manner that does not create or result in any significant adverse impacts upon its premises or within three hundred feet of the premises and location. (4)
All fire suppression & detection systems will be regularly serviced and maintained and will be signed off on by local agencies as required.
A floor plan of the facility has been prepared that meets the requirements of 16 CCR § 5006 and details the following:
A: The boundaries of the property and the proposed location to be licensed, showing all boundaries, dimensions, entrances and exits, interior partitions, walls, rooms, windows, and doorways, and shall include a brief statement or description of the principal activity to be conducted therein.
B. All commercial cannabis activities that will take place in each area of the premises and identify all limited-access areas.
C. Identify where all cameras are located and assign a number to each camera for identification purposes.
D. The diagram should be accurate, dimensioned, and to-scale (minimum scale of 1/4”).
E. If the proposed location consists of only a portion of a property, the diagram must be labeled indicating which part of the property will be used for the licensed premise and what activities will be used for the remaining property.
25.50 2. Gates & Fencings
The security of the perimeter will be checked by guards daily. The perimeter of the building is secured by video surveillance and adequate outside security lighting. All debris near the fencing will be removed. The authorized staff has remote access to the security system at all times via smartphones computers and tablets.
Any anomalies or sensors will immediately notify principals via push and email notification. On site, security personnel is equipped with a tablet with camera access at all times while on duty. Alarm trigger during nonhours of operations immediately triggers a call first to the Santa Cruz City police department and then the principal employees at The Hook.
3. Odor Control
The business has a full and robust odor control policy. If needed, the business will install and maintain, and use PHI Cell hydro ionization systems to eliminate odors leaving the Property. Such systems shall be independently tested, and the business shall take all necessary further steps to prevent odors from leaving the property.
All other areas that are exposed to product odor or where there is a potential for product exposure shall meet the following:
• Air intake/supply intake air shall have proper filtration. This shall be used to eliminate odors and/or contaminants from escaping outside.
• All air exhaust shall go through a listed specifically impregnated carbon filter for odor removal. • Corridors and hallways or any room considered non-odorous may not be used as part of odorous room ventilation design unless it is determined by AHJ that air may not migrate or diffuse from odorous area to non-odorous area.
• If rooftop units are used to provide both air conditioning and outside air, the discharge side of the RTU shall be equipped with the listed carbon filter impregnated specifically for agricultural odor removal.
Full spec sheets and information can be found in Section 3 A-B of the neighborhood compatibly plan. 4: Cameras
Security Cameras: Cameras are installed on the exterior of all buildings, entrances, and in every room with public access or where cannabis is located. (See Video Surveillance listed on pages 11 - 15 for a complete description of the camera system). We utilize the security specialists at Verkada Security based in San Mateo and Security Camera Corporation for installation, support, sales, and consulting on placement, location, and technology types. All cameras placement, recording, and frames per second are in line with local and state regulations. We will utilize a license plate camera to track and record all vehicles entering the parking area. We will utilize a state-of-the-art zoom cameras lot to monitor all activities and entrances at the exterior of the building and provide real-time adjustment and monitoring. All cameras have solid-state drives and cloud backups and record in resolutions that exceed local and state requirements. Cameras have smart sensors and alerts that inform management of any issues, anomalies, or breaches.
5. Alarm Systems
Sensors are placed on all cameras in all rooms. Motion sensors with cellular backup will be installed to detect any intrusion in the event the Internet or the camera system goes down. Management is equipped with an app that allows access and monitoring of the alarm systems when armed. Verkada Alarm will provide alarm
25.51 system monitoring and will alert owners, management, and law enforcement in the case of any breach or anomalies. If an intrusion is detected, law enforcement will be notified immediately. (See Electronic Security Systems listed on pages 11 - 15 for a complete description of the proposed alarm system). We will be using Verkada Alarm for our remote alarm monitoring and servicing. In addition to permitter and interior alarms, there are 5panic buttons placed throughout the property and staff has been trained on their location and use.
Housed locations will be at the front desk, manager's office, inventory room, and order fulfillment.
6. Lighting
Statistics show that crimes are less likely to occur in well-lit areas because a well-lighted property is an excellent deterrent against criminals. Security lighting is one of the most practical and effective ways to prevent crime in or around commercial facilities. The main objectives of our security lighting system at the facility sites are to illuminate dark areas and detect and recognize movement in the protected area. The best vision with outdoor lighting is obtained from downward-directed and shielded security lighting that is constantly on, supplemented with instant-on lighting triggered by motion detectors to add brighter light.
Updated exterior lighting has been added throughout the property and in the parking lots, including high spotlights to the facility. The facility and all walkways of the facility will be well illuminated to maximize visibility. The exterior building lighting and parking area lighting are of sufficient foot candles and color rendition to allow for the identification of any individual committing a crime on-site at a distance of no less than 20 feet. Lighting will be operated automatically by a photo-sensor or timers, ensuring that lighting will at all times be optimal for video capture.
Exterior lighting on the Facility and parking area lighting for the Facility will be balanced and does not result in glare on adjoining properties, complements the security systems described above to ensure that all areas of the facility are visible, and provides increased lighting at all entrances to the Facility. Exterior lighting will be turned on from dusk to dawn.
We have established a maintenance program to ensure all lights are operational. Roving security guards will notify the designated maintenance coordinator immediately of non-operational lights. All lighting has been installed per Santa Cruz County and Santa Cruz City regulations.
7. Posted Notices
Posted notices stating The Hook Facilities Policy and requirements of Santa Cruz City Ordinances will be placed in the parking lot stating;
1. The sale, dispensing, or consumption of alcoholic beverages on or about the Cannabis facility or in the parking lot area for the facility is prohibited.
2. Cannabis or Cannabis products may not be inhaled, smoked, eaten, ingested, vaped, or otherwise used or consumed on the premises or in the parking areas of the premise.
3. No Smoking
4. Loitering by persons on the premise or within 100 feet of the premise is prohibited.
The following shall be posted in a conspicuous location inside the premises; “Both the sales of cannabis and the diversion of cannabis to persons under age twenty-one (21) are violations of state law unless that person is at least eighteen (18) years of age and has a valid physician’s cannabis recommendation. The use of cannabis may impair a person’s ability to operate a motor vehicle or heavy
25.52 machinery. Loitering at the location of a cannabis business for an illegal purpose is prohibited by California Penal Code Section 647(h). This cannabis business is registered in accordance with the laws of the The City of Santa Cruz City.”
This sign shall be posted in Both English and Spanish.
8. Doors / Walls / Windows / Roof Tops
Areas, where Cannabis and Cannabis products will be kept, will be fully secured and can be accessed only from within the facility.
All-access doors will be designed to ensure they have the capability to remain secure and operational during a power outage. All main access point door hinges will be equipped with hinge-pin-locking screws to increase security. This configuration yields optimal conditions for surveillance. These existing design elements will not only make unauthorized access extremely unlikely; they will also discourage any theft attempts. Security doors are equipped with high-security commercial locks and have a camera monitoring all entry and exits.
Exterior doors to the premises shall remain locked from the inside to prevent unauthorized ingress to the premises. Ingress shall be allowed by means of a remote release operated from within the premises of the cannabis business. In all cases, doors shall remain openable from the inside to allow egress without the use of a key or special knowledge.
Windows and roof hatches of the premises shall be secured from the inside with effective means so as to prevent unauthorized entry..
In addition, all customers are prescreened prior to entry to the sales floor and assisted him by a dedicated staff while in the facility.
All aluminum doors will be fitted with steel inserts at the lock receptacles. Panic exit hardware will be a “push-bar” design. Emergency exit doors will have latch guards at least 12 inches in length protecting the lock bolt. Latch guards will be a minimum of 0.125-inch thick steel, affixed to the exterior of the door with nonremovable bolts, and attached so as to cover the gap between the door and doorjambs for a minimum of 6 inches both above and below the area of the latch.
8. Security Guards / Identification
All security personnel will be thoroughly screened, trained, and staffed through Hook Security Services, to ensure they are of the highest capability. We will provide security guards licensed by the Bureau of Security & Investigative Services (BSIS). Each guard will have in their possession a guard card issued by the BSIS indicating they have completed their initial 40 hours of training and additional 20 hours of training each additional year.
All Security Personnel will register and maintain valid registration status with the state of California’s Department of Consumer Affairs. At no time will any Security Personnel register with the State at any level that is less than that of a proprietary private security officer. All relevant documentation (application forms, fee receipts, live-scan fess, and proof of registration) will be maintained by Hook Security Services.
Training will consist of:
1. Powers to Arrest 10. Preserving Incident Scene 19. Firearms Training
2. Weapons of Mass Destruction 11. Crowd Control 20. Baton Training
3. Public Relations 12. Driver Safety 21. Fire Safety
4. Observation & Documentation 13. Supervision 22. Evacuation Procedures
25.53 5. Communication 14. Radio / Telephone Procedures 23. Chemical Agents
6. Liability / Legal Aspects 15. Courtroom Demeanor 24. Traffic Control / Parking
7. Appearance 16. Equipment Removal 25. Bomb Threat
8. Disaster Planning 17. Work Place Violence 26. Sexual Harassment
9. Escorts 18. Identification Card Procedures 27. Storing Procedures Security personnel will perform and keep records of having performed routine regular inspections of all security systems, barriers, gates, doors, and locks, immediately reporting any malfunctioning or compromised security feature to the Security Agent. Any incidents qualifying as irregular or suspicious will be handled immediately.
Security Personnel will have a nameplate or laminate containing the Security Personnel’s full name and the word “SECURITY” printed in bold, capital letters. The nameplate or laminate will be exhibited prominently on the clothing, at chest level, and will be visible and easily read at all times. The nameplate or laminate will be a minimum of 2 inches high and 4 inches wide, with the required information printed in capital letters, at least 4 inches high, and in contrasting color. As an alternative to a nameplate or laminate, the Security Personnel’s name and the word "SECURITY" may be embroidered on the Security Personnel’s outermost garment with the required information meeting the above specifications and located at chest level.
Written Post Orders will be provided to security personnel to ensure all policies, procedures, and directives are followed. In addition, incident reports will be created to include a reporting protocol to identify when an official report is to be prepared, who receives the written report, the content of the report, a follow-up to the report to ensure all parties are aware of the incident, and feedback to ensure corrections were made.
LIMITED CASH OPERATION
Cash payments will be directly deposited into a drop slot safe, limiting the amount of cash circulating at the Facility. The money will be removed from the safe and counted daily in a secured room. Access to the Facility will be limited to employees during all safe transfers. Two employees are required to be present during this time. Security cameras will oversee this entire process to insure everything taking place is accountable. Only high-level staff will have access to the drop safe and all money counted shall be signed off by two employees.
