Agenda packet — Santa Cruz City Council, November 19, 2024 (part 2 of 5)

2. City of Santa Cruz Downtown Plan and Downtown Plan Amendments EIR. a. 2020. Downtown Plan. As amended through January 28, 2020. Available online at:
https://www.cityofsantacruz.com/home/showpublisheddocument/8911/6374908388 88870000.
b. October 2017. Downtown Plan Amendments FEIR. SCH# 2017022050. Certified November 14, 2017. Includes Draft EIR document, dated July 2017. Available online at http://www.cityofsantacruz.com/government/city-departments/planning-andcommunity-development/environmental-documents.

3. Other City of Sana Cruz Adopted Plans and Studies.
a. 2022. Santa Cruz Community Farmers Market and the City of Santa Cruz Joint Statement. October 14, 2022. Accessed December 29, 2022 at https://www.cityofsantacruz.com/home/showpublisheddocument/91057/638018793 399130000.
b. 2022. Parks & Recreation Commission Agenda Report for December 12, 2022, Subject::
113, 119 Lincoln St: [CP22-0128; TR22-0201] (APNs 005-141-11, -21) – Appeal of the decision of the Director of Parks and Recreation to approve a Heritage Tree Removal Permit for removal of nine (9) Heritage Trees in conjunction with the Downtown Library and Affordable Housing Project. December 5, 2022.

13.146
Downtown Library and Affordable Housing Project
Environmental Review -96- March 2023
c. 2022. Final Soquel Avenue SDPS Feasibility Study, Feasibility Study for Constructing a Stormwater Pump Station at Soquel Avenue. December 2, 2022. Prepared for City of Santa Cruz. Prepared by Schaaf & Wheeler.
d. 2022. Vehicle Miles Traveled (VMT) Analysis for 119 Lincoln Street-Downtown Library and Affordable Housing Project. November 1, 2022.
e. 2022. City of Santa Cruz 2030 Climate Action Plan Update, Resilient Together. Adopted September 2022.
f. Adopted June 14, 2022. SB 743 Implementation Guidelines, City of Santa Cruz. May 12, 2022.
g. Adopted November 2021. 2020 Urban Water Management Plan. Prepared by the City of Santa Cruz, Water Department. Available online at:
https://www.cityofsantacruz.com/government/city-departments/water/urban-watermanagement-plan-2020. h. 2021. Library Site Re-Use Visioning Process Final Draft. Prepared by Group 4. June 14, 2021.
i. June 2020. Resolution of the City Council of the City of Santa Cruz Adopting the Use of Vehicle Miles Traveled as the New Transportation Measure of Environmental Impacts.

June 9, 2020 with Draft SB 743 Implementation Guidelines (May 27, 2020). j. Adopted August 2016. 2015 Urban Water Management Plan. Prepared by City of Santa Cruz Water Department.

4. AMBAG.
a. Adopted June 15, 2022. “2022 Regional Growth Forecast.” b. Adopted June 2022. Monterey Bay 2045 Moving Forward, 2045 Metropolitan Transportation Plan / Sustainable Communities Strategy. c. Adopted June 11, 2014. “2014 Regional Growth Forecast”.

5. California Air Resources Board (CARB)
a. 2022. 2022 Scoping Plan for Achieving Carbon Neutrality. November 2022. Accessed February 6, at https://ww2.arb.ca.gov/sites/default/files/2022-12/2022-sp.pdf. b. 2022. California Air Resources Board 2022 Scoping Plan—Appendix D, Local Actions.

November 2022. Accessed February 6, 2023 at
https://ww2.arb.ca.gov/sites/default/files/2022-11/2022-sp-appendix-d-localactions.pdf.

6. California Department of Finance. May 2022. “E-5 Population and Housing Estimates for Cities, Counties, and the State, 2020-2022.” Available online at:
https://dof.ca.gov/forecasting/demographics/estimates/e-5-population-and-housingestimates-for-cities-counties-and-the-state-2020-2022/.

13.147
Downtown Library and Affordable Housing Project
Environmental Review -97- March 2023

7. California Department of Forestry and Fire Protection (CAL FIRE). 2007. Fire Hazard Severity Zones in SRA Map. Available online at: https://osfm.fire.ca.gov/divisions/wildfire-planningengineering/wildland-hazards-building-codes/fire-hazard-severity-zones-maps/.

8. California Office of Planning and Research. 2018. Technical Advisory on Evaluating Transportation Impacts in CEQA. December 2018. Available online at:
https://opr.ca.gov/docs/20190122-743_Technical_Advisory.pdf.

9. California Hazardous Materials Database Reviews
a. California Department of Toxic Substances Control (DTSC). 2023. Waste and Substances Site List (Cortese List). Accessed February 6, 2023 at https://dtsc.ca.gov/dtscs-cortese-list/.
b. California Environmental Protection Agency (CalEPA). 2023. Cortese List Data Resources. Accessed February 6, 2023 at
https://calepa.ca.gov/SiteCleanup/CorteseList/.
c. CalEPA. 2023. Sites identified with Waste Constituent Above Hazardous Waste Levels Outside the Waste Management Unit. Accessed on January 17, 2023 at https://calepa.ca.gov/wp-content/uploads/sites/6/2016/10/SiteCleanup-CorteseListCurrentList.pdf. d. CalEPA. 2023. Hazardous Waste Facilities Subject to Corrective Action. Accessed February 6, 2023 at https://calepa.ca.gov/sitecleanup/corteselist/section-65962- 5a/?emrc=63e1903569867.
e. California State Water Resources Control Board (SWRCB). 2023. List of Leaking Underground Storage Tank Sites from the State Water Board’s GeoTracker database.

Accessed on February 6, 2023 at
https://geotracker.waterboards.ca.gov/search?CMD=search&case_number=&busines s_name=&main_street_name=&city=&zip=&county=&SITE_TYPE=LUFT&oilfield=&STA TUS=&BRANCH=&MASTER_BASE=&Search=Search
f. SWRCB. 2023b. List of Active Cease and Desist Orders and Cleanup and Abatement Orders. Accessed on February 6, 2023 at
https://www.waterboards.ca.gov/waterrights/water_issues/programs/enforcement/c ompliance/.

10. Monterey Bay Air Resources District.
a. Adopted March 15, 2017. 2012-2015 Air Quality Management Plan. Available online at: http://www.co.monterey.ca.us/home/showdocument?id=62318. b. February 2008. CEQA Air Quality Guidelines. Available online at:
https://www.mbard.org/files/f665829d1/CEQA_full+%281%29.pdf. c. Adopted April 1996-Revised February 2016. Guidelines for Implementing the California Environmental Quality Act.

11. University of California Santa Cruz.
a. 2023. Facts and Figures. Accessed on January 16, 2023 at https://www.ucsc.edu/about/facts-figures.html.

13.148
Downtown Library and Affordable Housing Project
Environmental Review -98- March 2023
b. 2023. Personal communication, Erika Carpenter, Senior Planner, Physical & Environmental Planning Services, Physical Planning, Development & Operations.

Project Studies and Other References

12. Albion Environmental, Inc. March 2022. Phase I Cultural Resources Inventory for the Santa Cruz Library Project, Santa Cruz, Santa Cruz County, California.

11. BKF Engineers. September 8, 2022. Stormwater Control Plan for Santa Cruz Library Mixed Use.

12. Cornerstone Earth Group. June 2, 2022. Geotechnical Investigation Downtown Library Residential Mixed-Use.

13. Dryad, LLC.
a. December 19, 2022. Consulting Arborist Services for Development – Addendum Report. b. September 8, 2022. Consulting Arborist Services for Development – Addendum Report. c. January 18, 2022. Tree Inventory and Evaluations Downtown Library Project.

14. Dudek.
a. 2023. Phase II Archaeological Testing and Evaluation Report Downtown Library MixedUse Project, Santa Cruz, California. January 2023. Prepared for City of Santa Cruz Economic Development Department.
b. 2023. Special Status Species Potential to Occur Review. c. 2022. Extended Phase I Archaeological Testing Report Downtown Library Mixed-Use Project Santa Cruz, California. November 2022. Prepared for City of Santa Cruz Economic Development Department. Prepared by Dudek.

15. Kimley-Horn. 2023. Transportation Impact Study, Downtown Library and Affordable Housing Project. January 31, 2023. Prepared for City of Santa Cruz.

16. Past Consultants, LLC. 2022. Historic Evaluation for 113 – 119 Lincoln St., Santa Cruz, CA. March 14, 2022.

17. Salter. 2023. Noise Impact Analysis Downtown Library Mixed-Use. February 6, 2023.

18. Weber, Hayes & Associates. 2022. Phase I/II Environmental Site Assessment. September 22, 2022.

Report Preparation: City of Santa Cruz Planning and Community Development Department and Economic Development Department in association with Dudek.

13.149
From: Mary Ripma
To: City Council
Subject: Downtown Branch SCPL
Date: Friday, November 15, 2024 9:45:28 AM
Dear Santa Cruz City Council,
I am one of many enthusiastic supporters of the whole new downtown branch of SCPL project.

Please meet any needs swiftly to continue to move the project forward with the great work of city staff and many partners.

Sincerely
Mary Ripma
131 Santa Cruz Street
Santa Cruz CA 95060
831-334-2223

13.150
From: Madison MacLeod
To: City Council
Cc: Bonnie Bush
Subject: Support for the Downtown Library and Affordable Housing Development Project Date: Sunday, November 17, 2024 11:48:17 AM
Dear City Council Members,
I am writing to express enthusiastic support for the Downtown Library and Affordable Housing Development Project. This initiative represents a significant and positive step for our community, and we appreciate the diligent efforts of the city staff and partners who have contributed to its progress.

We encourage swift and efficient action to address any outstanding needs, ensuring the project can continue to move forward seamlessly.

Thank you for your ongoing commitment to this essential development.

Sincerely,
Madison MacLeod, Esq.

Friends of the Santa Cruz Public Libraries

13.151
From: megan grenier
To: City Council
Subject: In Support of Downtown Library Project
Date: Sunday, November 17, 2024 4:35:06 PM
Good Afternoon,
I am writing to let you know that I support the downtown library project and hope that the project can move forward smoothly as possible with the support of the city staff and partners. I hope to attend the city council meeting on Tuesday afternoon.

Thank you,
Megan Grenier

13.152
From: Deborah Peronto
To: City Council; Bonnie Bush
Subject: New Building to be Reviewed at City Council Meeting Date: Sunday, November 17, 2024 7:49:14 PM
City Council Members,
I know you have a really full agenda this week and I just wanted to take a minute to encourage your support for moving permits and associated requirements as quickly as possible for the Downtown mixed use building project.

This Downtown project will help support our vulnerable populations, including the homeless and low and moderate income families. Being able to live near where you work resolves some of our traffic issues as well as increases quality of life.

Thank you for your attention and careful consideration of this project.

Debby Peronto
Santa Cruz County Resident and Property Owner
Sent from my iPhone

13.153
City Council

AGENDA REPORT
DATE: 10/31/2024
AGENDA OF: 11/19/2024
DEPARTMENT: Economic Development and Housing
SUBJECT: Kiosk Lease and License Agreement with Downtown Association of Santa Cruz (EDH)
RECOMMENDATION: Motion to:
1) Approve and authorize the City Manager to execute the Kiosk Lease and License Agreement with Downtown Association of Santa Cruz, and any documents, amendments or extensions of a non-substantive nature, in a form approved by the City Attorney, for the kiosk located at 1130 K2 Pacific Avenue; and 2) Approve the CEQA determination contained in this Agenda Report. The Council’s action is exempt from CEQA review under 14 CCR 15301 and 14 CCR 15061. Under those authorities, CEQA does not apply to (1) existing facilities involving negligible or no expansion of existing or former use; and (2) activities where it can be seen with certainty that there is no possibility that the activity may have a significant effect on the environment.

BACKGROUND: On March 13, 2012, City Council approved the Kiosk Lease Agreement (Agreement) with Downtown Association of Santa Cruz (DTA) for the kiosk located at 1130 K-2 Pacific Avenue. The Agreement was for a two-year term. The DTA is a year-round visitor information center which provides a strong, friendly and much needed presence in the center of Downtown and is run by knowledgeable and well-trained ambassadors. It also maintains a digital sign that is programmed to display information on Downtown events and may, for a fee, provide a platform for advertising to downtown businesses and visitor-serving attractions. The fee collected for digital advertising is used to fund operation costs for the kiosk.

The DTA transitioned to a month-to-month tenancy during the pandemic and the City and DTA are now prepared to execute a new Agreement to update terms and formalize an extension of the Agreement.

DISCUSSION: For over twelve (12) years, the DTA has been a good standing tenant who provides valuable visitor services, including information and referrals, and helps promote a vibrant Downtown in partnership with the City and EDH. In exchange for providing these services, the City has historically waived the monthly rent.

The City and DTA now wish to enter into a new Agreement for approximately two (2) years and two (2) months, terminating on January 31, 2027, with an option to extend for a two (2) year

14.1 period. The new Agreement has up to date terms and conditions for both the City and DTA.

The new Agreement also updates the license area for consistency with other kiosks, which will allow the DTA to better manage unwanted activity nearby and to conduct visitor serving programs and pop-up installations near the kiosk. Among the new terms, the City may require that the DTA collect fees, or fares, and sell goods, services, or tickets on the City’s behalf, including for the Santa Cruzer shuttle.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The proposed Council action is exempt from CEQA under: (1) 14 CCR 15301 – Class 1 Categorical Exemption because the Council action relates to the lease of an existing facility involving negligible or no expansion of existing or former use; and (2) 14 CCR 15061(b)(3) as an activity that, with certainty, does not have an effect on the environment.

HEALTH IN ALL POLICIES (HiAP): Promoting locally owned businesses and community organizations like the DTA helps support social and community bonds, improves community economic resilience, reduces commute times and pollution from owner operators, and generally aligns business activities with local culture and initiatives. While these factors may not directly affect public health, they have been shown to have a positive impact on the social determinants of health and support overall well-being in the community.

FISCAL IMPACT: The proposed action will not impact the City’s General Fund. Lease revenues from kiosks are maintained in the Kiosk Maintenance Fund (Fund 123), where they help fund repairs, maintenance, and contribution(s) to Downtown Programs managed by the Downtown Management Corporation. The proposed Agreement includes a minimum annual rent of $3,600 per year. This rent shall be waived by the City as credit toward services rendered, for as long as the DTA continues to provide kiosk-based visitor services. The minimum rent will be adjusted annually according to changes in the Consumer Price Index.

Prepared By:

Dave McCormic
Development Manager
Submitted By:

Bonnie Lipscomb
Director of Economic
Development and Housing
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. KIOSK LEASE AGREEMENT DOWNTOWN ASSOCIATION

14.2 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 1 KIOSK LEASE AND LICENSE AGREEMENT

BETWEEN

THE CITY OF SANTA CRUZ
AND

DOWNTOWN ASSOCIATION OF SANTA CRUZ

14.3 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 2 KIOSK LEASE AND LICENSE AGREEMENT
This Kiosk Lease and License Agreement (“Agreement”) is entered into by and between the City of Santa Cruz, a municipal corporation (hereinafter, “Landlord”) and the Downtown Association of Santa Cruz, a nonprofit organization (hereinafter “Tenant”). The effective date of this Agreement shall be ___________, 2024 (“Effective Date”). Landlord and Tenant are sometimes hereinafter referred to individually as “Party” and collectively as “Parties”. Landlord and Tenant agree to all terms and conditions of this Agreement as set forth herein
ARTICLE 1. BASIC LEASE PROVISIONS
The following are basic terms applicable to this Agreement. The Sections and Exhibits referenced below in parenthesis explain and define the basic terms specified below and are to be read in conjunction with basic terms herein:

1.01 Tenant’s Trade Name: “The Downtown Association of Santa Cruz” or “DTA” (Section

8.01).

1.02 Commencement Date of Term: December 1, 2024 (Section 3.01).

1.03 Term: As of the Commencement Date and terminating no later than 11:59 p.m. (PST) on January 31, 2027 (“Expiration Date”), unless sooner terminated or otherwise extended as permitted under this Agreement.

1.04 Premises and License Area: Kiosk located at 1130-K2 Pacific Avenue, Santa Cruz, CA 95060 and adjacent License Area (Section 2.02, Exhibit A).

1.05 Floor Area: Approximately sixty (60) square feet (Section 2.02).

1.06 NOT APPLICABLE

1.07 NOT APPLICABLE

1.08 Minimum Annual Rent: $3,600 per year (Section 4.01), subject to adjustment or offset.

1.09 Minimum Monthly Rent: $300/month or equal to 1/12 of the Minimum Annual Rent, as adjusted. (Section 4.01).

1.10 Use of Premises and License Area: Tenant shall use the Kiosk and License Area as a visitor information center, to operate Tenant’s Downtown Ambassador Program, and to support City sponsored programs and related sales or fares, as listed in Section 4.07 and Exhibit B and no other use without Landlord’s prior written consent. (Section 8.01).

1.11 Hours/Covenant of Continuous Operation: Tenant’s hours of operation unless otherwise agreed in writing shall be at least seven (7) hours per day between the hours of 6:00 AM and 12:00 AM, six (6) days per week during the summer (Memorial Day through Labor Day) and five days a week in the remaining months. Days of operation shall include the weekend year-round (Section 8.02).

1.12 Security Deposit: $750.00 (Section 7.01).

1.13 Guaranty of Lease. Not Applicable

1.14 Address for Notices to Tenant:

14.4 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 3 740 Front Street, Suite 160
Santa Cruz, CA 95060
(831) 332-7422
[email protected]
ARTICLE 2. LEASE/LICENSE OF PREMISES

2.01 City of Santa Cruz as Landlord. Tenant acknowledges and understands that Landlord is a municipality consisting of numerous offices and departments. Whenever a provision contained in this Agreement, or any extension, modification or amendment, requires the “written consent” of Landlord, such consent must be obtained from the then acting City Manager or authorized designee for the City of Santa Cruz. Tenant may not rely on any statement or representation by any other employee, agent or representative of Landlord in obtaining such consent and any such statement or representation other than the express written consent of the City Manager or authorized designee shall be null and void and have no effect. Nothing contained in this Section shall limit in any way the authority of any office or department, of the City of Santa Cruz from approving or withholding consent to any event or activity regulate by local law.

2.02 Premises. Landlord leases to Tenant and Tenant leases from Landlord the retail kiosk designated as 1130-K2 PACIFIC AVENUE, Santa Cruz, California (the “Premises”) (Exhibit A).

2.03 Reservations. Landlord reserves the right at any time to make alterations or additions to the Premises. This Agreement confers no rights either with regard to the subsurface of the land below the ground level of the Premises or with regard to airspace above the roof of the Premises.

2.04 License, Appurtenant Rights, Public Right of Way Landlord is the owner of the public right of way surrounding and adjacent to the Premises described herein. Tenant desires to obtain the permission of Landlord to perform certain acts upon and within the public right of way. Now, therefore, Landlord, as Licensor, grants to Tenant, as Licensee, a license for the use during business hours of a portion of the public right of way surrounding the kiosk (“License Area”) for the purpose of walk-up business, pick-ups and deliveries, and outdoor seating consisting of tables and chairs in connection with Tenant’s operation of its business at the Premises. The License Area is marked and described on the attached Exhibit D. The license is non-exclusive, non-assignable, and terminable and revocable at the will of Landlord.

The areas governed by the license are not a part of the Premises defined by the Agreement. Tenant, as Licensee, does not hold any estate or interest in the property of the City in the public right of way by virtue of this license. The City may formulate rules, conditions of license, regulations and a permit process for the use of the public property and right of way area surrounding and in close proximity to Pacific Avenue kiosks and Premises, and the uses of other areas in the public right way of the City. The areas surrounding the Premises may be governed thereby and Tenant agrees to be bound by these rules and regulations and obtain such permits or licenses as may be required. These areas may be governed by this Agreement to the extent it is not in conflict with City rules, regulations, and permit requirements as they now or hereafter exist.

Landlord shall at all times retain exclusive final authority over the public right of way including the License Area. Landlord shall have the right to perform any and all acts of construction and maintenance in the public right of way, including the License Area, as fully and completely as if the license for the use of the License Area did not exist. Landlord will not be liable to Tenant by reason of any injury to or interference with Tenant’s business or property for any inconvenience or damages caused thereby.

The Term applicable to the Premises does not apply to the License Area and Landlord retains the right at its sole discretion to terminate or revoke said license at any time. Termination or revocation of the

14.5 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 4 Licensee’s use of the License Area is not grounds for termination of the Agreement. Termination or restriction of use the use of the License Area does not reduce rental payments due under the Agreement.

The License Area will be managed similar to the management of the City’s Café/Retail Extension Areas. The Café Extension Area policies are attached as a frame of reference for the management of the License Area as Exhibit E (“Café Extension Areas Policies and Procedures”). Exhibit E notwithstanding, Landlord (City) shall have final determination as to all policies and procedures with respect to the License Area.

2.05 Tenant Improvements. If applicable, the respective obligations of Landlord and Tenant regarding preparation of and improvement to the Premises for Tenant’s use are set forth in Exhibit F attached to this Agreement and are defined as either Landlord’s Work or Tenant’s Work, as the case may be. Any improvement, fixture or item of equipment that is not listed on Exhibit F is Tenant’s obligation at its sole cost and any such item must be approved in writing by Landlord before work on such item of improvement or installation of said fixture or equipment commences.

2.06 Condition of Premises. Tenant acknowledges that it recognizes the uniqueness of the Premises and accepts them in their current and disclosed “AS IS, IN ITS CURRENT CONDITION, WITH ALL FAULTS” condition existing on the date of execution of this Agreement, subject to all applicable zoning, municipal, county, or state laws, ordinances and regulations affecting the use of the Premises and License Area, and subject to those items included on Exhibit F as Landlord’s Work. Tenant acknowledges that it has satisfied itself, by its own independent investigation, that the Premises are suitable for its intended use and neither Landlord nor its agents or representatives have made any representation or warranty as to the present or future suitability of the Premises for the conduct of Tenant's business.

ARTICLE 3. TERM

3.01 Commencement of Term. The initial term of this Agreement (the “Term”) shall commence on the date specified in Section 1.02 (“Commencement Date”) and shall continue until the date of termination specified in Section 1.03, unless terminated sooner in accordance with the terms and provisions of this Agreement.

At the City’s sole discretion and provided f Tenant is not in default at any time during the term of this Agreement , this Agreement may be amended to extend the term of this Agreement for an additional two (2) year period (the "First Extended Term") following the expiration of the initial term, upon the same terms and provisions contained in this Agreement except for the amount of the Minimum Annual Rent, which shall be adjusted as provided in Section 4.05. Tenant may exercise said option to extend the term by giving written notice to Landlord at least four (4) but not more than six (6) months before the expiration of the initial term.

If Tenant is declared to be in default at any time during the initial term of this Agreement, Tenant's election to extend the term of this Agreement shall be totally ineffective and this Agreement shall expire at the end of the initial term, unless otherwise terminated earlier in accordance with this Agreement.

3.02 Expiration; Holding Over. The Term will expire at 11:59 p.m. on the date specified in Section 1.03, unless sooner terminated or otherwise extended as permitted under this Agreement. If Tenant should remain in possession of the Premises after the expiration of the Term of this Agreement in the absence of a new agreement or amended agreement or after Landlord has declared a forfeiture of this Agreement as a result of Tenant’s default, then such holding over shall be construed as a tenancy from month-to-month, subject to all of the terms, conditions, provisions and obligations of this Agreement at the time this Agreement expires or upon Tenant’s default, as the case may be, except the Minimum Annual Rent shall be one and one-half (1.5) times the amount of such rent in effect prior to Tenant’s holdover.

Unless Tenant obtains the express written consent of Landlord to holding over, Landlord does not waive its right to pursue any legal or equitable remedy against Tenant with regard to Tenant’s continued possession of the Premises after the expiration of the Term of this Agreement. Under a month-to-month

14.6 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 5 tenancy, Tenant may terminate this Agreement by providing Landlord with written notice at least thirty (30) days prior to the intended termination date. Tenant shall be responsible for paying Rent through the termination date even if moving out early. Landlord may terminate the tenancy by giving notice to Tenant as required by law.

3.03 Surrender of Premises and Leasehold Interest.
(a) Surrender. On the expiration or termination of this Agreement, Tenant shall:
(i) surrender the Premises and License Area to Landlord in a clean, sanitized, and in good order and condition, except for ordinary wear and tear; and, (ii) surrender all keys to the Premises to Landlord; and, (iii) remove all of Tenant’s property and repair all damage resulting from the removal; and,
(iv) restore the Premises and License Area to the condition existing as of the first day of the Term or better; and,
(v) surrender in writing or by legal instrument any leasehold interest or claim to the Premises and License Area, improvements, equipment, fixtures, and use thereof.
(b) Landlord’s Property. Landlord may remove, store, and dispose of any items Tenant does not remove from the Premises and License Area as permitted or required under this Agreement. (c) No Implied Acceptance of Surrender. Landlord's acceptance of Tenant's surrender of the Premises and License Area will be valid and binding only if it is in a writing signed by Landlord, and no act by Landlord will be deemed to be Landlord's acceptance of Tenant's surrender. (d) Survival of Surrender Obligations. Tenant's obligations under this section will survive the expiration or termination of this Agreement.

ARTICLE 4. RENT

4.01 Rent.
(a) Beginning with the Commencement Date, Tenant agrees to and shall pay Landlord an annual fixed minimum rent (“Minimum Annual Rent”) of $3,600.00 in monthly installments of $300.00 (as of December 1, 2024 (“Minimum Monthly Rent”). Both the Minimum Annual Rent and Minimum Monthly Rent shall be adjusted annually (Section 4.05). (b) In addition to the Minimum Annual Rent specified above, Tenant shall pay to Landlord any additional rent (“Additional Rent”) as may be required by this Agreement including but not limited to payment for Operating Expenses, as defined in Section 6.01, and utility charges as provided in for in Section

10.02. (c) Landlord and Tenant agree that Landlord will waive the Minimum Annual Rent and Additional Rent owed by Tenant if: (i) Tenant’s real value of services rendered at the kiosk, including visitor information services provided, collection of fees and fares on behalf of Landlord, staff labor and material costs, and service fees incurred by Tenant for kiosk services and sales, excluding Rent and

14.7 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 6 Additional Rent (collectively “Value of Services”), meet or exceed the Minimum Annual Rent, and (ii) Tenant complies with all terms of this Agreement, with specific reference to Section 4.07 (“Collection of Fees, Fares, and Sales”). Tenant shall, upon written request by Landlord, furnish a summary with detail of the Value of Services for the period requested within thirty (30) days of Landlord’s request.

4.02 Commencement of Rent.
(a) Tenant’s obligation to pay the Minimum Annual Rent under this Agreement shall start on the date of Commencement of Term as set forth in Section 1.02. The Minimum Annual Rent, specified in Section 4.01, subject to adjustment as set forth in Section 4.05, shall be due no later than the fifteenth (15th) day of every month thereafter.
(b) In the event that Tenant’s obligation to pay rent does not commence on the fifteenth (15th) day of a calendar month, Tenant shall pay Rent for the fractional month on a per-diem basis (calculated on the basis of a thirty (30-day month) until the fifteenth (15sth) day of the calendar month following the commencement of Tenant’s obligation to pay rent. If the Term commences prior to Tenant’s obligation to pay Minimum Annual Rent and Percentage Rent, Tenant shall nonetheless be required to pay all sums set forth in the Agreement other than Minimum Annual Rent and Percentage Rent.

4.03 Minimum Rent. Tenant shall pay Landlord the Minimum Monthly Rent specified in Section 4.01 in arrears, subject to adjustment as set forth in Section 4.05, by the fifteenth (15th) day of the following calendar month at the address listed below, or at such other location as Landlord may notify Tenant in writing.

CITY OF SANTA CRUZ

FINANCE DEPARTMENT
1200 PACIFIC AVENUE – SUITE 270-290
SANTA CRUZ, CALIFORNIA 95060
Each monthly payment shall be paid without deduction, offset, prior notice or demand.

4.04 NOT APPLICABLE

4.05 Annual Adjustment To Annual Rents. The Minimum Annual Rent and Minimum Monthly Rent (referred to collectively, as “Minimum Rents”) specified herein shall each be subject to adjustment at the commencement of the term and each year thereafter including all extensions thereto (the “Adjustment Date”) as follows:
(a) The base for computing the adjustment is the Consumer Price Index, All Urban Consumers, San Francisco-Oakland- Hayward, All Items (1982-1984 = 100), as published by the United States Department of Labor, Bureau of Labor Statistics (“Index”), which is in effect on the date of the commencement of the term (“Beginning Index”). The Index published most immediately preceding the Adjustment Date in question (“Extension Index”) is to be used in determining the amount of the adjustment.

14.8 7
the conversion factor published by the United States Department of Labor, Bureau of Labor Statistics. If the Index is discontinued or revised during the term, such other government index or computation with which it is replaced shall be used in order to obtain substantially the same result as would be obtained if the index had not been discontinued or revised.

4.06 Late Charges and Interest on Unpaid Rent.
(a) Tenant acknowledges that late payment by Tenant to Landlord of rent will cause Landlord to incur costs not contemplated by this Agreement, the exact amount of such costs being extremely difficult and impracticable to fix. Such costs include, without limitation, processing and accounting charges, and late charges that may be imposed on Landlord by the terms of any encumbrance and note secured by any encumbrance covering the Premises.
(b) Therefore, if any installment of Rent due from Tenant, including Additional Rent, is not received by Landlord when due, Tenant shall pay to Landlord an additional sum of ten percent (10%) of the overdue rent as a late charge, and interest at the rate of one and one-half percent (1 1/2%) per month, or the maximum rate of interest allowed by law, on the unpaid balance of said rent or sum until paid. The Parties agree that said late charges and interest represents a fair and reasonable estimate of the costs that Landlord will incur by reason of late payment by Tenant. The acceptance by Landlord of any late charge shall not constitute a waiver of Tenant’s default with respect to the overdue amount, nor prevent Landlord from exercising any of the other rights and remedies available to Landlord under this Agreement or as provided by law.

4.07 Collection of Fees, Fares, and Sales.
(a) Tenant acknowledges that in the course of joint efforts between Landlord and Tenant, the Landlord may request that Tenant collect fees or fares (such as for the Santa Cruzer Shuttle), sell goods, services, or tickets on Landlord’s behalf, as consideration of reducing or waiving rent. (b) Tenant shall remit all fees or fares collected on behalf of Landlord pursuant to this Section 4.07 into a designated bank account within 60 days of collection or as otherwise specified by Landlord in writing.
(c) Tenant agrees to comply with all applicable PCI Data Security Standards (“PCI DSS”) requirements when collecting fees or fares on behalf of Landlord pursuant to this Section. (d) Tenant may, subject Landlord’s written approval, charge and retain a handling fee from any amount collected, in an amount not to exceed the amount of Tenant’s cost of collections, which may include but is not limited to credit card or processing fees, labor cost, and overhead. In no event, shall Tenant retain such charges without Landlord’s prior written approval. (e) Within thirty (30) days written request by Landlord, Tenant shall furnish a summary statement detailing any such fees, fares, or sales conducted, along with any fees retained by Tenant and their justification and use. Landlord shall, in its request, detail the period that Tenant shall cover in such statement.

