Santa Cruz City Council
January 28, 2025

documents
Funding Restriction for Strategy 3.5 Pajaro Regional Flood Management Agency:

Pajaro River
The Recipient or Pajaro Regional Flood Management Agency is not authorized to expend federal funds for land acquisition, or purchase of real property interest for parcel ?051- 231-17? (Task 4) until the recipient provides to NOAA: [evidence of agreement with a willing seller, draft evidence of title, appraisal, survey, draft conservation easement, and draft deed for each site], and NOAA has reviewed and approved them. This does not prohibit recipients from expanding funding to negotiate, conduct appraisals, title searches, etc prior to purchasing properties. This information should be submitted to NOAA?s Office for Coastal Management by May 31, 2027. Note that information should be submitted at least 120 days prior to anticipated real property acquisition in order to allow for NOAA review of due diligence materials.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Land Acquisition
Prior to completing land acquisition, the applicant must provide 1. property boundary, 2. presence of any historic or cultural sites within or adjacent to the parcel, 3. any existing Tribal use on or adjacent to the parcel that may be affected by this acquisition to OCM for environmental compliance review. The applicant cannot purchase the property with federal funds until the site information review is complete and a response from the OCM environmental compliance is received.This information should be submitted to NOAA?s Office for Coastal Management by May 31, 2027. Note that information should be submitted at least 120 days prior to anticipated real property acquisition in order to allow for NOAA review of due diligence materials.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 1.5: NOAA review of Intended Use Plan & Approval for RLF
Strategy 1.5: Community Foundation Santa Cruz County: Monterey Bay Climate Adaptation Revolving Fund was not sufficiently defined for the National Ocean Service to perform internal NOAA approvals for use of a Revolving Loan Fund by the time the final award file needed to be submitted to obligate funds. This action requires the NOAA review of the Intended Use Plan for the Revolving Loan Fund and internal approvals. The Recipient is not authorized to expend federal funds in the amount of $1,662,799 for the revolving loan fund until the recipient provides to NOAA the Intended Use Plan and any additional information requested to satisfy requirements for approval from NOAA This information should be submitted to NOAAs Office for Coastal Management by May 31, 2027. NOAA will review these tasks for approval of this action. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to establish the revolving loan fund, unless there are other conditions placed on the award that would restrict this expenditure of funds.

Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.80

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 1.5: Community Foundation Santa Cruz County:

MBC Adaptation
Strategy 1.5: Community Foundation Santa Cruz County: Monterey Bay Climate Adaptation Revolving Fund was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. For this funding restriction, each funded action must satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receive approval from NOAA. The Recipient is not authorized to expend federal funds in the amount of $1,662,799 for funding projects using the revolving loan fund until the recipient provides to NOAA environmental information such scope of work, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. As individual projects are identified, each one must be submitted for environmental compliance review. This information should be submitted to NOAAs Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete funding to projects, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 1.6: Central Coast Wetlands Group: MB Climate Adaptation
Strategy 1.6: Central Coast Wetlands Group: Monterey Bay Climate Adaptation RegionalMonitoring was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for implementing monitoring under Strategy 1.6 until the recipient provides to NOAA a scope of work for monitoring, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA?s Office for Coastal Management by May 31, 2028. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 1.6, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.81

05/31/2028 Submit requested
documents Unresolved
Funding Restriction for Strategy 2.1 Task 3: Watsonville Wetlands Watch Strategy 2.1: Watsonville Wetlands Watch: ?Pajaro Valley Climate Corps Workforce Development Training? was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for Task 3 activities that include earthwork or engagement in the environment until the recipient provides to NOAA necessary information, such as a scope of work, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA?s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 2.1 Task 3, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 2.2: Hartnell College
Strategy 2.2: Hartnell College: Climate-Ready Workforce Development and Leadership Program was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for activities within Tasks 1 and 2 that include earthwork or engagement in the environment until the recipient provides to NOAA necessary information, such as a scope of work, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA?s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 2.2, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 2.3: California State University Monterey Bay Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.82

Strategy 2.3: California State University Monterey Bay: Creating Generational Capacity in Coastal Climate Resilience and Risk Reduction was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for activities within Strategy 2.3 that include earthwork or engagement in the environment until the recipient provides to NOAA necessary information, such as a scope of work, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 2.3, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 2.4: University of California, Santa Cruz Strategy 2.4: University of California, Santa Cruz: Building and Diversifying the Climate Resilience Workforce through Undergraduate, Graduate, and Professional Training was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for activities within Strategy 2.4 that include earthwork or engagement in the environment until the recipient provides to NOAA necessary information, such as a scope of work, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 2.4, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 3.1, Task 6: City of Santa Cruz: Living Shorelines Strategy 3.1: City of Santa Cruz: City of Santa Cruz Living Shorelines? was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds in the amount of $1,250,000 for construction of living shoreline projects until the recipient provides to NOAA necessary information, such as a scope of work, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.83

(NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA's Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies.Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 3.1, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 3.2 Outcome 1: City of Santa Cruz Jessie Street Marsh Wetland
Strategy 3.2 (Outcome 1): City of Santa Cruz Jessie Street Marsh Wetland Enhancement and Multi-Use Trail was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. Fieldwork in support of engineering and design is not expected to affect the natural environment, but the applicant must provide location, methods, and timing for review prior to starting work. Fieldwork in support of engineering and design is not expected to affect the natural environment, but the applicant must provide location, methods, and timing for review prior to starting work. The Recipient is not authorized to expend federal funds for restoration implementation or any earthwork until the recipient provides to NOAA necessary information, such as a scope of work, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA's Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 3.2 (Outcome 1), unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 3.2 Outcome 2: City of Santa Cruz San Lorenzo Park Strategy 3.2 (Outcome 2): City of Santa Cruz San Lorenzo Park Flood Management and Habitat Enhancement was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. Fieldwork in support of engineering and design is not expected to affect the natural environment, but the applicant must provide location, methods, and timing for review prior to starting work. The Recipient is not authorized to expend federal funds for restoration implementation or any earthwork until the recipient provides to NOAA necessary information, such as a scope of work, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.84

approval from NOAA. This information should be submitted to NOAA's Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 3.2 (Outcome 2), unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 3.3: Pajaro Storm Drain Maintenance District County of Santa Cruz
Strategy 3.3: Pajaro Storm Drain Maintenance District (PSDMD), County of Santa Cruz:

Lower Watsonville Slough Ecosystem Restoration Project was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for restoration project implementation or any earthwork until the recipient provides to NOAA necessary information, such as a scope of work, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA's Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 3.3, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 3.4 Task 2: Land Trust of Santa Cruz County Strategy 3.4: Land Trust of Santa Cruz County: Wetland Restoration for a Climate Resilient Pajaro River Estuary was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. Any monitoring for this project will be completed under and according to Strategy 1.6 s environmental compliance The Recipient is not authorized to expend federal funds in the amount of $2,127,500 for restoration and revegetation or any earthwork until the recipient provides to NOAA necessary information, such as a scope of work, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.85

expend federal funds to complete Strategy 3.4, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 3.5: Pajaro Regional Flood Management Agency Strategy 3.5: Pajaro Regional Flood Management Agency: Pajaro River Confluence Area Project was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. Fieldwork in support of engineering and design is not expected to affect the natural environment, but the applicant must provide location, methods, and timing for review prior to starting work.The Recipient is not authorized to expend federal funds for channel and riparian habitat restoration work, agricultural land restoration, and construction that involve earthwork until the recipient provides to NOAA necessary information, such as a scope of work, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA?s Office for Coastal Management by May 31, 2028. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 3.5, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2028 Submit requested
documents Unresolved
Funding Restriction for Strategy 3.6 Outcome 1: Elkhorn Slough Foundation Las Lomas Living Shoreline
Strategy 3.6 (Outcome 1): Elkhorn Slough Foundation Las Lomas Living Shoreline Installation & Trail Rebuilding was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. Fieldwork in support of engineering and design is not expected to affect the natural environment, but the applicant must provide location, methods, and timing for review prior to starting work. The Recipient is not authorized to expend federal funds for marsh restoration and trail restoration/protection, where activities require earthwork or engagement with the environment, until the recipient provides to NOAA necessary information, such as a scope of work, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA?s Office for Coastal Management by May 31, 2028. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 3.6 Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.86

(Outcome 1), unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2028 Submit requested
documents Unresolved
Funding Restriction for Strategy 3.6 Outcome 2: Elkhorn Slough Foundation Marsh Transition Habitat
Strategy 3.6 (Outcome 2): Elkhorn Slough Foundation Marsh Transition Habitat Restoration along East Marsh was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for restoration implementation, including invasive species removal, revegetation, and restoration of wetland connectivity that include earthwork, until the recipient provides to NOAA necessary information, such as a scope of work, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA?s Office for Coastal Management by May 31, 2028. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 3.6 (Outcome 2), unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2028 Submit requested
documents Unresolved
Funding Restriction for Strategy 3.6 Outcome 3: Elkhorn Slough Foundation Design and Permitting
Strategy 3.6 (Outcome 3): Elkhorn Slough Foundation Design and Permitting for KirbyNorth Marsh Complex was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for activities that involve earthwork during physical and biological surveys required for design and permitting or restoration implementation for a 1.5 acre living shoreline until the recipient provides to NOAA necessary information, such as a scope of work, sampling protocol, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA?s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 3.6 (Outcome 3), unless there are other conditions placed on the award that would restrict this expenditure of funds.

Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.87

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 3.7 Outcome 1: Coastal Conservation & Research Salinas River Lagoon
Strategy 3.7 (Outcome 1): Coastal Conservation & Research Salinas River Lagoon and River Channel Water Control Structures was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. Fieldwork in support of engineering and design is not expected to affect the natural environment, but the applicant must provide location, methods, and timing for review prior to starting work.The Recipient is not authorized to expend federal funds for activities including earthwork for upgrading hydrologic control structures until the recipient provides to NOAA necessary information, such as a scope of work, sampling protocol, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 3.7 (Outcome 1), unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 3.7 Outcome 2: Coastal Conservation & Research Strategy 3.7 (Outcome 2): Coastal Conservation & Research Old Salinas River and Tembladero Slough Floodplain Restoration was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. Fieldwork in support of engineering and design is not expected to affect the natural environment, but the applicant must provide location, methods, and timing for review prior to starting work. The Recipient is not authorized to expend federal funds for activities including earthwork for floodplain enhancement and habitat restoration until the recipient provides to NOAA necessary information, such as a scope of work, sampling protocol, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA?s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 3.7 (Outcome 2), unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE DECISION DATE
Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.88

STATUS
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 3.8: Resource Conservation District of Monterey County
Strategy 3.8: Resource Conservation District of Monterey County: Salinas River Flood Risk Reduction and Habitat Improvement Project was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for activities including earthwork for habitat improvement until the recipient provides to NOAA necessary information, such as a scope of work, sampling protocol, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 3.8, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 3.9: Big Sur Land Trust (BSLT) Strategy 3.9: Big Sur Land Trust (BSLT): Carmel River Floodplain Restoration & Environmental Enhancement (CRFREE) was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for restoration and environmental enhancement that involves earthwork until the recipient provides to NOAA necessary information, such as a scope of work, sampling protocol, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 3.9, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.89

Funding Restriction for Strategy 3.10: Groundswell Coastal Ecology Strategy 3.10: Groundswell Coastal Ecology: Monterey Bay Living Shorelines Program was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds.

Fieldwork in support of engineering and design is not expected to affect the natural environment, but the applicant must provide location, methods, and timing for review prior to starting work. The Recipient is not authorized to expend federal funds for living shoreline implementation involving earthwork or engagement with the environment until the recipient provides to NOAA necessary information, such as a scope of work, sampling protocol, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 3.10, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 4.1: Peninsula Open Space Trust Strategy 4.1: Peninsula Open Space Trust: San Vicente Redwoods Prescribed Burn Preparation and Fuel Reduction Project was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for prescribed burn and fuel reduction activities involving earthwork or engagement with the environment until the recipient provides to NOAA necessary information, such as a scope of work, sampling protocol, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA?s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 4.1, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 4.2: Resource Conservation District of Monterey County
Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.90

Strategy 4.2: Resource Conservation District of Monterey County: North Monterey County Eucalyptus Treatment and Wildfire Prevention was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for eucalyptus treatment and wildfire prevention activities that include earthwork or engagement with the environment until the recipient provides to NOAA necessary information, such as a scope of work, sampling protocol, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 4.2, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 4.3: Resource Conservation District of Monterey County
Strategy 4.3: Resource Conservation District of Monterey County: Monterey Bay Prescribed Fire and Cultural Burning Expansion was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for fire prevention, prescribed burn and cultural burning activities involving earthwork or engagement with the environment until the recipient provides to NOAA necessary information, such as a scope of work, sampling protocol, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act(NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 4.3, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 4.4: Big Sur Land Trust Strategy 4.4: Big Sur Land Trust: Resilient Forest Restoration: Protecting Communities in the Wildland Urban Interface was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for fire Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.91

prevention or fuel reduction activities involving earthwork or engagement with the environment until the recipient provides to NOAA necessary information, such as a scope of work, sampling protocol, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 4.4, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved
Funding Restriction for Strategy 4.5: Santa Lucia Conservancy Strategy 4.5: Santa Lucia Conservancy: Santa Lucia Fuels Reduction Project was not sufficiently defined for the National Ocean Service to perform an environmental review by the time the final award file needed to be submitted to obligate funds. The Recipient is not authorized to expend federal funds for fire prevention and fuel reduction activities involving earthwork or engagement with the environment until the recipient provides to NOAA necessary information, such as a scope of work, sampling protocol, site plans, map, permits, environmental consultations and any additional information requested to satisfy requirements for National Environmental Policy Act (NEPA) and environmental consultation, and receives approval from NOAA. This information should be submitted to NOAA s Office for Coastal Management by May 31, 2027. NOAA will review these tasks for compliance with NEPA and Environmental compliance once the applicant has submitted the final documentation to determine if additional information is necessary and what level of NEPA documentation applies. Once this Specific Award Condition has been released by NOAA, the Recipient is authorized to expend federal funds to complete Strategy 4.5, unless there are other conditions placed on the award that would restrict this expenditure of funds.

DUE DATE TASK NAME DUE DATE

STATUS DECISION DATE
05/31/2027 Submit requested
documents Unresolved

STANDARD TERMS AND CONDITIONS
Performance Progress Report (PPR)-Award Start Date Semi-Annual Project Progress Reports are due on a semi-annual basis, no later than 30 days following the end of each six (6) month period from the start date of the original award. A comprehensive final Project Progress Report is due within 120 days after the award expiration date and will include the last interim reporting period.

DUE DATE TASK NAME DUE DATE
STATUS

DECISION
DATE
05/01/2025 April 2025 Semi-Annual Report Unresolved
Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.92

10/31/2025 October 2025 Semi-Annual
Report Unresolved
05/01/2026 April 2026 Semi-Annual Report Unresolved
10/31/2026 October 2026 Semi-Annual
Report Unresolved
05/01/2027 April 2027 Semi-Annual Report Unresolved
10/31/2027 October 2027 Semi-Annual
Report Unresolved
05/01/2028 April 2028 Semi-Annual Report Unresolved
10/31/2028 October 2028 Semi-Annual
Report Unresolved
05/01/2029 April 2029 Semi-Annual Report Unresolved
10/31/2029 October 2029 Semi-Annual
Report Unresolved
Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.93 1.

OMB Number: 4040-0007
Expiration Date: 02/28/2025

ASSURANCES - NON-CONSTRUCTION PROGRAMS
Public reporting burden for this collection of information is estimated to average 15 minutes per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding the burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Office of Management and Budget, Paperwork Reduction Project (0348-0040), Washington, DC 20503.

PLEASE DO NOT RETURN YOUR COMPLETED FORM TO THE OFFICE OF MANAGEMENT AND BUDGET. SEND IT TO THE ADDRESS PROVIDED BY THE SPONSORING AGENCY.

NOTE: Certain of these assurances may not be applicable to your project or program. If you have questions, please contact the awarding agency. Further, certain Federal awarding agencies may require applicants to certify to additional assurances.

If such is the case, you will be notified.

As the duly authorized representative of the applicant, I certify that the applicant:

Has the legal authority to apply for Federal assistance and the institutional, managerial and financial capability (including funds sufficient to pay the non-Federal share of project cost) to ensure proper planning, management
and completion of the project described in this
application.

Act of 1973, as amended (29 U.S.C. §794), which
prohibits discrimination on the basis of handicaps; (d) the Age Discrimination Act of 1975, as amended (42
U.S.C. §§6101-6107), which prohibits discrimination on
the basis of age; (e) the Drug Abuse Office and
Treatment Act of 1972 (P.L. 92-255), as amended,
relating to nondiscrimination on the basis of drug
abuse; (f) the Comprehensive Alcohol Abuse and
Alcoholism Prevention, Treatment and Rehabilitation
Act of 1970 (P.L. 91-616), as amended, relating to
nondiscrimination on the basis of alcohol abuse or
alcoholism; (g) §§523 and 527 of the Public Health
Service Act of 1912 (42 U.S.C. §§290 dd-3 and 290
ee- 3), as amended, relating to confidentiality of alcohol and drug abuse patient records; (h) Title VIII of the Civil Rights Act of 1968 (42 U.S.C. §§3601 et seq.), as
amended, relating to nondiscrimination in the sale,
rental or financing of housing; (i) any other
nondiscrimination provisions in the specific statute(s) under which application for Federal assistance is being made; and, (j) the requirements of any other
nondiscrimination statute(s) which may apply to the
application.

2. Will give the awarding agency, the Comptroller General of the United States and, if appropriate, the State,
through any authorized representative, access to and
the right to examine all records, books, papers, or
documents related to the award; and will establish a
proper accounting system in accordance with generally
accepted accounting standards or agency directives.

3. Will establish safeguards to prohibit employees from using their positions for a purpose that constitutes or presents the appearance of personal or organizational
conflict of interest, or personal gain.

4. Will initiate and complete the work within the applicable time frame after receipt of approval of the awarding
agency.

5. Will comply with the Intergovernmental Personnel Act of 1970 (42 U.S.C. §§4728-4763) relating to prescribed
standards for merit systems for programs funded under
one of the 19 statutes or regulations specified in
Appendix A of OPM's Standards for a Merit System of
Personnel Administration (5 C.F.R. 900, Subpart F).

6. Will comply with all Federal statutes relating to
nondiscrimination. These include but are not limited to:
(a) Title VI of the Civil Rights Act of 1964 (P.L. 88-352) which prohibits discrimination on the basis of race, color or national origin; (b) Title IX of the Education
Amendments of 1972, as amended (20 U.S.C.§§1681-
1683, and 1685-1686), which prohibits discrimination on the basis of sex; (c) Section 504 of the Rehabilitation Previous Edition Usable Standard Form 424B (Rev. 7-97)
Authorized for Local Reproduction Prescribed by OMB Circular A-102

7. Will comply, or has already complied, with the
requirements of Titles II and III of the Uniform
Relocation Assistance and Real Property Acquisition
Policies Act of 1970 (P.L. 91-646) which provide for
fair and equitable treatment of persons displaced or
whose property is acquired as a result of Federal or
federally-assisted programs. These requirements
apply to all interests in real property acquired for
project purposes regardless of Federal participation in purchases.

8. Will comply, as applicable, with provisions of the
Hatch Act (5 U.S.C. §§1501-1508 and 7324-7328)
which limit the political activities of employees whose principal employment activities are funded in whole
or in part with Federal funds.

Tracking Number:GRANT14067223 Funding Opportunity Number:NOAA-NOS-OCM-2023-2008068 Received Date:Feb 09, 2024 06:23:57 PM EST Exhibit A: Assurances
Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.94 Standard Form 424B (Rev. 7-97) Back

9. 12.

Will comply, as applicable, with the provisions of the DavisBacon Act (40 U.S.C. §§276a to 276a-7), the Copeland Act (40 U.S.C. §276c and 18 U.S.C. §874), and the Contract
Work Hours and Safety Standards Act (40 U.S.C. §§327-
333), regarding labor standards for federally-assisted
construction subagreements.

Will comply with the Wild and Scenic Rivers Act of
1968 (16 U.S.C. §§1271 et seq.) related to protecting
components or potential components of the national
wild and scenic rivers system.

10. Will comply, if applicable, with flood insurance purchase requirements of Section 102(a) of the Flood Disaster
Protection Act of 1973 (P.L. 93-234) which requires
recipients in a special flood hazard area to participate in the program and to purchase flood insurance if the total cost of insurable construction and acquisition is $10,000 or more.

11. Will comply with environmental standards which may be prescribed pursuant to the following: (a) institution of environmental quality control measures under the National Environmental Policy Act of 1969 (P.L. 91-190) and
Executive Order (EO) 11514; (b) notification of violating facilities pursuant to EO 11738; (c) protection of wetlands pursuant to EO 11990; (d) evaluation of flood hazards in floodplains in accordance with EO 11988; (e) assurance of project consistency with the approved State management
program developed under the Coastal Zone Management
Act of 1972 (16 U.S.C. §§1451 et seq.); (f) conformity of Federal actions to State (Clean Air) Implementation Plans under Section 176(c) of the Clean Air Act of 1955, as
amended (42 U.S.C. §§7401 et seq.); (g) protection of
underground sources of drinking water under the Safe
Drinking Water Act of 1974, as amended (P.L. 93-523);
and, (h) protection of endangered species under the
Endangered Species Act of 1973, as amended (P.L. 93-
205).

13. Will assist the awarding agency in assuring compliance with Section 106 of the National Historic Preservation
Act of 1966, as amended (16 U.S.C. §470), EO
11593(identification and protection of historic
properties), and the Archaeological and Historic
Preservation Act of 1974 (16 U.S.C. §§469a-1 et seq.).

14. Will comply with P.L. 93-348 regarding the protection of human subjects involved in research, development, and
related activities supported by this award of assistance.

15. Will comply with the Laboratory Animal Welfare Act of 1966 (P.L. 89-544, as amended, 7 U.S.C. §§2131 et
seq.) pertaining to the care, handling, and treatment of warm blooded animals held for research, teaching, or
other activities supported by this award of assistance.

16. Will comply with the Lead-Based Paint Poisoning
Prevention Act (42 U.S.C. §§4801 et seq.) which
prohibits the use of lead-based paint in construction or rehabilitation of residence structures.

17. Will cause to be performed the required financial and compliance audits in accordance with the Single Audit
Act Amendments of 1996 and OMB Circular No. A-133,
"Audits of States, Local Governments, and Non-Profit
Organizations."

18. Will comply with all applicable requirements of all other Federal laws, executive orders, regulations, and policies governing this program.

SIGNATURE OF AUTHORIZED CERTIFYING OFFICIAL TITLE

APPLICANT ORGANIZATION DATE SUBMITTED
Executive Director
California Marine Sanctuary Foundation
Danielle Brown
02/09/2024
Will comply with the requirements of Section 106(g) of
the Trafficking Victims Protection Act (TVPA) of 2000, as amended (22 U.S.C. 7104) which prohibits grant award
recipients or a sub-recipient from (1) Engaging in severe forms of trafficking in persons during the period of time that the award is in effect (2) Procuring a commercial
sex act during the period of time that the award is in
effect or (3) Using forced labor in the performance of the award or subawards under the award.

19. Tracking Number:GRANT14067223 Funding Opportunity Number:NOAA-NOS-OCM-2023-2008068 Received Date:Feb 09, 2024 06:23:57 PM EST Exhibit A: Assurances
Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.95 OMB Number: 4040-0009
Expiration Date: 02/28/2025

ASSURANCES - CONSTRUCTION PROGRAMS

PLEASE DO NOT RETURN YOUR COMPLETED FORM TO THE OFFICE OF MANAGEMENT AND BUDGET. SEND IT TO THE ADDRESS PROVIDED BY THE SPONSORING AGENCY.

Public reporting burden for this collection of information is estimated to average 15 minutes per response, including time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding the burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Office of Management and Budget, Paperwork Reduction Project (0348-0042), Washington, DC 20503.

Certain of these assurances may not be applicable to your project or program. If you have questions, please contact the Awarding Agency. Further, certain Federal assistance awarding agencies may require applicants to certify to additional assurances. If such is the case, you will be notified.

As the duly authorized representative of the applicant:, I certify that the applicant:

NOTE:

1. Has the legal authority to apply for Federal assistance, and the institutional, managerial and financial capability (including funds sufficient to pay the non-Federal share of project costs) to ensure proper planning,
management and completion of project described in
this application.

2. Will give the awarding agency, the Comptroller General of the United States and, if appropriate, the State,
the right to examine all records, books, papers, or
documents related to the assistance; and will establish a proper accounting system in accordance with
generally accepted accounting standards or agency
directives.

3. Will not dispose of, modify the use of, or change the terms of the real property title or other interest in the site and facilities without permission and instructions from the awarding agency. Will record the Federal
awarding agency directives and will include a covenant
in the title of real property acquired in whole or in part with Federal assistance funds to assure nondiscrimination during the useful life of the project.

4. Will comply with the requirements of the assistance
awarding agency with regard to the drafting, review and approval of construction plans and specifications.

5. Will provide and maintain competent and adequate
engineering supervision at the construction site to
ensure that the complete work conforms with the
approved plans and specifications and will furnish
progressive reports and such other information as may be required by the assistance awarding agency or State.

6. Will initiate and complete the work within the applicable time frame after receipt of approval of the awarding agency.

7. Will establish safeguards to prohibit employees from using their positions for a purpose that constitutes or presents the appearance of personal or organizational
conflict of interest, or personal gain.

8. Will comply with the Intergovernmental Personnel Act of 1970 (42 U.S.C. §§4728-4763) relating to prescribed
standards of merit systems for programs funded
under one of the 19 statutes or regulations specified in Appendix A of OPM's Standards for a Merit System of
Personnel Administration (5 C.F.R. 900, Subpart F).

9. Will comply with the Lead-Based Paint Poisoning
Prevention Act (42 U.S.C. §§4801 et seq.) which
prohibits the use of lead-based paint in construction or rehabilitation of residence structures.

10. Will comply with all Federal statutes relating to nondiscrimination. These include but are not limited to: (a) Title VI of the Civil Rights Act of 1964 (P.L. 88-352)
which prohibits discrimination on the basis of race,
color or national origin; (b) Title IX of the Education Amendments of 1972, as amended (20 U.S.C. §§1681
1683, and 1685-1686), which prohibits discrimination
on the basis of sex; (c) Section 504 of the
Rehabilitation Act of 1973, as amended (29) U.S.C.
§794), which prohibits discrimination on the basis of
handicaps; (d) the Age Discrimination Act of 1975, as
amended (42 U.S.C. §§6101-6107), which prohibits
discrimination on the basis of age; (e) the Drug Abuse
Office and Treatment Act of 1972 (P.L. 92-255), as
amended relating to nondiscrimination on the basis of
drug abuse; (f) the Comprehensive Alcohol Abuse and
Alcoholism Prevention, Treatment and Rehabilitation
Act of 1970 (P.L. 91-616), as amended, relating to
nondiscrimination on the basis of alcohol abuse or
alcoholism; (g) §§523 and 527 of the Public Health
Service Act of 1912 (42 U.S.C. §§290 dd-3 and 290 ee
3), as amended, relating to confidentiality of alcohol
and drug abuse patient records; (h) Title VIII of the
Civil Rights Act of 1968 (42 U.S.C. §§3601 et seq.), as amended, relating to nondiscrimination in the sale,
rental or financing of housing; (i) any other
nondiscrimination provisions in the specific statue(s)
under which application for Federal assistance is being made; and (j) the requirements of any other
nondiscrimination statue(s) which may apply to the
application.

Previous Edition Usable Authorized for Local Reproduction Standard Form 424D (Rev. 7-97) Prescribed by OMB Circular A-102
Tracking Number:GRANT14067223 Funding Opportunity Number:NOAA-NOS-OCM-2023-2008068 Received Date:Feb 09, 2024 06:23:57 PM EST Exhibit A: Assurances
Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.96 11. Will comply, or has already complied, with the requirements of Titles II and III of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (P.L. 91-646) which provide for fair and equitable treatment of persons displaced or whose property is
acquired as a result of Federal and federally-assisted
programs. These requirements apply to all interests in real property acquired for project purposes regardless of
Federal participation in purchases.

12. Will comply with the provisions of the Hatch Act (5 U.S.C. §§1501-1508 and 7324-7328) which limit the political
activities of employees whose principal employment
activities are funded in whole or in part with Federal funds.

13. Will comply, as applicable, with the provisions of the DavisBacon Act (40 U.S.C. §§276a to 276a-7), the Copeland Act (40 U.S.C. §276c and 18 U.S.C. §874), and the Contract
Work Hours and Safety Standards Act (40 U.S.C. §§327-
333) regarding labor standards for federally-assisted
construction subagreements.

14. Will comply with flood insurance purchase requirements of Section 102(a) of the Flood Disaster Protection Act of 1973 (P.L. 93-234) which requires recipients in a special flood hazard area to participate in the program and to purchase flood insurance if the total cost of insurable construction and acquisition is $10,000 or more.

15. Will comply with environmental standards which may be prescribed pursuant to the following: (a) institution of environmental quality control measures under the National Environmental Policy Act of 1969 (P.L. 91-
190) and Executive Order (EO) 11514; (b) notification
of violating facilities pursuant to EO 11738; (c)
protection of wetlands pursuant to EO 11990; (d)
evaluation of flood hazards in floodplains in accordance with EO 11988; (e) assurance of project consistency
with the approved State management program
developed under the Coastal Zone Management Act of
1972 (16 U.S.C. §§1451 et seq.); (f) conformity of
Federal actions to State (Clean Air) implementation
Plans under Section 176(c) of the Clean Air Act of
1955, as amended (42 U.S.C. §§7401 et seq.); (g)
protection of underground sources of drinking water
under the Safe Drinking Water Act of 1974, as
amended (P.L. 93-523); and, (h) protection of
endangered species under the Endangered Species
Act of 1973, as amended (P.L. 93-205).

16. Will comply with the Wild and Scenic Rivers Act of
1968 (16 U.S.C. §§1271 et seq.) related to protecting
components or potential components of the national
wild and scenic rivers system.

17. Will assist the awarding agency in assuring compliance with Section 106 of the National Historic Preservation
Act of 1966, as amended (16 U.S.C. §470), EO 11593
(identification and protection of historic properties), and the Archaeological and Historic Preservation Act of
1974 (16 U.S.C. §§469a-1 et seq).

18. Will cause to be performed the required financial and compliance audits in accordance with the Single Audit
Act Amendments of 1996 and OMB Circular No. A-133,
"Audits of States, Local Governments, and Non-Profit
Organizations."

19. Will comply with all applicable requirements of all other Federal laws, executive orders, regulations, and policies governing this program.

SIGNATURE OF AUTHORIZED CERTIFYING OFFICIAL TITLE
SF-424D (Rev. 7-97) Back

APPLICANT ORGANIZATION DATE SUBMITTED
Executive Director
California Marine Sanctuary Foundation
Danielle Brown
02/09/2024

20. Will comply with the requirements of Section 106(g) of the Trafficking Victims Protection Act (TVPA) of 2000, as amended (22 U.S.C. 7104) which prohibits grant award
recipients or a sub-recipient from (1) Engaging in severe forms of trafficking in persons during the period of time that the award is in effect (2) Procuring a commercial
sex act during the period of time that the award is in
effect or (3) Using forced labor in the performance of the award or subawards under the award.

Tracking Number:GRANT14067223 Funding Opportunity Number:NOAA-NOS-OCM-2023-2008068 Received Date:Feb 09, 2024 06:23:57 PM EST Exhibit A: Assurances Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.97 Version 11.15.24
California Marine Sanctuary Foundation: Special Terms and Conditions Attachment 7
California Marine Sanctuary Foundation Special Terms and Conditions Subaward No. ___CR114_______

1. Independent Contractor. Subrecipient acknowledges and agrees that it is engaged as an independent contractor by PTE to perform the Subaward work. As an independent contractor, Subrecipient acknowledges that PTE will not withhold any taxes from the compensation it pays to Subrecipient, and that Subrecipient is entirely responsible for all tax reporting and payment. Nothing in the Subaward is intended to, or shall be deemed to, constitute a partnership or joint venture between the parties. No party has the authority to bind any other party in contract or to incur any debts or obligations on behalf of any other party, and no party (including any employee or other representative of a party with responsibility for program matters) shall take any action that attempts or purports to bind any other party in such a manner, without the affected party’s prior written approval. No direction or instruction by PTE with respect to Subrecipient’s performance of the Subaward work or the Subaward shall in any way affect Subrecipient’s status as an independent contractor as described herein.

2. Publicity Requirements: All communications regarding the project associated with this Subaward must acknowledge PTE as the lead entity. This acknowledgment should be included in all projectrelated materials, including but not limited to press releases, reports, websites, social media posts, and presentations. Subrecipient acknowledges that PTE will serve as the sole point of contact for public communications about the project associated with this Subaward as a whole. Subject to the terms and conditions of this Subaward, including without limitation the “Use of Name” section of Attachment 1, Subrecipient is encouraged to coordinate with PTE for any communications that provide an overview of the entire project associated with this Subaward. Any inquiries regarding the overall status of the project associated with this Subaward, objectives, or impact should be directed to PTE. In addition to the terms and conditions provided in this Subaward, including without limitation the “Use of Name” section of Attachment 1, PTE reserves the right to review and approve all communications materials in connection with the project associated with this Subaward, including but not limited to educational, outreach, or press materials, before their release to ensure consistency with the project’s overall messaging. In any such communication, the relationship of the parties shall be accurately and appropriately described.

The project associated with this Subaward shall be co-branded as funded by NOAA. Any public-facing materials must include this acknowledgment prominently. In addition to the terms and conditions provided in this Subaward, including without limitation the “Use of Name” section of Attachment 1, PTE’s logo and NOAA branding should be used in accordance with PTE’s branding guidelines. Subrecipient shall ensure that these logos are used appropriately in all communications materials.

3. Monterey Bay Climate Adaptation Action Network (MBCAAN) Commitment: Subrecipient shall commit to participate, in good faith, as an active member of MBCAAN during the term of this Subaward.

This may include, but is not limited to, participation in quarterly meetings, participation in subcommittees as appropriate, and contribution to the development of planning documents and regional climate strategies.

4. Publication. Subject to the terms and conditions of this Subaward, Subrecipient shall have the right to publish and disseminate information derived from the performance of the work performed pursuant to this Subaward; provided, however, that PTE shall have the right to approve any such publication by Subrecipient prior to its publishing. Subrecipient shall provide PTE with a copy of any such publication at least thirty (30) days prior to submission for publication in order to review for confidential information, material which would affect pending patents, and to forward to Federal Awarding Agency, if applicable.

Subrecipient shall address and incorporate any comments, changes, revisions or requests by PTE with respect the publication prior to its publishing. Qualification for authorship shall be in keeping with generally accepted academic standards.

5. [Intellectual Property. Subrecipient hereby grants to PTE a worldwide, royalty-free, non-exclusive Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.98 Version 11.15.24
California Marine Sanctuary Foundation: Special Terms and Conditions and irrevocable license or sublicense, as the case may be, to use, display, publish and reproduce any of Subrecipient’s Intellectual Property (as defined below) associated with the Subaward work and the project associated with this Subaward to meet PTE’s obligations under the Federal Award, in connection with PTE’s marketing and distribution of information regarding the Subaward work and the project associated with this Subaward or otherwise as is relevant for PTE, in its discretion, to enjoy the benefit of the Subaward work. Subrecipient hereby grants to Federal Awarding Agency a worldwide, royaltyfree, non-exclusive and irrevocable license or sublicense, as the case may be, to use, display, publish and reproduce Subrecipient’s Intellectual Property associated with the Subaward work and the project associated with this Subaward and to authorize others to do so for federal purposes. Subrecipient shall own the data it generates under this Subaward. Subrecipient shall grant to PTE the right to receive copies of such data and to use data created as provided in the Statement of Work to the extent required to meet PTE’s obligations under the Federal Award, in connection with PTE’s marketing and distribution of information regarding the Subaward work and the project associated with this Subaward or otherwise as is relevant for PTE, in its discretion, to enjoy the benefit of the Subaward work. Subrecipient acknowledges the rights of the Federal Awarding Agency to use such data and to authorize others to do so for federal purposes. The term “Intellectual Property” shall mean trademarks, service marks, rights in trade names, business names, logos and trade dress, patents, utility models, rights in inventions, design rights, copyrights and related rights (including rights in computer software), database rights, rights in domain names, URLs and social media accounts, rights in confidential information, trade secrets, and all other similar rights in any part of the world.]

6. Confidentiality. "Confidential Information" shall mean any non-public information, including trade secrets, know-how, proprietary information, formulae, processes, techniques, and information concerning past, present, and future marketing, financial, research, and development activities that may be disclosed, whether orally or in writing, from or on behalf of a party (in such capacity, “Disclosing Party”) to the other Party (in such capacity, “Receiving Party”), or that may be otherwise received or accessed by Receiving Party in connection with this Subaward. In the event the Disclosing Party discloses Confidential Information to the other during the project associated with this Subaward, the Receiving Party agrees to disclose the Confidential Information only on a need-to-know basis to its employees, directors or other advisors or representatives who are subject to confidentiality obligations, to use the Confidential Information only for the purposes contemplated by this Subaward and to use reasonable efforts to prevent its disclosure to third parties.

Notwithstanding the foregoing, the Receiving Party may disclose the Confidential Information if such information (i) was already in the public domain or becomes publicly available through no wrongful act of receiving party, (ii) was previously known or developed by the receiving party without any violation of existing confidentiality obligations, or was known by receiving party prior to disclosure by disclosing party, as evidenced by tangible records; (iii) is disclosed to the receiving party by an independent third party who, to the best of the receiving party’s knowledge, is not under an obligation of confidentiality for such information to the disclosing party(iv) is independently developed or discovered by receiving party without use of disclosing party’s Confidential Information, as evidenced by tangible records; or (v) was required to be disclosed by operation of law.

The parties agree that each party retains ownership of the Confidential Information it provides to the other. The Receiving Party shall promptly return the Disclosing Party’s Confidential Information upon request. The obligations of this clause shall survive for a period of three (3) years following termination of this Subaward. Notwithstanding the forgoing, the parties agree that any personally identifiable health information shall be considered confidential.

7. Indemnification.
a. Notwithstanding anything to the contrary herein, Subrecipient shall defend, indemnify, and hold harmless PTE, and its officers, directors, employees, and agents, and any and any other party required by the contract between the Federal Funding Award and PTE (collectively, “Indemnitees”), from and against all claims, losses, costs, fines, penalties, judgments, liabilities, expenses, and damages of whatever nature, including but not limited to costs of defense, settlement and attorneys’ Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.99 Version 11.15.24
California Marine Sanctuary Foundation: Special Terms and Conditions fees (including the costs of attorneys in the employ of Indemnitees), arising out of, caused by or resulting from Subrecipient’s performance of or failure to perform the Subaward, to the extent caused in whole or in part by Subrecipient’s breach of the Subaward, or by the fraudulent, willful or negligent acts or omissions of Subrecipient, or any of Subrecipient’s subcontractors, employees, suppliers, manufacturers, providers of services, or other persons or entities engaged in work performed pursuant to this Subaward or for whose acts Subrecipient may be liable. This indemnification provision is binding on Subrecipient to the fullest extent permitted by law. b. If in the execution or performance of this Subaward, Subrecipient shall have failed to perform the its obligations under the Subaward in accordance with the terms, conditions, provisions or covenants of this Subaward or shall have violated any laws, rules, orders, regulations or ordinances applicable to Subrecipient’s obligations hereunder, then Subrecipient shall defend, indemnify and save the Indemnities harmless from all damages, liabilities, claims and expenses, including costs of defense, settlement, and attorneys' and professional fees paid by any Indemnitee or incurred by or assessed against any Indemnitee as a result of any such failures or violations committed by Subrecipient in the execution of performance of its obligations under this Subaward. c. Subrecipient agrees to indemnify, defend hold harmless the Indemnitees from and against all liabilities, costs, claims, penalties, forfeitures, causes of action, suits, and the costs and expenses incident thereto (including costs of defense, settlement, and attorneys’ fees, including the costs of attorneys in the employ of Indemnitees), which Indemnitees may suffer, incur, become responsible for or pay out as a direct or indirect result of any allegation, claim or proceeding involving any defamatory or unlawful matter or question of direct, contributing or indirect infringement of any intellectual property or other proprietary rights, including infringement of any trademark, patents or copyrights arising out of, caused by or in connection with the work performed by Subrecipient pursuant to the Statement of Work and/or Subrecipient’s performance of its obligations under this Subaward.
d. Notwithstanding the foregoing, this indemnity provision will not apply to any claim arising from the sole negligence or willful misconduct of PTE or its employees or agents. Subrecipient’s obligations under this indemnification provision shall survive the termination of, or completion of the work described in the Statement of Work and the performance of Subrecipient’s obligations under this Subaward. Subrecipient’s indemnification obligations that are part of this Subaward shall also apply to anyone hired by Subrecipient to perform any work under or in connection with this Subaward.

8. Insurance. Subrecipient shall carry and maintain at Subrecipient’s expense, prior to Subrecipient commencing work under this Subaward, insurance with an insurance provider with a minimum rating by AM Best no lower than A minus (A-) with coverage as specified below. Subrecipient shall produce evidence of insurance through a minimum means of a Certificate of Liability Insurance and Subrecipient Insurance Compliance Statement as filled out by their insurance provider and submitted to PTE, copies of which shall be furnished by Subrecipient to PTE upon written request at any time and from time-totime. These insurance requirements that are part of this Subaward shall also apply to anyone hired by Subrecipient to work under this Subaward.
a. Commercial General Liability Insurance, with minimum limits of $1,000,000 per occurrence /$2,000,000 aggregate for Bodily Injury, Personal Injury, Property Damage (BI, PI, PD), Sexual Harassment, Discrimination, and Contractual Liability.
b. Subrecipient shall provide Workers’ Compensation insurance as required by any applicable law or regulation together with Employer’s Liability insurance coverage. Subrecipient shall voluntarily provide Workers’ Compensation insurance for proprietors, partners, or others not statutorily required to maintain Workers’ Compensation insurance. At a minimum, the Workers’ Compensation coverage shall include the benefits and limits designated in the jurisdiction in which the project associated with this Subaward is located as well as any jurisdiction in which any of the Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

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California Marine Sanctuary Foundation: Special Terms and Conditions work performed in connection with the Statement of Work is performed. The Employer's Liability insurance shall be provided in amounts not less than:

Each Accident $1,000,000
Policy Limit for bodily injury by disease $1,000,000
Each Employee for bodily injury by disease $1,000,000
Subrecipient and its insurer shall waive all rights of subrogation against PTE, the Federal Funding Agency and any other party required by contract. Where a Professional Employer Organization (PEO) or “leased employees” are utilized, Subrecipient shall require its leasing company to provide Workers’ Compensation insurance for said workers and such policy shall be endorsed to provide an Alternate Employer endorsement in favor of Subrecipient and PTE. Where Subrecipient uses leased employees with Workers’ Compensation insurance provided by a PEO or employee leasing company, Subrecipient is strictly prohibited from subletting any of its work without the express written agreement of PTE.
c. Professional Liability Insurance. Professional errors and omissions liability insurance with limits of no less than One Million Dollars $1,000,000 each claim, aggregate limit included in the Policy Aggregate Limit of $2,000,000. Such professional liability insurance shall be continued for a period of no less than one year following completion of Subrecipient’s obligations under this Subaward.
d. Automobile Liability Insurance. If Subrecipient or Subrecipient’s officers, employees, agents or representatives utilize a motor vehicle in performing any of its obligations under this Subaward, Subrecipient shall provide owned/non-owned automobile liability insurance providing combined single limits covering bodily injury and property damage liability with limits of no less than One Million Dollars ($1,000,000) per incident or occurrence. PTE, the Federal Funding Agency, and any other party required by contract shall be named as Additional Insureds This insurance coverage is required unless the Subrecipient or Subrecipient’s officers, employees, agents or representatives do not drive a vehicle in conjunction with any part of the performance of this Subaward and Subrecipient and PTE both certify to this fact by initialing here ____ / ____. e. Deductibles. Any deductibles or self-insured retentions over $10,000 must be declared in writing and approved by PTE. PTE, in its sole discretion, may waive the requirement to reduce or eliminate deductibles or self-insured retentions, in which case, Subrecipient agrees that it will be responsible for and pay any self-insured retention or deductible and will pay any and all costs, losses, related investigations, claim administration and defense expenses related to or arising out of Subrecipient’s defense and indemnification obligations as set forth in this Agreement. f. Additional Insured Endorsement. Subrecipient shall obtain a separate endorsement to all required insurance policies, except Workers' Compensation insurance and Professional Liability insurance, naming PTE and its officers, officials and employees as additional insureds (“Additional Insureds”).
g. Subrecipient’s Insurance is Primary. Such insurance shall be primary and non-contributory to any insurance or self-insurance maintained by PTE. Any insurance or self-insurance maintained by any Additional Insureds shall be excess of Subrecipient’s insurance and shall not contribute with Subrecipient’s insurance. A Waiver of Subrogation shall apply in favor of the Additional Insureds. h. Subcontractors. Subrecipient shall require that all persons or entities engaged in work performed pursuant to this Subaward, including, but not limited to, contractors, subcontractors, suppliers, and providers of services are subject to the insurance and indemnity requirements stated herein, or shall include all such persons or entities engaged in work performed pursuant to this Subaward as additional insureds under its insurance policies.

Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

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California Marine Sanctuary Foundation: Special Terms and Conditions i. Certificates of Insurance. Certificates of Insurance shall be ordered by Subrecipient and provided to PTE by Subrecipient's insurance carrier for the above-listed coverages before starting work under this Subaward. All such Certificates shall indicate the amount of coverage and shall include “CMSF, its Officers, Agents and Employees” as Additional Insureds. Further, each insurance policy shall specifically include, without limitation, the following: (i) a provision whereby the policy may not be terminated or amended except after ten (10) days' prior written notice to PTE; and (ii) a provision that PTE and any other Additional Insured, although named as an insured, shall nevertheless be entitled to recover under the policy for losses sustained by the Additional Insured as a result of the acts or omissions of Subrecipient. Renewal certificates shall be provided to PTE prior to expiration of the policy(ies). Further, Subrecipient shall provide to PTE a certified copy of all insurance policies within ten (10) days of request. j. Equipment Insurance. Subrecipient will either (i) provide maintain fire, theft, and malicious damage insurance covering Subrecipient’s tools, construction equipment, and construction sheds and/or offices and, at the request of PTE, will furnish PTE with certificates of such insurance, or (ii) acknowledge to PTE in writing that Subrecipient will self-insure such items, and assumes all risk of loss of such items, agreeing not to look to PTE for any loss or damage to such items regardless of causation. Subrecipient shall have the sole responsibility for the proper storage and protection of materials stored at the project site associated with this Subaward. Any loss resulting from damage, theft or other casualty prior to the incorporation of such materials in the work performed under this Subaward and acceptance thereof by PTE shall be borne by the Subrecipient, except to the extent of insurance proceeds, if any.
k. Loss Reporting. Subrecipient shall immediately report to PTE, and promptly thereafter confirm in writing, the occurrence of any injury, loss or damage incurred by Subrecipient or its subcontractors or their receipt of notice or knowledge of any claim by a third party of any occurrence in the course of performing under this Subaward that may result in a claim.

9. Working Conditions.
a. Labor Unions. Subrecipient agrees to comply with all labor regulations promulgated by the labor union(s) having jurisdiction over the work performed under this Subaward or any portion thereof, or any other labor union with which Subrecipient has a contract, if any. Subrecipient further agrees to reasonably cooperate with any labor forces engaged by PTE, and its subcontractors and suppliers, regardless of whether such forces are union or non-union. b. Mutual Cooperation. Subrecipient agrees to use every effort to promote mutual cooperation between Subrecipient’s officers, employees, subcontractors and agents and PTE, which mutual cooperation is essential to the proper performance by the Subrecipient hereunder.

Subrecipient further covenants and agrees to reasonably cooperate with, and not to obstruct, hinder, or delay, the work performed by any other recipient of a subaward or their laborers and subcontractors (at all tiers). Subrecipient shall defend, indemnify and hold PTE harmless for all damages assessed against PTE to the extent caused by Subrecipient obstructing, hindering, or delaying the work of any other subaward recipient or their laborers and subcontractors (at all tiers). c. Safety. Subrecipient shall be responsible for the safety of its workers and Subrecipient shall comply with applicable federal and state worker safety-related laws and regulations at all times. If in the performance of Subrecipient’s obligations under this Subaward, it is necessary to conduct investigations or other operations in the field or at a project site, security and safety of the area of such field operations will be the responsibility of the Subrecipient. Subrecipient, at its expense, shall conform to the basic safety policy of PTE and comply with all specific safety requirements promulgated by any governmental authority, including, without limitation, the Construction Safety Act of 1969, as amended, or its successor; the Occupational Safety and Health Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.102
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California Marine Sanctuary Foundation: Special Terms and Conditions Act of 1970 as amended; “Construction Safety Orders and General Industry Safety Orders” in Title 8 of the California Code of Regulations; California Department of Health Services and local regulations; and all standards and regulations which have been or shall be promulgated by the parties or agencies which administer such acts and regulations. Subrecipient shall have and exercise full responsibility for compliance thereunder by Subrecipient and its agents, employees, materialmen and subcontractors generally and, in particular, with respect to the performance of Subrecipient’s obligations under this Subaward. Subrecipient shall receive, respond to, defend, and be responsible for all citations, assessments, fines or penalties which may arise in whole or in part, from Subrecipient or its agents’, employees’, materialmen’s or subcontractors’ failure or alleged failure to so comply and shall defend, indemnify and hold PTE harmless from any loss, damage, fines, costs, and expenses, including reasonable attorney's fees, which PTE may incur as a result of Subrecipient’s failure or alleged failure to so comply. Subrecipient shall further comply with PTE’s safety requirements, if any.

10. Additional Invoicing and Payment Terms. Invoices must be submitted to PTE within 30 days following the end of each quarter. PTE reserves the right to reject any invoice that does not comply with the terms of this Subaward. Subrecipient shall have the right to submit a corrected invoice; provided that such corrected invoice is submitted as soon as possible, and no later than thirty (30) days following the return of the rejected invoice to Subrecipient by PTE. PTE shall pay all undisputed invoices within 14 days after receipt of the funds from the Federal Awarding Agency to pay such undisputed invoices; provided, however, such payments shall continue to be provisional and subject to adjustment as provided in Section 4 of the “Terms and Conditions” of this Subaward. Notwithstanding any other provision of this Subaward, Subrecipient expressly acknowledges and agrees that PTE’s receipt of payment from Federal Awarding Agency for amounts invoiced by and due to Subrecipient is a condition precedent of any obligation of PTE to make any payments to Subrecipient, it being expressly agreed that the risk of Federal Awarding Agency’s nonpayment is borne by Subrecipient and not PTE and that PTE is relieved of, and excused from, any obligation to pay Subrecipient if Federal Awarding Agency does not pay PTE. Any payment advanced by PTE prior to receipt of payments from Federal Awarding Agency shall not be interpreted as a waiver, nor establish a course-of-dealing, nor otherwise affect PTE’s right to the enforcement of this “paid if paid” provision.

11. Budget Changes. Except as otherwise provided herein, in its performance of its obligations under this Subaward, the Subrecipient shall expend funds only on allowable costs and in the manner described in the Statement of Work approved by the PTE and Federal Agency. Expenditure on items contained in the Statement of Work and budget for this Subaward as shown in Attachment 5 may vary by as much as ten percent (10%) without prior approval by the PTE, provided the subrecipient submits a revised budget to PTE prior to requesting disbursement based on such revised budget. Notwithstanding the foregoing, the total amount of the budget as shown in Attachment 5 may not be increased, except by written amendment to the Subaward signed by both PTE and Subrecipient.

12. Statement of Work Changes. The parties may, pursuant to mutual agreement, limit, expand or otherwise modify the Statement of Work to be performed by Subrecipient hereunder, provided that such modifications to the terms of the Statement of Work shall be valid only if made in writing and executed by both PTE and Subrecipient.

13. Deliveries Upon Termination. Upon termination of this Subaward as provided for herein, Subrecipient shall furnish all necessary data, deliverables, and final reports, in accordance with the terms of this Subaward, including without limitation Sections 3, 4 and 5 of the “Terms and Conditions” and Attachment[s] 4 [and 5] of this Subaward, completed or in progress through the date of termination and such other documentation as reasonably requested the PTE with respect to the Subaward work performed the Subrecipient prior to the date of termination.

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California Marine Sanctuary Foundation: Special Terms and Conditions

14. Payments to Third Parties. Subrecipient covenants and agrees that all funds received for the performance of its obligations pursuant to the Subaward shall be used solely for the benefit of persons or firms supplying labor, materials, supplies, tools, machines, equipment or services exclusively for the project associated with this Subaward and that any funds paid to Subrecipient pursuant hereto shall immediately become and constitute a trust fund for the benefit of such persons and firms, and shall not in any instance be diverted by Subrecipient to any other purpose until all obligations arising hereunder to third persons have been fully discharged and all claims arising therefrom have been fully paid.

15. Closeout. Along with any other reports or deliverables required hereunder, Subrecipient shall submit its final invoice and any requested release and assignment forms to PTE within 30 calendar days following completion of the period of performance of this Subaward. In the event that quick closeout is requested by PTE, Subrecipient shall comply with FAR Part 42.708 to complete Subaward closeout.

Payment of the final invoice will be withheld pending:
• Completion, submission, and acceptance by PTE of all work performed under the Statement of Work;
• Completion by Subrecipient of any requested release forms, including patent/invention report, and property report; and
• Clear, visible, and proper marking of “final invoice” on the actual final invoice.