All deposit amounts will be verified before and after deposits are made and tracked by the company controller.
Operational Security Solutions (OSS) will be our contracted armored guard service to come and handle all cash collection and deposit to bank accounts. Cash pick up will occur at a minimum weekly.
BUSINESS HOURS
Our days and hours of operation shall be in strict compliance with the Santa Cruz City requirements and restrictions. The portion of premises where cannabis products are displayed, contained, or sold will not be open to the general public and only permitted registered directors, officers, members, incorporators, agents, managers, employees, patients, checked consumers over the age of 21, government or law enforcement officials will be allowed in the restricted areas of premises or areas of premises that contain cannabis.
We propose to operate between 9:00 am – 9:00 pm, Monday - Sunday. Unless otherwise restricted by the Santa Cruz City.
25.54 ACCESS CONDITIONS FOR STAFF & NON-STAFF BUSINESS ASSOCIATES All staff and business associates will park in dedicated parking spots. The facility personnel will use the vendor entrance to access the facility. All staff is required to use high-security keys to access the facility during offhours, including restricted areas within the facility such as record storage, inventory, or security monitoring areas at all times. Only designated staff will have access ability during non-operational hours.
The staff here refers to anyone defined by Santa Cruz City as a principal officer, board member, or employee.
Non-staff business associates are all those, such as vendors and contractors who do business with our Company but are not company agents. The Facility includes parking spaces inside the secured perimeter for deliveries. All Facility staff personnel will have a company-issued permanent photo identification card worn on a breakaway style lanyard at chest height at all times while on the clock, or In addition they will display their employee identification cards at all times. Staff will receive these upon hire. The badges will be the means to access areas of the Cannabis facility where public access is not permitted.
In addition, While engaged in the duties of his or her position for the cannabis business, but not at the cannabis business’ premises, each owner, manager, and employee shall at all times have in his or her possession a valid identification badge, issued by the Chief of Police, or his or her designee, and containing such information, including a suitable photograph, as the Chief of Police, or his or her designee, may require, and upon request by the Chief of Police, or his or her designee, or any other City official charged with enforcing the provisions of these regulations, or any state official charged with enforcing state law pertaining to commercial cannabis activity. No owner, manager, or employee shall engage in any activities on behalf of the cannabis business without first obtaining a valid identification badge. Identification badges shall expire one year after issuance.
Identification badges shall remain at the cannabis business’ premises when not in use. Owners, managers, and employees shall not take identification badges home or off-premises, except in the case of traveling offpremises on official business of the cannabis business, including delivery of cannabis or cannabis products.
All employees shall produce such valid identification badges for inspection.
To access restricted areas of the Facility, non-staff business associates will need a temporary identification tag.
Once the reason for their visit is confirmed, non-staff associates will receive temporary identification tags at the reception window before being allowed to enter the facility. Such a visitor must be accompanied by a staff member at all times. We will require that ID cards and tags be visibly worn by all staff and non-staff at all times within the facility. We also keep a visitor log for any vendors or contractors that have received escorted access to restricted areas. Records of this log will be kept for 7 years.
INTERNAL ACCESS-POINT CONTROL
Movement within each area of the facility will be tightly controlled. All main access doors leading into the facility will be equipped with keypad locks. Only permitted employees will be allowed to enter any areas of the facilities with restricted access. All access is limited by high-security keys, and/or passcodes. All systems will be checked once a week to ensure they are in working order. Any lost or stolen keys will be reported to the Security Manager immediately. Only certain staff will have access to all areas of the facility - these would include the General Manager, CEO, and Inventory Specialist. All activity of staff is tracked via the camera system.
PUBLIC ACCESS
25.55 The property identified will have ample parking and a loading zone and a door with a separate entrance for all vendors. The property has 14 designated parking spots including one ADA spot for customers..
Persons other than management, employees, volunteers, vendors, and contractors, may from time to time have legitimate reasons to visit our facility. These include:
● Law enforcement,
● Political officials and government administrators,
● Medical, health, and social service professionals, and ● The media.
Besides dispensary agents, no one other than law enforcement, county, and state officials, may enter the restricted areas of our facility unless their visit has been approved by management, they have been issued and are wearing a temporary facility identification tag authorizing their entry into restricted areas, and they are accompanied at all times by a staff member who has been specifically authorized to bring them into accessrestricted areas.
The entryway to the facility and Cannabis area will be staffed at all times and monitored by management or security, via tablets or remote viewing. This person will check in and allow access into the dispensing area only after proper screening, age verification, and Identification scanning, and the staff in the dispensing areas are ready. Staff may assist customers and patients on the display floor. All orders will be transacted at the sales counter. All live inventory will be kept in a limited access area behind the sales counter. All displayed inventory is kept behind glass and inaccessible to customers. Patients and customers will be monitored by staff and under camera surveillance at all times while on the retail display floor. When patients and customers are ready to purchase products they will approach the sales counter and be provided with products after payment has been received and order inventory verified. All cash payments and receiving of products shall happen at the sales order or express pick-up area separate from the dispensing floor. Individuals will be directed to the area where the Cannabis can be picked up and paid for. Signs will be posted to ensure the flow of traffic, alert the public of restricted areas, and identify exits and proper flow of the sales floor. There will be a guard on-site at the main entrance to greet and lead patients and customers into the facility, verify age and identification, and control all access into the facility.
ELECTRONIC SECURITY SYSTEMS
We will install a comprehensive electronic security system with video surveillance/recording capability, third-party monitoring, intrusion detection, and panic buttons. The cameras will be remotely accessible to the Santa Cruz City Police Department and shall be compatible with their software and hardware. Remote feeds will be in real-time with live access to the video footage from the cameras.
The facility will be equipped with, and at all times monitored (24/7) by a web-based closed-circuit television (CCTV) for security purposes. All cameras will be state-of-the-art capable of allowing facial identification of anyone in or near the facility. All cameras will have infrared technology for low light conditions capable of identifying activity at night or in unlit rooms. External video surveillance will cover all areas of possible ingress and egress. Internal video surveillance will cover every room within the building where cannabis is located or stored. This covers all areas where Cannabis is present or handled and all means of access to such areas. Video surveillance will cover external and internal areas 24/7. An electrical backup will be provided by
25.56 an Uninterrupted Power Supply unit sufficient to supply a minimum of 30 minutes of backup power to our cameras and computers. We will have both on and off-site storage capacity, enabling us to store required timelines for local and state requirements of video surveillance recording. A failure notification system will provide both audible and visible notifications if there is any failure in the electronic monitoring system.
The recordings of the monitoring will be maintained for a period of not less than ninety (90) days and will be made available and accessible to the Sheriff or any other City or County official charged with enforcing the provisions of the Cannabis Ordinances. The recordings will be made available immediately upon request for review and copying without the need for a search warrant, subpoena, or court order. We will also provide the Sheriff with the URL address of any on-site web-based video surveillance to monitor remotely at any time without a warrant, subpoena, or court order. The Police Department will be notified 72 hours in advance of any planned security system maintenance that will result in any stoppage of the continuous recording.
1. Panic Buttons and Internal Communications
Panic Buttons are installed at the reception desk, inventory room, and sales counter at each register. If utilized, will automatically notify call authorized management and Verkada Alarm who will immediately notify the Santa Cruz City Police Department and Santa Cruz Sheriff's Department. We have one active phone line with multiple active telephone handsets with intercom capability: The business shall operate and maintain an on-site twenty-four-hour landline telephone number at the premises for receiving complaints and other inquiries regarding the cannabis business.
2. ID Badges
Customized Identification Badges issued by the appropriate law enforcement official will be provided to all employees prior to starting employment. Company badges will be provided to vendors, and visitors to ensure no unauthorized individuals gain entry into the facilities. These badges will contain the individual's name and photograph, which will be worn in plain sight on their person at chest level. Badges will expire one year after issuance and must be renewed with the appropriate law enforcement agency within 30 days prior to expiration. Badges will be the property of the issuing agency and will be returned to the issuing agency within 24 hours of their expiration, or termination of employment or separation. Lost or stolen badges will be reported to the law enforcement agency immediately upon notice of loss or theft.
As required per state regulations we have our own internal identification badges/laminates that will be worn by employees at all times while on-premises and contain their photo, full name, employee identification number, company logo, and state license numbers. Employees are required to furnish badges at all times while working. Badges are to remain on-site and stored in the badge Identification Area when not in use by the employee(s).
3. Video Surveillance
Through the help of Security Camera Corporation, we will employ state-of-the-art external and internal cameras by Verkada Corp, each with a minimum resolution capacity of 1280 × 720 pixels per sq. inch. This is sufficient to allow facial identification of anyone in or near the facility. All cameras will have infrared technology for low light conditions, capable of identifying activity at night or in unlit rooms, and internal storage with solid-state drives.
The monitoring system will have the capability to produce removable media of the recordings such as date & time stamped tapes, flash drives, and still photographic images from a colored printer.
25.57 If required, the system will be equipped with an automatic notification system that will allow for immediate notification to the appropriate law enforcement agency and a camera system access code for dispatch to relay information to the responding officers on alarm activations.
Our Cloud-based CCTV camera system includes:
• External video surveillance covers all areas of possible ingress and egress. Internal video surveillance will cover the processing rooms. This covers all areas where cannabis is present or handled and all means of access to such areas. Video surveillance will cover external and internal areas 24 hours a day, seven days a week.
• Interior video surveillance covers all areas where cannabis goods are weighed, displayed, stored, loaded, unloaded, prepared, or moved within the premises, all limited access areas, security rooms, areas with surveillance storage devices, and order fulfillment and point of sale location. • All entrances and exits to the premises both internal and external are covered by video surveillance. • An electrical backup will be provided by a named brand Uninterrupted Power Supply unit sufficient to supply a minimum of 20 minutes of backup power to our cameras and computers. We will have both on and off-site storage capacity enabling us to store at least 90 days of video surveillance recording or the minimum amount required by state and /or local requirements. A failure notification system will provide both audible and visible notifications if there is any failure in the electronic monitoring system. • All recordings will be dated and time-stamped. In addition, all recordings are stored on the cloud securely offsite and available for review remotely at any time.
• The surveillance equipment will be properly secured to prevent tampering and will be capable of spanning geographically from a single facility to multiple facilities. Camera placement is such that it provides a clear unobstructed view of activity without sight blockage from furniture, lighting, or other equipment.
● The system shall be inspected and all devices tested annually by Security Camera Corporation.
4. Alarm Testing
A test signal will be transmitted to the central station every twenty-four (24) hours. The alarm system will provide coverage of the facility ingress/egress points, the exterior windows, offices, production areas, storage areas, and the product safe. The system will include four holdup alarms for staff use.