4.08Books and Records. Tenant shall keep full and complete records of its collecting fees and fares on Landlord’s behalf and summary with detail of the Value of Services provided by Tenant for a period of four years. Landlord, its employees and agents shall have the right at any and all times, during regular business hours, to examine and inspect all of the books and records of Tenant pertaining to its Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz

14.9 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 8 collection of fees and fares on Landlord’s behalf, and for making any necessary adjustments to the rent paid and owed.

4.09 Damages For Failure To Operate. Landlord desires to keep the Premises fully operational. Tenant acknowledges and understands that its failure to keep its business open and operational during the times set forth elsewhere in this Agreement without the prior written consent of Landlord will cause Landlord to incur costs not contemplated by this Agreement, the exact amount of such costs being extremely difficult and impracticable to fix. Therefore, (a) if Tenant fails to open and operate its business to the public by the date of Commencement of Rent, or (b) thereafter, if Tenant fails to continuously operate its business in accordance with the terms of this Agreement or vacates the Premises prior to the expiration of the term, Landlord shall have the right, at its option, to collect as liquidated damages an amount equal to one-thirtieth (1/30) of the monthly installment of Minimum Annual Rent for each day which Tenant fails to so operate in order to compensate Landlord for the loss of percentage rent and customer traffic, in addition to Minimum Annual Rent and all other charges and amounts payable under this Agreement. Landlord and Tenant agree that said charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of such action by Tenant.

ARTICLE 5. TAXES; ASSESSMENTS; AND, LICENSES

5.01 Personal Property Taxes. Tenant shall pay before delinquency all federal, state or local taxes, assessments, license fees, and other charges that are levied and assessed against Tenant’s personal property installed or located in or on the building, and that become payable during the term. On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments.

5.02 Possessory Interest Taxes. Pursuant to the provisions of Revenue and Taxation Code Section 107.6, Tenant is hereby advised that the terms of this Agreement may result in the creation of a possessory interest. Tenant shall pay before delinquency all possessory interest taxes, assessments, license fees, and other charges that are levied and assessed against the leasehold interest. “Possessory Interest Tax” means that tax imposed pursuant to laws of the State of California on leaseholds of tax exempt property and does not include taxes on Tenant’s inventory, personal, or any other tax or assessment that is presently or may, in the future be levied. On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments.

5.03 Parking and Business Improvement Area Zone and Charges. Tenant shall pay before delinquency all taxes, assessments, license fees, and other charges that are levied, assessed, charged or imposed upon businesses within any Parking and Business Improvement Area Zones established by the City of Santa Cruz or other such applicable local agency. On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments.

5.04 Taxes; Assessments; Title 12 Santa Cruz Municipal Code - Local Improvements.

Tenant shall pay before delinquency its proportionate share of all taxes, assessments, license fees, and other charges that are levied, and assessed against the building, other improvements, and land of which the Premises are part by any improvement and/or maintenance district established by the City of Santa Cruz or other such applicable local agency (including under Title 12 Santa Cruz Municipal Code - Local Improvements, as may be amended and any revised or successor ordinances or resolutions applicable thereto). On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments.

5.05 City of Santa Cruz Business License: A city business license is required concurrent or prior to execution of this Agreement. Contact the City’s Finance Department at 831-420-5050 for more information.

14.10 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 9 ARTICLE 6. OPERATING EXPENSES

6.01 Operating Expenses. In addition to the Minimum Annual Rent and Percentage Rent specified above, Tenant shall pay as Additional Rent or provide, certain expenses (the “Operating Expenses”) incurred by Landlord in the operation and maintenance of the Premises. These common Operating Expenses include, without limitation, general maintenance and repair of the awnings, general maintenance and repair of exterior siding, periodic cleaning of the roof, and certain maintenance, repairs and replacement of kiosk building systems (plumbing, electrical system, etc.). Upon request, on or before September 30th of each year, Landlord will provide Tenant with an annual statement or recapitulation of all charges allocated to Tenant as Operating Expenses and City reserves the right to seek payment thereof with prior notice to Tenant, of not less than 30 days, for Tenant’s payment of such expenses.

ARTICLE 7. SECURITY DEPOSIT

7.01 Amount of Deposit. Concurrently with the Commencement Date or within a timeline approved by Landlord, Tenant shall deposit with Landlord the sum set forth in Section 1.12 herein (“Security Deposit”); or an amount equal to two (2) months of the Minimum Monthly Rent, whichever is greater. This Security Deposit shall be held by Landlord, without liability for interest, as partial security for the full and faithful performance by Tenant of all the terms, covenants and conditions of this Agreement to be performed by Tenant. Landlord may commingle the Security Deposit and shall not be required to keep it separate from its general funds.

Landlord may adjust the Security Deposit amount annually to account for increases in Minimum Monthly Rent. Such additional Security Deposit amounts shall be due within a timeline approved by Landlord. The Security Deposit shall not exceed the equivalent of two months of the Minimum Monthly Rent.

7.02 Use and Return of Deposit. If Tenant fails to abide by any of the terms, covenants and conditions of this Agreement, then Landlord, at its option, may use any amount of the Security Deposit to compensate Landlord for any loss or damage sustained or suffered due to such failure by Tenant. The entire Security Deposit, or any portion thereof, may be applied by Landlord for the payment of overdue rent or other sums due and payable to Landlord by Tenant hereunder. Tenant shall, upon the written demand of Landlord, immediately remit to Landlord a sufficient amount to restore the Security Deposit to the original sum deposited, or two months of the Minimum Monthly Rent, whichever is greater. Failure to do so within five (5) days after such demand, or a timeline approved by Landlord, shall constitute a material breach of this Agreement. Should Tenant comply with all of the terms, covenants and conditions of this Agreement and promptly pay when due all of the rent herein provided and all other sums payable to Landlord, the Security Deposit will be returned in full to Tenant within thirty (30) days following the end of the Term or earlier termination of this Agreement.

7.03 Transfer of Security Deposit. Landlord may deliver the Security Deposit to Landlord’s assignee or successor in interest in the Premises, in the event that Landlord’s interest is sold, conveyed, transferred or assigned, and upon delivery, Landlord shall be discharged from any further liability with respect to repayment of the Security Deposit to Tenant.

ARTICLE 8. USE

8.01 Use of Premises. Tenant shall use the Premises under the trade name, and solely for the use specified, in Sections 1.01 and 1.10, respectively, herein.

14.11 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 10 state or local Health Department or Building Department laws, codes, or ordinances, or any other applicable laws and regulations. Tenant is permitted to warm food in the kiosk in manners acceptable to the Santa Cruz County Department of Environmental Health Service. Tenant further acknowledges and understands that all food preparation, either primary- or pre-preparation shall be conducted in a facility certified by the appropriate local governing body, specifically including the Santa Cruz County Department of Environmental Health Service.

Tenant shall not commit or suffer to be committed any waste upon the Premises or any nuisance or other act or thing which may disturb the quiet enjoyment of any other Tenants or their customers.

Tenant shall not use, or permit the Premises or any part thereof to be used, for any purpose other than the purpose for which the Premises are hereby leased. No use shall be made or permitted to be made of the Premises, nor acts done, which will increase the existing rate of insurance upon the Premises, or cause a cancellation of any insurance policy covering the Premises or any part thereof. Nor shall Tenant sell or permit to be kept, used, stored or sold in or about the Premises any article which may be prohibited by any policy of fire insurance obtained by Landlord. Tenant shall, at its sole cost, comply with any and all requirements regarding the use of the Premises by any company that issues a policy of fire, casualty or public liability insurance to Landlord. If Tenant’s use of the Premises results in a rate increase for the Premises or the building Tenant shall pay as Additional Rent within ten (10) days written notice, a sum equal to the additional premium caused by such rate increase.

8.02 Operation of Business/Covenant of Continuous Operation. During the term of this Agreement, including any and all extensions thereto, Tenant shall utilize all of its usable space within the Premises in the ordinary course of business. Tenant shall conduct its business in the Premises during the usual and customary days and hours for such type of business, as forth in Section 1.11, and shall operate the Premises continuously throughout the calendar year for the term of Agreement unless otherwise approved in writing by Landlord.

Tenant shall notify Landlord prior to any temporary closure of the business exceeding two (2) days, or any modification of ongoing operating hours. In the event Tenant desires to close the business for five (5) consecutive days, Tenant shall make a written request to Landlord at least fourteen (14) days prior to the start of the business closure, or immediately in the event of an emergency. In no event, shall Tenant close the business for five (5) consecutive days or more without Landlord’s prior written approval.

Notwithstanding any other terms of this Agreement, Tenant’s closure of the business shall not constitute a waiver or modification of any rent due.

In the event that Tenant intends to terminate this Agreement for any reason, or abandon the Premises, prior to the expiration of the term of this Agreement without the prior written consent of Landlord, Tenant shall immediately notify Landlord in writing of its intention to terminate or abandon. Except for the expiration of the term of this Agreement, Tenant agrees to keep the Premises open for business during regular business hours for a period of ninety (90) days following notice of termination or abandonment.

During this ninety (90) day period, Tenant shall keep the Premises adequately stocked with merchandise and maintain sufficient personnel in order to conduct its business in accordance with sound business practices.

8.03 Storage; Office Space. Tenant shall warehouse, store and stock within the Premises only such goods, wares and merchandise as Tenant intends to offer for retail sale on or about the Premises.

Tenant shall use for office, clerical or other non-selling purposes only such limited space in the Premises as is, from time to time, reasonably required for Tenant’s business operation on the Premises. Tenant shall not conduct any auctions, liquidation or bankruptcy sales, “fire” sales or sidewalk sales on, about or near the Premises without Landlord’s prior written consent.

14.12 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 11 8.04 Cooperative Retail Management. As a condition of this Agreement, Tenant shall be a member of any existing or future Cooperative Retail Management entity (“CRM”) organized for Tenants, property owners, retailers and City government in downtown Santa Cruz and of which Landlord is or will be a member. Tenant shall abide by the rules and regulations of the CRM entity. The objective of CRM shall be for retailers to cooperate in such areas as business hours, promotion, participation in special marketing events, maintenance of appearance of storefront windows and signs, and such other activities which relate to the overall economic retail environment of the downtown.

8.05 Hazardous or Toxic Materials. Tenant shall comply, at its expense, with all federal, state and local statutes or regulations concerning environmental conditions, emissions, pollutants and controls.

Tenant shall not cause, store, use or permit any Hazardous Material, including without limitation asbestos or polychlorinated biphenyls, to be brought upon, kept or used in or about the Premises by Tenant, its agents, employees, contractors or invites, without the prior written consent of Landlord, which Landlord shall not unreasonably withhold as long as Tenant demonstrates to Landlord’s reasonable satisfaction that such Hazardous Material is necessary or useful to Tenant’s business, does not violate any requirements of Landlord’s policies of fire, causality or public liability insurance and will be used, kept and stored in a manner that complies with all laws regulating any such Hazardous Material so brought upon or used or kept in or about the Premises.

If Tenant breaches any of its obligation stated herein, or if the presence of Hazardous Material on the Premises caused or permitted by Tenant results in contamination of the Premises, then Tenant shall indemnify, defend and hold Landlord harmless from any and all claims, judgment, damages, penalties, fines, costs, liabilities or losses, including, without limitation, diminution in value of the Premises, damages for the loss or restriction on use of rentable or usable space or of any amenity of the Premises, and sums paid in settlement of claims, attorneys’ fees, consultant fees and expert fees which arise during or after the lease term as a result of such contamination. Without limiting the foregoing, if the presence of any Hazardous Material on the Premises caused or permitted by Tenant results in any contamination of the Premises, Tenant shall promptly take all actions at its sole expense as are necessary to return the Premises to the condition existing prior to the introduction of any such Hazardous Material to the Premises; provided that Landlord’s approval of such actions shall first be obtained, which approval shall not be unreasonably withheld so long as such actions would not potentially have any material adverse long-term or short-term effect on the Premises.

As used herein, the term “Hazardous Material” means any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the State of California or the United States Government. The term “Hazardous Material” shall include without limitation, any material or substance which is (i) defined as a “hazardous waste,” “extremely hazardous waste” or “restricted hazardous waste” under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law); (ii) defined as a “hazardous substance” under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act); (iii) defined as a “hazardous material,” “hazardous substance,” or “hazardous waste” under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory); (iv) defined as a “hazardous substance” under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances); (v) petroleum; (vi) asbestos; (vii) listed under Article 9 or defined as hazardous or extremely hazardous pursuant to Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20; (viii) designated as a “hazardous substance” pursuant to Section 311 of the Federal Water Pollution Control Act (33 U.S.C. § 1317); (ix) defined as a “hazardous waste” pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (42 U.S.C. § 6903); or (x) defined as a “hazardous substance” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (42 U.S.C. § 9601), and any amendments or successor statutes thereto.

14.13 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 12 8.06 Compliance with Governmental Regulations. Tenant shall, at its sole cost and expense, comply with all of the requirements of all local, state and federal authorities now in force, or which may hereafter be in force, pertaining to the Premises. With regard to the use of the Premises, Tenant shall faithfully observe all local ordinances and state and federal statutes now in force or which may hereafter be in force.

8.07 Americans With Disabilities Act. Tenant acknowledges and expressly accepts full responsibility and shall incur all costs and expenses for compliance with the requirements of the Americans with Disabilities Act (ADA) and any other local, state or federal law or regulation regarding the accessibility of the Premises by disabled individuals. Tenant agrees to release, indemnify, defend and hold Landlord (and its officers, employees, representatives and agents) harmless for any claim, loss, expense or liability arising from Tenant’s failure to fully comply with all such laws or regulations.

8.08 CASp Inspection. Landlord states that the Premises has not been inspected by a Certified Access Specialist (CASp) Accordingly, this notice is provided by Landlord pursuant to California Civil Code Section 1938:
“A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or Landlord may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the Tenant or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of the construction-related accessibility standards within the premises.”
Unless otherwise expressly stated in this Agreement and subject to the terms of this Agreement:
(a) Tenant may elect at any time to perform a CASp inspection of the Premises at Tenant’s expense;
(b) any repairs or modifications necessary to correct violations of applicable construction-related accessibility standards within or about Premises are the responsibility of Tenant; (c) Tenant is responsible for compliance with applicable construction-related accessibility standards relating to Tenant’s alterations of or improvements to the Premises.

ARTICLE 9. ALTERATIONS AND ADDITIONS

9.01 Consent. Tenant shall not make any improvements, alterations or additions to the Premises without Landlord’s prior written consent. All improvements, alterations and additions shall be in conformity with the laws, directives, rules, permits, or regulations of all applicable public and governmental agencies. Prior to the commencement of any work relating to any repairs, alterations, improvements or additions approved by Landlord, Tenant’s contractor(s) shall notify the City of Santa Cruz at the address listed below under “Notices.”

14.14 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 13 or obligations to have been performed on the Premises by or at the request of Tenant. Tenant hereby indemnifies and holds Landlord harmless against loss, damage, attorneys’ fees and all other expenses on account of claims of lien of laborers or materialmen or others for work performed or materials or supplies furnished to Tenant or persons claiming under it.

9.03 Trade Fixtures. Tenant may install trade fixtures, display items, machinery or other trade equipment in conformance with all laws, ordinances, directives, rules, permits, or regulations of all applicable public and governmental agencies. With the exception of furniture, equipment and trade fixtures that may be removed by Tenant without causing damage to the Premises, all improvements, alterations or additions shall become part of the realty and belong to Landlord at termination of the Agreement. Tenant shall not remove any trade fixtures, display items, machinery or other trade equipment from the Premises, without Landlord’s written consent, if the removal of any such item would cause damage to the Premises and, in the absence of Landlord’s written consent to removal, any such item shall be deemed a part of the realty and belong to Landlord at termination of the Agreement.

9.04 Restoration. Except as otherwise provided herein, Tenant shall return the Premises to the same condition as existed at the date of execution of the Agreement, reasonable wear and tear excepted.

In addition, Landlord, at its election, may require Tenant to remove, at Tenant’s sole cost, any improvements, alterations or additions approved by Landlord in accordance with this Agreement. Tenant shall repair, at its sole cost, any damage resulting from the removal of any alterations, improvements, additions, equipment, machinery or trade fixtures.

9.05 Signs and Advertising Matter. Tenant will not place, install, maintain or construct or allow any third party to place, install, maintain or construct any sign, banner, flag, awning or canopy, covering, or advertising matter on the roof, or on any exterior door, wall or windows of the Premises without Landlord’s prior written consent, which shall not be unreasonably withheld. Tenant further agrees to maintain such sign, awning, canopy, decoration, lettering, advertising matter or window coverings in good condition and repair at all times. Tenant shall not display or sell any merchandise or allow carts, portable signs, devices, vending machines or other objects to be stored or remain on the sidewalk or elsewhere outside of the defined exterior of the Premises without the prior written consent of Landlord.

No advertising medium shall be used or allowed to be used by Tenant which can be heard or experienced outside the Premises, including without limitation, flashing lights, searchlights, loudspeakers, phonographs, radios or television.

Tenant agrees, at Tenant’s sole cost, to construct and install signs as may be required or allowed by Landlord in strict conformance with Landlord’s sign criteria specified in Exhibit G attached to this Agreement (“Sign Criteria”) which specifies the permissible design, material, color, location, size and letter style of any such signs. Tenant’s signs shall not be installed without the written consent of Landlord.

Tenant, at its sole cost, shall obtain all necessary permits before installing, erecting or constructing any such sign. Signs shall be installed prior to the commencement of Tenant’s business and thereafter shall be maintained by Tenant at Tenant’s sole expense. If Tenant fails to maintain any such sign(s), Landlord shall have the right to maintain any such sign(s) and Tenant shall reimburse Landlord for such cost, plus a twenty percent (20%) overhead fee. If Tenant installs a sign without Landlord’s prior written consent, or said sign does not conform to Landlord’s Sign Criteria, Landlord shall have the right, at its sole discretion, to remove and store Tenant’s sign at Tenant’s sole expense. The removal and storage costs shall bear interest at the rate of one and one half (1 1/2%) percent per month until paid, or at the maximum rate allowed by law, whichever is less.

Landlord reserves the right to revise the Sign Criteria for any reason, at any time, including without limitation changes in any governmental requirement. Within ninety (90) days of Landlord’s request, Tenant shall remove Tenant’s existing sign, patch and repair the underlying attachment surface, and install a new sign, at Tenant’s sole cost and expense, in accordance with Landlord’s then existing Sign Criteria.

14.15 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 14 9.06 Kiosk Windows. Tenant is prohibited from painting any and all windows of the kiosk Premises without the prior written consent of Landlord. Tenant further agrees to maintain the windows properly and in good repair, free of leaks, defects, cracks, shattering, or any other defect at Tenant’s sole cost and obligation. Tenant will immediately notify Landlord of any window damages and will immediately cause the windows to be repaired. Tenant will clean the windows using an appropriate cleaning medium that will not etch, scratch, or cloud or fog the windows. At Landlord’s discretion, Tenant shall cause to be removed any coverings, coatings, stickers or signage affixed to the windows, that may obstruct visibility, or otherwise be of detriment to the Pacific Avenue streetscape and community enjoyment thereof.

ARTICLE 10. UTILITIES

10.01 Separate Charges. Tenant shall pay for all water, heat, light, telephone service, internet, and any other utilities metered, sub-metered, or otherwise separately charged to the Premises.

10.02 Jointly Metered Utilities. Tenant shall pay, as Additional Rent, a pro rata share of any utility charges which are jointly metered or charged. Tenant’s pro rata share of these charges shall be based upon the ratio of the square footage of the Premises to the total square footage of the building or buildings serviced by such meter, plus any extraordinary uses by Tenant which may be reasonably ascertained by Landlord. Such charges will be paid as rent to Landlord at the time of regular rent payments.

10.03 Interruption. Landlord shall not be liable for any failure or interruption of any utility service being furnished to the Premises, and no such failure or interruption shall entitle Tenant to terminate this Agreement.

10.04 Electricity Use Included. The amount of the Minimum Monthly Rent specified in this Agreement includes use of electricity based upon historical average usage by former kiosk Tenants. Tenant agrees that Landlord may review Tenant’s consumption of electricity, and the Minimum Monthly Rent shall be adjusted annually by an amount equal to the estimated increase or decrease in Landlord’s costs for electricity. Landlord shall have the exclusive right to determine the amount of this adjustment and Tenant, upon reasonable request, shall be provided a computation as setting forth the adjustment.

In the event Landlord utilizes (sub)meter readings to measure actual electrical use by Tenant, Landlord reserves the right to charge Tenant the cost for electrical usage in excess of ten percent (10%) greater than the average monthly usage among all active kiosk Tenants.

Tenant shall endeavor to manage electrical costs through the use of energy efficient equipment, light bulbs, appliances, or other such point of use fixtures, as available; and, shall turn-off all nonessential, non-security or food safety related lighting or equipment when not in use.

ARTICLE 11. INDEMNIFICATION; INSURANCE

14.16 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 15 of Tenant, its employees, and agents under this Agreement; (ii) the acts or omissions of Tenant or its officers, directors, employees, agents, representatives, invitees, customers, contractors, subcontractors, suppliers, trespassers, or others acting on Tenant’s behalf or under Tenant’s authority or control; or (iii) the occupancy and/or use of the Premises and/or License Area (including, but not limited to any improvements or personal property located therein) by Tenant, or its officers, directors, employees, agents, representatives, invitees, customers, contractors, subcontractors, suppliers, trespassers, or others acting on Tenant’s behalf or under Tenant’s authority or control; (iv) any breach or default under this Agreement by Tenant; or (v) any construction or other work undertaken by Tenant on the Premises (including any design defects).

Tenant’s obligations in this Section, however, shall not extend to any Claims that are proximately caused by the sole negligence or willful misconduct of City, its officials, officers, employees, volunteers or agents. Tenant’s obligation to defend shall arise regardless of any claim or assertion that Landlord caused or contributed to the Claims.

11.02 Survival. The indemnification provisions herein and any other indemnification provided elsewhere in this Agreement shall survive the termination of this Agreement.

11.03 Insurance Requirements. Prior to the beginning of and throughout the duration of the Agreement, Tenant will maintain and comply with the Insurance Requirements as set forth in Exhibit H.

11.04 Tenant’s Failure To Maintain Insurance.
(a) Tenant agrees that if Tenant does not maintain any insurance policy required under this Agreement or fails to pay any premiums when due, Landlord may, at its election, either terminate this Agreement, require that the Premises be immediately closed for business pending reinstatement of insurance by Tenant, or obtain the necessary insurance and pay the premium, and the repayment thereof shall be deemed to be Additional Rent due by Tenant and payable on the next date upon which a payment of rent is due.
(b) In the event that Tenant fails to maintain insurance coverages, as required in this Agreement, and a loss or damage occurs that results in Landlord’s liability for copayments, deductibles, or other such charges to replace the loss under Landlord’s applicable insurance policy, Tenant agrees to reimburse the City for all such charges within ninety (90) days of the City’s notification to Tenant.

11.05 Waiver of Loss and Damage. Landlord shall not be liable for any damage to inventory or other property of Tenant, or others, located in, on or about the Premises, nor for the loss of or damage to any property of Tenant or of others by theft or otherwise, which is not the direct result of Landlord’s negligence, and Tenant waives any claim against Landlord with respect to such property. Landlord shall not be liable to Tenant, Tenant’s employees or representatives for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or leaks from any part of the Premises or from the pipes, appliance or plumbing works or from the roof, street or subsurface or from any other places or by dampness or by any other cause of whatsoever nature. Landlord shall not be liable to Tenant, Tenant’s employees or representatives for any such damage caused by other Tenants or persons in the Premises, occupants of adjacent property, or the public, or caused by operations in construction of any private, public or quasi-public work. All property of Tenant kept or stored on the Premises shall be so kept or stored at the sole risk of Tenant, and Tenant shall hold Landlord harmless from any claims arising out of damage to the same, including subrogation claims by Tenant’s insurance carriers, unless such damage shall be caused by the willful act or gross neglect of Landlord.

11.06 Notice by Tenant. Tenant shall give immediate notice to Landlord in case of fire or accidents in or around the Premises or of any damage or defects in the Premises, or any fixtures or equipment therein.

14.17 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 16 ARTICLE 12. MAINTENANCE AND REPAIRS

12.01 Landlord Maintenance Obligations. Except when repairs are made necessary as a result of damage caused by Tenant, its agents, employees, customers, invitees, subtenants, assignees or concessionaires or caused by the installation or removal of Tenant’s personal property, Landlord will be responsible for general maintenance and repairs of the kiosk, including but not limited to general maintenance and repair of the awnings, general maintenance and repair of exterior siding, periodic cleaning of the roof, and certain maintenance, repairs and replacement of kiosk building systems (plumbing, electrical system, etc.). Pursuant to Section 6.01, Tenant shall pay as Additional Rent the maintenance and repair expenses (Operating Expenses), incurred by Landlord.

12.02 Tenant Maintenance Obligations. Except as provided in Article 16 (Destruction), Tenant at its cost shall clean, maintain and keep all portions of the Premises (inside and out). License Area, and the sidewalks appurtenant to the Premises in a safe, clean, neat and sanitary condition, which shall include sweeping and trash pickup on a minimum daily basis.

Tenant shall promptly, at its expense, repair (and make replacements as needed) any damage to the Premises caused by Tenant, its agents, employees, customers, invitees, subtenants, assignees or concessionaires or caused by the installation or removal of Tenant’s personal property. All replacement equipment shall be of a quality equal to or exceeding that of the original equipment or improvements. To the greatest extent feasible, Tenant shall endeavor to replace all equipment or improvements with models that improve water, resource, and energy efficiency, or such features as will reduce the overall environmental impact of the business and kiosk space. Should Tenant fail to make these repairs and replacements for a period of three (3) days after delivery of a written demand by Landlord, or should Tenant commence, but fail to complete, any repairs or replacements within a reasonable time after written demand by Landlord, Landlord shall have the right to make such repairs or replacements without liability to Tenant for any loss or damage that may occur to Tenant’s stock or business, and Tenant shall pay for all costs incurred by Landlord in making such repairs or replacements, including an administrative overhead fee of twenty percent (20%) interest thereon at the maximum rate permitted by law from the date of commencement of the work through the date of payment.

Tenant shall, at its own expense, comply with all requirements of Landlord’s insurance underwriters and any other governmental authority having jurisdiction thereof, regarding the installation and periodic maintenance of fire suppression systems or apparatus.

12.03 Windows. Tenant shall replace, at its expense, any and all damaged or broken windows and window components on or about the Premises resulting from any cause whatsoever other than the direct negligence of Landlord. Tenant shall have full responsibility, at its sole discretion, to either selfinsure or obtain insurance policies covering damage or replacement of said windows and window components.

Tenant further acknowledges and accepts the terms and conditions identified in Section 9.06 of this Agreement, in its entirety, as relates to the condition and modification of the kiosk windows.

12.04 Trash and Recycling. Tenant is solely responsible for removing its waste and recycling generated as a result of its business operations. No waste and recycling service for the kiosks is officially provided or available for the kiosk Premises. Tenant is encouraged to make arrangements with a nearby business for utilizing their waste and recycling facilities. Tenant may be required to pay a fee to the nearby business for such right of use.

14.18 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 17 City waste disposal bins, Landlord may charge the actual cost of additional cleanup to Tenant. Tenant shall pay such charges with the next monthly rent.

12.05 Landlord’s Right of Entry. Landlord, its agents, contractors, employees and assigns may enter the Premises at all reasonable times to: (a) examine the Premises; (b) perform any obligation of, or exercise any right or remedy of, Landlord under this Agreement (c) make repairs, alterations, improvements or additions to the Premises, or to the Building as Landlord deems necessary; (d) perform work necessary to comply with laws, ordinances, rules or regulations of any public authority or of any insurance underwriter; (e) to post “for rent” or “for lease” signs or to show prospective tenants the Premises during the last six (6) months of the Term; and (f) perform work that Landlord deems necessary to prevent waste or deterioration in connection with the Premises should Tenant fail to commence to make, and diligently pursue to completion, its required repairs within three (3) days after written demand therefore by Landlord. Landlord will give a minimum of twenty-four (24) hours advance notice of such entry when practicable.

Tenant shall furnish key(s) to Premises within ten (10) days of Landlord’s written request.

ARTICLE 13. PARKING

13.01 No Parking Provided. No provisions for parking are contemplated with this Agreement.

Tenant, and its agents, representatives, and assigns, are responsible for all transportation of food, materials, and personnel to and from the premises, together with conformance to all City parking regulations and any charges, fees, or fines, as may apply for failure to comply with said regulations. In no event shall, the City be responsible for any loss, damage to, or impoundment of any vehicles employed by Tenant, and its agents, representatives, and assigns.

Information on parking regulations and public parking facilities are provided on the City’s webpage and can be reached at the following URL: http://www.cityofsantacruz.com/government/citydepartments/public-works/parking-services ARTICLE 14. ASSIGNMENT AND SUBLETTING

14.01 Prohibition Against Voluntary Assignment, Subletting, and Encumbering; Tenant’s Request to Landlord. Tenant’s voluntary assignment or encumbrance of Tenant’s interest in this Agreement, as well as Tenant’s subletting of the Premises, shall be strictly prohibited. Nor shall Tenant allow any other person or entity (other than Tenant’s employees) to occupy or use any part of the Premises or independently contract with another person or entity to operate the business, or any other business or trade, out of the kiosk. Any such assignment, encumbrance, sublease, occupancy or use agreement or independent contract shall be voidable by Landlord and, at Landlord’s election, shall constitute a default.

In agreeing to this strict and absolute prohibition, Landlord and Tenant acknowledge and agree that Landlord has agreed to enter into this Agreement in reliance upon Tenant’s representation that Tenant will personally operate the business out of the kiosk in a manner which is unique and cannot be readily replicated by other operators. The Parties therefore acknowledge that the strict and absolute prohibition against assignment, encumbrance, sublease, use or occupancy agreements or independently contracting, herein provided for is reasonable. Accordingly, any purported assignee, subtenant, other recipient of Tenant’s interest in this Agreement or the Premises, or independent contractor, is hereby notified that that any such transfer or contract is of no force and effect and is void from the outset.

14.19 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 18 (a) If Tenant is or becomes bankrupt or insolvent, makes an assignment for the benefit of creditors, or institutes a proceeding under the Bankruptcy Act in which Tenant is the bankrupt; or, if Tenant is a partnership or consists of more than one person or entity, if any partner of the partnership or other person or entity is or becomes bankrupt or insolvent, or makes an assignment for the benefit of creditors; (b) If a writ of attachment or execution is levied on this Agreement; (c) If, in any proceeding or action to which Tenant is a party, a receiver is appointed with authority to take possession of the Premises.

An involuntary assignment shall constitute a default by Tenant and Landlord shall have the right to elect to terminate this lease, in which case this Agreement shall not be treated as an asset of Tenant.

If a writ of attachment or execution is levied on this Agreement, Tenant shall have fifteen (15) days in which to cause the attachment or execution to be removed. If any involuntary proceeding in bankruptcy is brought against Tenant, or if a receiver is appointed, Tenant shall have thirty (30) days in which to have the involuntary proceeding dismissed or the receiver removed.