16. Audit. Subrecipient assures PTE that it complies with Single Audit requirements under 2 CFR 200 (“Uniform Guidance”), Subpart F and that it will notify PTE of completion of required audits and of any adverse findings which impact this Subaward. For a period of three (3) years after date of receipt of final payment, PTE, Federal Awarding Agency or an authorized representative shall have the right to audit, at its own expense and upon reasonable notice at a mutually agreeable time, all financial books, accounts, and records of funds received and costs and commitments incurred under this Subaward. If any audit reveals a discrepancy or error in reporting, Subrecipient will reimburse PTE upon request for the disallowed costs and expenses associated with such audit.

17. Disputes. The parties shall make good faith efforts to attempt to resolve all disputes through informal means. Each party agrees that, prior to resorting to litigation to resolve any dispute, it will confer with the other party to determine whether other procedures that are less expensive or less time-consuming can be adopted to resolve the dispute.

18. Anti-kickback. Subrecipient represents that no part of the total Subaward amount provided herein shall be paid directly or indirectly to any officer or employee of PTE or Federal Awarding Agency as wages, compensation, or gifts in exchange for acting as officer, agent, employee, subcontractor, or consultant to Subrecipient in connection with any work contemplated or performed relative to this Subaward.

19. Subcontractors. Any and all contracts, subcontracts or other agreements with a contractor, subcontractor of any tier, materialman, providers of services, or other persons or entities engaged to perform work pursuant to this Subaward shall be subject to all applicable terms and conditions of this Subaward, including, without limitation, the licensing, certification and confidentiality requirements set forth herein. Subrecipient shall remain legally responsible for the performance of all terms and conditions of this Subaward, including work performed by third parties under any other contracts, subcontracts or other third party agreements, whether approved by PTE or not. Subrecipient shall be responsible for requiring and confirming that each subcontractor meets the minimum insurance requirements specified in Section 8 of this Attachment 7 of the Subaward. Any subcontractor shall obtain the required insurance coverages, or better, and provide proof of same to PTE in the manner provided in in Section 8 of this Attachment 7 of the Subaward. The Subrecipient shall be responsible for any and all disputes arising out of its contracts for work in connection with this Subaward, including but not limited to payment disputes with any contractor, subcontractor of any tier, materialman, providers of services, or other persons or entities engaged to Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

6.104
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California Marine Sanctuary Foundation: Special Terms and Conditions perform work pursuant to this Subaward. Neither PTE nor the Federal Funding Agency will mediate disputes between Subrecipient and any other person or entity concerning responsibility for performance of work. Subrecipient will save and hold PTE harmless from and against any and all claims, liens, requests for payment, or liabilities of any kind (collectively, “Subcontractor Claims”) that may be filed by a contractor, subcontractor of any tier, materialman, provider of services, or other person or entity engaged to perform work in connection with this Subaward or any other person and Subrecipient will, at its own expense, defend all actions based upon such Subcontractor Claims and will pay all charges of attorneys and all costs and other expenses arising from such Subcontractor Claims.

20. Compliance with Laws; Examinations; Operations and Maintenance. a. Subrecipient shall perform the work described in the Statement of Work and its obligations under this Subaward in compliance with all applicable federal, state and local laws and regulations.

Subrecipient shall pay for, possess, maintain and comply with all federal, state and local permits, licenses and certificates that may be required for it to perform the work described in the Statement of Work and its obligations under this Subaward. Subrecipient shall comply with all federal, state and local air pollution control laws and regulations applicable to the Subrecipient and its work described in the Statement of Work (as required by California Code of Regulations title 13, section 2022.1). Subrecipient represents and warrants that it has procured all licenses to do business, if required by law, and has complied with all other legal requirements before submitting a bid for the Subaward or performing any work described in the Statement of Work and its obligations under this Subaward.
b. Subrecipient represents that it has carefully examined the drawings and specifications, governmental restrictions, permits and license requirements, and all other laws and rules applicable to the work described in the Statement of Work and its obligations under this Subaward.

Subrecipient further represents, if applicable, it has visited the premises of the project associated with this Subaward, has made all investigations essential to a full understanding of the difficulties which may be encountered, and has special qualifications for doing the work described in the Statement of Work. Subrecipient’s failure to note any defect, patent or latent, or any inconsistency or material omission during the course of the aforementioned examinations, visits and investigations shall not in any respect relieve Subrecipient from Subrecipient’s obligations under this Subaward or entitle Subrecipient to additional funds. c. Subrecipient will hold PTE harmless from any liability or penalty incurred or imposed by reason of an asserted or actual violation by Subrecipient of any such laws, regulations, ordinances, governmental restrictions, or other rules or failure to obtain valid licenses or permits. d. Subrecipient will conform to and obey all rules, regulations, policies and procedures imposed from time to time by PTE or the Federal Funding Agency with respect to the project associated with this Subaward or the performance of the work described in the Statement of Work and Subrecipient’s obligations under this Subaward.
e. Subrecipient will be solely responsible for design, construction, and operation and maintenance of projects within the Statement of Work. Review or approval of plans, specifications, bid documents, or other construction documents by PTE and the Federal Funding Agency is solely for the purpose of proper administration of funds by Federal Agency and shall not be deemed to relieve or restrict responsibilities of Subrecipient under this Subaward.

21. Attorneys’ Fees. If either party shall commence any legal action or proceeding, including an action for declaratory relief, against the other by reason of the alleged failure of the other to perform or keep any provision of this Subaward to be performed or kept, the party prevailing in said action or proceeding shall Docusign Envelope ID: 6DAD93B8-FACD-4D52-8601-802B74F244DA

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California Marine Sanctuary Foundation: Special Terms and Conditions be entitled to recover court costs and reasonable attorneys’ fees to be fixed by the court, and such recovery shall include court costs and attorneys’ fees on appeal, if applicable. As used herein, “prevailing party” means the party who dismisses an action or proceeding in exchange for payment of substantially all sums allegedly due, performance of provisions allegedly breached, or other consideration substantially equal to the relief sought by said party, as well as the party in whose favor final judgment is rendered.

22. Miscellaneous. This Subaward constitutes the entire agreement between the parties regarding the subject matter herein and all previous oral or written promises and agreements relating to the Subaward are hereby superseded to the extent they may be inconsistent herewith. a. Any modification to this Subaward shall be made in writing and must be signed by an authorized representative of each party.
b. All covenants, agreements, indemnities, guarantees and warranties made by Subrecipient shall survive completion of or termination of the Subrecipient’s obligations under this Subaward and the Subaward, and any payment of the funds of the Subaward, in full or in part. c. Any and all notices or demands or other documents or instruments provided for herein shall be in writing and shall be deemed effectively given or made (a) on the date served upon the party to be notified personally; (b) delivered to the party through e-mail, if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery courier (charges prepaid, receipt acknowledged) or if the recipient of such e-mail confirms receipt; (c) three days after being deposited in the United States mail registered or certified mail, return receipt requested, postage prepaid; or (d) one day after deposit or delivery to a reputable overnight courier, prepaid, receipt acknowledged, to the address of such party as set forth in this Subaward or to such other address as such party may last have designated by notice hereunder. Notice to PTE shall be directed to the PTE’s Administrative Contact and Authorized Official as set forth on Attachment 3A, and notice to Subrecipient shall be directed to Subrecipient’s Authorized Official as set forth on Attachment 3B. Rejection or refusal to accept delivery or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of notice as of the date such notice was deposited in the mail or delivered to the overnight courier. d. Whenever the singular number is used in this Subaward and when required by the content, the same shall include the plural and vice versa, and the neuter genders shall include the feminine and the masculine and vice versa.
e. The person executing this Subaward on behalf of Subrecipient hereto represents that they have been authorized to do so by the Board of Directors, officers, directors, members, managers, partners, or other governing body of Subrecipient.
f. Section headings herein are inserted only for convenience or reference, and shall in no way define, limit or prescribe the scope or extent of any provisions of this Subaward. g. PTE and Subrecipient each bind itself, its successors, assigns and legal representatives to the other party hereto, and to the successors, assigns and legal representatives of such other party in respect to all covenants, agreements and obligations contained in this Subaward. h. Subrecipient may not assign this Subaward without the prior written consent of PTE.

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California Marine Sanctuary Foundation: Special Terms and Conditions i. If any term or provision of this Subaward shall be held to any extent to be invalid or unenforceable, the remaining terms and provisions of this Subaward shall be valid and shall be enforceable to the fullest extent permitted by law.
j. This Subaward shall be construed and governed under the laws and statutes of the State of California.
k. The parties agree that jurisdiction and venue in any action brought by any party pursuant to this Subaward shall properly (but not exclusively) lie in any federal or state court sitting in Santa Barbara County, California. By execution and delivery of this agreement, each party irrevocably submits to the jurisdiction of such courts for itself and in respect of its property with respect to such action. The parties irrevocably agree that venue would be proper in such court, and hereby waive any objection that such court is an improper or inconvenient forum for the resolution of such action. l. Nothing in the Subaward shall be construed or interpreted as creating a contractual relationship with any third party, nor as creating a cause of action in favor of any third party against either PTE or Subrecipient, it being the intent of the parties that there are no intended third party beneficiaries of the Subaward.
m. This Subaward may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement.

A signed copy of this Subaward delivered by e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Subaward.

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6.107
City Council

AGENDA REPORT
DATE: 01/13/2025
AGENDA OF: 01/28/2025
DEPARTMENT: City Manager
SUBJECT: Emergency Debris Removal (e302501) – Authorization of Emergency Contracts and Budget Adjustment (CM/PR)
LOCATION: Districts 2, 4, and Coastal Areas Located South of the City of Santa Cruz
RECOMMENDATION: Motion to:
1) Ratify the emergency contract with Granite Construction (Watsonville, CA) for debris removal related to the December 2024 Municipal Wharf Incident in the amount of $385,000. The Parks and Recreation Director is authorized to execute change orders within the approved project budget;
2) Authorize the City Manager to execute a contract with Granite Construction (Watsonville, CA) for ongoing debris removal from the December 2024 Municipal Wharf Incident in the amount of $400,000 in a form approved by the City Attorney. The Parks and Recreation Director is authorized to execute change orders within the approved project budget; 3) Adopt a resolution to amend the FY 2025 budget to newly appropriate $400,000 of funds; and 4) Approve of the CEQA determination contained in this agenda report. The Council’s action is exempt from CEQA review under California Code of Regulations, Title 14, Division 6, Chapter 3, Article 18, Section 15269(c) as an emergency project. The Council’s action is also exempt from CEQA review under California Code of Regulations, Title 14, Division 6, Chapter 3, Article 18, Sections 15304 (“Minor Alterations to Land”), 15307 (“Actions for Protection of Natural Resources”), 15308 (“Actions for Protection of the Environment”), and 15061(b)(3) ("Common Sense Exemption”).

BACKGROUND: On December 23, 2024, a portion of the Santa Cruz Municipal Wharf collapsed into the ocean during an extreme high surf event. The collapse occurred at the south end of the Wharf, that had been under construction and closed to the public, where the demolished Dolphin Restaurant, sea lion viewing portals, and Restroom #3 were located. The event caused approximately 300 of the Wharf’s pilings to wash away. Debris, including, but not limited to the restroom structure, was carried south by the current, washing up on State and County beaches. Unconfirmed reports from Moss Landing and northern Monterey County

7.1 indicate a debris field approximately 12 miles wide as of January 8, 2025. Some debris has washed ashore on local beaches, and some has likely sunk into the ocean during the subsequent high surf events of late December 2024. To address the immediate public safety concerns, City of Santa Cruz (“City”) staff initiated an emergency contract with Granite Construction, a local contracting company that was available to immediately support emergency repairs. Following these events, on December 24, 2024, pursuant to his authority as Emergency Services Director, the City Manager declared the existence of a local emergency (the “Emergency Proclamation”).

The City Manager re-issued the Emergency Proclamation on December 31, 2024 and January 7, 2025, and the City Council ratified the Emergency Proclamation at its January 14, 2025 meeting.

DISCUSSION: On January 3, 2025, the City entered into an emergency contract with Granite Construction Company for $385,000 to remove debris from various locations. The executed contract is attached as "Emergency Agreement for Debris Removal Services – Granite Construction.” The contract expires on January 18, 2025, 15 days after the City issued the Notice to Proceed on January 3, 2025.

Santa Cruz Municipal Code Section 3.08.160 authorizes the Purchasing Manager to make emergency purchases when there exists a threat to public health, welfare or safety, provided that such acquisition is made with such competition as is practicable under the circumstances.

Debris removal conducted by Granite Construction included the removal and disposal of approximately 50 truckloads of material, comprising approximately 52 pilings and various decking pieces. This work was conducted at the following locations:
 Corcoran Lagoon,
 Seabright Beach,
 Twin Lakes State Beach, and
 Blacks Beach
The debris removal prioritized removing pieces of the Wharf located on beaches south of the Wharf to mitigate public safety risks associated with debris washing ashore in Santa Cruz and neighboring jurisdictions. The presence of large debris on beaches posed a potential risk to surfers, swimmers, and beachgoers and required immediate action. Additionally, California State Parks staff reported instances of creosote-treated debris from the Wharf being set on fire on State beaches. This significantly increased the urgency of debris removal and proper disposal of debris for final disposition in the appropriate facilities.

Additional Contract with Granite Construction
In addition to the initial emergency procurement, staff recommends awarding an additional contract to Granite Construction through emergency procurement pursuant to Santa Cruz Municipal Code Section 3.08.160. The City is unable to delay work to conduct a competitive bidding process as debris from the Wharf continue to pose a threat to public health, welfare or safety. The Purchasing Manager has selected Granite Construction while allowing such competition as is practicable under the circumstances. This contract will provide an interim solution for ongoing debris removal following the completion of the initial emergency debris response to mitigate harm to the public health and safety in the near future. The proposed contract, titled “Agreement for Debris Removal Services – Granite Construction," has a value of $400,000 and will become effective upon City Council approval on January 28, 2025.

7.2 Future Request for Proposals (RFP) for On-Call Emergency Debris Removal Services To enhance preparedness for future emergencies, the City will procure on-call emergency debris removal services. In January 2025, a Request for Proposals (RFP) will be issued to identify qualified contractors capable of providing long-term support for future debris removal operations. The RFP will be posted on the City’s website and OpenGov Procurement. This initiative aims to establish a robust and readily available system for addressing unforeseen debris removal needs effectively. The RFP will outline specific requirements for contractors, including:
• Rapid response capabilities: Ensuring swift mobilization and commencement of debris removal operations in the event of an emergency.
• Experience and expertise: Demonstrated experience in handling large-scale debris removal projects, including specialized knowledge of environmental regulations and safety protocols.
• Equipment and resources: Access to adequate equipment, personnel, and disposal facilities to efficiently manage debris removal operations. • Commitment to safety: A strong commitment to workplace safety and environmental protection throughout the debris removal process.

The selected contractor(s) will be placed on an on-call roster, ready to mobilize as needed to address future emergency situations. This proactive approach will significantly improve the City's capacity to respond effectively to unforeseen events and minimize potential disruptions to the community.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The Council's action on this item is exempt from CEQA as an emergency project pursuant to California Code of Regulations, Title 14, Division 6, Chapter 3, Article 18, Section 15269(c) which exempts:
“Specific actions necessary to prevent or mitigate an emergency. This does not include long-term projects undertaken for the purpose of preventing or mitigating a situation that has a low probability of occurrence in the short-term, but this exclusion does not apply (i) if the anticipated period of time to conduct an environmental review of such a long-term project would create a risk to public health, safety or welfare, or (ii) if activities (such as fire or catastrophic risk mitigation or modifications to improve facility integrity) are proposed for existing facilities in response to an emergency at a similar existing facility.” The debris removal is necessary to mitigate an emergency. The debris removal is not a long-term project undertaken for the purpose of preventing or mitigating a situation that has a low probability of occurrence in the short-term as staff believes that there is still wharf-related debris in the ocean that is likely to wash ashore in the coming weeks. And even if the debris removal were deemed a long-term project taken to mitigate a situation with a low probability of occurrence in the short-term, the anticipated period of time to conduct an environmental review would create a risk to public health, safety or welfare.

Additionally, the proposed Council action is exempt from CEQA under: (1) 14 CCR 15304 – Class 4 Categorical Exemption because the Council action consists of “minor public or private alterations in the condition of land, water, and/or vegetation which do not involve removal of healthy, mature, scenic trees except for forestry and agricultural purposes.” (Cal. Code Regs., tit. 14, § 15304.) (2) 14 CCR 15307 – Class 7 Categorical Exemption because the Council action is intended “to assure the maintenance, restoration, or enhancement of a natural resource.” (Cal.

7.3 Code Regs., tit. 14, § 15307.) (3) 14 CCR 15308 – Class 8 Categorical Exemption because the Council action is intended “to assure the maintenance, restoration, enhancement, or protection of the environment.” (Cal. Code Regs., tit. 14, § 15308.) The Council action does not include construction activities or relaxation of standards allowing environmental degradation as prohibited by the exception. (4) 14 CCR 15061(b)(3) – the “common sense” exemption because it can be seen with certainty that there is no possibility that the Council action in question may have a significant effect on the environment. (14 Cal Code Regs 15061(b)(3).) HEALTH IN ALL POLICIES (HiAP): The emergency contracts to clean debris off beaches align with the City of Santa Cruz’s Health in All Policies by addressing key social determinants of health, sustainability, and equity. Debris removal ensures safe, accessible environments for coastal recreation, protects public health by mitigating the impacts of debris on beaches, and enhances community well-being by reducing blight and safety hazards. Prioritizing rapid response and equitable action in debris removal ensures communities, especially those in lowlying coastal areas who are most affected by the extreme weather event, benefit from restored access to public beaches. The emergency contracts reflect responsible environmental stewardship, aligning with the ordinance’s focus on maintaining conditions for current and future generations.

FISCAL IMPACT:

1. The recommendation in this report impacts the General Fund: Yes

2. This recommendation requires a budget adjustment: Yes

3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: This project requires a budget adjustment (attached) to appropriate funds into the established project numbers for each City project. The contract costs may be potentially recoverable from insurance, Cal OES (California Governor’s Office of Emergency Services), and FEMA (Federal Emergency Management Agency).

Prepared By:

Meredith Albert
Emergency Operations
Manager
Viviane Pearson
Principal Management
Analyst
Submitted By:

Michelle Templeton
Assistant City Manager
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. EMERGENCY AGREEMENT FOR DEBRIS REMOVAL SERVICES - GRANITE CONSTRUCTION EXECUTED JANUARY 3, 2025.PDF

2. BUDGET ADJUSTMENT.PDF

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CONTRACT FOR STORM DEBRIS REMOVAL
This Construction Contract (“Contract”) is entered into and effective this 3rd day of January, 2025 by and between the CITY OF SANTA CRUZ (“City”), and GRANITE CONSTRUCTION (“Contractor”) referred to herein individually as a “Party” and collectively as “the Parties.”
WHEREAS, City agrees to hire Contractor to collect, remove, and dispose of storm debris from specified areas, including beaches and private properties, which are a result of the partial collapse of the Santa Cruz Wharf caused by recent winter storms (“Project”); and WHEREAS, Contractor represents that it has the required license, expertise, means, and ability to perform the scope of work as outlined in its proposal, which is attached as Exhibit “A” to this Contract (“Proposal”);
NOW, THEREFORE, in consideration of each other’s mutual promises, and incorporating the above Recitals, the Parties hereto agree as follows:

1. Term of Contract. Contractor shall commence work as promptly as practicable after receipt of a written Notice To Proceed from the City and complete the work within 15 Working Days, based on an agreed upon work schedule. All time limits stated herein are of the essence. This Contract shall terminate upon the completion of Contractor’s work, unless terminated sooner pursuant to the terms of this Contract.

2. Scope of Work and Work Schedule. Contractor will perform the work consistent with the scope of work and work schedule as defined and described in the Proposal attached hereto as Exhibit “A”, and in accordance with FEMA requirements and other applicable state and/or federal regulations attached hereto in Exhibit “B”, incorporated herein.

Contractor represents and warrants that Contractor: (i) is fully experienced and properly qualified to perform the class of work and service provided for herein, (ii) has the financial capability required for the performance of the work and services, and (iii) is properly equipped and organized to perform the work and services in a competent, timely, and proper manner, in accordance with the requirements of this Contract. Contractor shall supply all necessary labor, tools, materials, supplies, and equipment necessary to perform the required work.

2.1 Change in Scope of Work or Work Schedule.
(a) Any change in the scope of work to be done, method of performance, nature of materials or price thereof, work schedule changing the number of working days, or to any other matter materially affecting the performance or nature of the services will not be paid for or accepted unless such change, addition or deletion is approved in advance by the City, in a written Contract Change Order. (b) The changes will be set forth in written Contract Change Orders which specify the work to be done in connection with the changes, the basis of compensation for the Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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work, and any adjustments to the work schedule or work completion date. Such Change Orders shall be approved by the City. Upon receipt of an approved Contract Change Order, or of a written authorization from the City setting forth a description of the change and agreed upon changes in contract price, the Contractor shall proceed with the work so ordered.
(c) In the absence of an approved Contract Change Order or written authorization, the Contractor shall not be entitled to payment for any changed or extra work or any adjustment to the work schedule or work completion date. (d) When the changes increase or decrease the cost of the work, an adjustment of the Contract price will be made as set forth in the Change Order. Contractor shall receive compensation at the fees and rates previously agreed upon in writing. (e) Contractor shall not be entitled to an adjustment in the compensation or work schedule for delay, disruption, or interference caused by or within the control of Contractor. Delay, disruption, and interference attributable to and within the control of a subcontractor or supplier shall be deemed to be within the control of contractor.
(f) If the provisions of any bond require notice to be given to a surety of any change affecting the general scope of work or the provisions of the Contract (including, but not limited to, compensation or work schedule), the giving of any such notice will be Contractor’s responsibility. The amount of each applicable bond will be adjusted to reflect the effect of any such change.

3. Authorized Representatives. The authorized representatives shall be individuals with the necessary authority to direct work within the scope of this Contract and shall serve as the principal point of contact for the Project for each respective party.

3.1 City. City designates the following individual(s) as City’s authorized representative(s):

Taylor Kihoi. Only City’s authorized representative(s) is authorized to approve changes to this Contract on behalf of the City.

3.2 Contractor. Contractor designates the following individual(s) as Contractor’s authorized representative(s): Mark Magdaleno. Only Contractor’s authorized representative(s) is authorized to approve changes to this Contract on behalf of Contractor.

4. Hours of Work. All work will be performed during regular working hours between 8:00 a.m. and 5:00 p.m., Monday through Friday. No work will be done between the hours of 5:00 p.m. and 8:00 a.m., nor on Saturdays, Sundays or legal holidays except with the permission of the City, or except in case of an emergency.

5. Failure to Complete Work on Time (Liquidated Damages) All time limits stated in the Contract Documents are of the essence. If the work is not completed by Contractor in the time specified in the Contract, or within any period of Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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extension authorized by City, it is understood that City will suffer damage; and it being impracticable and infeasible to determine the amount of the actual damage, it is agreed that Contractor will pay City, as fixed and liquidated damages, and not as a penalty, the sum of $5000 dollars for each calendar day of delay until the work is completed and accepted, provided, however, that Contractor will not be charged liquidated damages because of any delays in the completion of the work due to unforeseeable causes beyond the control and without the fault or negligence of Contractor.

6. Licenses; Standard of Care; Equipment in Good Working Order.

6.1 Contractor represents and agrees that all personnel engaged by Contractor in performing work and services are and shall be fully qualified and are authorized or permitted under state and local law to perform such work and services. Contractor represents and warrants to the City that it has all required licenses and qualifications to perform the work and services required under this Contract, and will furnish satisfactory proof to City upon request.

6.2 Contractor represents that all equipment furnished and used shall be in good condition and shall be used in a workmanlike manner to ensure completed work in accordance with the scope of work.

6.3 Contractor shall perform the work and services under this Contract in a skillful and competent manner. Contractor shall be responsible to the City for any errors or omissions in the performance of work pursuant to this Contract. Should any errors caused by Contractor be found in such work and services, Contractor shall correct the errors at no additional charge to the City by redoing the work and agree to fulfill any and all warranty obligations for the work.

7. Permits. Permits and/or regulatory approvals required by governmental authorities will be obtained by City at City’s expense.

8. Compensation/Contract Price.

8.1 Lump Sum/Budget Limit. City will pay Contractor, for actual and complete performance of the work and services at the rates and fees set forth in the Proposal detailed in Exhibit A, attached to this Contract. Contractor will not be reimbursed for any costs or expenses at any rates that exceed the rates set forth in Exhibit A, unless agreed to by City through a Change Order. The total fees for the scope of work shall not exceed the following budget amount: $385,000. Such payment shall be considered the full compensation for all personnel, materials, supplies, and equipment used by Contractor in the scope of work.

8.2 Progress Payments-Except as otherwise agreed to in the Proposal, Contractor shall prepare and submit to the City, detailed invoice(s) on a monthly basis for fees and costs incurred based on the percentage of completion of the various portions/tasks of work identified in the scope of work during the previous 30 day billing period. The invoice Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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shall describe the progress of work rendered and shall be based on all labor and direct expense charges made for work performed hereunder. Labor charges shall be in accordance with the proposal. City shall pay the undisputed amounts due within thirty (30) days after the receipt of the invoice, subject to amounts it is contractually entitled to withhold or retain. The making of progress payments shall not be considered: (i) as City having inspected or approved Contractor’s work; (ii) to be an acceptance by City of any defective work or use of improper materials by Contractor. City is entitled to reduce the payment amount requested to account for defective work or if the estimate of the value of the work eligible for payment was incorrect.]

8.3 Retention. City may retain out of any payment due the Contractor up to 5% of the value of the work done. Under no circumstances shall any provision of this section be construed to limit the ability of City to withhold 150 percent of the value of any disputed amount of work from the final payment, as provided for Public Contract Code section 7107(c). In the event of a good faith dispute, nothing in this section shall be construed to require a public entity to pay for work that is not approved or accepted in accordance with the proper plans or specifications.

8.3.1 Securities in Lieu of Retention. In accordance with Public Contract Code Section 22300, except where federal regulations or polices do not permit substitution of securities, the Contractor may substitute securities for any moneys withheld by the City to ensure performance of the work. At the Contractor’s request and expense, securities equivalent to the amount withheld will be deposited with the City, or with a state or federally chartered bank in California as the escrow agent, who will then pay those moneys to the Contractor under the terms of an Escrow for Security Deposit agreement, in a form as approved by the City. Upon satisfactory completion of the work, the securities will be returned to the Contractor. Securities eligible for investment in accordance with this provision include those listed in Government Code Section 16430, bank or savings and loan certificates of deposit, interest bearing demand deposit accounts, standby letters of credit, or any other security mutually agreed to by the Contractor and the City. The Contractor will be the beneficial owner of any securities substituted for moneys withheld and will receive any interest thereon.

8.3.2 Escrow for Security Deposit . Alternatively, at the Contractor’s request and expense, the City will pay retentions earned directly to the escrow agent. At the Contractor’s expense, the Contractor may direct investment of the payments into securities. Upon satisfactory completion of the work, the Contractor will receive from the escrow agent all securities, interest, and payments received by the escrow agent from the City pursuant to this provision and the terms of the Escrow for Security Deposit agreement, in a form as approved by the City. The Contractor will, within 20 days of receipt of payment, pay to each subcontractor the respective amount of interest earned, less costs of retention withheld from each subcontractor, on monies withheld to ensure the Contractor’s performance of the work under this Contract.

Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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8.4 Final Payment. After completion of the work, the Contractor shall provide the final invoice of the work done and all payments due under the Contract, which show any deductions or amounts retained, if applicable. The amount determined due, less any retained amount, is payable 30 days after the completion and acceptance of the work in the manner provided by law and until after the Contractor has furnished the City a release by all claims by the Contractor and its subcontractors against City arising by virtue of the Contract, except such claims in definite amounts as the Contractor may specifically exempt from the operation of the release. City shall pay the retention amount to Contractor within 60 days after completion of the work pursuant to Public Contract Code §7107. The making of a final payment will not constitute a waiver by City of claims or rights against Contractor.

9. Acceptability of Work. City’s authorized representative shall decide all questions which may arise as to the quality or acceptability of work performed and as to the manner of performance and rate or progress of the work. The authorized representative will make a final inspection and determine that the Contract has been completed in all respects in accordance with the scope of work and requirements. Acceptance of the work shall not waive City’s rights and remedies related to the work.

10. Site Conditions and Safety.
(a) During the course of performing the scope of work under this Contract, the security and safety of the work area/site and the equipment will be Contractor’s sole responsibility.

Contractor shall at its sole cost and expense, ensure that the work site is properly maintained as to avoid injury or damage to any person or property in accordance with applicable legal and safety requirements, that all necessary barriers or signage to deter unauthorized entry and to protect the public are in place, such as notifying, warning, and protecting the public of any dangerous conditions on the property related to the work, installing a secure construction fence, security surveillance and patrol, and other reasonable measures, and as further requested by City to protect public health and safety during the course of the work.
(b) No material or equipment shall be stored where it will interfere with the safe passage of public traffic or the traffic of City or any other adjacent jurisdiction; and at the end of each day’s work and at other times when construction operations are suspended for any reason, Contractor shall remove all equipment and other obstructions from that portion of the roadway open for use by public traffic, the City, and other adjacent jurisdiction.

Spillage resulting from hauling operations along or across any public traveled way shall be removed promptly.
(c) Contractor shall not unreasonably interfere with the public’s use of the public right-ofway to the extent the public right-of-way is usable and accessible during the course of performing the Work. When Contractor’s operations require one-way traffic or creates a condition hazardous to public traffic, Contractor shall provide and station competent flaggers whose sole duties shall consist of directing the movement of public traffic Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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through or around the work, and as further required to comply with applicable traffic rules of the California Manual on Uniform Traffic Control Devices (CA MUTCD). (d) Contractor shall exercise due care to avoid damage to existing improvements, utility facilities, and adjacent property. The fact that any pipe or underground facility is not shown on the drawings shall not relieve the Contractor of responsibility or ascertaining the existence of any underground improvements or facilities which may be subject to damage by reason of the work.
(e) In carrying out its work, Contractor shall at all times, exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the work is to be performed, and be in compliance with all federal, state and local statutory and regulatory requirements including State of California, Division of Industrial Safety (Cal/OSHA) regulations, and the U.S. Department of Transportation Omnibus Transportation Employee Testing Act (as applicable). Safety precautions as applicable shall include instructions in accident prevention for all employees and the public, such as safe walkways, scaffolds, fall protection, ladders, bridges, gang planks, confined space procedures, trenching & shoring, equipment and wearing apparel as are necessary or lawfully required to prevent accidents or injuries or damage to public or private property. (f) Contractor agrees to keep the work site and other areas related to the work in a safe condition as reasonably possible at all times. All waste, rubbish, other debris, and any excess excavated material shall be removed from the work site in a manner that conforms to all applicable state, federal, and local laws and regulations. If dust problems should occur, dust control will be provided by the Contractor in a manner approved by the City at no additional expense to the City. At the start of the project, if applicable, Contractor will place filter fabric in all storm drain inlets in the project area so as to prevent soil particles from entering. If applicable, trench dewatering must be conducted so as to minimize sediment from entering storm drains in compliance with state laws. (g) Upon completion of the work, Contractor shall leave the City property and public rightof-way in a clean and orderly condition and except for the work under this Contract, shall restore or replace in-kind any improvements or landscaping damaged by Contractor, including any public property impacted by the work.in this Contract. The cost of such repairs shall be borne by the Contractor and may be deducted from any monies due or to become due the Contractor under the Contract. In the event Contractor fails to carry out its obligations pursuant to this Section, the City shall have the right to make any corrections or repair any damages caused by Contractor and Contractor shall be responsible to pay the City all costs, including City administrative staff time, arising therefrom within thirty (30) days of the date of an invoice therefor. (h) Any loss or damage to Contractor’s materials and equipment in the work area is Contractor’s sole responsibility, and the City shall not have any liability for any such loss or damage. Contractor is also solely responsible for any personal injury or property damage related to Contractor’s activities on or outside of City property, on private property, and in the public right-of way under this Contract, except to the extent caused Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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by City’s gross negligence or willful misconduct.

11. Hazardous Materials.
(a) Contractor shall not engage in any activity on, under, or about the City property, public right-of-way, or work site that violates any Federal, State or local laws, rules or regulations pertaining to hazardous, toxic or infectious substances or materials (“Hazardous Substances” or “Hazardous Materials”), and shall promptly, at Contractor’s expense, take all investigatory and/or remedial action required or ordered for clean-up of any contamination of the City property, public right-of-way, work site, or affected area of the elements surrounding the same created, released, or exacerbated by Contractor.

For the purposes of this Contract, the term “Hazardous Substances” or “Hazardous Materials” shall mean any substance or material which is capable of posing a risk of injury to health, safety or property, including all those materials and substances designated as hazardous or toxic by any federal, state or local law, ordinance, rule, regulation or policy, including but not limited to, all of those materials and substances defined as “Toxic Materials” in Sections 66680 through 66685 of Title 22 of the California Code of Regulations, Division 4, Chapter 30, as the same shall be amended from time to time, or any other materials requiring remediation under federal, state or local laws, ordinances, rules, regulations or policies. (b) If Contractor encounters, uncovers, or reveals the presence of Hazardous Materials at the work site or in any way related to the work, which removal or remediation is not expressly identified in the Contract as being within the scope of the work, or if Contractor or anyone for whom Contractor is responsible for the release, the presence or exacerbating the presence of Hazardous Materials, then Contractor shall immediately:
(1) secure or otherwise isolate such condition; (2) stop all work in connection with such condition and in any area affected thereby; and (3) notify City within 24 hours of Contractor’s knowledge of the presence of the Hazardous Materials. (c) If Contractor or anyone for whom Contractor is responsible for the release, the presence or exacerbating the presence of Hazardous Materials, Contractor is responsible for its remediation in compliance with all applicable laws and regulations. If Contractor fails to do so within a reasonable period of time, then City may remove and remediate the Hazardous Materials Condition, and impose a set-off against payments to account for the associated costs, including administrative fees..
(d) To the fullest extent permitted by law, Contractor shall defend, indemnify, and hold harmless the City, its officials, officers, employees, and agents from any and all costs, claims, expenses, penalties and attorney’s fees and costs arising out of a breach by Contractor of the subsection (a) above, including, but not limited to, the investigation, remediation and abatement of any contamination therein involved where the contamination was caused, released, or exacerbated by the acts or omissions of Contractor, its employees, subcontractors, suppliers, or agents or by anyone who was acting under Contractor’s authority or control.

Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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i. The obligations of the Contractor under this Section 11 of the Contract shall survive expiration or termination of this Contract to the fullest extent permitted by law.
ii. Contractor is only exempt from this indemnity obligation to the extent that the Hazardous Materials were not created or released, or the presence of the Hazardous Materials was not exacerbated by the acts of omissions of Contractor, its employees, subcontractors, suppliers, agents, or by anyone who was acting under Contractor’s authority or control.

12. Access for Inspection.

Contractor shall at all times maintain proper, safe, and secure facilities and provide safe access for inspection by City, its employees, or agents, to all parts of the work, as is reasonably possible. Nothing in this Contract is intended or shall be construed to limit in any way access by City to the work area at all reasonable times during the duration of this Contract, or the right of entry or inspection that City, its employees, agents, or any other governmental agency may have by operation of law. All work done and all materials furnished shall be subject to City’s inspection and approval. The right of general supervision shall not make the Contractor an agent of City and the liability of the Contractor for all damages to persons or to public or private property arising from the execution of the work shall not be reduced or waived because of such general supervision. The day-to-day inspection performed by the various inspectors employed by the City shall not constitute approval or ratification of work improperly done by the Contractor.

13. Indemnification.
(a) To the fullest extent permitted by law, Contractor agrees to indemnify, defend, and hold harmless the City, its officials, officers, and employees from and against any and all claims, demands, actions, damages, or expenses, (including attorney’s fees and costs) arising in any way related to the obligations or performance of this Contract by the Contractor, Contractor’s employees, subcontractors, or agents, except where caused by the sole or active negligence, or willful misconduct of the City.

Contractor’s obligation under this Section 13 of the Contract to defend shall arise regardless of any claim or assertion that City and its related parties caused or contributed to any claims. The obligations of the Contractor under this Section 13 of the Contract shall survive expiration or termination of this Contract to the fullest extent permitted by law.
(b) Contractor shall require its subcontractors to agree to the indemnification obligations stated in this Section 13 to the same extent and under the same terms and conditions as Contractor is required to defend, indemnify, and hold harmless City, its officials, officers and employees, as stated herein.

14. Insurance. Contractor agrees to procure and maintain the insurance coverages and limits, as required by City prior to the commencement of work, as specified in Exhibit “C”.

Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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15. Subcontractors.
(a) Except as provided in the scope of work or unless with the prior written approval of the City, Contractor shall not enter into any subcontract with any other party for purposes of providing any work or services covered by this Contract. Any subcontractors used on this public work project must be registered with the DIR in compliance with Labor Code sections 1771.1 and 1725.5, and Contractor shall provide proof of registration thereof. (b) In the event that Contractor employs any subcontractor, sub-tier contractor, or any person or entity involved for, with, or on behalf of Contractor in the performance of this Contract under Contractor’s control or authority (“subcontractor”), it shall be the Contractor’s responsibility to require and confirm that each subcontractor meets the minimum insurance requirements specified in Exhibit C. Contractor shall require all subcontractors to provide a valid certificate of insurance and the required endorsements to name the City as an additional insured under the liability insurance policies prior to commencing any work, and will provide proof of compliance to the City. (c) Subcontractors are to be bound to Contractor and to City in the same manner and to the same extent as the Contractor is bound to City under this Contract. Contractor shall be responsible to the City for the performance of any and all subcontractors who perform work under this Contract and any acts of negligence on their part. Contractor is solely responsible for all payments due to any subcontractor.

16. Bonds/Security for Work. It is agreed that Contractor shall furnish, concurrently with the execution hereof, cash, bond or other security authorized by the regulations of the City, naming the City as the beneficiary or loss payee, as set forth below:

16.1 Labor & Materials Bond and Performance Bond. City requires:
1) a Labor and Material Bond in the amount of 100% of the estimated cost of the work to ensure payment to all contractors, subcontractors, laborers, suppliers, and materialmen performing work or supplying materials (attached hereto as Exhibit D); and
2) a Performance Bond in the amount of 100% of the estimated cost of the work to ensure faithful performance of the work (attached hereto as Exhibit E).

Bonds shall be duly executed by a responsible corporate surety, authorized to issue such bonds in the State of California and secured through an authorized agent with an office in California.

16.2 Form of Security. The surety on each of said above bonds or other form of security (collectively, “Security”), and the form thereof shall be satisfactory to the City. If Contractor seeks to replace any Security instrument with another Security instrument, the replacement shall: (1) comply with all the requirements for Security in this Contract; (2) be provided by Contractor to City; and (3) upon its written acceptance by the City, be deemed a part of this Contract. Upon the City’s Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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acceptance of a replacement Security, the former Security may be released by the City upon Contractor’s written request.

16.3 Release of Security. City may withhold from any security to be released pursuant to this Section amounts sufficient to cover City’s costs and reasonable expenses and fees, including reasonable attorney’s fees, incurred as a result of a breach or an event of default. The City shall release the Labor & Materials Bond and Performance Bond amounts remaining after withholding, if any, as follows:
i. At six (6) months from the date of the completed work, and after all deficiencies have been corrected and in the absence of any claim against such Security, whichever is later, City shall release 100% of the Labor and Material Bond attributable to the completed work. If claims against the Labor and Material Bond have been filed, such Security shall be reduced to an amount equal to the total amount claimed by all claimants for whom liens have been filed and of which notice has been given to City. The balance of the Security shall be released upon settlement or release of all claims and obligations for which the Security was given. ii. Upon completion of the work, the City shall release the Performance Bond in an amount equal to 100% of the value of the accepted work.

17. California Air Resources Board (CARB). Contractor agrees as follows:
a. Contractor and Subcontractors shall maintain compliance with CARB requirements for certificate of reported compliance regarding in-use off-road diesel-fueled fleets regulation as stated in California Code of Regulations, Title 13 § 2449 et seq. Non-compliant vehicles are not permitted onsite unless and until Contractor provides City with a valid Certificate of Reported compliance.
b. Contractor must provide a statement verifying whether they comply or whether they are exempt from the regulation concurrently with the execution hereof. If in-use off-road diesel-fueled fleets regulation is applicable to the project, the Contractor shall submit a CARB’s Certificate of Reported Compliance (Certificate), attached and incorporated herein as Exhibit F, for vehicles subject to Cal. Code Regs., Title 13 § 2449 et seq.. c. Contractor is solely liable for all costs associated with compliance of all regulations imposed by CARB including, without limitation, Title 13 and all pending amendments, as well as all penalties, fines, damages, or costs associated with violations or failures to comply with these regulations. Contractor shall defend, indemnify, and hold harmless the City, its officials, officers, employees, agents, and authorized volunteers free and harmless from any claims, liabilities, costs, penalties, or interest arising from failure to comply with the aforementioned regulations.

18. Warranty of Work and Correction Guaranty. Contractor guarantees and warrants the work under this Contract, and agrees to correct any deficiencies and defects in materials, Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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equipment, supplies and workmanship; and Contractor agrees to remedy any damages arising from faulty or defective materials, equipment, or work at no cost to the City for a period of one (1) year after the work’s completion, whichever is later. In the event that the City is required to perform the repair work during the warranty period, Contractor shall pay all costs, losses, and damages arising out of or relating to such repair, removal, replacement, or reconstruction plus the City’s overhead fee of an additional 15% of all costs incurred by the City. This warranty provision does not affect or limit the City’s remedies in law or equity, including but not limited to, applicable statutes of limitations relating to defective work and breach of this Contract.

19. State Labor Code.

19.1 Prevailing Wages. This project is subject to compliance monitoring and enforcement by the Department of Industrial Relations (DIR). Contractor will be responsible for verifying compliance with all prevailing wage laws and regulations for all subcontractors. Pursuant to Section 1774 of the Labor Code, the Contractor and any subcontractors shall pay not less than the specified prevailing rates of wages to workers performing work and services under this Contract. If the Contract is federally-funded, the Contractor and any subcontractors shall not pay less than the higher of these rates or the rates determined by the United States Department of Labor. Pursuant to Section 1775 of the Labor Code, the Contractor and any subcontractors, shall, as a penalty to the City, forfeit the prescribed amounts per calendar day, or portion thereof, for each worker paid less than the prevailing wage rates. The Contractor is responsible for posting job site notices as prescribed by regulation pursuant to Labor Code section 1771.4(a)(2). The Contractor and each subcontractor, if any, must be registered with the DIR pursuant to Labor Code section 1725.5 and section 1771.1. The Contractor and each subcontractor, if any, must submit electronic certified payroll records at regular intervals (weekly, biweekly, or monthly), to the Labor Commissioner pursuant to Labor Code 1771.4.

Payroll records will contain all the information required pursuant to Labor Code Section 1776 and be signed under penalty of perjury.

19.2 Apprentices. Apprentices shall be employed on the work under this Contract in accordance with Labor Code Section 1777.5. The Contractor is responsible for compliance with Labor Code Section 1777.5 for all apprenticeable occupations whether employed directly or through subcontractors.

19.3 Contractors’ Duties Concerning Labor Code Compliance. As required by Labor Code 1775(b)(1), Labor Code Sections 1771, 1775, 1776, 1777.5, 1813 and 1815 are required to be included in the contract between the Contractor and subcontractors. The Contractor agrees to comply with these sections and all remaining provisions of the Labor Code.

19.4 Hours of Labor. Pursuant to Section 1810 of the Labor Code, 8 hours of labor shall constitute a legal day’s work. Pursuant to Section 1813 of the Labor Code, the Contractor and any subcontractors, shall, as a penalty to the City, forfeit the prescribed amount per calendar day for each worker required or permitted to work more than 8 hours in any 1 calendar day and 40 hours in any 1 calendar week without being compensated in Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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accordance with Section 1815. Contractor shall include terms in its subcontracts as required to make this paragraph effective as to each Subcontractor. Upon written request, Contractor shall withhold penalties forfeited by a Subcontractor pursuant to Labor Code section 1813 and this paragraph from payments due to such Subcontractor and remit such penalties withheld to the City.

19.5 Failure to Comply with Prevailing Wage. Any failure of Contractor and/or its subconsultant to comply with the above requirements relating to a public work project shall constitute a breach of this Contract that excuses the City’s performance of this Contract at the City’s sole and absolute option and shall be at the sole risk of Contractor. Contractor on behalf of itself and any subcontractor, agree to indemnify, defend and hold harmless the City and its officials, officers, employees, and agents from and against any and all claims, liabilities, losses, costs, expenses, attorney’s fees, damages, expenses, fines, financial consequences, interest, and penalties, of any kind or nature, arising from or relating to any failure (or alleged failure) of the Contractor and any subcontractor to pay prevailing wages or to otherwise comply with the requirements of prevailing wage law relating to a public work.

20. Local Hiring. Contractor and Subcontractors shall comply with Santa Cruz Municipal Code (SCMC) Chapter 3.10, which is incorporated into the Contract by reference. SCMC Chapter

3.10 specifically requires the City’s contractors and their subcontractors to make good faith efforts to hire qualified individuals who are local residents, as workers on City public works projects valued greater than the limit for formal bidding.

20.1 Good Faith Effort Statement. Contractor and listed subcontractors in the subcontractor’s Form must complete and submit to the City, prior to City’s issuance of the Notice to Proceed, the form entitled, “Good Faith Effort Statement for Local Hire,” as contained in Exhibit G.

20.2 Local Hire Residency Compliance. Contractor must also complete and submit to the City, on a weekly basis, documentation of local hiring. The “Local Hire Residency Compliance” form set forth in Exhibit H must be submitted with certified payroll records.

20.3 Records. SCMC Chapter 3.10 requires the maintenance of documents demonstrating that the Contractor has requested an apprentice from a minimum of two viable apprenticeship programs after the Contractor is awarded the contract and prior to commencing work. The Contactor or subcontractor will, prior to commencing work, submit to the City and the appropriate apprenticeship program, a DAS Form 140, provided as Exhibit I. The Contractor or subcontractor will also submit DAS Form 142, Request for Dispatch of Apprentice Form, provided as Exhibit J, at least three (3) working days before the date on which one or more apprentices are required. These forms are also available from the DAS web site
(http://www.dir.ca.gov/das/PublicWorksForms.htm ).

20.4 Failure To Comply. Failure to comply with any of the provisions of SCMC Chapter

3.10, including the maintenance of records, shall be deemed a breach of the Contract and Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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may result in the Contractor being declared “non-responsible” by the City and ineligible for the award of future City contracts.

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

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

22. Compliance with Laws. All activities of Contractor will be carried out in compliance with all applicable federal, state, and local laws and regulations, including applicable ordinances and resolutions. City, and its officials, officers, and employees, shall not be liable at law or in equity by reason of the failure of the Contractor to comply with this paragraph.

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

24. Equal Employment Opportunity. Contractor agrees to refrain from discriminatory employment practices on the basis of race, religious creed (including religious dress and grooming practices), color, national origin (including language use restrictions), ancestry, religion, disability (mental and physical), medical condition, sex, gender (including gender identity and gender expression), physical characteristics, marital status, age, sexual orientation, genetic information (including family health history and genetic test results), organizational affiliation, and military or veteran status, or any other consideration made unlawful by local, state or federal law, regarding any employee of, or applicant for employment with, such Contractor.

25. Event of Default and Notice. If Contractor (i) refuses or fails to proceed with the work with such diligence as will insure its completion within the time specified, including any extensions, (ii) fails to obtain completion of said work or improvement within such time, (iii) if the Contractor should be adjudicated as bankrupt, (iv) if Contractor should make a general assignment for the benefit of Contractor’s creditors, (v) if a receiver should be appointed in the event of Contractor’s insolvency, or (vi) if Contractor, or any of its subcontractors, agents, or employees should violate any of the provisions of this Contract, such occurrence or action shall constitute a “Default” under the Contract, and constitute Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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cause for termination. City may serve written notice upon Contractor and it’s surety of the event of Default under this Contract. City shall have the right, subject to this Section, to draw upon or use the appropriate security to do or cause to be done acts required of Contractor that Contractor has failed to perform or to otherwise mitigate City’s damages in the event of Default by Contractor. City’s right to draw upon or use the Security is in addition to any other remedy available to City. The Parties acknowledge that the estimated costs and surety amounts may not reflect the actual cost of construction of the work and, therefore, City’s damages reimbursable by Contractor for Contractor’s Default shall be all of the actual costs of completing the required work, or severable improvement thereof, regardless of whether the City’s costs of completion exceeds the amount of the surety amounts. City also is entitled to recover all associated costs of enforcing the terms of this Contract including City administrative costs for staff time, consultant fees, court fees, and attorneys’ fees and costs.

26. Termination.
(a) City may terminate this Contract at any time, with or without cause, in its sole discretion, by giving written notice to Contractor at least ten (10) calendar days prior to such termination. City may, at its option, allow Contractor to cure its failure to perform within 10 business days (or longer period authorized in writing by City) from the date of the City’s termination notice. The termination shall be become effective if Contractor has not cured within the specified time period to the City’s satisfaction. (b) Contractor may terminate this Contract for cause by providing written notice of intent to terminate not less than thirty (30) calendar days prior to an effective termination date.

Contractor may terminate for cause if the City fails to cure a material default in performance within a period of thirty (30) calendar days (or such longer period agreed to by Contractor), from the date of the Contractor’s written termination notice specifying the default in performance.
(c) Upon notice of termination by either the City or Contractor, Contractor will immediately act to not incur any additional obligations, costs or expenses, except as may be reasonably necessary to terminate its activities. City’s only obligation to Contractor will be payment for work authorized by and received to the satisfaction of the City up to and including the effective date of termination less any amounts withheld by the City for any expenses or damages sustained by City related to Contractor’s acts or omissions under the Contract.
(d) In the event of Contractor’s failure to perform pursuant to the Contract, the City reserves the right to obtain services elsewhere and Contractor will be liable for the difference between the Contract costs set forth in the terminated Contract and the actual full cost to the City to complete the Project. When exercising any rights or remedies under this paragraph, the City shall not be required to obtain the lowest price for the work performed.
(e) Subject to the terms and operation of any applicable performance bond, if the City has terminated the Contract for cause, it may exclude Contractor from the work site, take Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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possession of the work, incorporate in the work all materials and equipment stored at the site or for which the City has paid Contractor but which are stored elsewhere, and complete the work as the City may deem expedient.
(f) Termination of the Contract pursuant to this Section shall not relieve Contractor of any liability to the City for additional costs, expenses, or damages sustained by the City due to failure of Contractor to perform pursuant to the Contract. City reserves all remedies available to it at law or in equity for breach of Contractor’s obligations under this Contract, or failure to pay the City any damages due or penalties assessed within the time prescribed. City may withhold any payments to Contractor for the purpose of set off until such time as the exact amount of damages due the City from Contractor is determined. After the effective date of termination, Contractor will have no further claims against the City under the Contract. City shall not be liable for costs incurred by Contractor or its subcontractor(s) after receipt of a notice of termination No other compensation will be payable to Contractor for any loss of anticipated profits on unperformed services or other economic loss arising out of or resulting from such termination.

27. Dispute Resolution. The Parties agree to attempt in good faith to resolve through negotiation any dispute, claim or controversy arising out of or relating to this Contract.

Either party may initiate negotiations by providing written notice in letter form to the other party, setting forth the subject of the dispute and the relief requested. Promptly upon such notification, the Parties shall meet at a mutually agreeable time and place in order to exchange relevant information and perspective, and to attempt to resolve the dispute. In the event that no resolution is achieved, and if, but only if, the parties mutually agree, then prior to pursuing formal legal action, the parties shall make a good faith effort to resolve the dispute by non-binding mediation or negotiations between representatives with decision-making power, who, to the extent possible, shall not have had substantive involvement in the matters of the dispute. If the dispute is not resolved by these negotiations, the matter will be handled as the parties may agree or, otherwise as allowed by applicable law. Notwithstanding the foregoing provisions, nothing contained in this Contract shall impair the parties’ right to immediately pursue any and all legal remedies which may be available should there be a default in the terms of this Contract, and a failure to cure said default after notice as required under this Contract. If required by statute (e.g. applicable statute of limitation) to perfect or preserve a claim, either party may file the required notice of claim and/or commence litigation. To the extent that the Project involves or qualifies as a public works project, the Parties agree to comply with Public Contract Code sections 9204(e) and 20104-20104.6, but without waiving the requirements of the California Tort Claims Act, Gov’t Code section 800 et seq. unless otherwise agreed to by the Parties.

28. Contractor’s Records. City shall have the right to access and review records of Contractor and subcontractors related to the work on this Project for at least three years (or longer as otherwise specified) after issuance of final payment under this Contract.

When state or federal funds are involved in the Project’s funding or financing, the state or federal government shall have the same rights of access and examination as the City under Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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this provision.

29. Independent Contractor. Contractor represents that it has or will secure at its own expense all personnel, materials, and related services required to perform the services under this Contract. Contractor (and its employees, agents, representatives, and subcontractor(s)), in the performance of this Contract, shall act in an independent capacity and not as officers or employees or agents of the City. Contractor, not the City, shall have exclusive and complete control over its employees and subcontractors, and shall determine the method of performing the services hereunder. City, however, retains the right to require that work performed by Contractor meet specific standards consistent with the requirements of this Contract without regard to the manner and means of accomplishment thereof.

30. Contractor Not an Agent. Contractor shall have no authority, express or implied, to act on behalf of the City in any capacity pursuant to this Contract to bind the City to any obligation whatsoever.

31. Conflict of Interest. Contractor agrees to comply with conflict of interest laws in performing the work and services under this Contract. Contractor covenants that it presently has no interest and shall not acquire any interest, direct or indirect, which would conflict in any manner or degree with the performance of services required to be performed under this Contract. Contractor acknowledges that it is aware of and agrees to comply with the provisions of the Political Reform Act, Section 1090 of the Government Code, and the City’s conflict of interest code. Contractor will immediately advise the City if Contractor learns of a conflicting financial interest of Contractor’s during the term of this Contract.