Finally, the system shall be inspected and all devices tested annually.
A separate fire and monitoring alarm system will also be installed and inspected annually.
5.Intrusion and Motion Detection
Our alarm system will have motion detectors, including entryways, exits, hallways, storage rooms, and exterior access points. Rooms in which perimeter windows are located are equipped with motion detection..
The inventory door will also be contacted to detect openings through motion sensors when the system is armed. Verkada Alarm motion detectors are utilized to monitor the interior side of all exterior windows and doors. (These are separate from our motion-activated video recording). There will be triggers around the facility to alert our monitoring team of a possible intrusion or unauthorized access. Triggers can include:
• Motion-activated surveillance cameras or Infrared intrusion sensors
25.58 ● Unauthorized electronic access via supervision of system arming/disarming via individual personnel keypad combinations
● Security and fire alarm systems
Once an issue has been identified, email and phone notifications will be sent to the designated individuals authorized to receive the notifications. Issues can be but are not limited to:
• Door Ajar / Door Ajar Cleared / Door Forced Open / Too Many Invalid PINs • Door Locked / Unlocked by Timer
• Failed Access by Unknown or Know Person / Failed Access by a user with a group • Device Disengaged / Inoperative Equipment / Control Panel Opened/Closed • AC Power Loss / Battery Status / Attempts to access the site by unauthorized individuals
6. Third-Party Monitoring
We have contracted with Verkada Alarm to help deter, detect, and document security events at each facility from a remote location. Verkada Alarm will monitor for fire and for the security breach of doors or windows. Trained professionals from their monitoring centers will be able to access our security surveillance system at all times and will report and document any suspicious activity. Our internal security personnel will work with Verkada Alarm to establish guidelines for what entails suspicious activity and to ensure regulatory compliance. All cameras, utilize artificial intelligence, and any suspicious activity or threats are immediately escalated to a human for live monitoring and action.
BayAlarm Systems has been propelled into the "Top 100 Security Companies" due to its reputation of service that national chains cannot meet and will build upon our foundation of integrity, competence, and family values. For four decades Bay has provided reliable system installation, service, and 24-hour UL central station monitoring providing our commercial, industrial, and residential customers with 24-hour peace of mind.
10.Burglary Alarm System
We will install, maintain, and use a professionally monitored robbery and burglary alarm system; which meets the following requirements:
● The system shall report to a UL-listed central monitoring station at the Verkada Corporate Headquarters in, CA. The primary signal transmission is through Internet systems established on a secure server within the facility and additional back up system also will be via a dedicated telephone line with cellular/highsecurity GSM back-up. ● The control panel shall be a Vista-128BPT UL listed burglar alarm control panel; ● A test signal shall be transmitted to the central station at a minimum of every twenty-four (24) hours ● At a minimum, the system shall provide coverage of all facility entrances and exits, rooms with exterior windows, rooms with exterior walls, roof hatches, skylights, and storage room(s) that contain safe(s) ● The system shall include at least one 4 holdup alarm for staff use. - Staff has been trained on the use of this alarm and knows the location of each of these throughout the premises.
EQUIPMENT MAINTENANCE & TESTING
All security-related systems will be routinely inspected to insure that they are functioning properly. This includes:
25.59 ● Video surveillance equipment
● Third-party monitoring equipment and connections
● Alarm systems / Sensors
● Electrical connections
● Motion & Smoke Detectors
● Panic buttons
● Phone connections
● Information storage and backup systems
● Electrical backup systems
The Security Agent is responsible for ensuring that such inspections take place at reasonable intervals. We will promptly implement all necessary repairs to ensure the continued proper functioning of the security system.
Inspection results and maintenance records will be securely kept for review by Santa Cruz City and appropriate oversight authorities. We will utilize a battery backup to insure that in the event of a power outage our facility will still have the appropriate power needed to keep the building secure. This means our electronic access will remain along with the other systems that we will have in place.
HAZARDOUS MATERIALS AND FIRE SAFETY AND COMPLIANCE
Operations will comply with all national and local fire code requirements. The fire system design has been reviewed for approval by the Fire Department for permit issue prior to our use.
We will continue to hire a professional to monitor, inspect, and maintain all fire suppression and systems annually as if required.
There is no planned or expected use of hazardous materials including any flammable liquids or gases within the building. Household cleaning solutions and toner for printers and copy machines may be found in small amounts within the building but their use would be minimal and not rise to any level of concern including the need to develop and implement a Hazard Communication Program in compliance with 8 CCR” §5194, nor the filing of nor the filing of a Hazardous Materials Business Plan (HMBP) in compliance with Chapter 6.95 of the California Health and Safety Code and other local requirements.
Approved portable fire extinguisher(s) meeting the requirements of CFC Section 906 will be located as required within the prescribed travel distance within the facility. The portable fire extinguishers within the complex are maintained as required including servicing on an annual basis by an approved vendor. The maintenance of this equipment will be the responsibility of the tenant.
While not expected or anticipated, there will be no use of portable space heaters in the office. Should the use of portable space heaters be allowed, the use will be in accordance with CFC Section 605.10.
PERSONNEL AND TRAINING RECORDS
25.60 We maintain personnel records for each employee which will be maintained for a period of at least seven years past the end of the individual’s affiliation with us. All information listed below will be secured and maintained by the Human Resource Officer on an on-site encrypted computer system and paper file backup. ● Application & Documentation of all required training, ● Training for employees will include but is not limited to corporate and job descriptions, general security policies, visitation policy, safety, salvaging guidelines, emergency procedures, bookkeeping procedures, delivery reception procedures, sanitation procedures, procedures for receipt of inventory from vendors, production procedures, laboratory testing procedure if applicable, packaging and labeling procedure, salvaging questionable product and destruction of unusable product, transportation procedure if applicable, incident procedure, filter monitoring procedure, inventory reconciliation with internal POS and track and trace systems, employee training.
● Written policies for employees will include Instructions for Employee Eligibility Verification from the Department of Homeland Security, Disability Insurance Provisions, paid family leave, time of hire pamphlet that informs about worker's compensation for industrial injuries, including temporary disabilities, permanent disability benefits, supplemental job displacement benefits, and death benefits, notice to employees regarding Labor Code section 2810.5, prohibition of sexual harassment, paid sick leave policy, policy against discrimination, harassment, and retaliation, rest and meal periods - acknowledgment and waiver, at-will employee policy acknowledgment, leave of absence policies, pregnancy disability leave, non-work related disability leave (physical/mental illness not work-related), occupational leave (worker's comp), voting timeoff, jury duty, witness left, victims of domestic violence, sexual assault, stalking, and crime victims. ● A signed statement from the individual indicating the date, time, and place that he or she received training and the topics discussed, including the name and title of the presenters, and ● Record of any disciplinary action taken against an employee at any time during employment. ● Matters of occupational safety will be managed in accordance with applicable Cal-OSHA regulations. The safety program will include a combination of the development and implementation of several required written programs, training of employees in accordance with the job duties, inspections of safety-related equipment, and maintenance of records.
• In order to ensure ongoing compliance within the safety systems, records will be developed and maintained in compliance with Cal-OSHA requirements found in 8 CCR §3203 and 8 CCR §3204. Following is a list of the records that are expected to be developed and maintained.
1. Personnel safety training records
2. Equipment inspection records
1.Facility inspection records
2.OSHA Log 300 and 300A
● Based on an initial review of the operations, the overall safety and health programs will require the development and implementation of a number of written programs. These include the following:
Program Requirement Notes
Injury and Illness Prevention Program
(IIPP)
8 CCR §3203 Foundation of Safety Program
and Systems
25.61 ● Each of these programs will be customized for the specific operations that will be conducted at the facility.
The foundation of the overall safety and health programs will be the IIPP. The IIPP has eight required elements. These will include the following:
Covid-19 Prevention Program 8 CCR §§3205
– 3205.4
Requires a systematic
Program for the prevention of
workplace related COVID-19
exposures.
Emergency Action Plan 8 CCR §3220 Plans for evacuation and all other emergencies that might
occur. This will also include
evacuation of the public when
they are present.
Element Application
Responsibility Responsibility will be assigned for implementing the program.
Additional responsibility will be delegated throughout the organization to managers, supervisors, and employees.
Compliance Safety work rules will be developed for all aspects of the operations.
Programs for employee recognition and discipline will be developed.
This area will also identify other written safety programs and their role in the overall safety management system.
Communication Programs to communicate safety-related matters within the organization will be developed including procedures for anonymous reporting of safety concerns. Programs will include worksite postings, employee meetings, and the implementation of a Safety Committee Training Training and retraining programs for all aspects of the facility operations will be established and implemented. Based on the size of the fire, less than 10 employees, some aspects of this can be modified in accordance with the allowances within the regulation.
Hazard
Identification
Hazard identification programs including identification of the frequency and responsibility for worksite inspections will be developed and implemented. Included in this will be an assessment of the site to identify the required personal protective equipment that will be needed for specific tasks and operations.
Hazard Correction Programs to correct all identified hazards in a timely manner will be identified and implemented.
Incident
Investigation
A robust incident investigation process will be developed and implemented. The program will also include a program of near-miss (close call) reporting. The program will be based on current safety research that focuses on system improvements and organizational learning.
25.62 ● Full implementation of the safety programs and system requires a considerable amount of training.
Following is a description of the safety training programs that have been identified for implementation.
Recordkeeping Records retention and availability programs will be identified and implemented for all safety-related records.
Element Application
Training Description Employees
IIPP training Training in accordance with 8 CCR §3203 on all elements of the IIPP and responsibilities for each
level of employee within the organization.
All employees
COVI
D-19
Preve
ntion
traini
ng
Training on the preventative measures that the
employer has taken to prevent workplace related
exposure to COVID-19. To include the employer’s
response to occupationally related COVID-19 cases.
All employees
Emergency
Action Plan
Training on the elements of the site Emergency
Action Plan in accordance with 8 CCR §3220
including employee responsibilities and procedures
for reporting emergencies, emergency action to be
taken for each type of anticipated emergency, and
evacuation routes and areas of safe refuge.
Emergencies that will be covered in the training and
Plan include medical, fire, power failure, earthquake,
workplace violence and active shooter, chemical
release, and weather emergencies.
All employees
Fire
Prevention
Plan
Training on the elements of the Fire Prevention Plan
in accordance with 8 CCR §3221 including employee
responsibilities for prevention, maintenance of aisles, and inspection and maintenance requirements for the
fire protection systems found at the site.
All employees
Inspection
programs
Training will be provided to personnel involved in the
inspection of safety equipment and emergency
systems.