ARTICLE 15. DEFAULT

14.20 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 19 relating to bankruptcy, unless such petition is filed against Tenant and the same is dismissed within sixty (60) days;
(3) The appointment of a trustee or receiver to take possession of substantially all of Tenant’s assets located in the Premises or of Tenant’s interest in this Agreement; or
(4) The attachment, execution or other judicial seizure of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Agreement.
(g) Failure to abide by any local, state, or Federal governmental laws or regulations; or (h) Failure to maintain the Premises in a clean, safe, and attractive condition, as described above; and, failure to promptly remedy any maintenance issues within sixty (60) days of notice from Landlord.

15.02 Remedies. In the event of any breach by Tenant, in addition to other rights or remedies of Landlord at law or in equity, Landlord shall have the following remedies:
(a) Landlord shall have the right to recover against Tenant:
(1) The worth at the time of award of the unpaid rent that had been earned at the time of termination;
(2) The worth at the time of award of the amount by which the unpaid rent that would have been earned after termination until the time of award exceeds the amount of this rental loss that Tenant proves could have been reasonably avoided;
(3) The worth at the time of award of the amount by which the unpaid rent for the balance of the Term after the time of award exceeds the amount of this rental loss that Tenant proves could be reasonably avoided; and (4) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform Tenant’s obligations under the Agreement.
(b) The worth at the time of award of the amounts referred to in the previous subparagraphs shall be computed by allowing interest at ten percent (10%) per annum. The worth at the time of award of the amount referred to in subparagraph (3) shall be computed by discounting this amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%). (c) Efforts Landlord may make to mitigate the damages caused by Tenant’s breach of this Agreement shall not constitute a waiver of Landlord’s right to recover damages against Tenant, nor shall anything contained in this Agreement affect Landlord’s right to indemnification against Tenant for any liability arising prior to the termination of this Agreement for personal injuries or property damage, and Tenant agrees to indemnify and hold Landlord harmless from any injuries and damages, including all reasonable attorney fees and costs incurred by Landlord in defending any action brought against Landlord for any recovery, and in enforcing the terms and provisions of this indemnification against Tenant.

14.21 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 20 (d) However, the breach of this Agreement by Tenant, or an abandonment of the Premises by Tenant, will not constitute a termination of this Agreement, nor of Tenant’s right of possession under this Agreement, unless and until Landlord elects to do so, and until that time Landlord shall have the right to recover rent and all other payments to be made by Tenant under this Agreement as they become due; provided, that until Landlord elects to terminate this Agreement and Tenant’s right of possession under this Agreement, Tenant may sublet the Premises or to assign interests in this Agreement, or both, subject to the written consent of Landlord, at Landlord’s sole discretion. (e) As security for the performance by Tenant of all duties and obligations under the Agreement, Tenant assigns to Landlord the right, power, and authority, during the continuance of this Agreement, to collect the rents, issues, and profits of the Premises, reserving to Tenant the right, prior to any breach or default by Tenant under this Agreement, to collect and retain the rents, (solely in the case of a sublease previously approved by Landlord) issues, and profits, from the operation of Tenant’s approved business use, as they become due and payable, and so long as payments to Landlord are also kept current.

Upon any breach or default, Landlord shall have the right at any time afterward, without notice except as provided for previously, either in person, by agent, or by a receiver to be appointed by a court, enter and take possession of the Premises and collect rents, issues, and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney fees, upon any secured indebtedness, and in an order as Landlord may determine. (f) In the event that Landlord should take any act to maintain or preserve the Premises on Tenant’s behalf, or seek the appointment of a receiver to protect Landlord’s interests under this Agreement, such acts shall not constitute a termination of Tenant’s right of possession unless Tenant receives written notice from Landlord to regarding Landlord’s election to terminate. (g) Tenant acknowledges that Landlord has executed this Agreement in reliance on the financial information furnished by Tenant to Landlord as to Tenant’s financial condition. If it is determined at any time subsequent to the date of this Agreement that any of the financial information furnished by Tenant and relied upon by Landlord in executing this Agreement is substantially untrue or inaccurate, Tenant shall be deemed to be in default under this Agreement, which default shall not be subject to cure, and which shall entitle Landlord to exercise all remedies reserved to Landlord under this Agreement or otherwise available to Landlord at law.

15.03 Covenants and Conditions. All covenants made by Tenant hereby are conditions of this Agreement; therefore, in the event of any default by Tenant in fulfilling any of the same, Landlord may at any time thereafter at its option declare a forfeiture of this Agreement. Landlord shall not be obligated to perform any covenant made by Landlord under this Agreement which accrues after the date of any default by Tenant hereunder.

15.04 Landlord’s Right to Perform. All terms, covenants and conditions of this Agreement to be performed or observed by Tenant shall be performed or observed by Tenant at Tenant’s sole cost and expense, and without any reduction of rent. If Tenant shall fail to pay any sum of money, or other rent, required to be paid by it hereunder, or shall fail to perform any other term or covenant hereunder on its part to be performed, and such failure shall continue for ten (10) days after written notice thereof by Landlord, Landlord, without waiving or releasing Tenant from any obligation of Tenant hereunder, may, but shall not be obligated to, make any such payment or perform any such other term or covenant on Tenant’s part to be performed. All sums so paid by Landlord and all necessary costs of such performance by Landlord plus an administrative overhead fee of twenty percent (20%), together with interest thereon at the rate of the prime rate of interest per annum as quoted by the Bank of America from the date of such payment or performance by Landlord, shall be paid (and Tenant covenants to make such payment) to Landlord on Landlord’s demand, and Landlord shall have (in addition to any other right or remedy of Landlord) the same rights and remedies in the event of nonpayment by Tenant as in the case of failure by Tenant in the payment of any rent hereunder.

14.22 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 21 ARTICLE 16. DAMAGE OR DESTRUCTION

16.01 Landlord’s Duty To Repair.
(a) If the Premises are destroyed or materially damaged from a cause not insured against under a fire or casualty insurance required herein, or if the amount of available insurance proceeds, including deductible costs, is not sufficient to completely repair or restore any such damage or destruction, Landlord shall have the right to terminate this Agreement by giving written notice of termination to Tenant within thirty (30) days after the date Landlord receives notice of the damage or destruction. If the Agreement is not terminated, and the damage Is not caused in part or in hole by Tenant, then Landlord shall diligently proceed to repair and restore the Premises to the extent that insurance proceeds, including deductible costs, are sufficient to completely repair or restore any such damage or destruction. (b) If the Premises are materially damaged or destroyed from a cause covered by a fire or casualty insurance required herein, and it can be repaired or restored within ninety (90) days after commencement of repair or restoration, and the damage is not caused in part or in whole by Tenant, then Landlord shall diligently proceed to repair and restore the Premises. If Landlord determines that the Premises cannot be repaired or restored within this period, then Landlord shall have the right to terminate this Agreement by written notice to Tenant given within sixty (60) days after the date of the damage or destruction, and Tenant’s obligation to pay rent and other charges under this Agreement shall terminate as of the date of the damage or destruction, or the date Tenant ceases to do business at the Premises, whichever date is later.
(c) If the Premises are damaged to the extent of fifty percent (50%) or more of the replacement cost, Landlord may elect to terminate this Agreement by written notice to Tenant given within sixty (60) days after the date of the destruction.
(d) If Landlord elects or is required to make repairs under this Article, Tenant shall be entitled to a reduction in rent, equal to that portion of the Premises in which the floor area rendered unusable bears to the gross floor area of the Premises, from the date of damage to the earlier of the date Tenant reopens for business or thirty (30) days from completion of Landlord’s repair work. Tenant, however, shall not be entitled to a reduction in rent or relieved from paying charges to the extent the damage or destruction of the Premises was caused in whole or in part by Tenant. (e) Tenant waives the provisions of Civil Code sections 1932(2) and 1933(4) with respect to any destruction to the Premises.
(f) Except as otherwise provided in this Agreement, damage to or destruction of the Premises shall not terminate this Agreement or result in the abatement of any rent or other charges payable under this Agreement. Tenant expressly waives any right it may have, in law or equity, to offset any cost incurred by Tenant for repairs or restoration to the Premises against Tenant’s obligations to pay rent in connection with Landlord’s duties of repair and restoration under this Agreement. (g) Landlord’s duties of repair and restoration under the provisions of this Agreement shall extend only to those portions of the Premises insured by Landlord under a policy of fire or casualty insurance required herein and to the extent the damage is not caused in part or in whole by Tenant. Landlord shall not be responsible for any loss, damage, or destruction to Tenant’s personal property, trade fixtures, merchandise, inventory or equipment.

16.02 Tenant’s Duty to Repair or Replacement. Except as otherwise provided herein, Landlord’s obligation to restore shall not include the restoration or replacement of Tenant’s personal

14.23 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 22 property, trade fixtures, merchandise, inventory, or equipment. Tenant shall restore and replace said items in the event that Landlord is obligated or elects to repair any damage or destruction of the Premises.

ARTICLE 17. ESTOPPEL CERTIFICATES; ATTORNMENT

17.01 Tenant to Furnish Certificate. Tenant shall, within ten (10) days of written notice from Landlord, execute and deliver to Landlord a written statement certifying that this Agreement is unmodified and in full force and effect or, if modified, stating the nature of such modification. Tenant’s statement shall include other details requested by Landlord, such as the date to which rent and other charges are paid and Tenant’s acknowledgement concerning any uncured defaults in Landlord’s obligations under this Agreement and the nature of such defaults if they are claimed. Any such statement may be relied upon conclusively by any prospective purchaser or encumbrancer of the Premises. Tenant’s failure to deliver such statements within such time shall be conclusive upon Tenant that this Agreement is in full force and effect, except as and to the extent any modification has been represented by Landlord, and that there are no uncured defaults in Landlord’s performance and that not more than one (1) month’s rent has been paid in advance.

17.02 Attornment. If any proceedings are brought for foreclosure, or if the power of sale is exercised under any mortgage or deed of trust made by Landlord covering the Premises, Tenant shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as Landlord under this Agreement.

17.03 Additional Documents. Tenant, upon request of any party in interest, shall execute promptly such instruments and certificates necessary to carry out the intent of the foregoing Sections as shall be requested by Landlord.

ARTICLE 18. OTHER MUNICIPAL RULES AND REGULATIONS
This section intentionally left blank.

ARTICLE 19. MISCELLANEOUS

19.01 Sale or Lease of the Premises by Landlord. Notwithstanding any provisions of this Agreement, Landlord may assign in whole or in part Landlord’s interest in this Agreement and may sell all or part of Landlord’s leasehold interest in the real estate of which the Premises are a part. In the event of any sale or exchange of the Premises by Landlord and assignment by Landlord of this Agreement, Landlord shall be entirely freed and relieved of all liability under all covenants and obligations contained in or derived from this Agreement or arising out of any act, occurrence or omission relating to the Premises which occurs after the consummation of such sale, exchange or assignment.

19.02 Liability to Successors. The covenants and conditions herein contained shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of the Parties hereto who shall be jointly and severally liable for the covenants contained herein.

19.03 Interpretation. Whenever the singular number is used in this Agreement, the same shall include the plural. Reference to any gender shall include the masculine, feminine and neuter genders, and the word “person” shall include corporation, firm or association, when required by the content.

The headings or titles to the paragraphs of this Agreement are for convenience only and do not in any way define, limit or construe the contents of such paragraphs.

14.24 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 23 This instrument contains all of the agreements and conditions made between the Parties with respect to the hiring of the Premises and may not be modified orally or in any manner except by a written instrument signed by all the Parties to this Agreement.

The laws of the State of California shall govern the validity, performance and enforcement of this Agreement. If any provision of this Agreement is determined to be void by any court of competent jurisdiction, such determination shall not affect any other provision of this Agreement and such other provisions shall remain in full force and effect. If any provision of this Agreement is capable of two constructions, one which would render the provision void and one which would render the provision valid, the provision shall be interpreted in the manner which would render it valid.

Except as may otherwise be expressly stated, each payment required to be made by Tenant shall be in addition to and not in substitution for other payments to be made by Tenant.

19.04 Time. Time is of the essence in this Agreement.

19.05 Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, inability to obtain labor or materials or reasonable substitutes therefore, governmental restrictions, regulations or controls, enemy or hostile government action, civil commotion, fire or other casualty, and other causes beyond the reasonable control of the Party obligated to perform, shall excuse the performance by such Party for a period equal to that resulting from such prevention, delay or stoppage.

However, Tenant’s obligations to make payment for rental and other charges pursuant to the terms of this Agreement shall be excused or reduced only as elsewhere specifically provided in this Agreement.

19.06 Notices. All notices to be given by one Party to the other or options to be exercised under this Agreement shall be in writing, mailed or delivered to Tenant at the address shown in Section 1.14 and Landlord at the following address:

CITY OF SANTA CRUZ

DEPARTMENT OF ECONOMIC DEVELOPMENT AND HOUSING
ATTENTION: ASSET MANAGER, ECONOMIC DEVELOPMENT
337 LOCUST STREET
SANTA CRUZ, CA 95060
Mailed notices shall be sent by United States Postal Service, certified or registered mail, postage prepaid, and shall be deemed to have been given on the date of posting in the United States Postal Service.

Either Party may, by proper notice, at any time designate a different address to which notices shall be sent.

19.07 Relationship of Parties. The relationship of the Parties hereto is that of Landlord and Tenant and it is expressly understood and agreed that Landlord is not in any way or for any purpose a partner of Tenant, or a joint venturer with Tenant in the conduct of Tenant’s business or otherwise.

19.08 Waiver. The waiver by Landlord of any breach of any term, covenant or condition herein contained shall not be deemed to be a waiver of any other term, covenant or condition or any subsequent breach of the same or any other term, covenant or condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Agreement, other than the failure of Tenant to pay the particular rental so accepted, regardless of Landlord’s knowledge of such preceding breach at the time of acceptance of such rent. No covenant, term or condition of this Agreement shall be deemed to have been waived by Landlord, unless such waiver is in writing by Landlord.

14.25 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 24 19.09 Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such rent or pursue any other remedy in this Agreement provided.

19.10 Joint and Several Liability. If more than one individual or entity comprises Tenant, the obligations and liabilities imposed on each individual or entity that comprises Tenant under this Agreement will be joint and several.

19.10 Broker’s Commission. Each Party represents and warrants that there are no claims for brokerage commissions or finder’s fees arising from that Party’s activities in connection with this Agreement, and each Party agrees to indemnify and hold the other Party harmless from all liability arising from any such claim.

19.11 Guaranty of Lease. If Section 1.13 specifies the name of one or more Guarantor(s), Tenant’s obligations under this Agreement are guaranteed by that Guarantor(s), and Landlord reserves the right to enforce this Agreement against Guarantor(s). In that event, this Agreement shall not be effective until the named Guarantor(s) execute a written Guaranty in the form attached hereto as Exhibit C. If Section 1.13 is blank or marked "Not Applicable" then Tenant shall be solely responsible for all payments and performance required by this Agreement.

19.12 Recycling Activities. Tenant agrees to participate, to the greatest extent possible, in all existing or future recycling activities initiated or arranged by Landlord.

19.13 MacBride Principles and the Peace Charter. The City Council of the City of Santa Cruz approved Resolution No. NS-19,378 on the 24th day of July 1990, endorsing the MacBride Principles and Peace Charter and encourages all companies doing business in Northern Ireland to abide by the MacBride Principles and Peace Charter.

19.14 Approval by City Council/City Attorney. This Agreement, and any amendment of its terms, except as under such authority delegated to the City Manager or his/her designee, is subject to the approval of the City Council of the City of Santa Cruz and the City Attorney, and shall not bind Landlord until such time as their approval and consent has been received in writing.

19.15 Subordination This Agreement is and shall be subordinate to any encumbrance now of record or recorded after the date of this Agreement affecting the building, other improvements, and land of which the premises are a part.

Such subordination is effective without any further act of Tenant. Tenant shall from time to time, on request from Landlord, execute and deliver any documents or instruments that may be required by a lender to effectuate any subordination. If Tenant fails to execute and deliver any such documents or instruments, Tenant irrevocably constitutes and appoints Landlord as Tenant’s special attorney in fact to execute and deliver any such documents or instruments.

19.16 Permits and Approvals. All Government permits or approvals are required. Approval by Landlord of any action requiring approval does not constitute approval by the City of Santa Cruz any required permits or applications, and in no way limits the discretion of the City of Santa Cruz in the permit, regulatory, and approval process. Landlord and Tenant will render to each other reasonable assistance in obtaining necessary City of Santa Cruz and other governmental permits or approvals.

14.26 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 25 Any consent or approval of the City of Santa Cruz for any permit, application, or regulatory matter does not constitute consent or approval by Landlord under the terms of this Agreement.

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

19.18 Construction of Agreement. Each Party acknowledges that it has reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting Party shall not apply in the interpretation or construction of this Agreement.

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

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

14.27 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 26 LANDLORD:

CITY OF SANTA CRUZ,
a California municipal corporation
Date: ___________________ By:_______________________________ Matt Huffaker, City Manager
TENANT1
:

Date: ____________________ By: ________________________________

Printed: _____________________________

Date: ____________________ By: ________________________________

Printed: _____________________________
APPROVED AS TO FORM:

Date: ____________________ By:_______________________________ Stephanie Duck, Deputy City Attorney
1 City Signature Requirements for Corporation: Two 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 November 6, 2024

14.28 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 27 EXHIBIT A

PREMISES

14.29 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 28 EXHIBIT B

LIMITATIONS ON USE
Tenant shall use the premises as a visitor information center only. Tenant will maintain a digital sign in the north-facing window. The sign will be programmed to display information on Downtown events and may for a fee, provide a platform for advertising to downtown businesses and visitor-serving attractions. The fee collected for digital advertising shall be used to fund operation costs for the visitor information center.

Tenant may also sell tickets or products, collect fares, and conduct other quasi-commercial activities developed in partnership or at the request of the City (Landlord) as specified in Section 4.07.

Any significant changes in use shall require prior written approval by Landlord.

14.30 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 29 EXHIBIT C

NOT APPLICABLE

14.31 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 30 EXHIBIT D

LICENSE AREA
12’ MIN. CLEAR

NON-EXCLUSIVE

LICENSE / ENFORCEMENT AREA

14.32 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 31 EXHIBIT E
CAFÉ EXTENSION AREA POLICIES AND PROCEDURES
Purpose
The purpose of extension areas is to enhance the pedestrian ambiance of Downtown Santa Cruz by introducing uses attractive to pedestrians onto the pedestrian environment.

Designated extension areas shall be confined to uses that add activity and color to the street; permitted uses shall be limited to outdoor cafes or the selling of flowers, produce and newspaper/magazines, unless otherwise approved by the City Council or its designated agent.

Outdoor Cafes
• Cafes shall project no more than 12 feet from the property line into the public right-ofway, and in no case shall a café extension area result in a public promenade less than 12 feet, unless the café is located along Pacific Avenue in which case the public promenade can be 8 feet;
• The elevation of the extension area shall be the same as the public sidewalk, and shall meet accessibility standards;
• No permanent structures will be allowed within the public right-of-way. • If a separation between the café and the promenade is desired, this shall be achieved through low planters that could contain colorful flowers or a low hedge not permanently affixed to the sidewalk;
 The maximum height of such planters (including the planting) shall be no more than four feet; and
 Planters shall consist of high quality durable materials of a weight and mass that will discourage theft, vandalism or easy movement.
 Should applicant propose other means to achieve separation such as fencing, this shall be self-supporting and decorative.
• A canvas awning will be permitted to extend over the depth of the café extension area; no columns or supporting poles will be permitted within the public right-of-way. Awnings shall comply with the design and height guidelines prescribed below; • The use of removable umbrellas within sidewalk extension areas is also encouraged, provided that seven (7) feet of clearance is provided from the sidewalk. • Removable wind screens that are of a transparent material and that are an integral part of the planter will be permitted to extend the seasonal use of the café area. Such screens

14.33 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 32 shall not exceed a height of six (6) feet and shall be separated from the awnings to provide for air movement.

Retailing Uses
• Retailing uses within extension zones shall be limited to the sale of newspapers and magazines, flowers and produce, unless otherwise approved by the City Council or its designated agent;
• Such extension areas shall not exceed 6 feet in depth, unless it is determined that such depth is necessary to achieve the desired pedestrian objectives for the street, and in no case shall an extension area result in a public promenade that is less than 12 feet in depth or 8 feet along Pacific Avenue.
• Merchandise shall be displayed against the shop front and be oriented toward the street on tables or stands that do not exceed four feet in height; • No separation (e.g., planters or low walls) between the merchandise and the street shall be permitted.

Design Requirements
Furniture: All furniture (e.g. tables, chairs, retailing stands) shall be durable, well maintained, and of a high quality, suitable for outdoor use; such furniture should be light, not heavy or massive in nature, to ensure that it does not visually dominate the street. All furniture shall be approved by City Council or its designated agent at the time of permit hearing.

Design Materials: The design materials and colors used for chairs, tables display stands, lighting, and other fixtures (including umbrellas and awnings) shall be generally consistent with or complementary to both the architectural style and colors used on the building façades and the quality of fixtures along Pacific Avenue.

Lighting: Lighting of the café extension area shall be incorporated into the façade of the building and shall compliment the style of the building. Lights on buildings shall not be glaring to pedestrians and should illuminate only the extension area and the activities within. General illumination should be at 5 foot-candles, with a maximum of 10 foot-candles. Table lamps or candles are encouraged in café areas. Wired electrical fixtures will be allowed outside the face of the building, if contained within the semi-permanent barrier allowed for café extension areas and if installed by a licensed electrician. A lighting plan must be approved by the City Council or its designated agent.

14.34 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 33 EXHIBIT F
DESCRIPTION OF LANDLORD’S AND TENANT’S WORK
Not Applicable

14.35 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 34 EXHIBIT G

SIGN CRITERIA
All signage shall be developed in consultation with and approved by Landlord prior to fabrication and installation. All proposed signage, shall conform generally to the provisions of the City’s Sign Regulations for the Central Business District (CBD), as may be amended (see below).

Except as may be directed by Landlord, Tenant shall not be required to acquire a Sign Permit from the Planning Department for installation of signage on the Premises. (a) 24.12.352 SIGN REGULATIONS FOR CENTRAL BUSINESS DISTRICT (CBD) ZONE.

1. Purpose. The sign regulations have been created in order to: ensure the visibility of Central Business District (CBD) zoned businesses; to maintain safe and accessible public pedestrian areas; to ensure that signs are integrated with and harmonious to the buildings and sites which they occupy; to eliminate excessive and confusing sign displays; to preserve and improve the appearance of the CBD zone as a place in which to live and to work as an attraction to nonresidents, and to restrict signs which increase the probability of accidents by distracting attention or obstructing vision.

2. Permitting Requirements. Signs within the CBD zone are subject to the sign permit requirements of Chapter 24.08, Part 6 of the City of Santa Cruz Zoning Code, except as modified by this chapter. a. Projecting signs and hanging signs that conform to all provisions provided under subsection (7)(b) shall be permitted and do not require a sign permit.
b. Exceptions and variations to the requirements may be considered by the zoning administrator without a public hearing, subject to the exception procedure set forth in Section 24.08.580; sign permit findings set forth in Section 24.08.530; and the following criteria:

The alternate sign design is necessary to achieve visibility due to: 1) the location of existing, permitted sign, awnings/canopies, or other architectural features on surrounding structures, 2) the location of existing vegetation, required landscaping, or other natural elements worthy of preservation, or 3) the physical location of the building.

3. Prohibited Signs. Signs prohibited within the CBD zone are subject to the regulations in Part 4 of Chapter

24.12. Additional types of signs prohibited include:
a. Sandwich board/A-frame signs.
b. Temporary signs that are displayed for longer than thirty days and/or that are prohibited under subsection (6)(f).

4. Definitions.
a. “A-frame sign/sandwich board” shall mean a portable freestanding sign in the shape of the letter “A” as viewed from the side, typically with two sides facing opposite directions. b. “Canopy/awning sign” shall mean any sign that is part of a fabric or plastic structural protective cover over a door or entrance.
c. “Freestanding sign” shall mean any sign standing on the ground or the support for which stands or rests on the ground. Such signs are usually, but not necessarily, supported from the ground by one or more poles or posts, or similar uprights, with or without braces. d. “Halo illumination” shall mean a light source, which is not visible, where the light fixture is placed on the back side of the letter or sign face resulting in a glow around the outside of the lettering or sign. e. “Hanging sign” shall mean a projecting sign which is suspended from an overhang, canopy, marquee, or awning, or from a mounting attached directly to the building wall. f. “Icon sign” shall mean hanging or projecting signs that depict a physical object, such as a shoe, as opposed to signs that utilize lettering to convey the sign message. Icon signs may or may not include the name of the establishment.
g. “Master Sign Program” shall refer to a program that established to integrate all signs into a project’s design to achieve a unified architectural statement. A Master Sign Program provides a means for flexible application of sign regulations for properties with multiple signs, multi-tenant properties, and other properties with unified development, in order to encourage creativity and provide incentives to achieve, not circumvent, the intent of this division.

14.36 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 35 h. “Projecting sign” shall mean any sign which uses a building structure as its main source of support and contains copy that is mounted at an angle to the building face. Projecting signs may be mounted vertically or horizontally on the support structure.
i. “Public art” shall mean original works of art in any medium, whether two- or three-dimensional, created for placement in public places or integrated projects where the artwork is a part of the underlying architecture or landscape design and that is not prefabricated or standard design. Artwork should not use letters, words, numerals, figures, emblems, logos or any part or combinations thereof for the purpose of advertising goods, services or merchandise. Public art should enhance rather than impair pedestrian use of the area, particularly with respect to pedestrian visibility and circulation. j. “Sign” shall mean any structure, device, or design and appurtenant light structures used principally to advertise or attract attention of the public. The term shall not include the United States flag, or any governmental flag, properly displayed in an approved manner, patriotic bunting, and donor’s memorial plaques.
k. “Temporary sign” shall mean sign(s) placed for a time not to exceed thirty consecutive calendar days. These signs are generally used for special events or grand openings, but may include the name of a business. Banners are a type of temporary sign which hang over a public street, walkway or wall to advertise a special event or business.
l. “Wall sign” shall mean any sign posted or painted on, suspended from or otherwise affixed to the wall of any building or structure in an essentially flat position, or with the exposed face of the sign in a plane approximately parallel to the plane of such wall.
m. “Window sign/graphics” shall mean any building sign, pictures, symbols, or combination thereof, designed to communicate information about an activity, business, commodity, event, sale, or service, that is placed inside a window or upon the window pane or glass and is visible from the exterior of the window.

5. General Guidelines. The following statements are general rules for signs which apply to all parcels within the Central Business District zone.

General • Wall signs with large areas of dark colors, and which read as billboards because of size and corporate message, are out of place in the Central Business District zone.

Location • Shall not cover windows, roof shapes, or dominate trim.

Number • A maximum of 2 different types of the following signs per business:
• wall sign
• projecting sign
• hanging sign
• awning sign
Lighting • Internally illuminated signs shall be limited to illuminated lettering with an opaque background, neon signs, or halo illumination.
• Exterior Lighting for Signs. All signs should have the capacity of being lit for evening visibility.

Materials and
Methods of
Construction
• Any materials or methods of construction are acceptable; however, signs shall be legible and shall be constructed of durable, high quality materials.

Exceptions • A Master Sign Program may be created to allow for a coordinated long-term sign plan for a multi-tenant building.

Maintenance • All signs, together with all supports, braces, guys and anchors, shall be free from excessive deterioration, rot, rust and loosening, and shall be maintained in safe condition as determined by the building official or community development director.

The display surface of all signs shall be kept neat and clean at all times.

6. Development and Design Standards.
a. Wall Signs.

14.37 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 36 Area • The total area of all signs on a building shall be limited to a size equal to 1 square foot of sign per linear foot of frontage of building face, with a minimum allowance of
25 square feet regardless of front footage.
• Multiple Tenants. If the ground floor is occupied by more than 1 tenant, each tenant is entitled to a pro-rata share footage based on frontage used by that tenant. Each
tenant is entitled to minimum allowance of 25 square
feet regardless of frontage.
• If a continuous, solid band sign is used, only the area encompassed by the lettering shall be counted toward
the total sign area.

Location • Either on or above a tenant space fronting a public street, alley or public parking lot.
• Shall not cover windows, roof shapes, or other
distinguishing architectural features.

Height • No part of any sign shall extend above the top level of the wall upon or in front of which it is situated.

Projection • Not to exceed 12 inches from building face.

Number • One, with the exception of corner buildings, which may have one sign per building face fronting a street.
• Window signs are not included in the maximum number
b. Projecting Signs and Hanging Signs.

Area • A maximum of 6 square feet in area for projecting signs on Pacific Avenue and 8 square feet in area on all other streets, as measured on one side of a two-sided sign.

Projecting Sign
Hanging Sign
• A maximum of 6 square feet in area for hanging signs as measured on one side of a two-sided sign.

Location • Determined by visibility.
• Shall be located directly above or to the side of an
entrance of a tenant space.

Number • A maximum of one projecting sign or one hanging sign per frontage face.

Height • A minimum clearance of 8 feet.

Projection • For signs with an 8-14 foot clearance, signs may project 2 feet and may project 6 additional inches for each foot of clearance in excess of 8 feet.
• Not to exceed 4 feet.

Lettering • Usage of establishment’s name on the sign is preferred • An icon which has only the symbol or image of the store should suggest as nearly as possible those services
which are offered, or products which are sold, inside the establishment.

14.38 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 37 c. Window Graphics.

Area • Not to exceed more than 25% of the area of any
one window.

Location • Shall not obscure pedestrian’s visibility into shop. • Shall be integrated into store window displays.

Colors • Complementary and suitably contrasting accent
colors shall be used.

Methods of
Application
• Hand painted directly onto glass.
• Vinyl letters applied to glass.
• Clear acrylic panel hung or posted behind glass.
d. Street Address Numbers. Where consistent with the requirements of the city of Santa Cruz fire department, bold number graphics can be used to highlight a store’s address and location. This is especially effective when there is more than one shop per building. e. Canopy/Awning Signs. Signs painted on or affixed to canopies or awnings which are a part of a building shall be counted toward the total allowable area of wall signs. Signs suspended under canopies shall meet the requirements for a hanging sign provided under subsection (6)(b). f. Temporary Signs.
(1) Temporary signs, such as hastily, hand-painted “Sale” signs printed on paper and plastered in windows, are not permitted and shall be subject to the enforcement procedures provided under Title 4 of the City of Santa Cruz Municipal Code.
(2) Temporary signs not exceeding two in number and six square feet in total area for each business are allowed.
g. Public Art Exception. The zoning administrator shall determine whether a proposal contains the characteristics of a sign, i.e., whether its principal function is to serve as an advertisement. If the zoning administrator determines that the proposal is a sign, it shall be subject to the requirements of this part and may be subject to building and construction codes or other requirements of the municipal code. (b) 24.12.360 PERFORMANCE REGULATIONS – LIGHTING, MOVEMENT, SOUND.

1. Lighting.
a. Lighting of Signs. Where a sign is externally illuminated the light source must be shielded such that it is not visible from the front of the sign or lighting fixture, or from beyond the property line. Illuminated signs are prohibited in residential zone districts. Intermittent or flashing lighting shall be prohibited.