32. Legal Remedies. Either Party shall be entitled to all remedies afforded by law or in equity to enforce their respective rights under this Contract. No right or remedy in this Contract are intended to be exclusive of any other right or remedy, but every such right or remedy shall be cumulative and shall be in addition to and not a limitation of any duties, obligations, rights and remedies otherwise imposed or available by law, in equity or in the Contract.

33. Assignment and Successors. Contractor shall not assign any portion of the work required by this Contract nor otherwise assign or transfer any interests in it without prior written approval of City, which may be withheld or delayed in City’s sole and absolute discretion. This Contract will be binding on the heirs, legal representatives, successors and assigns of the Parties named herein.

34. Amendment. Except as otherwise provided in this Contract, neither this Contract nor any provision hereof may be waived, modified, amended, or discharged, or terminated except by an instrument in writing signed by the Parties, and then only to the extent set forth in such writing.

35. Force Majeure. Neither party hereto shall be considered in default in the performance of its obligation hereunder to the extent that the performance of any such obligation, except the payment of money, is prevented or delayed by an act of God, natural disaster, pandemic, acts of terrorism, war, by a strike, lockout or other labor difficulty, or other peril, which is beyond Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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the reasonable control of the affected party and without the negligence of the respective Parties. Each party hereto shall give notice promptly to the other of the nature and extent of any Force Majeure claimed to delay, hinder or prevent performance of the services under this Contract. Each Party will, however, make all reasonable efforts to remove or eliminate such a cause of delay or default and will, upon the cessation of the cause, diligently pursue performance of its obligations in this Contract. In the event either Party is prevented or delayed in the performance of its respective obligation by reason of such Force Majeure, there may be an equitable adjustment of the schedule only.

36. Governing Law and Venue. This Contract shall be governed and construed in accordance with the laws of the State of California. The Parties hereby agree that any action or proceeding to enforce any provision of this Contract shall be brought only in the appropriate state or federal court located in Santa Cruz County, California.

37. Notices. Any notice, approval, consent, waiver or other communication required or permitted to be given or to be served upon either Party in connection with this Contract shall be in writing. In addition to providing a courtesy notice via email, such notice shall be personally served, or sent by reputable overnight delivery service, such as Federal Express, or sent by priority U.S. mail, and notice shall be deemed given: (a) if personally served, when delivered to the Party to whom such notice is addressed; (b) if sent by reputable overnight delivery service, such as Federal Express, when delivered, (c) if sent by priority U.S. mail, notice shall be deemed delivered on the fifth business day after deposited with the U.S. Postal Service. Such notices shall be addressed to the Party to whom such notice is to be given at the Party’s address set forth below or as such party shall otherwise direct in writing to the other Party delivered or sent in accordance with this Section.

If to City: City of Santa Cruz
Attention:

Taylor Kihoi, Senior Professional Engineer
Telephone: (831) 420-5186
Email: [email protected]
If to Contractor: Granite Construction
Attention: Mark Magdaleno, Custom Job Estimator
Address: PO Box 720
Watsonville, California, 95077
Telephone: (831) – 574-9736
Email: [email protected]
____________________
A Party must provide written notice to the other of any changes to the above information.

38. Cumulative Rights; Waiver. The rights created under this Contract or by law or equity, shall be cumulative and may be exercised at any time and from time to time. No failure by either Party to exercise, and no delay in exercising any rights, shall be construed or deemed Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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to be a waiver thereof, nor shall any single or partial exercise by either Party preclude any other or future exercise thereof or the exercise of any other right. Any waiver of any provision or of any breach of any provision of this Contract must be in writing, and any waiver by either Party of any breach of any provision of this Contract shall not operate as or be construed to be a waiver of any other breach of that provision or of any breach of any other provision of this Contract. The failure of either Party to insist upon strict adherence to any term of this Contract on one or more occasions shall not be considered or construed or deemed a waiver of any provision or any breach of any provision of this Contract or deprive that Party of the right thereafter to insist upon strict adherence to that term or provision or any other term or provision of this Contract. No delay or omission on the part of either Party in exercising any right under this Contract shall operate as a waiver of any such right or any other right under this Contract.

39. Interpretation. Each party acknowledges that it has reviewed this Contract 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 Contract.

40. Severability. If any provision of this Contract is invalid, illegal or unenforceable, such provision shall be deemed to be served or deleted from this Contract and the balance of this Contract shall remain in full force and effect notwithstanding such invalidity, illegality or unenforceability.

41. Time. Time is of the essence for each provision of this Contract.

42. Entire Contract. This Contract, together with Exhibits and/or attachments and any agreements provided for herein, constitute the entire understanding between the Parties with respect to the matters set forth herein, and they supersede all prior or contemporaneous understandings or agreements between the Parties with respect to the subject matter hereof, whether oral or written. In the case of any conflict, the terms of this Contract shall control.

43. Counterparts. This Contract may be executed in counterparts, which, together, shall constitute one and the same instrument. Electronic, facsimile and scanned pdf signatures and copies of this Contract shall be accepted as originals.

44. Warranty of Authority. The signatories to this Contract warrant and represent that each is authorized to execute this Contract and that their respective signatures serve to legally obligate their respective representatives, agents, successors and assigns to comply with the provisions of this Contract.
[SIGNATURES ON FOLLOWING PAGE]
Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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IN WITNESS WHEREOF, the parties have executed this Contract as of the date first above referenced.

Technical Review By:

By: ___________________________ Date: ________________
____________, _________
Approved As To Form:

By: ___________________________ Date: ________________
Office of the City Attorney

CONTRACTOR
By: ___________________________ Date: ________________
_________ DEPARTMENT
By: ___________________________ Date: ________________
_____________________/ ________ Director

CITY OF SANTA CRUZ
By: ___________________________ Date: ________________
Matt Huffaker / City Manager
Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F 1/3/2025
Taylor Kihoi Senior Professional Engineer
1/3/2025
1/3/2025
1/3/2025
Parks and Recreation
Director
1/3/2025

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EXHIBIT “A”
Proposal/Scope of Work/Fee Schedule
Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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EXHIBIT “B”

SUPPLEMENTAL CONTRACT PROVISIONS FOR CONTRACTS

FUNDED IN-PART BY FEMA PUBLIC ASSISTANCE
ARTICLE 1 - REMEDIES

1.01 Remedies for Breach of Contract
For contracts exceeding $250,000, the following shall apply. If the Contractor violates or breaches the Contract, the City may avail itself of any or all of the remedies provided for elsewhere in this Contract. If there are no remedies provided for elsewhere in this Contract, the City may avail itself of any or all of the following remedies. After declaring the Contractor in default pursuant to the procedures in paragraph (a) of subdivision (2) of this section (B) below, the City may (i) withhold payment for unsatisfactory services, (ii) suspend or terminate the Contract in whole or in part; and/or(iii) have the services under this Contract completed by such means and in such manner, by contract procured with or without competition, or otherwise, as the City may deem advisable in accordance with all applicable Contract provisions and law. After completion of the services under this Contract, the City shall certify the expense incurred in such completion, which shall include the cost of procuring that contract. Should the expense of such completion, as certified by the City, exceed the total sum which would have been payable under the Contract if it had been completed by the Contractor, any excess shall be promptly paid by the Contractor upon demand by the City.

The excess expense of such completion, including any and all related and incidental costs, as so certified by the City may be charged against and deducted out of monies earned by the Contractor.

ARTICLE 2 - TERMINATION

2.01 Termination for Cause and Convenience
The City shall have the right to terminate the Contract in whole or in part for cause, for convenience, due to force majeure.

1. Termination for Cause. The City shall have the right to terminate the Contract, in whole or in part, for cause upon a determination that the Contractor is in default of the Contract.

Unless a shorter time is determined by the City to be necessary, the City shall effect termination according to the following procedure:
i. Notice to Cure. The City shall give written notice of the conditions of default, setting forth the ground or grounds upon which such default is declared (“Notice to Cure”).

The Contractor shall have ten (10) days from receipt of the Notice to Cure or any longer period that is set forth in the Notice to Cure to cure the default. The City may temporarily suspend services under the Contract pending the outcome of the default proceedings pursuant to this section.
ii. Opportunity to be Heard. If the conditions set forth in the Notice to Cure are not cured within the period set forth in the Notice to Cure, the City may declare the Contractor in default. Before the City may exercise his or her right to declare the Contractor in default, the Contractor must be given an opportunity to be heard upon not less than five (5) business days’ notice. The City may, in its discretion, provide for such opportunity to be in writing or in person. Such opportunity to be heard shall not occur prior to the end of the cure period but notice of such opportunity to be heard may be Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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given prior to the end of the cure period and may be given contemporaneously with the Notice to Cure
iii. Notice of Termination. After an opportunity to be heard, the City may terminate the Contract, in whole or in part, upon finding the Contractor in default. The City shall give the Contractor written notice of such termination (“Notice of Termination”), specifying the applicable provision(s) under which the Contract is terminated and the effective date of termination. If no date is specified in the Notice of Termination, the termination shall be effective either 10 calendar days from the date the notice is personally delivered or 15 calendar days from the date Notice of Termination is sent by another method. The Notice of Termination shall be personally delivered, sent by certified mail return receipt requested, or sent by fax and deposited in a post office box regularly maintained by the United States Postal Service in a postage pre-paid envelope.
iv. Grounds for Default. The City shall have the right to declare the Contractor in default:

1. Upon a breach by the Contractor of a material term or condition of this Contract, including unsatisfactory performance of the services;

2. Upon insolvency or the commencement of any proceeding by or against the Contractor, either voluntarily or involuntarily, under the Bankruptcy Code or relating to the insolvency, receivership, liquidation, or composition of the Contractor for the benefit of creditors;

3. If the Contractor refuses or fails to proceed with the services under the Contract when and as directed by the City;

4. If the Contractor or any of its officers, directors, partners, five percent (5%) or greater shareholders, principals, or other employee or person substantially involved in its activities are indicted or convicted after execution of the Contract under any state or federal law of any of the following:
a. a criminal offense incident to obtaining or attempting to obtain or performing a public or private contract;
b. fraud, embezzlement, theft, bribery, forgery, falsification, or destruction of records, or receiving stolen property; a criminal offense incident to obtaining or attempting to obtain or performing a public or private contract; c. fraud, embezzlement, theft, bribery, forgery, falsification, or destruction of records, or receiving stolen property;
d. a criminal violation of any state or federal antitrust law; e. violation of the Racketeer Influence and Corrupt Organization Act, 18 U.S.C. § 1961 et seq., or the Mail Fraud Act, 18U.S.C. § 1341 et seq., for acts in connection with the submission of bids or proposals for a public or private contract;
f. conspiracy to commit any act or omission that would constitute grounds for conviction or liability under any statute described in subparagraph (d) above; or
g. an offense indicating a lack of business integrity that seriously and directly affects responsibility as a City vendor.

5. If the Contractor or any of its officers, directors, partners, five percent (5%) or Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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greater shareholders, principals, or other employee or person substantially involved in its activities are subject to a judgment of civil liability under any state or federal antitrust law for acts or omissions in connection with the submission of bids or proposals for a public or private contract; or

6. If the Contractor or any of its officers, directors, partners, five percent (5%) or greater shareholders, principals, or other employee or person substantially involved in its activities makes or causes to be made any false, deceptive, or fraudulent material statement, or fail to make a required material statement in any bid, proposal, or application for the City of Santa Cruz or other government work. v. Basis of Settlement. The City shall not incur or pay any further obligation pursuant to this Contract beyond the termination date set by the City in its Notice of Termination.

The City shall pay for satisfactory services provided in accordance with this Contract prior to the termination date. In addition, any obligation necessarily incurred by the Contractor on account of this Contract prior to receipt of notice of termination and falling due after the termination date shall be paid by the City in accordance with the terms of this Contract. In no event shall such obligation be construed as including any lease or other occupancy agreement, oral or written, entered into between the Contractor and its landlord.

2. Termination for Convenience. The City shall have the right to terminate the Contract for convenience, by providing written notice (“Notice of Termination”) according to the following procedure. The Notice of Termination shall specify the applicable provision(s) under which the Contract is terminated and the effective date of termination, which shall be not less than 10 calendar days from the date the notice is personally delivered or 15 days from the date the Notice of Termination is sent by another method. The Notice of Termination shall be personally delivered, sent by certified mail return receipt requested, or sent by fax and deposited in a post office box regularly maintained by the United States Postal Service in a postage pre- paid envelope. The basis of settlement shall be as provided for in subparagraph (v) of paragraph (a) of subdivision (2) of this section (B), above.

3. Termination due to Force Majeure
i. For purposes of this Contract, a force majeure event is an act or event beyond the control and without any fault or negligence of the Contractor (“Force Majeure Event”). Force Majeure Events may include, but are not limited to, fire, flood, earthquake, storm or other natural disaster, civil commotion, war, terrorism, riot, and labor disputes not brought about by any act or omission of the Contractor. ii. In the event the Contractor cannot comply with the terms of the Contract (including any failure by the Contractor to make progress in the performance of the services) because of a Force Majeure Event, then the Contractor may ask the City to excuse the nonperformance and/or terminate the Contract. If the City, in its reasonable discretion, determines that the Contractor cannot comply with the terms of the Contract because of a Force Majeure Event, then the City shall excuse the nonperformance and may terminate the Contract. Such a termination shall be deemed to be without cause.
iii. If the City terminates the Contract due to a Force Majeure Event, the basis of settlement shall be as provided for in subparagraph (v) of paragraph (A) (1) of Section 2.01 above.

Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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ARTICLE 3 – EQUAL EMPLOYMENT OPPORTUNITY

3.01 Equal Employment Opportunity Requirements
The following applies to all construction contracts. During the performance of this contract, the contractor agrees as follows:

1. The contractor will not discriminate against any employee or applicant for employment because of race, color, religion, sex, sexual orientation, gender identity, or national origin. The contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment without regard to their race, color, religion, sex, sexual 7 See 2 C.F.R. Part 200, Appendix II, § C. Contract Provisions Guide 11 orientation, gender identity, or national origin. Such action shall include, but not be limited to the following: Employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided setting forth the provisions of this nondiscrimination clause.

2. The contractor will, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, or national origin.

3. The contractor will not discharge or in any other manner discriminate against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant. This provision shall not apply to instances in which an employee who has access to the compensation information of other employees or applicants as a part of such employee's essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with the contractor's legal duty to furnish information.

4. The contractor will send to each labor union or representative of workers with which he has a collective bargaining agreement or other contract or understanding, a notice to be provided advising the said labor union or workers' representatives of the contractor's commitments under this section, and shall post copies of the notice in conspicuous places available to employees and applicants for employment.

5. The contractor will comply with all provisions of Executive Order 11246 of September 24, 1965, and of the rules, regulations, and relevant orders of the Secretary of Labor.

6. The contractor will furnish all information and reports required by Executive Order 11246 of September 24, 1965, and by rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his books, records, and accounts by the administering agency and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders.

Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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7. In the event of the contractor's noncompliance with the nondiscrimination clauses of this contract or with any of the said rules, regulations, or orders, this contract may be canceled, terminated, or suspended in whole or in part and the contractor may be declared ineligible for further Government contracts or federally assisted construction contracts in accordance with procedures authorized in Executive Order 11246 of September 24, 1965, and such other Contract Provisions Guide 12 sanctions may be imposed and remedies invoked as provided in Executive Order 11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law.

8. The contractor will include the portion of the sentence immediately preceding paragraph (1) and the provisions of paragraphs (1) through (8) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to section 204 of Executive Order 11246 of September 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. The contractor will take such action with respect to any subcontract or purchase order as the administering agency may direct as a means of enforcing such provisions, including sanctions for noncompliance:

Provided, however, that in the event a contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the administering agency, the contractor may request the United States to enter into such litigation to protect the interests of the United States.

The applicant further agrees that it will be bound by the above equal opportunity clause with respect to its own employment practices when it participates in federally assisted construction work: Provided, that if the applicant so participating is a state or local government, the above equal opportunity clause is not applicable to any agency, instrumentality or subdivision of such government which does not participate in work on or under the contract.

The applicant agrees that it will assist and cooperate actively with the administering agency and the Secretary of Labor in obtaining the compliance of contractors and subcontractors with the equal opportunity clause and the rules, regulations, and relevant orders of the Secretary of Labor, that it will furnish the administering agency and the Secretary of Labor such information as they may require for the supervision of such compliance, and that it will otherwise assist the administering agency in the discharge of the agency's primary responsibility for securing compliance. The applicant further agrees that it will refrain from entering into any contract or contract modification subject to Executive Order 11246 of September 24, 1965, with a contractor debarred from, or who has not demonstrated eligibility for, Government contracts and federally assisted construction contracts pursuant to the Executive Order and will carry out such sanctions and penalties for violation of the equal opportunity clause as may be imposed upon contractors and subcontractors by the administering agency or the Secretary of Labor pursuant to Part II, Subpart D of the Executive Order. In addition, the applicant agrees that if it fails or refuses to comply with these undertakings, the administering agency may take any or all of the following actions: Cancel, terminate, or suspend in whole or in part this grant (contract, loan, insurance, guarantee); refrain from extending any further assistance to the applicant under the program with respect to which the failure or refund occurred until satisfactory assurance of future compliance has been received from such Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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applicant; and refer the case to the Department of Justice for appropriate legal proceedings.

ARTICLE 4 – CONTRACT WORK HOURS AND SAFETY STANDARDS ACT

4.01 Compliance with the Contract Work Hours and Safety Standards Act The following applies to contracts exceeding $100,000 and involve the employment of mechanics, laborers, and construction work.

Overtime requirements. No contractor or subcontractor contracting for any part of the contract work which may require or involve the employment of laborers or mechanics shall require or permit any such laborer or mechanic in any workweek in which he or she is employed on such work to work in excess of forty hours in such workweek unless such laborer or mechanic receives compensation at a rate not less than one and one-half times the basic rate of pay for all hours worked in excess of forty hours in such workweek.

Violation; liability for unpaid wages; liquidated damages. In the event of any violation of this section the contractor and any subcontractor responsible therefor shall be liable for the unpaid wages. In addition, such contractor and subcontractor shall be liable to the United States (in the case of work done under contract for the District of Columbia or a territory, to such District or to such territory), for liquidated damages. Such liquidated damages shall be computed with respect to each individual laborer or mechanic, including watchmen and guards, employed in violation of the clause set forth in this section, in the sum of $27 for each calendar day on which such individual was required or permitted to work in excess of the standard workweek of forty hours without payment of the overtime wages required by the clause set forth in this section.

Withholding for unpaid wages and liquidated damages. The City shall upon its own action or upon written request of an authorized representative of the Department of Labor withhold or cause to be withheld, from any moneys payable on account of work performed by the contractor or subcontractor under any such contract or any other federal contract with the same prime contractor, or any other federally-assisted contract subject to the Contract Work Hours and Safety Standards Act, which is held by the same prime contractor, such sums as may be determined to be necessary to satisfy any liabilities of such contractor or subcontractor for unpaid wages and liquidated damages as provided in the clause set forth in this section.

Subcontracts. The contractor or subcontractor shall insert in any subcontracts the clauses set forth in paragraph (A) through (D) of this section and also a clause requiring the subcontractors to include these clauses in any lower tier subcontracts. The prime contractor shall be responsible for compliance by any subcontractor or lower tier subcontractor with the clauses set forth in paragraphs (A) through (D) of this section.

4.02 Further Compliance with the Contract Work Hours and Safety Standards Act The contractor or subcontractor shall maintain payrolls and basic payroll records during the course of the work and shall preserve them for a period of three years from the completion of the contract for all laborers and mechanics, including guards and watchmen, working on the contract. Such records shall contain the name and address of each such employee, social security number, correct classifications, hourly rates of wages paid, daily and weekly number of hours worked, deductions made, and actual wages paid.

Records to be maintained under this provision shall be made available by the contractor or Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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subcontractor for inspection, copying, or transcription by authorized representatives of the Department of Homeland Security, the Federal Emergency Management Agency, and the Department of Labor, and the contractor or subcontractor will permit such representatives to interview employees during working hours on the job.

ARTICLE 5 – CLEAN AIR ACT AND FEDERAL WATER POLLUTION CONTROL ACT

5.01 Compliance with Clean Air Act
For contracts exceeding $150,000, the contractor agrees to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air Act, as amended, 42 U.S.C. § 7401 et seq.

The contractor agrees to report each violation to the City and understands and agrees that the City will, in turn, report each violation as required to assure notification to the Federal Emergency Management Agency (FEMA), and the appropriate Environmental Protection Agency Regional Office.

The contractor agrees to include these requirements in each subcontract exceeding $150,000 financed in whole or in part with federal assistance provided by FEMA.

5.02 Compliance with Federal Water Pollution Control Act For contracts exceeding $150,000, the contractor agrees to comply with all applicable standards, orders, or regulations issued pursuant to the federal Water Pollution Control Act, as amended, 33 U.S.C. § 1251 et seq.

The contractor agrees to report each violation to the City and understands and agrees that the City will, in turn, report each violation as required to assure notification to the Federal Emergency Management Agency (FEMA) and the appropriate Environmental Protection Agency Regional Office.

The contractor agrees to include these requirements in each subcontract exceeding $150,000 financed in whole or in part with federal assistance provided by FEMA.

ARTICLE 6 – DEBARMENT AND SUSPENSION

6.01 Suspension and Debarment
This contract is a covered transaction for purposes of 2 C.F.R. Part 180 and 2 C.F.R. Part 3000. As such, the contractor is required to verify that none of the contractor’s principals (defined at 2 C.F.R. § 180.995) or its affiliates (defined at 2 C.F.R. § 180.905) are excluded (defined at 2 C.F.R. § 180.940) or disqualified (defined at 2 C.F.R. § 180.935).

The contractor must comply with 2 C.F.R. Part 180, subpart C and 2C.F.R. Part 3000, subpart C, and must include a requirement to comply with these regulations in any lower tier covered transaction it enters into. This certification is a material representation of fact relied upon by the City. If it is later determined that the contractor did not comply with 2 C.F.R. Part 180, subpart C and 2 C.F.R. Part 3000, subpart C, in addition to remedies available to the City, the federal government may pursue available remedies, including but not limited to suspension and/or debarment.

The bidder or proposer agrees to comply with the requirements of 2 C.F.R. Part 180, subpart C and 2 C.F.R. Part 3000, subpart C while this offer is valid and throughout the period of any contract that may arise from this offer. The bidder or proposer further agrees to include a provision Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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requiring such compliance in its lower tier covered transactions.

ARTICLE 7 – BYRD ANTI-LOBBYING AMENDMENT

7.01 Byrd Anti-Lobbying Amendment, 31 U.S.C. § 1352 (as amended) Contractors who apply or bid for an award of more than $100,000 shall file the required certification. Each tier certifies to the tier above that it will not and has not used federally appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, officer or employee of Congress, or an employee of a Member of Congress in connection with obtaining any federal contract, grant, or any other award covered by 31 U.S.C. § 1352. Each tier shall also disclose any lobbying with nonfederal funds that takes place in connection with obtaining any federal award. Such disclosures are forwarded from tier to tier up to the recipient who in turn will forward the certification(s) to the federal awarding agency.

ARTICLE 8 – PROHIBITION ON CONTRACTING FOR COVERED

TELECOMMUNICATIONS EQUIPMENT OR SERVICES

8.01 Prohibitions
Section 889(b) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019, Pub. L. No. 115-232, and 2 C.F.R. § 200.216 prohibit the head of an executive agency on or after Aug.13, 2020, from obligating or expending grant, cooperative agreement, loan, or loan guarantee funds on certain telecommunications products or from certain entities for national security reasons.

Unless an exception in paragraph (C.) of this clause applies, the contractor and its subcontractors may not use grant, cooperative agreement, loan, or loan guarantee funds from the Federal Emergency Management Agency to:

1. Procure or obtain any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology of any system;

2. Enter into, extend, or renew a contract to procure or obtain any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology of any system; or

3. Enter into, extend, or renew contracts with entities that use covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system; or

4. Provide, as part of its performance of this contract, subcontract, or other contractual instrument, any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.

Exceptions.

1. This clause does not prohibit contractors from providing— i. A service that connects to the facilities of a third-party, such as backhaul, roaming, or interconnection arrangements; or
ii. Telecommunications equipment that cannot route or redirect user data traffic Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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or permit visibility into any user data or packets that such equipment transmits or otherwise handles.

2. By necessary implication and regulation, the prohibitions also do not apply to:
i. Covered telecommunications equipment or services that:
i. Are not used as a substantial or essential component of any system; and ii. Are not used as critical technology of any system.
ii. Other telecommunications equipment or services that are not considered covered telecommunications equipment or services.

Reporting requirement.

1. In the event the contractor identifies covered telecommunications equipment or services used as a substantial or essential component of any system, or as critical technology as part of any system, during contract performance, or the contractor is notified of such by a subcontractor at any tier or by any other source, the contractor shall report the information in paragraph (d)(2) of this clause to the recipient or subrecipient, unless elsewhere in this contract are established procedures for reporting the information.

2. The Contractor shall report the following information pursuant to paragraph (d)(1) of this clause:
i. Within one business day from the date of such identification or notification:

The contract number; the order number(s), if applicable; supplier name; supplier unique entity identifier (if known); supplier Commercial and Government Entity (CAGE) code (if known); brand; model number (original equipment manufacturer number, manufacturer part number, or wholesaler number); item description; and any readily available information about mitigation actions undertaken or recommended.
ii. Within 10 business days of submitting the information in paragraph (d)(2)(i) of this clause: Any further available information about mitigation actions undertaken or recommended. In addition, the contractor shall describe the efforts it undertook to prevent use or submission of covered telecommunications equipment or services, and any additional efforts that will be incorporated to prevent future use or submission of covered telecommunications equipment or services.

Subcontracts. The Contractor shall insert the substance of this clause, including this paragraph (E.), in all subcontracts and other contractual instruments.

ARTICLE 9 – DOMESTIC PREFERENCES FOR PROCUREMENTS

9.01 Domestic Preference for Procurements
As appropriate, and to the extent consistent with law, the contractor should, to the greatest extent practicable, provide a preference for the purchase, acquisition, or use of goods, products, or materials produced in the United States. This includes, but is not limited to iron, aluminum, steel, cement, and other manufactured products.

Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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For purposes of this clause:

1. Produced in the United States means, for iron and steel products, that all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States.

2. Manufactured products mean items and construction materials composed in whole or in part of non-ferrous metals such as aluminum; plastics and polymer-based products such as polyvinyl chloride pipe; aggregates such as concrete; glass, including optical fiber; and lumber.

ARTICLE 10 – OTHER PROVISIONS

10.01 Access to Records
The Contractor agrees to provide the City, the FEMA Administrator, the Comptroller General of the United States, or any of their authorized representatives access to any books, documents, papers, and records of the Contractor which are directly pertinent to this contract for the purposes of making audits, examinations, excerpts, and transcriptions.

The Contractor agrees to permit any of the foregoing parties to reproduce by any means whatsoever or to copy excerpts and transcriptions as reasonably needed.

The Contractor agrees to provide the FEMA Administrator or his authorized representatives access to construction or other work sites pertaining to the work being completed under the contract.

In compliance with section 1225 of the Disaster Recovery Reform Act of 2018, the City and the Contractor acknowledge and agree that no language in this contract is intended to prohibit audits or internal reviews by the FEMA Administrator or the Comptroller General of the United States.

10.02 Changes
The cost of any contract change, modification, amendment, addendum, change order, or constructive change must be necessary, allocable, within the scope of the agreement, reasonable for the scope of work, and otherwise allowable.

10.03 Department of Homeland Security Seal, Logo, and Flags The Contractor must obtain permission before using the Department of Homeland Security (DHS) seal(s), logos, crests, reproductions of flags, or likenesses of DHS agency officials.

10.04 Compliance with Federal Law, Regulations, And Executive Orders and Acknowledgement of Federal Funding
This is an acknowledgement that FEMA financial assistance will be used to fund all or a portion of the contract. The Contractor will comply with all applicable federal law, regulations, executive orders, FEMA policies, procedures, and directives.

10.05 No Obligation by Federal Government
The federal government is not a party to this contract and is not subject to any obligations or liabilities to the non-federal entity, contractor, or any other party pertaining to any matter resulting from the contract.

10.06 Program Fraud and False or Fraudulent Statements or Related Acts Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

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The Contractor acknowledges that 31 U.S.C. Chap. 38 (Administrative Remedies for False Claims and Statements) applies to the Contractor’s actions pertaining to this contract.

10.07 Affirmative Socioeconomic Steps
If subcontracts are to be let, the prime contractor is required to take all necessary steps identified in 2 C.F.R. § 200.321(b)(1)-(5) to ensure that small and minority businesses, women’s business enterprises, and labor surplus area firms are used when possible.

10.08 License and Delivery of Works Subject to Copyright and Data Rights The Contractor grants to the City, a paid-up, royalty-free, nonexclusive, irrevocable, worldwide license in data first produced in the performance of this contract to reproduce, publish, or otherwise use, including prepare derivative works, distribute copies to the public, and perform publicly and display publicly such data. For data required by the contract but not first produced in the performance of this contract, the Contractor will identify such data and grant to the City or acquires on its behalf a license of the same scope as for data first produced in the performance of this contract. Data, as used herein, shall include any work subject to copyright under 17 U.S.C. § 102, for example, any written reports or literary works, software and/or source code, music, choreography, pictures or images, graphics, sculptures, videos, motion pictures or other audiovisual works, sound and/or video recordings, and architectural works. Upon or before the completion of this contract, the Contractor will deliver to the City data first produced in the performance of this contract and data required by the contract but not first produced in the performance of this contract in formats acceptable by the City.

Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.37 1
APPENDIX A, 44 C.F.R. PART 18 – CERTIFICATION REGARDING LOBBYING Certification for Contracts, Grants, Loans, and Cooperative Agreements The undersigned certifies, to the best of his or her knowledge and belief, that:

No federal appropriated funds have been paid or will be paid, by or on behalf of the undersigned, to any person for influencing or attempting to influence an officer or employee of an agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any federal contract, the making of any federal grant, the making of any federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any federal contract, grant, loan, or cooperative agreement.

If any funds other than federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with this federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions.

The undersigned shall require that the language of this certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all subrecipients shall certify and disclose accordingly.

This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by section 1352, Title 31, U.S.C. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.

The Contractor, Granite Construction, certifies or affirms the truthfulness and accuracy of each statement of its certification and disclosure, if any. In addition, the Contractor understands and agrees that the provisions of 31 U.S.C. Chap. 38, Administrative Remedies for False Claims and Statements, apply to this certification and disclosure, if any.

Date: ___________________
Signature of Contractor’s Authorized Official: ____________________________________ Name and Title of Authorized Official: __________________________________________ Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F Chelsea Alameda
1/3/2025
Operations Finance Manager

7.38 2
EXHIBIT “C”
Insurance Requirements
Contractor/Subcontractor shall procure and maintain insurance against claims for injuries to persons or damages to property and otherwise which may arise from or in connection with the performance of the work under this Contract and the results of that work by Contractor, its employees, subcontractors, and agents.

A. CERTIFICATE REQUIREMENTS
The City will be issued a Certificate of Insurance (a Memorandum of Understanding will not be accepted) with the following minimum requirements:
• Certificate(s) will show current policy number(s) and effective dates, • Coverage and policy limits will meet, or exceed, requirements below, • The Certificate Holder will be City of Santa Cruz, Risk Management, 1200 Pacific Avenue, 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 as specified below.

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

Contractor shall procure and maintain insurance coverage and surety bonds during the term of the Contract as follows:

1. Commercial General Liability Insurance. (CGL): $5,000,000 PER OCCURRENCE; $5,000,000 AGGREGATE. Proof of coverage for $2 Million per occurrence and $10 Million in the aggregate, including products and completed operations, property damage, bodily injury, personal and advertising injury will be provided on Insurance Services Office (ISO) Form CG 00 01 covering CGL.

2. Automobile Liability Insurance. Proof of coverage for not less than $1,000,000 per accident for bodily injury and property damage provided on ISO Form Number CA 00 01 covering any auto (Code 1), or if Contractor has no owned autos, hired, (Code 8) and non-owned autos (Code 9).

Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.39 3

3. Workers’ Compensation and Employer’s Liability Insurance. Worker’s Compensation as required by the Labor Code of the State of California with statutory limits, and Employer’s Liability Insurance for all employees in workplaces involved in this Contract in the amount of, at least, $1,000,000 per accident for bodily injury or disease. The Certificate of Insurance shall include waiver of subrogation endorsement in favor of the City for all work performed by the Contractor and its employees.

4. Contractors’ Pollution Liability and/or Asbestos Pollution Liability (CPL) (if project involves environmental hazards) with limits no less than $2,000,000 per occurrence or claim, and $4,000,000 policy aggregate.
a. If the services involve lead-based paint or asbestos identification / remediation, the Pollution Liability shall not contain lead-based paint or asbestos exclusions. If the services involve mold identification / remediation, the Pollution Liability shall not contain a mold exclusion and the definition of “Pollution” shall include microbial matter including mold. b. The Automobile Liability policy shall be endorsed to include Transportation Pollution Liability insurance, covering hazardous materials to be transported by Contractor pursuant to the Contract. This coverage may also be provided on the Contractors Pollution Liability policy.

5. Builder’s Risk (Course of Construction) insurance utilizing an “All Risk” (Special Perils) coverage form, with limits equal to the completed value of the project and no coinsurance penalty provisions. Such coverage shall name City as a loss payee.

6. Other Requirements.
a. Additional Insured Endorsement. The City, its officers, officials, employees, and volunteers are to be covered as additional insureds on the CGL, CPL, and automobile insurance (if transporting hazardous materials) policies with respect to liability arising out of work or operations performed by or on behalf of Contractor including materials, parts, or equipment furnished in connection with such work or operations. General liability coverage will be provided in the form of an endorsement to Contractor’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).
b. Primary Insurance. For any claims related to this Contract, Contractor’s insurance shall be primary and non-contributory as respects City, its officials, officers, and employees, individually and collectively. Any insurance, self-insurance, or other coverage maintained by the City, its officials, officers, or employees shall be in excess of Contractor’s insurance and shall not contribute to it.
c. Waiver of Subrogation. Contractor hereby grants to the City a waiver of any right to subrogation, except as otherwise not applicable, which any insurer of said Contractor Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.40 4
may acquire against the City by virtue of the payment of any loss, including attorney’s fees under such insurance. Contractor 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.
d. Notice of Cancellation. The policies specified above are to state that coverage shall not be canceled by either party, except after prior written notice to the City. e. Self-Insured Retentions. Any self-insured retention must be declared to and approved by the City. City may require Contractor to provide proof of ability to pay losses and related expenses.
f. Acceptability of Insurers. Insurance is to be placed with insurers having a current A.M.

Best rating of no less than A-VII or equivalent or as otherwise approved by City. g. Subcontractors. Contractor shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein, and Contractor shall ensure that City is an additional insured on insurance required from subcontractors. h. Excess Liability/Umbrella Insurance Policies.

Contractor may use excess liability/umbrella policies to meet the required liability limits on the condition that they provide all of the insurance coverages required herein, including, but not limited to, primary and non-contributory, additional insured, Self-Insured Retentions (SIRs), indemnity, and defense requirements. The excess liability/umbrella insurance policies shall be provided on a true “following form” or broader coverage basis, with coverage at least as broad as provided on the underlying CGL insurance. No insurance policies maintained by the additional insureds, whether primary or excess, and which also apply to a loss covered hereunder, shall be called upon to contribute to a loss until the Contractor’s primary and excess liability policies are exhausted.
i. Claims Made Policies. If any of the required policies provide coverage on a claimsmade basis:

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

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

3. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a Retroactive Date prior to the contract effective date, the Contractor must purchase “extended reporting” coverage for a minimum of five (5) years after completion of contract work.

Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.41 5
j. Verification of Coverage. Contractor will furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL, CPL, and automobile Policies listing all policy endorsements to be approved by the City before work commences.

However, failure to obtain the required documents prior to the work beginning will not waive the Contractor’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. k. Special Risks or Circumstances. City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.

Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.42 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.43 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F 1/3/2025

7.44 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.45 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.46 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.47 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.48 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F 1/3/2025

7.49 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.50 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.51 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.52 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.53 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.54 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.55 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.56 Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.57 18
EXHIBIT “I”
DAS Form 140 (From Rev. 1/04)

PUBLIC WORKS CONTRACT AWARD INFORMATION
Contract award information must be sent to your Apprenticeship Committee if you are approved to train. If you are not approved to train, you must send the information (which may be this form) to ALL applicable Apprenticeship Committee in your craft or trade in the area of the site of public work. Go to:
http://www.dir.ca.gov/das/PublicWorksFroms.htm for information about programs in your area and trade. You may also consult your local Division of Apprenticeship Standards (DAS) office whose telephone number may be found in your local directory under California, State of, Industrial Relations, Division of Apprenticeship Standards.

Do not send this form to the Division of Apprenticeship Standards NAME OF YOUR COMPANY CONTRACTOR’S STATE LICENSE No.

MAILING ADDRESS, NUMBER & STREET, CITY , ZIP CODE AREA CODE & TELEPHONE No.

NAME & ADDRESS OF PUBLIC WORKS PROJECT DATE YOUR CONTRACT EXECUTED

DATE OF EXPECTED OR ACTUAL START OF

PROJECT

NAME & ADDRESS OF PUBLIC AGENCY AWARDING CONTRACT ESTIMATED NUMBER OF JOURNEYMEN HOURS
THIS FORM IS BEING SENT TO: (NAME & ADDRESS OF APPRENTICESHIP

PROGRAM(S)

OCCUPATION OF APPRENTICE

ESTIMATED NUMBER OF APPRENTICE
HOURS

APPROXIMATE DATES TO BE EMPLOYED
This is not a request for dispatch of apprentices.

Contractors must make a separate request for actual dispatch, in accordance with Section 230.1 (a) California Code of Regulations Check One Of The Boxes Below

1.  We are already approved to train apprentices by the Enter name of Committee
Apprenticeship Committee. We will employ and train under their Standards.

2.  We will comply with the standards of
Enter name of Committee
Apprenticeship Committee for the duration of this job only.

3.  We will employ and train apprentices in accordance with the California Apprenticeship Council regulations, including § 230.1 (c) which requires that apprentices employed on public projects can only be assigned to perform work of the craft or trade to which the apprentice is registered and that the apprentices must at all times work with or under the direct supervision of journeyman/men.

Signature Date
Typed Name
Title
State of California – Department of Industrial Relations DIVISION OF APPRENTICESHIP STANDARDS Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.58 19
EXHIBIT “J”
DAS Form 142 (From Rev. 9/03)

REQUEST FOR DISPATCH OF AN APPRENTICE
(Do not send this form to DAS)
You may use this form to request dispatch of an apprentice from the Apprenticeship Committee in the craft or trade in the area of public work. Go to: http://www.dir.ca.gov/das/PublicWorksForms.htm for information about programs in your area and trade. You may also consult your local Division of Apprenticeship Standards (DAS) office whose telephone number may be found in your local directory under California, State of, Industrial Relations, Division of Apprenticeship Standards.

Date:

To Applicable Apprenticeship Committee:

Address:

Telephone: Fax:

Contractor Requesting Dispatch:

Address:

Telephone: Fax:

Person Making Request:

Number of Apprentice(s) Needed: Craft or Trade:

Date Apprentice(s) to Report: (48 hours notice required) Name of Person to Report to:

Address to Report to:

Time to Report:

You may use this form, or make a verbal or written request, to ask for the dispatch of an apprentice. Please take note of California Code of Regulations, Title 8, § 230.1 (a) which says in part: if in response to a written request an Apprenticeship Committee does not dispatch any apprentice to a contractor who has agreed to employ and train apprentices in accordance with either the Apprenticeship Committee’s Standards or these regulations within 72 hours of such request (excluding Saturdays, Sundays and holidays) the contractor will not be considered in violation of this section as a result of failure to employ apprentices… Docusign Envelope ID: EFA92CB7-1EF6-49C9-8A41-A4402DC76E4F

7.59 City of Santa Cruz

BUDGET ADJUSTMENT REQUEST
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ACCOUNT 352-(&71$0(
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NET: $

REQUESTED BY DEPARTMENT HEAD

APPROVAL

BUDGET/ACCOUNTING
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FINANCE DIRECTOR

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CITYMANAGER

APPROVAL
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TOTAL EXPENDITURE

TOTALREVENUE
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 Clear Form
2025
01/16/2025
DEBRIS REMOVAL FOR 2024 WHARF DAMAGE (e302501)
0 170-30-00-0000-54990 e302501-100-2020-0 2024 WHARF DAMAGE 400,000 400,000
-400,000
Viviane
Pearson
Digitally signed by
Viviane Pearson
Date: 2025.01.16
14:42:51 -08'00'
Anthony Elliot
Digitally signed
by Anthony Elliot
Date: 2025.01.17
15:37:45 -08'00'
Emily
Burton
Digitally signed
by Emily Burton
Date: 2025.01.18
17:54:33 -08'00'
Elizabet
h Cabell
Digitally signed by
Elizabeth Cabell
Date: 2025.01.21
08:56:26 -08'00' 7.60
City Council

AGENDA REPORT
DATE: 01/15/2025
AGENDA OF: 01/28/2025
DEPARTMENT: Planning and Community Development
SUBJECT: Establishment of a Council Ad Hoc Housing Subcommittee (CN) LOCATION: Citywide
RECOMMENDATION: Motion to establish a Council Ad Hoc Housing Subcommittee with the members to include Mayor Keeley, Vice Mayor Kalantari-Johnson, and Councilmember Newsome.

BACKGROUND: Throughout 2023, Mayor Keeley, (then Councilmember and now) Vice Mayor Kalantari-Johnson, and Councilmember Newsome served on the Council Ad Hoc Housing Element Subcommittee. The subcommittee provided opportunities to socialize and refine potential Housing Element goals, policies, and objectives, and it was an invaluable part of the City achieving on-time certification of the Housing Element in December 2023. Housingrelated issues continue to be a topic of interest to both the community and Council, and the certified Housing Element contains 127 actionable objectives that must be implemented over the next seven years. Many of the objectives direct the City to implement policy changes.

DISCUSSION: Given the significant policy considerations associated with the implementation of the Housing Element objectives and the ongoing community and Council interest in the topic of housing, it is recommended that an Ad Hoc Housing Subcommittee be formed. With the policy knowledge gained from the earlier Housing Element Subcommittee, it is recommended that the Housing Subcommittee contain the same membership as that 2023 subcommittee.

In conjunction with the implementation of the Housing Element objectives, the new Housing Subcommittee would review and comment on a broad range of topics before they are presented to the full Council, such as an update to the Community Outreach Policy for Planning & Community Development projects; updates to the density bonus ordinance for consistency with state law and ease of implementation; furtherance of “missing middle” housing strategies; updates to the objective standards for development projects, including private and public-rightof-way standards; promotion of a range of mobility options, particularly pedestrian, bicycle, and transit modes, with new housing projects; and other related opportunities for Santa Cruz to continue its regional and statewide leadership role in addressing housing challenges.

Staff from the Planning & Community Development Department and from the Economic Development & Housing Department lead many of the efforts to implement the Housing

8.1 Element. Accordingly, they will serve as the primary staff support for the subcommittee, with staff from other departments, such as the City Manager’s Office, City Attorney’s Office, Public Works, and other departments, assisting when needed.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: The Council's action on this item is exempt under CEQA Guidelines Section 15306, Information Collection, in that the formation of the Housing Subcommittee and the actions of the subcommittee are for information gathering purposes used to study issues. The actions do not involve formal approval, adoption, or funding decisions that would result in changes to environmental resources. Rather, the subcommittee’s work will require separate approvals from the City Council. The requisite CEQA clearances will be included as part of the future actions by the full City Council.

HEALTH IN ALL POLICIES (HiAP): The goal of Health in All Policies (HiAP) is to ensure that decision-makers are informed about the impacts on the three HiAP pillars of health, equity, and sustainability when reviewing projects and policy options. By implementing Housing Element, the Housing Subcommittee’s work will support housing options throughout the City for all needs and all affordability levels. The Housing Subcommittee’s work will promote health by encouraging housing, services, and efficient land use patterns that encourage sustainable living situations, active transportation, and healthy lifestyles. The Housing Element objectives contain an Affirmatively Furthering Fair Housing component that focuses on improving equity in housing and access to resources and assistance programs. The resource conservation and environmental stewardship objectives in the Housing Element also provide a variety of steps to address housing sustainability. Through the subcommittee’s forthcoming efforts to implement Housing Element objectives, its establishment meets each of the HiAP pillars.

FISCAL IMPACT:

1. The recommendation in this report impacts the General Fund: No

2. This recommendation requires a budget adjustment: No

3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: The formation and support of the subcommittee will be accomplished using existing staff resources. Future Council actions stemming from Housing Element implementation or related subcommittee recommendations may have budgetary implications, and those will be evaluated and disclosed as part of those future actions.

Prepared By:

Fred Keeley
Mayor
Submitted By:

Shebreh Kalantari-Johnson
Vice Mayor
Approved By:

Scott Newsome
Councilmember
ATTACHMENTS:

None.

8.2 City Council

AGENDA REPORT
DATE: 01/10/2025
AGENDA OF: 01/28/2025
DEPARTMENT: Economic Development and Housing
SUBJECT: Santa Cruz Municipal Wharf Ground (Builder) Lease for Construction of New Restaurant at 45 Municipal Wharf (APN 007-341-05) with Santa Cruz Waterfront, Inc. (EDH)
LOCATION: District 4
RECOMMENDATION: Motion to adopt a resolution authorizing the City Manager to negotiate and execute a new ground lease and authorizing the Economic Development and Housing Director to finalize designs through the permit process, and approve or execute any amendments, deeds of trust and assignments, or documents needed thereto of a non-substantive nature, in forms approved by the City Attorney, for planning and construction of a new restaurant on real property located at 45 Municipal Wharf (APN 007-341-05) between the City of Santa Cruz and Santa Cruz Waterfront, Inc.

BACKGROUND: The Santa Cruz Municipal Wharf is home to over 20 local businesses. Many of the structures that house these businesses on the Wharf have been built through public-private partnerships with business owners. Through long-term development leases of property on the Wharf (aka deck space) the City secures private investment that ultimately provides ongoing rent revenues for the City.

The property at 45 Municipal Wharf (“Miramar Site”) was expanded in the 1960’s to construct the Miramar Fish Grotto, which replaced the original Miramar restaurant circa 1969. The Miramar Fish Grotto closed in December 2015. Initial efforts to preserve the building for release proved untenable as significant repairs were needed for not only the structure, but for the Wharf beneath it. This led to demolition of the structure in winter 2019-2020. In 2021, the City secured a grant from the U.S. Economic Development Administration (EDA) to upgrade the Wharf structure under the property to enable redevelopment. The EDA provided this grant funding to support job creation and local economic recovery in the wake of the pandemic. The original vision with EDA called for future construction of a two-story restaurant on site.

Around the time that the Miramar closed, Mark Gilbert, owner of Firefish, Woodies, Gilberts Gifts, and formerly The Dolphin Restaurant, had been in discussion with the owner of the Miramar at the time, about purchasing the restaurant and had reached out to the City with his interest. Following resolution of an outstanding default with former the owner, the City Council directed staff to negotiate with Mr. Gilbert on a new restaurant for the property. An early

9.1 rendering of his initial concept is included as an example in the adopted Wharf Master Plan (pg. 47).

Complications around approval of the Wharf Master Plan (“WMP”), necessary demolition and repairs to the Miramar site, needed fundraising, and pandemic delays slowed the negotiation and planning process. Additionally, in April 2022 there was a kitchen fire at Firefish and in December 2023 storm related damage to the end of the wharf which led to demolition of The Dolphin. As damage to his other businesses has now been resolved, Mr. Gilbert has been eager to move the Miramar project forward and is working with Fuse Architects on plans for his latest vision.

On November 15, 2023, staff provided an informational report (Attachment 1) on his conceptual design to the Historic Preservation Commission (“HPC”). Through this meeting HPC provided early consultation on the design aesthetic and direction. Although it is not typical to meet with HPC prior to filing a Historic Alteration Permit request, staff felt that the first new structure on the Wharf is an opportunity to set the tone for future buildings and that involving the HPC early was important to help ensure the building is “...designed in a manner that helps restore the historical character of the Wharf without creating a false historical narrative,” as stated in the Wharf Master Plan policies. HPC was largely supportive of the design concept, which followed design guidelines in the WMP and incorporated historical precedent around materials, textures, structural features, and openness, while also offering a variety of distinct experiences. HPC also provided constructive feedback on additional ways to enhance the structure’s alignment with historical precedents, most notably to draw influence from “simple” elements that “a fishermen might’ve created.”
The proposed structure, under the working title of Miramar, would have been two-stories, including several distinct experiences such as a custom chowder and oyster bar, a hybrid indoor/outdoor covered upstairs lounge and event space, as well as exterior overlook seating.

The concept was meant to scale with the seasons and would adapt staffing and operations according to demand. In total, the structure capped out around 14,000 square feet and 32-feet in height at the roof ridge; slightly higher than the tallest point of Olitas. The proposed height was below the 35-foot maximum established in the WMP. Unfortunately, financial modeling through a project pro-forma has indicated that the project, as designed, is not financially viable due to current market conditions, construction costs, and current interest rates.

It is unlikely that market conditions or construction costs will improve in the foreseeable future.

As a result, a more modest structure is needed to adequately balance cost with achievable demand and market capture. Mr. Gilbert is committed to the project but is seeking an executed lease to ensure City Council support before committing substantial investment on redesign.

To move the project forward, staff recommends that City Council authorize the City Manager or his designee to finalize negotiations and to authorize the City Manager to execute a lease agreement for the premises, including completing the design through the permitting process, and any other documents necessary to facilitate development of a new Wharf restaurant on the property.

DISCUSSION: Having modeled several other potential concepts through the pro-forma, staff and Mr. Gilbert are in agreement that a scalable design, based on a smaller initial building footprint, and including outdoor seating on both the ground and second floors will be more feasible. This approach will provide valuable capacity during the peak summer season, while

9.2 reducing initial construction cost and optimizing the efficiency of indoor space during slower off-season months. Fuse has prepared initial massing concepts for the revised design and it is envisioned to follow a similar design aesthetic as the most recent proposal, but would aim for approximately 5,175 square feet (SF) of structure on the ground floor and about 2,400 SF upstairs (the previous design was 14,000 SF. Outdoor dining would be available on both the ground floor with roughly 1,750 SF downstairs and 2,400 SF upstairs. The structure is also targeting a design that, should future demand support a larger restaurant, the building could be expanded within the existing parcel, or rather “filled in,” with minimal impacts to the operating business. The estimated project cost to be funded by Mr. Gilbert is approximately $7,000,000- $8,000,000.

Staff has negotiated the following key terms for the Lease and would update all exhibits and remaining items at the project proceeds through permitting and regulatory approvals:

Term of Lease: Initial term of thirty-five (35) years expiring in 2060 (exact date will be finalized upon Lease execution).

Options: Three five (5) year extensions.

Construction Period: One (1) to two (2) years.

Initial Minimum Base Rent: $63,500 per year
Percentage Rent: 3% of gross sales
Base Rent Adjustments: Reassessed every five (5) years, based on a percentage of observed sales.

Tenant Improvements: In addition to constructing the restaurant structure, Santa Cruz Waterfront, Inc. will be responsible for fitting out and maintaining interior finishes and equipment.

Capital Improvements: Beginning with the 15th year after construction, Santa Cruz Waterfront, Inc. will make contributions of up to 1% of the restaurant’s annual gross sales to a Capital Improvement fund and continuing throughout the term of the Lease.

Capital fund payments may include a graduated schedule
and/or fund balance, based on pro-forma scenarios and
final building cost.

Capital Improvement funds will be used to upgrade and
improve or repair and replace major building components and systems, as needed. Funds will remain a City project for the property and a portion of the Capital Improvement funds may also be used for replacement and repairs to
Wharf infrastructure benefitting the property or business.

9.3 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. CEQA evaluation for construction of the new restaurant structure will likely tier off the WMP Final Environmental Impact Report and clearance will be pursued during the project permitting and entitlement process.

HEALTH IN ALL POLICIES (HiAP): Promoting locally owned businesses 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 influence public health, they have been shown to have a positive impact on the social determinants of health and support overall wellbeing in the community. Rent revenues generated through Wharf leases also fund critical maintenance and repairs that sustain the Wharf to minimize the risk of property damage or personal injury and help to avert environmental disaster from structural failure that would occur overtime without active maintenance.

FISCAL IMPACT:

1. The recommendation in this report impacts the General Fund: Yes

2. This recommendation requires a budget adjustment: No

3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: The proposed action will generate revenues for the City’s General Fund dedicated to the Wharf (Fund 104). Lease revenues in this fund support repairs, maintenance, and operations at the Wharf, including the Wharf Crew, Parking, and Marine Safety. Proposed lease terms are anticipated to yield approximately $180,000 per year in rent at the modeled target sales of at least $6,000,000 annually.