Affected/involved
employees
Cal/
OSHA
General
Industry
30-hour
course
In accordance with the California Business and
Professions Code, Section 26051.5, employers in
the cannabis industry with two or more employees
must ensure that one supervisor and one employee
have successfully completed a Cal/OSHA 30-hour
general industry outreach training course offered by
a training provider that is authorized by an OSHA
Training Institute (OTI) Education Center.
At least one
supervisor and one
employee
25.63 POLICIES AND PROCEDURES FOR FACILITY SECURITY
1. Incident Management and Emergency Response
We understand that smooth operations require well-laid contingency plans and a staff well-trained in their execution. Under the leadership of our Security Agent and with input from appropriate local agencies and enforcement authorities, as of 8/01/2023, we are currently developing a comprehensive Emergency Response Plan.
The Emergency Response Plan will include contingencies for non-security-related emergencies such as medical emergencies, bomb threats, fires, explosions, chemical releases, and weather-related disasters to ensure an appropriate and orderly response. This will prevent non-security-related emergencies from becoming aggravated security emergencies as well. Emergency procedures and emergency contact numbers will be provided in writing to all employees and posted prominently in all areas of the facility.
We will also develop a comprehensive set of guidelines for dealing with security threats. All staff will learn and be drilled in these procedures to ensure they are adequately prepared for emergencies. Preparedness means all staff members:
● Know how to assess emerging situations to determine the type and level of threat they may pose; ● Know how to respond to different kinds of security threats; ● Know which types of situations warrant the activation of panic buttons; and ● Know how to proceed when a security alarm goes off or a panic button has been activated.
If a security breach is found to constitute an actual emergency, authorities will be notified as required. We will then follow the emergency response procedures it will establish in cooperation with local law enforcement authorities to smoothly bring the situation under their control.
Procedures will be revised and updated as necessary. They will be reviewed at least once every twelve months. We will invite local law enforcement to offer their input on up-to-date security threat analysis and contingency planning.
2. Outside Partnerships
Local law enforcement and neighbors in close proximity to our facilities have the name of one or more contact persons on our staff that they can notify day or night in case there is a problem impacting them or that they feel may impact us.
We will periodically reach out to any neighbors adjacent to the facility to ensure that there are no unreported problems of this sort.
We will reach out to local law enforcement and are committed to developing a professional working relationship and a coherent contingency plan for incidents that require a law enforcement involvement at our Equipment/
System
Frequency
First Aid Kits Quarterly inspection of inventory by site personnel.
Training Description Employees
25.64 facility. Local law enforcement officials will be invited on-site to discuss and evaluate potential security risks, and vulnerabilities, and to assist in the development or enhancement of our current security program.
Local law enforcement officials are also welcome to come tour and discuss security issues at our other locations at any time during normal operating hours.
3. Closing Procedures
After the cessation of business each day our closing procedures require that the alarms be set by two (2) or more employees who will all exit at the same time. At the close of each business day, our personnel will insure that all rooms are locked, the processed cannabis and cannabis to be disposed of are under lock and key in the safe, all currency is locked in a safe, and that the security alarms are set and cameras are in working order. The security guard is on duty and monitoring cameras and ensuring the facility is left in a locked, armed, and safe manner and shall escort all staff to the parking lot at end of the business day.
4. Preventing Theft & Non-Diversion
Since regular inventory and supply chain tracking is crucial to preventing diversion, inventory will be manually performed on a regularly scheduled basis by facility employees to verify the accuracy of our computerized inventory management system. In addition, the following measures will also be enforced:
● Any personnel that commits theft or diversion will result in their immediate termination and the incident will be reported to the Santa Cruz Sheriff’s Department and the Santa Cruz City Police Department. ● Only authorized individuals will be allowed into restricted portions of the facility thereby reducing the threat of threat or diversion of cannabis.
● At the check-in, we verify the status of the customer's legal government-issued ID and verify their doctor's recommendation if applicable.
● Track when Cannabis patient’s recommendations expire and monitor each transaction to ensure the patient is not purchasing more than is reasonable or legally allowed.
Santa Cruz Sheriff’s Department and Santa Cruz City Police Department and / or one of his/her authorized representatives shall be notified within twenty-four (24) hours after discovering any of the following;
• Significant discrepancies were identified during inventory. • Diversion, theft, loss, or any criminal activity involving the facility or its operations, or any agent, officer, or employee of the business.
• The loss or unauthorized alteration of records related to Cannabis or agents of the business. • Any other breach of security.
5. Preventing Consumption of Cannabis on Premises.
We shall not permit the consumption of Cannabis, drugs, or alcohol. Any Cannabis or Cannabis Paraphernalia that shows evidence of cannabis having been consumed or partially consumed will be reported to the appropriate law enforcement agency. No recreational use by staff or any other persons shall be allowed at dispensary premises at any time.
25.65 6. Incident and Nuisance Logs.
We will maintain an incident log with reports of incidents that triggered an alarm. Such reports shall be made available to Santa Cruz City during any inspection of the facility. We will notify the Santa Cruz City Police Department by electronic means within twenty-four (24) hours of any incident in which theft, burglary, robbery, or break-in occurred, whether or not items were actually removed from the facility. Our facility manager shall follow up the initial notice with a written report describing in detail the factual circumstances surrounding the incident and include an inventory of all stolen items, if applicable. The incident log will be kept in a safe and secure filing cabinet as well as on Google Drive for a Digital Copy.
We will maintain a log of any public nuisance activity on the premises or within three hundred feet of the premises. The log shall include any information required by the Chief of Police, or his or her designee, including but not limited to the date and time of the occurrence; the type of activity; the circumstances surrounding the activity; the identity of any persons involved in the activity if known; the corrective action was taken by the cannabis business; and the police case number if applicable. This log will have digital and paper copies.
7. Ingress / Egress / Access
We will secure the perimeter of the Facility to prevent unauthorized intrusion.
All exits or entrances that are not visible from a public or common area are conspicuously marked. Panic exit hardware will be push-bar design. Any aluminum doors used shall be fitted with steel inserts at the lock receptacles and any outward opening doors shall be fitted with hinge stud kits, welded hinges, or set-screw hinge pins. Double doors will be fitted with three-point locking hardware and push bars consistent with fire agency regulations and requirements. All emergency exits will be solid core doors featuring hinge-pin removable deterrence. Emergency exit doors will have latch guards at least 12 inches in length protecting the locking bolt area. Latch guards will be a minimum of 0.125-inch thick steel, affixed to the exterior of the door with non-removable bolts, and attached so as to cover the gap between the door and the doorjamb for a minimum of six inches both above and below the area of the latch. If glass doors or doors with glass panes are utilized in the Facility they must have a high security internal gate system with commercial grade locks to prevent unauthorized entry.
Besides management, employees, volunteers, vendors, and contractors, no one other than law enforcement or City agents, may enter the restricted areas of the Facility unless management has approved their visit.
Movement within the Facility will be tightly controlled and regulated.
No cannabis or cannabis products will be visible with the naked eye from any public or other private property, nor will Cannabis or any product containing Cannabis be visible from the exterior of the Facility.
All areas devoted to the sale of cannabis at the Facility will be secured and separated from public access, with physical barriers and any other security measures necessary to prevent an unauthorized entry.
8. Suspicious Activity and Loitering
Staff is trained to identify and respond appropriately to all levels of suspicious activity. Loitering will not be tolerated. Loitering will result first in a warning from our staff or security guard, and then in notification to the Santa Cruz City Police Department.
9. Weapons
No person shall be in possession of any firearm while on the premises without having first obtained a
25.66 license from the appropriate state or local agency authorizing the person to be in possession of such firearm.
I. Persons in possession of a firearm while on the premises must provide the City Manager and the Chief of Police, or their designees, ten (10) days before bringing the firearm onto the premises or location, with the following:
1. A copy of the license issued to the person by the appropriate state or local agency authorizing him or her to possess such firearm;
2. A copy of his or her law enforcement identification (if he or she is employed by a law enforcement agency);
3. A copy of his or her California driver’s license or California identification card; and
4. Any other information reasonably required by the Chief of Police, or his or her designee, to show that the individual is in compliance with the provisions of all laws regarding the possession and use of a firearm.
10.Visitors
All authorized visitors to the dispensing area of the premises shall be logged in and issued a visitor pass. No one under the age of 18 will be allowed in the dispensing areas of the premises. The visitor log will include the name, date of visit, duration of visit, the purpose of visit, and name of the person visiting (if applicable).
All visitors will be escorted to and from their location. This does not include patrons of the facility or customers. They will at a minimum be checked in and have their ID and if applicable doctors’ recommendations verified.
OPERATIONS SECURITY
Making sure that our routine operations follow secure procedures is as important as physically securing each facility and having emergency response procedures in place. Consistent, proactive operational security policies and procedures greatly reduce the likelihood that emergencies will arise.
1. Staffing Structure and Current Employee Roster
We anticipate employing 10 individuals, with emphasis on residents from the Santa Cruz City and County of Santa Cruz. Not all employees such as the office and administration will work at the licensed premises.
Instead, non-cannabis operations will occur at an offsite office location. The breakdown of positions by title and job description is;
1. Operations Manager
2. General Manager
3. Marketing Director
4. : Marketing Assistant
5. Purchasing Manager
6.. Inventory Manager
7. Supervisor B2
8. Retail SpecialistB1
9.. Security
25.67 10. Office Manager
2. Background Checks
All owners and managers will have to take and pass a Live-Scan Fingerprint Criminal History Records Search by the Police or Sheriff’s department. We may also perform background checks on any contractors or vendors who regularly work within the facility or will be employed there for an extended time. Copies of any public records obtained through the background check process will be provided to the individual concerned. To ensure transparency, the entire background checking process will be conducted by a third party.
We will not employ anyone who has been charged with or convicted of, drug-related crimes, or crimes of moral turpitude within the last 10 years unless the drug-related crimes were legal according to the laws of that state in which the violation or alleged violation occurred. Also, we elect not to engage any contractors or vendors who would have access on a regular basis or for an extended time to restricted areas of our facility if they have been convicted of any felony offenses.
An accurate and up-to-date employee list shall be maintained on the premises and shall be made available to the Santa Cruz County Sheriff’s Department and Santa Cruz City Police Department or one of their authorized officers upon request. The employee list shall include the full name, physical residential address, all telephone numbers (home & cell phone), date of birth, social security number, and date of hire for each employee.
3. Training and Drills
Employees will be tested on training content and must pass the test by their third attempt in order to remain employed. All staff will also go through periodic refresher seminars, as well as new training on any policy updates or changes in procedure. All procedures will be rehearsed in periodic drills. In addition to training and periodic drills, all employees will receive official company references material, written in both English & Spanish. The material will be presented in an easy-to-use outline format, explaining all operational, safety, and security protocols. Local law enforcement, fire department, and ambulance services will be consulted prior to developing our official safety and security protocols. We will also work with the local law enforcement agency to develop effective ongoing employee training seminars and practices.