Illuminated surfaces with an integral light source, such as electroluminescent paneling, may be used if their illumination intensity does not interfere with surrounding land uses. Lighted signs in the Beach Recreational Area and time and temperature devices in any district are not subject to these restrictions. b. Searchlights. Portable shielded arc-type searchlights shall be permitted as temporary signs, in commercial and industrial districts only, provided that the beam of the searchlight shall not be projected at less than a forty-five degree angle measured from a horizontal plane, and shall not project upon or reflect upon property or buildings other than the property or buildings of permittee.

2. Movement and Sound.
a. Animated Signs. Movement or semblance of movement of signs shall be limited to three cycles per minute, except that in the Beach Recreational Area, there shall be no limit. b. Sound. No sign shall be designated for the purpose of emitting sound. See also Section 24.12.328 above (roof signs) and Section 24.12.330 above (flags, etc., regulations)

14.39 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 38 14.40
Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 39 EXHIBIT H

INSURANCE REQUIREMENTS
Tenant shall procure and maintain for the duration of the Agreement, insurance against claims for injuries to persons or damages to property which may arise from or in connection with Tenant’s operation on, access to, and/or use of the leased premises and license area. The cost of such insurance shall be borne by Tenant.

A. Insurance Certificate Requirements.

The City will be issued a Certificate of Insurance (a Memorandum of Understanding will not be accepted) with the following minimum requirements:
• Certificate(s) will show current policy number(s) and effective dates, • Coverage and policy limits will meet, or exceed, requirements below, • The Certificate Holder will be City of Santa Cruz, Risk Management, 1200 Pacific Ave., Suite 290, Santa Cruz, CA 95060,
• Certificate will be signed by an authorized representative, • An endorsement, if required below, will be provided to show the City, its officers, officials, employees, and volunteers as additional insureds, and
• Coverages must be maintained during the term of the Agreement with the City, unless a longer duration is required.

B. Minimum Scope and Limit of Insurance.

Tenant acknowledges that the insurance coverage and policy limits set forth in this section constitute the minimum amount of coverage required. If Tenant maintains broader insurance coverage and/or higher limits than the minimums shown below, Landlord shall be entitled to the broader insurance coverage and/or higher limits maintained by Tenant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to Landlord.

Tenant shall maintain limits no less than the following:

1. Commercial General Liability (CGL): $2,000,000.00 per occurrence; $2,000,000 in the aggregate, including products and completed operations, property damage, bodily injury and personal & advertising injury insuring against all liability of Tenant and its employees, agents, representatives, subtenants, assignees and concessionaires arising out of and in connection with Tenant's use or occupancy of the Premises; and, if applicable, liability for the sale and distribution of liquor and alcoholic beverages.

2. “All Risk” Property Insurance Coverage. Tenant shall, at Tenant's sole expense, obtain and keep in full force and effect an insurance policy covering all of Tenant's personal property, trade fixtures, equipment and merchandise located in or upon the Premises in an amount sufficient to cover not less than one hundred percent (100%) of the replacement value thereof, providing protection against any peril included within including sprinkler damage, vandalism and malicious mischief endorsements ordinarily included in extended coverage casualty insurance policies. Tenant shall be solely responsible for any uninsured loss or damage caused to Tenant's personal property, trade fixtures, equipment and merchandise located in or upon the Premises for any reason.

3. Fire Insurance\Legal Liability Coverage.

14.41 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 40 Tenant, at its sole cost, shall procure and maintain in full force and effect at all times during the Term of this Agreement, fire and extended coverage insurance satisfactory to Landlord covering the Premises to keep all leased property or rented space, Tenant improvements therein in an amount not less than one hundred percent (100%) of the full replacement cost against loss or destruction by fire and all perils, including vandalism, malicious mischief, special extended perils (“special form”). The property insurance is to be endorsed to include Legal Liability Coverage (ISO Form CP 00 40 04 02 or equivalent) with a limit equal to the replacement cost of the leased property. Landlord shall be named as an additional insured and loss payee on the policies. Any loss payable under any policy described in this section shall be paid by the insurance company to Landlord or as otherwise agreed by the Parties to be used to fund the repair or replacement of the damaged Premises or improvement pursuant to this Agreement. “Full replacement cost,” as used in this section, shall mean the actual cost of replacement for the building and other improvements on the Premises, as determined from time to time.

4. Business Interruption Insurance.

Policy with adequate limits to cover the term of this Agreement and shall contain an inflation endorsement if the Premises or Tenant improvements are destroyed or rendered inaccessible by a risk insured against by a policy of standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements. Insurance proceeds thereunder shall be payable to Landlord for loss of rents.

5. Workers’ Compensation and Employer’s Liability Insurance.

Tenant shall obtain policies as required by applicable law against liability arising on account of injuries or death to workers or employees on the Premises or any improvement of Tenant. Such workers’ compensation insurance shall be in amounts at least equal to the maximum liability of Tenant, its agents, and contractors under the Workers’ Compensation Insurance and Safety Act of the State of California and the Federal Longshore and Harbor Workers’ Compensation Act, as applicable. Tenant shall also maintain Employer’s Liability insurance with limits no less than One Million Dollars ($1,000,000) per accident for bodily injury or disease, $1,000,000 disease – policy limit, $1,000,000 disease – each employee.

Such insurance shall include a waiver of subrogation in favor of Landlord.

C. Other Insurance Provisions.

ADDITIONAL INSURED STATUS
The City, its officers, officials, employees, agents, 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 Tenant, including materials, parts, or equipment furnished in connection with such work or operations, products and completed operations. General liability coverage will be provided in the form of an endorsement to Tenant’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, Tenant’s insurance coverage will be primary and noncontributory as respects the City, its officers, officials, and employees. Any insurance or self14.42 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 41 insurance maintained by the City, its officers, officials, and employees will be excess of Tenant’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
Tenant hereby grants to the City a waiver of any right to subrogation, except as otherwise not applicable, which any insurer of said Tenant may acquire against the City by virtue of the payment of any loss, including attorney’s fees under such insurance. Tenant 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
Tenant 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 Tenant’s primary and excess liability policies are exhausted.

SELF-INSURED RETENTIONS (SIR)
Self-insured retentions must be declared to and approved by the City. City may require Tenant 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.

VERIFICATION OF COVERAGE
Tenant 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, and any Excess Liability/Umbrella policies, as applicable, 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 Tenant’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.

SUBCONTRACTORS
Tenant shall include their subcontractor(s) as additional insured(s) under the policies or shall furnish separate certificates and endorsements for each contractor and subcontractor for any work related to the leased premises. Tenant shall require and verify that all contractors and subcontractors maintain insurance meeting all the requirements stated herein, and Tenant shall ensure that City, its officers, officials, employees, agents, and volunteers are named as additional insureds on insurance required from its contractor(s) and subcontractor(s).

14.43 Lease Agreement between the City of Santa Cruz and Downtown Association of Santa Cruz 42 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 Tenant.

14.44 City Council

AGENDA REPORT
DATE: 10/31/2024
AGENDA OF: 11/19/2024
DEPARTMENT: Economic Development and Housing
SUBJECT: Kiosk Lease and License Agreement with Paul Cocking dba café gg (EDH) RECOMMENDATION: Motion to:
1) Approve and authorize the City Manager to execute the Kiosk Lease and License Agreement with Paul Cocking doing business as café gg, and any documents, amendments or extensions of a non-substantive nature, in a form approved by the City Attorney, for the kiosk located at 1130 K1 Pacific Avenue; and 2) Approve of the CEQA determination contained in this Agenda Report. The Council’s action is exempt from CEQA review under 14 CCR 15301 and 14 CCR 15061. Under those authorities, CEQA does not apply to (1) existing facilities involving negligible or no expansion of existing or former use; and (2) activities where it can be seen with certainty that there is no possibility that the activity may have a significant effect on the environment.

BACKGROUND: The City frequently advertises City-owned commercial space available for lease, including the Downtown kiosks. Beginning in April 2024, the kiosks located at 1130 K-1 and 1520 K-2 Pacific Avenue were made available for lease and posted for submissions. The advertisement was included in a department newsletter and on the Choose Santa Cruz website.

The City received three (3) proposals. These proposals were competitively screened to evaluate business readiness, experience, and the potential to expand dining options in Downtown Santa Cruz.

DISCUSSION: Based on the application and review process, City staff recommends that City enter into a Kiosk Lease and License Agreement with Paul Cocking doing business as café gg for the kiosk located at 1130 K-1 Pacific Avenue. Mr. Cocking has more than thirty (30) years of experience in the food service industry. He is currently the owner of the downtown staple restaurant, Gabriella Café, which has long been a leader in the farm-to-table movement. Gema Cruz, the head chef at Gabriella Café, also brings more than 25 years of culinary experience and is expected to be a leading force in the menu and operations of the café gg kiosk.

The kiosk is proposed to offer a variety of Mexican inspired quick service meals, such as tamales, pupusas, pressed sandwiches/tortas, and other related foods. Prices will likely range from approximately $5 to $15 and include a variety of drinks and sides.

15.1 The proposed Tenant has requested an initial term for the lease of one (1) year and includes an option to extend the term for an additional one (1) year, if the tenant is in good standing.

HEALTH IN ALL POLICIES (HiAP): Promoting locally owned businesses helps support social and community bonds, improves community economic resilience, and generally aligns business activities with local culture and initiatives. While these factors may not have a direct impact on public health, they have been shown to have a positive impact on the social determinants of health and support overall well-being in the community. Locally owned businesses may also reduce commute times and pollution from owner operators, which supports reduction in greenhouse gas emissions which is identified in the City’s Climate Action Plan.

FISCAL IMPACT: The proposed action will not impact the City’s General Fund. Lease revenue from kiosks are maintained in the Kiosk Maintenance Fund (Fund 123), where they help fund repairs, maintenance, and contributions to Downtown Programs managed by the Downtown Management Corporation. The proposed lease includes a minimum annual rent of $3,600 per year or six percent (6%) of sales, whichever is greater.

Prepared By:

Dave McCormic
Development Manager
Submitted By:

Bonnie Lipscomb
Director of Economic
Development and Housing
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. KIOSK LEASE AND LICENSE AGREEMENT WITH PAUL COCKING.PDF

15.2 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 1 KIOSK LEASE AND LICENSE AGREEMENT
This Kiosk Lease and License Agreement (“Agreement”) is entered into by and between the City of Santa Cruz, a municipal corporation (hereinafter, “Landlord”) and Paul Cocking, doing business as (“dba”) cafe gg (hereinafter “Tenant”). The effective date of this Agreement shall be _______________, 2024 (“Effective Date”). Landlord and Tenant are sometimes hereinafter referred to individually as “Party” and collectively as “Parties”. Landlord and Tenant agree to all terms and conditions of this Agreement as set forth herein.

ARTICLE 1. BASIC LEASE PROVISIONS
The following are basic terms applicable to this Agreement. The Sections and Exhibits referenced below in parenthesis explain and define the basic terms specified below and are to be read in conjunction with basic terms herein:

1.01 Tenants Trade Name: “cafe gg” (Section 8.01)

1.02 Commencement Date of Term: December 1, 2024 (Section 3.01).

1.03 Term: As of the Commencement Date and terminating no later than 11:59 p.m. (PST) on January 31, 2026 (“Expiration Date”), unless sooner terminated or otherwise extended as permitted under this Agreement.

1.04 Premises and License Area: Kiosk located at 1130 K-1 Pacific Avenue, Santa Cruz, CA 95060 and adjacent License Area. (Section 2.02, Exhibit A).

1.05 Floor Area: Approximately sixty (60) square feet (Section 2.02).

1.06 Tenant’s Deadline to Complete Tenant’s Work: NOT APPLICABLE

1.07 Percentage Rent Rate: Six Percent (6%) (Section 4.01).

1.08 Minimum Annual Rent: $3,600.00 (Section 4.03), increasing annually thereafter.

1.09 Minimum Monthly Rent: $300/month or equal to 1/12 of the Minimum Annual Rent, as adjusted (Section 4.05).

1.10 Use of Premises and License Area: Tenant shall use the Kiosk and License Area for retail or food service sales of those items listed in Exhibit B and for no other use without Landlord’s prior written consent. (Section 8.01).

1.12 Security Deposit: $600.00. (Section 7.01).

1.13 Guaranty of Lease: Not applicable (Section 19.12; Exhibit C).

15.3 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 2 1.14 Address for Notices to Tenant:

Paul Cocking
910 Cedar Street
Santa Cruz, CA 95060
[email protected]
ARTICLE 2. LEASE/LICENSE OF PREMISES

Nothing contained in this Section shall limit in any way the authority of any office or department of the City of Santa Cruz from approving or withholding consent to any event or activity regulate by local law.

2.02 Premises. Landlord leases to Tenant and Tenant leases from Landlord the retail kiosk designated as 1520-K1 PACIFIC AVENUE, Santa Cruz, California (the “Premises”) (Exhibit A).

2.04 License, Appurtenant Rights, Public Right of Way. Landlord is the owner of the public right of way surrounding and adjacent to the Premises described herein. Tenant desires to obtain the permission of Landlord to perform certain acts upon and within the public right of way. Now, therefore, Landlord, as Licensor, grants to Tenant, as Licensee, a license for the use during business hours of a portion of the public right of way surrounding the kiosk (“License Area”) for the purpose of walk-up business, pick-ups and deliveries, and outdoor seating consisting of tables and chairs in connection with Tenant’s operation of its business at the Premises. The License Area is marked and described on the attached Exhibit D. The license is non-exclusive, non-assignable, and terminable and revocable at the will of Landlord.

15.4 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 3 The Term applicable to the Premises does not apply to the License Area and Landlord retains the right at its sole discretion to terminate or revoke said license at any time. Termination or revocation of the Licensee’s use of the License Area is not grounds for termination of the Agreement. Termination or restriction of use the use of the License Area does not reduce rental payments due under the Agreement.

2.06 Condition of Premises. Tenant acknowledges that it recognizes the uniqueness of the premises and accepts them in their current and disclosed “AS IS, IN ITS CURRENT CONDITION, WITH ALL FAULTS” condition existing on the date of execution of this Agreement, subject to all applicable zoning, municipal, county, or state laws, ordinances and regulations affecting the use of the Premises and License Area, and subject to those items included on Exhibit F as Landlord’s Work. Tenant acknowledges that it has satisfied itself, by its own independent investigation, that the Premises are suitable for its intended use and neither Landlord nor its agents or representatives have made any representation or warranty as to the present or future suitability of the Premises for the conduct of Tenant's business.

ARTICLE 3. TERM

If Tenant is not in default at any time during the term of this Agreement Tenant shall have the option to extend the term of this Agreement for an additional two (2) year period (the "First Extended Term") following the expiration of the initial term, upon the same terms and provisions contained in this Agreement except for the amount of the Minimum Annual Rent, which shall be adjusted as provided in Section 4.05 and

4.08. Tenant may exercise said option to extend the term by giving written notice to Landlord at least four (4) but not more than six (6) months before the expiration of the initial term. If Tenant is declared to be in default at any time during the initial term of this Agreement, Tenant's election to extend the term of this Agreement shall be totally ineffective and this Agreement shall expire at the end of the initial term, unless otherwise terminated earlier in accordance with this Agreement.

3.02 Expiration; Holding Over. The Term will expire at 5:00 p.m. on the date specified in Section 1.03, unless sooner terminated or otherwise extended as permitted under this Agreement. If Tenant should remain in possession of the Premises after the expiration of the Term of this Agreement in the absence of a new agreement or after Landlord has declared a forfeiture of this Agreement as a result of Tenant’s default, then such holding over shall be construed as a tenancy from month-to-month, subject to all of the terms, conditions, provisions and obligations of this Agreement at the time this Agreement expires or upon Tenant’s default, as the case may be, except the Minimum Annual Rent shall be one and one-half (1.5) times the amount of such rent in effect prior to Tenant’s holdover. Unless Tenant obtains the express written consent of Landlord to holding over, Landlord does not waive its right to pursue any legal or

15.5 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 4 equitable remedy against Tenant with regard to Tenant’s continued possession of the Premises after the expiration of the Term of this Agreement. Under a month-to-month tenancy, Tenant may terminate this Agreement by providing Landlord with written notice at least thirty (30) days prior to the intended termination date. Tenant shall be responsible for paying Rent through the termination date even if moving out early. Landlord may terminate the tenancy by giving notice to Tenant as required by law.

ARTICLE 4. RENT

4.01 Rent. Beginning with the Commencement Date, Tenant agrees to and shall pay Landlord the greater of an annual fixed minimum rent (“Minimum Annual Rent”) of $3,600.00 in monthly installments of $300.00 (“Minimum Monthly Rent”) or six percent (6%) of Tenant’s monthly gross sales (“Percentage Rent”), whichever is greater. The Minimum Annual Rent shall be adjusted annually (Section

4.05).

In addition to the Annual Minimum Rent and Percentage Rent specified above, Tenant shall pay to Landlord any additional rent (“Additional Rent”) as may be required by this Agreement including but not limited to payment for Operating Expenses, as defined in Section 6.01, and utility charges as provided in for in Section 10.02.

4.02 Commencement of Rent.
(a) Tenant’s obligation to pay the Minimum Annual Rent or Percentage Rent under this Agreement shall commence on the date of Commencement of Term as set forth in Section 1.02.

15.6 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 5 (b) In the event that Tenant’s obligation to pay rent does not commence on the first (1st) day of a calendar month, Tenant shall pay Rent for the fractional month on a per-diem basis (calculated on the basis of a thirty (30)-day month) until the first (1st) day of the calendar month following the commencement of Tenant’s obligation to pay rent. If the Term commences prior to Tenant’s obligation to pay Minimum Annual Rent and Percentage Rent, Tenant shall nonetheless be required to pay all sums set forth in the Agreement other than Minimum Annual Rent and Percentage Rent.

4.03 Minimum Rent. Tenant shall pay Landlord the greater of the Percentage Rent or the Minimum Monthly Rent specified in Section 4.01, subject to adjustment as set forth in Section 4.05, by the fifteenth (15th) day of the following calendar month at the address listed below, or at such other location as Landlord may notify Tenant in writing.

CITY OF SANTA CRUZ

FINANCE DEPARTMENT
1200 PACIFIC AVENUE, SUITE 290
SANTA CRUZ, CALIFORNIA 95060
Each monthly payment shall be paid without deduction, offset, prior notice or demand.

4.04 Percentage Rent/Monthly Statements.
(a) On or before the fifteenth (15th) day of each calendar month, Tenant shall furnish to Landlord the written Statement of Gross Income and Rent Computation (Exhibit G - the “Monthly Statement”), certified by Tenant to be correct, showing the total Gross Sales and Percentage Rent due during the preceding calendar month. Said statement shall be in the format prescribed and approved by Landlord, as set forth in Exhibit G, and subject to future modification. In addition, Tenant shall provide Landlord with copies of all State Sales Tax reports at the same time as they are provided to the State Board of Equalization.

4.05 Annual Adjustment To Annual Rents. The Minimum Annual Rent and Minimum Monthly Rent (referred to collectively, as “Minimum Rents”) specified herein shall each be subject to adjustment at the commencement of the term and each year thereafter including all extensions thereto (the “Adjustment Date”) as follows:
(a) The base for computing the adjustment is the Consumer Price Index, All Urban Consumers, San Francisco-Oakland-Hayward, All Items (1982-1984 = 100), as published by the United States Department of Labor, Bureau of Labor Statistics (“Index”), which is in effect on the date of the commencement of the term (“Beginning Index”). The Index published most immediately preceding the Adjustment Date in question (“Extension Index”) is to be used in determining the amount of the adjustment.

If the Extension Index is increased over the Beginning Index, the Minimum Annual Rent for the following year (until the next rent adjustment) shall be set by multiplying the preceding year’s Minimum Annual Rent set forth above by a fraction, the numerator of which is the Extension Index and the denominator of which is the Beginning Index.
(b) In no case shall the Minimum Annual Rent be less than the amount set forth in Section 1.08, nor shall the Minimum Rents be less than the Minimum Rents in effect immediately prior to the adjustment date then occurring. On adjustment of the Minimum Rents as provided in this Agreement, Landlord shall notify Tenant in writing of the new Minimum Rents. If the Index has changed so that the base differs from that in effect when the term commences, the Index shall be converted in accordance with the conversion factor published by the United States Department of Labor, Bureau of Labor Statistics. If the Index is discontinued or revised during the term, such other government index or computation with which it is replaced shall be used in order to obtain substantially the same result as would be obtained if the index had not been discontinued or revised.

15.7 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 6 4.06 Late Charges and Interest on Unpaid Rent.
(a) Tenant acknowledges that late payment by Tenant to Landlord of rent will cause Landlord to incur costs not contemplated by this Agreement, the exact amount of such costs being extremely difficult and impracticable to fix. Such costs include, without limitation, processing and accounting charges, and late charges that may be imposed on Landlord by the terms of any encumbrance and note secured by any encumbrance covering the Premises.
(b) Therefore, if any installment of Rent due from Tenant, including Additional Rent, is not received by Landlord when due, Tenant shall pay to Landlord an additional sum of ten percent (10%) of the overdue rent as a late charge, and interest at the rate of one and one-half percent (1 1/2%) per month, or the maximum rate of interest allowed by law, on the unpaid balance of said rent or sum until paid. The Parties agree that said late charges and interest represents a fair and reasonable estimate of the costs that Landlord will incur by reason of late payment by Tenant. The acceptance by Landlord of any late charge shall not constitute a waiver of Tenant’s default with respect to the overdue amount, nor prevent Landlord from exercising any of the other rights and remedies available to Landlord under this Agreement or as provided by law.
(c) Additionally, if a check is returned for non-sufficient funds (“NSF”), Tenant shall pay to Landlord a $25 NSF fee. If any payment is returned for NSF or because Tenant stops payment, then Landlord may, in writing, require Tenant to pay future rent in cash.

4.07 Gross Sales. The term “Gross Sales” as used in this Agreement means all gross receipts of every kind and nature from sales and services from all business conducted by Tenant on, in, at or from the Premises, whether upon credit or for cash, in every department operating in the Premises, whether operated by Tenant or by any subtenant or concessionaire, excepting therefrom any rebates or refunds to customers and the amount of all sales or excise tax receipts collected from customers and paid by Tenant to any government agency. Sales upon credit shall be included in the Gross Sales for the period in which the merchandise is delivered or service rendered to the customer, regardless of when payment is made.

4.08 Books and Records. Tenant shall keep full and complete records of its daily Gross Sales for a period of four (4) years. Landlord, its employees and agents shall have the right at any and all times, during regular business hours, to examine and inspect all of the books and records of Tenant pertaining to its business conducted in, on, or from the Premises and License Area, for the purpose of investigating and verifying the accuracy of any statement of Gross Sales, and for making any necessary adjustments to the rent paid and owed. Landlord may obtain an audit of Tenant’s business and if the Gross Sales figures provided to Landlord are determined to be inaccurate, payment shall be made by Tenant upon Landlord’s written request to reflect the accurate amount of Percentage Rent owed to Landlord. If the audit discloses an inaccuracy of greater than 2 percent (2%) error with respect to the amount of Gross Sales reported by Tenant, then Tenant shall pay the cost of the audit; otherwise Landlord shall pay for the audit cost. If audit discloses any willful or substantial inaccuracies, this Agreement may be terminated by Landlord.

15.8 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 7 Landlord and Tenant agree that said charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of such action by Tenant.

ARTICLE 5. TAXES; ASSESSMENTS; AND, LICENSES

5.03 Parking and Business Improvement Area Zone and Charges. Tenant. shall pay before delinquency all taxes, assessments, license fees, and other charges that are levied, assessed, charged or imposed upon businesses within any Parking and Business Improvement Area Zones established by the City of Santa Cruz or other such applicable local agency. On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments.

5.04 Taxes; Assessments; Title 12 Santa Cruz Municipal Code Local Improvements.

Tenant shall pay before delinquency its proportionate share of all taxes, assessments, license fees, and other charges that are levied, and assessed against the building, other improvements, and land of which the premises are part by any improvement and/or maintenance district established by the City of Santa Cruz or other such applicable local agency (including under Title 12 Santa Cruz Municipal Code - Local Improvements, as may be amended, and any revised or successor ordinances or resolutions applicable thereto). On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments.

5.05 City of Santa Cruz Business License. A city business license is required concurrent or prior to execution of this Agreement. Contact the City’s Finance Department at 831-420-5050 for more information.

ARTICLE 6. OPERATING EXPENSES

15.9 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 8 ARTICLE 7. SECURITY DEPOSIT

7.01 Amount of Deposit. Concurrently with the Commencement Date or within a timeline approved by Landlord, Tenant shall deposit with Landlord the sum set forth in Section 1.12 herein (“Security Deposit”); or an amount equal to two months of the Minimum Monthly Rent, whichever is greater. This Security Deposit shall be held by Landlord, without liability for interest, as partial security for the full and faithful performance by Tenant of all the terms, covenants and conditions of this Agreement to be performed by Tenant. Landlord may commingle the Security Deposit and shall not be required to keep it separate from its general funds.

Landlord may adjust the Security Deposit amount annually to account for increases in Minimum Monthly Rent or Percentage Rent. Such additional Security Deposit amounts shall be due within a timeline approved by Landlord. The Security Deposit shall not exceed the equivalent of two months of the Minimum Monthly Rent.

7.02 Use and Return of Deposit. If Tenant fails to abide by any of the terms, covenants and conditions of this Agreement, then Landlord, at its option, may use any amount of the Security Deposit to compensate Landlord for any loss or damage sustained or suffered due to such failure by Tenant. The entire Security Deposit, or any portion thereof, may be applied by Landlord for the payment of overdue rent or other sums due and payable to Landlord by Tenant hereunder. Tenant shall, upon the written demand of Landlord, immediately remit to Landlord a sufficient amount to restore the Security Deposit to the original sum deposited or two months of the Minimum Monthly Rent, whichever is greater. Failure to do so within five (5) days after such demand, or a timeline approved by Landlord, shall constitute a material breach of this Agreement. Should Tenant comply with all of the terms, covenants and conditions of this Agreement and promptly pay when due all of the rent herein provided and all other sums payable to Tenant to Landlord, the Security Deposit will be returned in full to Tenant within thirty (30) days following the end of the Term or earlier termination of this Agreement.

ARTICLE 8. USE

8.01 Use of Premises. Tenant shall use the Premises under the trade name, and solely for the use specified, in Sections 1.01 and 1.10, respectively, herein.

Tenant hereby acknowledges and understands that the kiosk is not designed for, nor properly vented for, nor can it be modified for, primary cooking activities, including but not limited to pan frying and/or deep frying or any other type of cooking or other activity which is not permitted under state or local Health Department or Building Department laws, codes, or ordinances, or any other applicable laws and regulations. Tenant is permitted to warm food in the kiosk in manners acceptable to the Santa Cruz County Department of Environmental Health Service. Tenant further acknowledges and understands that all food preparation, either primary- or pre-preparation shall be conducted in a facility certified by the appropriate local governing body, specifically including the Santa Cruz County Department of Environmental Health Service.

Tenant shall not commit or suffer to be committed any waste upon the Premises or any nuisance or other act or thing which may disturb the quiet enjoyment of any other Tenants or their customers.

15.10 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 9 cause a cancellation of any insurance policy covering the Premises or any part thereof. Nor shall Tenant sell or permit to be kept, used, stored or sold in or about the Premises any article which may be prohibited by any policy of fire insurance obtained by Landlord. Tenant shall, at its sole cost, comply with any and all requirements regarding the use of the Premises by any company that issues a policy of fire, casualty or public liability insurance to Landlord. If Tenant’s use of the Premises results in a rate increase for the Premises or the building Tenant shall pay as Additional Rent within ten (10) days written notice, a sum equal to the additional premium caused by such rate increase.

Notwithstanding any other terms of this Agreement, Tenant’s closure of the business shall not constitute a waiver or modification of any rent due.

8.03 Storage; Office Space. Tenant shall warehouse, store and stock within the Premises only such goods, wares and merchandise as Tenant intends to offer for retail sale on or about the Premises.

8.04 Cooperative Retail Management. As a condition of this Agreement, Tenant shall be a member of any existing or future Cooperative Retail Management entity (“CRM”) organized for Tenants, property owners, retailers and City government in downtown Santa Cruz and of which Landlord is or will be a member. Tenant shall abide by the rules and regulations of the CRM entity. The objective of CRM shall be for retailers to cooperate in such areas as business hours, promotion, participation in special marketing events, maintenance of appearance of storefront windows and signs, and such other activities which relate to the overall economic retail environment of the downtown.

15.11 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 10 such Hazardous Material is necessary or useful to Tenant’s business, does not violate any requirements of Landlord’s policies of fire, causality or public liability insurance and will be used, kept and stored in a manner that complies with all laws regulating any such Hazardous Material so brought upon or used or kept in or about the Premises.

8.06 Compliance with Governmental Regulations. Tenant shall, at its sole cost and expense, comply with all of the requirements of all local, state and federal authorities now in force, or which may hereafter be in force, pertaining to the Premises. With regard to the use of the Premises, Tenant shall faithfully observe all local ordinances and state and federal statutes now in force or which may hereafter be in force.

15.12 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 11 8.08 CASp Inspection. Landlord states that the Premises has not been inspected by a Certified Access Specialist (CASp) Accordingly, this notice is provided by Landlord pursuant to California Civil Code Section 1938:
“A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or Landlord may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the Tenant or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of the construction-related accessibility standards within the premises.”
Unless otherwise expressly stated in this Agreement and subject to the terms of this Agreement:
(a) Tenant may elect at any time to perform a CASp inspection of the Premises at Tenant’s expense;
(b) any repairs or modifications necessary to correct violations of applicable construction-related accessibility standards within or about Premises are the responsibility of Tenant; and (c) Tenant is responsible for compliance with applicable construction-related accessibility standards relating to Tenant’s alterations of or improvements to the Premises.

ARTICLE 9. ALTERATIONS AND ADDITIONS

9.02 Notices. At least fifteen (15) days prior to commencing any work relating to any improvements, alterations or additions approved by Landlord, Tenant shall notify Landlord in writing of the expected commencement date. Landlord shall have the right thereafter to post and maintain on the Premises such notices as Landlord deems necessary to protect Landlord and the Premises from mechanics’ liens, materialmen’s liens or any other liens. Tenant shall pay, when due, all claims for labor and materials furnished to or for Tenant for use in improving the Premises. Tenant shall not permit any mechanics’ or materialmen’s liens to be levied against the Premises arising out of work performed, materials furnished or obligations to have been performed on the Premises by or at the request of Tenant. Tenant hereby indemnifies and holds Landlord harmless against loss, damage, attorneys’ fees and all other expenses on account of claims of lien of laborers or materialmen or others for work performed or materials or supplies furnished to Tenant or persons claiming under it.

15.13 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 12 and, in the absence of Landlord’s written consent to removal, any such item shall be deemed a part of the realty and belong to Landlord at termination of the Agreement.