Prepared By:

David McCormic
Asset & Development
Manager
Submitted By:

Bonnie Lipscomb
Director of Economic
Development and Housing
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. RESOLUTION.DOCX

2. HISTORIC PRESERVATION COMMISSION PRESENTATION - DECEMBER 20, 2023.PDF

3. DRAFT BUILDER LEASE.DOCX

9.4 RESOLUTION NO. NSRESOLUTION FOR THE CITY COUNCIL OF THE CITY OF SANTA CRUZ

AUTHORIZING THE CITY MANAGER TO ENTER INTO A BUILDER/GROUND

LEASE, AND AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO

EXECUTE ANY AMENDMENTS OR DOCUMENTS NEEDED THERETO, IN A FORM

APPROVED BY THE CITY ATTORNEY, FOR REAL PROPERTY LOCATED AT AND ADJACENT TO 45 MUNICIPAL WHARF (APN 007-341-05)
All or a necessary quorum and majority of the City Council of the City of Santa Cruz, a California Municipal Corporation, (“City”) hereby consents to, adopts and ratifies the following resolution:

WHEREAS, the City of Santa Cruz, owns that certain property known as the Santa Cruz Municipal Wharf, atop public trust submerged tidelands granted to the City of Santa Cruz by the California State Lands Commission by the following statutes; Chapter 342, Statutes of 1872; Chater 902, Statutes of 1968; and, Chapter 1291, Statutes of 1969; and, WHEREAS, a property known as 45 Municipal Wharf (“Premises” – APN 007-341-05), has been in a largely undeveloped state following demolition of the former Miramar Fish Grotto Restaurant, and Wharf repairs completed in 2022; and,
WHEREAS, the City and Mr. Mark Gilbert, representing Santa Cruz Waterfront, Inc., have negotiated terms for the construction and operation of a new restaurant on the property (“Project”) under a proposed builder/ground lease between the Parties; and, WHEREAS, in the course of planning and construction of the Project minor modification to terms, as well as the execution of permitting, supporting documentation or agreements, and surety or financing mechanisms, may be required to be executed by the City in an expedient manner; and,
WHEREAS, the Parties wish to finalize negotiations and execute said ground lease to assign responsibilities and facilitate additional design and permitting of the Project, together with execution of any other documents as may be necessary for completion of the project; and, NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa Cruz as follows:

SECTION 1. City Manager is hereby authorized to execute the project’s ground lease and the City Manager or his designee is hereby authorized to execute any amendments, modifications, or extensions thereof, as well as any related applications or permits, and any other related documents necessary for completion of the Project and operation of the Lease, all in a form approved by the City Attorney.

SECTION 2. The Project’s builder/ground lease shall supersede any prior existing lease, license, or other claims by third parties upon the property, except for any interim licenses, which

9.5 shall be terminated prior to the start of construction. The Lessee shall be solely responsible for the development of the Project improvements and ongoing operation and maintenance, as specified in the Lease, throughout the lease term.

SECTION 3. In the event, that financing of the project requires financial indenture or encumbrance of the Premises, the amount of such encumbrance shall not exceed the actual cost of construction and financing of the new structure and any ancillary improvements. Lessee shall be responsible for all of City’s costs to remedy or remove such encumbrance as specified in the Lease.

PASSED AND ADOPTED this 28th day of January, 2025, by the following vote:

AYES:

NOES:

ABSENT:

DISQUALIFIED:

APPROVED: ____________________________
Fred Keeley, Mayor
ATTEST:

Bonnie Bush, City Clerk Administrator

9.6 " FISHING SHACKS ALONG EDGE " IMAGE COURTESY OF HISTORIC PHOTOS SHARED BY DAVID McCORMICK 512 CAPITOLA AVENUE + CAPITOLA + CALIFORNIA + 95010 | 831 .479 .9295 | © FUSE ARCHITECTS + BUILDERS 2023 pacific ocean
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soquel
point
W E A V I N G A N E W D E S I G N I N T O A H I S T O R I C F A B R I C . . .

Ensure new buildings are designed in a manner that helps restore the historical character of the Wharf without creating a false historical narrative.

W I T H M A R K G I L B E R T

M I R A M A R R E S T A U R A N T
1 santa cruz capitola
santa cruz wharf
45 M u n i c i p a l W h a r f + Santa Cruz + California + 95060 H i s t o r i c P r e s e r v a t i o n C o m m i s s i o n R e v i e w December 20 , 2023
17 1
1 9.7
512 CAPITOLA AVENUE + CAPITOLA + CALIFORNIA + 95010 | 831 .479 .9295 | © FUSE ARCHITECTS + BUILDERS 2023

E X I S T I N G C H A R A C T E R
A ONE-SIDED MAIN STREET...
pedestrian experience is minimized by mostly opaque building facades and storefronts on one side and rows of parking & trash enclosures on the other side lack of engagement from existing buildings, lack of openness the experience of being above the ocean is lost
THAT PRIORITIZES PARKING AND VEHICULAR CIRCULATION...
about 50% of the Wharf is currently dedicated to cars
440 parking spaces planned for peak summer months & weekends only inefficient long and linear configuration with one entrance and one exit parking obstructs view towards Boardwalk from ground level H I S T O R I C P R E S E R V A T I O N C O M M I S S I O N R E V I E W || D E C . 2 0 , 2 0 2 3 2 W I T H M A R K G I L B E R T

M I R A M A R R E S T A U R A N T

9.8 S T E A M E R

L A N E
512 CAPITOLA AVENUE + CAPITOLA + CALIFORNIA + 95010 | 831 .479 .9295 | © FUSE ARCHITECTS + BUILDERS 2023

S I T E C ON T E X T

MIRAMAR SITE
the site is flanked by two single story buildings
the lot is 48'-0" deep by 148'-3" long with a rear boardwalk the Miramar is located at the deepest portion of parking allowing for maximum exposure from the exterior
H I S T O R I C P R E S E R V A T I O N C O M M I S S I O N R E V I E W || D E C . 2 0 , 2 0 2 3 3 W I T H M A R K G I L B E R T

M I R A M A R R E S T A U R A N T

9.9 PHOTOS COURTESY OF WHARF MASTER PLAN REPORT FURNISHED BY ROMA DESIGN GROUP 512 CAPITOLA AVENUE + CAPITOLA + CALIFORNIA + 95010 | 831 .479 .9295 | © FUSE ARCHITECTS + BUILDERS 2023

S I T E H I S T O R Y
1940's - AN OUTWARD ORIENTED AND OPEN RESTAURANT
the original Miramar Fish Grotto was welcoming and inviting; accommodating a quick in and out or a causal seated dining experience 1970's/2000's - AN INWARD FOCUSED RESTAURANT
the remodeled Miramar focused more on the dining experience and created a long, wall-lined pedestrian experience which is similar to several restaurants on the Wharf today service bar open to sidewalk
operable windows at sidewalk
proportionally more openings than wall

PRESENT - AN EMPTY LOT THAT CAN MAXIMIZE THE PEDESTRIAN

EXPERIENCE ON THE WHARF
with no building, this is portion of the Wharf offers a pedestrian experience of sitting down outdoors and enjoying the views
extremely closed off from public
dark openings, uninviting to pedestrians
proportionally more wall than openings
minimal positive engagement
H I S T O R I C P R E S E R V A T I O N C O M M I S S I O N R E V I E W || D E C . 2 0 , 2 0 2 3

CASE STUDY
Salt Wharf restaurant in
Camden, Maine
covered roof deck dining
experience on the water
maximizes guest experience
and is not currently
offered on the Wharf
4 W I T H M A R K G I L B E R T

M I R A M A R R E S T A U R A N T

9.10 WIND FROM SOUTHWEST

PRIMARY

ENTRANCE

SECONDARY

ENTRANCE
UPPER
ACCESS
BOARDWALK
UP
UP
UP
< SURF CITY SANTA CRUZ >
< NOLAND'S ON THE WHARF >

VIEW OF

STEAMER LANE

VIEW OF

STEAMER LANE

VIEW OF

STEAMER LANE

VIEW OF

STEAMER LANE

VIEW OF

STEAMER LANE

VIEW OF

STEAMER LANE

VIEW OF

STEAMER LANE

VIEW OF

STEAMER LANE

VIEW OF

THE BOARDWALK

VIEW OF

THE BOARDWALK
512 CAPITOLA AVENUE + CAPITOLA + CALIFORNIA + 95010 | 831 .479 .9295 | © FUSE ARCHITECTS + BUILDERS 2023

P R O G R A M A N A L Y S I S

L E G E N D
ENTRY

INTERIOR

VIEW SHED

OYSTER BAR

CHOWDER
BAR

SERVICE
BAR
BAKED
GOODS

DEVELOPING A GROUND FLOOR CONCEPT
views to the inside of the restaurant and ocean views looking out from the restaurant > back of house locations
> visual interest / engagement
sidewalk engagement
access points

LIVE FIRE

VERTICAL

CIRCULATION
WIND
FORCES

BACK OF

HOUSE MASS
EXHIBIT.

KITCHEN
DINING

EXTERIOR

VIEW SHED
H I S T O R I C P R E S E R V A T I O N C O M M I S S I O N R E V I E W || D E C . 2 0 , 2 0 2 3 5 W I T H M A R K G I L B E R T

M I R A M A R R E S T A U R A N T

G R O U N D F L O O R
S C A L E : n . t . s .

9.11 WIND FROM SOUTHWEST
DN
DN DN
< SURF CITY SANTA CRUZ >
< NOLAND'S ON THE WHARF >
UPPER
ACCESS

VIEW OF

STEAMER LANE

VIEW OF

STEAMER LANE

VIEW OF

VIEW OF STEAMER LANE

STEAMER LANE

VIEW OF

STEAMER LANE

VIEW OF

STEAMER LANE

VIEW OF

STEAMER LANE

VIEW OF

STEAMER LANE

VIEW OF THE BOARDWALK

VIEW OF

THE BOARDWALK VIEW OF THE BOARDWALK
512 CAPITOLA AVENUE + CAPITOLA + CALIFORNIA + 95010 | 831 .479 .9295 | © FUSE ARCHITECTS + BUILDERS 2023

P R O G R A M A N A L Y S I S

DEVELOPING AN UPPER FLOOR CONCEPT
views to the indoor & outdoor dining and views looking out from the dining areas > back of house locations
> visual interest / engagement
sidewalk engagement
access points

L E G E N D
ENTRY
INDOOR

VIEW SHED

OUTDOOR
DINING

SERVICE
BAR
FIRE

FEATURE

VERTICAL

CIRCULATION
WIND
FORCES

BACK OF

HOUSE MASS

KITCHEN
INDOOR
DINING

OUTDOOR

VIEW SHED

EXTERIOR

VIEW SHED
H I S T O R I C P R E S E R V A T I O N C O M M I S S I O N R E V I E W || D E C . 2 0 , 2 0 2 3 6 W I T H M A R K G I L B E R T

M I R A M A R R E S T A U R A N T

U P P E R F L O O R
S C A L E : n . t . s .

9.12 UP
UP
< SURF CITY SANTA CRUZ >
< NOLAND'S ON THE WHARF >
DN
DN
< SURF CITY SANTA CRUZ >
< NOLAND'S ON THE WHARF >
9 RISERS @ 7" TALL
9 TREADS @ 12" DEEP
512 CAPITOLA AVENUE + CAPITOLA + CALIFORNIA + 95010 | 831 .479 .9295 | © FUSE ARCHITECTS + BUILDERS 2023

I N F I L L T H A T R E T A I N S A P E D E S T R I A N F O C U S demonstration kitchen (with ocean views) visible from the sidewalk making of products and goods along the storefront
overall add to appeal and interest of the sidewalk experience

GROUND FLOOR PLAN
front of restaurant offers pedestrian views of baking goods, along with casual chowder bar and oyster bar dining with operable windows that open to the public front of restaurant at ground floor has over 70% openness to promote positive engagement with pedestrian

UPPER FLOOR PLAN
primarily outdoor seating along front of restaurant at upper level to maximize views from the site while attracting pedestrians front of restaurant at upper floor has over 77% openness to promote positive engagement with pedestrian entry
ocean view
exhibition
kitchen
oyster bar
ocean
view bar
chowder bar display
kitchen
elev. ocean view dining
steamer lane
elev.
kitchen ocean
view bar
ocean view
outdoor
dining
ocean view
indoor
dining
office
H I S T O R I C P R E S E R V A T I O N C O M M I S S I O N R E V I E W || D E C . 2 0 , 2 0 2 3

ACCESS ACCESS ACCESS
ACCESS
ACCESS
ACCESS
host
host

W I T H M A R K G I L B E R T
7 M I R A M A R R E S T A U R A N T

G R O U N D F L O O R
S C A L E : n . t . s .

U P P E R F L O O R
S C A L E : n . t . s .

FIRST FLOOR SF:

FIRST FLOOR SEATING:
±7,000
±200

SECOND FLOOR SF
(CONDITIONED):

SECOND FLOOR SF
(UNCONDITIONED):

SECOND FLOOR SEATING:
4,200
2,300
±300

TOTAL FLOOR SF
(CONDITIONED):

TOTAL FLOOR SF
(UNCONDITIONED):

TOTAL SEATING:
±11,200
±2,300
±500

9.13 LJ
'-
I
512 CAPITOLA AVENUE + CAPITOLA + CALIFORNIA + 95010 | 831 .479 .9295 | © FUSE ARCHITECTS + BUILDERS 2023

C O N C E P T U A L P E R S P E C T I V E S
Improve the appearance of the commercial buildings, the attractiveness of the storefronts and adjacent sidewalk and the quality of the pedestrian experience.

H I S T O R I C P R E S E R V A T I O N C O M M I S S I O N R E V I E W || D E C . 2 0 , 2 0 2 3

W I T H M A R K G I L B E R T

M I R A M A R R E S T A U R A N T
8 9.14
512 CAPITOLA AVENUE + CAPITOLA + CALIFORNIA + 95010 | 831 .479 .9295 | © FUSE ARCHITECTS + BUILDERS 2023

C O N C E P T U A L P E R S P E C T I V E S - F R O N T Openness and transparency contribute to the environment that they create and to visitor appeal; facades should become more open and achieve a 40% openness as they had in the past.

WEATHERED
REDWOOD SIDING;

ORIENTATION VARIES
WD-03
POWDER COAT -ORKYNAR FINISHED

BLACK METAL
MTL-01

NEOLITH STONE SIDING

FUSION SERIES

SHILIN SLATE
STN-01 WD-01

REDWOOD SLATTED
(VERTICAL) WOOD

WALL & SCREEN

STANDING SEAM

ZINC ROOFING
MTL-02
WOOD CEILING;

FINISH TBD
WD-02

SHOU SUGI BAN
WOOD SIDING;

ORIENTATION VARIES
WD-04

DESIGN STANDARDS KEYNOTES
BUILDING HEIGHT: 32'-0" TO RIDGE
WINDOWS & GLAZING: 9'-0" AND 10'-0" UNITS
FINISHED FLOOR GRADE: AT SIDEWALK
4:12 STANDING SEAM ZINC ROOF
SIDEWALK CANOPY: 12'-0" TALL

ACTIVE STOREFRONT

SIGNAGE AT FRONT END OF CANOPY

BUILDING TRANSPARENCY
H I S T O R I C P R E S E R V A T I O N C O M M I S S I O N R E V I E W || D E C . 2 0 , 2 0 2 3 9 W I T H M A R K G I L B E R T

M I R A M A R R E S T A U R A N T
G
A
A
B
B
B
B
C
C
D
D
E
E
E
F
G
F
F
F
H

9.15 512 CAPITOLA AVENUE + CAPITOLA + CALIFORNIA + 95010 | 831 .479 .9295 | © FUSE ARCHITECTS + BUILDERS 2023

C O N C E P T U A L P E R S P E C T I V E S - F R O N T Bring the storefronts right up to the edge of the sidewalk and thus create a more engaging relationship to the pedestrians on the street.

WEATHERED
REDWOOD SIDING;

ORIENTATION VARIES
WD-03
POWDER COAT -ORKYNAR FINISHED

BLACK METAL
MTL-01

NEOLITH STONE SIDING

FUSION SERIES

SHILIN SLATE
STN-01 WD-01

REDWOOD SLATTED
(VERTICAL) WOOD

WALL & SCREEN

STANDING SEAM

ZINC ROOFING
MTL-02
WOOD CEILING;

FINISH TBD
WD-02

SHOU SUGI BAN
WOOD SIDING;

ORIENTATION VARIES
WD-04

DESIGN STANDARDS KEYNOTES
WINDOWS & GLAZING: 9'-0" AND 10'-0" UNITS
FINISHED FLOOR GRADE: AT SIDEWALK
4:12 STANDING SEAM ZINC ROOF
SIDEWALK CANOPY: 12'-0" TALL

ACTIVE STOREFRONT

SIGNAGE AT FRONT END OF CANOPY

BUILDING TRANSPARENCY
H I S T O R I C P R E S E R V A T I O N C O M M I S S I O N R E V I E W || D E C . 2 0 , 2 0 2 3 10 W I T H M A R K G I L B E R T

M I R A M A R R E S T A U R A N T
A
B
C
E
F
G
A
A A
B
C
D
D
E
E
F
G
F
D

9.16 512 CAPITOLA AVENUE + CAPITOLA + CALIFORNIA + 95010 | 831 .479 .9295 | © FUSE ARCHITECTS + BUILDERS 2023

C O N C E P T U A L P E R S P E C T I V E S - R E A R
Recall some of the kinds of design features that are characteristic of the original Wharf buildings and structures.

WEATHERED
REDWOOD SIDING;

ORIENTATION VARIES
WD-03
POWDER COAT -ORKYNAR FINISHED

BLACK METAL
MTL-01

NEOLITH STONE SIDING

FUSION SERIES

SHILIN SLATE
STN-01 WD-01

REDWOOD SLATTED
(VERTICAL) WOOD

WALL & SCREEN

STANDING SEAM

ZINC ROOFING
MTL-02
WOOD CEILING;

FINISH TBD
WD-02

SHOU SUGI BAN
WOOD SIDING;

ORIENTATION VARIES
WD-04

DESIGN STANDARDS KEYNOTES
BUILDING HEIGHT: 32'-0" TO RIDGE
4:12 STANDING SEAM ZINC ROOF

BUILDING TRANSPARENCY
SECOND FLOOR USE: OUTDOOR & INDDOR DINING
11'-0" TALL WINDOWS ALONG BOARDWALK
H I S T O R I C P R E S E R V A T I O N C O M M I S S I O N R E V I E W || D E C . 2 0 , 2 0 2 3 11 W I T H M A R K G I L B E R T

M I R A M A R R E S T A U R A N T
A
B
C
A
B
D
E
C
C
E
D
E
D

9.17 512 CAPITOLA AVENUE + CAPITOLA + CALIFORNIA + 95010 | 831 .479 .9295 | © FUSE ARCHITECTS + BUILDERS 2023

H I S T O R I C P R E C E D E N C E

VENT STACKS
vent stacks were prevalent along the Wharf in the 1950's the new Miramar will bring a similar aesthetic to the elevator tower

INDOOR / OUTDOOR CONNECTION
many retail stores were inviting and often had large openings the new Miramar will have flip up windows along the sidewalk

CANOPY SIGNAGE
the old Stagnareo building had vertical signage above the canopy the new Miramar proposes the use of the old sign in a similar fashion

REDWOOD
redwood is a large part of the history
of the Wharf and the Miramar will highlight
the material at the entrance along with
other locations
H I S T O R I C P R E S E R V A T I O N C O M M I S S I O N R E V I E W || D E C . 2 0 , 2 0 2 3 12 W I T H M A R K G I L B E R T

M I R A M A R R E S T A U R A N T

9.18 Miramar Lease 1

SANTA CRUZ MUNICIPAL WHARF GROUND LEASE

BETWEEN

THE CITY OF SANTA CRUZ
AND
SANTA CRUZ WATERFRONT, INC.

9.19 Miramar Lease 2

TABLE OF CONTENTS
[INSERT]
EXHIBIT “A” Property...............................................................................................

EXHIBIT “B” Premises .............................................................................................

EXHIBIT “C” Preliminary Title Report.......................................................................

EXHIBIT “D” Form of Quarterly Statement...............................................................

EXHIBIT “E” Municipal Wharf Sign Guidelines ........................................................

EXHIBIT “F” Guarantee of Lease.............................................................................

EXHIBIT “G” Construction Work Best Management Practices and Storm Water Best Management Practices for Private and Public Development Projects .........................................................................

EXHIBIT “H” Schedule of Performance....................................................................

9.20 Miramar Lease 3

SANTA CRUZ MUNICIPAL WHARF GROUND LEASE
This Santa Cruz Municipal Wharf Ground Lease (the “Lease”) is made this ____ day of _____, 2025 (“Effective Date”), by and between the City of Santa Cruz, a municipal corporation (hereinafter “Landlord") and Santa Cruz Waterfront, Inc., a California Corporation (hereinafter “Tenant”). (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 Lease as set forth herein.

RECITALS
A. Landlord is the owner of certain real property in the City of Santa Cruz, California, commonly known as 45 Municipal Wharf (the “Property”) located on the Santa Cruz Municipal Wharf (the “Wharf”), as more particularly described in Exhibit “A”, attached hereto and incorporated herein by reference.

B. Tenant desires the right to construct and operate a new commercial restaurant building and related improvements, furnishings, fixtures, and equipment, in accordance with the terms and conditions of this Lease (collectively referred to in this Lease as "Tenant’s Work” or “New Improvements”) on a portion of the Property as shown on Exhibit “B”, attached hereto and incorporated herein by reference. Tenant desires to lease from Landlord the portion of the Property upon which the New Improvements will be constructed, situated, and operated, consisting of approximately ± 7,104 square feet of space on the Wharf (together with certain appurtenant rights and easements), all of which are also depicted on Exhibit “B” (“Premises”), to be used solely for the purpose of constructing, operating, and maintaining the New Improvements in accordance with the agreement of the Parties as set forth in and subject to the terms and conditions of this Lease. The New Improvements will include a ground floor, consisting of approximately ± 7,104 square feet of space, plus a second story.

Once constructed, the New Improvements shall be subject to the terms and conditions of this Lease.

C. Located on the Property is an existing commercial restaurant building (“Existing Improvements”). Before Tenant commences construction of the New Improvements, Landlord will demolish and remove the Existing Improvements, make certain repairs to the pilings, substructure, and decking under the Premises, and replace certain pilings under the Premises, the scope and details of which shall be determined by Landlord in its sole and absolute discretion, taking into consideration the approved plans and specifications for the New Improvements, as more fully described in Section 5.01 of this Lease (“Landlord’s Work”). Tenant agrees to reimburse Landlord for a portion of the costs and expenses of Landlord’s Work, as further detailed in this Lease (see Section 5.01 (Landlord’s Work; Tenant Reimbursement Payment)).

D. Landlord desires to lease to Tenant and Tenant desires to lease from Landlord, on the terms and subject to the conditions of this Lease, the Premises in exchange for Tenant’s performance of its obligations pursuant to this Lease and for the rent and other consideration described herein.

AGREEMENT
NOW THEREFORE, in consideration of the rental payments to be made hereunder by Tenant to Landlord and the mutual terms, covenants, agreements, representations, and

9.21 Miramar Lease 4
warranties contained in this Lease, and subject to the terms and conditions of this Lease, the Parties agree as follows:

Recitals. The foregoing Recitals are made part of this Lease and incorporated herein.

ARTICLE 1 - LEASE OF PREMISES

1.01 City of Santa Cruz as Landlord. Tenant acknowledges and understands that Landlord is a municipality consisting of numerous offices, departments, agencies, and districts. Whenever a provision contained in this Lease, or any extension, modification, or amendment, requires the written consent of Landlord, such consent must be obtained from the City Manager or Assistant City Manager for the City of Santa Cruz (“City”). 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 Assistant City Manager shall be null and void and have no effect. Nothing contained in this Section shall limit in any way the authority of any office, department, agency, or district of the City or County of Santa Cruz, California from approving or withholding consent to any event or activity regulated by local law. (a) 1.02 The Premises. For and in consideration of the rents to be paid and promises and covenants to be performed by Tenant under this Lease, Landlord agrees to lease the Premises to Tenant, and Tenant agrees to lease the Premises from Landlord and to construct the New Improvements on the Property, in accordance with and subject to the terms and conditions provided in this Lease. Reference to the “Premises” is to that portion of the Property upon which the New Improvements will be constructed, situated, and operated by Tenant as shown on Exhibit “B”, and generally consisting of approximately ± 7,104 square feet of space on the Wharf (together with certain appurtenant rights and easements), located at 45 Municipal Wharf, in the City of Santa Cruz, County of Santa Cruz, State of California, all as more particularly described in Exhibit “B”.
(b) Pursuant to Sections 7.01 and 7.02 of this Lease, Tenant shall own the New Improvements during the Lease Term and upon expiration or earlier termination of this Lease, the New Improvements shall without compensation to Tenant automatically become Landlord’s property. The use, construction, installation, maintenance, repair, restoration, alteration, improvement, occupancy, encumbrance, transfer, ownership, and surrender of the New Improvements shall be subject to the terms and conditions of this Lease. (c) The Premises leased shall not include, and the Tenant shall have no rights in:
(i) the Existing Improvements that are to be installed or demolished before Tenant commences construction of the New Improvements (as further discussed in Section

2.01 and Article 5 below); or
(ii) the Wharf, or the Wharf pilings, substructure, and decking underlying or surrounding the Premises, but Tenant shall have the right to use said structural support elements underlying the Premises solely for structural support, utilities, and access

1.03 Status of Title. This Lease and title to the leasehold estate created by this Lease are subject to those exceptions, easements, rights, rights-of-way, and other matters of record (including, but not limited to, those set forth on the Preliminary Title Report issued by First American Title on February 23, 2017 (Order Number 4402-5406981), a copy of which is

9.22 Miramar Lease 5
attached hereto as Exhibit “C” and incorporated herein by reference), affecting the Premises, structures, or other improvements on the Premises, and land of which the Premises are a part, and such other matters as are apparent from an inspection of the Premises (“Title Exceptions”). Notwithstanding the foregoing, on the Effective Date, Landlord shall deliver to Tenant, at Tenant’s sole cost and expense, a leasehold policy of title insurance with such endorsements as Landlord may reasonably request (“Leasehold Title Policy”), insuring Tenant’s leasehold interest in the Premises, subject to the Title Exceptions, including, but not limited to those shown on Exhibit “C”. Tenant shall pay the premium for such Leasehold Title Policy. The Parties agree that Tenant is not responsible for the payment of (a) any monetary obligations encumbering the Premises prior to the Effective Date (except those, if any, resulting from the activities, acts, or omissions of Tenant, or Tenant’s officers, directors, employees, representatives, contractors, subcontractors, agents, or others acting on Tenant’s behalf or under Tenant’s authority or control) or (b) the local, state, or federal tax obligations of any previous tenant of the Premises.

1.04 Security Deposit.
(a) Concurrently with Tenant’s execution of this Lease, Tenant shall deposit with Landlord the sum of Fifteen Thousand Dollars ($15,000) (the “Security Deposit”). 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 Lease to be performed by Tenant. Landlord may commingle the Security Deposit and shall not be required to keep it separate from its general funds. The amount of the Security Deposit in no way limits the liabilities of Tenant under any provision of this Lease. (b) If Tenant fails to abide by any of the terms, covenants, and/or conditions of this Lease, or otherwise is in default with respect to the provisions of this Lease, then Landlord, at its option (and without any obligation to do so), 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 in the form of a cashier’s check to restore the Security Deposit to the original sum deposited. Failure to do so within five (5) calendar days after such demand shall constitute a material breach of this Lease.
(c) If Tenant fully performs all of its duties and obligations under this Lease, complies with all of the terms, covenants, and conditions of this Lease, and promptly pays when due all of the rent herein provided and all other sums payable by Tenant under this Lease, Landlord will return to Tenant the full Security Deposit (if no portion of the Security Deposit has been used by Landlord) or the remaining unused portion of the Security Deposit held by Landlord within thirty (30) calendar days after the expiration or earlier termination of this Lease, Tenant’s vacation of the Premises, and Landlord’s receipt of possession of the Premises in accordance with the provisions of this Lease.

9.23 Miramar Lease 6
(d) If Tenant shall default under this Lease more than two (2) times in any twelve (12) month period, irrespective of whether or not such default is cured, then the Security Deposit shall, within ten (10) days after demand by Landlord, be increased by Tenant to an amount equal to (i) two (2) times the amount specified in subsection 1.04(a) above; or (ii) such amount as may be otherwise reasonably required by Landlord. (e) 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. (f) Tenant waives the provisions of California Civil Code section 1950.7 and any laws, whether now or in the future in effect, or common law rule, to the contrary of this Section

1.04. 1.05 Guarantee of Lease. Tenant’s obligations under this Lease are guaranteed by Mark Gilbert Ventures, Inc. (“Guarantor”) under the Guarantee of Lease in the form of Exhibit “F” attached hereto (“Guarantee”). Provided Tenant has not been in default under the Lease more than two (2) times without the default being cured and is not then in default under the Lease, Guarantor’s obligations under the Guarantee shall continue in full force and effect from the Effective Date until the expiration of ten (10) Lease Years, at which time Guarantor’s obligations under the Guarantee shall terminate.

1.06 Reservations. This Lease confers no rights on Tenant either with regard to the water or land below the ground level of the Premises and/or Wharf deck or with regard to airspace above the roof of the Premises, but Tenant shall have the right to use the Wharf solely for structural support, utilities, and access Easements for light and air are not granted in this Lease. Landlord reserves and shall at all times have the right to make alterations, repairs, improvements, or additions to the Wharf and all associated structures, including, but not limited to, areas and structures under and/or affecting the Wharf. Landlord also reserves the right to construct other buildings or improvements on the Wharf and to make alterations or additions thereto. Tenant hereby waives any claims for damage against Landlord (including, but not limited to, those arising from loss of business) by reason of Landlord’s entry onto the Wharf and/or removal of all of any portion of any structure or building on the Wharf (other than the New Improvements) for the purposes of making repairs. Landlord further reserves the right to enter and access the roof of any buildings and/or structures on and/or comprising the Premises and/or New Improvements and to use any space within the walls, above the ceiling finish, beneath the floor surface, and under the Premises and/or New Improvements for purposes including, but not limited to, inspections, utility lines and conduits, and/or Wharf operation and maintenance. Except as otherwise expressly provided herein, when exercising the rights reserved under this Section, Landlord shall not unreasonably disturb or materially interfere with Tenant’s quiet enjoyment of the Premises.

1.07 Condition of Premises/As-Is. Tenant recognizes the uniqueness of the Premises and agrees to accept the Premises in the condition existing after completion of Landlord’s Work and issuance of the Notice to Proceed and, again on the Commencement Date (defined in Section 2.01 below), subject to all applicable zoning and municipal, county, local, state, and/or federal Laws affecting the use of the Premises. As used in this Lease, the term “Law(s)” means any constitution, law, ordinance, principle of common law, code, rule, regulation, statute, act, treaty, decree, directive, order, rule, and/or regulation of any

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Governmental Body that is now in force, or that may be enacted or promulgated in the future.

As used in this Lease, the term “Governmental Body(ies)” means any (a) federal, state, local, municipal, regional, or other government; (b) governmental or quasi-governmental authority of any nature (including, but not limited to, any agency, regulatory authority, department, board, commission, court, or other entity exercising governmental or quasigovernmental powers); and (c) body exercising, or entitled or purporting to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power.

Tenant’s taking possession of the Premises shall be deemed to be conclusive evidence of Tenant’s acceptance of the Premises in its then existing condition. Tenant further acknowledges and agrees that neither Landlord nor its agents or representatives have made any representation or warranty (express or implied) as to the condition of the Wharf or Premises or the present or future suitability of the Premises (or New Improvements to be constructed on the Premises) for the conduct of Tenant's business or any purposes whatsoever. Tenant represents that it has inspected the Premises as of the Effective Date and will again inspect the Premises upon receipt of the Notice to Proceed, upon commencement of the Construction Period (defined in Section 2.01 below), and as of the Commencement Date (defined in Section 2.01 below). Except as otherwise expressly provided in this Lease, Tenant agrees to accept the Premises in their “AS IS, WHERE IS, IN ITS CURRENT CONDITION, WITH ALL FAULTS” condition, with no representation as to the fitness for a particular use, physical condition, zoning, environmental conditions, etc. Tenant acknowledges that it has satisfied (and upon receipt of the Notice to Proceed, upon commencement of the Construction Period, and as of the Commencement Date, will satisfy) itself, by its own independent investigation that the Premises (and, once constructed, the New Improvements) are suitable for its intended use. Landlord does not warrant or guarantee the Premises (or New Improvements) as being suitable for Tenant’s purposes. Tenant is responsible for determining whether or not the building codes, zoning, applicable permits, approvals, authorizations, Laws, and covenants and/or restrictions of record ("Applicable Requirements") are appropriate for Tenant's intended use. Notwithstanding the foregoing, Landlord acknowledges that, as of the Effective Date, the Premises is currently located in the C-B (Beach Commercial) zoning district. After issuance of the Notice to Proceed as defined in Section 2.01(b), below, correction of any item of non-compliance with an Applicable Requirement shall be the obligation of Tenant at Tenant's sole cost and expense, except for defects in Landlord’s Work to the extent covered by a valid and unexpired warranty. Any work required by Tenant to prepare the Premises and New Improvements for occupancy (other than the Landlord’s Work described in Section 5.01 below, for which Tenant shall partially reimburse Landlord as further provided in Section 5.01) shall be paid for by Tenant and shall be subject to all of the terms and conditions set forth in this Lease. Tenant acknowledges that: (a) it has been advised by Landlord to satisfy itself with respect to the condition of the Premises and, once constructed, the New Improvements (including, but not limited to, the electrical, security, environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability for Tenant’s intended use and; (b) Tenant has made (and will make) such investigation as it deems necessary with reference to such matters and assumes the responsibility therefore as the same relate to its occupancy and use of the Premises and the New Improvements, except as otherwise expressly provided in this Lease; and (c) neither Landlord, nor Landlord’s employees, officers, officials, representatives, or agents have made any oral or written representations or warranties with respect to said matters other than as expressly set forth in this Lease.

1.08 Liquor License.

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(a) Landlord agrees to allow Tenant to apply for a Type 47 liquor license (“Liquor License”) pursuant to California Business and Professions Code Section 23824 (applicable to City owned property), and Landlord (at no cost to Landlord) shall reasonably cooperate in Tenant’s application. Pursuant to California Business and Professions Code Section 23824, as part of the application process and provided Tenant has timely fulfilled its prior obligations under in this Lease (including, but not limited to, timely pursuing and obtaining the Building Permit and paying the Tenant Reimbursement Payments), Landlord will file with the California ABC a written request that the license be issued and a written statement setting forth the reasons why issuance of the license would be in the public interest. (b) Tenant must apply for such Liquor License by no later than thirty (30) calendar days following the City’s issuance of the Building Permit (defined in Section 5.03, below) for the New Improvements. At least ten (10) calendar days before submitting its application for the Liquor License, Tenant must provide Landlord with a copy of the application and supporting documentation. Within five (5) calendar days of submitting the Liquor License application, Tenant must provide Landlord with a copy of the final application and all documentation submitted as part of that application. Within (10) calendar days of Tenant’s receipt, Tenant must provide Landlord with a copy of the approved Liquor License. (c) All costs, expenses, and fees relating to such Liquor License and related application shall be paid by Tenant.
(d) Tenant shall obtain the Liquor License no later than the Commencement Date (defined in Section 2.01, below).
(e) Subject to and conditioned upon the authority granted in the Liquor License and the terms and conditions of this Lease, upon receipt of the Liquor License, Tenant may cause or permit the sale, service, or consumption of alcoholic beverages within the New Improvements in compliance with the terms, conditions, limitations, and restrictions set forth in such Liquor License. Upon receipt of the Liquor License, Tenant covenants and agrees that in no event will it cause or permit the sale, service, or consumption of alcoholic beverages within or about the Premises and/or New Improvements in violation of the Lease, Liquor License, or any applicable Laws.

1.09 Wharf Closure. Tenant acknowledges and understands that for public health, welfare, and safety reasons, the Wharf may be subject to closure (either full or partial) due to conditions and/or events, including, but not limited to, ocean (including, but not limited to, high surf), waterfront, and/or weather related conditions, as well as Force Majeure events (as defined in Section 19.01 [Force Majeure]) (collectively “Closure Conditions”). Tenant enters into this Lease with full knowledge of the existing conditions of the Wharf and its exposure to Closure Conditions, and with the understanding that at any point during the Term (as defined in Article 2 below), the Landlord may close the Wharf, Premises, and/or New Improvements to access and use (including, but not limited to Tenant’s access and/or use) due to Closure Conditions, without any liability to Tenant by virtue of such closure and/or related actions.

During any such period of Wharf closure where Tenant is completely unable to access and use the Premises and New Improvements, Tenant shall not be liable to Landlord for damages for failure to operate pursuant to Section 3.09 (Damages For Failure To Operate) below.

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ARTICLE 2 - TERM OF LEASE

2.01 Term of Lease.
(a) This Lease shall be effective as of the Effective Date (defined above). The rights and obligations of Landlord and Tenant under this Lease are binding as of the Effective Date, unless a provision of this Lease specifically sets forth another commencement date for the performance of an obligation. Notwithstanding the foregoing, Tenant shall have no right to use or occupy the Premises until after the issuance of the Notice to Proceed as defined in Section 2.01(b) below.
(b) Following Landlord’s completion of Landlord’s Work (as defined in Section 5.01 below), as reasonably determined by Landlord, and the City’s issuance of a Building Permit for the New Improvements on the Premises, Landlord shall notify Tenant in writing when Tenant may commence construction of the New Improvements (hereinafter referred to as the “Notice to Proceed”). Landlord’s issuance of the Notice to Proceed is expressly conditioned upon the timely satisfaction or waiver of each of the pre-conditions set forth below (collectively “NTP Pre-conditions”):
(i) The Landlord’s Work has been completed (as reasonably determined by Landlord);
(ii) Landlord has approved the final Construction Documents and the contract with the general contractor for the New Improvements in accordance with Section

5.03 (Conditions of Construction of New Improvements) below; (iii) Tenant has delivered to Landlord evidence reasonably satisfactory to the Landlord that the Tenant has obtained firm and binding written commitment(s) for the financing necessary for all aspects of the design, development, and construction of the New Improvements on the Premises (including, without limitation, the construction and take-out financing, as defined in Section 5.03(d) (Approval of Construction Financing)); and (iv) The New Improvements Coastal Development Permit (“CDP”) and the Design Permit, the Administrative Use Permit, and Building Permit (as such terms are defined in Section 5.03(a) below) for the New Improvements have been issued. (c) After issuance of the Notice to Proceed, Tenant shall, within 400 calendar days complete construction of the Tenant’s Work (in conformance with Article 5 and subject to Section 2.01(f), Section 5.08(e) and Section 19.01 [Force Majeure], below) and commence operations on the Premises (“Construction Period”).
(i) Prior to the Construction Period, Tenant’s access to the Premises will be strictly limited as Landlord’s Work on site will be ongoing. Prior to the Construction Period, Tenant and its design professionals, contractors, and consultants may (“Tenant Project Team”, after providing Landlord with at least forty-eight (48) hours advance written notice, schedule for access and enter upon the Premises solely for purposes of planning and designing the New Improvements. No construction activities may be performed by Tenant (or its design professionals, contractors, or consultants) prior to the Construction Period. Tenant

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Project Team shall be responsible for furnishing all required safety equipment needed for the Tenant Project Team, during any such entrance on site.
(ii) During the Construction Period, Tenant and its design professionals, contractors, and consultants may enter upon the Premises solely for purposes of planning, designing, and constructing the New Improvements, moving in, and preparing the Premises for operations.
(iii) Tenant’s entrance upon and/or occupancy of the Premises prior to and during the Construction Period shall be subject to all terms, conditions, and provisions of this Lease, with the exception of the rent obligations (defined in Article 3 below), which rent obligations shall commence on the Commencement Date (as defined below). (d) The initial term (“Initial Term”) of this Lease shall commence on the Commencement Date (defined below) and continue for a period of thirty-five (35) years, unless terminated earlier or extended as provided for herein. (e) The “Commencement Date” shall begin on the earlier of (1) the first day of the month in which the City issues a Certificate of Occupancy for the New Improvements, following final approval of Tenant’s Work by all required City departments (including, but not limited to, the Planning and Community Development Department (including, but not limited to, the Building and Safety Division), Economic Development Department, and Fire Department) and the California Coastal Commission, or (2) the first day of the month in which Tenant opens for business to the public in all or any part of the Premises, or (3) the date established in Section 2.01(f) below. Landlord and Tenant agree to confirm the actual Commencement Date in writing when it occurs; however, the failure to so confirm shall have no effect on the Commencement Date or expiration date. Each consecutive full twelve (12) calendar month period, commencing with the Commencement Date shall be a “Lease Year.” (f) If Tenant has not completed Tenant’s Work and received a Certificate of Occupancy for the New Improvements within the Construction Period (subject to subsection

5.08(e) and Section 19.01 [Force Majeure], below), the Initial Term and Tenant’s obligation to pay rent as provided in this Lease shall nevertheless commence and the Commencement Date shall be the first day of the month in which such 400-day period expires. If Tenant does not complete Tenant’s Work and receive a Certificate of Occupancy for the New Improvements within 720 calendar days after Landlord’s issuance of the Notice to Proceed (subject to subsection 5.08(e) and Section 19.01 [Force Majeure], below, and the rights of secured Leasehold Lenders as provided in Article 8), Landlord shall have the right (in addition to all other rights and remedies provided in this Lease or by law or equity) to terminate this Lease upon thirty (30) calendar days prior written notice delivered to Tenant. Termination under this subsection shall not relieve Tenant from the payment of any sums then due to Landlord or others from any claim for costs, expenses, debts, liquidated damages (including, but not limited to, those set forth in Section 5.08), rent, liabilities, damages, or injuries previously accrued or then accruing against Tenant.

2.02. Extension of Term. If Tenant fully and faithfully performs all of the terms and conditions of this Lease, Tenant shall have the option to extend the Initial Term of this Lease for three (3) additional five (5) year periods (the “First Extended Term”, the “Second Extended Term” and the “Third Extended Term”, respectively, and collectively, the “Extended Terms”) immediately following the expiration of the Initial Term (or applicable Extended Term), upon the same terms and provisions contained in this Lease except for the

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amount of the rent, which shall be adjusted and increased as provided in Section 3.02. The Initial Term and Extended Terms are collectively referred to herein as the “Term.” Tenant may exercise said option to extend the Initial Term, and any Extended Term, by giving written notice (the “Extension Notice”) to Landlord at least six (6), but not more than twelve (12) months before the expiration of the Initial Term or applicable Extended Term. Notwithstanding the foregoing, Tenant shall not have the option to extend the Initial Term or any Extended Term, and Tenant’s election to extend the Initial Term (or any Extended Term) of this Lease shall be totally ineffective and this Lease shall expire at the end of the Initial Term, or current Extended Term, if: (i) as of the date of the Extension Notice, Tenant is in default under this Lease; (ii) Tenant is in default on the date the Extension Term is to commence; or (iii) Tenant has been in default without the default being cured more than two (2) times in the twelve (12) month period before the date of the Extension Notice (each a “Disqualifying Default”).

In the event of a Disqualifying Default, Landlord may (in its sole and absolute discretion and without any obligation to do so) elect to accept the Extension Notice notwithstanding the default of Tenant (which acceptance shall not waive or otherwise relieve Tenant of its obligations to promptly correct such default(s) and fully comply with all terms and conditions of this Lease).

Tenant’s failure to timely give the Extension Notice to Landlord shall constitute an election by Tenant not to exercise the option to extend. In that event, Tenant’s option (and all subsequent options) shall automatically and immediately terminate without notice and this Lease shall expire at the end of the Initial Term, or current Extended Term. Tenant shall have no other rights to extend the Lease Term.

Except as provided in Section 11.02(b) below, any extension or option granted to Tenant in this Lease is personal to the original Tenant and any assignees approved by Landlord in accordance with Article 11 (Transfers, Assignment, and Subletting) of this Lease and cannot be assigned or exercised by anyone other than said original Tenant (or an assignee previously approved by Landlord).

2.03 Expiration. The Term will expire at 5:00 p.m. on the expiration date of the Initial Term specified in Section 2.01, unless the Term is earlier terminated or extended in accordance with Section 2.02 of this Lease, in which case the Term shall expire at 5:00 p.m. on the earlier termination date or the expiration date of any properly exercised Extended Term. On expiration or earlier termination of this Lease, Tenant shall peaceably surrender and vacate the Premises and all improvements in, on, and/or about the Premises (including, but not limited to, the New Improvements) to Landlord as provided in and in accordance with Section

5.12 (Trade Fixtures), Section 5.13 (Standards), Section 7.02 (Landlord Ownership of Improvements Upon Expiration or Termination) and Article 14 (Surrender and Holdover), below.

2.04 Quit Claim Deed. At any time after the expiration or earlier termination of this Lease, Tenant shall execute, acknowledge and deliver to Landlord, within fifteen (15) days after receipt of written demand therefore, a good and sufficient deed whereby all right, title and interest of Tenant in and to the Premises, New Improvements, and other improvements are quitclaimed to Landlord. Should Tenant fail or refuse to deliver the required deed to Landlord, Landlord shall have the right to prepare and record a notice reciting the failure of Tenant to execute, acknowledge, and deliver such deed. Said notice shall be conclusive evidence of the termination of this Lease and of all right of Tenant in and to the Premises, the New Improvements, and other improvements.

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ARTICLE 3 – RENT AND CAPITAL IMPROVEMENT CONTRIBUTIONS

3.01 Minimum Annual Rent through Year 5. Beginning on the Commencement Date (as defined in Section 2.01 above) and continuing through the end of the fifth Lease Year, Tenant shall pay to Landlord, on a quarterly basis, the greater of (hereinafter referred to as the “Minimum Annual Rent”):
(a) a minimum annual base rent (“Minimum Annual Base Rent”) of $63,500 per calendar year, paid in minimum quarterly installments of $15,875; or (b) subject to Section 3.05(b) below, a percentage rent (“Percentage Rent”) in a sum equal to three percent (3%) of Tenant’s Gross Sales (as defined below in Section 3.05, Gross Sales).

The Parties acknowledge and agree that the foregoing Percentage Rent calculation does not (and shall not be construed to) render the Parties partners or joint venturers or result in (or be deemed to result in) the Landlord sharing in Tenant’s profits or revenues (including, but not limited to, profits or revenues derived from the sale of alcoholic beverages). Such calculation (in conjunction with the operating covenants, including, but not limited to, those contained in Section 3.09 (Damages for Failure to Operate), Section 4.01 (Permitted Use and Operation of Business; Covenant to Operate), Section 4.04 (Hours of Operation), and Section

5.02 (Tenant’s Duty to Construct)) is a mechanism for computing and determining a portion of the appropriate market-based consideration to be paid by Tenant to Landlord for the use, possession, and enjoyment of the Premises.

The foregoing Minimum Annual Rent, Minimum Annual Base Rent, and Percentage Rent shall be subject to increase during the Term as provided in Section 3.02 below.

3.02 Adjustments to Minimum Annual Rent and Percentage Rent During the Term. (a) Subject to Section 3.05(b) below, commencing with the first day of the sixth (6th) Lease Year and continuing through the end of the tenth (10th) Lease Year of the Term, Tenant shall pay to Landlord, on a quarterly basis, Minimum Annual Rent in an amount equal to the greater of 1) seventy-five percent (75%) of the average total annual rent (which includes without limitation the applicable Minimum Annual Rent, Minimum Annual Base Rent, and/or Percentage Rent, and Additional Rent as defined in Section 3.12 below) paid by Tenant for the preceding five (5) year period (paid in equal quarterly installments); or 2) a Percentage Rent in a sum equal to three percent (3%) of Tenant’s Gross Sales (as defined below in Section 3.05, Gross Sales). In no event shall the Minimum Annual Rent for the five-year period commencing with the beginning of Lease Year 6, be less than $95,000 with minimum quarterly installments of $23,750.
(b) Subject to Section 3.05(b) below, commencing with the first day of the eleventh (11th) Lease Year and continuing through the end of the fifteenth (15th) Lease Year of the Term, Tenant shall pay to Landlord, on a quarterly basis, Minimum Annual Rent in an amount equal to the greater of 1) seventy-five percent (75%) of the average total annual rent (which includes without limitation the applicable Minimum Annual Rent, Minimum Annual Base Rent, and/or Percentage Rent, and Additional Rent as defined in Section 3.12 below) paid by Tenant for the immediately preceding five (5) year period; or 2) a Percentage Rent in a sum equal to three percent (3%) of Tenant’s Gross Sales (as defined below in Section 3.05, Gross Sales).

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In no event shall the Minimum Annual Rent for the five-year period commencing with the beginning of Lease Year 11, be less than the Minimum Annual Rent established for the immediately preceding five (5) year period.
(c) Subject to Section 3.05(b) below, commencing with the first day of the sixteenth (16th) Lease Year and continuing through the end of the twentieth (20th) Lease Year of the Term, Tenant shall pay to Landlord, on a quarterly basis, Minimum Annual Rent in an amount equal to the greater of 1) seventy-five percent (75%) of the average total annual rent (which includes without limitation the applicable Minimum Annual Rent, Minimum Annual Base Rent, and/or Percentage Rent, and Additional Rent as defined in Section 3.12 below) paid by Tenant for the immediately preceding five (5) year period; or 2) a Percentage Rent in a sum equal to three percent (3%) of Tenant’s Gross Sales (as defined below in Section 3.05, Gross Sales).

In no event shall the Minimum Annual Rent for the five-year period commencing with the beginning of Lease Year 16, be less than the Minimum Annual Rent established for the immediately preceding five (5) year period.
(d) Subject to Section 3.05(b) below, commencing with the first day of the twentyfirst (21st) Lease Year and continuing through the end of the twenty-fifth (25th) Lease Year of the Term, Tenant shall pay to Landlord, on a quarterly basis, Minimum Annual Rent in an amount equal to the greater of 1) seventy-five percent (75%) of the average total annual rent (which includes without limitation the applicable Minimum Annual Rent, Minimum Annual Base Rent, and/or Percentage Rent, and Additional Rent as defined in Section 3.12 below) paid by Tenant for the immediately preceding five (5) year period; or 2) a Percentage Rent in a sum equal to four percent (4%) of Tenant’s Gross Sales (as defined below in Section 3.05, Gross Sales). In no event shall the Minimum Annual Rent for the five-year period commencing with the beginning of Lease Year 21, be less than the Minimum Annual Rent established for the immediately preceding five (5) year period.
(e) Subject to Section 3.05(b) below, commencing with the first day of the twentysixth (26th) Lease Year and continuing through the end of the thirtieth (30th) Lease Year of the Term, Tenant shall pay to Landlord, on a quarterly basis, Minimum Annual Rent in an amount equal to the greater of 1) seventy-five percent (75%) of the average total annual rent (which includes without limitation the applicable Minimum Annual Rent, Minimum Annual Base Rent, and/or Percentage Rent, and Additional Rent as defined in Section 3.12 below) paid by Tenant for the immediately preceding five (5) year period; or 2) a Percentage Rent in a sum equal to four percent (4%) of Tenant’s Gross Sales (as defined below in Section 3.05, Gross Sales).

In no event shall the Minimum Annual Rent for the five-year period commencing with the beginning of Lease Year 26, be less than the Minimum Annual Rent established for the immediately preceding five (5) year period.
(f) Subject to Section 3.05(b) below, commencing with the first day of the thirty-first (31st) Lease Year and continuing through the end of the thirty-fifth (35th) Lease Year of the Term, Tenant shall pay to Landlord, on a quarterly basis, Minimum Annual Rent in an amount equal to the greater of 1) seventy-five percent (75%) of the average total annual rent (which includes without limitation the applicable Minimum Annual Rent, Minimum Annual Base Rent, and/or Percentage Rent, and Additional Rent as defined in Section 3.12 below) paid by Tenant for the immediately preceding five (5) year period; or 2) a Percentage Rent in a sum equal to four percent (4%) of Tenant’s Gross Sales (as defined below in Section 3.05, Gross Sales).

In no event shall the Minimum Annual Rent for the five-year period commencing with the beginning of Lease Year 31, be less than the Minimum Annual Rent established for the immediately preceding five (5) year period.

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(g) Subject to Section 3.05(b) below, commencing with the beginning of any of the three (3) five-year Extended Terms, Tenant shall pay to Landlord, on a quarterly basis, Minimum Annual Rent in an amount equal to the greater of 1) seventy-five percent (75%) of the average total annual rent (which includes without limitation the applicable Minimum Annual Rent, Minimum Annual Base Rent, and/or Percentage Rent, and Additional Rent as defined in Section 3.12 below) paid by Tenant for the five (5) year period immediately preceding the subject Extended Term; or 2) a Percentage Rent in a sum equal to five percent (5%) of Tenant’s Gross Sales (as defined below in Section 3.05, Gross Sales). In no event will the Minimum Annual Rent for any of the Extended Terms be less than the Minimum Annual Rent established for the five (5) year period immediately preceding each such Extended Term. (i) Landlord shall notify Tenant in writing of the new Minimum Annual Rent upon each adjustment as provided for above. Failure of Landlord to so notice Tenant shall not relieve Tenant of responsibility to pay any increase in Minimum Annual Rent.

3.03 Quarterly Payments. During the specific periods of time set forth in Section 3.01 and Section 3.02 of this Lease, Tenant shall pay rent to Landlord in minimum quarterly installments equal to the applicable Minimum Annual Rent divided by four (4), or the specified Percentage Rent for the subject quarter, whichever is greater.

3.04 Rent Payment Schedule. The quarterly rent payment schedule is based on the calendar year, with the following quarterly end dates: March 31st, June 30th, September 30th, and December 31st. Rent for the preceding quarter shall be due and payable in full by Tenant on the thirtieth (30th) day of the month immediately following the end of such quarter and shall be considered late (and subject to a late charge and interest as set forth below) five (5) days after the due date. Rent shall be paid in lawful money of the United States and remitted to Landlord at 809 Center Street, Rm. 101, Santa Cruz, CA 95060 or at such other location as Landlord may notify Tenant in writing.