Security and emergency response training is only part of the comprehensive training required for all employees. Training will also cover:
● Cannabis laws and regulations,
● OSHA and COVID 19 protocols and compliance
● Secure electronic record keeping,
● Procedures for product sales, and
● Personal safety, fire safety, and crime prevention.
PACKAGING SECURITY
• All Packaging shall comply with CA state regulations and meet TH 003.0 Quality Control Procedures SOP guidelines
• All products sold are recorded and tracked in Metrc and verified with corresponding shipping manifests and purchase invoices.
25.68 • Any other measures as required by state regulations will be met
INVENTORY SECURITY
1. Sale / Tracking
We utilize Blaze, an inventory and point of sale tracking and control system to track every transaction. All sales will take place under camera surveillance in order to capture inventory movement and individuals making purchases. The tracking system is capable of producing historical transactional data. The system captures all transactions, including, but not limited to (cannabis tracking, inventory data, gross sales (by weight & sale). The system has the capability to produce historical transactional data, and all weighing / measuring devices will be equivalent to Division 5 of the Business & Professions Code.
2. Storage
All Cannabis will be stored in a high-security area (inventory room). Inventory will be removed from the daily storage area only for the purpose of an immediate sale. Storage areas will meet all local requirements. The storage area will have a volumetric intrusion detection device(s) installed and connected to the facility intrusion detection system as well as internal security reinforcements and alarm and camera monitoring and tracking.
3. Visibility
No Cannabis at the Facility will be visible with the naked eye from any public or private property, nor will Cannabis, any product containing Cannabis, or graphics depicting Cannabis or Cannabis products be visible from the immediate exterior of the property. All products shall be placed in an opaque exit bag upon sale.
4. Disposal of Unused or Surplus Cannabis
Disposal of cannabis products shall be done in accordance with TH 006.0 Waste Management Plan SOP guidelines. We render all cannabis waste unusable prior to destruction and disposal.
Cannabis waste will be kept in a locked secure box in the inventory room until a scheduled destruction occurs.
All cannabis waste shall be rendered unusable and unrecognizable by mixing the waste with a nonconsumable medium, including but not limited to one or more of those listed below, so that the resulting mixture is at least 50 percent non-cannabis waste. The resulting mixture may then be composted on site, placed in a premises’ wet bin for pickup, or transferred to a waste disposal facility approved by the Chief of Police, or his or her designee. The following inert mediums may be used in the mixture: paper waste; plastic waste; cardboard waste; food waste; grease or other compostable oil waste; bokashi or other compost activators; soil; a medium approved by the City that will render the cannabis waste unusable and unrecognizable.
All products and waste will be tracked, logged, and confirmed with staff prior to transport to waste facility or disposal in locked city receptacle. We shall report any stolen or lost cannabis by filing a police report or in-person with the Santa Cruz City Police Department and notifying The Bureau of Cannabis Control in writing within twenty-four (24) hours of becoming aware of the theft or loss.
5. Daily Limits
Our inventory management and POS system BLAZE tracks each order by the customer including date, time, and inventory purchased. BLAZE will alert users if daily limits by patient/customer have been reached and
25.69 allow staff to monitor their purchasing and intervene on any and all sales that would be in excess of daily purchasing limits. Blaze internal security systems prevent sales that are in excess of daily limits.
6. Record Keeping
We keep meticulous records, complying with local, state, and federal laws and regulations regarding collective records, inventory records, and transportation records. All inventory control records for seven years and made available to the County of Santa Cruz and its authorized representatives on request.
The cannabis business shall maintain all records and documents required by Sec. 14.53.403 of Santa Cruz City Cannabis Ordinance and any City Manager regulations and provide them to any city official upon request and quarterly as stated in Santa Cruz City Cannabis Ordinance.
6. Age Verification
All adult-use patrons shall be required to submit a copy of valid government-issued picture identification.
Scanner software is incorporated into Blaze to ensure the validity of government-issued IDs. No patrons with an expired ID or Identification not showing a picture of the patron shall be permitted entry. The age verification device shall retain a log of all scans that include the following information: date, time, and age.
This log shall be kept for a minimum of 180 days.
VEHICLE – EMPLOYEE - PUBLIC SECURITY
1. Employee & Public Protection at Facility
We will ensure that all employees, patients, and the general public entering the facility and parking area are not in any danger, or be placed in harm’s way.
1. There will be a minimum of 1 security guard(s) during hours of operation (9:00am – 9:00pm) and at all times when staff is present. During hours of operation a minimum of one security guard will ensure the parking lot is safe and monitor cameras, sensitive use areas, and the flow of patients and customers into and out of the building. Security services have been contracted for the licensed premises for all hours through Hook Security Services.
2. Transport Protection
We will ensure that the security of transport agents/vendors is protected during the delivery of the product, and inventory being transported will comply with Department regulations; Security Guards are trained to escort and assist vendors from vehicles into the facility and to ensure safe transport of cannabis goods from the parking lot into secured areas of the premises.
INFORMATION SYSTEM SECURITY
1. Securing Data
Our data and information are as valuable as our products. We will take both ordinary and extraordinary measures to protect our information systems and keep our data secure. Ordinary measures are:
● Using virus protection, spam filtering, firewalls, and encryption ● Keeping software and OS updated
● Using passwords and changing them frequently
● Using secure wireless networks
25.70 ● Restricting web browsing
● Initiating frequent and secure data backups
We will limit access to our network by using unique user passwords and by restricting IP addresses and MAC addresses to specific computers. The use of third-party email, web, and data servers will be avoided. ● All data and information from our security system and from our inventory control system will be secured and encrypted and backed up automatically every night, not only to a private server on-site but also to a secure, off-site server location. Should there be an emergency, natural disaster, or criminal breach at our facility, all data remain safe and remotely accessible on our remote backup server. ● For data backup, we will be uploading all data to our cloud server on a daily basis to ensure that we do not ever lose sensitive information pertaining to the operation of the facility.
2. Customer & Employee Information
Just as sensitive and important as our security system data and our inventory tracking data are our customer and employee records. Consequently, all the safeguards in place to protect and preserve our security data and inventory control data will also be employed to preserve patient/employee information and prevent any breach of confidentiality, ensuring that the electronic storage, transmission, and retrieval of all records information is secure. All digital records will allow HIPPA and PCI regulations and guidelines. We do not sell, provide, or furnish any confidential patient or customer information to any third party.
25.71 a. Security alarms for the building that include motion activation and manual activation Capabilities;
The Hook Santa Cruz has installed Security alarms for the building that include motion activation and manual activation capabilities;
b. Exterior security lights that provide three-hundred-sixty-degree coverage around the perimeter of all buildings while meeting the performance standards in the zoning Ordinance;
The Hook Santa Cruz has installed, and or upgraded existing exterior security lights that provide three-hundred-sixty-degree coverage around the perimeter of all buildings while meeting the performance standards in the zoning ordinance c. Exterior security cameras that provide three-hundred-sixty-degree coverage around the perimeter of all egress and ingress into the building. The security camera system
shall have the capability to provide the recordings to police within twenty-four hours;
The Hook Santa Cruz has installed exterior security cameras that provide threehundredsixty- degree coverage around the perimeter of all egress and ingress into the building.
The security camera system shall have the capability to provide the recordings to police within twenty-four hours;
d. Interior cameras within the business itself that cover the doors, windows, and the sales counter area of the business;
The Hook Santa Cruz has installed Interior cameras within the business itself that cover the doors, windows, and the sales counter area of the business;
25.72 e. Doors leading into the vestibules and all rooms used for growing and processing (drying) cannabis must be steel and have a bolt lock or key pad lock; The Hook Santa Cruz has installed and or upgraded existing locks doors and security measures pursuant to retail operations. The Hook Santa Cruz does not grow or process (drying) cannabis.
f. Fire-Rating. All rooms used for growing and processing shall be fire-rated, with solidcore doors, and shall remain locked;
The Hook Santa Cruz does not grow or process (drying) cannabis. g. Security Doors and Windows. All doors and windows shall be fortified and levered windows replaced with solid windows that have a security coating to prevent illegal entry;
The Hook Santa Cruz will fortify all windows where required. The building has solid windows, no levered windows.
h. Onsite Security Theft Prevention. Cannabis retail businesses that are open to the public shall provide an on-site security guard during business hours and adequate security on the premises, including lighting and alarms, to ensure the safety of persons and to protect the premises from theft. All security procedures and systems shall be reviewed and approved by the police department.
The Hook Santa Cruz is open to the public and will provide an on-site security guard during business hours and adequate security on the premises, including lighting and alarms, to ensure the safety of persons and to protect the premises from theft.
The Hook Santa Cruz will submit for review All security procedures and systems to the city of Santa Cruz police department.
i. Exterior lighting of the parking area shall be kept at a sufficient intensity so as to provide adequate lighting for patrons and employees, while not disturbing surrounding residential or commercial areas.
The Hook Santa Cruz will install and or update exterior lighting of the parking area to be kept at a sufficient intensity so as to provide adequate lighting for patrons and employees, while not disturbing surrounding residential or commercial areas. j. Lighting plan
See Site Plans.
25.73 18. Signage Plan. All signage and advertising shall comply with the state of California Business and Professions Code Sections 26150 through 26155 and any modifications or relocations of these code sections. In addition, any form of advertisement or signage that includes pricing of cannabis and cannabis products, details related to specific cannabis products, or photography or graphics of the cannabis plant or cannabis products is prohibited except on a dedicated business website accessible only through an age gate portal. Other than the above-noted restrictions related to pricing, specific cannabis products, photography, and graphics, signage shall be regulated by Part 4, Advertising Devices, Signs and Billboards, of this chapter, Community Design. The above-noted restrictions related to pricing, specific cannabis products, photography, and graphics apply to consumer advertising and signage and do not apply to direct, business-to-business advertising that is not available to the general public.
The Hook Santa Cruz will ensure all signage and advertising complies with the state of California Business and Professions Code Sections 26150 through 26155 and any modifications or relocations of these code sections. The Hook Santa Cruz will refrain from any form of advertisement or signage that includes pricing of cannabis and cannabis products, details related to specific cannabis products, or photography or graphics of the cannabis plant or cannabis products is prohibited except on a dedicated business website accessible only through an age gate portal.
The Hook Santa Cruz will ensure all signage will adhere to Part 4, Advertising Devices, Signs and Billboards, of the city of Santa Cruz ordinance and Community Design.
See Site Plans.