9.04 Restoration. Except as otherwise provided herein, Tenant shall return the Premises to the same condition as existed at the date of execution of the Agreement, reasonable wear and tear excepted. In addition, Landlord, at its election, may require Tenant to remove, at Tenant’s sole cost, any improvements, alterations or additions approved by Landlord in accordance with this Agreement. Tenant shall repair, at its sole cost, any damage resulting from the removal of any alterations, improvements, additions, equipment, machinery or trade fixtures.

Tenant agrees, at Tenant’s sole cost, to construct and install signs as may be required or allowed by Landlord in strict conformance with Landlord’s sign criteria specified in Exhibit H attached to this Agreement (“Sign Criteria”) which specifies the permissible design, material, color, location, size and letter style of any such signs. Tenant’s signs shall not be installed without the written consent of Landlord.

9.06 Kiosk Windows. Tenant is prohibited from painting any and all windows of the kiosk Premises without the prior written consent of Landlord. Tenant further agrees to maintain the windows properly and in good repair, free of leaks, defects, cracks, shattering, or any other defect at Tenant’s sole cost and obligation. Tenant will immediately notify Landlord of any window damages and will immediately cause the windows to be repaired. Tenant will clean the windows using an appropriate cleaning medium that will not etch, scratch, or cloud or fog the windows. At Landlord’s discretion, Tenant shall cause to be removed any coverings, coatings, stickers or signage affixed to the windows, that may obstruct visibility, or otherwise be of detriment to the Pacific Avenue streetscape and community enjoyment thereof.

15.14 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 13 ARTICLE 10. UTILITIES

10.01 Separate Charges. Tenant shall pay for all water, heat, light, telephone service, internet, and any other utilities metered, sub-metered, or otherwise separately charged to the Premises.

ARTICLE 11. INDEMNIFICATION; INSURANCE

11.01 Indemnification. Landlord shall not be liable to Tenant for any damage to Tenant or Tenant’s property from any cause which is not the result of Landlord’s gross negligence or willful misconduct. Tenant, as a material part of the consideration for this Agreement, hereby expressly waives and releases all claims against Landlord, its officers, employees, representatives and agents, for any injury or damage to any person or property on or about the Premises arising for any reason. To the fullest extent permitted by law, Tenant agrees to indemnify, release, defend and hold harmless Landlord, its officials, officers, employees, volunteers, and agents from any loss, claim, liability, cost, expense, including attorney’s fees (collectively, the “Claims”) for any injury or damage to person or property, or of any kind or nature, occurring in, on or about the Premises, arising for any reason which relate to: (i) the obligations of Tenant, its employees, and agents under this Agreement; (ii) the acts or omissions of Tenant or its officers, directors, employees, agents, representatives, invitees, customers, contractors, subcontractors, suppliers, trespassers, or others acting on Tenant’s behalf or under Tenant’s authority or control; or (iii) the occupancy and/or use of the Premises and/or License Area (including, but not limited to any improvements or personal property located therein) by Tenant, or its officers, directors, employees, agents, representatives, invitees, customers, contractors, subcontractors, suppliers, trespassers, or others acting on Tenant’s behalf or under Tenant’s authority or control; (iv) any breach or default under this Agreement by Tenant; or (v) any construction or other work undertaken by Tenant on the Premises (including any design defects).

15.15 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 14 11.02 Survival. The indemnification provisions herein and any other indemnification provided elsewhere in this Agreement shall survive the termination of this Agreement.

11.03 Insurance Requirements. Prior to the beginning of and throughout the duration of the Agreement, Tenant will maintain and comply with the Insurance Requirements as set forth in Exhibit I.

11.04 Tenant’s Failure To Maintain Insurance. Tenant agrees that if Tenant does not maintain any insurance policy required under this Agreement or fails to pay any premiums when due, Landlord may, at its election, either terminate this Agreement, require that the Premises be immediately closed for business pending reinstatement of insurance by Tenant, or obtain the necessary insurance and pay the premium, and the repayment thereof shall be deemed to be additional rent due by Tenant and payable on the next date upon which a payment of rent is due. In the event that Tenant fails to maintain insurance coverages, as required in this Agreement, and a loss or damage occurs that results in Landlord’s liability for copayments, deductibles, or other such charges to replace the loss under Landlord’s applicable insurance policy, Tenant agrees to reimburse the City for all such charges within ninety (90) days of the City’s notification to Tenant.

ARTICLE 12. MAINTENANCE AND REPAIRS

12.02 Tenant Maintenance Obligations. Except as provided in Article 16 (Destruction), Tenant, at its cost, shall clean, maintain, and keep all portions of the Premises (inside and out), License Area, and the sidewalks appurtenant to the Premises in a safe, clean, neat and sanitary condition, which shall include sweeping and trash pickup on a minimum daily basis.

Tenant shall promptly, at its expense, repair (and make replacements as needed) any damage to the Premises caused by Tenant, its agents, employees, customers, invitees, subtenants, assignees or

15.16 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 15 concessionaires or caused by the installation or removal of Tenant’s personal property. All replacement equipment shall be of a quality equal to or exceeding that of the original equipment or improvements. To the greatest extent feasible, Tenant shall endeavor to replace all equipment or improvements with models that improve water, resource, and energy efficiency, or such features as will reduce the overall environmental impact of the business and kiosk space. Should Tenant fail to make these repairs and replacements for a period of three (3) days after delivery of a written demand by Landlord, or should Tenant commence, but fail to complete, any repairs or replacements within a reasonable time after written demand by Landlord, Landlord shall have the right to make such repairs or replacements without liability to Tenant for any loss or damage that may occur to Tenant’s stock or business, and Tenant shall pay for all costs incurred by Landlord in making such repairs or replacements, including an administrative overhead fee of twenty percent (20%), interest thereon at the maximum rate permitted by law from the date of commencement of the work through the date of payment.

12.03 Windows. Tenant shall replace, at its expense, any and all damaged or broken windows and window components on or about the Premises resulting from any cause whatsoever other than the direct negligence of Landlord. Tenant shall have full responsibility, at its sole discretion, to either self-insure or obtain insurance policies covering damage or replacement of said windows and window components.

Tenant further acknowledges and accepts the terms and conditions identified in Section

9.06 of this Agreement, in its entirety, as relates to the condition and modification of the kiosk windows.

Tenant may not dispose of its business waste and recycling in the Pacific Avenue waste and recycling receptacles, however, Tenant’s customers may do so. In the event, that excessive dumping of business waste requires Landlord’s removal of said waste, over and above standard waste and recycling of City waste disposal bins, Landlord may charge the actual cost of additional cleanup to Tenant. Tenant shall pay such charges with the next monthly rent.

Landlord will give a minimum of twenty-four (24) hours advance notice of such entry when practicable.

Tenant shall furnish key(s) to Premises within ten (10) days of Landlord’s written request.

ARTICLE 13. PARKING

13.01 No Parking Provided. No provisions for parking are contemplated with this Agreement.

Tenant, and its agents, representatives, and assigns, are responsible for all transportation of food, materials,

15.17 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 16 and personnel to and from the premises, together with conformance to all City parking regulations and any charges, fees, or fines, as may apply for failure to comply with said regulations. In no event shall, the City be responsible for any loss, damage to, or impoundment of any vehicles employed by Tenant, and its agents, representatives, and assigns.

14.01 Prohibition Against Voluntary Assignment, Subletting, and Encumbering; Tenant’s Request to Landlord. Tenant’s voluntary assignment or encumbrance of Tenant’s interest in this Agreement, as well as Tenant’s subletting of the premises, shall be strictly prohibited. Nor shall Tenant allow any other person or entity (other than Tenant’s employees) to occupy or use any part of the premises or independently contract with another person or entity to operate the business, or any other business or trade, out of the kiosk. Any such assignment, encumbrance, sublease, occupancy or use agreement or independent contract shall be voidable by Landlord and, at Landlord’s election, shall constitute a default.

14.02 Involuntary Assignment. No interest of Tenant in this Agreement shall be assignable by operation of law including, without limitation, the transfer of this Agreement by testate or intestate succession. Each of the following acts shall be considered an involuntary assignment:
(a) If Tenant is or becomes bankrupt or insolvent, makes an assignment for the benefit of creditors, or institutes a proceeding under the Bankruptcy Act in which Tenant is the bankrupt; or, if Tenant is a partnership or consists of more than one person or entity, if any partner of the partnership or other person or entity is or becomes bankrupt or insolvent, or makes an assignment for the benefit of creditors;
(b) If a writ of attachment or execution is levied on this Agreement; (c) If, in any proceeding or action to which Tenant is a party, a receiver is appointed with authority to take possession of the Premises.

ARTICLE 15. DEFAULT

15.01 Events of Default. The occurrence of any of the following shall constitute a material breach and default of this Agreement by Tenant:

15.18 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 17 (a) The failure of Tenant to pay or cause to be paid any rent, monies or other charges due Landlord as set forth in this Agreement on or before the due date for payment of any such amounts; (b) The failure of Tenant to maintain all insurance coverage as set forth in Article 11. (c) The abandonment of the Premises by Tenant, which shall mean failure to operate as set forth in this Agreement for five (5) consecutive days, except by prior written notice by Tenant at least fourteen (14) days in advance and with the written consent of Landlord; (d) Except as otherwise provided in this Agreement, the failure of Tenant to do or cause to be done any act as set forth in this Agreement, if the failure continues for fifteen days (15) consecutive days after notice has been given to Tenant. However, Tenant shall not be in default of this Agreement if Tenant commences to cure the default within said fifteen (15) day period and diligently and in good faith continues to cure the default to the satisfaction of Landlord; (e) Tenant causing, permitting or suffering, without the prior written consent of Landlord, any act when this Agreement requires Landlord’s prior written consent or prohibits such act; or (f) Any act of bankruptcy caused, suffered or permitted by Tenant. For the purposes of this Agreement, “act of bankruptcy” shall include any of the following:
(1) Any general assignment or general arrangement for the benefit of creditors;
(2) The filing of any petition by or against Tenant to have Tenant adjudged a bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy, unless such petition is filed against Tenant and the same is dismissed within sixty (60) days;
(3) The appointment of a trustee or receiver to take possession of substantially all of Tenant’s assets located in the Premises or of Tenant’s interest in this Agreement; or
(4) The attachment, execution or other judicial seizure of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Agreement.
(g) Failure to abide by any local, state, or Federal governmental laws or regulations; or
(h) Failure to maintain the premises in a clean, safe, and attractive condition, as described above; and, failure to promptly remedy any maintenance issues within sixty (60) days of notice from Landlord.

15.19 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 18 exceeds the amount of this rental loss that Tenant proves could have been reasonably avoided;
(3) The worth at the time of award of the amount by which the unpaid rent for the balance of the Term after the time of award exceeds the amount of this rental loss that Tenant proves could be reasonably avoided; and (4) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform Tenant’s obligations under the Agreement.
(b) The worth at the time of award of the amounts referred to in the previous subparagraphs shall be computed by allowing interest at ten percent (10%) per annum. The worth at the time of award of the amount referred to in subparagraph (3) shall be computed by discounting this amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).
(c) Efforts Landlord may make to mitigate the damages caused by Tenant’s breach of this Agreement shall not constitute a waiver of Landlord’s right to recover damages against Tenant, nor shall anything contained in this Agreement affect Landlord’s right to indemnification against Tenant for any liability arising prior to the termination of this Agreement for personal injuries or property damage, and Tenant agrees to indemnify and hold Landlord harmless from any injuries and damages, including all reasonable attorney fees and costs incurred by Landlord in defending any action brought against Landlord for any recovery, and in enforcing the terms and provisions of this indemnification against Tenant. (d) However, the breach of this Agreement by Tenant, or an abandonment of the Premises by Tenant, will not constitute a termination of this Agreement, nor of Tenant’s right of possession under this Agreement, unless and until Landlord elects to do so, and until that time Landlord shall have the right to recover rent and all other payments to be made by Tenant under this Agreement as they become due; provided, that until Landlord elects to terminate this Agreement and Tenant’s right of possession under this Agreement, Tenant may sublet the Premises or to assign interests in this Agreement, or both, subject to the written consent of Landlord, at Landlord’s sole discretion. (e) As security for the performance by Tenant of all duties and obligations under the Agreement, Tenant assigns to Landlord the right, power, and authority, during the continuance of this Agreement, to collect the rents, issues, and profits of the Premises, reserving to Tenant the right, prior to any breach or default by Tenant under this Agreement, to collect and retain the rents, (solely in the case of a sublease previously approved by Landlord) issues, and profits, from the operation of Tenant’s approved business use, as they become due and payable, and so long as payments to Landlord are also kept current.

15.20 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 19 inaccurate, Tenant shall be deemed to be in default under this Agreement, which default shall not be subject to cure, and which shall entitle Landlord to exercise all remedies reserved to Landlord under this Agreement or otherwise available to Landlord at law.

ARTICLE 16. DAMAGE OR DESTRUCTION

15.21 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 20 bears to the gross floor area of the Premises, from the date of damage to the earlier of the date Tenant reopens for business or thirty (30) days from completion of Landlord’s repair work. Tenant, however, shall not be entitled to a reduction in rent or relieved from paying charges to the extent the damage or destruction to the Premises was caused in whole or in part by Tenant. (e) Tenant waives the provisions of Civil Code sections 1932(2) and 1933(4) with respect to any destruction of the Premises.
(f) Except as otherwise provided in this Agreement, damage to or destruction of the Premises shall not terminate this Agreement or result in the abatement of any rent or other charges payable under this Agreement. Tenant expressly waives any right it may have, in law or equity, to offset any cost incurred by Tenant for repairs or restoration to the Premises against Tenant’s obligations to pay rent in connection with Landlord’s duties of repair and restoration under this Agreement. (g) Landlord’s duties of repair and restoration under the provisions of this Agreement shall extend only to those portions of the Premises insured by Landlord under a policy of fire or casualty insurance required herein and to the extent the damage is not caused in part or in whole by Tenant. Landlord shall not be responsible for any loss, damage, or destruction to Tenant’s personal property, trade fixtures, merchandise, inventory or equipment.

16.02 Tenant’s Duty to Repair or Replacement. Except as otherwise provided herein, Landlord’s obligation to restore shall not include the restoration or replacement of Tenant’s personal property, trade fixtures, merchandise, inventory, or equipment. Tenant shall restore and replace said items in the event that Landlord is obligated or elects to repair any damage or destruction of the Premises.

ARTICLE 17. ESTOPPEL CERTIFICATES; ATTORNMENT

17.01 Tenant to Furnish Certificate. Tenant shall, within ten (10) business days of written notice from Landlord, execute and deliver to Landlord a written statement certifying that this Agreement is unmodified and in full force and effect or, if modified, stating the nature of such modification. Tenant’s statement shall include other details requested by Landlord, such as the date to which rent and other charges are paid and Tenant’s acknowledgement concerning any uncured defaults in Landlord’s obligations under this Agreement and the nature of such defaults if they are claimed. Any such statement may be relied upon conclusively by any prospective purchaser or encumbrancer of the Premises. Tenant’s failure to deliver such statements within such time shall be conclusive upon Tenant that this Agreement is in full force and effect, except as and to the extent any modification has been represented by Landlord, and that there are no uncured defaults in Landlord’s performance and that not more than one (1) month’s rent has been paid in advance.

ARTICLE 18. OTHER MUNICIPAL RULES AND REGULATIONS
This section intentionally left blank.

15.22 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 21 ARTICLE 19. MISCELLANEOUS

The headings or titles to the paragraphs of this Agreement are for convenience only and do not in any way define, limit or construe the contents of such paragraphs.

This instrument contains all of the agreements and conditions made between the Parties with respect to the hiring of the Premises and may not be modified orally or in any manner except by a written instrument signed by all the Parties to this Agreement.

Except as may otherwise be expressly stated, each payment required to be made by Tenant shall be in addition to and not in substitution for other payments to be made by Tenant.

19.04 Time. Time is of the essence in this Agreement.

CITY OF SANTA CRUZ

DEPARTMENT OF ECONOMIC DEVELOPMENT AND HOUSING
ATTENTION: ASSET MANAGER, ECONOMIC DEVELOPMENT
337 LOCUST STREET
SANTA CRUZ, CA 95060

15.23 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 22 Mailed notices shall be sent by United States Postal Service, certified or registered mail, postage prepaid, and shall be deemed to have been given on the date of posting in the United States Postal Service.

Either Party may, by proper notice, at any time designate a different address to which notices shall be sent.

19.09 Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such rent or pursue any other remedy in this Agreement provided.

19.11 Broker’s Commission. Each Party represents and warrants that there are no claims for brokerage commissions or finder’s fees arising from that Party’s activities in connection with this Agreement, and each Party agrees to indemnify and hold the other Party harmless from all liability arising from any such claim.

19.12 Guaranty of Lease. If Section 1.13 specifies the name of one or more Guarantor(s), Tenant’s obligations under this Agreement are guaranteed by that Guarantor(s), and Landlord reserves the right to enforce this Agreement against Guarantor(s). In that event, this Agreement shall not be effective until the named Guarantor(s) execute a written Guaranty in the form attached hereto as Exhibit "C". If Section 1.13 is blank or marked "Not Applicable" then Tenant shall be solely responsible for all payments and performance required by this Agreement.

19.13 Recycling Activities. Tenant agrees to participate, to the greatest extent possible, in all existing or future recycling activities initiated or arranged by Landlord.

19.14 MacBride Principles and the Peace Charter. The City Council of the City of Santa Cruz approved Resolution No. NS-19,378 on the 24th day of July 1990, endorsing the MacBride Principles and Peace Charter and encourages all companies doing business in Northern Ireland to abide by the MacBride Principles and Peace Charter.

19.15 Approval by City Council/City Attorney. This Agreement, and any amendment of its terms, except as under such authority delegated to the City Manager or his/her Designee, is subject to the approval of the City Council of the City of Santa Cruz and the City Attorney, and shall not bind Landlord until such time as their approval and consent has been received in writing.

15.24 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 23 19.16 Subordination. Agreement lease is and shall be subordinate to any encumbrance now of record or recorded after the date of this Agreement affecting the building, other improvements, and land of which the premises are a part.

19.17 Permits and Approvals. All Government permits or approvals are required. Approval by Landlord of any action requiring approval does not constitute approval by the City of Santa Cruz of any required permits or applications, and in no way limits the discretion of the City in the permit, regulatory, and approval process. Landlord and Tenant will render to each other reasonable assistance in obtaining necessary City of Santa Cruz and other governmental permits or approvals.

Any consent or approval of the City of Santa Cruz for any permit, application, or regulatory matter does not constitute consent or approval by Landlord under the terms of this Agreement.

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

19.19 Construction of Agreement. Each Party acknowledges that it has reviewed this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting Party shall not apply in the interpretation or construction of this Agreement.

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

19.21 Warranty of Authority. The signatories to this Agreement warrant and represent that each is authorized to execute this Agreement and that their respective signatures serve to legally obligate their respective representatives, agents, successors and assigns to comply with the provisions of this Agreement.
[Signatures on Following Page]

15.25 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 24 LANDLORD:

CITY OF SANTA CRUZ,
a California municipal corporation
Date: ___________________ By: ____________________________ Matt Huffaker, City Manager
TENANT:

Date: ____________________ By: ________________________________ Paul Cocking
dba cafe gg
APPROVED AS TO FORM:

Date: ____________________ By:_______________________________ Stephanie Duck, Deputy City Attorney

October 31, 2024

15.26 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 25 EXHIBIT A

PREMISES
Approximately located at 1130-K1 Pacific Avenue, Santa Cruz, CA 95060.

15.27 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 26 EXHIBIT B

LIMITATIONS ON USE
Tenant shall use the Premises for the sale of Mexican food.

Except as outlined above, Tenant shall not sell menu items, excepting beverages, which are available from or directly compete with other tenants in the Downtown Kiosk Program.

Any significant menu changes shall be approved by Landlord. Landlord shall not unreasonably withhold approval of requested changes except in cases where unfair competition will result, and in cases where Tenant desires to sell items being sold by other tenants of Landlord in the Downton Kiosk Program.

Tenant shall endeavor to serve food and beverages that are distinct from nearby businesses and the menu as a whole shall not substantially replicate dishes that have otherwise been available nearby prior to inclusion on Tenant’s menu.

15.28 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 27 EXHIBIT C

GUARANTY OF LEASE
Not Applicable

15.29 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 28 EXHIBIT D

LICENSE AREA
Approx. License Area
(non-exclusive) PACIFIC AVE.

15.30 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 29 EXHIBIT E
CAFÉ EXTENSION AREA POLICIES AND PROCEDURES
Purpose
The purpose of extension areas is to enhance the pedestrian ambiance of Downtown Santa Cruz by introducing uses attractive to pedestrians onto the pedestrian environment.

Outdoor Cafes
• Cafes shall project no more than 12 feet from the property line into the public right-of-way, and in no case shall a café extension area result in a public promenade less than 12 feet, unless the café is located along Pacific Avenue in which case the public promenade can be 8 feet; • The elevation of the extension area shall be the same as the public sidewalk, and shall meet accessibility standards;
• No permanent structures will be allowed within the public right-of-way. • If a separation between the café and the promenade is desired, this shall be achieved through low planters that could contain colorful flowers or a low hedge not permanently affixed to the sidewalk;
 The maximum height of such planters (including the planting) shall be no more than four feet; and
 Planters shall consist of high quality durable materials of a weight and mass that will discourage theft, vandalism or easy movement.
 Should applicant propose other means to achieve separation such as fencing, this shall be self-supporting and decorative.
• A canvas awning will be permitted to extend over the depth of the café extension area; no columns or supporting poles will be permitted within the public right-of-way. Awnings shall comply with the design and height guidelines prescribed below; • The use of removable umbrellas within sidewalk extension areas is also encouraged, provided that seven (7) feet of clearance is provided from the sidewalk. • Removable wind screens that are of a transparent material and that are an integral part of the planter will be permitted to extend the seasonal use of the café area. Such screens shall not exceed a height of six (6) feet and shall be separated from the awnings to provide for air movement.

15.31 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 30 Retailing Uses
• Retailing uses within extension zones shall be limited to the sale of newspapers and magazines, flowers and produce, unless otherwise approved by the City Council or its designated agent; • Such extension areas shall not exceed 6 feet in depth, unless it is determined that such depth is necessary to achieve the desired pedestrian objectives for the street, and in no case shall an extension area result in a public promenade that is less than 12 feet in depth or 8 feet along Pacific Avenue.
• Merchandise shall be displayed against the shop front and be oriented toward the street on tables or stands that do not exceed four feet in height;
• No separation (e.g., planters or low walls) between the merchandise and the street shall be permitted.

Wired electrical fixtures will be allowed outside the face of the building, if contained within the semipermanent barrier allowed for café extension areas and if installed by a licensed electrician. A lighting plan must be approved by the City Council or its designated agent.

15.32 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 31 EXHIBIT F
DESCRIPTION OF LANDLORD’S AND TENANT’S WORK
Not Applicable

15.33 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 32 EXHIBIT G

INITIAL MONTHLY STATEMENT
Gross Income and Rent Computation

IN ACCOUNT WITH

CITY OF SANTA CRUZ
FINANCE DEPARTMENT – REVENUE
1200 PACIFIC AVENUE, SUITE 290
SANTA CRUZ, CALIFORNIA 95060

MONTHLY STATEMENT OF GROSS INCOME AND RENT
FOR MONTH ENDING _________________ 20___

1. Gross monthly income (all sales and business transactions): ............................... $ ___________

2. Cash or credit refunds made upon sales from premises: ........................................ $ ___________

3. The amount of any city, county, state or federal sales, luxury or excise taxes on sales from the premises where such taxes are both added to the selling price and paid to the taxing authorities by Tenant: .......................................................... $ ___________

4. Total adjustments (Line 2 plus Line 3): ................................................................... $ ___________

5. Adjusted gross income (Line 1 minus Line 4): ........................................................ $ ___________

6. Percentage Rent (Line 5 x 6% ): .............................................................................. $ ___________

7. Minimum Monthly Rent: ........................................................................................... $ __300.00____

8. RENT DUE (the greater of Line 6 or Line 7): .......................................................... $ ___________

9. LATE FEE (10% of Line 8 if paid after the due date): ............................................. $ ___________

10. INTEREST ON UNPAID RENT (1.5% monthly interest of Line 8 if paid after the due date): .................................................................................................. $ ___________

11. CREDIT/TRUE UP (amount of any prior rent over/underpayments)*: .................... $ ___________

12. TOTAL REMITTANCE (Sum of Line 8-11): ........................................................... $ _____________ Description of Credit/True-Up
I hereby certify that “Gross Monthly Income” reported herein is equal to total gross sales which have been or will be reported on the State, Local, and District Sales and Use Tax Return submitted to the State Board of Equalization for the period ending _________________. ______________________________________________________
Signature of Tenant or Tenant’s Principal Agent
Executed at Santa Cruz, California on ______________________, 20_____ This completed and signed form, together with the accompanying payment, must be received by the City no later than close of business on the fifteenth day of the month following the month for which you are reporting sales.

15.34 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 33 EXHIBIT H

2. Permitting Requirements. Signs within the CBD zone are subject to the sign permit requirements of Chapter 24.08, Part 6 of the City of Santa Cruz Zoning Code, except as modified by this chapter. a. Projecting signs and hanging signs that conform to all provisions provided under subsection (7)(b) shall be permitted and do not require a sign permit. b. Exceptions and variations to the requirements may be considered by the zoning administrator without a public hearing, subject to the exception procedure set forth in Section 24.08.580; sign permit findings set forth in Section 24.08.530; and the following criteria:

3. Prohibited Signs. Signs prohibited within the CBD zone are subject to the regulations in Part 4 of Chapter 24.12. Additional types of signs prohibited include:
a. Sandwich board/A-frame signs.
b. Temporary signs that are displayed for longer than thirty days and/or that are prohibited under subsection (6)(f).

15.35 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 34 e. “Hanging sign” shall mean a projecting sign which is suspended from an overhang, canopy, marquee, or awning, or from a mounting attached directly to the building wall. f. “Icon sign” shall mean hanging or projecting signs that depict a physical object, such as a shoe, as opposed to signs that utilize lettering to convey the sign message. Icon signs may or may not include the name of the establishment.
g. “Master Sign Program” shall refer to a program that established to integrate all signs into a project’s design to achieve a unified architectural statement. A Master Sign Program provides a means for flexible application of sign regulations for properties with multiple signs, multi-tenant properties, and other properties with unified development, in order to encourage creativity and provide incentives to achieve, not circumvent, the intent of this division. h. “Projecting sign” shall mean any sign which uses a building structure as its main source of support and contains copy that is mounted at an angle to the building face. Projecting signs may be mounted vertically or horizontally on the support structure. i. “Public art” shall mean original works of art in any medium, whether two- or threedimensional, created for placement in public places or integrated projects where the artwork is a part of the underlying architecture or landscape design and that is not prefabricated or standard design. Artwork should not use letters, words, numerals, figures, emblems, logos or any part or combinations thereof for the purpose of advertising goods, services or merchandise. Public art should enhance rather than impair pedestrian use of the area, particularly with respect to pedestrian visibility and circulation.
j. “Sign” shall mean any structure, device, or design and appurtenant light structures used principally to advertise or attract attention of the public. The term shall not include the United States flag, or any governmental flag, properly displayed in an approved manner, patriotic bunting, and donor’s memorial plaques.
k. “Temporary sign” shall mean sign(s) placed for a time not to exceed thirty consecutive calendar days. These signs are generally used for special events or grand openings, but may include the name of a business. Banners are a type of temporary sign which hang over a public street, walkway or wall to advertise a special event or business. l. “Wall sign” shall mean any sign posted or painted on, suspended from or otherwise affixed to the wall of any building or structure in an essentially flat position, or with the exposed face of the sign in a plane approximately parallel to the plane of such wall. m. “Window sign/graphics” shall mean any building sign, pictures, symbols, or combination thereof, designed to communicate information about an activity, business, commodity, event, sale, or service, that is placed inside a window or upon the window pane or glass and is visible from the exterior of the window.

5. General Guidelines. The following statements are general rules for signs which apply to all parcels within the Central Business District zone.

General • Wall signs with large areas of dark colors, and which read as billboards because of size and corporate message, are out of place in the Central Business District zone.

Location • Shall not cover windows, roof shapes, or dominate trim.

15.36 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 35 • Exterior Lighting for Signs. All signs should have the capacity of being lit for evening visibility.

Materials and
Methods of
Construction
• Any materials or methods of construction are acceptable; however, signs shall be legible and shall be constructed of durable, high quality materials.

Exceptions • A Master Sign Program may be created to allow for a coordinated long-term sign plan for a multi-tenant building.

6. Development and Design Standards.
a. Wall Signs.

Area • The total area of all signs on a building shall be limited to a size equal to 1 square foot of sign per
linear foot of frontage of building face, with a
minimum allowance of 25 square feet regardless of
front footage.
• Multiple Tenants. If the ground floor is occupied by
more than 1 tenant, each tenant is entitled to a prorata share footage based on frontage used by that tenant. Each tenant is entitled to minimum allowance
of 25 square feet regardless of frontage.
• If a continuous, solid band sign is used, only the area encompassed by the lettering shall be counted
toward the total sign area.

Location • Either on or above a tenant space fronting a public street, alley or public parking lot.
• Shall not cover windows, roof shapes, or other
distinguishing architectural features.

Height • No part of any sign shall extend above the top level of the wall upon or in front of which it is situated.

Projection • Not to exceed 12 inches from building face.

Number • One, with the exception of corner buildings, which may have one sign per building face fronting a street.
• Window signs are not included in the maximum
number

15.37 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 36 b. Projecting Signs and Hanging Signs.

Area • A maximum of 6 square feet in area for projecting signs on Pacific Avenue and 8 square feet in area on
all other streets, as measured on one side of a twosided sign.

Projecting Sign
Hanging Sign
• A maximum of 6 square feet in area for hanging signs
as measured on one side of a two-sided sign.

Location • Determined by visibility.
• Shall be located directly above or to the side of an
entrance of a tenant space.

Number • A maximum of one projecting sign or one hanging sign per frontage face.

Height • A minimum clearance of 8 feet.

Projection • For signs with an 8-14 foot clearance, signs may project 2 feet and may project 6 additional inches for
each foot of clearance in excess of 8 feet.
• Not to exceed 4 feet.

Lettering • Usage of establishment’s name on the sign is preferred
• An icon which has only the symbol or image of the
store should suggest as nearly as possible those
services which are offered, or products which are sold, inside the establishment.
c. Window Graphics.

Area • Not to exceed more than 25% of the area of
any one window.

Location • Shall not obscure pedestrian’s visibility into shop.
• Shall be integrated into store window
displays.

Colors • Complementary and suitably contrasting
accent colors shall be used.

15.38 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 37 f. Temporary Signs.
(1) Temporary signs, such as hastily, hand-painted “Sale” signs printed on paper and plastered in windows, are not permitted and shall be subject to the enforcement procedures provided under Title 4 of the City of Santa Cruz Municipal Code. (2) Temporary signs not exceeding two in number and six square feet in total area for each business are allowed.
g. Public Art Exception. The zoning administrator shall determine whether a proposal contains the characteristics of a sign, i.e., whether its principal function is to serve as an advertisement. If the zoning administrator determines that the proposal is a sign, it shall be subject to the requirements of this part and may be subject to building and construction codes or other requirements of the municipal code.
(b) 24.12.360 PERFORMANCE REGULATIONS – LIGHTING, MOVEMENT, SOUND.