3.05 Gross Sales.
(a) Subject to subsection (b) below, the term "Gross Sales" as used in this Lease means all gross receipts of every kind and nature from sales and services from all business conducted by Tenant on, in, at, about, or from the Premises and/or New Improvements and, whether upon credit or for cash, in every department operating on, in, at, or about the Premises and/or New Improvements, whether operated by the 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.
(b) Notwithstanding anything contained in this Lease that may be construed to the contrary, if at any time during the Term (including, but not limited to, any Extended Term), any court or regulatory agency having jurisdiction issues a final judgment, determination, decision, ruling, or regulation that applies to Landlord or Tenant and prohibits or materially restricts (as determined by Landlord) the assessment or collection of Percentage Rent calculated based on Gross Sales that include alcohol sales, then: (i) the sale of alcoholic beverages shall be eliminated from the definition of Gross Sales, and (ii) Landlord shall increase the rent to account for the elimination of alcoholic beverages from the definition Gross Sales so that the

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total rent payable by Tenant to Landlord under this Lease is unchanged by the exclusion of alcohol sales. In no event shall the total amount of rent payable by Tenant to Landlord during the Term be reduced as a result of the elimination of alcoholic beverages from the definition of Gross Sales.

3.06 Quarterly Statements. In accordance with the Rent Payment Schedule (defined in Section 3.04 above), Tenant shall furnish to Landlord a written quarterly statement of Gross Sales and rent (the “Quarterly Statement”), certified by Tenant to be correct, showing the total Gross Sales and Percentage Rent and other rent due based upon the preceding quarter.

Said statement shall be in the format prescribed and approved by Landlord, as set forth in Exhibit “D” attached hereto and made part hereof, and subject to future modification by Landlord. 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. Tenant acknowledges that rent paid without being accompanied by the Quarterly Statement will be considered late payment of rent.

3.07 Late Charge and Interest on Unpaid Rent.
(a) Tenant acknowledges that late payment by Tenant to Landlord of rent, and/or failure to submit when due Quarterly Statements, California state, local, and district sales and use returns, and/or other reports and documentation set forth herein, will cause Landlord to incur costs not contemplated by this Lease, 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/or note secured by any encumbrance covering the Premises. (b) Therefore, if any installment of rent, Quarterly Statement, sales and use return, and/or report, record, or documentation referenced herein which is due from Tenant 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 ½ %) per month, or the maximum rate of interest allowed by law (whichever is less), on the unpaid balance of said rent or sum until paid (or until such outstanding Quarterly Statement, report, or record is received by Landlord). 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 (and/or late submittal of required documentation) 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 Lease or as provided by law. (c) If any interest rate specified in this Lease is higher than the rate permitted by law, the interest rate is hereby decreased to the maximum legal interest rate permitted by law.

3.08 Books and Records.
(a) Tenant shall keep full, complete and proper books, records, and accounts of its operations and daily Gross Sales. Landlord and its employees, representatives, and agents shall have the right, with twenty-four (24) hours prior notice, anytime during the regular business hours, to examine and copy all of the books and records of Tenant, including, but not limited to, any sales tax reports, balance sheets, and/or profit and loss statements pertaining to the business of Tenant conducted on, in, at, about, or from the Premises and/or

9.33 Miramar Lease 16
New Improvements, for the purpose of investigating and verifying the accuracy of any Quarterly Statement or of Gross Sales.
(b) If Tenant fails to furnish any Quarterly Statement or annual balance sheet and profit and loss statement when due, Landlord shall have the right, after giving Tenant five (5) business days' written notice, to employ an auditor to examine Tenant's books and records and verify the amount of Tenant's Gross Sales and accuracy of the Quarterly Statement. Such verification will be binding on Tenant, and Tenant shall promptly pay the cost of the examination, plus any rent shown to be due. In addition, Landlord may, once in any calendar year, cause an audit of the Tenant's business to be made by an accountant of Landlord's selection.
(c) Tenant shall keep all its records for seven (7) years. If an audit discloses an understatement by Tenant of three percent (3%) or more in Gross Sales or other rent for the period of any report, then the Tenant shall immediately pay to Landlord the cost of such audit, as well as the Additional Rent payable by Tenant to Landlord, plus interest and late charges; otherwise, the cost of such audit shall be paid by Landlord. (d) Tenant shall provide Landlord, annually within 90 calendar days after the close of the business fiscal year for income tax purposes, Tenant's current annual balance sheet and profit and loss statement for Tenant's business on, in, at, about, or from the Premises and/or New Improvements, either certified by Tenant to be true and correct or accompanied by a report of Tenant's CPA. Any Guarantor of this Lease shall, until the expiration of Guarantor’s obligations herein, and upon request but not more frequently than annually, provide Landlord with its current balance sheet, either certified under penalty of perjury by Guarantor to be true and correct or accompanied by a report of Guarantor’s CPA. Any annual balance sheet or profit and loss statement submitted by Tenant or Guarantor shall be used by Landlord only to verify and audit compliance with this Lease, including, but not limited to, verification and auditing of Gross Sales records.
(e) Landlord agrees to maintain all business information obtained through Quarterly Statements and/or audits as confidential to the extent legally permitted and allowed under the Public Records Act, with the exception of information required to bring or defend legal actions. (f) Tenant agrees to use a cash collection system acceptable to Landlord to record sales. Landlord may, at its option, require Tenant to institute changes in said cash collection system.

3.09 Damages for Failure to Operate. LANDLORD DESIRES TO KEEP THE WHARF FULLY OPERATIONAL AND TO RECEIVE RENT FROM TENANT. TENANT

ACKNOWLEDGES AND UNDERSTANDS THAT ITS FAILURE TO KEEP ITS BUSINESS

OPEN AND OPERATIONAL DURING THE TIMES SET FORTH ELSEWHERE IN THIS

LEASE WITHOUT THE PRIOR WRITTEN CONSENT OF LANDLORD WILL CAUSE

LANDLORD TO INCUR COSTS NOT CONTEMPLATED BY THIS LEASE, 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 ON THE COMMENCEMENT DATE (SUBJECT TO SECTION 5.08(E) AND SECTION 19.01 (FORCE MAJEURE)), OR (B) THEREAFTER, IF TENANT FAILS TO

CONTINUOUSLY OPERATE ITS BUSINESS IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS LEASE (SUBJECT TO SECTION 19.01 (FORCE MAJEURE) AND

ANY APPLICABLE CURE PERIOD SET FORTH IN THIS LEASE) OR VACATES OR

9.34 Miramar Lease 17

ABANDONS THE PREMISES PRIOR TO THE EXPIRATION OF THE INITIAL TERM, OR

ANY EXTENDED TERM, LANDLORD SHALL HAVE THE RIGHT, AT ITS OPTION, TO

COLLECT AS LIQUIDATED DAMAGES AN AMOUNT EQUAL TO ONE THREE HUNDRED AND SIXTY-FIFTH (1/365) OF THE APPLICABLE MINIMUM ANNUAL RENT (AS SET FORTH IN SECTIONS 3.01 AND 3.02 ABOVE) 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 LEASE.

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 AND THAT LANDLORD MAY (AT ITS OPTION AND

WITHOUT ANY OBLIGATION TO DO SO) DEDUCT SAID CHARGE FROM THE SECURITY DEPOSIT. THIS LIQUIDATED DAMAGES PROVISION SHALL NOT IN ANY WAY AFFECT OR LIMIT LANDLORD’S RIGHTS OR REMEDIES RESULTING FROM TENANT’S BREACH OF ANY OTHER OBLIGATION UNDER THIS LEASE.

BY EXECUTING THIS LEASE, TENANT ACKNOWLEDGES THAT IT HAS READ AND

UNDERSTOOD THE ABOVE PROVISION COVERING LIQUIDATED DAMAGES, AND

THAT TENANT WAS REPRESENTED BY COUNSEL WHO EXPLAINED THE

CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION AT THE TIME THIS LEASE WAS EXECUTED. TENANT’S PAYMENT OF THE AMOUNTS NOTED ABOVE AS

LIQUIDATED DAMAGES HEREUNDER IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO LANDLORD PURSUANT TO CIVIL CODE SECTION 1671.

Tenant’s Initials: ________________

3.10 Rent Forbearance Until Commencement Date. Consistent with Sections 2.01 (Term of Lease) and 3.01 (Minimum Annual Rent through Year 5) above and subject to Section 3.09 (Damages for Failure to Operate) and Section 5.08 (Construction Performance Milestones for New Improvements), Landlord shall not collect Minimum Annual Rent from Tenant until the Commencement Date.

3.11 Capital Improvement Contributions.
(a) Commencing with the beginning of Lease Year 16 of the Term of this Lease and continuing through the remaining Term of the Lease (including, but not limited to any Extended Terms), Tenant shall fund a capital improvement reserve fund (the “Capital Improvement Fund”) in accordance with the provisions of this Section for the cost of Permitted Capital Improvements (as defined below).
(b) Tenant and Landlord agree and acknowledge that the purpose of the Capital Improvement Fund shall be to provide funds for the costs and expenses of additions, replacements, renovations, and/or significant upgrades of or to the improvements on the Premises, including, but not limited to, building exteriors and major building systems (such as HVAC, mechanical, electrical, plumbing, vertical transportation, security, communications, Wharf substructure and pilings, structural elements, roof, etc.) that significantly increase the capacity, efficiency, useful life, and/or or economy of operation of the improvements or their major systems, and structural work necessary to comply with the Americans with Disabilities Act (“ADA”), all as determined by Landlord (the “Permitted Capital Improvements”).

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Landlord’s reasonable determination as to whether an addition, replacement, renovation, or upgrade is necessary and constitutes a Permitted Capital Improvement shall be binding upon Tenant and shall conclusively establish whether amounts may be disbursed from the Capital Improvement Fund. Notwithstanding any provision contained in this Lease that may be construed to the contrary, the Capital Improvement Fund shall not be used to fund the Tenant’s initial construction of the New Improvements (or any portion thereof). (c) Commencing with the beginning of Lease Year 16 of the Term of this Lease, Tenant shall make quarterly deposits to the Capital Improvement Fund in an amount equal to one percent (1%) of Tenant’s total Gross Sales (as defined above) for the previous quarter.

All interest and earnings on the Capital Improvement Fund shall be added to the Capital Improvement Fund, but shall not be treated as a credit against the Capital Improvement Fund deposits required to be made by Tenant pursuant to this Section 3.11 (Capital Improvement Contributions).
(d) The Capital Improvement Fund shall be held in an account established and administered by Landlord into which deposits shall be made by Tenant pursuant to this Section 3.11 (Capital Improvement Contributions).
(e) Disbursements shall be made from the Capital Improvement Fund only for costs which have been approved by Landlord in writing and which satisfy the requirements of this Section 3.11 (Capital Improvement Contributions). For the purpose of obtaining Landlord’s prior written approval of any Capital Improvement Fund disbursements, Tenant shall submit to Landlord on an annual calendar year basis a capital expenditure plan (the “Capital Expenditure Plan”) for the upcoming year which details the amount and purpose of anticipated Capital Improvement Fund expenditures for which Tenant requests Landlord’s approval, which approval shall not be unreasonably withheld. Any anticipated expenditure set forth in such Capital Expenditure Plan which is approved in writing by Landlord as an acceptable Capital Improvement Fund disbursement shall be considered pre-approved by Landlord (but only up to the amount of such expenditure approved by Landlord and set forth in the annual Capital Expenditure Plan) for the duration of the upcoming year. Tenant shall have the right during the course of each year to submit to Landlord for Landlord’s approval revisions to the then current Capital Expenditure Plan in effect for such year, or individual expenditures not noted on the previously submitted Capital Expenditure Plan. Prior to the disbursement of any amounts from the Capital Improvement Fund, Tenant shall furnish to Landlord applicable invoices, evidence of payment and other back-up materials reasonably acceptable to Landlord, documenting and substantiating costs incurred and the use of amounts from the Capital Improvement Fund.
(f) Notwithstanding any provision contained in this Lease that may be construed to the contrary, the Capital Improvement Fund shall not be used to fund any portion of the cost of periodic, recurring, or ordinary expenditures, repairs, or replacements, excepting repairs or replacement of Wharf substructure and pilings, that keep the Premises or its major systems in an ordinarily efficient operating condition, but that do not significantly add to their value or appreciably prolong their useful life. Permitted Capital Improvements must constitute capital replacements, improvements, or equipment under generally accepted accounting principles consistently applied. Permitted Capital Improvements shall not include costs for any necessary repairs to remedy any broken or damaged improvements (including, but not limited to the New Improvements and Tenant Improvements), all of which costs shall be borne solely by Tenant. All specific purposes and costs for which Tenant desires to utilize amounts from

9.36 Miramar Lease 19
the Capital Improvement Fund shall be subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld.
(g) Notwithstanding any provision contained in this Lease that may be construed to the contrary, Landlord may utilize and expend 50% of any Capital Improvement Fund contributions of Tenant that remain unspent in any calendar year for maintenance, repairs, or replacement of Wharf decking, substructure, and pilings related to or supporting the Premises (as reasonably determined by Landlord), provided that Landlord shall not utilize and expend that portion of the Capital Improvement Fund for which Tenant has timely submitted a Capital Expenditure Plan and received Landlord’s written approval to fund a Permitted Capital Improvement in accordance with this Section 3.11. Landlord’s reasonable determination as to whether any Wharf maintenance, repair, or replacement work is related to or supports the Premises shall be binding upon Tenant and shall conclusively establish whether Landlord may use and expend amounts from the Capital Improvement Fund.

3.12 Additional Rent. All amounts which Tenant is required to pay pursuant to this Lease (other than Minimum Annual Rent, Minimum Annual Base Rent, or Percentage Rent, as applicable), together with any fine, penalty, interest, and costs which may be added for nonpayment or late payment thereof, shall constitute additional rent (hereinafter referred to as “Additional Rent”). Unless this Lease provides otherwise, Tenant shall pay all Additional Rent due with the next quarterly installment of the applicable Minimum Annual Rent (or Percentage Rent, as applicable). If Tenant fails to pay when due any Additional Rent due under this Lease, then Landlord shall have the right, but not the obligation, to pay the same and shall have all of the rights, powers, and remedies with respect thereto as are provided herein or by law in the case of nonpayment of Minimum Annual Rent, Minimum Annual Base Rent, or Percentage Rent, as applicable. The term “rent” as used in this Lease shall mean the applicable Minimum Annual Rent, Minimum Annual Base Rent, Percentage Rent, and Additional Rent.

ARTICLE 4 - USE OF PREMISES

4.01 Permitted Use and Operation of Business; Covenant to Operate. (a) During the Construction Period (as defined in Section 2.01 above), Tenant shall use the Premises solely for the purpose of planning, designing, constructing, and furnishing a commercial restaurant building and related improvements on the Premises, in conformance with this Article 4.
(b) On the Commencement Date (as defined in Section 2.01 above) and throughout the Term of this Lease, Tenant shall use the Premises and New Improvements solely for the purpose of establishing, operating, maintaining, and managing for profit a successful commercial restaurant(s), providing courteous, uniform, respectable and high quality food and beverage services to the public, and a gift shop(s), or other income-producing business(es) as approved by Landlord in writing. Tenant’s business shall be established and conducted throughout the Term with a high level of service and quality. Tenant’s initial branding and business concepts shall be new to the Wharf and approved by the City of Santa Cruz’s Economic Development Director. Thereafter, Tenant shall be entitled to maintain creative control over branding and business concepts within the Premises and New Improvements, subject to the requirements of the Wharf Master Plan and all Applicable Requirements (as

9.37 Miramar Lease 20
defined in Section 1.07, above), Regulatory Approvals (as defined in Section 4.02 below), and Laws concerning the Premises and/or New Improvements.
(c) Although Tenant may maintain creative control over its branding and business concepts at any time after the implementation of the initial branding and business concepts, Tenant shall not change the use of the Premises or New Improvements without first obtaining the written consent of Landlord (which consent may be delayed or withheld in Landlord’s sole and absolute discretion). After the Commencement Date, Tenant shall use its best efforts to continuously operate its business on the Wharf and use and permit the use of the Premises and New Improvements for purposes permitted by this Section 4.01, which will maximize Gross Sales as defined in Section 3.05.
(1) (d) Tenant shall use best efforts to maximize Gross Sales as defined in Section 3.05.At a minimum, Tenant shall implement the following standards Prior to the end of Lease Year 20 of the Term of this Lease, Tenant (in addition to constructing, at its sole cost and expense, the New Improvements) shall invest an amount equal to at least $150,000, adjusted for inflation as outlined in Section 4.01(d)(3) below,(which amount may be invested over a period of several years) in furniture, fixtures and equipment to the Premises, which improvements shall be subject to Landlord’s reasonable approval.

No later than thirty (30) calendar days following the expiration of Lease Year 20 of the Term of this Lease, Tenant shall submit to Landlord an accounting of all expenses paid by Tenant for any additional furniture, fixtures and equipment. Such accounting shall include copies of paid receipts, paid invoices, and other documentation as determined by Landlord to be sufficient to validate Tenant’s aggregate costs for the improvements. In the event that Tenant cannot document its expenditures for the furniture, fixtures and equipment in the amount required herein, Tenant shall, immediately upon demand from Landlord, pay to Landlord any underage as determined by Landlord.
(2) Prior to the end of the Initial Term, and as a requirement to obtain Landlord’s approval of Tenant’s First Extended Term option, Tenant (in addition to constructing, at its sole cost and expense, the New Improvements, and making the upgrades and investments in the Premises required pursuant to subsection 4.01(d)(1) above) shall invest an additional amount equal to at least $150,000, adjusted for inflation as outlined in subsection 4.01(d)(3) below, in additional furniture, fixtures and equipment to the Premises, which amount may be invested over a period of several years, and which improvements shall be subject to Landlord’s reasonable approval.

No later than thirty (30) calendar days prior to the expiration of the Initial Term of this Lease, Tenant shall submit to Landlord an accounting of all expenses paid by Tenant for any additional furniture, fixtures and equipment. Such accounting shall include copies of paid receipts, paid invoices, and other documentation as determined by Landlord to be sufficient to validate Tenant’s aggregate costs for the furniture, fixtures and equipment. In the event that Tenant cannot document its expenditures for the furniture, fixtures and equipment in the amount required herein, Tenant shall, immediately upon demand from Landlord, and as a requirement to obtain Landlord’s approval of Tenant’s First Extended Term option, pay to Landlord any underage as reasonably determined by Landlord. (3) The required investments in new furniture, fixtures and equipment established in subsections 4.01(d)(1) and 4.01(d)(2) shall be adjusted from their present value established as of the Effective Date of this Lease to the equivalent current value in U.S. Dollars

9.38 Miramar Lease 21
as of the date that Tenant submits documentation of such expenditures for City verification, in satisfaction of each of subsections 4.01(d)(1) and 4.01(d)(2). (4) For the purposes of subsection 4.01(d)(3), The base for computing the adjustment is the Consumer Price Index, All Urban Consumers, San Francisco-Oakland-San Jose Metropolitan Area, 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 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. In the event, that this Index is unavailable or its definitions, scope, or metropolitan area, may have changed over the term of this Lease, the parties agree to select another such comparable and applicable inflation metric within sixty (60) days of Tenant’s submission of expenditures to the City.

4.02 Compliance with Laws; Permits. Tenant shall, at Tenant's own cost and expense, observe, comply with, and conform to all valid Laws and requirements (including, without limitation, those requiring capital improvements to the Premises and/or improvements thereon, including, but not limited to, the New Improvements) of all Governmental Bodies (including, without limitation, federal, state, county, and/or municipal) and any board of fire underwriters (or other similar body now or hereafter constituted), relating to the Premises and/or the improvements located (or to be located) thereon (including, but not limited to, the New Improvements), any activities on, at, or in connection with the Premises and/or the improvements located (or to be located) thereon (including, but not limited to, the New Improvements), and any use and/or occupancy of the Premises and/or the improvements located (or to be located) thereon (including, but not limited to, the New Improvements and including, without limitation, any particular use or occupancy by Tenant), whether those Laws and requirements are now in force or are subsequently enacted. Any use permitted by this Lease, as well as any construction, improvement, or modification of the Premises or the improvements located (or to be located) thereon (including, but not limited to, the New Improvements), must be independently consistent with, and not in violation of, the provisions of the City of Santa Cruz Charter and Municipal Code, Applicable Requirements, and Laws.

Tenant is advised and understands that in addition to this Lease, Tenant may need to obtain permits, licenses, registrations, authorizations, certifications, permissions, dispensations, authorizations, and/or other regulatory approvals (collectively “Regulatory Approvals”) from the City of Santa Cruz and/or other Governmental Bodies prior to engaging in the permitted uses, performing the Tenant’s Work, and/or engaging in any other construction, improvement, or modification of the Premises, or the improvements located (or to be located) thereon (including, but not limited to, the New Improvements). Tenant shall be responsible for obtaining and maintaining, at its own cost and expense, any and all licenses, permits, and/or other Regulatory Approvals required for Tenant’s Work and Tenant’s occupancy and use of the Premises, any portion of the Premises, and any improvements located (or to be located) thereon (including, but not limited to, the New Improvements), in the manner contemplated under this Lease, including, without limitation, those necessary for the construction and operation of the New Improvements, any Tenant Improvements, and all related uses (but excluding those Regulatory Approvals required solely for Landlord’s Work). Tenant shall promptly take all actions necessary to comply with all Laws and Regulatory Approvals

9.39 Miramar Lease 22
regulating the occupancy and/or use by Tenant of the Premises, and improvements located (or to be located) thereon (including, but not limited to, the New Improvements).

4.03 Prohibited Uses; No Illegal Purposes or Nuisance. Tenant shall not use, or permit the Premises (or any part thereof or any improvement located or to be located thereon, including, but not limited to, the New Improvements) 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, or any improvement located (or to be located) thereon (including, but not limited to, the New Improvements), 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. Tenant shall not sell or permit to be kept, used, stored, or sold in, on, at, or about the Premises (or any improvement located or to be located thereon, including, but not limited to, the New Improvements) any article which may be prohibited by any policy of fire insurance obtained by the Landlord. Tenant shall, at its sole cost and expense, comply with any and all requirements regarding the use of the Premises (and any improvement located or to be located thereon, including, but not limited to, the New Improvements) by any company that issues a policy of fire, casualty, or public liability insurance to the Landlord. Tenant shall not use or permit the Premises (or any improvement located or to be located thereon, including, but not limited to, the New Improvements) or any portion thereof to be improved, developed, used, or occupied in any manner or for any purpose that is in any way in violation of any valid Law of any Governmental Body.

Furthermore, Tenant shall not cause, maintain, commit, or permit the Premises (or any improvement located or to be located thereon, including, but not limited to, the New Improvements) or any underlying portion of the Wharf to be used in any way that constitutes waste or a nuisance (as now or hereafter defined by any applicable statutory or decisional Law), or that unreasonably annoys, disturbs, or interferes with owners and/or occupants of, or causes damage to the balance of the Wharf or neighboring premises, properties, or improvements. Tenant shall not conduct any auctions, liquidation or bankruptcy sales, “fire” sales or sidewalk sales on, about or near the Premises or New Improvements without Landlord’s prior written consent. Tenant shall at no time allow slot machines or any other gaming machines or arcade amusement machines (including, without limitation pinball, video, and other games of amusement), to be used, operated or kept within the Premises or New Improvements without the prior written consent of Landlord.

4.04 Hours of Operation. Tenant’s minimum hours of operation, unless otherwise agreed by Landlord in writing, shall be the following:
(a) May through October – 11:00 AM through 9:00 PM
(b) September through April – 11:00 AM through 8:00 PM
(c) Tenant shall not be required to be open for business:
i. During periods when the Wharf is normally closed from 2:00 AM to 5:00 AM or otherwise closed by explicit direction of the City of Santa Cruz. ii. During periods when Tenant is closed for repairs or remodeling carried out by Tenant.
iii. During periods of unusually severe weather which has a materially adverse impact on Tenant’s ability to operate.

9.40 Miramar Lease 23
iv. During Closure Conditions as defined in Section 1.09 above.

4.05 Storage and Office Space. Tenant may warehouse, store, and stock within the Premises or New Improvements only such goods, wares, supplies, and merchandise as Tenant intends to offer for sale or consumption on or about the Premises or New Improvements. Tenant shall be entitled to use for office, clerical, or other non-selling purposes only such limited space in the Premises or New Improvements as is reasonably required for Tenant’s business operation on the Premises.

4.06 Hazardous or Toxic Materials.
(a) Tenant shall, at its cost and expense, comply with all federal, state, and local Laws concerning environmental conditions, emissions, pollutants, and controls. Tenant warrants and agrees that it will not introduce, disturb, release, discharge, use, maintain, generate, store, treat, or dispose of any Hazardous Material in, at, about, or on the Premises (or any improvements located or to be located thereon, including, but not limited to, the New Improvements) in violation of any applicable local, state, or federal environmental Laws (including, but not limited to, those laws described below). Tenant further warrants and agrees that Tenant shall not cause, store, use, or permit any Hazardous Material, including without limitation, asbestos, chlorinated solvents (such as tetrachloroethylene), or polychlorinated biphenyls, to be brought upon, kept, or used in, at, about, or on the Premises (or the improvements located or to be located thereon, including, but not limited to, the New Improvements) by Tenant, its agents, officers, directors, employees, contractors, or others acting on Tenant’s behalf or under Tenant’s authority or control, 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 to Tenant’s business, does not violate any requirements of the 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. (b) Tenant shall indemnify, defend (with counsel reasonably satisfactory to Landlord), and hold harmless Landlord (and its officials, officers, directors, employees, volunteers, contractors, representatives, and agents) from and against (a) any Hazardous Materials contamination of the Premises (or the improvements located or to be located thereon, including, but not limited to, the New Improvements) caused by Tenant, its officers, directors, employees, agents, contractors, and/or anyone acting within Tenant’s authority or control; and (b) any and all claims, actions, lawsuits, judgments, damages, penalties, fines, costs, expenses (including, but not limited to, reasonable attorneys’ fees), liabilities, and/or losses, including, without limitation, diminution in value of the Premises (or the improvements located or to be located thereon, including, but not limited to, the New Improvements), damages for the loss or restriction on use of rentable or usable space or of any amenity of the Premises (or the improvements located or to be located thereon, including, but not limited to, the New Improvements), damages arising from any adverse impact on marketing of space on the Wharf, 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 (i) the presence in, on, under, at, or about the Premises (or the improvements located or to be located thereon, including, but not limited to, the New Improvements), or discharge in, on, at, under, or from the Premises (or the improvements located or to be located thereon, including, but not limited to, the New Improvements) of any Hazardous Materials generated and/or brought on or about the

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Premises (or the improvements located or to be located thereon, including, but not limited to, the New Improvements) by Tenant (or its officers, directors, employees, agents, contractors, or anyone acting within Tenant’s authority or control); and/or (ii) Tenant’s failure to comply with any applicable local, state, or federal environmental Laws (including, without limitation, those laws described below). Without limiting the foregoing, if the presence of any Hazardous Material on the Premises (or the improvements located or to be located thereon, including, but not limited to, the New Improvements) caused or permitted by Tenant results in any contamination of the Premises (or the improvements located or to be located thereon, including, but not limited to, the New Improvements), Tenant shall promptly take all actions at its sole cost and expense as are necessary to return the Premises (and the improvements located or to be located thereon, including, but not limited to, the New Improvements) to the condition existing prior to the introduction of any such Hazardous Material; 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 (or the improvements located or to be located thereon, including, but not limited to, the New Improvements). (c) Notwithstanding anything contained in this Section 4.06 that may be construed to the contrary, Tenant shall not be responsible for or indemnify or defend any person or entity for any claim, action, lawsuit, judgment, damage, penalty, fine, cost, expense, liability, and/or loss to the extent proximately caused by: (i) the presence of Hazardous Material existing and present at, about, on, under, or in the Premises prior to the issuance of the Notice to Proceed (excluding any Hazardous Materials brought on site by Tenant, or its officers, directors, employees, agents, representatives, contractors, and/or anyone acting on Tenant’s behalf or under Tenant’s authority or control); or (ii) the sole negligence or willful misconduct of Landlord or its employees, agents, or contractors.
(d) 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 Body, 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.

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4.07 Americans with Disabilities Act. From and after Landlord’s completion of the Landlord’s Work and issuance of the Notice to Proceed and continuing throughout the Term of the Lease, Tenant acknowledges and expressly accepts full responsibility and shall incur all costs and expenses (whether structural or non-structural in nature) for compliance with the requirements of the ADA and any other Law regarding the accessibility of the Premises (and the improvements located or to be located thereon, including, but not limited to, the New Improvements) by disabled individuals. Tenant agrees to release, indemnify, defend, and hold harmless Landlord (and its officials, officers, directors, employees, agents, representatives, independent contractors, successors, and assigns) from and against any claim, loss, expense or liability arising from Tenant’s failure to fully comply with all such Laws and/or this Section

4.07 (Americans with Disabilities Act).

Landlord states that the Premises have 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.” Notwithstanding anything to the contrary in this Lease, any and all repairs, additions, replacements, and/or modifications of the Premises (and/or the improvements located or to be located thereon, including, but not limited to, the New Improvements) necessary to comply with the ADA and/or correct any items of non-compliance or violations of construction-related accessibility standards are the sole responsibility of Tenant and Tenant shall incur all associated fees, costs, and expenses.

4.08 Disposal/Recycling of used Cooking Oil. Tenant shall be fully responsible for the handling, recycling and/or disposing of all cooking oil used at, on, about, or within the Premises and/or New Improvements. Landlord shall not provide any offsite facilities for the storage of used cooking oil.

4.09 Green Business Program.
(a) Landlord desires that all Wharf tenants become a certified Green Business through the City of Santa Cruz Green Business Program. Green Businesses reduce carbon dioxide generation, conserve energy by using fluorescent lighting and Energy Star rated equipment, conserve water through the use of low-flow toilets and water flow restrictors, conserve natural resources by promoting public transit, biking, and walking, reduce waste by recycling and composting and using materials with recycled content, and use less toxic products, all of which provide a safer and healthier environment for employees and visitors to the Wharf.

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(b) Tenant shall contact the City of Santa Cruz Green Business Program and schedule and complete a free Green Business Program Audit. (c) Upon receiving the results of the Green Business Program Audit, and at Tenant’s sole discretion, Tenant may proceed to become a certified Green Business. (d) As an incentive to Tenant to become a certified Green Business, and only after receiving Landlord’s express written approval, Tenant may utilize up to twenty-five (25) percent of Tenant’s contributions to the Capital Improvement Fund for improvements to the Premises specifically listed on the Certified Green Business Program Checklist. (e) Upon receipt from Tenant of documented proof of Tenant’s payment of costs for eligible Green Business improvements, and Tenant’s certification as a Green Business Program, Landlord, at Landlord’s sole and absolute discretion, will reimburse Tenant or defer collection of Tenant’s required quarterly Capital Improvement Fund contributions until the total amount deferred equals the amount of Tenant’s Green Business improvement costs, at which time Tenant shall resume making quarterly Capital Improvement Fund contributions.

4.10 Use of Sidewalk Area. Tenant shall not in any way encumber, obstruct, or impede the sidewalks in front of the Premises and/or New Improvements. Tenant shall at all times keep and maintain said sidewalks in good condition and repair, free and clear of all obstacles, stands (including, but not limited to, hostess, waitress/waiter and other stands), dirt, mud, water, debris, rubbish, filth, minor repairs, and other encumbrances or obstructions, and safe and convenient for the use of the public.

ARTICLE 5 - LANDLORD’S WORK; TENANT CONSTRUCTION OF NEW IMPROVEMENTS; TENANT ALTERATIONS, ADDITIONS AND IMPROVEMENTS

5.01 Landlord’s Work; Tenant Reimbursement Payments.
(a) Prior to commencement of the Construction Period (as defined in Section 2.01, above), to prepare the Premises for Tenant’s Work and occupancy, Landlord shall have completed certain demolition work (including, demolition and removal of the Existing Improvements) and made certain repairs to the pilings, substructure, and decking under the Premises and replaced certain pilings under the Premises, the scope and details of which shall be identified, defined, and determined by Landlord in its sole and absolute discretion, taking into consideration the approved plans and specifications for the New Improvements (collectively “Landlord’s Work”). Landlord will make the plans and specifications for Landlord’s Work available to Tenant before Landlord advertises the project for bidding so that Tenant’s structural engineer may review the same, provided such Tenant review must not in any way delay, hinder, or negatively impact Landlord’s Work or the associated bidding process.
(b) Without agreeing to undertake any activity requiring the subsequent exercise of discretion by the City of Santa Cruz, or any department thereof, Landlord will (1) secure funding for the Landlord’s Work, and (2) with reasonable diligence and due care, complete Landlord’s Work, contingent upon compliance with the California Environmental Quality Act, codified at California Public Resources Code Sections 21000 et seq. as may be amended from time-to-time (“CEQA”). It is estimated that Landlord’s Work will be completed within twelve (12) Months after the California Coastal Commission issues the New Improvements CDP (defined in Section 5.03(a)(2), below), subject to extension for Force Majeure Events as

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provided in Section 19.01 below (“Estimated Outside Delivery Date”). In the event Landlord does not complete Landlord’s Work within the later of 1) 200 calendar days after the Estimated Outside Delivery Date; or, 2) Tenant’s application for a Building Permit for the Tenant Improvements. (subject to Section 19.01 (Force Majeure), below), Tenant or Landlord may terminate this Lease by giving the other Party no less than thirty (30) calendar days’ prior written notice of termination, provided any such termination notice must be delivered and received, if at all, before the Notice to Proceed is issued. In the event Tenant timely exercises its termination rights pursuant to this Section, Landlord will return to Tenant the unused portion of the Security Deposit in accordance with the terms and conditions of Section 1.04 (Security Deposit) above. If Landlord’s failure to complete Landlord’s Work within 200 calendar days after the Estimated Outside Delivery Date (subject to Section 19.01 (Force Majeure), below) is proximately caused by Landlord’s sole negligence or willful misconduct (acting in its proprietary capacity as Landlord and owner of the Premises and not in its regulatory capacity as the City of Santa Cruz), Landlord will return to Tenant the Tenant Progress Payment #1 (defined below), otherwise, Landlord will retain all Tenant Reimbursement Payments.

Thereafter, in the event of such termination, the Parties shall have no thereafter accruing liability to each other, excepting only those provisions of this Lease that expressly survive termination. Termination under this subsection shall not relieve Tenant from the payment of any sums then due to Landlord or others from any claim for costs, expenses, debts, liabilities, damages, or injuries previously accrued or then accruing against Tenant. (c) Concurrently with Tenant’s execution of this Lease, Tenant shall make a lump sum payment to Landlord in the amount of One Hundred Eighty-Five Thousand Dollars ($185,000), as the first deposit on the Leasehold Premises and to offset Landlord’s upfront costs and expenses relating to Landlord’s Work, which payment shall be referred to herein as the “Tenant Progress Payment #1.”
(d) Immediately upon the occurrence of all of the following: (a) completion of Landlord’s Work; and (b) issuance of the Notice to Proceed, Tenant shall make a lump sum payment to Landlord in the amount of One Hundred Eighty-Five Thousand Dollars ($185,000), as final deposit on the Leasehold Premises and to help offset Landlord’s upfront costs and expenses relating to Landlord’s Work, which payment shall be referred to herein as the “Tenant Progress Payment #2.” Tenant Progress Payment #1 and #2 shall be collectively referred to as “Tenant Progress Payments.”

5.02 Tenant’s Duty to Construct. Tenant shall, at Tenant's sole cost and expense, construct or cause to be constructed on the Premises, a new two-story commercial restaurant building and related improvements (the “Tenant’s Work” or “New Improvements”) in the manner and according to the terms, conditions, and standards specified in this Article 5. Such New Improvements shall be an independent, free standing structure located entirely within the boundaries of the Premises. After the satisfaction or waiver of the NTP Pre-conditions set forth in Section 2.01(b) above, Landlord shall issue to Tenant the Notice to Proceed (as defined in Section 2.01(b), above). Tenant shall commence construction of the New Improvements promptly following receipt of the Notice to Proceed and shall diligently prosecute and fully complete Tenant’s Work in accordance with the Schedule of Performance (attached hereto as Exhibit “H” and incorporated herein, and as may be amended at Landlord’s sole discretion) and within the time period set forth in Section 2.01(c), subject to the provisions of Section 2.01(f), Section 5.08 (Construction Performance Milestones for New Improvements), and Section 19.01 (Force Majeure), below.

5.03 Conditions of Construction of New Improvements. Before commencing any work on the New Improvements and before any building materials have been delivered to the

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Premises by Tenant or under Tenant’s authority or at Tenant’s direction, Tenant shall comply with the following conditions or procure Landlord’s prior written waiver of the condition or conditions specified in the waiver:
(a) Regulatory Approvals. Tenant, at Tenant’s sole cost, expense and responsibility, shall obtain any necessary permits, licenses, variances, and/or other Regulatory Approvals to develop, construct, install, and/or operate the New Improvements (excluding those Regulatory Approvals required solely for Landlord’s Work). Tenant agrees to protect and save Landlord and the property of Landlord, including, but not limited to, the Premises, free and harmless from any cost and/or expense associated with said permits, licenses, variances, and/or other Regulatory Approvals. Tenant shall notify Landlord in writing at least fifteen (15) calendar days prior to submitting application(s) to any Governmental Body (other than the City of Santa Cruz) for any applicable Regulatory Approval (including, but not limited to, any planning permit, development permit, construction permit, or building permit) pertaining to the Premises or the New Improvements. Tenant shall provide Landlord with a copy of all application(s) within five (5) calendar days of making said application(s), along with copies of all documentation submitted as part of the application(s). Tenant shall also provide Landlord with a copy of all permits, licenses, and/or other Regulatory Approval issued for the Premises and/or New Improvements within ten (10) calendar days of Tenant’s receipt. The Regulatory Approvals required for the New Improvements include, but are not limited to, the following:
(1) Design Permit and Administrative Use Permit for New Improvements. Tenant must obtain from the City a design permit (“Design Permit”) and an administrative use permit (“Administrative Use Permit”) for the New Improvements. Tenant must submit to the City’s Planning and Community Development Department a complete application (as determined by the City) for the Design Permit and the Administrative Use Permit within three (3) months of the Effective Date.
(2) Coastal Development Permit for New Improvements. A coastal development permit must be obtained from the California Coastal Commission for the New Improvements (“New Improvements CDP”). The Parties anticipate that such New Improvements CDP will be processed as an amendment to Landlord’s existing coastal development permit for the Wharf, CDP 3-81-041. The application for the New Improvements CDP must include, among other things, a copy of Tenant’s approved Design Permit and Administrative Use Permit and Tenant’s final Construction Documents (as defined in Section 5.03(b), below). Landlord and Tenant will cooperate in good faith to prepare the application for the New Improvements CDP.

To this end, Tenant shall promptly (within no more than five (5) calendar days of the request) provide Landlord with all information and/or documentation relating to the New Improvements and Tenant’s proposed use of the Premises and New Improvements as Landlord (and/or the California Coastal Commission) may reasonably request. Landlord, as the owner of the underlying Premises and holder of CDP 3-81-041, will submit the application for the New Improvements CDP to the California Coastal Commission.
(3) Building Permit for New Improvements. Tenant must obtain a building permit from the City of Santa Cruz to perform Tenant’s Work and construct the New Improvements on the Premises (“Building Permit”). After Landlord approves the Construction Documents (defined in Section 5.03(b) below) and within thirty (30) calendar days after the California Coastal Commission issues the New Improvements CDP, Tenant must submit to the City’s Planning and Community Development Department a complete application (as determined by the City) for the Building Permit for the New Improvements.

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(4) If, despite Tenant’s best efforts, any of the Design Permit, Administrative Use Permit, New Improvements CDP, and Building Permit necessary for Tenant’s Work are not approved after the expiration or waiver of any and all appeal periods, Tenant or Landlord may terminate this Lease by giving the other Party no less than thirty (30) calendar days’ prior written notice of termination, provided such termination notice must be delivered and received, if at all, before the Notice to Proceed is issued. In the event a Party timely exercises such right to terminate this Lease, Landlord will return to Tenant the unused portion of the Security Deposit in accordance with the terms and conditions of Section 1.04 above. If Tenant’s failure to obtain such permits is proximately caused by the sole negligence or willful misconduct of Landlord (acting in its proprietary capacity as Landlord and owner of the Premises and not in its regulatory capacity as the City of Santa Cruz), Landlord will return to Tenant the Tenant Reimbursement Payment #1 (defined above), otherwise, Landlord shall retain all Tenant Reimbursement Payments. Following such termination, the Parties shall have no thereafter accruing liability to each other, excepting only those provisions of this Lease that expressly survive termination. Termination under this subsection shall not relieve Tenant from the payment of any sums then due to Landlord or others from any claim for costs, expenses, debts, liquidated damages (including, but not limited to, those set forth in Section 5.08), rent, liabilities, damages, or injuries previously accrued or then accruing against Tenant. (b) Plans and Specifications.
(i) Delivery to Landlord. Tenant shall, at Tenant's own cost and expense, engage an architect or engineer duly licensed to practice as such in the State of California to prepare plans, specifications, drawings, and related documents (the “Construction Documents”) for the New Improvements and shall submit the following to Landlord for approval:

A. Preliminary Plans and Specifications. Before submitting any plans or other Construction Documents to the Building and Safety Division of the City’s Planning and Community Development Department or other City departments or other Governmental Bodies for Regulatory Approvals and no later than four (4) months before commencing any construction on the New Improvements, Tenant shall deliver to Landlord for Landlord’s approval, two (2) copies of the following:

1. Preliminary Construction Documents, including, but not limited to, preliminary drawings and materials with elevations and rendered perspectives, drainage plans, utilities, sewer and service connections, locations of ingress and egress to and from public thoroughfares, curbs, gutters, street lighting, designs, and locations for any structures, outdoor signs, storage areas, and landscaping, all sufficient to enable potential contractors and subcontractors to make reasonably accurate bid estimates and to convey the architectural design of the New Improvements to Landlord so as to enable Landlord to make an informed judgment about the design and quality of construction; and

2. A statement of estimated construction costs for the New Improvements prepared by the engaged architect or engineer.

B. Detailed Construction Documents. No later than two (2) months before commencing any construction on the New Improvements, Tenant shall deliver to Landlord for Landlord’s approval, two (2) copies of the following:

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1. Detailed Construction Documents, including, without
limitation, detailed working drawings, plans, and specifications (including, but not limited to, design plans, structural framing plans, and other detailed plans and specifications) for the New Improvements; and

2. A revised statement of estimated construction costs for the New Improvements prepared by the engaged architect or engineer.

C. Final Construction Documents. Tenant shall prepare final working Construction Documents (including, but not limited to, design plans, structural framing plans, and other final working plans and specifications) substantially conforming to the preliminary and detailed Construction Documents previously approved by Landlord, and submit them to the appropriate Governmental Body(ies) for approval and permits.

Immediately upon receipt, Tenant shall deliver to Landlord one complete set of the final working Construction Documents as approved and permitted by the Governmental Body(ies). (ii) Landlord's Approval or Rejection of Construction Documents. Within fifteen (15) business days after receipt by Landlord of any of the documents submitted to Landlord for approval under Section 5.03(b)(i) above, Landlord shall either approve those documents by endorsing Landlord's approval on each such document and returning one set of the documents to Tenant, or Landlord shall give written notice to Tenant of any objections Landlord may have to those documents. Within fifteen (15) calendar days of the date Landlord gives written notice to Tenant of any objections, Tenant may deliver corrective amendments to the documents to Landlord and Landlord shall, within fifteen (15) calendar days after receiving the corrective amendments, serve written notice on Tenant of Landlord's approval or rejection of the documents as so amended. Tenant shall not deliver Construction Documents to any Governmental Body for a Regulatory Approval until such Construction Documents are approved as provided in this Section 5.03(b)(ii). (iii) Lender’s Approval. Tenant shall deliver to Landlord the written approval of the final Construction Documents by the lender(s) committed to financing the construction of the New Improvements.
(iv) Compliance with Santa Cruz Wharf Master Plan Report and Santa Cruz Wharf Engineering Report. The Construction Documents prepared for the New Improvements by Tenant shall comply with all applicable goals, policies, and guidelines contained in the 2014 Santa Cruz Wharf Engineering Report (dated October 8, 2014) and the Santa Cruz Wharf Master Plan Report (dated October 2014), as such may be amended , particularly those certain Design Standards, all of which are incorporated herein and made part hereof by reference.

Landlord’s Approval of General Contractor. Tenant shall furnish to Landlord for Landlord’s approval, a true and correct copy of Tenant’s proposed contract with the general contractor for the New Improvements, along with evidence of the general contractor’s financial condition. The contract shall grant Tenant the right to assign and Landlord and/or Tenant’s Lender the right (but not the obligation) to assume (subject to the rights of secured Leasehold Lenders as provided in Article 8) Tenant’s obligations and rights under that contract if Tenant defaults (with such assignment becoming effective only upon and to the extent of Landlord’s acceptance of such assignment(s) in writing and only if the Tenant’s Lender has not accepted such assignment(s) in writing within thirty (30) calendar days of Lender’s receipt of notice of Tenant’s default). Landlord may disapprove such contract by notice given within thirty

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(30) calendar days following Landlord’s receipt of the copy of the proposed contract and evidence specified above. The notice shall specify the grounds for disapproval.

Landlord shall not unreasonably disapprove the contract and shall be considered to have approved the contract in the absence of notice of disapproval given within thirty (30) calendar days after Landlord receives the contract and evidence specified above. (c) Approval of Construction Financing. Upon or prior to the issuance of the Building Permit, Tenant shall deliver to Landlord evidence reasonably satisfactory to Landlord that Tenant has obtained firm and binding written commitment(s) for the financing necessary for all aspects of the design, development, and construction of the New Improvements on the Premises. Such evidence shall include, without limitation, true and correct copies of all documents, evidencing the approval and commitment of financing for the New Improvements. “Financing” includes both the construction (or interim) financing and the take-out (or longterm) financing. As used herein, “construction financing” means interim or short-term financing for construction of the New Improvements (or authorized and approved Tenant Improvements) and “take-out financing” means long-term financing, the proceeds of which, in whole or in part, are to repay and discharge the construction loan. Landlord may require by notice that no construction commence on the New Improvements until the take-out financing is firmly committed, but may disapprove the financing only if it violates an express provision of this Lease.

(d) Approval of Disbursements. Landlord shall have the right to approve of the method of disbursing the construction loan funds during the Construction Period, unless the approved construction contract for the New Improvements (referenced in Section 5.03(c) (Landlord’s Approval of General Contractor), above and Section 5.05 (All Work on Written Contract), below) or other Construction Documents address the method and manner of disbursing funds, provided Landlord’s right of approval shall not delay the progress of construction.
(e) Evidence of Insurance. Prior to entering the Premises and/or commencing any of Tenant’s Work, Tenant shall deliver to Landlord the original certificates and amendatory endorsements, or copies of the applicable insurance policies, evidencing the insurance coverage required under Article 10.

5.04 Changes in Construction Documents. After approval by Landlord of the Construction Documents pertaining to the New Improvements, any substantial change in the Construction Documents must be approved in writing by Landlord. For purposes of this Section, "substantial change" means a change that (i) materially alters the exterior appearance of the New Improvements, (ii) substantially alters the approved design intent, or a (iii) results in a decrease or increase in construction costs of $50,000 or more. Minor changes in work or materials not constituting a substantial change need not be approved by Landlord, but a copy of the altered plans and specifications reflecting those changes must be promptly given to Landlord before work using the altered plans and specifications commences. Any request for approval of a substantial change in the Construction Documents must be accompanied by a copy of the altered Construction Documents reflecting the substantial change(s) (collectively “Request for Approval”). Provided the proposed substantial change does not require the Landlord to engage a professional to evaluate such change, within fifteen (15) business days after the Request for Approval is received by Landlord, Landlord shall either approve those documents (as changed), or Landlord shall give written notice to Tenant of any objections Landlord may have to those documents. To prevent delays in the progress of construction, any “substantial change” in the Construction

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Documents shall be considered approved if Landlord does not notify Tenant of any objections within said fifteen (15) business days after Landlord receives the Request for Approval (accompanied by a copy of the altered Construction Documents reflecting the proposed substantial change(s)).

5.05 All Work on Written Contract. All work required in the design and construction of the New Improvements, including, but not limited to, any site preparation work, landscaping work, and/or utility installation work, as well as actual design and construction work on the New Improvements, shall be performed only by competent architects, engineers, and contractors licensed and registered under the Laws of the State of California and shall be performed in accordance with written contracts with those architects, engineers, and contractors. Each such contract shall comply with applicable California prompt payment Laws. The contracts between Tenant and the architect and engineers engaged to design the New Improvements shall include a provision, permitting Landlord, its successors and assigns, to use the plans and specifications prepared pursuant to such design contracts, in connection with the construction, maintenance, operations, alteration of, and addition to the New Improvements.

The construction contracts shall provide that the final payment under the contract due to the contractor shall be in an amount equaling at least five (5) percent of the full amount payable under the contract and shall not be paid to contractor until whichever of the following last occurs: (a) The expiration of 35 days from the date of recording by Tenant of a Notice of Completion of the New Improvements, Tenant agreeing to record that Notice of Completion promptly within the time specified by law for the recording of that notice; or (b) The settlement and discharge of all liens of record claimed by persons who supplied any labor and/or materials for the construction of the New Improvements.

5.06 Performance and Payment Bonds. At the time of entering a contract with Tenant for such work and/or services, each contractor engaged by Tenant to perform any work or services for construction of the New Improvements (or authorized and approved Tenant Improvements), including, but not limited to, any construction, site preparation, utility installation, or landscaping services, shall furnish to Tenant, who shall promptly deliver copies of both of the following to Landlord:
(a) A faithful performance bond issued by a corporate surety authorized to issue surety insurance in California, in an amount equal to one hundred (100) percent of the contract price payable under the contract securing the faithful performance by the contractor of its contract with Tenant, and in form and content acceptable to Landlord. If the performance bond provides for a one-year warranty a separate maintenance bond is not necessary. If the warranty period specified in the subject contract is for longer than one year, a maintenance bond equal to 10% of the contract price is required; and (b) A labor and materials payment bond issued by a corporate surety authorized to issue surety insurance in California, in an amount equal to one hundred (100) percent of the contract price payable under the contract securing the payment of all claims for the performance of labor or services on, or the furnishing of materials for, the performance of the contract and in form and content acceptable to Landlord.

The labor and materials payment bond and faithful performance bond (and maintenance bond, if applicable) referenced above shall be issued by an insurance organization or surety currently authorized by the Insurance Commissioner to transact business of insurance in the State of California with a current A.M. Best rating of no less than A-: VII, unless otherwise acceptable to the Landlord.

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5.07 Compliance with Law and Standards; Construction Work Best Management Practices. The New Improvements shall be constructed, all work on or about the Premises shall be performed, and all buildings or other improvements on or about the Premises shall be installed, erected, and maintained in accordance with: (a) all Applicable Requirements and Laws of all federal, state, county, and/or local Governmental Bodies having jurisdiction over the Premises; and (b) the standards set forth in Section 5.13 below (including, but not limited to, compliance with and conformance to all applicable provisions of the City’s Construction Work Best Management Practices and the City’s Storm Water Best Management Practices for Private and Public Development Projects, copies of which are attached hereto as Exhibit “G”). In the event of any inconsistency or conflict between the standards set forth in Section

5.13 and the terms and conditions set forth in Sections 5.02 through 5.08, the terms and conditions set forth in Sections 5.02 through 5.08 shall prevail as applied to the New Improvements.

5.08 Construction Performance Milestones for New Improvements; Liquidated Damages.
(a) After Landlord approves the Construction Documents and no later than thirty (30) calendar days after the California Coastal Commission issues the New Improvements CDP, Tenant shall submit to the Building and Safety Division of the City’s Planning and Community Development Department a complete (as determined by the City) application for the Building Permit for the New Improvements. Such submittal must include, without limitation, the Construction Documents and other documentation required for such Building Permit.
(b) On or before issuance of the Building Permit, Tenant shall have obtained a written, firm, and binding commitment from a lender described in Section 8.02 below for the financing necessary for all aspects of the design, development, and construction of the New Improvements on the Premises. All financing commitment(s) shall be subject to and comply with Article 8 (Tenant Financing; Leasehold Encumbrance). In the event Tenant fails to obtain financing from a lender by that date, Tenant shall have an additional thirty (30) days from the date the Building Permit is issued to obtain such financing. If Tenant fails to obtain financing by the deadlines set forth herein, Landlord or Tenant shall have the right (in addition to all other rights and remedies provided in this Lease or by law or equity) to terminate this Lease by giving written notice of termination to the other Party not earlier than thirty (30) days after issuance of the Building Permit. Any such termination notice must be delivered and received, if at all, before the Notice to Proceed is issued. In the event this Lease is terminated due to Tenant’s failure to obtain financing, Landlord will return to Tenant the unused portion of the Security Deposit in accordance with the terms and conditions of Section 1.04 (Security Deposit) and the Parties shall have no thereafter accruing liability to each other, excepting only those provisions of this Lease that expressly survive termination. Termination under this subsection shall not relieve Tenant from the payment of any sums then due to Landlord or others from any claim for costs, expenses, debts, liquidated damages (including, but not limited to, those set forth in Section 5.08), rent, liabilities, damages, or injuries previously accrued or then accruing against Tenant.