19.Community Relations. The business shall provide the zoning administrator, the chief of police, and all neighbors located within fifty feet of the establishment with the name, phone number, and facsimile number of an on-site community relations staff person to whom notice can be provided if there are operating problems associated with the establishment. The business shall make every good faith effort to encourage neighbors to call this person to try to solve operating problems, if any, before any calls or complaints are made to the police department or the zoning administrator.
The Hook Santa Cruz will provide the zoning administrator, the chief of police, and all neighbors located within fifty feet of the establishment with the name, phone number, and email address of an on-site community relations staff person to whom notice can be provided if there are operating problems associated with the establishment.
Community Relations Staff:
David Volkland
[email protected]
(760) 616-0077
The Hook Santa Cruz will make every good faith effort to encourage neighbors to call this person to try to solve operating problems, if any, before any calls or complaints are made to the police department or the zoning administrator.
25.74 20. Conspicuous Posting of Conditions, Licenses and Permits. The business shall post a copy of the conditions of approval for the administrative use permit on the premises in a place where it may be readily viewed by any member of the general public. A copy of the city cannabis retailer license (for retail businesses) and the state cannabis license (for all cannabis businesses) shall also be posted in a prominent position on the premises.
The Hook Santa Cruz will post a copy of the conditions of approval for the administrative use permit on the premises in a place where it may be readily viewed by any member of the general public. A copy of the city cannabis retailer license (for retail businesses) and the state cannabis license (for all cannabis businesses) shall also be posted in a prominent position on the premises.
21. Additional Operating Procedures. The business shall meet any specific additional operating procedures and measures as may be imposed as conditions of approval by the zoning administrator at the time of issuance of the administrative use permit in order to ensure that the business will be a good neighbor.
The Hook Santa Cruz will meet any specific additional operating procedures and measures as may be imposed as conditions of approval by the zoning administrator at the time of issuance of the administrative use permit in order to ensure that the business will be a good neighbor.
22. Operational Manual. In addition to the required application materials, the business shall submit an operations manual to describe the operation of the facility in conformance with these performance standards and the requirements of state law. The operations manual shall be consistent with the operations plan submitted to the state in the business’s state license application.
The Hook Santa Cruz has prepared an operations manual to describe the operation of the facility in conformance with these performance standards and the requirements of state law. The operations manual is consistent with the operations plan submitted to the state in The Hook Santa Cruz state license application.
Bryce Berryessa | Principal
Bryce Berryessa is responsible for strategic and business planning and financial oversight.
He is the company liaison to the public, press, and regulatory officials.
Bryce has called Santa Cruz County home since 2006. He currently resides in Santa Cruz with his wife Crista and sons Odin and Sage. Bryce came to California after graduating from the University of Utah in 2005 with a BA in English and Interpersonal Communications. Bryce soon began working on an organic medical cannabis farm. He devoted the next five years to studying sustainable agriculture practices, farming techniques, cannabis cultivation, and medicinal cannabis for healing and wellness.
Bryce is an internationally renowned cannabis expert specializing in medical and adultuse retail operations, cultivation, facility design, organic farm management,
25.75 Soquel.
manufacturing, extraction technology, and product development. Bryce is a seasoned cannabis business entrepreneur, executive, and advocate. He is the co-founder of several cannabis businesses based in the County of Santa Cruz.
● TreeHouse - an award-winning dispensary, art gallery, and community meeting place in
● The Hook Capitola and Watsonville - California's first cannabis outlet store and first dispensary in
● Grow Co - Grow Co boutique, hydroponic indoor cannabis cultivation in Watsonville
● John Kelly Co –a boutique and indoor soil cannabis cultivation Bryce’s career includes consulting with companies and creating entities dedicated to making positive change in their communities. He specializes in medical and adult-use retail operations, cultivation, facility design, organic farm management, manufacturing, extraction, and product development.
He has helped clients obtain cannabis permits in California, Nevada, and Canada and helped create manuals and designed licensed cultivation facilities in both Canada and the United States. Bryce is committed to progress in the cannabis industry and is an advocate for its development locally. He has served on the Board of Directors for several trade associates and helped shaped policy and legislation that moved the cannabis industry forward.
● California Cannabis Manufacturers Assn. - Member Board of Directors 2016 - 2021
● California Cannabis Industry Assn. - Member Board of Directors 2018-2020 ● California Cannabis Industry Assn. - Manufacturing and Agriculture Committee Co-Chair
● Association of Standardized Cannabis - Member Board of Directors 2013-2018 ● California Growers Assn. - Member Board of Directors 2016-2018 ● City of Watsonville Medical Cannabis Advisory Committee - Member 2016 ● Community Prevent Partners Cannabis Initiative Committee - Member 2018- 2019
● Santa Cruz County Business Council – Board Member 2019 – Present Bryce's has been featured in publications including High Times, The Cannabis Encyclopedia, The New York Times, The Guardian, and Jorge Cervantes’ Grow Bible.
He was also featured on Canna Insider, Cannabis Business Minds and The Cannabis Connection, and shared best practices for organic cannabis farms at the Eco-Farm Conference. In 2019, he was listed on Marijuana Ventures Magazine’s top 40 cannabis professionals under the age of 40. He also received Santa Cruz County’s Community Prevention Partners Vision Award.
Kyle Giorchino | Principal
25.76 Soquel
Kyle will be responsible for strategic and business planning, financial oversight, and operational compliance of dispensary operations. He participates in the hiring of all key personnel and ensures company policies and procedures are followed. He is the direct report for all upper management and implements the company’s strategic priorities and quarterly objectives.
Kyle is a California native that has called Santa Cruz home since purchasing his home in Aptos in 2010. He currently resides with his partner Emily and dog Irie. Kyle is an avid outdoorsman who enjoys nature, motocross, hiking, and exploring. Kyle studied botany at the University of Santa Cruz California and holds a Bachelor of Science degree from U.C.S.C. with a major in Plant Science.
Kyle has continued his education since graduation and regularly attends leadership and business workshops and seminars. He is currently training to be an implementer with the Entrepreneurial Operating System (EOS) which is run by over 6700 businesses worldwide. He is working with the leadership team at TreeHouse and The Hook to implement the tools and benefits of the EOS system.
Kyle is a seasoned cannabis entrepreneur, executive, and operator and the co-founder of 3 cannabis businesses in the County of Santa Cruz.
● TreeHouse - award-winning dispensary, art gallery, and community meeting place in
● The Hook Capitola and Watsonville - California's first cannabis outlet store and first dispensary in Capitola.
With a background in sales and service, Kyle is a eleven-year veteran of the industry, first as a budtender, then promoted to management. He has thorough knowledge of retail cannabis operations, improving efficiency and profits at TreeHouse, then creating a business plan for The Hook.
Kyle is a natural leader who has developed an award-winning professional team. Under Kyle’s leadership, The Cookie Co. (a former venture), was rated as a Best of Yelp business and has won Best Northern California Dispensary from Lealfly.com four times since 2016. Since relocating & rebranding as TreeHouse in January 2018, he has continued to lead his team to success and recognition.
TreeHouse was voted Runner Up Best Dispensary and won Best Head Shop by Santa Cruz Swellies 2018. In 2019 TreeHouse won runner up for Best Dispensary in the Santa Cruz Swellies, and won runner up Best Edibles and Best Dispensary by the Goodtimes voter choice awards. TreeHouse won top honors in 2020 for Best Dispensary in the Santa Cruz Swellies, and Best Delivery Service in Santa Cruz Sentinel voter choice awards. It again won runner up for Best Dispensary by the Goodtimes voter choice awards in 2021 and 2022. Today, TreeHouse is ranked by Leafly for Top Customer Service in the Santa Cruz area.
The Hook has also won Runner up for best Dispensary by Good Times voters choice
25.77 awards every year it has been in operation 2020-2022.
Under Kyle's leadership, The Hook, TreeHouse, and its predecessor the Cookie Co has fostered a close working relationship with the Santa Cruz Sheriff’s Department and the County of Santa Cruz Cannabis Licensing office. No cannabis organization under Kyles leadership has ever been cited or received any violations for its operations by any county or state organization. He has established standard operating procedures, inventory controls, and best practices that have allowed The Hook and TreeHouse to meet and exceed all regulatory requirements of Santa Cruz County and the Department of Cannabis Control.
OPERATIONS PLAN
Opening Procedures
The manager on duty shall arrive 30 minutes prior to opening. They will disarm the security system, count the cash in each register, open the point of sale systems, and complete an opening report.
Security and other staff will arrive 15 minutes prior to opening and ensure all monitoring systems are functioning properly and confirm no locks or systems have been tampered with. The store will not be opened without security present, and all doors and window security gates will remain locked until open.
Closing Procedures
The manager on duty will count the cash and deposit into the drop safe in the limited access area and complete a closing report. Staff will sanitize commonly touched surfaces and clean and dispose of non- cannabis waste. Security will remain present until all have left the building, security gates and doors are locked, and the alarm is armed.
Day to Day Operations
Each day it is our intention to promote healing and a greater sense of well-being in the community. The Hook Dispensary is a place for any adult to feel at ease. We guarantee a positive, uplifting shopping experience because we deeply care about our customers.
We believe that every one of them has the right to access quality, affordable cannabis.
We are here to listen to and accommodate our customers' needs while providing them with a full menu of safe, trusted, and affordable products priced everyday 30%-50% off MSRP.
The Hook has an operating manual, The Hook Employee Handbook, that states company policy and standard operating procedures for employees.
The Hook will operate in compliance with all local, state, OSHA, and Department of Cannabis Control regulations. Cannabis shall not be consumed on the premises. All sales will be reported in the METRC track and trace system in compliance with the Department of Cannabis Control Regulations. The store will not open without the presence of security guards. Cannabis will only be sold to those with valid government
25.78 identification, aged 21 and over, or 18 and over with a current medical recommendation.
Identification will be verified by staff upon entry. Loitering outside or around the premises is prohibited and will be regulated by security personnel.
Customer check-in procedures
Customers are required to present their identification to personnel prior to accessing the customer sales area. Customers will be directed to a que upon entering the building which does not have access to any cannabis products while in the que. Only customers aged 21 and over (or 18 and over with a current medical recommendation) with valid government-issued identification are allowed to enter the retail area. Customers will be entered into the POS cue to be served in the order of entry. Customers in cue wait in the display area and are to be called in by budtender in order of arrival who will verify ID prior to transacting any sales.
Procedures for receiving deliveries during business hours Deliveries occur between 9 am and 5 pm. Delivery drivers will check in with staff prior to and again upon arrival. Deliveries will occur through a separate entrance located in back of premisis. Cannabis products will be inspected for tamper-proof packaging, proper labeling, and certificates of analysis. The product quantities and packages will be verified against the METRC manifest and accepted in the METRC track and trace system immediately.