Illuminated signs are prohibited in residential zone districts. Intermittent or flashing lighting shall be prohibited. Illuminated surfaces with an integral light source, such as electroluminescent paneling, may be used if their illumination intensity does not interfere with surrounding land uses.

Lighted signs in the Beach Recreational Area and time and temperature devices in any district are not subject to these restrictions.
b. Searchlights. Portable shielded arc-type searchlights shall be permitted as temporary signs, in commercial and industrial districts only, provided that the beam of the searchlight shall not be projected at less than a forty-five degree angle measured from a horizontal plane, and shall not project upon or reflect upon property or buildings other than the property or buildings of permittee.

24.12.328 above (roof signs) and Section 24.12.330 above (flags, etc., regulations)

15.39 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 38 EXHIBIT I

A. Insurance Certificate Requirements.

B. Minimum Scope and Limit of Insurance.

Tenant shall maintain limits no less than the following:

3. Fire Insurance\Legal Liability Coverage. Tenant, at its sole cost, shall procure and maintain in full force and effect at all times during the Term of this Agreement, fire and extended coverage insurance satisfactory to Landlord covering the Premises to keep all leased property or rented space, Tenant improvements therein in an amount not less than one hundred percent (100%) of the full replacement cost against loss or destruction by fire and all perils, including vandalism, malicious

15.40 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 39 mischief, special extended perils (“special form”). The property insurance is to be endorsed to include Legal Liability Coverage (ISO Form CP 00 40 04 02 or equivalent) with a limit equal to the replacement cost of the leased property. Landlord shall be named as an additional insured and loss payee on the policies. Any loss payable under any policy described in this section shall be paid by the insurance company to Landlord or as otherwise agreed by the Parties to be used to fund the repair or replacement of the damaged Premises or improvement pursuant to this Agreement. “Full replacement cost,” as used in this section, shall mean the actual cost of replacement for the building and other improvements on the Premises, as determined from time to time.

4. Business Interruption Insurance. Policy with adequate limits to cover the term of this Agreement and shall contain an inflation endorsement if the Premises or Tenant improvements are destroyed or rendered inaccessible by a risk insured against by a policy of standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements. Insurance proceeds thereunder shall be payable to Landlord for loss of rents.

5. Workers’ Compensation and Employer’s Liability Insurance. Tenant shall obtain policies as required by applicable law against liability arising on account of injuries or death to workers or employees on the Premises or any improvement of Tenant. Such workers’ compensation insurance shall be in amounts at least equal to the maximum liability of Tenant, its agents, and contractors under the Workers’ Compensation Insurance and Safety Act of the State of California and the Federal Longshore and Harbor Workers’ Compensation Act, as applicable. Tenant shall also maintain Employer’s Liability insurance with limits no less than One Million Dollars ($1,000,000) per accident for bodily injury or disease, $1,000,000 disease – policy limit, $1,000,000 disease – each employee.

Such insurance shall include a waiver of subrogation in favor of Landlord.

C. Other Insurance Provisions.

PRIMARY COVERAGE
For any claims related to this Agreement, Tenant’s insurance coverage will be primary and noncontributory as respects the City, its officers, officials, and employees. Any insurance or selfinsurance maintained by the City, its officers, officials, and employees will be excess of Tenant’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

15.41 Lease Agreement between the City of Santa Cruz and Paul Cocking dba cafe gg 40 EXCESS LIABILITY/UMBRELLA INSURANCE POLICIES
Tenant 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 Tenant’s primary and excess liability policies are exhausted.

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.

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 Tenant.

15.42 City Council

AGENDA REPORT
DATE: 10/31/2024
AGENDA OF: 11/19/2024
DEPARTMENT: Economic Development and Housing
SUBJECT: Kiosk Lease and License Agreement with Crepe Cones LLC (EDH) RECOMMENDATION: Motion to:
1) Approve and authorize the City Manager to execute the Kiosk Lease and License Agreement with Crepe Cones LLC, and any documents, amendments or extensions of a non-substantive nature, in a form approved by the City Attorney, for the kiosk located at 1520 K-2 Pacific Avenue.
2) Approve the CEQA determination contained in this Agenda Report. The Council’s action is exempt from CEQA review under 14 CCR 15301 and 14 CCR 15061. Under those authorities, CEQA does not apply to (1) existing facilities involving negligible or no expansion of existing or former use; and (2) activities where it can be seen with certainty that there is no possibility that the activity may have a significant effect on the environment.

The City received three (3) proposals. These proposals were competitively screened to evaluate business readiness, experience, and the potential to expand dining options in Downtown Santa Cruz.

DISCUSSION: Based on the application and review process, City staff recommends that the City enter into a Kiosk Lease and License Agreement with Matheu McCabe doing business as Crepe Cones LLC (Crepe Cones) for the kiosk located at 1520 K-2 Pacific Avenue. Mr.

McCabe has approximately ten (10) years of experience in the food service industry, including experience as a chef and manager. Additionally, he helped build A is For Apple Inc., an organization that treats and educates children with development delays. A is For Apple Inc. was recently sold to a national company and now Mr. McCabe desires to get back into the food service industry.

For the kiosk, Crepe Cones offers a unique twist on the traditional crepe. Crepes will be served as cones, making them easy to hold and enjoy while on the move. Proposed offerings will range from approximately $1.50 to $10.00 and include a variety of sweet and savory crepes as well as

16.1 drinks. The menu will include organic and locally sourced ingredients whenever possible to support the community and provide the best taste and quality to its customers.

The initial term of the lease is two (2) years and two (2) months, from November 20, 2024 to January 31, 2027, and includes an option to extend the term for an additional two (2) years, if the tenant is in good standing.

HEALTH IN ALL POLICIES (HiAP): Promoting locally owned businesses helps support social and community bonds, improves community economic resilience, and generally aligns business activities with local culture and initiatives. While these factors may not have direct impact on public health, they have been shown to have a positive impact on the social determinants of health and support the overall well-being in the community. Locally owned businesses may also reduce commute times and pollution from owner operators, which supports reduction in greenhouse gas emissions and the business proposes the use of organic and locally sourced ingredients whenever possible which supports both healthier eating and a healthier environment.

Prepared By:

Dave McCormic
Development Manager
Submitted By:

Bonnie Lipscomb
Director of Economic
Development and Housing
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. KIOSK LEASE AND LICENSE AGREEMENT WITH CREPE CONES LLC.PDF

16.2 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 1 KIOSK LEASE AND LICENSE AGREEMENT
This Kiosk Lease and License Agreement (“Agreement”) is entered into by and between the City of Santa Cruz, a municipal corporation (hereinafter, “Landlord”) and Crepe Cones LLC, a California limited liability company (hereinafter “Tenant”). The effective date of this Agreement shall be _________________, 2024 (“Effective Date”). Landlord and Tenant are sometimes hereinafter referred to individually as “Party” and collectively as “Parties”. Landlord and Tenant agree to all terms and conditions of this Agreement as set forth herein.

1.01 Tenants Trade Name: “Crepe Cones” (Section 8.01)

1.02 Commencement Date of Term: November 20, 2024 (Section 3.01).

1.04 Premises and License Area: Kiosk located at 1520 K-2 Pacific Avenue, Santa Cruz, CA 95060 and adjacent License Area. (Section 2.02, Exhibit A).

1.05 Floor Area: Approximately sixty (60) square feet (Section 2.02).

1.06 Tenant’s Deadline to Complete Tenant’s Work: N/A

1.07 Percentage Rent Rate: Six Percent (6%) (Section 4.01).

1.08 Minimum Annual Rent: $3,600.00 (Section 4.01), increasing annually thereafter.

1.09 Minimum Monthly Rent: $300/month or equal to 1/12 of the Minimum Annual Rent, as adjusted (Section 4.01).

1.10 Use of Premises and License Area: Tenant shall use the Kiosk and License Area for food service sales of those items listed in Exhibit B and for no other use without Landlord’s prior written consent. (Section 8.01).

1.12 Security Deposit: $600.00. (Section 7.01).

1.13 Guaranty of Lease: Matheu McCabe (Section 19.12; Exhibit C).

16.3 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 2 1.14 Address for Notices to Tenant:
125 Canterbury Drive
Aptos, CA 95003
[email protected]
ARTICLE 2. LEASE/LICENSE OF PREMISES

2.01 City of Santa Cruz as Landlord. Tenant acknowledges and understands that Landlord is a municipality consisting of numerous offices and departments. Whenever a provision contained in this Agreement, or any extension, modification or amendment, requires the “written consent” of Landlord, such consent must be obtained from the City Manager or authorized designee for the City of Santa Cruz. Tenant may not rely on any statement or representation by any other employee, agent or representative of Landlord in obtaining such consent and any such statement or representation other than the express written consent of the City Manager or authorized designee shall be null and void and have no effect. Nothing contained in this Section shall limit in any way the authority of any office or department of the City of Santa Cruz from approving or withholding consent to any event or activity regulate by local law.

2.02 Premises. Landlord leases to Tenant and Tenant leases from Landlord the retail kiosk described in Section 1.04 (the “Premises”) (Exhibit A).

16.4 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 3 Licensee’s use of the License Area is not grounds for termination of the Agreement. Termination or restriction of use the use of the License Area does not reduce rental payments due under the Agreement.

ARTICLE 3. TERM

At the City’s sole discretion and provided Tenant is not in default at any time during the term of this Agreement, this Agreement may be amended to extend the term of this Agreement for an additional two (2) year period (the "First Extended Term") following the expiration of the initial term, upon the same terms and provisions contained in this Agreement except for the amount of the Minimum Annual Rent, which shall be adjusted as provided in Section 4.05. Tenant may exercise said option to extend the term by giving written notice to Landlord at least four (4) but not more than six (6) months before the expiration of the initial term.

16.5 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 4 tenancy, Tenant may terminate this Agreement by providing Landlord with written notice at least thirty (30) days prior to the intended termination date. Tenant shall be responsible for paying Rent through the termination date even if moving out early. Landlord may terminate the tenancy by giving notice to Tenant as required by law.

3.03 Surrender of Premises and Leasehold Interest.
(a) Surrender. On the expiration or termination of this Agreement, Tenant shall:
(i) surrender the Premises and License Area to Landlord in a clean, sanitized, and in good order and condition, except for ordinary wear and tear; and, (ii) surrender all keys to the Premises to Landlord; and, (iii) remove all of Tenant’s property and repair all damage resulting from the removal; and,
(iv) restore the Premises and License Area to the condition existing as of the first day of the Term or better; and,
(v) surrender in writing or by legal instrument any leasehold interest or claim to the Premises and License Area, improvements, equipment, fixtures, and use thereof.
(b) Landlord’s Property. Landlord may remove, store, and dispose of any items Tenant does not remove from the Premises and License Area as permitted or required under this Agreement. (c) No Implied Acceptance of Surrender. Landlord's acceptance of Tenant's surrender of the Premises and License Area will be valid and binding only if it is in a writing signed by Landlord, and no act by Landlord will be deemed to be Landlord's acceptance of Tenant's surrender. (d) Survival of Surrender Obligations. Tenant's obligations under this Section will survive the expiration or termination of this Agreement.

ARTICLE 4. RENT

4.01 Rent. Beginning with the Commencement Date, Tenant agrees to and shall pay Landlord the greater of 1), an annual fixed minimum rent (“Minimum Annual Rent”) of $3,600.00 in monthly installments of $300.00 (“Minimum Monthly Rent”); or 2), six percent (6%) of Tenant’s monthly gross sales (“Percentage Rent”), whichever is greater. The Minimum Annual Rent shall be adjusted annually (Section 4.05).

4.02 Commencement of Rent.
(a) Tenant’s obligation to pay the Minimum Annual Rent or Percentage Rent under this Agreement shall start on the date of Commencement of the Term as set forth in Section 1.02. The greater of the Minimum Annual Rent or Percentage Rent specified in Section 4.01, subject to adjustment as set forth in Section 4.05, shall be due no later than the fifteenth (15th) day of every month thereafter.

16.6 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 5 (b) In the event that Tenant’s obligation to pay rent does not commence on the fifteenth (15th) day of a calendar month, Tenant shall pay Rent for the fractional month on a per-diem basis (calculated on the basis of a thirty (30) day month) until the fifteenth (15th) day of the calendar month following the commencement of Tenant’s obligation to pay rent. If the Term commences prior to Tenant’s obligation to pay Minimum Annual Rent and Percentage Rent, Tenant shall nonetheless be required to pay all sums set forth in the Agreement other than Minimum Annual Rent and Percentage Rent.

CITY OF SANTA CRUZ

FINANCE DEPARTMENT
1200 PACIFIC AVENUE, SUITE 290
SANTA CRUZ, CALIFORNIA 95060
Each monthly payment shall be paid without deduction, offset, prior notice or demand.

4.05 Annual Adjustment To Annual Rents. The Minimum Annual Rent and Minimum Monthly Rent (referred to collectively, as “Minimum Rents”) specified herein shall each be subject to adjustment at the commencement of the term and each year thereafter including all extensions thereto (the “Adjustment Date”) as follows:
(a) The base for computing the adjustment is the Consumer Price Index, All Urban Consumers, San Francisco-Oakland-Hayward, All Items (1982-1984 = 100), as published by the United States Department of Labor, Bureau of Labor Statistics (“Index”), which is in effect on the date of the commencement of the term (“Beginning Index”). The Index published most immediately preceding the Adjustment Date in question (“Extension Index”) is to be used in determining the amount of the adjustment.

16.7 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 6 4.06 Late Charges and Interest on Unpaid Rent.
(a) Tenant acknowledges that late payment by Tenant to Landlord of rent will cause Landlord to incur costs not contemplated by this Agreement, the exact amount of such costs being extremely difficult and impracticable to fix. Such costs include, without limitation, processing and accounting charges, and late charges that may be imposed on Landlord by the terms of any encumbrance and note secured by any encumbrance covering the Premises.
(b) Therefore, if any installment of Rent due from Tenant, including Additional Rent, is not received by Landlord when due, Tenant shall pay to Landlord an additional sum of ten percent (10%) of the overdue rent as a late charge, and interest at the rate of one and one-half percent (1 1/2%) per month, or the maximum rate of interest allowed by law, on the unpaid balance of said rent or sum until paid. The Parties agree that said late charges and interest represents a fair and reasonable estimate of the costs that Landlord will incur by reason of late payment by Tenant. The acceptance by Landlord of any late charge shall not constitute a waiver of Tenant’s default with respect to the overdue amount, nor prevent Landlord from exercising any of the other rights and remedies available to Landlord under this Agreement or as provided by law.
(c) Additionally, if a check is returned for non-sufficient funds (“NSF”), Tenant shall pay to Landlord a $25 NSF fee. If any payment is returned for NSF or because Tenant stops payment, then Landlord may, in writing, require Tenant to pay future rent in cash.

16.8 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 7 Landlord and Tenant agree that said charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of such action by Tenant.

ARTICLE 5. TAXES; ASSESSMENTS; AND, LICENSES

5.04 Taxes; Assessments; Title 12 Santa Cruz Municipal Code Local Improvements.

Tenant shall pay before delinquency its proportionate share of all taxes, assessments, license fees, and other charges that are levied, and assessed against the building, other improvements, and land of which the Premises are part by any improvement and/or maintenance district established by the City of Santa Cruz or other such applicable local agency (including under Title 12 Santa Cruz Municipal Code - Local Improvements, as may be amended, and any revised or successor ordinances or resolutions applicable thereto). On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments.

ARTICLE 6. OPERATING EXPENSES

ARTICLE 7. SECURITY DEPOSIT

16.9 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 8 greater. This Security Deposit shall be held by Landlord, without liability for interest, as partial security for the full and faithful performance by Tenant of all the terms, covenants and conditions of this Agreement to be performed by Tenant. Landlord may commingle the Security Deposit and shall not be required to keep it separate from its general funds.

7.02 Use and Return of Deposit. If Tenant fails to abide by any of the terms, covenants and conditions of this Agreement, then Landlord, at its option, may use any amount of the Security Deposit to compensate Landlord for any loss or damage sustained or suffered due to such failure by Tenant. The entire Security Deposit, or any portion thereof, may be applied by Landlord for the payment of overdue rent or other sums due and payable to Landlord by Tenant hereunder. Tenant shall, upon the written demand of Landlord, immediately remit to Landlord a sufficient amount to restore the Security Deposit to the original sum deposited or two months of the Minimum Monthly Rent, whichever is greater. Failure to do so within five (5) days after such demand, or a timeline approved by Landlord, shall constitute a material breach of this Agreement. Should Tenant comply with all of the terms, covenants and conditions of this Agreement and promptly pay when due all of the rent herein provided and all other sums payable to Landlord, the Security Deposit will be returned in full to Tenant within thirty (30) days following the end of the Term or earlier termination of this Agreement.

ARTICLE 8. USE

8.01 Use of Premises. Tenant shall use the Premises under the trade name, and solely for the use specified, in Sections 1.01 and 1.10, respectively, herein.

Tenant shall not commit or suffer to be committed any waste upon the Premises or any nuisance or other act or thing which may disturb the quiet enjoyment of any other Tenants or their customers.

16.10 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 9 Premises or the building, Tenant shall pay as Additional Rent within ten (10) days written notice, a sum equal to the additional premium caused by such rate increase.

Notwithstanding any other terms of this Agreement, Tenant’s closure of the business shall not constitute a waiver or modification of any rent due.

8.03 Storage; Office Space. Tenant shall warehouse, store and stock within the Premises only such goods, wares and merchandise as Tenant intends to offer for retail sale on or about the Premises.

16.11 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 10 If Tenant breaches any of its obligation stated herein, or if the presence of Hazardous Material on the Premises caused or permitted by Tenant results in contamination of the Premises, then Tenant shall indemnify, defend and hold Landlord harmless from any and all claims, judgment, damages, penalties, fines, costs, liabilities or losses, including, without limitation, diminution in value of the Premises, damages for the loss or restriction on use of rentable or usable space or of any amenity of the Premises, and sums paid in settlement of claims, attorneys’ fees, consultant fees and expert fees which arise during or after the lease term as a result of such contamination. Without limiting the foregoing, if the presence of any Hazardous Material on the Premises caused or permitted by Tenant results in any contamination of the Premises, Tenant shall promptly take all actions at its sole expense as are necessary to return the Premises to the condition existing prior to the introduction of any such Hazardous Material to the Premises; provided that Landlord’s approval of such actions shall first be obtained, which approval shall not be unreasonably withheld so long as such actions would not potentially have any material adverse long-term or short-term effect on the Premises.

16.12 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 11 state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or Landlord may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the Tenant or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of the construction-related accessibility standards within the premises.”
Unless otherwise expressly stated in this Agreement and subject to the terms of this Agreement:
(a) Tenant may elect at any time to perform a CASp inspection of the Premises at Tenant’s expense;
(b) any repairs or modifications necessary to correct violations of applicable construction-related accessibility standards within or about Premises are the responsibility of Tenant; and (c) Tenant is responsible for compliance with applicable construction-related accessibility standards relating to Tenant’s alterations of or improvements to the Premises.

ARTICLE 9. ALTERATIONS AND ADDITIONS

16.13 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 12 alterations or additions approved by Landlord in accordance with this Agreement. Tenant shall repair, at its sole cost, any damage resulting from the removal of any alterations, improvements, additions, equipment, machinery or trade fixtures.

Tenant agrees, at Tenant’s sole cost, to construct and install signs as may be required or allowed by Landlord in strict conformance with Landlord’s sign criteria specified in Exhibit H attached to this Agreement (“Sign Criteria”) which specifies the permissible design, material, color, location, size and letter style of any such signs. Tenant’s signs shall not be installed without the written consent of Landlord.

Tenant, at its sole cost, shall obtain all necessary permits before installing, erecting or constructing any such sign. Signs shall be installed prior to the commencement of Tenant’s business and thereafter shall be maintained by Tenant at Tenant’s sole expense. If Tenant fails to maintain any such sign(s), Landlord shall have the right to maintain any such sign(s) and Tenant shall reimburse Landlord for such cost, plus a twenty percent (20%) overhead fee. If Tenant installs a sign without Landlord’s prior written consent, or said sign does not conform to Landlord’s Sign Criteria, Landlord shall have the right, at its sole discretion, to remove and store Tenant’s sign at Tenant’s sole expense. The removal and storage costs shall bear interest at the rate of one and one half percent (1 1/2%) per month until paid, or at the maximum rate allowed by law, whichever is less.

ARTICLE 10. UTILITIES

10.01 Separate Charges. Tenant shall pay for all water, heat, light, telephone service, internet, and any other utilities metered, sub-metered, or otherwise separately charged to the Premises.

16.14 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 13 serviced by such meter, plus any extraordinary uses by Tenant which may be reasonably ascertained by Landlord. Such charges will be paid as rent to Landlord at the time of regular rent payments.

ARTICLE 11. INDEMNIFICATION; INSURANCE

11.02 Survival. The indemnification provisions herein and any other indemnification provided elsewhere in this Agreement shall survive the termination of this Agreement.

11.03 Insurance Requirements. Prior to the beginning of and throughout the duration of the Agreement, Tenant will maintain and comply with the Insurance Requirements as set forth in Exhibit I.

16.15 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 14 11.04 Tenant’s Failure To Maintain Insurance.
(a) Tenant agrees that if Tenant does not maintain any insurance policy required under this Agreement or fails to pay any premiums when due, Landlord may, at its election, either terminate this Agreement, require that the Premises be immediately closed for business pending reinstatement of insurance by Tenant, or obtain the necessary insurance and pay the premium, and the repayment thereof shall be deemed to be Additional Rent due by Tenant and payable on the next date upon which a payment of rent is due.
(b) In the event that Tenant fails to maintain insurance coverages, as required in this Agreement, and a loss or damage occurs that results in Landlord’s liability for copayments, deductibles, or other such charges to replace the loss under Landlord’s applicable insurance policy, Tenant agrees to reimburse the City for all such charges within ninety (90) days of the City’s notification to Tenant. (c) Landlord has the right at any time to demand a copy of a Certificate of Insurance from Tenant for the policies of insurance required herein and any other reasonable evidence proving compliance with these provisions. The failure to provide the Landlord with such evidence within five (5) days of such demand shall constitute a material breach of this Agreement.

ARTICLE 12. MAINTENANCE AND REPAIRS

16.16 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 15 Tenant shall promptly, at its expense, repair (and make replacements as needed) any damage to the Premises caused by Tenant, its agents, employees, customers, invitees, subtenants, assignees or concessionaires or caused by the installation or removal of Tenant’s personal property. All replacement equipment shall be of a quality equal to or exceeding that of the original equipment or improvements. To the greatest extent feasible, Tenant shall endeavor to replace all equipment or improvements with models that improve water, resource, and energy efficiency, or such features as will reduce the overall environmental impact of the business and kiosk space. Should Tenant fail to make these repairs and replacements for a period of three (3) days after delivery of a written demand by Landlord, or should Tenant commence, but fail to complete, any repairs or replacements within a reasonable time after written demand by Landlord, Landlord shall have the right to make such repairs or replacements without liability to Tenant for any loss or damage that may occur to Tenant’s stock or business, and Tenant shall pay for all costs incurred by Landlord in making such repairs or replacements, including an administrative overhead fee of twenty percent (20%), interest thereon at the maximum rate permitted by law from the date of commencement of the work through the date of payment.

12.03 Windows. Tenant shall replace, at its expense, any and all damaged or broken windows and window components on or about the Premises resulting from any cause whatsoever other than the direct negligence of Landlord. Tenant shall have full responsibility, at its sole discretion, to either self-insure or obtain insurance policies covering damage or replacement of said windows and window components.

Tenant further acknowledges and accepts the terms and conditions identified in Section 9.06 of this Agreement, in its entirety, as relates to the condition and modification of the kiosk windows.

Landlord will give a minimum of twenty-four (24) hours advance notice of such entry when practicable.

Tenant shall furnish key(s) to Premises within ten (10) days of Landlord’s written request.

16.17 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 16 ARTICLE 13. PARKING

13.01 No Parking Provided. No provisions for parking are contemplated with this Agreement.

16.18 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 17 ARTICLE 15. DEFAULT

15.01 Events of Default. The occurrence of any of the following shall constitute a material breach and default of this Agreement by Tenant:
(a) The failure of Tenant to pay or cause to be paid any rent, monies or other charges due Landlord as set forth in this Agreement on or before the due date for payment of any such amounts; (b) The failure of Tenant to maintain all insurance coverage as set forth in Article 11. (c) The abandonment of the Premises by Tenant, which shall mean failure to operate as set forth in this Agreement for five (5) consecutive days, except by prior written notice by Tenant at least fourteen (14) days in advance and with the written consent of Landlord; (d) Except as otherwise provided in this Agreement, the failure of Tenant to do or cause to be done any act as set forth in this Agreement, if the failure continues for fifteen days (15) consecutive days after notice has been given to Tenant. However, Tenant shall not be in default of this Agreement if Tenant commences to cure the default within said fifteen (15) day period and diligently and in good faith continues to cure the default to the satisfaction of Landlord; (e) Tenant causing, permitting or suffering, without the prior written consent of Landlord, any act when this Agreement requires Landlord’s prior written consent or prohibits such act; or (f) Any act of bankruptcy caused, suffered or permitted by Tenant. For the purposes of this Agreement, “act of bankruptcy” shall include any of the following:
(1) Any general assignment or general arrangement for the benefit of creditors;
(2) The filing of any petition by or against Tenant to have Tenant adjudged a bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy, unless such petition is filed against Tenant and the same is dismissed within sixty (60) days;
(3) The appointment of a trustee or receiver to take possession of substantially all of Tenant’s assets located in the Premises or of Tenant’s interest in this Agreement; or
(4) The attachment, execution or other judicial seizure of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Agreement.
(g) Failure to abide by any local, state, or Federal governmental laws or regulations; or
(h) Failure to maintain the Premises in a clean, safe, and attractive condition, as described above; and, failure to promptly remedy any maintenance issues within sixty (60) days of notice from Landlord.

16.19 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 18 (1) The worth at the time of award of the unpaid rent that had been earned at the time of termination;
(2) The worth at the time of award of the amount by which the unpaid rent that would have been earned after termination until the time of award exceeds the amount of this rental loss that Tenant proves could have been reasonably avoided;
(3) The worth at the time of award of the amount by which the unpaid rent for the balance of the Term after the time of award exceeds the amount of this rental loss that Tenant proves could be reasonably avoided; and (4) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform Tenant’s obligations under the Agreement.
(b) The worth at the time of award of the amounts referred to in the previous subparagraphs shall be computed by allowing interest at ten percent (10%) per annum. The worth at the time of award of the amount referred to in subparagraph (3) shall be computed by discounting this amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).
(c) Efforts Landlord may make to mitigate the damages caused by Tenant’s breach of this Agreement shall not constitute a waiver of Landlord’s right to recover damages against Tenant, nor shall anything contained in this Agreement affect Landlord’s right to indemnification against Tenant for any liability arising prior to the termination of this Agreement for personal injuries or property damage, and Tenant agrees to indemnify and hold Landlord harmless from any injuries and damages, including all reasonable attorney fees and costs incurred by Landlord in defending any action brought against Landlord for any recovery, and in enforcing the terms and provisions of this indemnification against Tenant. (d) However, the breach of this Agreement by Tenant, or an abandonment of the Premises by Tenant, will not constitute a termination of this Agreement, nor of Tenant’s right of possession under this Agreement, unless and until Landlord elects to do so, and until that time Landlord shall have the right to recover rent and all other payments to be made by Tenant under this Agreement as they become due; provided, that until Landlord elects to terminate this Agreement and Tenant’s right of possession under this Agreement, Tenant may sublet the Premises or to assign interests in this Agreement, or both, subject to the written consent of Landlord, at Landlord’s sole discretion. (e) As security for the performance by Tenant of all duties and obligations under the Agreement, Tenant assigns to Landlord the right, power, and authority, during the continuance of this Agreement, to collect the rents, issues, and profits of the Premises, reserving to Tenant the right, prior to any breach or default by Tenant under this Agreement, to collect and retain the rents, (solely in the case of a sublease previously approved by Landlord) issues, and profits, from the operation of Tenant’s approved business use, as they become due and payable, and so long as payments to Landlord are also kept current.

16.20 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 19 (g) Tenant acknowledges that Landlord has executed this Agreement in reliance on the financial information furnished by Tenant to Landlord as to Tenant’s financial condition. If it is determined at any time subsequent to the date of this Agreement that any of the financial information furnished by Tenant and relied upon by Landlord in executing this Agreement is substantially untrue or inaccurate, Tenant shall be deemed to be in default under this Agreement, which default shall not be subject to cure, and which shall entitle Landlord to exercise all remedies reserved to Landlord under this Agreement or otherwise available to Landlord at law.

ARTICLE 16. DAMAGE OR DESTRUCTION

16.21 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 20 (c) If the Premises are damaged to the extent of fifty percent (50%) or more of the replacement cost, Landlord may elect to terminate this Agreement by written notice to Tenant given within sixty (60) days after the date of the destruction.
(d) If Landlord elects or is required to make repairs under this Article, Tenant shall be entitled to a reduction in rent, equal to that portion of the Premises in which the floor area rendered unusable bears to the gross floor area of the Premises, from the date of damage to the earlier of the date Tenant reopens for business or thirty (30) days from completion of Landlord’s repair work. Tenant, however, shall not be entitled to a reduction in rent or relieved from paying charges to the extent the damage or destruction to the Premises was caused in whole or in part by Tenant. (e) Tenant waives the provisions of Civil Code sections 1932(2) and 1933(4) with respect to any destruction of the Premises.
(f) Except as otherwise provided in this Agreement, damage to or destruction of the Premises shall not terminate this Agreement or result in the abatement of any rent or other charges payable under this Agreement. Tenant expressly waives any right it may have, in law or equity, to offset any cost incurred by Tenant for repairs or restoration to the Premises against Tenant’s obligations to pay rent in connection with Landlord’s duties of repair and restoration under this Agreement. (g) Landlord’s duties of repair and restoration under the provisions of this Agreement shall extend only to those portions of the Premises insured by Landlord under a policy of fire or casualty insurance required herein and to the extent the damage is not caused in part or in whole by Tenant. Landlord shall not be responsible for any loss, damage, or destruction to Tenant’s personal property, trade fixtures, merchandise, inventory or equipment.

ARTICLE 17. ESTOPPEL CERTIFICATES; ATTORNMENT

16.22 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 21 ARTICLE 18. OTHER MUNICIPAL RULES AND REGULATIONS
This section intentionally left blank.

ARTICLE 19. MISCELLANEOUS

The headings or titles to the paragraphs of this Agreement are for convenience only and do not in any way define, limit or construe the contents of such paragraphs.

Except as may otherwise be expressly stated, each payment required to be made by Tenant shall be in addition to and not in substitution for other payments to be made by Tenant.

19.04 Time. Time is of the essence in this Agreement.

16.23 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 22 CITY OF SANTA CRUZ

Either Party may, by proper notice, at any time designate a different address to which notices shall be sent.

19.13 Recycling Activities. Tenant agrees to participate, to the greatest extent possible, in all existing or future recycling activities initiated or arranged by Landlord.