Tenant shall cause construction of the New Improvements to be commenced no later than forty-five (45) calendar days after issuance of the Notice to Proceed. (c) Tenant shall cause construction of the New Improvements to be diligently pursued without unnecessary interruption, and shall cause the New Improvements to be

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completed and ready for occupancy within the time limits set forth in Section 2.01(c) and the Schedule of Performance (Exhibit “H”), subject to the provisions of Section 2.01(f), above, and subsection 5.08(e), below.
(d) The time for completion set forth in Section 5.08(d) above may be extended for a period equivalent to the period of delay, to the extent construction or commencement of construction is actually, reasonably, and materially delayed by a Force Majeure Event (defined in Section 19.01 below) which prevents the progress of the work. Where there is such a Force Majeure Event, Tenant must immediately notify Landlord, giving full particulars of the Force Majeure Event preventing or delaying construction or commencement of construction, and Tenant must use its best efforts to eliminate or mitigate the effect of such Force Majeure Event upon its performance. Tenant shall use reasonable diligence to avoid any such delay and to resume construction as promptly as possible after the delay. (e) LANDLORD AND TENANT AGREE THAT TIMELY COMMENCEMENT,

CONSTRUCTION, AND COMPLETION OF THE NEW IMPROVEMENTS AND

COMPLIANCE WITH THE ASSOCIATED PERFORMANCE MILESTONES LISTED IN SUBSECTIONS 5.08(A-E) ABOVE IS NECESSARY TO AVOID CAUSING LANDLORD

SERIOUS FINANCIAL DETRIMENT AND THAT THE ACTUAL AMOUNT OF DETRIMENT IS EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN AT THIS TIME. THE

PARTIES AGREE THAT IF TENANT FAILS TO TIMELY ACHIEVE ANY OR ALL OF THE PERFORMANCE MILESTONES LISTED IN SUBSECTIONS 5.08(A-E) ABOVE AND

COMMENCE, CONSTRUCT, AND COMPLETE THE NEW IMPROVEMENTS WITHIN THE

DEADLINES SPECIFIED IN THIS LEASE (AFTER EXPIRATION OF ALL APPLICABLE

NOTICE AND CURE PERIODS) FOR ANY REASON OTHER THAN AS THE RESULT OF LANDLORD’S DEFAULT UNDER THIS LEASE, THEN TENANT SHALL PAY LANDLORD AS LIQUIDATED DAMAGES THE SUM OF FIVE HUNDRED, AND 00/100 DOLLARS ($500.00) PER CALENDAR DAY FOR EACH DAY NEEDED TO COMPLETE THE

SUBJECT PERFORMANCE MILESTONE IN EXCESS OF THE TIME SPECIFIED IN THIS

LEASE, WHICH AMOUNT LANDLORD MAY (AT ITS OPTION WITHOUT ANY OBLIGATION TO DO SO) DEDUCT FROM THE SECURITY DEPOSIT. LANDLORD AND TENANT

AGREE THAT, UNDER THE CIRCUMSTANCES EXISTING AS OF THE DATE OF THIS

LEASE, THE PAYMENT OF THE SPECIFIED AMOUNT IS A FAIR AND REASONABLE

ESTIMATE OF THE DAMAGES THAT WILL BE INCURRED BY LANDLORD FOR TENANT’S FAILURE TO TIMELY COMMENCE, CONSTRUCT, AND COMPLETE THE NEW

IMPROVEMENTS IN ACCORDANCE WITH THE SUBJECT PERFORMANCE MILESTONES. THIS LIQUIDATED DAMAGES PROVISION SHALL NOT IN ANY WAY AFFECT OR LIMIT LANDLORD’S RIGHTS OR REMEDIES RESULTING FROM TENANT’S BREACH OF ANY OTHER OBLIGATION UNDER THIS LEASE.

BY EXECUTING THIS LEASE, TENANT ACKNOWLEDGES THAT IT HAS READ

AND UNDERSTOOD THE ABOVE PROVISION COVERING LIQUIDATED DAMAGES, AND

THAT TENANT WAS REPRESENTED BY COUNSEL WHO EXPLAINED THE

CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION AT THE TIME THIS LEASE WAS EXECUTED. TENANT’S PAYMENT OF THE AMOUNTS NOTED ABOVE AS

LIQUIDATED DAMAGES HEREUNDER IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO LANDLORD PURSUANT TO CIVIL CODE SECTION 1671.

Tenant Initial: Landlord’s Initial ___________________

9.52 Miramar Lease 35

5.09 Requirement of Landlord's Prior Written Consent for Tenant Improvements.

Tenant shall not make any alterations, additions, repairs, or improvements to the exterior of the Premises or improvements located (or to be located) thereon (including, but not limited to, the New Improvements) without Landlord’s prior written consent (which consent may be withheld or delayed in Landlord’s sole and absolute discretion). Tenant shall not make any improvements, alterations, or additions to the interior of the Premises or improvements located (or to be located) thereon (including, but not limited to, the New Improvements) which cost in excess of Fifty Thousand Dollars ($50,000) without Landlord’s prior written consent. In the event of an emergency, Tenant may promptly commence repairs to the Premises and/or New Improvements, but shall provide written notice to Landlord as soon as practical. All alterations, additions, repairs, or improvements shall be in conformity with the Laws of all applicable Governmental Bodies and the terms and conditions of this Lease, including, but not limited to, the provisions of this Article 5. Any alterations, additions, repairs, or improvements shall be made at Tenant’s sole costs and expense. Alterations, additions, and improvements that may be made to or placed on the Premises and/or New Improvements by Tenant are collectively referred to herein as “Tenant Improvements”.

5.10 Notices; Liens. Except in the event of an emergency threatening life or property, at least fifteen (15) calendar days prior to commencing any work relating to the New Improvements or any Tenant Improvements to the Premises approved by Landlord, Tenant shall notify the Wharf Supervisor in writing of the expected commencement and completion dates for the work. Landlord shall have the right thereafter to post and maintain on the Premises such notices (including, but not limited to, notices of Landlord’s non-responsibility) 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 at or for use in the Premises and/or New Improvements.

At all times during the Term of this Lease, Tenant shall keep the Premises and all improvements now or hereafter located on the Premises (including, but not limited to, the New Improvements and any Tenant Improvements) free and clear of all liens and claims of liens for labor, services, materials, supplies, or equipment performed on or furnished to the Premises and/or New Improvements except for Leasehold Encumbrances authorized and approved by Landlord in writing in accordance with Article 8 of this Lease. With the exception of Leasehold Encumbrances authorized and approved by Landlord in writing in accordance with Article 8 of this Lease, Tenant shall not suffer or permit any mechanics’ or materialmen’s lien, attachment, execution, or similar liens or stop notices to attach to, or to be filed or levied against the New Improvements or the Premises (including, but not limited to, the equipment or improvements located thereon) or against Landlord’s interest therein). Subject to the provisions of Section 5.11 (Contesting Liens) below, if any such liens, stop notices, or similar proceedings are filed or commenced, Tenant shall, within twenty (20) calendar days after notice of the filing, cause the same to be discharged of record by payment, deposit, order of court, or by bonding. Subject to the provisions of Section 5.11 (Contesting Liens) below, should Tenant fail to pay and discharge or cause the Premises (and improvements now or hereafter located on the Premises, including, but not limited to, the New Improvements) to be released from any such lien or claim of lien within twenty (20) calendar days after notice of the filing of such lien or claim, Landlord shall have, in addition to all other remedies provided under this Lease or applicable Law, the right (but not the obligation) to cause the same to be released by such means as Landlord shall deem proper (including, but not limited to, paying, adjusting, compromising, and discharging any such lien or claim on any terms and in any manner that Landlord may deem appropriate on behalf of the Tenant) and charge Tenant the

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costs incurred by Landlord as Additional Rent. In that event, Tenant shall, on or before the first day of the next calendar month following any such payment by Landlord, reimburse Landlord for the full amount paid by Landlord in paying, adjusting, compromising, and/or discharging that lien or claim of lien, including, but not limited to, any attorneys' fees or other costs expended by Landlord, together with interest at the then-maximum legal rate from the date of payment by Landlord to the date of repayment by Tenant.

Tenant shall indemnify, hold harmless, and defend Landlord from and against any liens and encumbrances arising out of any work performed or materials furnished by or at the direction of Tenant, as well as any loss, damage, attorneys’ fees, and all other costs and 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 Tenant. Nothing in this Lease shall be deemed or construed in any way as giving Tenant any right, power or authority to contract for or permit, on Landlord’s behalf or as to Landlord’s interest, the rendering of any services or the furnishing of any materials.

5.11 Contesting Liens. If Tenant desires to contest any lien of the nature set forth in Section 5.10 (Notices; Liens) above, it shall notify Landlord of its intention to do so within ten (10) calendar days after the filing of such lien, and Tenant shall furnish the bond required in California Civil Code § 8424 (or any comparable statute hereafter enacted) or otherwise cause such lien to be removed within twenty (20) calendar days after it has been recorded against the Premises and/or New Improvements. Within five (5) calendar days after the final determination of the validity thereof, Tenant shall satisfy and discharge such lien and the amount owed to the extent held valid, and all penalties, interest, and cost in connection therewith, as the case may be. In the event of any such contest, Tenant shall indemnify, defend, and protect Landlord and the Premises (and improvements located or to be located thereon, including, but not limited to, the New Improvements) against all loss, cost, expense, and damage (including, but not limited to, attorney’s fees and costs) resulting therefrom. If Tenant fails to comply with the foregoing provisions, Landlord may (but is not obligated to) do so on behalf of Tenant and charge the Tenant the costs incurred by Landlord as Additional Rent.

5.12 Trade Fixtures. Tenant may install trade fixtures, display items, machinery or other trade equipment in conformance with all Applicable Requirements and Laws. With the exception of furniture, kitchen equipment, appliances and trade fixtures, all improvements, alterations, or additions shall become part of the realty and belong to Landlord at expiration or earlier termination of the Lease. Tenant may remove any trade fixtures, display items, kitchen equipment, appliances, machinery, or other trade equipment from the Premises and New Improvements if Tenant repairs any and all damage caused by the removal of any such item to Landlord’s reasonable satisfaction. Notwithstanding the foregoing, if the removal of any such item would cause damage to the Premises or New Improvements in excess of Five Thousand Dollars ($5,000), Tenant must obtain Landlord’s prior written consent for such removal.

5.13 Standards.
(a) No structure or other improvement of any kind (including, but not limited to, the New Improvements and any Tenant Improvements) which requires Landlord’s prior approval shall be constructed on the Premises unless and until the Construction Documents (including, but not limited to, the plans and specifications) and proposed location of that structure and/or improvement have been approved in writing by Landlord. All structures and/or other

9.54 Miramar Lease 37
improvements of any kind (including, but not limited to, the New Improvements and any Tenant Improvements) which require Landlord’s prior approval shall be constructed on the Premises in compliance with the Construction Documents (including, but not limited to, the plans and specifications) approved in writing by Landlord. (b) Tenant shall accomplish any and all repair, construction, addition, improvement, and/or alteration on, at or about the Premises and/or New Improvements expeditiously, diligently, and with due care.
(c) Tenant shall take all reasonably necessary measures to minimize any damage, disruption or inconvenience caused by such work and make adequate provision for the safety and convenience of all persons affected thereby. Dust, noise, and other effects of such work shall be controlled by Tenant using methods customarily utilized in order to control deleterious effects associated with construction.
(d) All alterations, additions, repairs, or improvements (including, but not limited to the New Improvements and any Tenant Improvements) shall be constructed and maintained in a good and workmanlike manner, using only new materials of good quality and high standard, and in compliance with all applicable local, state and federal Laws and Regulatory Approvals.
(e) Tenant shall have the sole responsibility for obtaining all necessary Regulatory Approvals for any Tenant Improvements and shall make application for such Regulatory Approvals directly to the person or Governmental Body having jurisdiction. Tenant shall notify Landlord in writing at least fifteen (15) calendar days prior to submitting application(s) to any Governmental Body for any development, construction, or building permit or license pertaining to the Premises or the Tenant Improvements. Tenant shall provide Landlord with a copy of all application(s) within five (5) calendar days of making said application(s), along with copies of all documentation (including, but not limited to, plans and specifications) submitted as part of the application(s). Tenant shall also provide Landlord, within ten (10) calendar days of Tenant’s receipt, a copy of all Regulatory Approvals subsequently issued. (f) Tenant shall pay all Landlord’s costs to review and approve any Tenant Improvement.
(g) All construction work on, at, in, or about the Premises and/or New Improvements shall comply with and conform to all applicable provisions of the City’s Construction Work Best Management Practices and the City’s Storm Water Best Management Practices for Private and Public Development Projects, copies of which are attached hereto as Exhibit “G” and incorporated herein, and also available online at http://www.cityofsantacruz.com/government/city-departments/public-works/stormwater/bestmanagement-practices, http://www.cityofsantacruz.com/home/showdocument?id=6031, and http://www.cityofsantacruz.com/home/showdocument?id=36560. (h) It shall be the obligation of Tenant (and/or any contractor and/or subcontractor under Tenant) to comply with and conform to all applicable State of California labor Laws (including, but not limited, applicable prevailing wage laws and requirements as further detailed in Section 19.13 below), and the Parties agree that Tenant shall be liable for any violation thereof. Notwithstanding the foregoing, Tenant may seek an opinion letter from the Department of Industrial Relations as to whether prevailing wage laws apply to the construction of the New Improvements.

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(i) With respect to Tenant Improvements involving structural changes, Tenant shall submit to Landlord evidence that Tenant either has sufficient cash on-hand to build the Tenant Improvements in accordance with the approved Construction Documents (defined in Section 5.03 above), or has obtained a written commitment, in form and content reasonably acceptable to Landlord, to provide financing to build such Tenant Improvements in accordance with the approved Construction Documents. Any financing commitment shall be subject to and shall comply with Article 8. The lender (if any) will be prepared to close the loan subject to delivery of Landlord’s approval of the financing. (j) Tenant shall make, at its sole cost and expense, changes, alterations, or additions in and to Tenant Improvements, the New Improvements, and structures on the Premises that may be required by any Applicable Requirement and/or Law (including, but not limited to, the ADA) from time to time.
(k) The construction of any Tenant Improvements involving structural changes (other than the New Improvements, which must meet and satisfy the specific requirements and milestones set forth in Sections 5.02 through 5.08, above) shall strictly conform to the requirements and terms of this provision.
i. Tenant shall submit an executed construction contract or contracts, in a form and content reasonably acceptable to Landlord, with competent and financiallyresponsible contractors for construction in accordance with the Construction Documents approved by Landlord.
ii. Tenant will commence construction within two (2) months of approval by Landlord of the construction contract(s) and Tenant shall continuously and diligently pursue construction to completion. Provided, however, the commencement and completion dates may be extended pursuant to subsection 5.13(k)(iii) below. All construction will be substantially in accordance with the Construction Documents (including, but not limited to, the plans, specifications and working drawings) previously approved in writing by Landlord. In the event of any inconsistency or conflict between the approved Construction Documents and the terms and conditions of this Lease, the terms and conditions of this Lease shall prevail. iii. The time(s) during which Tenant’s construction is delayed by Force Majeure Events (as defined in Section 19.01 below), shall be added to the times for the commencement and completion of the construction established above on a day-for-day basis.

Where there is such a Force Majeure Event, Tenant must immediately notify Landlord, giving full particulars of the Force Majeure Event preventing or delaying construction, and Tenant must use best efforts to eliminate or mitigate the effect of such Force Majeure Event upon its performance. Tenant shall use reasonable diligence to avoid any such delay and to resume construction as promptly as possible after the delay.
(l) Tenant shall indemnify, defend, and hold harmless Landlord its officials, officers, directors, employees, agents, representatives, volunteers, independent contractors, successors and assigns from and against any damage, claims, cost, expense, or liability as a result of the Tenant Improvements, including, without limitation, any and all expenses such as consultant, architect, contractor fees, and attorney fees related to reviewing and approving the plans and/or removing the Tenant Improvements upon termination or expiration of this Lease. This Article 5 shall not expand or restrict the indemnity obligations of the Parties under Article 10 (Indemnification and Insurance) below.

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(m) With the exception of furniture, equipment, and trade fixtures that may be removed by Tenant pursuant to Section 5.12 (Trade Fixtures) above, the Tenant Improvements shall be surrendered with and remain on the Premises (and/or New Improvements, as applicable) upon expiration or earlier termination of the Lease, subject to Landlord’s right to require their removal by Tenant within sixty (60) calendar days after the termination or expiration of the Lease.
(n) Tenant shall, at the expiration or earlier termination of the Lease, remove the Tenant’s personal property and the trade fixtures that are removable under Section 5.12 (Trade Fixtures), whether or not bolted or otherwise attached to the Premises or New Improvements, and shall repair all resultant damage or injury to the Premises and/or New Improvements.
(o) Notwithstanding any other provision of this Lease, the Parties agree that upon expiration or earlier termination of this Lease, Landlord shall have no liability or obligation to pay compensation for any improvements made to the Premises or the New Improvements.

5.14 Signs and Advertising Matter.
(a) 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 or New Improvements without Landlord’s prior written consent, which shall not be unreasonably withheld. Tenant further agrees to maintain such sign, banner, flag, awning, canopy, covering, or advertising matter in good condition and repair at all times. Tenant shall not display or sell any merchandise or allow carts, stands, 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 or New Improvements without the prior written consent of the Landlord (which consent may be withheld in Landlord’s sole discretion). (b) No advertising medium shall be used or allowed to be used by Tenant which can be heard or experienced outside the Premises or New Improvements, including without limitation, flashing lights, searchlights, loudspeakers, phonographs, radios, or television.

Except with Landlord’s prior written consent, Tenant shall not display, paint or place, or cause to be displayed, painted or placed, any handbills, bumper stickers, or other advertising devices on any vehicle parked in the parking area of the Wharf, including, but not limited to, those belonging to Tenant, or to Tenant’s agent or any other person; nor shall Tenant distribute or cause to be distributed on the Wharf any handbills or other advertising devices. (c) Tenant agrees, at Tenant’s sole cost and expense, to construct and install signs as may be required or allowed by Landlord in strict conformance with the Municipal Wharf Sign Guidelines (“Sign Guidelines”) attached hereto as Exhibit “E” and the design standards in the 2014 Santa Cruz Wharf Master Plan Report and 2014 Santa Cruz Wharf Engineering Report (both of which are available online at http://www.cityofsantacruz.com/government/city-departments/economicdevelopment/development-projects/santa-cruz-wharf-master-plan) (the “Design Standards”), made part hereof by reference. Tenant’s signs shall not be installed without the prior written consent of Landlord. Tenant, at its sole cost and expense, shall obtain all necessary permits before installing, erecting, or constructing any such sign. Signs shall be

9.57 Miramar Lease 40
installed prior to the commencement of Tenant’s business and thereafter shall be maintained by Tenant at Tenant’s sole cost and expense. If Tenant fails to maintain any such sign(s), Landlord shall have the right (but not the obligation) 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 the Landlord’s prior written consent, or said sign does not conform to Landlord’s Sign Guidelines or the Design Standards, Landlord shall have the right (but not the obligation), in its sole discretion, to remove and store Tenant’s sign at Tenant’s sole cost and 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. (d) Landlord reserves the right to revise the Sign Guidelines and the Design Standards for any reason, at any time, including without limitation changes in any governmental requirement or Landlord’s renovation of the Wharf. Within ninety (90) days of Landlord’s request, Tenant shall remove Tenant’s existing sign, patch the underlying attachment surface, and install a new sign, at Tenant’s sole cost and expense, in accordance with Landlord’s then existing Sign Guidelines and Design Standards.

ARTICLE 6 - TAXES AND UTILITIES.

6.01 Tenant to Pay Taxes. After the completion of Landlord’s Work, Tenant shall be solely responsible for and promptly pay before delinquency during the Term of this Lease, without abatement, deduction, or offset, any and all real, possessory interest, and personal property taxes, general and special assessments, and other charges and fees of any description (including, without limitation, any increase caused by a change in the tax rate or by a change in assessed valuation) attributable, levied or assessed by any Governmental Body on or against the Premises, the improvements located (or to be located) on the Premises (including, but not limited to the New Improvements), personal property located on, at, about or in the Premises or improvements located or to be located thereon (including, but not limited to the New Improvements), and the leasehold estate created by this Lease. Tenant shall also be responsible for all other operating costs associated with the Premises and/or the New Improvements, and/or Tenant’s use of and/or operations at the Premises and/or the New Improvements. On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments.

Landlord hereby gives notice to Tenant, pursuant to Revenue and Taxation Code Section 107.6 that this Lease may create a possessory interest that is the subject of property taxes levied on such interest, the payment of which taxes shall be the sole obligation of Tenant.

Tenant shall advise (in writing) any subtenant or third party using the Premises and/or New Improvements of the requirements of Section 107.6.

Any payments under this Section shall not reduce or offset rent payments. Landlord has no liability for such payments.

6.02 Payment Before Delinquency. Any and all taxes, fees, charges, and assessments and installments of taxes, fees, charges, and assessments required to be paid by Tenant under this Lease shall be paid by Tenant at least ten (10) calendar days before each such tax, charge, fee, assessment, or installment of tax, charge, fee, or assessment becomes delinquent. On the written request of Landlord, Tenant shall deliver to Landlord the official and original receipt evidencing the payment of any taxes, fees, assessments, and other charges required under this Article or Tenant shall retain at its sole cost and expense for the Term of

9.58 Miramar Lease 41
this Lease a tax service to notify Landlord whether the taxes, assessments, and other charges have been paid by Tenant as required under this Article. If Tenant fails to timely pay any taxes, fees, charges, or assessments, as provided herein, Landlord shall have the right, but not the obligation, to pay such taxes, fees, charges, and/or assessments on behalf of Tenant and collect such amounts from Tenant as Additional Rent.

6.03 Taxes Payable in Installments. Should any special tax or assessment be levied on or assessed against the Premises that may be either paid in full before a delinquency date within the Term of this Lease or paid in installments over a period either within or extending beyond this Lease, Tenant shall have the option of paying the special tax or assessment in installments. The fact that the exercise of the option to pay the tax or assessment in installments will cause the Premises to be encumbered with bonds or will cause interest to accrue on the tax or assessment is immaterial and shall not interfere with the free exercise of the option by Tenant. Should Tenant exercise the option to pay any such tax or assessment in installments, Tenant shall be liable to pay only those installments (plus, any applicable interest) becoming due during the Term of this Lease. Landlord shall cooperate with Tenant and on written request of Tenant execute or join with Tenant in executing any instruments required to permit any such special tax or assessment to be paid in installments.

6.04 Tax Returns and Statements. Tenant shall, as between Landlord and Tenant, have the duty of attending to, preparing, making, and filing any statement, return, report, or other instrument required or permitted by Law in connection with the determination, equalization, reduction, or payment of any taxes, assessments, fees, or other charges that are or may be attributable to, levied on, or assessed against the Premises, the improvements located (or to be located) on the Premises (including, but not limited to, the New Improvements and any Tenant Improvements), personal property located on or in the Premises or improvements, and the leasehold estate created by this Lease.

6.05 Tax Hold-Harmless Clause. Tenant shall indemnify, defend, and hold Landlord and Landlord’s property, including, but not limited to, the Wharf, the Premises and any improvements (including, but not limited to, the New Improvements and any Tenant Improvements) now or subsequently located on the Premises, harmless from any liability, loss, cost, or damage resulting from any taxes, fees, assessments, or other charges required by this Article 6 to be paid by Tenant and from all interest, penalties, and other sums imposed thereon and from any sales or other proceedings to enforce collection of any such taxes, assessments, or other charges.

6.06 Parking and Business Improvement Area Zone and Charges. Tenant shall pay before delinquency all taxes, assessments, fees, and other charges that are attributable, levied, assessed, charged, or imposed upon businesses within any Parking and Business Improvement Area Zones that include the Santa Cruz Municipal Wharf, which may be established by the City of Santa Cruz. On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments.

6.07 Parking Deficiency Fees; Title 12 Santa Cruz Municipal Code - Local Improvements. Tenant shall pay before delinquency its proportionate share of all taxes, assessments, fees (including, but not be limited to, parking deficiency fees) which are imposed on tenants or owners of businesses located on the Santa Cruz Municipal Wharf, and other charges that are attributable, levied, and/or assessed against the building(s), and other improvements on the Santa Cruz Municipal Wharf, which may be created under Title 12 Santa Cruz Municipal Code - Local Improvements as amended (Chapter 12:32.420, Resolutions

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NS-2233, 20190, and 20424) or any revised or successor ordinances or resolutions thereto.

On demand by Landlord, Tenant shall furnish Landlord with satisfactory evidence of these payments.

6.08 Utilities.
(a) Landlord represents that gas, water, sanitary sewer, and electricity are currently available to the Premises. Tenant shall make all arrangements and be solely responsible for obtaining all gas, water, electricity, heat, fuel, telephone service, refuse disposal, sewer, grease interceptor, maintenance, security services, and other utilities and services (collectively “Utilities and Services”) for the Premises and/or improvements located or to be located thereon (including, but not limited to the New Improvements and any Tenant Improvements). Tenant shall promptly pay or cause to be paid before delinquency, and hold Landlord and Landlord's property including, but not limited to, the Premises and improvements located or to be located thereon (including, but not limited to, the New Improvements and any Tenant Improvements) free and harmless from, all charges, costs, and expenses for the furnishing of all Utilities and Services to the Premises and/or improvements located or to be located thereon (including, but not limited to, the New Improvements and any Tenant Improvements) and for the removal of garbage, tallow, and rubbish from the Premises and/or improvements located or to be located thereon (including, but not limited to, the New Improvements and any Tenant Improvements).
(b) Tenant shall pay, as Additional Rent, a pro rata share of any Utilities and Services which are jointly metered or charged. Tenant’s pro rata share of these charges and fees shall be based upon the ratio of the square footage of the Premises and the New Improvements 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. (c) Landlord shall not be liable for any failure or interruption of any Utilities and/or Services being furnished to the Premises or New Improvements, and no such failure or interruption shall entitle Tenant to terminate this Lease. (d) Any payments under this Section shall not reduce or offset rent payments.

Landlord has no liability for such payments.

6.09 Payment by Landlord. Should Tenant fail to pay within the time specified in this Article any taxes, assessments, fees, or other charges required by this Article to be paid by Tenant, Landlord may, without notice to or demand on Tenant, pay, discharge, or adjust that tax, assessment, fee, or other charge for the benefit of Tenant. In that event, Tenant shall promptly on written demand of Landlord reimburse Landlord for the full amount paid by Landlord in paying, discharging, or adjusting that tax, assessment, fee, or other charge together with interest thereon at the then-maximum legal rate from the date of payment by Landlord until the date of repayment by Tenant. If this Article does not specify the time within which Tenant must pay any charge required by this Article, Tenant shall pay that charge before it becomes delinquent.

ARTICLE 7 - OWNERSHIP OF IMPROVEMENTS

7.01 Tenant Ownership of Improvements During Term.

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(a) Any improvements existing on the Premises at the Effective Date of this Lease shall remain Landlord’s property. Landlord shall also own any improvements constructed on the Premises by Landlord.
(b) Landlord owns the Premises and the Wharf and the pilings, substructure, and decking under the Premises, provided however, solely during the Term of this Lease, the Tenant shall own the New Improvements, subject to the terms and conditions of this Lease. (c) Title to the New Improvements and any Tenant Improvements to be constructed on the Premises by Tenant shall be owned by Tenant until expiration of the Term or earlier termination of this Lease. Tenant shall not, however, remove any improvements from the Premises, nor waste, destroy, or modify any improvements on the Premises, except as permitted by this Lease.

7.02 Landlord Ownership of Improvements Upon Expiration or Termination. Subject to Landlord’s right to require removal of fixtures and improvements as provided in Article 5, all permanent improvements and fixtures on the Premises (including, but not limited to, the New Improvements) at the expiration of the Term or earlier termination of this Lease shall, without compensation to Tenant, automatically and without any act of Landlord, Tenant, or any third party become Landlord's property. Tenant shall surrender the Premises and all improvements constructed thereon (including, but not limited to, the New Improvements) to Landlord at the expiration of the Term or earlier termination of this Lease, free and clear of all liens, encumbrances, and third party claims; provided, however, in the event this Lease is terminated during the first thirty (30) years of the Term, the New Improvements may only be encumbered by those Leasehold Encumbrances authorized and approved in writing by Landlord pursuant to Section 8.02 (Hypothecation for Financing) below. Tenant shall indemnify, defend and hold harmless Landlord against all liability and loss arising from such liens, encumbrances, or claims and/or from Landlord’s exercise of the rights conferred by this Section. Upon the expiration of the Term or earlier termination of the Lease, Tenant agrees to execute, acknowledge, and deliver to Landlord any instrument requested by Landlord as necessary in Landlord's opinion to perfect Landlord's right, title, and interest in and to the Premises and the permanent improvements (including, but not limited to, the New Improvements) and fixtures located thereon (which instrument may include, but is not necessarily limited to, a quit claim deed, whereby all right, title, and interest of Tenant in and to the Premises, including, but not limited to, the New Improvements, is quitclaimed to Landlord). Tenant may remove any movable personal property and equipment (including trade fixtures and kitchen equipment), provided such removal is consistent with Section 5.12 (Trade Fixtures) and Tenant shall repair (at Tenant’s sole cost and expense) any damage caused by such removal. Tenant shall not remove trade fixtures, display items, machinery, or other trade equipment except as allowed pursuant to Section 5.12 (Trade Fixtures) above.

Notwithstanding anything contained in this Lease that may be construed to the contrary, to the full extent permitted by law (including, but not limited to, California Public Resources Code Section 6312, or any successor statute), the Parties agree that upon expiration or earlier termination of this Lease, Landlord shall have no liability or obligation to pay compensation for any improvements made to the Premises (including, but not limited to, the New Improvements and any Tenant Improvements).

ARTICLE 8 - TENANT FINANCING; LEASEHOLD ENCUMBRANCE

8.01 Encumbrances on Landlord's Title; Subordination of Landlord’s Security Interest in Chattel.

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(a) As of the Effective Date, the Premises shall be free and clear of all recorded monetary liens and encumbrances except (i) those identified on the Preliminary Title Report attached hereto as Exhibit “C” and (ii) those that are consistent with and expressly agreed to in accordance with this Lease.
(b) After the Effective Date, any mortgage or monetary encumbrance placed by Landlord on the Premises shall be subject and subordinate to this Lease and to any Leasehold Encumbrance (as defined in Section 8.02 below) then in existence on the leasehold estate as permitted by this Lease.
(c) Any security interest of Landlord, arising under or by virtue of this Lease or by operation of law, in or to Tenant’s chattels shall be junior and inferior to the lien of any Leasehold Lender for a Leasehold Encumbrance authorized and approved by Landlord in accordance with this Article 8.

8.02 Hypothecation for Financing.
(a) For the purpose of (i) financing or refinancing the design, permitting, alteration, construction, and/or reconstruction of the New Improvements or Landlord-approved capital improvements on the Premises, or (ii) acquiring, installing, and maintaining furnishings, fixtures, or equipment on the Premises and/or the New Improvements during the Initial Term of this Lease, Tenant may engage in a Leasehold Encumbrance (as defined below) with a Leasehold Lender only if, in addition to such other applicable terms and conditions of this Lease, the provisions in this Section 8.02 are complied with and satisfied. As used herein, the term “Leasehold Encumbrance” means a Transfer (as defined in Section 11.01 below) by which the Tenant’s leasehold estate is used to secure a debt or other obligation arising from or related to Tenant’s use and/or operation of the Premises and/or the New Improvements and includes a Security Instrument by which Tenant’s leasehold estate is encumbered, mortgaged, conveyed, assigned, or otherwise Transferred to secure such debt or other obligation. As used herein, the term “Security Instrument” means the deed of trust, mortgage, or other encumbering instrument, evidencing the Leasehold Encumbrance. Tenant may have one or more Leasehold Encumbrances at any time during the Initial Term of this Lease. As used herein, the term “Leasehold Lender” means a holder or holders of the Leasehold Encumbrance. In no event shall the unpaid balance on the Leasehold Encumbrances either individually or collectively exceed a loan-to-value ratio of seventy-five (75%) of the Premises as improved by the Tenant. The Leasehold Encumbrance(s) shall affect only Tenant’s leasehold estate and shall be subject to all of the terms, conditions, and provisions of this Lease. Landlord’s fee interest in the Premises shall not be encumbered or subordinated.
(b) Notices to Landlord.
(i) Tenant shall give Landlord prior written notice of any Leasehold Encumbrance, together with a copy of the proposed deed of trust or other Security Instrument and documentation demonstrating to Landlord’s satisfaction the financial and operational responsibility and appropriateness of the proposed Leasehold Lender. Tenant shall provide Landlord within five (5) calendar days such other or additional information and/or documentation as may be reasonably requested by Landlord.

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(ii) Either concurrently with or immediately following the recordation of the Leasehold Encumbrance, Tenant shall provide Landlord with a fully executed conformed copy of each Leasehold Encumbrance (e.g. the deed of trust or other Security Instrument evidencing the encumbrance), the note secured thereby, all related loan documents (including copies of all appraisals), and all amendments thereto, together with a written notice containing the name and address of each Leasehold Lender. In the event of any assignment of a Leasehold Encumbrance or in the event of a change of address of a Leasehold Lender, Tenant shall immediately provide the new name and address of the assignee or Leasehold Lender to Landlord.
(iii) Upon and immediately after the recordation of the Leasehold Encumbrance, Tenant, at Tenant's sole cost and expense, shall cause to be recorded in the office of the Santa Cruz County Recorder, a written request duly executed and acknowledged by Landlord, for Landlord to receive a copy of any notice of default and of any notice of sale under the Leasehold Encumbrance as provided by the statutes of the State of California.

Either concurrent with or immediately following the recordation of such written request, Tenant shall cause a fully conformed copy thereof to be delivered to Landlord. (iv) Notices of default and notices of foreclosure shall be given to Landlord contemporaneously with service on Tenant.
(c) Notices to Leasehold Lenders.
(i) A Leasehold Lender shall not be entitled to notice or a copy of any notice from Landlord, until and unless Tenant provides Landlord with Leasehold Lender’s name and address and requests in writing that such Leasehold Lender receive notices (“Leasehold Lender Notice”).
(ii) After Landlord receives a Leasehold Lender Notice, Landlord shall send to such Leasehold Lender a notice of any default by Tenant under this Lease at the same time as and whenever any such notice of default shall be given by Landlord to Tenant, addressed to such Leasehold Lender at the address last furnished to Landlord. Tenant irrevocably directs that Landlord accept, and Landlord agrees to accept, performance and compliance by any such Leasehold Lender of and with any term, covenant, agreement, provisions, condition, or limitation on Tenant's part to be kept, observed or performed hereunder with the same force and effect as though kept, observed, or performed by Tenant. (d) Use of Funds.
(i) Any funds derived from a loan secured by a Landlord approved and authorized Leasehold Encumbrance shall be used only for the purpose of (i) financing and/or refinancing the design, permitting, alteration, construction, and/or reconstruction of the New Improvements or Landlord-approved capital improvements on the Premises, and/or (ii) acquiring, installing, and maintaining furnishings, fixture, or equipment on the Premises and/or the New Improvements.
(ii) The proceeds of any loan(s) secured by a Landlord approved and authorized Leasehold Encumbrance shall be used first to pay any costs, expenses, and charges directly connected with the construction, alteration, and/or reconstruction of the subject improvement(s) on the Premises (including, but not limited to, the New Improvements) and any mechanics’ liens or other charges levied or leviable against the Premises because of

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any improvements (including, but not limited to, the New Improvements) made on the Premises by Tenant or its successors in interest.
(e) Required Provisions in Leasehold Encumbrance. In addition to the ordinary and customary provisions regularly required by a Leasehold Lender or title company insuring a Leasehold Lender’s interest under an encumbrance similar to the Leasehold Encumbrance, the Leasehold Encumbrance shall contain all of the following provisions:
(i) Tenant’s Leasehold Encumbrance shall only encumber the New Improvements and shall not encumber Landlord’s fee title interest in the Premises or the Wharf;
(ii) Tenant may refinance any unpaid balance on the Leasehold Encumbrance or obtain any amounts under the Leasehold Encumbrance only as permitted by this Section 8.02;
(iii) The due date of the Leasehold Encumbrance or the promissory note(s) secured by the Leasehold Encumbrance may not be extended and the loan documents for the Leasehold Encumbrance may not be amended or modified in any material way, except with the prior written consent of Landlord; and
(iv) Any and all notices of default under the Leasehold Encumbrance or under the promissory note(s) secured by the Leasehold Encumbrance must be given in writing to both Tenant and Landlord and Landlord shall have the right (but not the obligation) to cure any default not cured by Tenant within thirty (30) calendar days after expiration of the period granted to Tenant to cure a default.
(f) Landlord Consent. The prior written consent of Landlord (which consent shall not be unreasonably withheld, conditioned, or delayed) shall be required for:
(i) A Transfer of this Lease at foreclosure sale under the Leasehold Encumbrance, under judicial foreclosure, or by an assignment in lieu of foreclosure; and/or (ii) Any subsequent Transfer by the Leasehold Lender where the purchaser at such foreclosure sale is other than the Leasehold Lender.

In either such event the Leasehold Lender must, prior to consummation of the Transfer, notify the Landlord in writing of any such proposed Transfer, setting forth the name and address of the proposed transferee, the effective date of such Transfer, and including the express written agreement (in form satisfactory to Landlord) of the transferee agreeing to be bound by and comply with all terms, conditions, and provisions of the Lease and fully assuming and agreeing to timely perform and discharge as a direct obligation of transferee to Landlord all of the obligations, responsibilities, duties, and liabilities under this Lease, together with a copy of the document by which such Transfer is to be made. Any such transferee shall be liable to perform all obligations, responsibilities, and duties of the Tenant under this Lease from and after the date of such Transfer. Any subsequent Transfer of this Lease or the leasehold (or any portion thereof) shall be subject to the terms, conditions, limitations, and restrictions relating to Transfers and assignments as set forth in this Lease. (g) Leasehold Lender Opportunity to Remedy Default. Any Leasehold Lender for which Landlord received a Leasehold Lender Notice as provided in Section 8.02(c) shall have

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the right, but not the obligation, to remedy the default or acts or omissions of Tenant within the period and in the manner specified in this provision. For as long as there is in effect any Leasehold Encumbrance (that satisfies the requirements set forth in this Section 8.02), before Landlord may terminate this Lease because of any default under or breach of this Lease by Tenant, Landlord shall give written notice of the default or breach to the Leasehold Lender in accordance with the Leasehold Lender Notice as provided in Section 8.02(c) and afford such Leasehold Lender the opportunity after service of the notice to do one of the following:
(i) Cure the breach or default within ten (10) calendar days after expiration of the time period granted to Tenant under this Lease for curing the subject default, when the default can be cured by the payment of money to Landlord or some other person or entity; or (ii) Cure the breach or default within thirty (30) calendar days after expiration of the time period granted to Tenant under this Lease for curing a default, when the breach or default must be cured by something other than the payment of money; provided, however, that in the event that the nature of such cure is such that more than thirty (30) calendar days are reasonably required, the Leasehold Lender shall have such additional period of time as is reasonably required provided that Leasehold Lender commences the cure within such thirty (30) calendar days and thereafter diligently and continuously prosecutes the cure to completion.

Landlord shall not be required to furnish any further notice(s) of default to said Leasehold Lender.
(h) Foreclosure in Lieu of Curing Default.
(i) A Leasehold Lender under a Leasehold Encumbrance (that satisfies the requirements set forth in this Section 8.02) may forestall termination of this Lease by Landlord for a default under or breach of this Lease by Tenant by commencing proceedings to foreclose the Leasehold Encumbrance. The proceedings so commenced may be for the judicial or non-judicial foreclosure of the Leasehold Encumbrance under a power of sale contained in the security instrument. The proceedings shall not, however, forestall termination of this Lease by Landlord for the default or breach by Tenant unless all of the following conditions are met:
(i) The proceedings are commenced within thirty (30) calendar days after service on Leasehold Lender of the notice described in Section 8.02(c)(ii) above; (ii) The proceedings are, after having been commenced, diligently pursued in the manner required by law to completion; and (iii) Leasehold Lender timely keeps and performs all of the terms, covenants, and conditions of this Lease requiring the payment or expenditure of money by Tenant and timely performs all of Tenant’s other obligations under this Lease until the foreclosure proceedings are complete or are discharged by redemption, satisfaction, payment, or conveyance of the leasehold estate to Lender. (ii) Nothing in this Section 8.02(h) (Foreclosure in Lieu of Curing Default) shall extend this Lease beyond the Term or any Extended Term, or require a Leasehold Lender to continue any foreclosure proceedings after a breach or default has been remedied.

If Tenant’s breach or default is fully remedied to Landlord’s satisfaction and the Leasehold

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Lender discontinues such foreclosure proceedings, this Lease may continue as if no breach or default under this Lease occurred.
(iii) Before a Leasehold Lender, or any other assignee, future transferee, or purchaser by foreclosure of the Leasehold Encumbrance, acquires the leasehold estate, the New Improvements, or any interest in the Premises or any improvements located thereon, it shall, as an express condition precedent, agree in writing to assume each and every obligation, duty, responsibility and liability under this Lease. Regardless, with the exception of said Leasehold Lender, no Transfer to an assignee, future transferee, or purchaser by foreclosure of a Leasehold Encumbrance shall be effective without Landlord’s prior written consent, which shall not be unreasonably withheld or delayed. (iv) The assignee, purchaser, or future transferee at any sale of this Lease or of the leasehold estate in any proceedings for the foreclosure of or trustee’s sale under any Leasehold Encumbrance, or pursuant to any deed in lieu of foreclosure, shall be deemed an assignee or transferee of this Lease, and shall be deemed to have agreed to perform all of the terms, covenants, conditions, obligations, responsibilities, duties, and liabilities on the part of Tenant to be performed in this Lease, but only from and after the date of such purchase and assignment, and only for so long as such purchaser, future transferee, or assignee is the owner of or holds title to the leasehold estate.
(v) If Landlord denies consent to (A) the successful bidder or purchaser upon foreclosure or (B) a proposed future transferee, assignee, or sublessee of the Leasehold Lender, the sole and exclusive remedy against Landlord shall be for such party or the Leasehold Lender to seek relief in the nature of specific performance. (vi) A Leasehold Lender shall include a statement in any Notice of Foreclosure, Notice of Default, or Notice of Trustee’s Sale that provides the requirements for Landlord’s consent.
(i) Limitation on Tenant’s Right to Encumber. Subject to the provisions of Section

8.01 above, any Leasehold Encumbrance now or hereafter placed on Tenant’s interest in the Premises and any improvements located or to be located thereon (including, but not limited to, the New Improvements) shall be subject to any limitations in this Lease and Landlord’s interest in the tidelands under the Wharf. Tenant shall not use, encumber, or Transfer this Lease, the New Improvements, or any interest in the Premises as security or collateral for any action unless directly related to the permitted uses allowed by this Lease. (j) No Rights to Encumber Interest of Landlord. Tenant may encumber the New Improvements in accordance with and subject to the requirements of this Section 8.02.

However, the provisions of this Section 8.02 do not give any person or entity the right to mortgage, hypothecate, cause a Transfer of, or otherwise encumber or cause any liens to be placed against the Landlord’s interest in the Wharf or the Premises. No Leasehold Encumbrance shall extend to, attach to, or otherwise affect the fee, reversionary interest, or estate of Landlord in and to the Premises or the Wharf. The Leasehold Encumbrance and all rights acquired under it shall be subject to the terms and conditions of and each and all of the covenants, conditions, and restrictions stated in this Lease and to all rights and interests of Landlord, except as otherwise expressly provided in this Lease. Should there be any conflict between the provisions of the Lease and of any Leasehold Encumbrance executed by Tenant, the provisions of this Lease shall control.

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(k) Estoppel Certificate. Landlord shall, within ten (10) business days after receipt of written request from Tenant or any Leasehold Lender, certify by written instrument to any Leasehold Lender or proposed Leasehold Lender: (i) as to whether this Lease has been modified, supplemented, amended, extended or renewed; (ii) as to the existence of any breach or default of this Leased; and (ii) as to the commencement and expiration dates of the Term of this Lease.

8.03 Additional Provisions. As to any Leasehold Encumbrance (that satisfies the requirements set forth in Section 8.02 above), Landlord consents to terms that provide (a) for an assignment of Tenant's share (if any) of the net proceeds from any award or other compensation resulting from a total or partial (other than temporary) taking of the Premises by condemnation subject to the terms of Article 18 (Condemnation) below; (b) for the Leasehold Lender for which Landlord received a Leasehold Lender Notice as provided in Section 8.02(c) to enter upon the Premises during business hours, with reasonable advance notice (but, in any event, no less than 48 hours prior notice) to Landlord and Tenant, to view the state of the Premises; (c) that a default by Tenant under this Lease shall constitute a default under the Leasehold Encumbrance; (d) for an assignment of Tenant's right, if any, to terminate, cancel, modify, change, supplement, alter, or amend this Lease; and (e) effective upon any default in any such Leasehold Encumbrance, (1) for the foreclosure of the Leasehold Encumbrance pursuant to a power of sale, by judicial proceedings, or other lawful means and the subsequent sale of the leasehold estate to the purchaser at the foreclosure sale and a sale by such purchaser if the purchaser is the Leasehold Lender (subject to the other terms and conditions of this Article 8), (2) for the appointment of a receiver, irrespective of whether the Leasehold Lender accelerates the maturity of all indebtedness secured by the Leasehold Encumbrance, (3) for the right of the Leasehold Lender or the receiver to enter and take possession of the Premises to manage and operate the same and to collect the sub-rentals, issues, and profits therefrom and to cure any default under the Leasehold Encumbrance or any default by Tenant under this Lease, and (4) for an assignment of Tenant's right, title, and interest in and to (A) any deposit of cash, securities, or other property, which may be held to secure the performance of covenants, conditions and agreements contained in this Lease, (B) the premiums for or dividends upon any insurance provided for the benefit of any Leasehold Lender or required by the terms of this Lease, as well as (C) any refunds or rebates of taxes or assessments upon or other charges against the Premises, whether paid or to be paid.

8.04 No Modification without Lender's Consent. For as long as there is any Leasehold Encumbrance (that satisfies the requirements set forth in Section 8.02 [Hypothecation for Financing] above) in effect for which Landlord receives a Leasehold Lender Notice as provided in Section 8.02(c) above, Tenant and Landlord hereby expressly stipulate and agree that they will not materially modify this Lease nor cancel this Lease (subject to Landlord’s right to terminate this Lease pursuant to the terms and conditions of Section 2.01(f), Section

5.01(b), Section 5.03(a), and Section 5.08(b), above, and Section 10.03, Section 11.03, and Article 14, below) without the written consent of a Leasehold Lender entitled to notice as provided in Section 8.02(c) above and having that Leasehold Encumbrance (which consent shall not be unreasonably withheld or delayed).

8.05 Right of Lender to Realize on Security. A Leasehold Lender with a Leasehold Encumbrance (that satisfies the requirements set forth in Section 8.02 [Hypothecation for Financing] above) shall have the right at any time during the Term of this Lease and the existence of the Leasehold Encumbrance to do both of the following:

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(a) Any act or thing required of Tenant under this Lease, and any such act or thing done and performed by Leasehold Lender shall be as effective to prevent a forfeiture of Tenant's rights under this Lease as if done by Tenant; and (b) Realize on the security afforded by the leasehold estate by foreclosure proceedings, accepting an assignment in lieu of foreclosure, or other remedy afforded in law or in equity or by the Security Instrument, and, subject to satisfaction of the requirements set forth in Section 8.02 above:
(1) To transfer, convey, or assign the title of Tenant to the leasehold estate created by this Lease to any purchaser at any foreclosure sale, whether the foreclosure sale is conducted under court order or a power of sale contained in the Security Instrument, or to an assignee under an assignment in lieu of foreclosure; and (2) To acquire and succeed to the interest of Tenant under this Lease by virtue of any foreclosure sale, whether the foreclosure sale is conducted under a court order or a power of sale contained in the Security Instrument, or by virtue of an assignment in lieu of foreclosure. The Leasehold Lender or any person or entity acquiring the leasehold estate shall be liable to perform Tenant's obligations under this Lease during the period, if any, in which that entity or person has ownership of the leasehold estate or possession of the Premises.

8.06 New Lease to Lender. Notwithstanding any other provision of this Lease that may be construed to the contrary, should this Lease terminate because of any default under or breach of this Lease by Tenant, Landlord agrees to enter into a new lease for the Premises with the Leasehold Lender under a Leasehold Encumbrance, provided all of the following conditions are satisfied:
(a) A written request for the new lease is served on Landlord by Leasehold Lender within fifteen (15) calendar days after service on Leasehold Lender of the notice described in Section 8.02(c) of this Lease;
(b) The new lease;
(i) Is for a term ending on the same date the Term of this Lease would have ended had this Lease not been terminated;
(ii) Provides for the payment of rent at the same rate that would have been payable under this Lease during the remaining Term of this Lease had this Lease not been terminated; and
(iii) Contains the same terms, covenants, conditions, and provisions as are contained in this Lease (except those that have already been fulfilled or are no longer applicable).
(c) The Leasehold Lender, on execution of the new lease by Landlord, shall pay any and all sums that would at the time of the execution of the new lease be due under this Lease but for its termination and shall otherwise fully remedy, or agree in writing to remedy, any other defaults under or breaches of this Lease committed by Tenant that can be remedied; (d) The Leasehold Lender, on execution of the new lease, shall pay all reasonable costs and expenses, including, but not limited to, attorneys' fees and court costs, incurred in

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terminating this Lease, recovering possession of the Premises from Tenant or the representative of Tenant, and preparing the new lease;
(e) The new lease shall be subject to all existing subleases between Tenant and subtenants, provided that for any sublease, the subtenant agrees in writing to attorn to Leasehold Lender (or its assignee); and
(f) The new lease shall be assignable by Leasehold Lender only with the prior written consent of Landlord.

8.07 No Merger of Leasehold and Fee Estates. For as long as any Leasehold Encumbrance (that satisfies the requirements set forth in Section 8.02 [Hypothecation for Financing] above) is in existence, in the event that the title to Landlord's estate and to Tenant's estate shall be acquired by the same person, firm, or entity, other than as a result of termination of this Lease, no merger shall occur if the effect of such merger would materially impair the lien of any Leasehold Encumbrance.

8.08 Lender as Assignee of Lease. No Leasehold Lender under any Leasehold Encumbrance shall be liable to Landlord as an assignee of this Lease unless and until Leasehold Lender acquires all rights of Tenant under this Lease through foreclosure, an assignment in lieu of foreclosure, or as a result of some other action or remedy provided by law or by the instrument creating the Leasehold Encumbrance.

8.09 Lender as Including Subsequent Security Holders. The term "Leasehold Lender" as used in this Lease shall mean not only the lender that loaned money to Tenant for the original construction of the New Improvements, but also to any subsequently created Leasehold Encumbrance (that satisfies the requirements set forth in Section 8.02 [Hypothecation for Financing] above).

8.10 Two or More Leasehold Lenders. In the event two or more Leasehold Lenders each exercise their rights under this Lease and there is a conflict that renders it impossible to comply with all requests of Leasehold Lenders, the Leasehold Lender whose Leasehold Encumbrance would have senior priority in the event of a foreclosure shall prevail.

ARTICLE 9 - REPAIRS AND RESTORATION

9.01 Maintenance by Tenant.
(a) At all times after the completion of Landlord’s Work and issuance of the Notice to Proceed, Tenant, at its sole cost and without expense to Landlord, assumes full responsibility for operation, maintenance, and repair of the Premises and improvements located (or to be located) thereon (including, but not limited to, the New Improvements).

Tenant expressly waives all rights to make repairs at Landlord’s expense under Sections 1941 and 1942 of the California Civil Code.
(b) At all times after the completion of Landlord’s Work and issuance of the Notice to Proceed and throughout the Term of this Lease, Tenant shall, at its sole cost and expense, keep and maintain the Premises and improvements located (or to be located) thereon (including, but not limited to, the New Improvements) in good order, condition, and repair and in compliance with all Laws and Applicable Requirements, and shall promptly and diligently repair, restore, and/or make all replacements necessary to keep the Premises and

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improvements located (or to be located) thereon (including, but not limited to, the New Improvements) in such condition, including, without limitation, the inspection, maintenance, repair, and replacement of grease traps, grease hoods, cooking appliances, HVAC systems, plumbing, sewer systems, fire sprinkler systems, building foundations (and other structural components of any and all buildings located or to be located on the Premises), exterior and interior walls, doors, windows, plate glass, awnings, roofs, and all other systems serving the Premises and/or the New Improvements, and structural and non-structural components of the Premises and improvements located (or to be located) thereon (including, but not limited to, the New Improvements). Without limiting the foregoing, Tenant’s maintenance and repair obligations shall include, without limitation, the following:
(1) Professional maintenance and cleaning of all grease hoods (including, but not limited to, the plenums, exhaust duct, fans, clean outs, and stainless steel flashings) and grease traps every ninety (90) days, or once a month if mesquite or live charcoal is used. (2) Cleaning the building sewer main and the sewer distribution system related to the Premises and improvements located (or to be located) thereon (including, but not limited to, the New Improvements) with a roto-rooter system a minimum of four (4) times per year to prevent grease accumulation in the sewer system. Tenant shall also maintain, without limitation, all plumbing fixtures and the plumbing system in the Premises and improvements located (or to be located) thereon (including, but not limited to, the New Improvements). (3) Steam-cleaning the pedestrian sidewalk fronting the Premises and/or the New Improvements on a quarterly basis.
(4) Keeping and maintaining the sidewalk fronting the Premises and/or the New Improvements in good condition and repair, free and clear of all obstacles, stands, dirt, mud, water, debris, rubbish, filth, and other encumbrances or obstructions, and safe and convenient for the use of the public.
(5) Windows shall be washed inside and out on a regular basis; flags, awnings, and signs shall be maintained in a good condition; lights shall be kept operable; any fabric awnings shall be washed regularly and repaired immediately if ripped or torn; graffiti shall be removed immediately; any brass hardware shall be polished regularly. (6) All wood-fired stoves and ovens shall be inspected on an annual basis and shall be re-pointed or repaired as required.
(7) Handling, recycling, and/or disposing of all cooking oil used at, on, about, or within the Premises and/or the New Improvements.
(c) All replacement equipment shall be of a quality, value, and use equal to or exceeding that of the original equipment or improvements. Should Tenant fail to promptly and diligently make these repairs and replacements or otherwise maintain and/or repair the Premises and improvements located (or to be located) thereon (including, but not limited to, the New Improvements) for a period of ten (10) calendar days after delivery of a written demand by Landlord, Landlord shall have the right (but not the obligation) 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 and expenses incurred by Landlord in making such repairs and/or replacements, together with interest thereon at the maximum rate permitted by law from the date of commencement of the work through the date

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of payment. Tenant shall, at its sole cost and expense, promptly and diligently repair any damage to the Premises, building(s), and/or improvements located (or to be located) on the Premises, the New Improvements, and/or the Wharf caused by Tenant, its agents, employees, representatives, contractors, customers, invitees, subtenants, assignees and/or concessionaires, or caused by the installation or removal of Tenant’s personal property. (d) Tenant shall, at its own expense, comply with all requirements of the Landlord’s insurance underwriters and any other governmental authority having jurisdiction thereof, regarding the installation and periodic maintenance of fire suppression systems or apparatus. (e) Tenant shall have no responsibility to maintain, repair or replace any portion of the Premises prior to the completion of Landlord’s Work and issuance of the Notice to Proceed.
(f) Except as provided in and Section 3.11 (relating to Landlord’s use of the Capital Improvement Fund for maintenance, repairs, or replacements of Wharf decking, substructure, and pilings) and Section 5.01 (relating to Tenant’s payment of the Tenant Reimbursement Payments), Tenant shall have no responsibility to maintain, repair, or replace any portion of the Wharf decking, substructure, and pilings related to or supporting the Premises, unless such maintenance, repair, or replacement is triggered or caused by a Claim for which Tenant is required to indemnify, defend, and hold harmless Landlord or other Indemnified Parties under this Lease.