Inventory control procedures
Cannabis products shall be accepted only from licensed distributors with METRC manifests and corresponding METRC package tags. All cannabis products will have a unique identifying batch number, which can be related back to a positive certificate of analysis as well as a package number and METRC manifest. The Hook utilizes Blaze Retail as its point of sale (POS) system. Blaze reports all sales and inventory adjustments to METRC in real-time. All products will be named in the POS system using standard nomenclature so that the correct item is sold. Only one METRC package per item will be shelved at a time, to ensure that the correct batch and package is sold.
Inventory counts of the store are conducted weekly and discrepancies are reported to METRC in real-time. Changes in inventory are reported in a weekly leadership meeting, and all unusual changes in inventory are investigated by the Inventory Specialist and General Manager. Waste is reported to METRC within 24 hours.
Cash handling procedures
Cash is collected from retail sales throughout the day. Each sale is conducted in an individual cash drawer on the POS system. Bills $20 and larger will be verified with a counterfeit pen. The manager on duty makes cash drops throughout the day to keep cash drawer contents under $2000. All cash drops are reported in the POS system. Cash drops will be collected and deposited into the drop safe in a limited access area. Upon closing, each cash drawer will be restored to $200. All money in excess of $200 is sealed in a tamper-proof bag with the amount and cash draw number, employee ID, and then
25.79 deposited into the drop safe. The following morning, the opening manager verifies that each cash drawer contains $200. The General Manager or Assistant General Manager verify the amount of each cash drop. Each day’s cash drops is totaled and the amount verified against the daily cash receipts reported by the POS system. Any discrepancies between the two that is greater than $5 shall be investigated by the booker keeper and store manager. The amount of cash held in the safe, including the change fund, will be verified weekly and reported at the weekly leadership meeting.
The Hook has a bank account with Northbay Credit Union which opened May 2020. We deposit cash into this account via a money courier service, Spectran. Deposits are made on a weekly basis. A minimum of 80% of gross cash receipts are deposisted. Any amount of cash spent is documented on a cash log and verified by the Bookkeeper and General Manager weekly. Cash payments made to distribution companies are documented, and signature is required for pickup.
Continuing Education and Employee Training
The Hook will support employee growth and development within the organization.
During the 90-day initial training period, employees are given clear expectations and guidelines describing how they can thrive, grow, and achieve pay increases and promotions. We have a shared upward mobility plan which prioritizes coaching and training staff to mentor employees into positions of higher pay and responsibility whenever possible. All employees are compensated at their normal pay rates for all training, both internal and external. In addition, employees are encouraged to come to training that occurs when they are not scheduled for work.
Those who attend training outside of their normal scheduled work hours are compensated for attendance.
Initial Training
The initial training period consists of scheduled learning and training through video courses, policy and manual review, hands-on learning, and testing for comprehension and mastery of skills and policy. This training period is conducted during the first 90 days of employment with the company.
Hands-on skill development, review, and comprehensive training on all crucial policies and procedures for employee job roles include:
● Instruction on culture, mission, core values, and annual and quarterly objectives ● Customer service training
● Conflict resolution
● Product Knowledge
● Cannabis uses, applications, and benefits
● Cannabinoid Science and Research
25.80 ● Employee Manual
● Retail compliance
● Inventory Management and Point of Sale System functions and tools ● Security and Safety Plan
● OSHA training
● COVID Operations and Safety Plan*
Ongoing Training
All staff receives weekly training, attends monthly all-hands meetings and quarterly one-on-one reviews. The Hook has a shared Google Drive Training folder which contains vendor information and trainings, training videos, and additional content for continuing education. The company intercommunication tool Slack also has a specific channel #education where staff can request training on specific subjects, get clarification on training topics or issues, and discuss continuing education topics.
The Hook has a full-time Engagement Manager (EM) who is responsible for the management of education internally and externally. The EM facilitates and conducts all weekly staff training meetings including educating all staff on company values, policies, and cannabis products and research. Other educational tasks of the EM include:
• Create and revise company Field Guide, which is a comprehensive documentation of all staff curriculum made available to all staff • Schedule record, and verify the usefulness of Vendor training for staff • Create weekly Monday postings on #education Slack channel about cannabis news and education. Monitor and responding to all questions and posts on the #education and #training Slack channels and ensure that these channels are a resource for questions from staff
• Plan and coordinate internal training. The EM will attend and or lead training to continue contact with vendors for any follow-up, as well as record training and use recordings for future staff education and new staff onboarding and reference.
Personal Development
Each employee receives quarterly reviews that provide the following:
• Opportunities to set personal and professional goals with direct supervisors • Candid conversations around what is working and where performance needs improvement
• Identification of areas in which the employee can improve • Opportunities for employee to request and obtain further support or training The Hook requires management and encourages employee personal development
25.81 which is crucial for self-confidence and satisfaction. Employees can work with their supervisors on a Personal Development Plan to:
• Document individual goals outside of work to create a pathway for accomplishing goals through one and three-year plans
• Establish milestones through quarterly action items that are accomplished within 90 days
The Hook is developing partnerships and learning assets that will assist employees on a variety of topics. These include:
• Financial planning and personal investment
• Economics, budget and savings
• Insurance
• Management development, business tools and skills
• Health, wellness, mindfulness and mediation
• Conflict resolution, non-violent communication
Finance and Tax Compliance
The Hook has engaged local Scotts Valley firm Accountabl to provide CPA and Financial Strategy Services. Accountabl assists with financial strategy, budgeting, forecasting, cash flow management, and tax preparation. Accountabl is headed by Naseem Nangoli, CPA, who lives in Scotts Valley.
STAFF ROLES
Principals
The principals will be responsible for:
• Strategic and business planning
• Financial oversight including setting operational budget and strategy • Operational compliance of dispensary operation oversight • Acting as company liaison to the public, press, and regulatory officials • Working with the General Manager to ensure the annual plan and quarterly priorities of the company are carried out
• Advocating the company’s core values, mission, and vibe General Manager
The General Manager is the direct reporting officer for all management and facilitates the implementation of the company’s strategic priorities and quarterly objectives.
Responsibilities include:
25.82 • Oversee day-to-day operations
• Compliance, adherence to EOS processes
• Ensure company policies and procedures are followed
• Authorize all inventory purchases, inventory budget, and supply chain strategy per individual location
Assistant General Manager
The Assistant General Manager works closely with the General Manager to manage the daily operation of the dispensary, handling the needs of all customers, and developing a professional team that is passionate about cannabis. The Assistant General Manager also works closely with all employees as a liaison to the General Manager. They must be fully competent in all aspects of the store, including:
• Implementation of policies and the hiring, development, and supervision of dispensary staff
• Maintenance of reports as they pertain to the daily operations and finances • Employee compliance, interviewing, training new employees • Ordering products, inventory control, loss prevention, etc. • Act as Community Relations Liaison tasked with ensuring positive relationships are maintained with neighbors, regulators, vendors, and customers • Addresses and remedies all complaints internal and external of the organization Inventory Manager (Buyer)
The Inventory Manager works closely with the General Manager and must be fully competent in all aspects of the store. This position also works closely with all employees as a product liaison to the General Manager. Responsibilities include but are not limited to:
• METRC compliance, oversight and management of product inventory • Hiring, development, and supervision of dispensary staff • Inventory maintenance of reports
• Compliance, interviewing, training new employees
• Ordering products, inventory control, loss prevention, etc. • Dispensary inventory management, handling intake, compliance, maintenance, and stocking of products
Inventory Assistant
The Inventory Assistant works directly under the Inventory Manager to manage the inventory of the dispensary. Priorities include METRC compliance, Management of product inventory, and development and supervision of dispensary staff. Additional
25.83 responsibilities include but are not limited to:
• Manage intake, compliance, maintenance, and stocking of products • Ensure all products are shelved clearly and appropriately • Organize inventory storage room
• Account for and log defective or returned products
• Ensure all product information is reported accurately in Blaze POS and METRC • Work directly with the Engagement Manager to provide and acquire training documents, videos, and other items for continuing education of staff
25.84 Budetender L2
Budtender L2’s manage retail staff and ensure they understand their duties, including bud tending, order fulfillment, product knowledge, and reception. They are experts and demonstrate an exceptional understating of all job functions for Retail Specialists. Other responsibilities include:
• Supervise, direct, and aid in the opening and closing of the shop • Oversee shop and perimeter upkeep
• Track employee and security timeliness and job responsibilities • Track and monitor employee breaks and lunches
• Be the first to address any customer complaints, defective products, or returns • Provide change as necessary to cash drawer and conduct scheduled cash drops Budtenders
Retail specialists are the primary point of contact with all customers and shape the member experience. They are responsible for ensuring all customer information entered into Blaze is accurate and current. They are trained to provide stellar customer service in a fun and informative manner while exhibiting the company values and vibe. Retail specialists are highly trained to assist customers in making informed purchasing decisions by asking questions to identify the wants and needs of each customer and making appropriate recommendations.