19.14 MacBride Principles and the Peace Charter. The City Council of the City of Santa Cruz approved Resolution No. NS-19,378 on the 24th day of July 1990, endorsing the MacBride Principles and

16.24 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 23 Peace Charter and encourages all companies doing business in Northern Ireland to abide by the MacBride Principles and Peace Charter.

19.15 Approval by City Council/City Attorney. This Agreement, and any amendment of its terms, except as under such authority delegated to the City Manager or his/her designee, is subject to the approval of the City Council of the City of Santa Cruz and the City Attorney, and shall not bind Landlord until such time as their approval and consent has been received in writing.

19.16 Subordination. Agreement lease is and shall be subordinate to any encumbrance now of record or recorded after the date of this Agreement affecting the building, other improvements, and land of which the premises are a part.

Any consent or approval of the City of Santa Cruz for any permit, application, or regulatory matter does not constitute consent or approval by Landlord under the terms of this Agreement.

16.25 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 24 LANDLORD:

CITY OF SANTA CRUZ,
a California municipal corporation
Date: ___________________ By: ____________________________ Matt Huffaker, City Manager
TENANT: Crepe Cones LLC

Date: ____________________ By: ________________________________ Matheu McCabe, Manager

APPROVED AS TO FORM:

Date: ____________________ By:_______________________________ Stephanie Duck, Deputy City Attorney

October 30, 2024

16.26 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 25 EXHIBIT A

PREMISES
Approximately located at 1520 K-2 Pacific Avenue, Santa Cruz, CA 95060.

16.27 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 26 EXHIBIT B

LIMITATIONS ON USE
Tenant shall use the Premises for the sale of crepes.

Except as outlined above, Tenant shall not sell menu items, excepting beverages, which are available from or directly compete with other tenants in the Downtown Kiosk Program.

16.28 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 27 EXHIBIT C

GUARANTY OF LEASE

1. In consideration of the execution of the attached Lease dated ______________, 2024, by and between City of Santa Cruz, a municipal corporation (“Landlord”) and Crepe Cones LLC, a California limited liability company, (“Tenant”) for the premises known as 1520 K-2 Pacific Avenue in Santa Cruz, California, the undersigned Guarantor(s) hereby unconditionally and irrevocably guarantee(s) to Landlord, its successors and assigns, the prompt payment by Tenant of the rent and all other sums required under the Lease, and the faithful performance by Tenant of all the terms, covenants, and conditions contained in the Lease. The lease is incorporated herein by reference.

2. This Guaranty shall not be affected by any deviation from or alteration of the terms, covenants, or conditions of the Lease or by any permitted assignment or subletting of all or any part of the interest of Tenant in the Lease. This Guaranty shall not be released, extinguished, modified, or in any way affected by failure on the part of Landlord to enforce any or all of its rights or remedies whether pursuant to the terms of the Lease or at law or in equity.

3. This Guaranty is a continuing one and shall terminate only on payment by Tenant of all the rent and other sums required under the Lease and on performance by Tenant of all duties and obligations contained in the Lease.

4. The undersigned waives notice: (a) of any default by Tenant (i) in payment by Tenant of any of the rent or other sums hereby guaranteed and (ii) in performance by Tenant of the terms, covenants, and conditions of the Lease, and (b) of acceptance by Landlord of this Guaranty. Landlord agrees to give written notice to the undersigned prior to commencing legal action against Tenant or against the undersigned.

5. The undersigned consents that Landlord may from time to time extend the time for performance or otherwise modify, alter, or change the Lease and any or all of its provisions and may extend the time for payment of the rent and all other sums hereby guaranteed and may receive and accept notes, checks, and other instruments for the payment of money made by Tenant and extensions and renewals thereon without in any way releasing or discharging the undersigned from its obligations under this Guaranty. Notice of presentment of any such note or notes and/or notice of default in the payment thereof at maturity and/or protest or notice of protest thereof is expressly waived.

6. The undersigned further consents and agrees that Landlord shall not be required, in order to enforce this Guaranty, to first institute suit or exhaust its legal remedies against Tenant. This Guaranty of Lease shall not be extinguished as a result of any bankruptcy proceeding.

7. This Guaranty may be immediately enforced against the undersigned (jointly and/or severally if more than one guarantor) on any default by Tenant, and the insolvency of Tenant shall be deemed a default.

8. In the event any action should be commenced by Landlord against the undersigned to enforce any of the terms or conditions of this Guaranty, Landlord shall be entitled to recover from the undersigned hereunder in any action in which it shall prevail, reasonable attorneys’ fees and expenses.

9. If there is more than one Guarantor, the obligations and liabilities imposed on each individual that serves as a Guarantor under this Guaranty will be joint and several.

10. This Guaranty shall inure to the benefit of Landlord, its successors and assigns, and shall bind the successors and assigns of the undersigned.

16.29 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 28 11. The unenforceability, invalidity, or illegality of any provision(s) of this Guaranty shall not render the other provisions unenforceable, invalid, or illegal.

12. The undersigned Guarantor(s) acknowledge(s) that he/she has/have reviewed this Guaranty 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 Guaranty.

13. The undersigned Guarantor(s) acknowledge(s) giving mature and careful thought to this Guaranty and has the legal capacity and standing to enter into this Guaranty. The undersigned Guarantor(s) acknowledges understanding the meaning and legal consequences of this Guaranty.

14. This Guaranty may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the undersigned has executed this Guaranty this ______ day of _____________, 2024.

Guarantor:
______________________
Matheu McCabe, individually and
as manager of Crepe Cones LLC

16.30 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 29 CERTIFICATE OF ACKNOWLEDGMENT OF NOTARY PUBLIC
State of California)
County of Santa Cruz)
On ______________________ before me, , Notary
Public, personally appeared __________________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

(This area for official notary seal)
Signature ______________________________
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

16.31 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 30 EXHIBIT D

LICENSE AREA
Minimum
8’ sidewalk
Approximate Maximum
License Area
(non-exclusive)
8’
PACIFIC AVE.

16.32 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 31 EXHIBIT E
CAFÉ EXTENSION AREA POLICIES AND PROCEDURES
Purpose
The purpose of extension areas is to enhance the pedestrian ambiance of Downtown Santa Cruz by introducing uses attractive to pedestrians onto the pedestrian environment.

16.33 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 32 Retailing Uses
• Retailing uses within extension zones shall be limited to the sale of newspapers and magazines, flowers and produce, unless otherwise approved by the City Council or its designated agent; • Such extension areas shall not exceed 6 feet in depth, unless it is determined that such depth is necessary to achieve the desired pedestrian objectives for the street, and in no case shall an extension area result in a public promenade that is less than 12 feet in depth or 8 feet along Pacific Avenue.
• Merchandise shall be displayed against the shop front and be oriented toward the street on tables or stands that do not exceed four feet in height;
• No separation (e.g., planters or low walls) between the merchandise and the street shall be permitted.

16.34 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 33 EXHIBIT F
DESCRIPTION OF LANDLORD’S AND TENANT’S WORK
Not Applicable

16.35 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 34 EXHIBIT G

MONTHLY STATEMENT
Gross Income and Rent Computation

IN ACCOUNT WITH

CITY OF SANTA CRUZ
FINANCE DEPARTMENT – REVENUE
1200 PACIFIC AVENUE, SUITE 290
SANTA CRUZ, CALIFORNIA 95060

MONTHLY STATEMENT OF GROSS INCOME AND RENT
FOR MONTH ENDING _________________ 20___

1. Gross monthly income (all sales and business transactions): ............................... $ ___________

2. Cash or credit refunds made upon sales from premises: ........................................ $ ___________

4. Total adjustments (Line 2 plus Line 3): ................................................................... $ ___________

5. Adjusted gross income (Line 1 minus Line 4): ........................................................ $ ___________

6. Percentage Rent (Line 5 x 6%): ............................................................................... $ ___________

7. Minimum Monthly Rent: ........................................................................................... $ __300.00____

8. RENT DUE (the greater of Line 6 or Line 7): .......................................................... $ ___________

9. LATE FEE (10% of Line 8 if paid after the due date): ............................................. $ ___________

11. CREDIT/TRUE UP (amount of any prior rent over/underpayments)*: .................... $ ___________

16.36 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 35 EXHIBIT H

2. Permitting Requirements. Signs within the CBD zone are subject to the sign permit requirements of Chapter 24.08, Part 6 of the City of Santa Cruz Zoning Code, except as modified by this chapter. a. Projecting signs and hanging signs that conform to all provisions provided under subsection (7)(b) shall be permitted and do not require a sign permit. b. Exceptions and variations to the requirements may be considered by the zoning administrator without a public hearing, subject to the exception procedure set forth in Section 24.08.580; sign permit findings set forth in Section 24.08.530; and the following criteria:

16.37 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 36 d. “Halo illumination” shall mean a light source, which is not visible, where the light fixture is placed on the back side of the letter or sign face resulting in a glow around the outside of the lettering or sign.
e. “Hanging sign” shall mean a projecting sign which is suspended from an overhang, canopy, marquee, or awning, or from a mounting attached directly to the building wall. f. “Icon sign” shall mean hanging or projecting signs that depict a physical object, such as a shoe, as opposed to signs that utilize lettering to convey the sign message. Icon signs may or may not include the name of the establishment.
g. “Master Sign Program” shall refer to a program that established to integrate all signs into a project’s design to achieve a unified architectural statement. A Master Sign Program provides a means for flexible application of sign regulations for properties with multiple signs, multi-tenant properties, and other properties with unified development, in order to encourage creativity and provide incentives to achieve, not circumvent, the intent of this division. h. “Projecting sign” shall mean any sign which uses a building structure as its main source of support and contains copy that is mounted at an angle to the building face. Projecting signs may be mounted vertically or horizontally on the support structure. i. “Public art” shall mean original works of art in any medium, whether two- or threedimensional, created for placement in public places or integrated projects where the artwork is a part of the underlying architecture or landscape design and that is not prefabricated or standard design. Artwork should not use letters, words, numerals, figures, emblems, logos or any part or combinations thereof for the purpose of advertising goods, services or merchandise. Public art should enhance rather than impair pedestrian use of the area, particularly with respect to pedestrian visibility and circulation.
j. “Sign” shall mean any structure, device, or design and appurtenant light structures used principally to advertise or attract attention of the public. The term shall not include the United States flag, or any governmental flag, properly displayed in an approved manner, patriotic bunting, and donor’s memorial plaques.
k. “Temporary sign” shall mean sign(s) placed for a time not to exceed thirty consecutive calendar days. These signs are generally used for special events or grand openings, but may include the name of a business. Banners are a type of temporary sign which hang over a public street, walkway or wall to advertise a special event or business. l. “Wall sign” shall mean any sign posted or painted on, suspended from or otherwise affixed to the wall of any building or structure in an essentially flat position, or with the exposed face of the sign in a plane approximately parallel to the plane of such wall. m. “Window sign/graphics” shall mean any building sign, pictures, symbols, or combination thereof, designed to communicate information about an activity, business, commodity, event, sale, or service, that is placed inside a window or upon the window pane or glass and is visible from the exterior of the window.

5. General Guidelines. The following statements are general rules for signs which apply to all parcels within the Central Business District zone.

General • Wall signs with large areas of dark colors, and which read as billboards because of size and corporate message, are out of place in the Central Business District zone.

Location • Shall not cover windows, roof shapes, or dominate trim.

Number • A maximum of 2 different types of the following signs per business:
• wall sign
• projecting sign
• hanging sign
• awning sign

16.38 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 37 Lighting • Internally illuminated signs shall be limited to illuminated lettering with an opaque background, neon signs, or halo illumination.
• Exterior Lighting for Signs. All signs should have the capacity of being lit for evening visibility.

Materials and
Methods of
Construction
• Any materials or methods of construction are acceptable; however, signs shall be legible and shall be constructed of durable, high quality materials.

Exceptions • A Master Sign Program may be created to allow for a coordinated long-term sign plan for a multi-tenant building.

6. Development and Design Standards.
a. Wall Signs.

Location • Either on or above a tenant space fronting a public street, alley or public parking lot.
• Shall not cover windows, roof shapes, or other
distinguishing architectural features.

Height • No part of any sign shall extend above the top level of the wall upon or in front of which it is situated.

Projection • Not to exceed 12 inches from building face.

Number • One, with the exception of corner buildings, which may have one sign per building face fronting a street.
• Window signs are not included in the maximum
number

16.39 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 38 b. Projecting Signs and Hanging Signs.

Area • A maximum of 6 square feet in area for projecting signs on Pacific Avenue and 8 square feet in area on
all other streets, as measured on one side of a twosided sign.

Projecting Sign
Hanging Sign
• A maximum of 6 square feet in area for hanging signs
as measured on one side of a two-sided sign.

Location • Determined by visibility.
• Shall be located directly above or to the side of an
entrance of a tenant space.

Number • A maximum of one projecting sign or one hanging sign per frontage face.

Height • A minimum clearance of 8 feet.

Projection • For signs with an 8-14 foot clearance, signs may project 2 feet and may project 6 additional inches for
each foot of clearance in excess of 8 feet.
• Not to exceed 4 feet.

Lettering • Usage of establishment’s name on the sign is preferred
• An icon which has only the symbol or image of the
store should suggest as nearly as possible those
services which are offered, or products which are sold, inside the establishment.
c. Window Graphics.

Area • Not to exceed more than 25% of the area of
any one window.

Location • Shall not obscure pedestrian’s visibility into shop.
• Shall be integrated into store window
displays.

Colors • Complementary and suitably contrasting
accent colors shall be used.

16.40 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 39 f. Temporary Signs.
(1) Temporary signs, such as hastily, hand-painted “Sale” signs printed on paper and plastered in windows, are not permitted and shall be subject to the enforcement procedures provided under Title 4 of the City of Santa Cruz Municipal Code. (2) Temporary signs not exceeding two in number and six square feet in total area for each business are allowed.
g. Public Art Exception. The zoning administrator shall determine whether a proposal contains the characteristics of a sign, i.e., whether its principal function is to serve as an advertisement. If the zoning administrator determines that the proposal is a sign, it shall be subject to the requirements of this part and may be subject to building and construction codes or other requirements of the municipal code.
(b) 24.12.360 PERFORMANCE REGULATIONS – LIGHTING, MOVEMENT, SOUND.

24.12.328 above (roof signs) and Section 24.12.330 above (flags, etc., regulations)

16.41 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 40 EXHIBIT I

A. Insurance Certificate Requirements.

B. Minimum Scope and Limit of Insurance.

Tenant shall maintain limits no less than the following:

16.42 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 41 replacement cost against loss or destruction by fire and all perils, including vandalism, malicious mischief, special extended perils (“special form”). The property insurance is to be endorsed to include Legal Liability Coverage (ISO Form CP 00 40 04 02 or equivalent) with a limit equal to the replacement cost of the leased property. Landlord shall be named as an additional insured and loss payee on the policies. Any loss payable under any policy described in this section shall be paid by the insurance company to Landlord or as otherwise agreed by the Parties to be used to fund the repair or replacement of the damaged Premises or improvement pursuant to this Agreement. “Full replacement cost,” as used in this section, shall mean the actual cost of replacement for the building and other improvements on the Premises, as determined from time to time.

Such insurance shall include a waiver of subrogation in favor of Landlord.

C. Other Insurance Provisions.

PRIMARY COVERAGE
For any claims related to this Agreement, Tenant’s insurance coverage will be primary and noncontributory as respects the City, its officers, officials, and employees. Any insurance or selfinsurance maintained by the City, its officers, officials, and employees will be excess of Tenant’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.

16.43 Lease Agreement between the City of Santa Cruz and Crepe Cones LLC 42 applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer.

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.

16.44 City Council

AGENDA REPORT
DATE: 10/31/2024
AGENDA OF: 11/19/2024
DEPARTMENT: Economic Development and Housing
SUBJECT: Approval of Navigation Center Grant Application (EDH) RECOMMENDATION: Motion to adopt a resolution to approve submission of an application for the California Department of Health Care Services (DHCS) Behavioral Health Infrastructure Bond Act (BHIBA) of 2024 Round 1 funding for behavioral health services at the Navigation Center to be located at 125 Coral Street and authorize the City Manager to execute a Program Funding Agreement for the award amount, and any documents, amendments or extensions of a non-substantive nature, in a form approved by the City Attorney.

BACKGROUND: The City purchased the site at 125 Coral Street in 2022 for three million dollars with the intention of using it to increase the supply of emergency shelter beds within the City so that other temporary shelter sites may be closed. Through the course of extensive community outreach and the Coral Street Visioning Process, a City initiative that set goals and priorities for the Coral Street Homeless Services Campus (Coral Street Campus), the current project scope is to develop a Navigation Center. It will provide low barrier, temporary, service enriched shelter to unhoused individuals and families. The Navigation Center will also provide supportive services to enable clients to more quickly obtain permanent housing. The City and County of Santa Cruz (County) staff have been meeting regularly with Housing Matters, a nonprofit service provider that leases the City property located at 115 Coral Street, and other service providers, to further define the scope of the Navigation Center programs.

The California Department of Health Care Services (DCHS) launched the Behavioral Health Continuum Infrastructure Program (BHCIP) to address historic gaps in the behavioral health care continuum and meet the growing demand for services and support across the life span of vulnerable individuals in need. Voters approved Proposition 1 which funded the Behavioral Health Infrastructure Bond Act of 2024 that created a new source of infrastructure funding in the State of California (State). All projects must support people with health insurance through MediCal. Requests for Applications (RFAs) for the BHCIP Round 1: Launch Ready applications was released in July 2024 with a deadline application of December 13, 2024. This is a unique opportunity to obtain major funding for the infrastructure development of the Navigation Center at 125 Coral Street.

DISCUSSION: The State priorities for the BHCIP, Round 1: Launch Ready RFAs align closely with the goals of program development for the Navigation Center, such as:

17.1  Address urgent needs in the care continuum for people with mental health or substance use conditions, including unhoused people, veterans, older adults, and adults with disabilities.
 Invest in behavioral health and community care options that advance health equity.  Meet the needs of vulnerable populations with the greatest barriers to access, including people experiencing unsheltered homelessness and justice involvement.  Leverage County and Medi-Cal investments to support ongoing sustainability.

Within the BHCIP eligibility considerations, projects using a campus-type model that colocates multiple levels of care on the continuum are strongly encouraged. Applicants proposing residential facilities will be prioritized for a funding award.

From the list of grant eligible behavioral health facilities, the City application will focus on the Adult Residential Substance Use Disorder (SUD) Treatment facility defined as a residential alcoholism or drug abuse recovery or treatment facility which is designed to serve adults and provides 24 hour, residential, nonmedical, alcoholism or drug abuse recovery or treatment services. The Adult Residential SUD facility will provide services for some of the most vulnerable clients of the Navigation Center who are unhoused or in temporary emergency shelters. At the current time, there is a shortage of residential treatment beds within the County Continuum of Care. As a result, there are long waits, often on the street, for people to access treatment. The City is approximating the Adult Residential SUD facility will serve up to 50 individuals, with the final program size to be determined through the grant application process.

The viability of including an outpatient clinic for substance use disorders and a social rehabilitation facility will also be evaluated during the grant application process.

To be eligible for the BHCIP Bond funding, a project must demonstrate “project readiness” with the threshold requirements. These requirements are site control, a sustainable business plan, a conceptual/schematic site plan, stakeholder support, demonstration of County and Medi-Cal investments to support sustainability, and a 10% match. The City can already prove site control and a match through the purchase of the property at 125 Coral Street. Through the grant application process, the other threshold requirements and thus the vision of a new Navigation Center will become more clearly defined.

This grant will not fund the infrastructure for all of the program services envisioned for the Navigation Center. It could, however, fund major expenses for the pre-development and site preparation at 125 Coral Street and a portion of construction costs. If the grant application is successful, the funding will not be available until sometime in 2026. Between the time of a grant award and receiving grant funding, staff will work to assemble additional funding for other programs that will be colocated at the site.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The proposed Council action to authorize submittal of a grant application is not a “project” under CEQA. “Project” is defined by CEQA as:
“an activity which may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, and which is any of the following:
(a) An activity directly undertaken by any public agency.

17.2 (b) An activity undertaken by a person which is supported, in whole or in part, through contracts, grants, subsidies, loans, or other forms of assistance from one or more public agencies.
(c) An activity that involves the issuance to a person of a lease, permit, license, certificate, or other entitlement for use by one or more public agencies.” (Pub. Resources Code, § 21065.)
The proposed Council action is not a “project” under CEQA because no direct or indirect physical change to the environment is anticipated by this Council action. Any facility that may ultimately be constructed on the site will likely qualify for a Class 32 Categorical Exemption, which applies to infill projects that are consistent with all applicable general plan policies and zoning criteria under 14 CCR Section 15332.

HEALTH IN ALL POLICIES (HiAP): A navigation center is a place where people experiencing homelessness can find immediate shelter and, by entry, be provided with services that will help them connect with long-term housing options and any other services they may need. California Assembly Bill 101 defines a navigation center as a housing first, low-barrier, temporary, service enriched shelter focused on helping homeless individuals and families to quickly obtain permanent housing. Low barrier includes best practices to reduce barriers to entry, such as allowing partners, pets, storage of personal items, and privacy. (Gov. Code Sec. 65660)” Inclusion in the Navigation Center for the delivery of behavioral health services, particularly substance use disorders, will fill a critical care gap for the permanent housing placement of unhoused members of our community.

FISCAL IMPACT: The grant application requires a 10% match if awarded grant funds. The City has invested three million dollars in the purchase of the property which will be leveraged to request up to thirty million dollars in BHCIP grant funding. If awarded, this grant will fund predevelopment and site development costs at 125 Coral Street and infrastructure costs for the behavioral health component of the Navigation Center programming. Staff will work to leverage this funding award to apply for funding for other Navigation Center programs.

Prepared By:

Kathryn Mintz
Development Manager
Submitted By:

Bonnie Lipscomb
Director of Economic
Development and Housing
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. RESOLUTION AUTHORIZING APPLICATION TO AND PARTICIPATION IN BHCIP.DOCX

2. BOND_BHCIP_PROGRAM UPDATE.PDF

17.3 RESOLUTION NO. NS-30,XXX

A RESOLUTION OF THE SANTA CRUZ CITY COUNCIL AUTHORIZING

APPLICATION TO AND PARTICIPATION IN THE BEHAVIORAL HEALTH CONTINUUM INFRASTRUCTURE PROGRAM (“BHCIP”)
WHEREAS:

A. The California Department of Health Care Services, through its contractor Advocates for Human Potential, Inc., (“Department”) has issued a Request for Applications, dated July 15, 2024 (“RFA”), for the BHCIP Round 1 (2024) Launch Ready Program (“Program”). The Department has issued the RFA for Program grant funds pursuant to California Welfare and Institutions Code sections 5965-5967.01 (“Behavioral Health Infrastructure Bond Act of 2024”).

B. CITY OF SANTA CRUZ, a California Charter City (“Applicant”), desires to apply for Program grant funds and has submitted an application for Program grant funds (“Application”) to the Department for review and consideration.

C. The Department is authorized to administer BHCIP pursuant to the Behavioral Health Infrastructure Bond Act of 2024. Program funding allocations are subject to the terms and conditions of the RFA, the Application, Program Funding Agreement (“Program Funding Agreement”), and all other legal requirements of the Program.

THEREFORE, IT IS RESOLVED THAT:

1. Applicant is hereby authorized and directed to submit an Application to the Department in response to the RFA, and to apply for Program grant funds in a total amount not to exceed $30,000,000.

2. If the Application is approved, Applicant is hereby authorized and directed to enter into, execute, and deliver a Program Funding Agreement for the total award amount, and all other documents required or deemed necessary or appropriate to secure the Program grant funds from the Department and to participate in the Program, and all amendments thereto (collectively, the

17.4 “Program Documents”).

3. Applicant acknowledges and agrees that it shall be subject to the terms and conditions specified in the Program Funding Agreement. Any and all activities, expenditures, information, and timelines represented in the Application are enforceable through the Program Funding Agreement. Funds are to be used for the allowable expenditures and activities identified in the Program Funding Agreement.

4. MATT HUFFAKER, THE CITY MANAGER, (the “Authorized Signatory”), is authorized to execute the Application and the Program Documents on behalf of Applicant for participation in the Program.

PASSED AND ADOPTED this XX day of XX, 2024, by the following vote:

AYES: [ # ] NAYS: [ # ] ABSTAIN: [ # ] ABSENT: [ # ]
The undersigned, Bonnie Bush, the City Clerk of Applicant, does hereby attest and certify that the foregoing is a true and full copy of a resolution of the Corporation’s governing body adopted at a duly convened meeting on the date above-mentioned, and that the resolution has not been altered, amended, or repealed.

SIGNATURE: DATE:

NAME: TITLE:
[NOTICE AND INSTRUCTIONS APPEAR ON THE FOLLOWING PAGE]

17.5 NOTICE AND INSTRUCTIONS

1. Notice. The Department is providing this template Authorizing Resolution as informational guidance only. The Department encourages each Applicant to consult with professional legal counsel during the development of its own formal, legally binding statement that it is authorized to apply to and participate in the Program. a. Please note, however, that any limitations or conditions on the authority of the signatory or signatories to execute the Application or the Program Documents may result in the Department rejecting the Authorizing Resolution.

2. Accuracy, Verification. The Department will verify that this Authorizing Resolution comports with Applicant’s operative organizational documents (e.g., Articles of Incorporation, bylaws). Applicant must timely notify the Department, in writing, of any discrepancies between its Authorizing Resolution and its organizational documents, along with a written explanation of same.

3. Dollar Amounts of Grant Awards. The Department recommends identifying an authorized dollar amount that is exactly the amount requested in the Application. If Applicant is ultimately awarded an amount that differs from the amount identified in the Authorizing Resolution, the Department will require a new Authorizing Resolution from Applicant before execution of a Program Funding Agreement.

4. Authorized Signatory or Signatories, Designee. Applicant may authorize multiple signatories, so long as there is clarifying language as to whether the signatories are authorized to execute the Program Documents individually or collectively.

5. Vote Count. Please fill out the field by every voting category (i.e., Ayes, Nays, Abstain, Absent). If none, please indicate zero (0) for that field. The vote count must comport with relevant provisions in Applicant’s operative organizational documents (e.g., authorized number of directors, quorum).

6. Certification of Authorizing Resolution. The individual who certifies the Authorizing Resolution cannot also be authorized to execute the Program Documents on behalf of Applicant. The individual who certifies this Authorizing Resolution must be either 1) the Secretary of the corporation; 2) the Chairperson/President of the Board of Directors, if different than the Authorized Signatory; or 3) all members of the Board of Directors of the corporation.

17.6 1
California Department of Health Care Services
Proposition 1:

Behavioral Health Infrastructure
Bond Act of 2024:

Behavioral Health Continuum
Infrastructure Program
Round 1 (2024): Launch Ready and
Round 2 (2025): Unmet Needs
OVERVIEW .......................................................................................................................................................... 2 BHCIP TO DATE................................................................................................................................................... 3 TECHNICAL ASSISTANCE ......................................................................................................................................... 3 ELIGIBLE ENTITIES ................................................................................................................................................. 4 ELIGIBILITY CONSIDERATIONS 5
ELIGIBLE FACILITY TYPES 7
FUNDING PARAMETERS ......................................................................................................................................... 9 ENCUMBRANCE AND USE RESTRICTIONS 9
MATCH 9
FUNDING REGIONS 10

17.7 Bond BHCIP Program Update
2 The California Department of Health Care Services (DHCS) launched the Behavioral Health Continuum Infrastructure Program (BHCIP) to address historic gaps in the behavioral health care continuum and meet the growing demand for services and support across the life span of vulnerable individuals in need. This Program Update reflects the addition of the Behavioral Health Infrastructure Bond Act of 2024. The following information is provided as a supplement to the forthcoming Requests for Applications (RFAs). Bond BHCIP Round 1: Launch Ready RFA is expected to be released in July 2024 for up to $3.3 billion in funding. Bond BHCIP Round 2:

Unmet Needs RFA is expected to be released in May 2025 for up to $1.1 billion in funding.

The State priorities for BHCIP are:
● Address urgent needs in the care continuum for people with mental health or substance use conditions, including unhoused people, veterans, older adults, adults with disabilities, and children and youth.
● Invest in behavioral health and community care options that advance health equity of behavioral health care and community options.
● Increase options across the life span that serve as an alternative to incarceration, hospitalization, homelessness, and institutionalization. ● Meet the needs of vulnerable populations with the greatest barriers to access, including people experiencing unsheltered homelessness and justice involvement. ● Ensure care can be provided in the least restrictive settings to support community integration, choice, and autonomy.
● Leverage county and Medi-Cal investments to support ongoing sustainability. ● Leverage the historic state investments in housing and homelessness.

Overview
Through the BHCIP rounds to date since launch in 2021, DHCS funding has allowed eligible entities in all regions of the state to develop an unparalleled array of new and expanded behavioral health facilities for in-patient and out-patient care. However, inequities across the health care system remain seen in California. Statewide, a 6,000-plus behavioral health bed shortfall is contributing to the unmet need among people experiencing homelessness who have mental illness and/or substance use disorders.1 Additionally, a 2022 DHCS report, “Assessing the Continuum of Care for Behavioral Health Services in California”2 and the Rand Corporation’s “Adult Psychiatric Bed Capacity, Need, and Shortage Estimates in California—2021”3 examined population health disparities across the behavioral health continuum and determined continued high need for facilities across the spectrum statewide. 1 CalHHS The Next Step to Transform California’s Behavioral Health System 2 Document by DHCS titled "Assessing the Continuum of Care for Behavioral Health Services in California" 3 McBain, Ryan K., Jonathan H. Cantor, Nicole K. Eberhart, Shreya S. Huilgol, and Ingrid Estrada-Darley, Adult Psychiatric Bed Capacity, Need, and Shortage Estimates in California—2021. Santa Monica, CA: RAND Corporation, 2022.

17.8 3
Bond BHCIP Program Update
In March 2024, California voters passed Proposition 1, that includes the Behavioral Health Services Act (Senate Bill 326) and the Behavioral Health Infrastructure Bond Act (BHIBA) of 2024 (Assembly Bill 531), authorizing DHCS to make additional BHCIP grant funding available to eligible entities. The BHIBA is a $6.38 billion general obligation bond to develop a wide range of behavioral health treatment, residential care settings, and supportive housing to help provide appropriate care facilities for Californians experiencing mental health conditions and substance use disorders.

Of the total bond amount, DHCS is authorized to award up to $4.393 billion “to construct, acquire, and rehabilitate real estate assets or to invest in needed infrastructure to expand the continuum of behavioral health treatment resources to build new capacity or expand existing capacity for short-term crisis stabilization, acute and subacute care, crisis residential, communitybased mental health residential, substance use disorder residential, peer respite, community and outpatient behavioral health services, and other clinically enriched longer term treatment and rehabilitation options for persons with behavioral health disorders in the least restrictive and least costly setting.”4 Of these funds, $1.5 billion of competitive grant funding will be exclusively available to cities, counties, city and counties, and Tribal entities and $30 million shall be specifically designated to Tribal entities. The balance of the funds, up to $2.893 billion, is available to cities, counties, Tribal entities, and nonprofit and for-profit organizations. The BHCIP portion of the bond is estimated to fund 6,800 residential treatment beds and 26,700 outpatient treatment slots for behavioral health and will build on other major behavioral health initiatives in California. Additional bond funding requirements will be available with the release of the RFAs.