9.02 Maintenance by Landlord.
(a) Following completion of Landlord’s Work and the issuance of the Notice to Proceed, Landlord shall have no responsibility to maintain, repair, or replace the Premises or improvements located (or to be located) thereon, or any portion thereof. (b) Tenant expressly waives (1) the right to require Landlord to make repairs; (2) any right to make repairs at the expense of Landlord; (3) the right to reduce or offset rent as a consequence of the condition of the Premises or the improvements located thereon (including, but not limited to, the New Improvements); (4) the benefits of California Civil Code Section 1932, 1941, and 1942, as amended from time to time, or any superseding statute, and of any other law permitting Tenant to make repairs at Landlord's expense; and (5) any Law, judicial pronouncement, or common law principal similar thereto, which is now or hereinafter in effect or is otherwise inconsistent with the provisions of this Lease.

9.03 Requirements of Governmental Agencies. At all times after completion of Landlord’s Work and issuance of the Notice to Proceed, Tenant, at Tenant's own cost and expense, shall do all of the following:
(a) Make all alterations, additions, and/or repairs to the Premises and/or the improvements on the Premises (excluding Landlord’s Work, but including, without limitation, the New Improvements) required by any valid Law now or hereafter made or issued by any federal, state, county, local, or other Governmental Body; (d) Indemnify, defend and hold Landlord and the property of Landlord, including, but not limited to the Premises, free and harmless from any and all liability, loss, damages, fines,

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penalties, claims, and actions resulting from Tenant's failure to comply with and perform the requirements of this Section.

9.04 Tenant's Duty to Restore Premises.
(a) Tenant shall immediately notify Landlord in writing upon the occurrence of any damage or destruction that may occur on the Premises or improvements located thereon (including, but not limited to, the New Improvements).
(b) If at any time following completion of Landlord’s Work and the issuance of the Notice to Proceed and/or during the Term of this Lease, the Premises or any improvements now or hereafter on the Premises (including, but not limited to, the New Improvements) are damaged or destroyed in whole or in part by fire, theft, the elements, or any other cause not proximately caused by the sole negligence or willful misconduct of Landlord, this Lease shall continue in full force and effect and Tenant, at Tenant's own cost and expense, shall promptly repair and restore the Premises, improvements (including, but not limited to the New Improvements), and/or any portion thereof, which are damaged or destroyed. (c) Unless this Lease has been terminated pursuant to the provisions of Section

9.05 (Option to Terminate Lease for Destruction), Tenant’s obligation to make payments of Minimum Annual Rent (or Percentage Rent), and Additional Rent and to perform all its obligations, covenants, and conditions shall not be affected by any damage or destruction of the Premises or improvements located thereon (including, but not limited to, the New Improvements) by any cause whatsoever (other than the sole negligence or willful misconduct of Landlord), and Tenant hereby waives the provisions of any Law now or hereafter in effect contrary to such obligations of Tenant as herein set forth, or which relieves Tenant therefrom. (d) Following completion of Landlord’s Work and the issuance of the Notice to Proceed, upon any event of damage or destruction to the Premises or improvements located thereon (including, but not limited to, the New Improvements), Tenant shall at its sole cost and expense promptly take such actions and undertake and complete such work as is necessary to assure the safe condition of the Premises and improvements (including, but not limited to, the New Improvements) pending the ultimate disposition. (e) Any repair and/or restoration by Tenant shall comply with all Laws and Applicable Requirements, and with respect to the New Improvements, shall comply with the original plans for the New Improvements described in Article 5, except as may be otherwise modified by Tenant and approved in writing by Landlord. The work of repair and restoration shall be commenced by Tenant within sixty (60) calendar days after the damage or destruction occurs and shall be completed with due diligence not later than six (6) months after the work is commenced, or such additional time as may be mutually agreed upon by the Parties in writing. In all other respects, the work of repair and restoration shall be done in accordance with the standards set forth in Section 5.13 and requirements for the construction of improvements and alterations on the Premises set forth in Article 5 of this Lease. (f) The provisions of California Civil Code Sections 1932(2) and 1933(4), and any successor statutes, are inapplicable with respect to any destruction of the Premises or improvements located thereon (including, but not limited to, the New Improvements), such sections providing that a lease terminates upon the destruction of the Premises unless otherwise agreed between the Parties to the contrary.

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9.05 Option to Terminate Lease for Destruction. . Notwithstanding Section 9.04 of this Lease, Tenant shall have the right to terminate this Lease if the New Improvements are damaged or destroyed by a casualty for which Tenant is not required under this Lease to carry insurance and the cost to repair or restore the damaged or destroyed New Improvements exceeds fifty percent (50%) of the fair market value of the New Improvements immediately before the damage or destruction, provided Tenant complies with all of the following conditions:
(a) Tenant must provide Landlord with written notice of termination based on such damage or destruction, if at all, within thirty (30) calendar days after the occurrence of the damage or destruction and any such notice, once given, shall be irrevocable; (b) Tenant must not then be in default under any provision or condition of this Lease;
(c) Within ten (10) calendar days after giving the above termination notice, Tenant must effectively transfer to Landlord all right, title, and interest in the Security Deposit; (d) Until the effective termination date, Tenant shall continue to make payments when due as required by the provisions of this Lease, applying the Security Deposit to payments latest in time under the Lease, provided the Minimum Annual Rent shall be reduced in proportion to the reduction in utility of the New Improvements caused by such casualty; (e) Tenant shall pay in full (or have paid in full) any outstanding indebtedness incurred by Tenant and secured by an encumbrance or encumbrances (including, but not limited to, a Leasehold Encumbrance) on the leasehold and/or the Premises (or improvements located thereon, including, but not limited to, the New Improvements); (f) Tenant shall deliver possession of the Premises (including, but not limited to, the New Improvements) to Landlord and quitclaim all right, title and interest in the land and improvements (including, but not limited to the New Improvements) if, and promptly upon, ceasing to do business on the Premises;
(g) Tenant shall cause to be discharged all liens and encumbrances resulting from any act or omission of Tenant;
(h) Tenant shall effectively relinquish all remaining options to extend or renew the Lease, provided that the giving of notice of termination as a condition of relief from the obligation to repair, restore, or reconstruct shall be conclusively construed as such a relinquishment; and
(i) All of the insurance proceeds shall be paid to Landlord (except to the extent of any personal property owned by Tenant and covered by such insurance) and Tenant shall effectively relinquish and transfer to the Landlord all such insurance proceeds.

Upon such termination, all rent and other sums paid or payable under this Lease shall be prorated and paid up to the date of Lease termination.

9.06 Application of Insurance Proceeds. Following completion of Landlord’s Work and the issuance of the Notice to Proceed, unless this Lease has been terminated pursuant to the

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provisions of Section 9.05 above, any and all fire or other insurance proceeds that become payable at any time during the Term of this Lease because of damage to or destruction of any improvements on the Premises (including, but not limited to, the New Improvements) shall be paid to Tenant (or transferred to a Leasehold Lender as may be required by the applicable loan documents) and applied by Tenant (and/or the Leasehold Lender) toward the cost of repairing and restoring the damaged or destroyed improvements in the manner required by Section 9.04 of this Lease.

9.07 Landlord’s Right of Entry. Landlord, its agents, contractors, employees, representatives, contractors, and assigns may enter the Premises and New Improvements at all reasonable times to:
(a) Examine the Premises and improvements (including, but not limited to, the New Improvements);
(b) Perform any obligation of, or exercise any right or remedy of, Landlord under this Lease;
(c) Make repairs, alterations, improvements, and/or additions to the Premises, or to other portions of the Wharf as Landlord deems necessary; (d) Perform work necessary to comply with Laws of any Governmental Body or requirements of any insurance underwriter;
(e) Show prospective tenants the Premises and New Improvements 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 New Improvements, the Premises, and/or the Wharf should Tenant fail to commence to make, and diligently pursue to completion, in a reasonable time, as defined by Landlord, Tenant’s required repairs after written demand therefor by Landlord. Landlord will give Tenant a minimum of twenty-four (24) hours advance notice of such entry when practical, except in the case of an emergency and/or in situations involving an immediate peril and/or hazard to the Wharf, when such entry shall be made summarily by Landlord. Landlord shall be the sole and exclusive judge as to what constitutes immediate peril and hazard to the Wharf.

Tenant hereby waives any claims for damage against Landlord arising from loss of business by reason of Landlord’s entry onto, use of, and/or modification to any portion of the Premises, the New Improvements, or any structure or building on the Wharf for the purpose of making any such repairs, alteration, improvements, and/or additions.

ARTICLE 10 - INDEMNIFICATION AND INSURANCE

10.01 Indemnification. To the fullest extent permitted by law, in addition to any other indemnity provided for in this Lease, and notwithstanding any other provisions of this Lease to the contrary, Tenant agrees to indemnify, defend (with counsel reasonably satisfactory to Landlord), and hold harmless Landlord, its elected officials, officers, employees, agents, attorneys, volunteers, representatives, successors and assigns (“Indemnified Parties”) from and against all claims, demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without

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limitation, attorney’s fees, disbursements and court costs) of every kind and nature (individually, a “Claim” and, collectively, “Claims”) arising from, related to, or caused by (directly or indirectly): (i) Tenant’s rights and/or obligations under this Lease, (ii) the acts or omissions of Tenant or its officers, employees, agents, servants, representatives, customers, contractors, subcontractors, suppliers, subtenants, or others acting on Tenant’s behalf or under Tenant’s authority or control (collectively “Tenant Agents” and individually “Tenant Agent”), (ii) the occupancy and/or use of the Premises, or improvements (including, but not limited to the New Improvements) by Tenant, or any Tenant Agent, (iv) Tenant’s occupation and/or use of the Premises, the New Improvements, or Tenant Improvements, and/or (v) any and all plans, permits, licenses, or other Regulatory Approvals relating to the Premises and/or the New Improvements. The indemnification in this Section 10.01 specifically includes, without limitation, all Claims arising by reason of:
(a) The death or injury of any person or damage to real or personal property caused or allegedly caused by the condition of the Premises, New Improvements, or Tenant Improvements or an act or omission of Tenant or any Tenant Agent; (b) Any work performed on or materials furnished to the Premises, New Improvements, or Tenant Improvements by or at the request of Tenant or any Tenant Agent, with the exception of Landlord’s Work or maintenance performed by Landlord; and/or (c) Tenant’s failure to perform any provision of this Lease or to comply with any requirement of governing Law, Applicable Requirements, or any requirement imposed on the Premises, New Improvements, or Tenant Improvements by any duly authorized Governmental Body.

Tenant’s obligations in this Section shall not extend to any Claim that is proximately caused by the sole negligence or willful misconduct of Landlord or an Indemnified Party, subject to any immunities which may apply to Landlord with respect to such Claims. This indemnification provision and any other indemnification provided elsewhere in this Lease shall survive the termination of this Lease and shall survive for the entire time that any third party can make a Claim.

The insurance obligations of the Tenant (and its contractors and subcontractors) are separate, independent obligations under this Lease, and the obligations for defense and indemnity contained in this Section and elsewhere in this Lease are not intended to modify, nor should they be construed as modifying, or in any way limiting, the insurance obligations set forth in this Lease. Tenant shall ensure that its contractors and subcontractors (e.g. those constructing the New Improvements and any Tenant Improvements or performing any work on the Premises) also fully indemnify, defend, and hold harmless the Indemnified Parties to the same extent that Tenant is required to indemnify, defend, and hold harmless such Indemnified Parties.

10.02 Insurance Requirements. Before Tenant enters the Premises (or any portion thereof) or commences any work on or at the Premises, Tenant shall, at its sole cost and expense, procure and maintain in full force and effect with companies reasonably acceptable to Landlord, so long as may be necessary to fully protect Landlord (and, in any event, for no less than the duration of the Lease) insurance coverage fully conforming to the requirements of this Article 10. Landlord may require commercially reasonable increases in the minimum limits for the Commercial General Liability and Automobile Liability coverages. If Tenant’s existing

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coverage does not meet the requirements set forth herein, Tenant agrees to amend, supplement or endorse the existing coverage to do so at no additional cost to Landlord.

Compliance in full with the insurance requirements stated in this Lease is understood to be a condition precedent to Landlord’s obligations under this Lease. (a) Scope and Limits of Insurance.
(1) During Construction. Prior to constructing the New Improvements or any Tenant Improvements on the Premises (including, but not limited to, preconstruction activities), Tenant shall, at its sole cost and expense, procure and maintain (or cause its contractor(s) and subcontractor(s) to procure and maintain) in full force and effect with companies reasonably acceptable to Landlord, so long as may be necessary to fully protect Landlord (and in any event throughout the course of construction and for the duration of any warranty period), insurance for injuries to persons or damage to property fully conforming to the requirements of this Article 10 and satisfying the following specifications.

A. Commercial General Liability (CGL): Insurance Services Office (ISO) Form CG 00 01 covering CGL on an “occurrence” basis only with the general aggregate applying on a per project basis and including but not limited to products and completed operations, contractual liability, broad form property damage, including damage to rented premises, injury to or destruction of Landlord’s property, death, bodily injury, and personal & advertising injury, coverage for explosion, collapse, and underground damages, and limited pollution liability endorsement, with limits no less than $5,000,000 per occurrence, $5,000,000 personal injury liability, $5,000,000 aggregate for products-completed operations for Tenant’s general contractor. For subcontractors, minimum limits of no less than $2,000,000 per occurrence are required. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit.

B. Automobile Liability on an “Any Auto” Basis: ISO Form Number CA 00 01 covering any auto (Code 1), with limit no less than $1,000,000 combined single limit each occurrence/per accident for bodily injury and property damage.

C. Workers’ Compensation insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limits of no less than $1,000,000 per accident for bodily injury or disease – policy limit, $1,000,000 disease – each employee. The Workers Compensation policy shall be endorsed with a waiver of subrogation in favor of Landlord (and its officials, officers, directors, employees, volunteers and agents). The insurers shall agree to waive all rights of subrogation against Landlord and its officials, officers, directors, employees, volunteers, and agents for all work performed by Tenant and/or Tenant’s contractors, and their respective employees, agents and subcontractors.

D. Builder’s Risk (Course of Construction) insurance utilizing an “All Risk” (Special Perils) coverage form, with limits equal to the completed value of the project and no coinsurance penalty provisions. Tenant may submit evidence of Builder’s Risk insurance in the form of Course of Construction coverage. Such coverage shall name the Landlord as a loss payee as their interest may appear.

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E. Professional Liability (APPLICABLE TO ALL INDEPENDENT

CONTRACTORS OF ANY TIER PERFORMING ANY PROFESSIONAL SERVICES INCLUDING ENGINEERS, SURVEYORS, OR CONSULTANTS): If the subject scope of work includes professional services, including without limitation design or engineering, the design professional shall procure and maintain Professional Errors and Omissions coverage written on a standard industry policy with minimum limits and conforming to the requirements stated herein. Such coverage shall carry limits of no less than $1,000,000 per occurrence or claim, and $2,000,000 policy aggregate. Claims Made polices shall include a five-year extended reporting period beyond completion of the work.

F. Contractor’s Pollution Liability Limits (APPLICABLE ONLY

TO CONTRACTORS AND SUBCONTRACTORS OF ANY TIER PERFORMING ANY

REMOVAL, REMEDIATION, ABATEMENT, TRANSPORTATION OR DISPOSAL OF ANY

HAZARDOUS MATERIALS AND/OR PROJECTS INVOLVING ENVIRONMENTAL HAZARDS): In addition to the insurance coverages identified and required above, if Tenant or any of its contractors or subcontractors of any tier are required to perform abatement, removal, remediation, transportation, or disposal of hazardous, toxic, or contaminated material, including, but not limited to, asbestos, heavy metals, etc., (“HTC Material”), Tenant or its contractor(s) must procure and maintain Contractor’s Pollution Liability insurance coverage or its equivalent. Such coverage shall carry limits of no less than $1,000,000 per occurrence or claim, and $2,000,000 policy aggregate. Claims Made polices shall include a five-year extended reporting period beyond completion of the work. Coverage shall include an MCS-90 endorsement to Tenant’s or its contractor’s Comprehensive Automobile Liability policy or an endorsement to the Contractor’s Pollution Liability to extend to transportation and hauling of HTC Material.

G. Surety Bonds: see below and Section 5.06.

The limits of insurance described herein are not intended as a limitation of liability under this Lease. Tenant and/or its contractors may obtain higher limits. If Tenant (or its contractors or subcontractors) maintains higher limits than the minimums shown above, the Landlord shall be entitled to coverage for the higher limits maintained. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the Landlord. Furthermore, the requirements for coverage and limits shall be (1) the minimum coverage limits specified in this Lease, or (2) the broader coverage and maximum limits of coverage of any insurance policy or proceeds available to the named insured, whichever affords greater coverage.
(2) Throughout Lease Term. Upon the Commencement Date, and, in any event, before Tenant enters the Premises, Tenant shall, at its sole cost and expense, procure and maintain in full force and effect, so long as may be necessary to fully protect Landlord (and, in any event, for no less than the duration of the Lease) insurance against claims for injuries to persons and/or damages to property fully conforming to the requirements of this Article 10 and satisfying the following specifications. The cost of such insurance shall be borne by Tenant.

A. Commercial General Liability (CGL): ISO Form CG 00 01 covering CGL on an “occurrence” basis, including, but not limited to, products and completed operations, contractual liability, broad form property damage, including damage to rented premises, injury to or destruction of Landlord’s property, death, bodily injury, and personal & advertising injury, coverage for explosion, collapse and underground damages, and limited

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pollution liability endorsement, with limits no less than $2,000,000 per occurrence/$4,000,000 aggregate, $2,000,000 personal injury liability, $2,000,000 aggregate for products-completed operations. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit.

B. Workers’ Compensation insurance as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limits of no less than $1,000,000 per accident for bodily injury or disease, $1,000,000 disease – policy limit, $1,000,000 disease – each employee. The Workers Compensation policy shall be endorsed with a waiver of subrogation in favor of Landlord (and its officials, officers, directors, employees, representatives, volunteers and agents). The insurers shall agree to waive all rights of subrogation against Landlord and its officials, officers, directors, employees, representatives, volunteers, and agents arising from Tenant’s occupancy and/or use of the Premises and/or New Improvements.

C. “All Risk” Property Insurance against all risks of loss or damage to the New Improvements and any Tenant Improvements or betterments, personal property, trade fixtures, equipment, and/or merchandise located in, on, or upon the Premises or New Improvements (including, but not limited to, loss resulting from fire, windstorm, hail, lightning, vandalism, malicious mischief, and such other perils ordinarily included in extended coverage casualty insurance policies). Such insurance shall be maintained with limits no less than $1,000,000 or in an amount sufficient to cover not less than one hundred percent (100%) of the full replacement value thereof (whichever is greater) with no coinsurance penalty provision. Property insurance coverage shall name the Landlord as the loss payee as its interest may appear.

D. Automobile Liability: ISO Form
Number CA 00 01 covering any auto (Code 1), or if Tenant has no owned autos, hired, (Code 8) and non-owned autos (Code 9), with limit no less than $1,000,000 combined single limit each occurrence/per accident for bodily injury and property damage.

The limits of insurance described herein are not intended as a limitation of liability under this Lease. Tenant may obtain higher limits in its discretion. If Tenant maintains higher limits than the minimums shown above, Landlord requires and shall be entitled to coverage for the higher limits maintained. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the Landlord.

Furthermore, the requirements for coverage and limits shall be (1) the minimum coverage limits specified in this Lease, or (2) the broader coverage and maximum limits of coverage of any insurance policy or proceeds available to the named insured, whichever affords greater coverage.
(b) Other Insurance Provisions. All insurance required to be carried by Tenant (and/or its contractors and subcontractors) pursuant to this Article (excluding Workers’ Compensation) shall be subject to the Landlord’s reasonable approval and shall include the following endorsements and provisions:
(1) Required Endorsements and Provisions. The insurance policies are to contain, or be endorsed to contain, the following provisions:

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A. Additional Insured Status. The Landlord (the City of Santa Cruz), its officers, officials, directors, employees, agents, representatives, and volunteers are to be covered as additional insureds on the CGL policy (and Contractor’s Pollution Liability policy if the activities include abatement, removal, remediation, transportation, or disposal of HTC Material), automobile liability policy, and any and all excess or umbrella insurance policies with respect to liability arising out of work or operations performed by or on behalf of Tenant including, but not limited to, materials, parts, or equipment furnished in connection with such work or operations and automobiles owned, leased, hired, or borrowed by or on behalf of Tenant. General liability coverage can 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 both CG 20 10 and CG 20 37 forms if later revisions used). There shall be no change or modification from the standard ISO form language.

B. Primary Coverage. For any claims related to the Lease, the Premises and/or the improvements located thereon (including, but not limited to, the New Improvements and Tenant Improvements), Tenant’s insurance coverage shall be primary insurance as respects the Landlord, its officers, officials, directors, employees, agents, representatives, and volunteers. Any insurance or self-insurance maintained by the Landlord, its officers, officials, directors, employees, agents, representatives, or volunteers shall be excess of Tenant’s insurance and shall not contribute with it.

C. Notice of Cancellation. Each insurance policy required by this Article 10 shall provide that coverage shall not be canceled, except with written notice to the Landlord.

D. Property insurance coverage shall name the Leasehold Lenders and the Landlord as a loss payee as their interest may appear.

E. Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by the Landlord. If the deductibles exceed $10,000, then, at the option of the Landlord, either: Tenant shall obtain coverage to reduce or eliminate such deductibles or self-insured retentions as respects the Landlord, its officers, officials, directors, agents, employees, representatives, and volunteers; or Tenant shall provide a financial guarantee satisfactory to the Landlord guaranteeing payment of losses and related investigations, claim administration, and defense 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 Landlord.
(2) Claims Made Policies. If any coverage required is written on a claimsmade coverage form:

A. The retroactive date must be shown, and this date must be before the execution date of the contract or the beginning of contract work.

B. Insurance must be maintained and evidence of insurance must be provided for at least the duration of the Lease and, as applicable, five (5) years after completion of any work.

C. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a retroactive date prior to the contract effective, or start

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of work date, Tenant must purchase extended reporting period coverage for a minimum of five (5) years after completion of any work.

D. A copy of the claims reporting requirements must be submitted to the Landlord for review.
(3) Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best rating of no less than A: VII, unless otherwise acceptable to the Landlord/City of Santa Cruz.
(4) Waiver of Subrogation. Tenant hereby grants to Landlord a waiver of any right to subrogation that any of its insurers may acquire against Landlord or any of the other additional insureds by virtue of payment of any loss covered by any insurance policy required by this Lease. Tenant agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the Landlord has received a waiver of subrogation endorsement from the insurer(s). The Parties also agree to the Waiver of Subrogation in Section 10.05 below. (5) The Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of the Landlord (and its officials, officers, directors, employees, representatives, volunteers and agents) for all work performed by Tenant and/or Tenant’s subtenants, and their respective employees, agents, representatives, contractors and subcontractors.
(6) Verification of Coverage. Tenant shall furnish the Landlord with a certificate of the insurance (ACORD form 25S) and amendatory endorsements, or copies of the applicable insurance language, effecting coverage required by this Lease, satisfactory to Landlord, evidencing that the coverage required under this Lease is in place, stating policy numbers, dates of expiration and limits of liability thereunder, containing the provisions specified herein, and further providing that such policies shall not be subject to cancellation, lapse or change except after at least thirty (30) calendar days’ prior written notice to the Landlord (ten (10) calendar days for non-payment of premium). All certificates and endorsements are to be received and approved by the Landlord before Tenant enters the Premises and before any work on the Premises commences and thereafter upon renewal of such policies prior to the expiration of the term of such coverage. Failure to demand evidence of full compliance with the insurance requirements set forth in this Lease or failure to identify any insurance deficiency shall not relieve Tenant from, nor be construed or deemed a waiver of, Tenant’s obligation to maintain the required insurance at all times during the performance of this Lease. The Landlord reserves the right to require complete, certified copies of all required insurance policies, including, but without limitation, endorsements, required by this Lease, at any time upon reasonable prior written notice. (7) Contractors and Subcontractors. Tenant shall require and verify that all subtenants, contractors, and subcontractors maintain insurance meeting all the requirements stated herein, and Tenant shall ensure that the Landlord, its officers, officials, employees, directors, agents, representatives, and volunteers, are additional insureds on insurance required from subtenants, contractors, and subcontractors. For CGL coverage subtenants, contractors, and subcontractors shall provide coverage with a format at least as broad as CG 20 38 04 13. Insurance requirements for contractors and subcontractors may be modified with written agreement from the City of Santa Cruz’s Risk Manager, depending on the scope of work.

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(8) Surety Bonds. Tenant or its contractor shall provide the following Surety Bonds for each and every project, including, but not limited to, the New Improvements and any Tenant Improvement on the Premises: (A) Performance bond, and (B) Payment bond.

The Payment Bond and the Performance Bond shall meet the requirements of Section 5.06 and shall be in a sum equal to the contract price for the subject project, New Improvements, or Tenant Improvement. If the Performance Bond provides for a one-year warranty a separate Maintenance Bond is not necessary. If the warranty period specified in the subject contract is for longer than one year, a Maintenance Bond equal to 10% of the contract price is required.

Bonds shall be duly executed by a responsible corporate surety, authorized to issue such bonds in the State of California and secured through an authorized agent with an office in California.
(9) Special Risks or Circumstances. Landlord reserves the right to modify these requirements at any time, including, but not limited to, limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.

10.03 Tenant’s Failure to Maintain Insurance. Tenant agrees that if Tenant does not procure, maintain, and show evidence of any insurance policy required under this Lease or fails to pay any premiums when due, Landlord may, at its election (but without any obligation to do so), terminate this Lease (subject to the rights of any secured Leasehold Lender as provided in Article 8), 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 the Tenant and payable on the next date upon which a payment of rent is due. 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 (including, but not limited to, complete, certified copies of all required insurance policies, including, but not limited to, endorsements). The failure to provide the Landlord with such evidence within five (5) business days of such demand shall constitute a material breach of this Lease.

10.04 Other Insurance Requirements.
(a) If Tenant is unable to obtain any policy of insurance required by Landlord under this Lease, then Landlord, at its sole discretion (without any obligation to do so), and subject to the availability of coverage, may purchase such policy of insurance and Tenant shall reimburse Landlord for Tenant’s pro rata share of the cost of such insurance. In determining Tenant’s pro rata share of the premiums for any such insurance specified herein, the schedule issued by the organization making the insurance rate on the improvements, areas, and/or risks covered, showing the various components of such rates, shall be conclusive evidence of the charges which make up the insurance rate and the pro rata share to be charged to the Premises. If such a schedule cannot be obtained, then Tenant’s pro rata share shall be based upon the ratio that the gross floor area of the Premises and improvements (including, but not limited to the New Improvements) bears to the total gross leasable floor area of the building or buildings for which said insurance policy relates. Landlord may estimate the cost of insurance and collect and impound Tenant’s share of these costs upon written notice to Tenant.
(b) If Tenant cannot obtain its own insurance policies for fire and extended coverage and Landlord, at its sole discretion, exercises its option to purchase such insurance to cover

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the Premises, Tenant understands the Landlord’s current insurance policy for fire and extended coverage has a $10,000 deductible.

10.05 Waiver of Subrogation. Tenant and Landlord each waive its right of recovery against the other, and each Party’s successors, assigns, directors, officers, officials, employees, agents and representatives for any loss or damage caused to property belonging to the Tenant or Landlord which is recovered under any valid and collectible insurance policy of either the Tenant or Landlord in force at the time of any such loss or damage. Tenant and Landlord hereby waive, on behalf of each Party’s insurance carriers, any right of subrogation it may have against the other Party and each shall notify its carriers of the waiver contained herein.

10.06 Waiver of Loss and Damage. Except for damages proximately caused by Landlord’s sole negligence or willful misconduct, Landlord shall not be liable for any damage to inventory or other property of Tenant, or others, located in, on or about the Premises or the New Improvements, nor for the loss of or damage to any property of Tenant or of others by theft or otherwise, and Tenant waives any claim against Landlord with respect to such property.

Landlord shall not be liable to Tenant or Tenant’s employees, agents, 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 the New Improvements, or from the pipes, appliance or plumbing works or from the roof, street or subsurface or from any other places or by any other cause of whatsoever nature. Landlord shall not be liable to Tenant or Tenant’s employees, customers, guests, invitees, agents, or representatives for any such damage caused by other tenants or persons in the Premises or the New Improvements, occupants of adjacent property of the Wharf, 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 or the New Improvements 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, but not limited to, subrogation claims by Tenant’s insurance carriers, unless such damage shall be proximately caused by the sole negligence or willful misconduct of Landlord.

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

ARTICLE 11 - TRANSFERS, ASSIGNMENT, AND SUBLETTING

11.01 Transfers. Except as expressly provided in Article 8 above, Tenant and its permitted successors and assigns shall not either voluntarily, or by operation of law, Transfer its interest in this Lease, the Premises, or the New Improvements, or any portion thereof, without first providing written request to Landlord and obtaining Landlord’s express prior written consent, which consent shall not unreasonably be withheld. As used in this Lease, the term “Transfer” means any attempt to sell, convey, assign, sublease, transfer, mortgage, pledge, grant, hypothecate, or encumber this Lease or any interest in this Lease, the Premises, the New Improvements, or any portion thereof or the buildings and improvements thereon, and any attempt to sublet, license, or grant any concession to the Premises or the New Improvements, in whole or in part, or allow any person other than Tenant’s employees, agents, customers, and invitees to occupy or use all or any portion of the Premises or the New Improvements.

Tenant shall comply with the following requirements for any Transfer. Tenant agrees that failure to satisfy these requirements are reasonable bases for Landlord to deny consent (but is not exhaustive of the bases to deny consent):

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(a) Tenant shall give Landlord at least thirty (30) calendar days’ written notice of its proposed Transfer and provide appropriate documentation demonstrating to Landlord’s satisfaction the financial and operational responsibility and appropriateness of the proposed transferee. Tenant shall provide Landlord within five (5) calendar days such other or additional information and/or documentation as may be reasonably requested by Landlord. (b) Tenant shall provide the terms and provisions of the proposed Transfer. (c) Except as otherwise provided in this Lease for a permitted Leasehold Encumbrance, the proposed transferee shall expressly assume this Lease. (d) Tenant shall pay all Landlord’s actual costs associated with Landlord’s consideration of the Transfer, regardless of whether such transfer is consummated, or in connection with any other actions taken by Landlord pursuant to Article 8.

11.02 Landlord Consent; Tenant’s Request to Landlord.
(a) Any Transfer made in violation of this Article 11 is voidable, at Landlord’s election, and shall constitute a default subject to the cure right in Article 13. (b) For purposes of this Article, the consent of Landlord shall be construed as meaning the express written approval of any Transfer by the City Council of Santa Cruz, California, or any agent or representative authorized by said City Council to give said consent.

Unless otherwise provided in writing by Landlord, approved transferees and assignees may extend the Initial Term of this Lease (and any applicable Extended Term) by exercising any option(s) to extend or renew the Initial Term (or Extended Term, as applicable) of this Lease granted herein that have not already commenced at the time of said assignment. (c) Notwithstanding anything to the contrary herein, Landlord hereby agrees that Tenant may encumber this Lease, Tenant’s leasehold estate, the New Improvements and any Tenant Improvements (but not the fee interest in the real property) through a Leasehold Encumbrance to assure payment of obligations of Tenant solely as and to the extent allowed in accordance with Article 8 (Tenant Financing; Leasehold Encumbrance), above. The Tenant’s right to encumber, to the extent hereby granted, includes financing and refinancing subject to the terms, conditions, and limitations set forth in Article 8, above. (d) The following are conditions precedent to any Transfer by Tenant:
(1) Tenant shall give Landlord reasonable notice of the proposed Transfer with appropriate documentation as evidence that the proposed assignee or transferee qualifies as a permitted assignee or transferee.
(2) Except as otherwise provided in Article 8 of this Lease for a permitted Leasehold Lender holding a Landlord approved and authorized Leasehold Encumbrance, the proposed assignee or transferee shall expressly assume all the terms, covenants, obligations, responsibilities, liabilities, duties, and conditions of this Lease.

11.03 Involuntary Assignment.
(a) Each of the following acts shall be considered an involuntary assignment:

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(1) 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;
(2) If a writ of attachment or execution is levied on this Lease; and/or (3) If, in any proceeding or action to which Tenant is a party, a receiver is appointed with authority to take possession of the Premises or the New Improvements. (b) An involuntary Transfer shall constitute a default by Tenant and Landlord shall have the right to elect to terminate this Lease, in which case this Lease shall not be treated as an asset of Tenant. Notwithstanding the foregoing, a Leasehold Lender’s foreclosure of a Landlord approved and authorized Leasehold Encumbrance as permitted pursuant to Article 8 (Tenant Financing; Leasehold Encumbrance) shall not be construed as a default within the meaning of this subsection (subject to the provisions of Article 8 above). (c) If a writ of attachment or execution is levied on this Lease, Tenant shall have fifteen (15) calendar 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) calendar days in which to have the involuntary proceeding dismissed or the receiver removed.

11.04 Consent Required. Tenant shall not, without Landlord’s prior written consent, Transfer any interest in this Lease or any right or privilege appurtenant hereto or permit use of the Premises or the New Improvements by any person or persons other than Tenant, its employees, agents, invitees, and customers. It is agreed that Landlord will not be acting unreasonably in refusing to consent to a Transfer if, in Landlord’s opinion, (A) the quality of the operation of the proposed assignee or transferee is not equal to or better than that of the Tenant, (B) such assignee or transferee may adversely affect the business of the other tenants or the tenant mix on the Wharf or Landlord’s ability to obtain rent, (C) such assignee or transferee does not have a positive net worth on the date of assignment, or (D) such assignee or transferee does not have adequate net worth on the date of assignment to successfully operate the business contemplated under this Lease (as determined by Landlord). The term “net worth” shall mean the amount by which the total of all asset shall exceed the total of all liabilities as determined by an independent certified public accountant in accordance with generally accepted accounting principles.

11.05 Deemed Assignment. Any Transfer of this Lease from Tenant by merger, consolidation, liquidation, or sale of a controlling interest of corporate stock shall constitute an assignment. All Transfers shall require Landlord approval.

11.06 Unauthorized Assignment or Sublease. Any attempted Transfer without Landlord’s required consent shall be void. Any assignee, subtenant, transferee or other recipient of Tenant’s interest in this Lease is hereby notified that such Transfer is of no force or effect without Landlord’s prior written consent.

11.07 Effect of Consent. Consent by Landlord to a Transfer shall not release Tenant from its primary liability under this Lease. Landlord’s consent to one Transfer or occupation by other

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parties shall not be deemed a consent to other or future assignments or use by other parties, or constitute a waiver of the requirements of this Article 11.

11.08 Surrender of Lease. The voluntary or other surrender or a cancellation of this Lease by Tenant shall not work a merger, and shall, at the election of Landlord, either terminate all or any existing subleases or sub-tenancies or may operate as an assignment to Landlord of any or all of such subleases or sub-tenancies. Landlord shall exercise its election within thirty (30) calendar days of the event so requiring.

ARTICLE 12 – PERFORMANCE STANDARDS

12.01 Construction. Tenant shall meet the construction performance milestones set forth in Section 5.08 of this Lease or be subject to the liquidated damages provisions stated therein.

All construction shall be performed and completed in conformance with the standards and requirements set forth in Article 5.

12.02. Upgrades, Additions, Alterations and Improvements During the Term. Tenant shall implement upgrades, additions, alterations, and improvements to the Premises and New Improvements in accordance with Article 5 and Section 4.01 of this Lease.

ARTICLE 13 - DEFAULT AND REMEDIES

13.01 Continuation of Lease in Effect. In addition to all other rights and/or remedies of Landlord at law, in equity, and/or under this Lease, the Landlord has the remedy described in California Civil Code Section 1951.4, as such may be amended (Landlord may continue lease in effect after Tenant’s breach and abandonment and recover rent as it becomes due, if Tenant has right to sublet or assign, subject only to reasonable limitations). Accordingly, the breach of this Lease by Tenant, or an abandonment of the Premises or the New Improvements by Tenant, shall not constitute a termination of this Lease, nor of Tenant’s right of possession under this Lease, unless and until Landlord elects to so terminate this Lease, and until that time Landlord may (at Landlord’s option) continue this Lease in full force and effect and shall have the right to recover rent and all other payments to be made by Tenant under this Lease as they become due; provided, that until Landlord elects to terminate this Lease and Tenant’s right of possession under this Lease, Tenant shall have the right to sublet the Premises or to assign interests in this Lease, or both, subject only to the written consent of Landlord, which consent shall not be unreasonably withheld or delayed. The Parties intend that this Section

13.01 satisfies the requirements of and that the Landlord has the remedy set forth in California Civil Code Civil Code §1951.4.

13.02 Remedies. In the event of a Tenant default under this Lease, Landlord may, at Landlord’s option, exercise any and all rights and remedies available to a Landlord under the laws of the State of California (including, but not limited to, those rights and remedies set forth in California Civil Code Sections 1951.2, 1951.3, 1951.4, and 1951.8), including, but not limited to, the right to do any of the following:
(a) Terminate this Lease by written notice to Tenant in conformance with applicable Law and bring an action to recover the following from Tenant:
(1) The worth at the time of award of the unpaid rent that had been earned at the time of termination of the Lease;

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(2) The worth at the time of award of the amount by which the unpaid rent that would have been earned after termination of the Lease until the time of award exceeds the amount of 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 rental loss that Tenant proves could be reasonably avoided; and (4) Any other amount necessary to compensate Landlord for all detriment proximately caused by Tenant's failure to perform Tenant's obligations under this Lease or in the ordinary course of things would be likely to result therefrom.

The “worth at the time of award” of the amounts referred to in subparagraphs

13.02(a)(1) and (a)(2) 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 13.02(a)(3) shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).
(b) Bring an action, in addition to or in lieu of the action described in subparagraph (a) of this Section, to reenter and regain possession of the Premises (and the New Improvements) in the manner provided by the laws of unlawful detainer of the State of California then in effect.
(c) Efforts Landlord may make to mitigate the damages caused by Tenant’s breach of this Lease shall not constitute a waiver of Landlord’s right to recover damages against Tenant, nor shall anything contained in this Lease affect Landlord’s right to indemnification against Tenant for any liability arising prior to the termination of this Lease (including, but not limited to, for personal injuries and/or property damage). (d) In the event Landlord terminates this Lease pursuant to this Section 13.02, and Tenant has made an advance payment of rent as defined in California Civil Code §1951.7, and Tenant has requested in writing that Landlord notify it of any initial reletting of the Premises, then and only then must Landlord notify Tenant pursuant to California Civil Code §1951.7(c) that the Premises have been relet.
(e) In the event that Landlord should take any act to maintain or preserve the Premises or the New Improvements on Tenant’s behalf, or seek the appointment of a receiver to protect Landlord’s interests under this Lease, such acts shall not constitute a termination of Tenant’s right of possession unless Tenant receives written notice from Landlord regarding Landlord’s election to terminate.

13.03 Breach and Default by Tenant. All covenants and agreements contained in this Lease are declared to be conditions to this Lease and to the Term hereby leased to Tenant.

The occurrence of any of the following shall constitute a default of this Lease by Tenant:

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(a) Continued failure to operate or the vacation or abandonment of the Premises or the New Improvements for thirty (30) consecutive calendar days (or more) after the date of Landlord’s written notice to Tenant;
(b) Tenant’s failure to make any payment required under this Lease when such failure continues for a period of five (5) calendar days after the date of Landlord’s written notice that payment is due; provided that such notice provided in this section shall be in lieu of, and not in addition to, any notice required under Section 1161 of the California Code of Civil Procedure, as may be amended;
(c) Tenant’s failure to obtain and maintain all insurance coverage as set forth in Article 10;
(d) Tenant’s failure to timely perform its obligations under Section 5.08 (Construction Performance Milestones for New Improvements; Liquidated Damages); (e) Tenant’s failure to observe or perform any covenant, condition, or agreement contained in this Lease (except for a monetary default specified in Section 13.03(b) above), where such failure is not cured within thirty (30) calendar days after written notice of the default is served on Tenant by Landlord;
(f) Tenant’s failure to discharge any mechanic’s or other lien that it is obligated to discharge under the terms of this Lease within the applicable time period provided in this Lease;
(g) Tenant’s failure to pay promptly when due each and every installment of principal and interest of any private loan encumbering the New Improvements or Tenant’s leasehold estate for which Tenant is responsible (including, but not limited to, any Leasehold Encumbrance permitted by this Lease) and such failure continues beyond: (1) the expiration of any applicable grace or cure period, and (2) the date by which Tenant must make payment to cure any notice of default received from the holder of such private loan; (h) Tenant’s default under a Leasehold Encumbrance;
(j) The appointment of a receiver to take possession of the Premises or improvements located thereon (including, but not limited to, the New Improvements), or of Tenant's interest in, to, and under this Lease, the leasehold estate, or of Tenant's operations for any reason, including, without limitation, assignment for benefit of creditors or voluntary or involuntary bankruptcy proceedings, when not released within sixty (60) days; (j) An assignment by Tenant for the benefit of creditors; or the voluntary filing by Tenant or the involuntary filing against Tenant of a petition, other court action, or suit under any law for the purpose of:
(1) adjudicating Tenant as bankrupt,
(2) extending time for payment,
(3) satisfaction of Tenant's liabilities, or

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(4) reorganization, dissolution, or arrangement on account of, or to prevent, bankruptcy or insolvency; provided, however, that in the case of an involuntary proceeding, if all consequent orders, adjudications, custodies, and supervisions are dismissed, vacated, or otherwise permanently stayed or terminated within sixty (60) days after the filing or other initial event, then Tenant shall not be in default under this Section; and
(k) The subjection of any right or interest of Tenant to or under this Lease to attachment, execution, or other levy, or to seizure under legal process when the claim against Tenant is not released within sixty (60) days.

13.04 Cumulative Remedies. The remedies given to Landlord in this Article shall not be exclusive but shall be cumulative with and in addition to all remedies now or hereafter allowed by Law and elsewhere provided in this Lease.

13.05 Waiver of Breach. The waiver by Landlord of any breach by Tenant of any of the provisions of this Lease shall not constitute a continuing waiver or a waiver of any subsequent breach by Tenant of either the same or a different provision of this Lease.

13.06 Landlord Right to Cure. If Tenant (a) defaults under this Lease, or (b) fails to comply with any obligation under this Lease which, in Landlord’s reasonable opinion creates an emergency, Landlord may (but is not obligated to) cure the default. Tenant shall reimburse Landlord, as Additional Rent, for all costs and expenses incurred and payments made by Landlord in connection therewith, within ten (10) calendar days after Tenant is billed for such costs, expenses, and payments.

ARTICLE 14 – SURRENDER AND HOLDOVER

14.01 Surrender of Premises. On expiration or earlier termination of this Lease, Tenant shall peaceably surrender and vacate the Premises and all improvements in, on, or about the Premises (including, but not limited to the New Improvements) to Landlord. Surrender and/or removal of improvements, fixtures, trade fixtures, and other property shall be as directed in the provisions of this Lease on trade fixtures (Section 5.12), alterations and improvements (Article 5), repairs and restoration (Article 9), and ownership of improvements (Article 7) at expiration or earlier termination. Tenant shall leave the surrendered Premises, improvements (including, but not limited to, the New Improvements), and any other property in good, safe, and broom-clean condition, except as provided to the contrary in provisions of this Lease on maintenance, repair, and restoration of the Premises and improvements (Article 9). All property that Tenant is required to surrender shall become Landlord’s property on expiration or earlier termination of this Lease. All property that Tenant is not required to surrender but that Tenant abandons shall, at Landlord’s election, become Landlord’s property at expiration or earlier termination. Tenant’s removal of its personal property and equipment shall be in compliance with all applicable Laws and Regulatory Approvals and subject to Article 5 above.

Tenant shall reimburse Landlord for and indemnify and hold Landlord harmless against any and all damages that Landlord incurs from Tenant’s delay in vacating and surrendering the Premises and the New Improvements, removing Tenant’s personal property and equipment, and/or restoring the Premises and the New Improvements. This indemnification and hold harmless provision extends to any and all damages, costs, and expenses incurred by Landlord as a result of Tenant’s breach of the covenants contained herein with respect to the condition

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of the Premises and/or the New Improvements at the expiration or earlier termination of this Lease as provided in this Lease.

14.02 Holdover. If Tenant should remain in possession of the Premises and/or the New Improvements after the expiration or earlier termination of the Term of this Lease in the absence of a new lease agreement or Landlord’s granting of an additional Extended Term, or after Landlord has declared a forfeiture of this Lease 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 Lease at the time this Lease expires or upon the Tenant’s default, as the case may be, except the Minimum Annual Rent shall be one and one-half (1 ½) times the amount of such rent in effect prior to the Tenant’s holdover. Unless the 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 and/or the New Improvements after the expiration of the Term of this Lease.

ARTICLE 15 - ESTOPPEL CERTIFICATES; ATTORNMENT

15.01 Estoppel Certificate. Landlord and Tenant shall, within ten (10) business days of receipt of written notice from the other Party, execute and deliver a written estoppel certificate (“Estoppel Certificate”) regarding the state of the Lease between the Parties. The Estoppel Certificate shall be in the form reasonably designated by the requesting Party and include the following: (1) the Term of the Lease and any right to extend or renew contained in the Lease; (2) any modifications to the Lease; (3) the date to which rent has been paid; (4) the amount of any Security Deposit posted; and (5) the amount of any prepaid rent.

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

15.03 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 reasonably requested by Landlord.

ARTICLE 16 – PARKING

16.01 Employee Parking. Tenant understands and agrees that it will use good faith efforts to discourage Tenant’s employee from parking on the Wharf except by permit issued by Landlord. Tenant and its employees shall park their vehicles only in those areas as may be designated for such purpose by Landlord. Tenant and its employees agree not to occupy parking places directly in front of Wharf businesses.

16.02 Customer Parking. Landlord shall have the right to adopt and implement such parking programs as may be necessary to alleviate parking problems during peak traffic periods, including, without limitation, requiring the use of off-site parking. Landlord reserves the right to change the entrances, exits, traffic lanes, and the boundaries and locations of the parking area. Tenant shall be responsible for compliance with all parking rules and regulations as may be adopted and implemented by Landlord from time to time relating to the Wharf, including, without limitation, systems of validation, shuttle transportation or any other programs which may be deemed necessary or appropriate by Landlord to control, regulate, or assist parking

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by customers of the Wharf. Landlord will apply such rules and regulations uniformly to all retail or restaurant establishments on the Wharf.

ARTICLE 17 - MUNICIPAL WHARF RULES AND REGULATIONS

17.01 Rules and Regulations. Tenant acknowledges and understands that the Premises are located on property of Landlord primarily devoted to commerce and navigation, namely the Municipal Wharf, which is under exclusive control of Landlord. By executing this Lease, Tenant agrees to abide by all laws, ordinances, directives, rules, and regulations promulgated by the City Council of the City of Santa Cruz now existing or hereafter made for the government, management, maintenance, operation, and/or improvement of the Wharf, including, without limitation, such directives as to the usage of the Wharf as may be determined or promulgated by the officials, officers, or representatives of Landlord in their official or departmental capacity. Tenant further agrees that such laws, ordinances, directives, rules, regulations or conditions as may be imposed by Landlord through its City Council, administrative officers, department heads, and/or duly authorized representatives, shall be subject to compliance by Tenant.

ARTICLE 18 – CONDEMNATION

18.01 Condemnation. If the Premises or New Improvements (or any portion thereof) are taken under the power of eminent domain or sold in lieu of condemnation (collectively "Condemnation"), this Lease shall terminate as to the part taken as of the date the condemning authority takes title or possession, whichever first occurs. If the New Improvements or more than 50% of the rentable area of the entire Premises and improvements located thereon (including, but not limited to, the New Improvements) are taken by Condemnation, Tenant may, at Tenant’s option, to be exercised in writing within ten (10) calendar days after Landlord shall have given Tenant written notice of such taking (or in the absence of such notice, within ten (10) calendar days after the nature and extent of the taking have been finally determined) terminate this Lease as of the date the condemning authority takes such possession. If Tenant does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises and New Improvements remaining, except that the Minimum Annual Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation. Landlord and Tenant agree to execute an amendment or other appropriate instrument modifying this Lease within thirty (30) calendar days after the partial taking, confirming the reduction in the Premises and Minimum Annual Rent. Each Party waives the provisions of California Code of Civil Procedure Section 1265.130 allowing either Party to petition the Superior Court to terminate this Lease in the event of a partial taking of the Premises.

18.02 Award
(a) Condemnation by Other than City of Santa Cruz. Except as otherwise provided herein and subject to the rights of any secured Leasehold Lender as provided in Article 8, if the Premises are wholly or partially condemned by a condemning authority other than the City of Santa Cruz, Landlord shall be entitled to receive all compensation and anything of value awarded, paid, or received in settlement or otherwise in connection with such Condemnation(“Award”) and Tenant waives any right or claim to any part thereof from Landlord or the condemning authority.

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Notwithstanding the foregoing, Tenant shall be entitled to claim and recover from the condemnor (but not from Landlord): (a) the unamortized or undepreciated value of any leasehold improvements owned by Tenant that Tenant has the right to remove at the end of the Lease Term and that Tenant elects not to remove; (b) the reasonable removal and relocation costs for any leasehold improvements that Tenant has the right to remove and elects to remove (if condemnor approves of the removal); (c) the fair market value of any merchandise, personal property, and furniture, fixtures, and equipment owned by Tenant that are taken in connection with such Condemnation; (d) the loss of goodwill, if agreed to be paid by the condemnor or awarded by the court; and (e) relocation costs under California Government Code section 7262, the claim for which Tenant may pursue through any appropriate proceeding. Tenant shall have the right to negotiate directly with the condemnor for the recovery of the portion of the Award to which Tenant is entitled under this Section. (b) Condemnation by City of Santa Cruz. If the City of Santa Cruz takes the Premises or New Improvements (or any portion thereof) by Condemnation, the Tenant shall be entitled to receive the Award, subject to the rights of Leasehold Lenders and the rights of the City of Santa Cruz under governing Condemnation Laws, including, but not limited to California Code of Civil Procedure Sections 1230.010 through 1273.050, inclusive.

ARTICLE 19 - OTHER PROVISIONS

19.01 Force Majeure. Except as otherwise expressly provided in this Lease, if the performance of any act required by this Lease to be performed by either Landlord or Tenant is prevented or delayed by reason of any act of God, earthquake, natural disaster, flood, strike, lockout, labor dispute, inability to secure labor or materials or reasonable substitutes therefore, restrictive governmental laws or regulations, unusually severe weather substantially differing from what normally would have been expected (based on historic weather data), or any other cause (except financial inability) beyond the reasonable control of and not caused by the fault or negligence of the Party required to perform the act, the time for performance of the act will be extended for a period equivalent to the period of delay and performance of the act during the period of delay will be excused. However, nothing contained in this section shall excuse the prompt payment of rent by Tenant as required by this Lease or the performance of any act rendered difficult or impossible solely because of the financial condition of the Party required to perform the act. Tenant's obligations to make payment of rent and other charges pursuant to the terms of this Lease shall be excused or reduced only as elsewhere specifically provided in this Lease.

19.02 Retention of Discretion. Tenant acknowledges and agrees that Landlord is entering into this Lease in its capacity as a property owner with a proprietary interest in the Premises and improvements thereon (including, but not limited to, the New Improvements) and not as a regulatory agency with police powers. Nothing in this Lease limits in any way Tenant’s obligation to obtain any and all required Regulatory Approvals from applicable Governmental Bodies.
(a) Tenant acknowledges that Landlord is not committing itself or agreeing to undertake any activity requiring the subsequent exercise of discretion by the City of Santa Cruz, or any department thereof, including but not limited to the approval of the New Improvements or any Tenant Improvements, any CEQA documents, any development

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proposal, or any land use regulation governing the Premises or the New Improvements, or any other approval.
(b) Tenant understands and agrees that the City of Santa Cruz reserves the right to exercise its discretion as to all matters which it is, by law, entitled or required to exercise its discretion, including, but not limited to, the consideration of the New Improvements, any Tenant Improvements, any CEQA documents, a final development or project, any and all plans, or Regulatory Approvals, and/or any other acts or activities requiring the subsequent independent exercise of discretion by the City of Santa Cruz or any agency or department thereof.
(c) Nothing in this Lease shall obligate the City of Santa Cruz in its regulatory capacity (as opposed to its proprietary capacity as the Landlord and property owner hereunder) to exercise its discretion in any particular manner, and notwithstanding any provisions of this Lease to the contrary, any exercise of discretion required by Law or permitted by this Lease shall not be deemed to constitute a breach of Landlord’s duties under this Lease.