Additional tasks include:
• Communicate specials and pertinent information to customers • Provide helpful information, answer questions
• Respond appropriately to complaints
• Open and close dispensary, ensuring cleanness of shop • Answer the phone, take orders, run cash register
• Organize inventory (shop upkeep)
• Fill orders properly
Security (Cannabis Concierge)
Security is the first point of contact with the public. Their primary role is to ensure a peaceful and safe environment at The Hook. All Security staff must maintain a valid BSIS security guard certification. Job duties include:
• Identify and register new patients
• Maintain an orderly flow in and out of The Hook
• Maintain Front App chat communication
• Maintain a positive, fun, and engaging attitude
25.85 • Uphold security protocol, observe, report, and diffuse situations before they become problems
• Ensure that security operations plan is followed
25.86 • Monitor parking lot, review cameras, monitor sales floor for suspicious activity or diversion
• Ensure all alarms and cameras are always functioning properly • Document and report any security violations, inventory issues, or other security-related incidents
Office Manager
The Office Manager is responsible for back of house operations and is tasked with assisting members of the management team with special projects. Additional duties include:
• Aid in the planning and execution of training, events, and engagement activities • Aid in all scanning, filing, and organizing company files including inventory, manifests, employee files, and other documents
• Process, sort, and route all incoming and outgoing mail • Manage the purchasing and ordering of non-cannabis inventory Engagement Manager
The Engagement Manager works with the Marketing Director to manage all vendor and community partnerships. This generally involves maintaining partnerships for promotions, events, demos, specials, and includes:
• Generate written communication to vendors and staff
• Print and digital advertising
• Brainstorm, plan, and schedule promotions
• Manage partnerships with other community businesses
• Facilitate and schedule all staff training including vendor education, product knowledge, operational changes, ongoing training on process and procedure • Manage the Google Drive Training and Resources Folder and moderates the internal communications channels on Slack for #education and #training • Manage Special events including:
• vendor/artist/food provider coordination and communication, collection • communicate with the graphic designer
• oversee collateral marketing materials and social media posting/promotion • order and coordinate materials
• Collaborate on social media and marketing strategies
• Manage staff Field Guide and Resources
• Create monthly newsletter and content, based on topics of social justice, cannabis education, staff passions, current inventory, community events and highlights, and other pertinent information
25.87 Marketing Director
The marketing director supervises the marketing department, including direct oversight of the
Engagement Manager and Marketing Assistant. The Marketing Director is a member of the
upper management team who contributes to weekly meetings and troubleshoots issues facing the company. The Marketing Director is responsible for creating and executing the company’s annual marketing plan. Job responsibilities include:
• Brand Management
• Graphic Design
• Web Design and Management
• Content Creation & Management
• Analytics Management (Including tracking & updating upper management weekly) • Internal Communication Management
• Print Marketing Creation & Management
• Digital Marketing Creation & Management
• Marketing Campaign Creation, Management, & Execution
• Marketing Strategist
• Marketing Cannabis Compliance Management
• Management of and collaboration on social media and marketing strategies with the marketing team. This includes meeting with the Marketing Director and Engagement Manager weekly to discuss and plan strategies and campaigns • Schedule social media posts, and update the marketing team • Content creation and posting on multiple platforms
• Collaboration on special outreach. Specifics to be determined by the marketing department
• Receiving and giving relevant training including social media posting, search engine optimization, marketing data analytics, new platform training, advertisement optimization
Marketing Assistant
The Marketing Assistant works collaboratively with the Marketing Director to carry out marketing objectives for The Hook. The positions responsibilities include:
• Schedule and posts all external communications
• Manage social media
• Respond to customer reviews and questions
25.88 • Manage and respond to emails, phone messages, and other customer or press inquiries
• Generate content for the Marketing Director and Engagement Manager • Assist with all special events and external events and functions Employee Policies and Procedures
The Hook Employee Handbook, states company policy and standard operating procedures. Employees are expected to act ethically, honestly, and with the highest standard of personal integrity while performing their responsibilities.
The Hook is an equal opportunity employer. We recruit, hire, promote, and evaluate all personnel without regard to race, color, religion, sex, sexual orientation, national origin, age, disability, ancestry, citizenship status, uniform service member status, marital status, pregnancy, or medical condition.
We are a zero-tolerance workplace for violence and threats of violence. We do not tolerate harassment of any kind, including but not limited to:
• Sexual harassment, slurs, inappropriate humor
• Verbal, graphic, or physical conduct relating to an individual’s race, color, religion, sex, national origin, ancestry, citizenship status, pregnancy, disability, age, uniform service member status, marital status, medical condition, or sexual orientation
It is the policy of The Hook to provide its employees with a safe and healthy workplace and to follow procedures designed to safeguard all employees. We comply with all applicable Occupational Safety and Health Act (OSHA) Law and Standards.
The Hook is focused on providing safe, affordable, and high-quality cannabis products to medical and adult-use patrons. Our manual, which is compliant with State of California and City of Santa Cruz laws concerning all cannabis operations, is designed to help employees achieve that goal.
Employee Manual Operational Procedures
The Hook also wants to make sure that the cannabis products it provides are supplied in a clean, safe, and secure environment. All personnel are required to follow the Operational Procedures listed in our employee manual.
The following is a sample of topics addressed in the Employee Manual:
25.89 Employment policies
The Hook adheres to State of California, County of Santa Cruz and City of Santa Cruz employment policies, including personnel administration, equal employment opportunities, harassment awareness, immigration law, safety standards and first aid, outside employment and the School Partnership Act (Labor Code Section 230.8).
Employees are given information on work schedule, benefits, paid holidays and the various categories of leave.
Job performance
Employees are given standards of conduct; computer use, electronic data, and equipment; housekeeping, handling confidential information, unacceptable activities, personal phone calls, and dress code. Conditions for immediate separation from employment include but are not limited to:
• Violation of local, state or federal law
• Violation of The Hook’s anti-harassment policy, including sexual harassment - verbal or written
• Physical violence against customers or fellow employees • Unauthorized possession of firearms, weapons or explosives on company property • Possession, consumption or use of alcoholic beverages or controlled substances while on company premises, except medications prescribed by a physician which do not impair safety or work performance • Theft
Drug Free Workplace
The policy of The Hook is to maintain a drug free workplace. This policy includes alcoholic beverages and prescription drugs, as well as illegal inhalants, drugs, and/or controlled substances as defined in schedules I through V of the Controlled Substances Act, 21 U.S.C. Sec. 812, 21 C.F.R. Sec. 13008, and the state and local law of the jurisdiction where the workplace is located, excluding medical cannabis and other physician-prescribed medications.
Personal Appearance and Hygiene
• Employees must be well-groomed and practice good personal hygiene • Employees are required to wear appropriate attire
• All employees are issued an identification laminate to wear while within the facility • Employees must wash their hands after eating, smoking, using the restroom, and after break time
• Personal expression is welcome if consistent with our professional image
25.90 • Proper shaving and hygiene must be maintained by all employees. Any employee with a beard or mustache must keep them well groomed • Pungent perfumes or colognes are prohibited from being used by any employee during work hours
Visitors
• Employees cannot have visitors unless previously requested and cleared by management
Contact with Media
• Media statements, if requested, are only to be made by the Chief Executive Officer (CEO)
Food and Beverages
• All food and drinks must be consumed in the designated areas • Employees are only allowed one (1) closed drink container to be located in the break room
Performance Reviews
• New employees will be reviewed at the end of their three-month probationary period • Employees will thereafter receive quarterly performance reviews to analyze pay structure, discuss progress and all strengths and weaknesses as well as review continuing education and job training opportunities Entrance Safety (Restricted Areas)
• All security doors will be locked at all times
• Any door entrance with a security code or security access must be opened by an authorized employee only
• No employee may hold the door open for another employee • Each employee must access the areas using their own unique fingerprint scan and/or key fob. Doors are locked and access is controlled for very specific reasons
• Overriding these operational procedures is grounds for discipline, including immediate termination
Security Plan
The Hook shall implement sufficient security measures to deter and prevent the unauthorized entrance into areas containing medical cannabis or medical cannabis products and to deter and prevent the theft of cannabis or cannabis products at the
25.91 facility.
The business shall provide adequate security on the premises to ensure the safety of persons and to protect the premises from theft. All security shall, at a minimum, meet the requirements of state law for cannabis businesses as well as any additional requirements included as conditions of approval for the site use permit.
Except as may otherwise be determined by the City Manager or his/her designee(s), these security measures shall include, but shall not be limited to, the following:
• Security alarms for the building that include motion activation and manual activation capabilities
• Exterior security lights that provide 360-degree coverage around the perimeter of all buildings while meeting the performance standards in the Zoning Ordinance
• Exterior security cameras that provide 360-degree coverage around the perimeter of all egress and ingress into the building. The security camera system shall have the capability to provide the recordings to police within 24 hours • Interior cameras within the business itself that cover the doors, windows, and the sales counter area of the business
• Doors leading into the vestibules and all rooms used for growing and processing (drying) cannabis must be steel and have a bolt lock or key padlock • All rooms used for growing and processing shall be fire-rated, solid-core doors and shall remain locked
• All doors and windows shall be fortified, and levered windows replaced with solid windows that have a security coating to prevent illegal entry; and • Cannabis retail businesses that are open to the public shall provide an onsite security guard during business hours and adequate security on the premises, including lighting and alarms, to ensure the safety of persons and to protect the premises from theft
• All security procedures and systems shall be reviewed and approved by the Police Department
• Exterior lighting of the parking area shall be kept at a sufficient intensity to provide adequate lighting for patrons and employees, while not disturbing surrounding residential or commercial areas
In addition to City requirements The Hook shall notify the City Manager or his/her designee(s) or the police department within twenty-four (24) hours after discovering any of the following:
25.92 • Significant discrepancies identified during inventory. The level of significance shall be determined by the regulations promulgated by the City Manager or his/her designee
• Diversion, theft, loss, or any criminal activity involving the business or any agent or employee of the business
• The loss or unauthorized alteration of records related to cannabis, registering qualifying patients, primary caregivers, or employees or agents of the business • Any other breach of security
Written Security Plan
The Hook has a comprehensive written security plan to be reviewed by the City, Chief of Police, and/or designee.
The Hook will provide additional security as needed and appropriate for the community, and will include:
• Facility security personnel in sufficient numbers to ensure the safety of staff • Facility security cameras; and protocols for contractors, visitors, and employees entering and exiting the facility
• Monitoring of dedicated parking, if any, either with security personnel or with security cameras
• Security personnel in the areas where the product is acquired, stored, or processed in sufficient number to ensure the safety of staff and security of all cannabis and cannabis- derived product on site
Entrance Security
Facility entrances and windows will be locked during non-business hours and secured with security gates.
Security Camera Monitoring
The Hook will use high-definition security camera monitoring and recording, 24 hours per day, 7 days per week, to monitor all entrances and exits to and from the premises, and all interior spaces where cannabis, cash or currency are being stored regularly for any period.
Video recordings shall be maintained for a minimum of ninety (90) days and shall be made available to the City Manager, the City Police Department, or a designee upon request.
The Hook utilizes Verkada for its security monitoring and alarm systems. Verkada Cameras utilizes state of the art artificial intelligence to alert of suspected threats,
25.93 and all cameras have motion detection. All cameras will be include live monitoring by a human when alarms are armed during non open hours. Any threats or suspicious activity immediately sends a warning with video clips to principals. Any attempt to access site notifies alarm monitoring company and law enforcement is contacted. In addition, speakers will be installed so monitoring company or principals can alert trespassers that they are being monitored.
SAFETY PLAN AND TRAINING
The Hook ownership has worked with Safety Compliance Management Inc. (SCM) a safety and health consultation firm headquartered in San Ramon, California to help identify and prepare the state required OSHA training and safety plan. This information was used as the basis for this evaluation and report and also to identify the various ongoing safety programs that will be required to be implemented once the operations have been established. The codes relied upon in the formation of this report include the current edition of the California Building Code (CBC), the current edition of the California Fire Code (CFC), the current California Health and Safety Code, and applicable Cal/OSHA regulations found in Title 8 of the California Code of Regulations (8 CCR). From this review, the Report also contains plans and programs that will be required to ensure the safety of employees and where applicable, the public.