The Department of Housing and Community Development (HCD) will oversee the remaining BHIBA available funding – up to $2 billion in total. There will be a separate Notice of Funding Availability for that portion of the BHIBA.

BHCIP to Date
DHCS was authorized through 2021 legislation to establish BHCIP and award $2.2 billion to construct, acquire, and expand properties and invest in mobile crisis infrastructure related to behavioral health. DHCS has been releasing these funds through multiple grant rounds targeting various gaps in the state’s behavioral health facility infrastructure. Forty-nine counties have been awarded BHCIP funding through Round 1 to Round 5.

BHCIP funding rounds:
● Round 1: Mobile Crisis, $205 million ($55 million Substance Abuse and Mental Health Services Administration grant funding)
● Round 2: County and Tribal Planning Grants, $16 million ● Round 3: Launch Ready, $518.5 million
● Round 4: Children and Youth, $480.5 million
● Round 5: Crisis and Behavioral Health Continuum, $430 million 4 AB-531, The Behavioral Health Infrastructure Bond Act of 2023.

17.9 4
Bond BHCIP Program Update
Technical Assistance
As consistent with previous BHCIP rounds of funding, Advocates for Human Potential, Inc. (AHP), a consulting and research firm focused on improving health and human services systems, is serving as the administrative entity for BHCIP and will be assisting in technical assistance (TA) provisions.

Beginning in May 2024, AHP will hold virtual webinars and learning collaboratives to assist in application preparation. These events will review various project-related topics. TA will help applicants understand the minimum project requirements and budgeting practices. Minimum project requirements include a sustainable business plan, a conceptual site plan, architectural and engineering narratives, and an initial budget based on the site plan.

By November 2024 and as part of the RFA process, AHP will provide a pre-application consultation (PAC) to applicants. All prospective applicants will be required to engage in a PAC, which will provide an opportunity to discuss the proposed project, match requirements and potential sources of local match, statutory and regulatory requirements, how the project addresses local need/gaps and the State’s priorities, and other related considerations. AHP will provide these PACs in coordination with experts in real estate, finance, Tribal relations, and behavioral health, as needed. Applicants will submit a request for a PAC and complete a survey to indicate their understanding of the project requirements. The deadline to request a PAC will be eight weeks before the application deadline.

Following award announcements, specialized TA will be provided to all BHCIP grantees. In addition, AHP will offer ongoing general training and TA, including learning collaboratives and other opportunities, for grantees throughout the life of the project.

Additional information and TA related to the RFA will be available at the Building California website portal. AHP will also develop and update on an ongoing basis a list of Frequently Asked Questions (FAQs) that will be accessible to all prospective applicants and grantees.

Eligible Entities
Counties, cities, Tribal entities (including 638s and urban Indian clinics), nonprofit organizations, and for-profit organizations whose projects reflect the State’s priorities and align with facility types listed in Table 1 are eligible to apply for this funding, noting the following stipulations and specifications:
● Projects must make a commitment to serve Medi-Cal beneficiaries. ● For-profit organizations, including private real estate developers, with related prior development experience who are collaborating with nonprofit organizations, Tribal entities, or counties may apply, but will be required to demonstrate a legal agreement

17.10 Bond BHCIP Program Update
5 (e.g., Memorandum of Understanding [MOU]) with the county, Tribal entity, city, forprofit organization, or nonprofit organization to confirm the organization’s role in the project, including that they are working on behalf of the service provider).

Recipients of BHCIP awards in prior rounds are eligible to apply. Any additional BHCIP funding awarded must be used to further expand or create new facility capacity. To be considered, applications must clearly explain the funding request for additional behavioral health project expansion and how it meets the statewide need. Funding shall not fund budget shortfalls or cost overruns for any previously awarded BHCIP projects.

Eligibility Considerations
All applicants must demonstrate how their infrastructure project will expand community-based facility capacity exclusively for behavioral health services in the continuum of care. Regional models or collaborative partnerships aimed at construction, renovation, and/or expansion of community-based services are eligible, as are projects using a campus-type model that collocates multiple levels of care on the continuum are strongly encouraged. In addition, scoring will take into consideration a focus on the State’s priorities, including efforts to advance equity and to expand services in regions and counties that currently do not have an adequate number of treatment options for behavioral health facilities. In an effort to be consistent with the bond proposal to expand 6,800 residential treatment beds, applicants proposing residential facilities will be prioritized for funding award. Expanded residential treatment beds will also assist counties with the implementation of the Community Assistance, Recovery and Empowerment (CARE) Act.

All applicants must describe the local needs based on the statewide needs assessment report and any local needs assessment used to justify the proposed expansion. All applicants will be required to demonstrate how the proposed project will advance equity. Projects will be required to certify that they will not exclude certain populations outside their mission or scope, such as those who are justice-involved or children and youth in foster care. Grantees with behavioral health facilities that offer Medi-Cal behavioral health services will be required to have a contract in place with their county to ensure the provision of Medi-Cal services once the funded facility’s expansion or construction is complete.

To be eligible for funding, a project must demonstrate “project readiness.” At a minimum, the fundamental threshold requirements for “project readiness” are as follows:
● Site control. Any of the following may be used to prove site control (other documentation demonstrating site control may be submitted for DHCS consideration):
o Title vested to applicant (ownership)
o Executed Purchase and Sale Agreement (PSA)
o Mutually executed Letter of Intent (LOI)
o Pre-existing long-term lease (acceptance of a BHCIP award will require a lease extension of no fewer than 30 years)

17.11 Bond BHCIP Program Update
6 o Executed Exclusive Negotiation Agreement (ENA)
o A memorandum of understanding (MOU) does not constitute site control. Please be sure to discuss any other proposed site control documentation during your required pre-application consultation.
● A sustainable business plan with 5-year projections within existing available funding (income and expenses) of future objectives and strategies for achieving them. ● A conceptual/schematic site plan with a forecast of the developmental potential of the property. The further the construction drawings are toward “permit ready” the higher the application will be scored, all other items being equal. ● Stakeholder support as demonstrated by letters of support from internal boards of directors, Tribal councils or advisory boards, and professional/community partners, as relevant. City, nonprofit, or for-profit applicants must also include a letter of support from their county behavioral health agency.
● Demonstration of county and Medi-Cal investments to support ongoing sustainability. ● Match amount and source identified.

In addition, inclusion of a professionally bid development budget, including all local prevailing wage rates, one for each phase, and a total budget for acquisition and construction, will increase an applicant’s score. However, it will not guarantee an award.

Three phases of project development will be considered during the evaluation of each application. Applicants must be in one of the three phases; applicants in later phases will be scored higher. All projects must meet the minimum threshold of project readiness to be awarded grant funds. Applicant projects are considered to be in a given phase of development only after they have met all of the requirements in the previous phase. Required documentation will be reviewed with each applicant during the PAC process and must be submitted as part of the application.

Payment processes will be subject to the bond funding requirements that will be outlined in the RFA. Guidance and technical assistance will be provided regarding data and information necessary from grantees in order to comply with bond requirements. Grantees may submit invoices for program funds as specified milestones are achieved and related documentation is submitted to AHP. Funding will occur through draw requests for work completed and invoiced.

Funding is intended for planning, preconstruction, permitting, and construction; allowable costs include those activities identified in the development phases below. ● Phase 1: Planning and pre-development
o Development team established; includes attorney, architect, and/or design-build team.
o Site control, defined as ownership, an executed PSA, an executed LOI, a long-term lease, or an executed ENA.
o Basis of design; includes architectural and engineering narratives.

17.12 Bond BHCIP Program Update
7 o Property-specific site investigation report and due diligence. o Budget with cost estimates based on site plan/drawings. ● Phase 2: Design development
o Site control established with deed, PSA, option contract, LOI, or leasehold. o Site plan established with a schematic plan with architectural and engineering specifications.
o Stakeholder support established as demonstrated by a letter from city/county/board of directors/Tribal entity.
o Able to gain building permits within six months of funding. o Able to close on land and gain building permits within six months of funding. o Able to start construction within nine months of funding. ● Phase 3: Shovel ready
o Ownership of real estate site.
o Preliminary plan check completed, with comments received. o Construction drawings complete or near completion.
o General contractor (builder) selected and ready for hire. o Ninety percent of construction drawings ready for submission for building permit. o Building permit ready to be issued.
o Able to start construction within 60 days or less.
● Final Phase: Construction
o Projects that rehabilitate or renovate an existing facility are allowable as long as they result in an expansion of behavioral health services for the target population. o Essential furniture and equipment are allowable costs, as per the DHCS allowable expense list. There is a maximum of 10 percent of the total budget allowed for this purpose.

Full funding of a proposed development project will be contingent on completion of all three phases of development planning. The planning and pre-development phase, which includes the submission of construction documents for building permit review, must be completed within six months of grant funding award.

Eligible Facility Types
The following facility types may be considered for project funding only if they are expanding or creating new behavioral health infrastructure.

17.13 Bond BHCIP Program Update
8 Table 1. Eligible Facility Types
Bond BHCIP: Round 1 and Round 2 Eligible Facility Types Acute Psychiatric Hospital
Adolescent Residential SUD Treatment Facility
Adult Residential SUD Treatment Facility
Behavioral Health Urgent Care (BHUC)/Mental Health Urgent Care (MHUC) Chemical Dependency Recovery Hospital
Children’s Crisis Residential Program (CCRP)
Community Mental Health Clinic (outpatient)
Community Residential Treatment System (CRTS)/Social Rehabilitation Program (SRP) Community Treatment Facility (CTF)
Community Wellness/Prevention Center (Tribal entities only) Crisis Stabilization Unit (CSU)
General Acute Care Hospital (GACH) for behavioral health services only Hospital-based Outpatient Treatment (outpatient detoxification/withdrawal management) Mental Health Rehabilitation Center (MHRC)
Narcotic Treatment Program (NTP)
NTP Medication Unit
Office-based Opioid Treatment
Outpatient Treatment for SUD
Partial Hospitalization Program
Peer Respite
Perinatal Residential SUD Facilities
Psychiatric Health Facility (PHF)
Psychiatric Residential Treatment Facility (PRTF)
Short-term Residential Therapeutic Program (STRTP)
Skilled Nursing Facility with Special Treatment Program (SNF/STP) Sobering Center (funded under the Drug Medi-Cal Organized Delivery System [DMC-ODS] and/or Community Supports)
Social Rehabilitation Facilities (SRFs)
For purposes of this funding, a Behavioral Health Urgent Care (BHUC) facility, also known as Mental Health Urgent Care (MHUC), is a walk-in center with voluntary stabilization-oriented services specific to individuals experiencing behavioral health or mental health crisis for less than 24 hours. This community-based option is typically designed to provide an alternative to emergency department visits for urgent medical needs. BHUCs/MHUCs must focus on serving individuals in need of crisis services, commit to serving Medi-Cal beneficiaries, and offer some or all of the following:
● Multi-disciplinary health assessment
● Psychiatric evaluation, diagnosis, and treatment
● Crisis stabilization and intervention, mental health counseling, and medication evaluation

17.14 Bond BHCIP Program Update
9 ● Direct referrals for treatment of care
● Linkage to community-based solutions
● Peer support
Facility types that are not eligible for funding:
● Correctional settings
● Schools
Applicants will be expected to define the types of facilities they will operate and explain how they will expand service capacity exclusively for community-based behavioral health facilities.

Funding Parameters
Applicants will be expected to develop a competitive and itemized professional development budget for all development costs, including legal, insurance, permits and fees and performance and payment bonds, that will be scored alongside applications for projects of similar setting types and sizes. In addition, scoring will take into consideration the speed of project delivery and operations, with a focus on the State’s priorities, including efforts to advance equity and to expand services in regions and counties that currently do not have an adequate number of treatment options for behavioral health facilities.

DHCS, AHP, and its subcontractors will conduct a financial viability assessment, considering continued fluctuations in construction and other costs. Through various TA activities, such as the PAC, interviews, and financial document review, the State will assess long-term operational sustainability once the capital project is complete and in use for its intended purpose.

Post Award Expectations
Grantees must commit to executing BHCIP contracts within 90 days of receipt of conditional award notice. Failure to fully execute contracts within the required timeframe may result in rescinding BHCIP funding awards. DHCS will not accept any redlines to the contract.

Encumbrance and Use Restrictions
Applicants will be required to commit to operating services in the financed facility for the intended purpose for a minimum of 30 years within existing funding for behavioral health services. BHCIP funding cannot be used to fund services. The approved building use restriction will be detailed in the written contract.

Match
Mandatory match guidelines are required by statute and will be set according to applicant type.

17.15 Bond BHCIP Program Update
10 Project Funding Awarded Local Government and
Nonprofit Organization For-Profit Organization
under $150 million 10 percent 25 percent
above $150 million 10 percent 25 percent
Higher priority for applicants that include a higher local match Tribal entities (regardless of funding awarded) = 5 percent match.

Match in the form of cash and in-kind contributions—such as land or existing structures—to the real costs of the project will be allowed. The State must approve the match source. Cash may come from:
● Local funding;
• Mental Health Services Act (MHSA) funds from Community Services and Supports and Capital Facilities and Technological Needs (CFTN) components; ● Behavioral Health Services Act (BHSA) funds from the Behavioral Health Services and Supports;
● Foundation/philanthropic support;
● Opioid settlement funds for SUD facilities;
● Loans or investments;
● Incentive payments from managed care plans; or
● Another source.

Services, Behavioral Health Subaccount funding, and State general funds will not be allowed as match.

Funding Regions
Regional funding caps will be established and the amounts available per region will be determined based on the Behavioral Health Subaccount. In Bond BHCIP Round 1: Launch Ready, the $1.5 billion available exclusively for County, City, and Tribal entities will not be subject to a regional funding cap. The remaining BHCIP funding will be subject to the regional funding caps and as outlined below.

In addition, for the Bond BHCIP Round 1: Launch Ready up to $1.8 billion and Bond BHCIP Round 2: Unmet Needs up to $1.1 billion will be available for all eligible entities, 20 percent of funds available for BHCIP will be set aside for use in regions at the State’s discretion to ensure funding is effectively aligned with need. (For example, this reserve money may be used to fund highscoring projects in oversubscribed regions.)

17.16 Bond BHCIP Program Update
11 Following an initial round of regional funding allocations, DHCS will conduct periodic reviews of the number of completed applications from each region. If an insufficient number of competitive applications is received and awarded within a region, the remaining funding will be awarded at the discretion of DHCS or shifted to the remaining Bond BHCIP Round.

Table 2. Bond BHCIP Round 1 (2024): Launch Ready - Regional & Statewide Funding *Of the $1.5B, a minimum of $30M shall be designated to Tribal entities as required by statute.

1. Regions for All Eligible Entity Funds
Sub-Total Available to
Regions for All Eligible
Entities:
$1.8 billion
Los Angeles County $479,190,226
Bay Area: Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, Sonoma $278,108,183
Southern California: Imperial, Orange, Riverside, San Bernardino, San Diego, Ventura $263,680,311
San Joaquin Valley: Fresno, Kern, Kings, Madera, Merced, San Joaquin, Stanislaus, Tulare $154,666,275
Sacramento Area: El Dorado, Placer, Sacramento, Sutter, Yolo, Yuba $81,768,565 Central Coast: Monterey, San Benito, San Luis Obispo, Santa Barbara, Santa Cruz $51,771,065
Balance of State: Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Inyo, Lake, Lassen, Mariposa, Mendocino, Modoc, Mono, Nevada, Plumas, Shasta, Sierra, Siskiyou, Tehama, Trinity, Tuolumne $58,815,375
Tribal $90,000,000
Discretionary: The discretionary set-aside may also be used to fund high-scoring projects in regions that have met their funding reserve $342,000,000

2. No Regional Caps for County, City, and Tribal (only) Funds Sub-Total Available
Statewide for County, City,
and Tribal*:
$1.5 billion
Total for Bond BHCIP Round 1: Launch Ready Up to $3.3 billion

17.17 Bond BHCIP Program Update
12 Table 3. Bond BHCIP Round 2 (2025): Unmet Needs - Regional Funding Cap - Projections Regions for All Eligible Entity Funds
Sub-Total Available to
Regions for All Eligible
Entities:

Up to $1.1 billion
Los Angeles County $292,838,472
Bay Area: Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, Sonoma $169,955,001
Southern California: Imperial, Orange, Riverside, San Bernardino, San Diego, Ventura $161,137,968
San Joaquin Valley: Fresno, Kern, Kings, Madera, Merced, San Joaquin, Stanislaus, Tulare $94,518,279
Sacramento Area: El Dorado, Placer, Sacramento, Sutter, Yolo, Yuba $49,969,678 Central Coast: Monterey, San Benito, San Luis Obispo, Santa Barbara, Santa Cruz $31,637,873
Balance of State: Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Inyo, Lake, Lassen, Mariposa, Mendocino, Modoc, Mono, Nevada, Plumas, Shasta, Sierra, Siskiyou, Tehama, Trinity, Tuolumne $35,942,729
Tribal $55,000,000
Discretionary: The discretionary set-aside may also be used to fund high-scoring projects in regions that have met their funding reserve $209,000,000 *Total award amount available contingent on bond administrative costs utilized as outlined in statute.

Total for Bond BHCIP Rounds 1 and 2 Up to $4.4 billion
Total for Bond BHCIP Round 2: Unmet Needs Up to $1.1 billion

17.18 City Council

AGENDA REPORT
DATE: 10/31/2024
AGENDA OF: 11/19/2024
DEPARTMENT: Economic Development and Housing
SUBJECT: Small Business Saturday Proclamation (EDH)
RECOMMENDATION: Motion to issue a proclamation recognizing Small Business Saturday on November 30, 2024 and encouraging all community members to shop locally this holiday season.

BACKGROUND: Small Business Saturday is a day dedicated to supporting small businesses and communities across the country and is part of the larger Shop Small Movement. Founded by American Express in 2010 and sponsored by the Small Business Administration, this day is celebrated each year on the Saturday after Thanksgiving in the U.S. Since it started in 2010, consumers have reported spending an estimated $200 billion at small businesses across all 14 Small Business Saturdays combined.

DISCUSSION: The Shop Small Movement highlights the importance of supporting small and locally owned businesses. This year is the 15th anniversary of Small Business Saturday and this annual event falls between Black Friday (the Friday after Thanksgiving) and Cyber Monday (the Monday after Thanksgiving), two major marketing campaigns encouraging spending at large national and online retailers. In contrast, Small Business Saturday is a day dedicated to supporting the diverse range of local businesses that help create jobs, boost the economy, and keep communities thriving across the country. Small businesses rely on the holiday shopping season for much of their revenue and depend on support from local shoppers to survive. The City of Santa Cruz is a proud supporter of Small Business Saturday and the contributions these businesses make to the local economy and community. The City encourages all residents and visitors to shop and dine locally and to recognize the impact made when supporting local small businesses on Small Business Saturday, throughout the holiday season, and most importantly, all year long.

The Economic Development and Housing Department’s Business Services team is collecting Small Business Saturday promotions from local businesses and will share those deals on social media, @ChooseSantaCruz on Instagram, and on the ChooseSantaCruz.com website.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The proposed Council action is not a “project” under CEQA because it does not have the potential to cause a physical change in the environment directly or indirectly.

18.1 HEALTH IN ALL POLICIES (HiAP): This annual event supports public health by reducing emissions from driving out of the community to shop or ordering online goods that need to be transported far distances. The annual event also promotes equity by supporting small and locally owned businesses who are often disadvantaged from larger national chains. When customers shop locally, their dollars stay local and recirculate in the economy and contribute to a more vibrant and sustainable economy.

FISCAL IMPACT: This proclamation will not impact the City’s General Fund. Small Business Saturday has the potential to generate additional sales tax revenue that can impact the City’s General Fund.

Prepared By:

Rebecca Unitt
Economic Development
Manager
Submitted By:

Bonnie Lipscomb
Director of Economic
Development and Housing
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. PROCLAMATION.DOC

18.2 WHEREAS SINCE ITS INCEPTION IN 2010, SMALL BUSINESS SATURDAY, FALLING BETWEEN BLACK FRIDAY AND

CYBER MONDAY, HAS ILLUMINATED THE SIGNIFICANCE OF SUPPORTING SMALL, INDEPENDENTLY OWNED BUSINESSES ACROSS THE COUNTRY; and

WHEREAS SMALL BUSINESS SATURDAY IS A DAY DEDICATED TO SUPPORTING THE DIVERSE RANGE OF LOCAL

BUSINESSES THAT HELP CREATE JOBS, BOOST THE ECONOMY, AND KEEP COMMUNITIES THRIVING ACROSS THE COUNTRY; and

WHEREAS THE CITY OF SANTA CRUZ CELEBRATES OUR SMALL BUSINESSES AND THE CONTRIBUTIONS THAT THEY MAKE TO OUR LOCAL ECONOMY AND COMMUNITY; and

WHEREAS SMALL BUSINESSES RELY ON THE HOLIDAY SHOPPING SEASON FOR MUCH OF THEIR REVENUE AND THE SUPPORT OF LOCAL SHOPPERS TO THEIR BUSINESSES EACH YEAR TO SURVIVE; and

WHEREAS EIGHTY-FIVE PERCENT OF SANTA CRUZ BUSINESSES ARE SMALL BUSINESSES EMPLOYING NINE PEOPLE OR LESS; and
WHEREAS THERE ARE OVER 500 RETAIL BUSINESSES IN SANTA CRUZ PROVIDING NEARLY 4,800 JOBS; and

WHEREAS PURCHASING GOODS AND SERVICES FROM LOCAL SMALL BUSINESSES KEEPS THOSE DOLLARS LOCAL AND CONTRIBUTES TO A MORE VIBRANT AND SUSTAINABLE ECONOMY; and

WHEREAS THE CITY OF SANTA CRUZ ENCOURAGES ALL RESIDENTS AND VISITORS TO SHOP AND DINE LOCALLY AND TO RECOGNIZE THE IMPACT WE CAN MAKE WHEN WE SUPPORT LOCAL SMALL BUSINESSES; and

WHEREAS BUSINESSES ACROSS THE COUNTRY WILL BE CELEBRATING SMALL BUSINESS SATURDAY AND ENCOURAGING SHOPPERS TO SHOP LOCAL:

NOW, THEREFORE, I, FRED KEELEY, MAYOR OF THE CITY OF SANTA CRUZ, DO HEREBY PROCLAIM SATURDAY, NOVEMBER 30, 2024 AS “SMALL BUSINESS SATURDAY DAY” IN THE CITY OF SANTA CRUZ AND ENCOURAGE ALL CITIZENS TO JOIN ME IN SHOPPING LOCAL TODAY AND THROUGHOUT THE YEAR. ______________________________________________

FRED KEELEY, MAYOR
Signed and Sealed this ___th Day of November 2024

18.3 City Council

AGENDA REPORT
DATE: 10/30/2024
AGENDA OF: 11/19/2024
DEPARTMENT: Finance
SUBJECT: Liability Claims Filed Against the City of Santa Cruz (FN) RECOMMENDATION: Motion to reject the liability claims of 1) Cameron Abrams and 2) Autumn Amber Parks, based on staff recommendation.

BACKGROUND: N/A.

DISCUSSION: I. Claims to be rejected:

1. Claimant: Cameron Abrams
Date of occurrence: 5/31/2024
Date of claim: 10/9/2024
Amount of claim: $35,000.00
Claimant seeks damages and compensation for medical expenses related to injuries allegedly sustained in a vehicle accident on Highway 17 in Santa Clara County.

Represented by Legal Counsel

2. Claimant: Autumn Amber Parks
Date of occurrence: 8/15/2024
Date of claim: 10/21/2024
Amount of claim: $100,000.00
Claimant seeks damages and compensation for injuries allegedly resulting from a vehicle accident.

Self-Represented
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: N/A HEALTH IN ALL POLICIES (HiAP): N/A
FISCAL IMPACT: No fiscal impact.

19.1 Prepared By:

Ross Brandon
Risk & Safety Manager
Submitted By:

Elizabeth Cabell
Finance Director
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

None.

19.2 City Council

AGENDA REPORT
DATE: 10/31/2024
AGENDA OF: 11/19/2024
DEPARTMENT: Planning and Community Development
SUBJECT: Award Agreement for Plan Review and Inspection Services for Building and Safety Division. CEQA: Exempt 15061(b)(3) (PL)
RECOMMENDATION: Motion to:
1) Award three contracts to 4Leaf, Inc. (4Leaf), BPR Consulting Group (BPR), CSG Consultants, Inc. (CSG) with annual renewals up to five years, recognizing the environmental exemption; and
2) Authorize the City Manager to execute a contract in a form approved by the City Attorney with 4Leaf, BPR, and CSG, with the Director of Planning and Community Development authorized to execute change orders within the approved budget.

BACKGROUND: The Building and Safety Division of the Planning and Community Development Department is responsible for ensuring public safety by enforcing state and local building codes. This involves reviewing plans, issuing permits, and conducting inspections. Over the past three years (FY 2022 to FY 2024), the Building and Safety Division has issued approximately 1,800 permits annually, and the division’s inspectors have conducted an average of approximately 8,700 inspections annually. The current contract for plan review and inspection services has been in effect since 2017. In accordance with the City’s established procurement standards and purchasing policies, staff initiated a competitive solicitation to secure a new contract to replace the existing agreement.

On May 31, 2024, the City issued a Request for Proposal (RFP) PL-0141 seeking qualified vendors to provide independent plan review and building inspection services for the Building and Safety Division. The services are intended to minimize response time and improve customer service by supplementing in-house staff with consulting services. The scope of work included plan check reviews and on-site inspections for both residential and commercial projects. The RFP was posted on the City’s website and OpenGov Procurement, and the solicitation notification was sent to a list of 11,384 vendors on OpenGov. Proposals were due by 4:00 PM on July 1, 2024.

DISCUSSION: Eleven firms submitted proposals, all of which were evaluated by an evaluation committee comprised of subject matter experts in plan review and inspection services. The committee assessed proposals based on adherence to RFP requirements, firm background, qualifications, expertise, and experience in Phase 1. Six vendors were selected for interviews in

20.1 Phase 2 for presentation, project workplan, and references. Table 1 summarizes the RFP evaluation criteria for Phase 1 for 80 points and Phase 2 for 20 points for a total of 100 points.

Table 1: Proposal Evaluation Criteria for the RFP PL-0141 Phase 1 and Phase 2 Proposal Evaluation Criteria Evaluation Phase Points
Written Proposal Evaluation (80 Points)
Adherence to RFP Requirements  Phase 1 10
Firm Background Information  Phase 1 10
Firm Qualifications, Expertise, and Experience Phase 1 15 Team Qualifications, Expertise and Experience Phase 1 10 Technical Approach/Work Plan  Phase 1 25
Cost Proposal  Phase 1 10
Oral Interview Evaluation (20 Points)
References  Phase 2 5
Project Understanding, Work Plan and Approach  Phase 2 5 Quality of Presentation Phase 2 10
100
The results of the RFP “Plan Review and Inspection Services” evaluation are summarized in the attached Summary Score Sheet, with the top scoring firms highlighted in Table 2:

Table 2: Summary of Evaluation for Top 3 Firms
Firm Phase 1
Written
Evaluation
(80 Points)*
Phase 2
Oral Interviews
(20 Points)*
Phases Total
(100 Points)*
CSG Consultants, Inc. 76.9 17.3 94.2
4LEAF, Inc. 75.1 18.3 93.4
BPR Consulting Group 73.1 17.2 90.3
Given that the scores of the top three firms were within a competitive range and given that a range of third-party plan check and inspection staff can help the Building and Safety Division meet established plan check and inspection timelines, staff recommends awarding the contract to all three firms. This multi-vendor approach will ensure continuity of service delivery and flexibility in response to varying workloads of the firms, since the nature of inspections and plan review requests may be unpredictable. In addition, having an on-call contract allows the Building and Safety Division the flexibility to utilize the services provided under the contract as needed to support the operations. Staff recommends awarding the contracts to 4Leaf, BPR, and CSG, effective January 1, 2025. Each contract will have an initial term of six months starting on January 1, 2025, until June 30, 2025, with four one-year renewal options for a total of five years.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: This contract award has no impact on the natural environment, because it does not create any physical change to the environment, does not change any of the existing practices, and only establishes how the City will use third-party services to ensure that plans and construction meets applicable

20.2 codes. Thus, it is exempt from review under the California Environmental Quality Act (CEQA) Section 15061(b)(3) (known as the “Common Sense” exemption).

HEALTH IN ALL POLICIES (HiAP): The proposed contract is consistent with the Health in All Policies pillars of equity, public health, and sustainability in that the project will promote fiscal sustainability, which will assist the City in dedicating funding towards broader equity, public health, and sustainability efforts. Further, the services performed by the contract agencies support creation of affordable housing, thereby promoting equity; help ensure that buildings are safe for all occupants, thereby promoting equity and public health; and ensure that construction follows local and state green building requirements, thereby promoting sustainability.

FISCAL IMPACT: Funds are available in the Planning and Community Development FY2025 budget for professional and technical services, which is budgeted for $475,000 for General Fund 101 and $73,000 for Green Building Educational Resource Fund 108.

Prepared By:

Allison Webster
Management Analyst
Submitted By:

Lee Butler
Director of Planning and
Community Development
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. SUMMARY SCORE SHEET FOR RFP PL-0141.DOCX

2. PROFESSIONAL SERVICES AGREEMENT FOR 4LEAF, INC.PDF

3. PROFESSIONAL SERVICES AGREEMENT FOR BPR CONSULTING GROUP.PDF

4. PROFESSIONAL SERVICES AGREEMENT FOR CSG CONSULTANTS, INC.PDF

20.3 SUMMARY SCORE SHEET FOR RFP PL-0141

PLAN REVIEW AND INSPECTION SERVICES
Planning and Community Development Department | Building & Safety Division Firm Phase 1
Written
Evaluation
(80 Points)*
Phase 2
Oral
Interviews
(20 Points)*
Phases Total
(100 Points)*
CSG Consultants, Inc. 76.9 17.3 94.2
4LEAF, Inc. 75.1 18.3 93.4
BPR Consulting Group 73.1 17.2 90.3
Bureau Veritas 72.8 16.2 89.0
Shums Coda Associates 71.9 15.7 87.6
Willdan Engineering 70.7 13.8 84.5
Builders Protection Group 68.5 ** 68.5
Interwest Consulting Group, Inc. 67.7 ** 67.7
The Code Group, Inc. (VCA Code) 66.2 ** 66.2
Plan Review Consultants, Inc. 65.6 ** 65.6
True North Compliance Services, Inc. 65.5 ** 65.5
* Points are rounded to the nearest tenth
** Not selected to proceed to Round 2

20.4 20.5

20.6 20.7

20.8 20.9

20.10 20.11

20.12 20.13

20.14 20.15

20.16 20.17

20.18 20.19

20.20 20.21

20.22 City of Santa Cruz Professional Services Agreement for Plan Review and Building Inspection Services

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Santa Cruz City CouncilNovember 19, 2024

Santa Cruz City Council
November 19, 2024