19.03 Attorneys' Fees. Should any litigation be commenced between the Parties to this Lease concerning the Premises, the New Improvements, this Lease, or the rights and duties of either Party in relation thereto, the Party prevailing in that litigation shall be entitled, in addition to any other relief that may be granted in the litigation, to a reasonable sum as and for that Party's attorneys' fees in that litigation that shall be determined by the court in that litigation or in a separate action brought for that purpose.

19.04 Advertising and Promotion Fund. Landlord, upon acquiring approval from a majority of Wharf tenants and licensees, may establish a Wharf Marketing Association (“Association”) to market, advertise and promote the Municipal Wharf and its various businesses. By executing this Lease, Tenant agrees to join the Association, if any, and to contribute funds to a Wharf Marketing and Promotion Fund (“Fund”) for the purpose of developing coordinated marketing plans which may include without limitation, media advertising, community-relations programs, special events and promotions of the Wharf and its businesses.

The Association members shall select a board of directors or other such advisory group as a majority of the members of the Association shall select which shall decide and approve all expenditures from the fund. The activities of the Association shall be financed by the proceeds of the Fund and shall be based upon an annual budget based on an appropriate fiscal year.

If the Landlord elects to establish the Association, Landlord may impose a marketing fee on all members of the Association to implement the Fund. The marketing fee shall not exceed one-half percent (1/2%) of Gross Sales as defined in this Lease. No such charge shall be imposed unless all members of the Association are similarly charged. This fee shall be in addition to any other rent, payment or charge required under this Lease and shall be paid in monthly installments to the Landlord for remittance to the Association.

If a Business Improvement and Assessment District is established in the future which includes the Wharf and its tenants, the collection of marketing fees described above shall terminate if the assessments collected through said District equal or exceed the amounts collected by the Landlord for deposit into the Fund during the prior fiscal year.

19.05 Governing Law. This Lease, and all matters relating to this Lease, shall be governed by the laws of the State of California in force at the time any need for interpretation of this

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Lease or any decision or holding concerning this Lease arises. Jurisdiction for any action or proceeding arising out of or relating to this Lease shall be in a state court situated in the County of Santa Cruz, State of California.

19.06 Binding on Heirs and Successors. This Lease shall be binding on and shall inure to the benefit of the heirs, executors, administrators, successors, and assigns of the Parties hereto, but nothing in this section shall be construed as a consent by Landlord to any assignment of this Lease or any interest in the lease by Tenant except as provided in Article 11 (Transfers, Assignment and Subletting) of this Lease.

19.07 Partial Invalidity. If any provision of this Lease is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions of this Lease shall remain in full force and effect unimpaired by the holding.

19.08 Sole and Only Lease. This instrument and the exhibits incorporated herein constitute the sole and only agreement between Landlord and Tenant respecting the subject matter of this Lease, including, the Premises, the leasing of the Premises to Tenant, the New Improvements, and the other terms and conditions set forth in this Lease, and correctly sets forth the obligations of Landlord and Tenant to each other as of its date. Any agreements or representations respecting the subject matter of this Lease, including, the Premises, their leasing to Tenant by Landlord, the New Improvements, or any other matter discussed in this Lease not expressly set forth in this instrument or the exhibits incorporated herein are null and void.

19.09 Time of Essence. Time is expressly declared to be of the essence of this Lease.

19.10 Memorandum of Lease for Recording. Neither Landlord nor Tenant shall record this Lease without the written consent of the other. However, Landlord and Tenant shall, at the request of either at any time during the Term of this Lease, execute a memorandum or "short form" of this Lease for purposes of, and in a form suitable for, recordation. The memorandum or "short form" of this Lease shall describe the Parties, set forth a description of the leased Premises, specify the Term of this Lease, incorporate this Lease by reference, and include any other provisions reasonably required by Leasehold Lender(s).

19.11 Notices. All notices to be given by one Party to the other or options to be exercised under this Lease shall be in writing, mailed or personally delivered to Landlord and Tenant at the following addresses:

Landlord
City of Santa Cruz
Attn. Director
Economic Development and Redevelopment
337 Locust St.

Santa Cruz, CA 95060
Tenant

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Mailed notices shall be sent by certified or registered mail, postage prepaid, or reputable overnight delivery service which provides written proof of delivery, and shall be deemed to have been given on the date of posting. Either Party may, by proper notice, at any time designate a different address to which notices shall be sent.

19.12 No Partnership or Joint Venture. Nothing in this Lease shall be construed to render Landlord in any way or for any purpose a partner, joint venturer, or associate in any relationship with Tenant other than that of Landlord and Tenant, nor shall this Lease be construed to authorize either to act as agent for the other.

19.13 Prevailing Wage. It shall be the obligation of Tenant and/or any contractor or subcontractor under Tenant to comply with and conform to all applicable State of California labor laws, rules and regulations and the Parties agree that the Landlord shall not be liable for any violation thereof. Unless a valid exemption applies, the construction of the New Improvements may (and the construction of other Tenant Improvements may) be considered a public works project under the California Labor Code (see California Labor Code Sections 1720 et seq. and Title 8, California Code of Regulations, Chapter 8, Subchapter 3, commencing with Section 16000) and subject to labor compliance monitoring and enforcement by the Department of Industrial Relations (“DIR”). In performing the New Improvements and any Tenant Improvements, Tenant (and its contractor(s) and subcontractor(s) performing the work) shall conform to any and all prevailing wage requirements applicable to the work on the Premises under this Lease. Tenant (and its contractors and subcontractors) shall adhere to prevailing wage determinations made by the Director of the DIR pursuant to California Labor Code Part 7, Chapter 1, Article 2, as applicable to the New Improvements and/or Tenant Improvements and associated work.

Tenant shall ensure that its contractors and subcontractors also comply with and adhere to this prevailing wage provision. Tenant shall be responsible for any failure of Tenant’s contractors and/or subcontractors to comply with applicable prevailing wage and public works laws. If the Tenant is unsure whether the subject work is a “public work” as defined in the California Labor Code, it may wish to seek a timely determination from the DIR or an appropriate court.

When constructing the New Improvements and any Tenant Improvements, the Tenant must either: (1) Proceed on the assumption that the subject work is a public work and ensure that: (a) Prevailing wages are paid; and (b) The project budget for labor reflects these prevailing wage requirements; and (c) The subject work complies with all other requirements of prevailing wage law, including, but not limited to, keeping accurate payroll records, and complying with all working hour requirements, posting requirements, and apprenticeship obligations; or (2) Before commencing any portion of the subject work, timely obtain a legally binding determination from the DIR or a court of competent jurisdiction that the proposed work is not a public work. Only the California DIR and courts of competent jurisdiction have jurisdiction to issue legally binding determinations that a particular project is or is not a public work.

If the subject work of construction is considered public works under the California Labor Code (see California Labor Code Sections 1720 et seq. and Title 8, California Code of Regulations, Chapter 8, Subchapter 3, commencing with Section 16000), Tenant, as the awarding agency, is required to include in their bid invitations and public works contracts (among other things), notice of the following: (1) the public works contractor registration requirement as specified in Labor Code section 1771.1(a), and (2) that the project is subject

9.94 Miramar Lease 77
to compliance monitoring and enforcement by the DIR. DIR recommends including the text of Labor Code sections 1725.5 (contractor registration requirements and criteria), 1771.1 (requirement to register as a condition to bid or work on public works), and 1771.4 (project compliance monitoring) in contract documents. For public works projects, Tenant (and/or its contractor[s]) may contact DIR for a list of covered trades and the applicable prevailing wage.

Journeyman and Apprentice Prevailing Wage Rates can be accessed at the following website:
http://www.dir.ca.gov/dlsr/DPreWageDetermination.htm. (Reference: California Labor Code 1773.2). If Tenant has any questions about this contractual requirement or the wage, record keeping, apprenticeship or other significant requirements of California prevailing wage law, it is recommended that Tenant consult DIR and/or a qualified labor attorney of its choice before entering into this Lease.

Tenant agrees to indemnify, defend, and hold harmless Landlord and its officers, officials, directors, employees, agents, representatives, and volunteers and each of them, from and against any and all claims, liabilities, losses, costs, expenses, attorney’s fees, damages, expenses, fines, interest, and penalties, of any kind or nature, arising from or relating to any failure (or alleged failure) of the Tenant (and/or any of its contractors and/or subcontractors) to comply with the applicable prevailing wage laws. If Landlord (or its officers, officials, directors, employees, agents, representatives, or volunteers) are named as a party in any dispute arising from the failure (or alleged failure) of Tenant (or its contractors and/or subcontractors) to pay prevailing wages, the Tenant agrees that Landlord (and other indemnified parties) may appoint their own independent counsel, and the Tenant agrees to pay all attorney’s fees and defense costs of the Landlord (and the other indemnified parties) as billed, in addition to all other damages, fines, penalties and losses incurred by the Landlord and the other indemnified parties as a result of the action.

19.14 Limitation of Liability. The obligations of Landlord under this Lease shall not constitute personal obligations of Landlord’s City Council members, officials, directors, officers, employees, representatives, agents, or volunteers, and Tenant shall not seek recourse against Landlord’s City Council members, officials, directors, officers, employees, representatives, agents, or volunteers, or any of their personal assets for such satisfaction.

Landlord shall not be liable to Tenant for penalties or liquidated damages, or for special, indirect, consequential, or incidental losses or damages including, but not limited to, lost profits, loss or interruption of business, lost or damaged data, loss of use of facility or equipment, or the failure or increased expense of operations, regardless of whether any such losses or damages are characterized as arising from breach of contract, breach of warranty, tort, strict liability, or otherwise, even if Landlord is advised of the possibility of such losses or damages, or if such losses or damages are foreseeable.

19.15 Counterparts. This Lease may be executed in several counterparts and all such executed counterparts shall constitute one agreement binding on all of the Parties in spite of the fact that all of the Parties have not signed the same counterpart.

19.16 Offer. Preparation of this Lease by either Party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto.

19.17 Exhibits. All Exhibits referenced in this Lease are hereby incorporated as though set forth in full herein.

The Parties have executed this Lease as of the date first written above.

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LANDLORD
City of Santa Cruz
By: _______________________________ _____________________ Martín Bernal Date
Its: City Manager
TENANT
By: _______________________________ _______________________ Date
Its:

APPROVED AS TO FORM:
_________________________________ _______________________ Anthony Condotti
Office of the City Attorney

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Exhibit “A”
Property

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Exhibit “B”
Premises

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Exhibit “C”
Preliminary Title Report (attached)

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Exhibit “D”
Form of Quarterly Statement

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Exhibit “E”
Municipal Wharf Sign Guidelines

1.01. Purpose.
a. These Municipal Wharf Guidelines (“Guidelines”) are intended to provide Wharf Tenants with general criteria regarding appropriate business signage. b. All advertising devices and signs shall comply with the regulations set forth at Santa Cruz Municipal Code (“SCMC”) Chapter 24.12 Part 4 entitled “Advertising Devices, Signs and Billboards” and the Santa Cruz Wharf Master Plan Design Standards (“Design Standards”) all made part hereof by reference. c. In the event of conflict or inconsistency between these Guidelines and the Design Standards, the Design Standards shall prevail.
d. In the event of conflict or inconsistency between these Guidelines, the Design Standards, and SCMC Chapter 24.12 Part 4, SCMC Chapter 24.12 Part 4 shall prevail.

2.01. City Approval. AII exterior signs must be approved in writing by the City Wharf Staff Committee. Certain types and sizes of signs require zoning and building or electrical permits.

3.01. Sign Application Process.
a. Tenants shall submit an application for all new signage to the City’s Wharf Property Manager. The application shall consist of:
i. Dimensioned drawings of the sign;
ii. Type of material, color, lighting, and other sign characteristics; iii. Sketch or photograph showing proposed location with approximate dimensions to ground, roof, doors, and windows.
b. The Wharf Property Manager will forward the application to the City Staff Wharf Committee for review and action.
c. Upon City Staff Wharf Committee action, the Wharf Property Manager shall inform the Tenant of the decision. If the application is approved, the Tenant will be notified of any other City approvals required.

4.01. Sign Criteria.
a. Types. The following types of signs are appropriate for use on the Wharf:
i. Signs painted directly on buildings.
ii. Signs mounted directly on building walls.

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iii. Individual letters and numerals mounted directly on building walls. iv. Neon signs.
v. Iconic signs.
vi. Window signs.
vii. Hanging Signs.
b. Size. Each Wharf business is allowed thirty (30) square feet of total sign area. The following configurations are acceptable:
i. One 6’x5’ sign;
ii. Three 2’x5’ signs;
iii. One 4’x5’ sign, one 2x2’ sign, and one 3’x2’ sign; iv. Other configurations as approved by City Staff Wharf Committee. c. Location.
i. Signs should normally be located at or near pedestrian eye level. ii. Signs shall not project above the roof line or project over the sidewalk unless there is an 8’ high clearance over the sidewalk.
iii. Neon signs are permitted on building exteriors and in windows. iv. Other types of signs positioned in windows are discouraged in order to allow views into and through business spaces.

5.01. Sign Design Considerations.
a. Given the nature of the Wharf and its environs, marine-oriented themes are most appropriate.
b. Signs Painted Directly on Buildings - This type of sign lends itself well to buildings on the Wharf and could develop an overall visual theme. The size of such signs is dependent on the section of the building where they are proposed. Large wall sections could appropriately contain larger signs.
c. Signs Mounted on Building Walls - Useful for locations where painting directly on building walls is not desirable. Carved wooden or composite material signs with a marine-related theme can work well. Wall-mounted signs are to be flush with the building surface.
d. Individual Letters Mounted on the Building - Letters should not exceed 12” in height and should not project more than 2” from the building wall. Plastic letters are not allowed, nor are self-illuminated letters. Letters in colors that appropriately contrast with the background are most effective.

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e. Neon Signs - Neon signs provide light, color, and vibrancy, and are especially effective after dark. Neon signs are appropriate for display in windows, provided that they are in scale with the window size and do not completely obscure views through the window. Neon signs may also be mounted directly on the building wall to supplement a painted sign. Flashing or blinking neon signs are not permitted. f. Iconic Signs - Iconic signs are hanging or projecting signs which depict a physical object such as an anchor or a boat, as contrasted with signs which utilize lettering to convey the sign’s message. Iconic signs that are in scale with the structure and use of the building are most effective. Iconic signs may not present obstructions to pedestrian traffic, and an 8’ overhead clearance is required for any iconic sign overhanging a pedestrian walkway.
g. Window Signs - Painted signs or decals on glass should be designed so that views into and through the business are maintained.
h. Hanging Signs - Small hanging signs beneath an overhang or canopy may be approved if they are incidental and purposeful (e.g., advertising an “Annual Sale”). i. Sign Lighting - Flood lighting of signs is allowed provided that lights are directed away from pedestrians.
j. Banners and Flags - Banners, flags and pennants may be used for specific and limited purposes, but when used to excess may actually detract from the desired result. These advertising devices must be approved on a case-by-case basis. k. Temporary Signs and Posters - These advertising devices are generally discouraged but may be used for no longer than fourteen days at a time with prior approval. They may not obstruct views into and through buildings. l. Menus - Food establishments may display menus securely fixed to the wall or in an enclosed display case. A display case may be lighted. m. Addresses - All businesses should display clearly legible address numbers. They may be incorporated into signage as appropriate.
n. Sandwich Board and Movable Freestanding Signs - Are not permitted.

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Exhibit “F”
Guarantee

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Exhibit “G”
Construction Work Best Management Practices (attached)

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Exhibit “H”
Schedule of Performance

9.106
City Council

AGENDA REPORT
DATE: 01/08/2025
AGENDA OF: 01/28/2025
DEPARTMENT: Finance
SUBJECT: Living Wage Rate Annual Prescription for Fiscal Year 2026 (FN) LOCATION: Citywide
RECOMMENDATION: Motion to adopt a resolution upwardly indexing the prescribed minimum living wage rate by 2.3%, the amount which corresponds to San Francisco-OaklandHayward Area Consumer Price Index (CPI) for Urban Wage Earners and Clerical Workers, for the period ending October 31, 2024, to become effective July 1, 2025; and rescinding Resolution No. NS-30,276.

BACKGROUND: On February 28, 2023, the City Council adopted Ordinance No. 2023-03 pertaining to the payment of a living wage. Section 5.10.040 of the ordinance requires that the City Council adopt a recommendation regarding adjustments to minimum living wage rates and benefits annually to be effective on July 1st, 2025. This section of the ordinance further requires that, at a minimum, the living wage rates shall be upwardly indexed each year by an amount which corresponds to the San Francisco-Oakland-Hayward area CPI for Urban Wage Earners and Clerical workers for the twelve-month period ending on October 31, of the previous year.

DISCUSSION: This CPI data for the period ending October 31, 2024, reflects an increase of

2.3%. Staff recommends that this percentage be used to upwardly index the current living wage rate, effective July 1, 2025. Using this percentage to calculate the new minimum living wage rates will result in the following:

1. The minimum living wage to be paid to employees when they receive the minimum leave and health insurance benefits prescribed in this resolution shall be increased by $.47 to $21.20 per hour.

2. The minimum living wage to be provided to employees where the employees do not receive the minimum leave and health insurance benefits prescribed in this resolution shall be increased by $.52 to $23.13 per hour.

3. The minimum sick leave, vacation leave and health insurance benefits which must be provided to employees in order to qualify for the $21.20 per hour wage rate shall be as follows:

A.Compensated sick leave/vacation leave: a combined twelve (12) days annually for fulltime employees and prorated for employees working less than full time.

B.Uncompensated sick leave/vacation leave: a combined ten (10) days annually for fulltime employees and prorated for employees working less than full time.

10.1 C. Health insurance benefits: the payment of at least $1.92 per hour towards the payment for a health insurance policy for each employee.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION: N/A HEALTH IN ALL POLICIES (HiAP): N/A
FISCAL IMPACT:

1. The recommendation in this report impacts the General Fund: No

2. This recommendation requires a budget adjustment: No

3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: This rise in the minimum living wage may increase contract pricing for some service contracts; however it is not possible to determine any fiscal impact at this time.

Prepared By:

Rachel Rodriguez
Buyer I
Submitted By:

Elizabeth Cabell
Finance Director
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. FY26 RESOLUTION FOR PRESCRIPTIVE ANNUAL INCREASE TO LIVING WAGE.DOC

10.2 RESOLUTION NO. NSRESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ ESTABLISHING MINIMUM LIVING WAGE RATES EFFECTIVE JULY 1, 2025 AND RESCINDING RESOLUTION NO. NS-30,276
WHEREAS, the City Council adopted Ordinance No. 2023-03 on February 28, 2023; and WHEREAS, the living wage ordinance, at Municipal Code Section 5.10.030 requires the payment of a living wage to all “employees” as that term is defined in the ordinance; and WHEREAS, Section 5.10.040 requires the City Council on an annual basis to consider a recommendation annually to prescribe by resolution the minimum living wage rates to be paid to employees pursuant to the requirements of the ordinance to become effective no later than July 1 of each year.

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

1. The minimum living wage to be paid to employees when said employees receive the minimum vacation leave, sick leave, and health insurance benefits prescribed in this resolution shall be $21.20 per hour.

2. The minimum living wage to be provided to employees where the employees do not receive the minimum vacation leave, sick leave, and health insurance benefits prescribed in this resolution shall be $23.13 per hour.

3. The minimum vacation leave, sick leave, and health insurance benefits which must be provided to employees in order to qualify for the $21.20 per hour minimum living wage prescribed in this resolution shall be as follows:

A. Compensated sick leave/vacation leave: a combined twelve (12) days annually for fulltime employees and prorated for employees working less than full time.

B. Uncompensated sick leave/vacation leave: a combined ten (10) days annually for fulltime employees and prorated for employees working less than full time.

C. Health insurance benefits: the payment of at least $1.92 per hour towards the payment for a health insurance policy for the employee.

10.3 PASSED AND ADOPTED this 28th day of January 2025, by the following vote:

AYES:

NOES:

ABSENT:

DISQUALIFIED:

APPROVED: _____________________________
Fred Keeley, Mayor
ATTEST: _________________________________
Bonnie Bush, City Clerk Administrator

10.4 City Council

AGENDA REPORT
DATE: 01/09/2025
AGENDA OF: 01/28/2025
DEPARTMENT: Economic Development and Housing
SUBJECT: 2021 Program Year Annual Action Plan Amendment (EDH) LOCATION: Districts 1 and 4
RECOMMENDATION: Motion to amend the 2021-2022 U.S. Department of Housing and Urban Development (HUD) Annual Action Plan for Community Development Block Grant (CDBG) to cancel the “2021PY Senior Studio – NRSA" project for $50,000 and reallocate the funding to “2021PY Market St. Senior Center Renovations” and direct staff to submit to HUD for approval.

BACKGROUND: The City receives Community Development Block Grant (CDBG) and Home Investment Partnerships Program (HOME) entitlement funding annually from the U.S.

Department of Housing and Urban Development (HUD). To obtain these funds, the City must develop and adopt a five-year Consolidated Plan (CP) which identifies and analyzes strategies for addressing specific community needs. The five-year CP provides strategic direction for housing and community development activities carried out in the City. The City’s CP was prepared and submitted for approval to HUD’s Office of Community and Planning Development (CPD) in 2020.

Each Program Year (PY), the City must approve an Annual Action Plan (AAP) specifying activities that will be undertaken during that PY and setting the annual budget by allocating funds. The amendment is focused on PY2021. The original 2021 AAP was approved by City Council on April 27, 2021. The 2021 AAP awarded funding to both the London Nelson Senior Studio (called “2021PY Senior Studio – NRSA” in the 2021 AAP) in the amount of $50,000 and to the Market St. Senior Center in the amount of $110,000. Since then, the London Nelson Senior Studio project has not moved forward, while the Market St. Senior Center has made progress with project milestones and is gearing up to spend the available funding.

HUD requires that grantees like the City must adhere to timely spending practices, which means the City needs to review and make adjustments to ensure timely spending of CDBG funds. When HUD CDBG timeliness requirements are not met, the City can face negative consequences such as facing more HUD oversight in project allocations, the City needing to formulate a HUD approved remediation plan to spend program funds more quickly and ultimately can face a reduction of funds available to spend in the jurisdiction.

11.1 The Market St. Senior Center project will include: ADA improvements, updating the lighting and electrical for energy efficiency, mold remediation, and plumbing and fixture improvements.

The Market St. Senior Center project received $100,000 in PY2020 CDBG funds and, as mentioned above, $110,000 in PY2021 CDBG funds. Since the project was awarded additional funding for PY2021, costs have increased to move the Market St. Senior Center project forward in the amount of $50,000, which brings total needed project funding to $260,000.

DISCUSSION: Due to the project shortfall faced by the Market St. Senior Center, staff met to discuss the needs of current projects and identify a solution that would both improve timeliness of CDBG funding while moving forward the Market St. Senior Center renovations. The staff recommendation to shift funding from the London Nelson Senior Studio to the Market St. Senior Studio was summarized in the Year-End Budget Adjustment which was approved by City Council on October 22, 2024. This is a formal memorialization of Council action previously taken. Consolidating the funding into one project helps the City both move towards meeting the annual timeliness requirement for CDBG funding while still allowing the London Nelson Senior Studio project to apply again in future funding rounds when the project is further along with planning and scope.

CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:

Project does not require CEQA review, project does not meet definition of Project under CEQA as it does not have a potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. The project site is limited to the existing building.

HEALTH IN ALL POLICIES (HiAP): The CDBG project being amended is consistent with the HiAP framework, as it is directly fulfilling the “Thriving Families” Collective of Results and Evidence-based (CORE) condition by enhancing recreational facilities for older adults in the community.

FISCAL IMPACT:

1. The recommendation in this report impacts the General Fund: No

2. This recommendation requires a budget adjustment: No

3. The recommendation creates an on-going expenditure commitment: No FISCAL IMPACT DESCRIPTION: No Impact.

Prepared By:

Emily Watkins
Housing Program Specialist
Jess Mellor
Principal management Analyst
Submitted By:

Bonnie Lipscomb
Director of Economic
Development and Housing
Approved By:

Matt Huffaker
City Manager
ATTACHMENTS:

1. RESOLUTION NS-.DOCX

2. AMENDED CDBG BUDGET.PDF

3. AAP AMENDMENT REDLINE.PDF

11.2 RESOLUTION NO. NS-XX,XXX

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CRUZ AMENDING THE 2021-2022 HUD ANNUAL ACTION PLAN
WHEREAS, the City of Santa Cruz is a designated U.S. Department of Housing and Urban Development (HUD) entitlement grantee that annually receives federal Community Development Block Grant (CDBG), Community Development Block Grant (CDBG) and Home Investment Partnerships Program (HOME) grant funds from HUD; and
WHEREAS, HUD requires that any jurisdiction receiving federal CDBG and HOME grant funds from HUD prepare an Annual Action Plan (AAP) to allocate grant funds; and WHEREAS, HUD requires that any jurisdiction receiving federal CDBG and HOME grant funds from HUD prepare an AAP to identify the activities that will be undertaken in the coming Program Year (PY) and requires noticing of and a public comment period for amendments to prior AAPs, Consolidated Plans and Citizen Participation Plan in accordance with the City’s Citizen Participation Plan; and
WHEREAS, the City Council, in accordance with its approved Citizen Participation Plan, held a public hearings April 27, 2021, for the purpose of soliciting input from the public on the proposed 2021-2022 AAP; and
WHEREAS, allocations have been made to various non-profit and public subrecipient organizations, to provide funding for public services, facilities, housing and other Capital Improvement projects; and
WHEREAS, on October 22, 2024 the City Council approved a budget adjustment which reprogramed funding from the 2021 PY London Nelson Senior Studio Project to the 2021 PY Market St. Senior Center Renovations Project; and
WHEREAS, in accordance with the City’s approved Citizen Participation Plan, the Action Plan must be amended whenever a decision is made to propose a substantial change in the Plan; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Santa Cruz as follows:

1. Cancel project number 12 “2021PY Senior Studio – NRSA" of the 2021 Annual Action Plan and reallocate the $50,000 in funding to project number 8 “2021PY Market St.

Senior Center Renovations” of the 2021 Annual Action Plan Am1. Amend the 2021- 2022 U.S. Department of Housing and Urban Development (HUD) Annual Action Plan for Community Development Block Grant (CDBG) to cancel the “2021PY Senior Studio – NRSA" project for $50,000 and reallocate the funding to “2021PY Market St.

11.3 RESOLUTION NO. NS-XX,XXX
2 Senior Center Renovations”. for a total amount of $160,000 in CDBG funding being awarded to the Market St. Senior Center Renovations project.

2. 2. The amendment will be submitted to HUD for approval as per the City’s Citizen Participation Plan.

PASSED AND ADOPTED this 28th day of January, 2025 by the following vote:

AYES:

NOES:

ABSENT:

DISQUALIFIED:

APPROVED: ______________________________
Fred Keeley, Mayor
ATTEST: _________________________________
Bonnie Bush, City Clerk Administrator

11.4 Requested
Funding
Prior Year
Funding
Recommended
Funding
Activity: Market St. Senior Center Renovation $125,000 $100,000 $110,000 Applicant: City of Santa Cruz $160,000
Activity: Senior Art Studio at Louden Nelson $50,000 $0 $0 Applicant: City of Santa Cruz

CAPITAL IMPROVEMENT PROJECTS
2021-22 PY CDBG BUDGET

CDBG PROGRAM BUDGET
2021-2022 PROGRAM YEAR

11.5 Annual Action Plan
2021
1 OMB Control No: 2506-0117 (exp. 09/30/2021)
Projects
AP-35 Projects – 91.220(d)
Introduction
This section includes the projects proposed for the 2021-2022 Program Year.

Projects
# Project Name
1 2021PY HOME Program Administration
2 2021PY CHDO Set-Aside
3 2021PY Security Deposit Program
4 2021PY Second Harvest Food Bank
5 2021PY Nueva Vista Community Resources NRSA
6 2021PY California Rural Legal Assistance
7 2021PY Teen Center NRSA
8 2021PY Market St. Senior Center Renovations
9 2021PY Rehabilitation Program Delivery Costs
10 2021PY CDBG Program Administration
11 2021PY Homeless Infrastructure
12 2021PY Senior Studio - NRSA
13 PY21 HOME Future Affordable Housing Projects
14 2021PY Central Park
Table 1 - Project Information
Describe the reasons for allocation priorities and any obstacles to addressing underserved needs
The allocation of funds is aligned with the top housing and community development needs identified in the Consolidated Plan, input received in public meetings, and discussions of elected officials during plan development. The major obstacle to addressing the underserved needs is the lack of adequate funding, especially for affordable housing activities and supportive housing as well as programs to provide for the homeless population. With the dissolution of Redevelopment Agencies in California and reduced State and Federal funding for community programs and affordable housing, our ability to address the extensive needs in the community has been seriously compromised.

11.6 Annual Action Plan
2021
2 OMB Control No: 2506-0117 (exp. 09/30/2021)
AP-38 Project Summary
Project Summary Information

11.7 Annual Action Plan
2021
3 OMB Control No: 2506-0117 (exp. 09/30/2021)
1 Project Name 2021PY HOME Program Administration
Target Area
Goals Supported
Needs Addressed
Funding HOME: $42,614.00
Description Administration funding would partially support 4 staff persons, training and other expenses incurred for operation of the HOME Program.

Target Date 6/30/2022
Estimate the number
and type of families
that will benefit from
the proposed
activities
N/A for administration
Location Description 337 Locust St. Santa Cruz, CA
Planned Activities Administration of HOME Program.
2 Project Name 2021PY CHDO Set-Aside
Target Area
Goals Supported Increase and preserve affordable housing Needs Addressed Homeless Assistance Programs
Affordable Housing
Funding HOME: $59,421.00
Description The City of Santa Cruz currently has two CHDO organizations, MidPen, and Habitat for Humanity. Neither applied for funding this year. We are actively encouraging a nearby CHDO, First Community Housing (FCH) to apply for CHDO status in Santa Cruz, as FCH is working on a number of HOME eligible projects in the coming years.

Target Date 6/30/2022
Estimate the number
and type of families
that will benefit from
the proposed
activities
N/A
Location Description City-wide

11.8 Annual Action Plan
2021
4 OMB Control No: 2506-0117 (exp. 09/30/2021)
Planned Activities No activities are planned at this time, these funds will be combined with prior year CHDO set-aside funding when a local CHDO is ready to apply.
3 Project Name 2021PY Security Deposit Program
Target Area
Goals Supported Support County-wide Homeless Strategic Plan Increase and preserve affordable housing
Needs Addressed Affordable Housing
Funding HOME: $100,000.00
Red Cross: $11,000.00
State Funding: $100,000.00
Description This is an on-going program supported by the City to provide security deposit assistance for approximately 75 low, very-low, and extremely low income households to enable them to secure rental housing.

Security deposit loan funding is provided by HOME Program and Red Cross Funding. The County of Santa Cruz Housing Authority (HA) administers the Program. The project qualifies for HOME Program funding under 24 CFR, Part 92.205(a) for tenant based rental assistance/security deposits.

Target Date 6/30/2022
Estimate the number
and type of families
that will benefit from
the proposed
activities
Program will help about 75 low-, very-low, and extremely-low income households into rental housing who lack money for a security deposit. Program is also used to assist the 180/2020 Program in housing the most medically vulnerable and chronically homeless persons.

Location Description Citywide
Planned Activities Activities include processing applications, providing loans to qualified applicants for security deposits, distributing funds to landlords, and receiving reimbursements when tenant vacates unit.
4 Project Name 2021PY Second Harvest Food Bank
Target Area Neighborhood Revitalization Strategy Area
Goals Supported Provide community and supportive services.

Needs Addressed Community Services and Youth Programs
Funding CDBG: $25,000.00

11.9 Annual Action Plan
2021
5 OMB Control No: 2506-0117 (exp. 09/30/2021)
Description The ability to ensure basic healthy foods reach those in need in the City of Santa Cruz has been impacted by COVID-19. Since March 2020, Second Harvest Food Bank has recognized the rippling impact of COVID-19. During the countywide Shelter-in-Place order there was a tripling of the number of people attending food bank distributions and a ten-fold increase in the number of calls to the community food hotline. These distributions are serving roughly 25,000 people needing food assistance county-wide with a large portion residing within the City of Santa Cruz, including newly unemployed and furloughed residents. Though infection rates are decreasing and no CDBG-CV funding remains, the need remains great for PY2021.National Objective: LMCMatrix Code: 5W Food BanksPresumed benefit: No Target Date 6/30/2022
Estimate the number
and type of families
that will benefit from
the proposed
activities
25,000 low income persons, mostly extremely low and very low income.

Location Description Beach flats food pickup as main distribution and citywide in food pantries all over the City.

Planned Activities Food distribution at location within NRSA and at foodbanks throughout the City of Santa Cruz.
5 Project Name 2021PY Nueva Vista Community Resources NRSA Target Area Neighborhood Revitalization Strategy Area
Goals Supported Provide community and supportive services.

Needs Addressed Community Services and Youth Programs
Funding CDBG: $100,000.00
General Fund: $55,000.00
Red Cross: $25,000.00

11.10 Annual Action Plan
2021
6 OMB Control No: 2506-0117 (exp. 09/30/2021)
Description Activity provides for operating expenses for Nueva Vista Resources, which includes the Nueva Vista Resource Center (formerly known as Familia Center) and the Beach Flats Community Center. Nueva Vista Resources is a Latino based center with a primary focus to serve the low-income families in the Lower Ocean Street and Beach Flats Neighborhood, including community services and youth programs.

Nueva Vista is designated as a qualified CBDO which operates under Community Bridges. This project will be linked to two separate activities.Matrix Code: 5D and 5ZEligible Activity: Youth Services National Objective: LMC- Low/Mod Limited ClientelePresumed Benefit:

N
Target Date 6/30/2022
Estimate the number
and type of families
that will benefit from
the proposed
activities
Statistically there are about 7,115 individuals in the NRSA, which is the primary target for these programs. Of those, with combined program efforts of both Nueva Vista and Community Bridges, about 1,200 individuals will benefit from program services. The NRSA neighborhood has the largest minority (Hispanic) populations in the City. About 40% are Hispanic versus 21% City-wide.

Location Description 2017-2022 Lower Ocean- Beach/South of Laurel Neighborhood Revitalization Strategy Area
Planned Activities Nueva Vista Resource Center (formerly known as Familia Center), has two programs assisted with CDBG funding. The first program is Client Services which provides assistance to families through advocacy and support, information, referrals, follow up, educational workshops, youth enrichment programs, emergency food and clothing, and assistance with enrollment into government programs including CalFresh, MediCal and Covered CA. The second program is located at the Beach Flats Community Center which provides youth programs and activities as well as serving as a community center for the neighborhood.
6 Project Name 2021PY California Rural Legal Assistance Target Area
Goals Supported Provide community and supportive services.

Needs Addressed Community Services and Youth Programs
Funding CDBG: $25,000.00
General Fund: $25,000.00

11.11 Annual Action Plan
2021
7 OMB Control No: 2506-0117 (exp. 09/30/2021)
Description California Rural Legal Assistance, Inc. (CRLA) will provide assistance to low-income residents of the City of Santa Cruz on a range of housing matters, to help individuals and families make informed decisions and to take action to obtain, maintain, or improve their housing situation.

CRLA will accomplish this through individual assistance, including legal representation when necessary. Matrix Code: 5CEligible Activity: Legal ServicesNational Objective: LMC- Low/Mod Limited Clientele Target Date 6/30/2022
Estimate the number
and type of families
that will benefit from
the proposed
activities
95 City low, very low and extremely low income residents in approximately 45 households including homeless persons and those in housing crises.

Location Description The program operates city-wide.

Planned Activities Education, outreach, and legal representation as needed, all related to Housing.
7 Project Name 2021PY Teen Center NRSA
Target Area Neighborhood Revitalization Strategy Area
Goals Supported Provide community and supportive services.

Needs Addressed Community Services and Youth Programs
Funding CDBG: $40,000.00
General Fund: $120,000.00
Description CDBG funds will be used toward staff costs for the Teen Center to provide a safe place and programs for teens in a low-income area of the City.Matrix Code: 5DEligible Activity: Youth Services National Objective: LMC- Low/Mod Limited ClientelePresumed Benefit: N Target Date 6/30/2022
Estimate the number
and type of families
that will benefit from
the proposed
activities
It is estimated that about 350 Teens participate in the program throughout the year. Over 50% are from households that are at or below 30% of Area Median Income (AMI) with almost 75% being below 50% AMI.

Location Description Low-income target area within to the NRSA

11.12 Annual Action Plan
2021
8 OMB Control No: 2506-0117 (exp. 09/30/2021)
Planned Activities The Teen Center has daily activities including a healthy eating program, an outdoor garden, homework assistance with access to 4 computers and free Wi-Fi, games such as foosball and a pool table, and direct access to Laurel Park. Additionally the Center provides mentorship opportunities for teens. The Teen Center also collaborates with other organizations to provide field trips and other experiences. In the past this has included a 2-day, 2-night camping/white water rafting trip on the American River.
8 Project Name 2021PY Market St. Senior Center Renovations Target Area
Goals Supported Revitalize community facilities & infrastructure.

Needs Addressed Community Facility Improvements
Funding CDBG: $110,000.00160,000.00
Description Rehabilitation including ADA improvements, lighting and electrical, mold remediation, plumbing and fixtures. Note: total project scope will be reduced to accommodate the allotment of funds as there are no other sources. National Objective: LMC- presumed benefit. Matrix Code: 3A Senior Centers
Target Date 6/30/2023
Estimate the number
and type of families
that will benefit from
the proposed
activities
Annual, the center helps around 250 very low income, extremely low income and low income seniors
Location Description Market St. Senior Center at 222 Market St. in Santa Cruz Planned Activities Rehab of building.
9 Project Name 2021PY Rehabilitation Program Delivery Costs Target Area
Goals Supported Increase and preserve affordable housing Needs Addressed Affordable Housing
Funding CDBG: $6,500.00

11.13 Annual Action Plan
2021
9 OMB Control No: 2506-0117 (exp. 09/30/2021)
Description Activity provides funding for Unified Housing Rehabilitation Program (UHRP) consultant contract to administer existing UHRP loans and staff costs for new rehab projects. Matrix Code: 14HEligible Activity: Rehab:

AdministrationNational Objective: LMH-Low/Mod HousingPresumed Benefit: N
Target Date
Estimate the number
and type of families
that will benefit from
the proposed
activities
All participants in UHRP are low-, very low- or extremely low-income, approximately 10.

Location Description UHRP is city-wide
Planned Activities Consultant administers existing UHRP loans. Staff oversees and monitors current and past rehabilitation projects and agreements. 10 Project Name 2021PY CDBG Program Administration
Target Area
Goals Supported
Needs Addressed Planning and Administration
Funding CDBG: $132,470.00
Description Administration funding would partially support 3 staff persons, training and other expenses incurred for operation of the CDBG and related consultant contracts for planning and administration.Matrix Code:
21AEligible Activity: General Program Admin
Target Date 6/30/2022
Estimate the number
and type of families
that will benefit from
the proposed
activities
N/A
Location Description Economic Development Department offices are located at 337 and 330 Locust St.

Planned Activities Administration of CDBG and HOME Programs. 11 Project Name 2021PY Homeless Infrastructure
Target Area

11.14 Annual Action Plan
2021
10 OMB Control No: 2506-0117 (exp. 09/30/2021)
Goals Supported Support County-wide Homeless Strategic Plan Needs Addressed Homeless Assistance Programs
Community Facility Improvements
Funding CDBG: $236,092.00
Description Construction and/or repair of homeless infrastructure including:
hygiene bay renovations, rehabilitation of homeless facilities, designated homeless bathrooms, site acquisition for homeless facilities, design costs for homeless facilities and project management for homeless infrastructure projects.National Objective: LMC presumed benefitMatrix Code: 3C Homeless Facilities
Target Date 6/30/2023
Estimate the number
and type of families
that will benefit from
the proposed
activities
1000 Extremely Low Income
Location Description Citywide
Planned Activities Homeless infrastructure rehab and construction 12 Project Name 2021PY Senior Studio - NRSA
Target Area Neighborhood Revitalization Strategy Area
Goals Supported Revitalize community facilities & infrastructure.

Needs Addressed Community Facility Improvements
Funding CDBG: $50,000.00
Description Foundation, electrical hookups and ADA ramp for installation of an existing modular unit to be used as a studio for the senior residents.National Objective: LMC- presumed benefitMatrix Code: 3A Senior Centers
Target Date 6/30/2023
Estimate the number
and type of families
that will benefit from
the proposed
activities
250 very low income, extremely low income and low income seniors Location Description Louden Nelson Community Center

11.15 Annual Action Plan
2021
11 OMB Control No: 2506-0117 (exp. 09/30/2021)
Planned Activities Foundation, ramp and electrical hookups. 13 Project Name PY21 HOME Future Affordable Housing Projects Target Area
Goals Supported Increase and preserve affordable housing Needs Addressed Affordable Housing
Funding HOME: $224,106.00
LIHTC: $21,000,000.00
Redevelopment Fund: $897,014.00
State Funding: $6,064,000.00
Description This funding is intended to be awarded to Affordable Housing Projects.

Upcoming projects that are good candidates for this funding include the Pacific Metro Station projects which will have over 100 units, and the Library Mixed-use Project. Projects have to have all other funding secured, subsidy layering completed and a financial analysis that the costs are all reasonable per HUD guidelines.This amount can be added to prior funding set aside for HOME Affordable housing project, unused administration funding from prior years, and unclaimed CHDO funds.

Target Date 6/30/2025
Estimate the number
and type of families
that will benefit from
the proposed
activities
This funding amount will likely be enough to fund 1 HOME assisted unit, but as there are no projects ready to receive HOME funding, the estimate will be 0 for this program year. The goal will be updated when HOME funding is awarded to a project as the last money in.

Location Description City wide.

Planned Activities Affordable housing demolition, acquisition, construction, predevelopment activities as permitted, subsidy layering reviews, environmental reviews and other costs as permitted for HOME Affordable Housing creation.
14 Project Name 2021PY Central Park
Target Area
Goals Supported Revitalize community facilities & infrastructure.

Needs Addressed Community Facility Improvements
Funding CDBG: $7,289.00

11.16 Annual Action Plan
2021
12 OMB Control No: 2506-0117 (exp. 09/30/2021)
Description Additional allocation will cover funding gap for park renovation including: ADA improvements and improved playground features for residents in low income neighborhood.Matrix Code: 3FEligible Activity:

Parks, Recreational FacilitiesNational Objective: LMA- Low and Moderate Income Area Benefit
Target Date 6/30/2022
Estimate the number
and type of families
that will benefit from
the proposed
activities
There are 7,126 residents in this census tract, 23% are living below the poverty line and about 60% are at the low-mod level. This is additional funding added to the project extends the ADA accessible portion of the playground, so the goals were already included in the 2019 Program year, so will not be included below to not double count the outcome.

Location Description Central Park project is located on Dakota Ave Planned Activities Park renovation.

11.17 Annual Action Plan
2021
13 OMB Control No: 2506-0117 (exp. 09/30/2021)

11.18 City Council

AGENDA REPORT
DATE: 01/08/2025
AGENDA OF: 01/28/2025
DEPARTMENT: City Manager
SUBJECT: 2024 Health in All Policies Progress Update and Proposed 2025 Health in All Policies City Council Committee Workplan (CM)
LOCATION: Citywide
RECOMMENDATION: Motion to:
1) Accept 2024 Health in All Policies (HiAP) progress update; and 2) Adopt the 2025 HiAP City Council Committee workplan.

BACKGROUND: Recognizing the role of local governments in promoting community wellbeing through policy and decision-making, the City Council prioritized equity, public health, and sustainability by adopting Council Policy 14.9 in November 2019 (attached) and a Health in All Policies (HiAP) ordinance (Ordinance No. 2019-22, attached) in December 2019. Subsequently, the City Council adopted a Year 1 Implementation Work Plan in January, 2020 and upon completion of that Work Plan, in November, 2021, adopted a multi-year workplan that extended through 2024. The City Council also adopted a set of Community Well-being Outcome indicator metrics
(https://www.cityofsantacruz.com/home/showpublisheddocument/94836/638276874418500000).

The metrics are intended to be referenced to better understand the impact of the City and its partners’ collective efforts over time.

On November 9, 2021, City Council adopted a complementary resolution recognizing the history and current existence of racism and white supremacy in the community, reviving the HiAP City Council Committee and directing the committee to return to the council with concrete, actionable steps to work toward building a more just, inclusive and safe community. Each calendar year the City adopts an annual HiAP City Council Committee workplan that guides the implementation of the direction contained in both the 3-year implementation workplan and the anti-racial discrimination resolution.

DISCUSSION: In addition to a qualitative assessment of annual calendar year progress on the HiAP citywide workplan, staff track two quantifiable sets of metrics. First, staff are in the process of updating the adopted Community Well-being Outcome indicator metrics. Staff report on any significant trends in these metrics, recognizing that trends usually are observable on a

12.1 decadal timeframe. Trends in the outcome indicator metrics will be reported upon completion of the current update. Second, staff track the proportion of City Council agenda reports that address the three HiAP pillars in the discussion section of agenda reports as required by City Council policy. The goal is that every agenda report meaningfully addresses the three pillars so that Councilmembers have the wholistic information needed to make decisions and policies that improve community well-being.

After several years where the proportion of agenda reports that meet this requirement remained fairly static, in calendar year 2023, there was a significant increase in agenda reports that mention HiAP (from around 9% in 2022 to 33% in 2023) and a modest increase in the agenda reports that meaningfully address HiAP (from about 8% in 2022 to 11.3% in 2023). In 2024, the upward trend continued with 33% of reports meaningfully addressing HiAP and 13% of reports mentioning HiAP, meaning that approximately half (46%) of all agenda reports either reference or meaningfully addressed HiAP, indicating substantial progress in embedding the HiAP framework into City policy and decision making. To sustain this progress, in 2024, a HiAP section was added to the City’s agenda report template. This addition is expected to ensure that all future agenda reports will include HiAP considerations meaningfully. Additionally, staff will continue offering HiAP trainings through the employee training catalog and leverage other opportunities to further incorporate HiAP in City policymaking.

In terms of qualitative progress, the City reports on the status of progress on activities in the Citywide 2021-2024 HiAP workplan, the anti-racial discrimination resolution, and the HiAP City Council Committee’s annual workplan for calendar year 2024. Workplan activities denoted with an asterisk (*) also represent activities completed pursuant to the anti-racial discrimination resolution
Citywide 2021-2024 HiAP Workplan Progress:

Workforce Development Initiative (all departments) – ongoing initiative included hosting monthly regional workforce partner meeting, partnering with Your Future is our Business on a Trades Day at the Civic Auditorium in November, 2022, 2023 and 2024 and receipt of a Department of Energy Weatherization Assistance Program grant to fund low income green and healthy home retrofits that includes a workforce development initiative in partnership with Central Coast Energy Services. The Water Department’s new procurement process for capital investment projects does not pay for travel, giving preference to local vendors. Both the Fire and Police Departments have established youth career programs. Additionally, a grant proposal was submitted for green jobs development in 2024 and a skilled job fair is planned for March, 2025.

Engagement for the purpose of relationship and capacity building* (all departments) – Ongoing.

Staff conducted a wide variety of community engagement to support coastal resilience building and a Housing and Urban Development (HUD) Grant proposal submitted in October 2024 for Affordable Housing and Climate Resilience in Frontline Communities in Santa Cruz, which resulted from community driven priorities identified during engagement. The City’s Code Compliance team conducted engagement with the Lower Ocean and Beach Flats neighborhoods though neighborhood trash clean-up days. The Economic Development and Housing Department staff conducted outreach during design of public art projects and participates in artist design and selection committees for art in private development projects. In 2025, the CMO will lead the development of an Equitable Engagement Policy. Internally, the Human Resources Department

12.2 conducted extensive engagement with employees in 2024 as part of the Culture as a Competitive Advantage initiative.

Design standard operating procedure/best practices for equity focused community engagement* (CMO + departments) - Partially completed. The City developed an internal translation and interpretation guide as well as an equity best practices in engagement guide and conducted employee training on both. Additionally, City contracted with 3 local translation/interpretation firms to provide added capacity for those activities within the City.

Ongoing evaluation and recommendations for new CORE/Community Development Block Grant funding allocations based on equity (CMO, EDH and HiAP City Council Committee) - The “lessons learned” were incorporated into the CORE RFP (2025-2028) which was released on June 3, 2024 and closed August 3, 2024. On November 19, 2024 the County Board of Supervisors and City Council approved the CORE funding recommendations for the 2025-2028 cycle. The HiAP City Council Committee reviews annual allocations for CDBG funding.

Join the Local and State Government Alliance for Racial Equity (GARE)* (All departments)- Completed and renewed annually. Staff utilize for training, research, and peer exchange on equity topics.

Equity based Community Climate Action Plan 2030 (CAP 2030) and Climate Adaptation Plan 2028 development (CMO + departments) - CAP 2030 completed and adopted in 2022; currently in implementation and reporting phase. CAP 2030 progress was reported at the January 14, 2025 City Council meeting. In December 2024, staff completed the draft Local Hazard Mitigation and Climate Adaptation Plan (LHM-CAdapt Plan 2025-2030) and submitted it to the California Office of Emergency Management for approval. The LHM-CAdapt Plan 2025-2030 will be presented to City Council for adoption in spring 2025.

Active development of green mixed use affordable housing projects (EDH) – Ongoing with recent Congressional allocations and grant funding bringing the projects closer to construction.

Diversity, Equity, Inclusion and Accessibility (DEIA) initiative*(HR + departments) - In progress. HR provided an update at the October, 2024 HiAP City Council Committee Meeting that staffing enabled progress on this effort in 2024 including developing a DEIA statement. The HiAP City Council Committee directed staff to provide an update in 2025. Between October and December 2024, Human Resources conducted over 30 site visits to discuss citywide organizational culture, including the DEIA initiative, its mission statement, and key definitions.

Staff provided feedback on workplace motivation, culture improvements, and other related projects, with submissions due by December 31, 2024. HR is now summarizing responses and will share key findings and their impact on DEIA development. Preliminary feedback highlights the need to enhance diversity training, particularly in computer literacy, English as a second language, gender identity, multi-generational collaboration, and LGBTQIA+ inclusion. Next steps include refining the City's diversity training program and policies to better address these areas.

More training for City Council and employees (HR + departments) – Ongoing. In 2024, staff members and all commissions were provided training on HiAP through an agenda report preparation training session. Additional training content was updated in the Advisory Bodies Handbook and each commission and committee was provided training on both CAP 2030 and HiAP during the summer of 2024.

12.3 Employee Equal Opportunity Committee (EEOC)* (HR): The EEOC helps the City explore avenues to apply the HiAP framework to its Human Resources policies. The ongoing work by this Committee will be reported to the HiAP City Council Committee in 2025 as part of HR’s biennial report. The EEOC is a strategic partner in reviewing feedback from the culture conversations and projects including the DEIA initiative.

Develop oversized vehicle ordinance to reduce the environmental damage associated with dumping sewage, reduce litter and bring safe parking that would improve equity. (PD + departments) – Ordinance adopted by City Council in 2022 and updated in 2023. The Coastal Commission renewed the Coastal Permit in 2024 for a two-year time period, and City monitoring and implementation continue, including provision of 24/7 and overnight safe parking programs for those residing in oversized vehicles.

Focus on sustainability, equity and inclusion in City’s existing building electrification, objective standard project, Housing Element implementation, and Downtown Plan Expansion project (PL) - Ongoing. Explicit outreach conducted with individuals from, and organizations that serve, historically under-represented or under-served people to inform these projects and policies. For example, see the HUD PRO Housing grant proposal for Affordable Housing and Climate Resilience in Frontline Communities in Santa Cruz submitted in the fall 2024. Other examples include initial work on anti-displacement strategies started with the Downtown Plan Expansion project and many approaches noted in the Housing Element to meet objectives that Affirmatively Further Fair Housing.

Develop list of prequalified local vet, BIPOC, small and women contractors for residents to reference. Incomplete. In 2025, follow up with El Pajaro and Black Santa Cruz, Ventures on related lists and programming as well as similar County initiative.

Exploration and integration of Carbon and Equity Budgeting* (FN) Integrated 3 HIAP pillars into FY23 – FY25 budget for informational purposes. There is a HiAP discussion in the popular annual financial report and three pillars are highlighted in each department’s budget summary in the annual budget report specifically noted by symbols throughout the accomplishments, goals, workload indicators and performance measures. Currently work between the City Manger’s Office and Finance departments aims to further integrate these pillars into the FY26 capital investment program (CIP) budget for prioritization purposes. The HiAP City Council Committee requests staff provide an update to the Committee on this work prior to FY26 budget hearings.

The City is also working with a graduate student to further understanding on ensuring equitable distribution of CIP projects in coastal resilience work.

Other directives from the anti-racial discrimination resolution that are partially complete or ongoing include:
• Conduct authentic community engagement with communities of color that includes, but is not limited to, increasing access to government decision-makers, and engaging with the communities prior to making decisions.
• Serve as a resource to People of Color towards existing resources for People of Color agencies and community members.
• Support resources for racial equity processes and outcomes including to leaders of color serving communities of color, building capacity in the understanding of racism and

12.4 equity and their impacts on community well-being, and engagement with trusted messengers who reflect the communities they serve.
• Pursue cross-sector and cross-jurisdiction partnerships within Santa Cruz County and alignment in dismantling white supremacy, fortifying our commitment to fostering antiracist and anti-discrimination community culture, and celebrating and highlighting past and existing culture and leadership of People of Color community members.